Please help...its urgent

A/c entries 638 views 3 replies

VIDYA BHOSALE

Accountant

44 Points Joined July 2013

Friends,

Suppose I have applied for a housing loan for purchase of a residential property in say FY1213.

The Bank has sanctioned the same in the same year i.e PY 1213

I got the cheque from the bank on say 30 March , 2013.

Note : The cheque is in favour of the seller of the property.

I deposited the cheque in seller's bank a/c on 2nd April, 2013.

Registration procedures in respect of that property were not completed as on 31st March, 2013.

Now, my question is will the loan reflect in the balance sheet for the FY1213? What will be the entry?

if we say, loan should reflect in FY1213 as the loan was sanctioned in that year and the cheque from bank also was recd in FY1213, then which a/c to debit? You might say debit to advance given for property, but actually the advance was not given in that year.

Please, please guide me on this matter. I am really confused.

Replies (3)

Richa

377 Points Joined June 2012

Vidya - you are saying that the registration procedures are not completed. My question is whether the possession is obtained by the buyer ? If the possession is obtained by the buyer then it is irrelevant whether the registrations procedures are completed or not , the property will be shown in the books for the year ending 31-03-2013. Property A/c will be debited and Bank's loan A/c will be Credited. But if no possession is obtained and the cheque is paid into seller's A/c after 31-03-2013, then cheque in hand A/c will be Debited and Bank's Loan A/c will be Credited.

In both the cases, Bank's Loan A/c will be credited since the cheque is received.

VIDYA BHOSALE

Accountant

44 Points Joined July 2013

Thanks Richa... The posession was not obtained as on 31st march, 2013 and is still not yet obtained. I agree that in any case the loan will reflect in the balance sheet.But, cheque in hand a/c means exactly to debit which account beacuse i want to file the income tax return and i have to show it under a proper head?

Richa

377 Points Joined June 2012

But you cannot show it as advance to seller as neither you have forwarded the cheque to him nor you have deposited in his A/c.

Moreover, if you get a cheque which you have not deposited in bank, there are two options - first Credit the a/c of the giver of cheque and Debit cheque in hand A/c (which is generally done).

Second - Do nothing - neither credit the A/c of the giver nor Dedit cheque in hand A/c.

But in your case, second option is not available since as you have received the loan cheque and with this you become liable and you will have to recognise this loan. Now comes the question as what should be debited - you cannot debit bank a/c as its balance remains the same, you cannot debit seller's a/c since you haven't paid him any money. So the best option is to debit cheque in hand A/c.

And I don't think this will in any case influence the tax return. As the loan is received at the end of the year, I believe no instalment was paid in 12-13. Whatever is debited is also not your income.

So, go ahead will the cheque in hand A/c.