Set-off of Debtors and Creditors

Manish (student) (47 Points)

05 July 2011  

Is there any rule in income tax or company act which do not allow to set off debit balance and credit balance of same person? FOR EXAMPLE - 

In books of Mr A.

Sale to mr X - Mr. X Debtor 500/-

Purchase from Mr X. - Mr X Creditor 400/-

 

By Mr X   400 dr

       To Mr X   400 cr

 

Now balance remains - Mr x debtor 100/-

IS THIS TYPE OF ENTRY ALLOWED OR WE HAVE TO GIVE MONEY AND RECEIVE MONEY ???