hi friends ,
what will be the entry for this sum
a dishonoured B/R for rs 400 returned to the firm by bank had been credited to bank a/c for collection of bills and debited to B/R a/c .a cheque was later received from the customer for 400 and was duly paid into the firms bank a/c ...pleaase explain me in detail
ENTRY ON DISHONOUR:
PARTY A/C ........................DR 400
TO, BANK A/C....... 400
WHY? : BECAUSE WE HAVE TO TAKE AMOUNT FROM THE PARTY AGAIN.., AND BANK A/C THAT WAS DEBITED EARLIER WILL BE REVERSED. BANK WILL PASS ENTRY ONLY ON REALIZATION, SO THINK ONLY FROM OUR POINT OF VIEW...
ENTRY ON GETTING AMOUNT BACK:
NORMAL ENTRY: BANK A/C DR TO PARTY A/C BY AMOUNT 400/-
1. It seems from your question that when the B/R was initially deposited with bank, you passed the entry bank a/c for collection of bills Dr. B/R A/c Cr.
2. When the B/R was dishonoured you should have debited the Debtor (from whom B/R was received) but you debited B/R a/c. (wrongly)
3. Now on receiving the new cheque from the Debtor you debited bank and credited the debtor (though you have not stated this, but i am assuming it).
4. In this case rectifying entry should be Debtor a/c Dr. B/R a/c Cr.
5. By passing this entry, the amount pending in B/R a/c will disappear and also the amount credited to the debtor will also disappear.
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