Stale Cheques

Supposing in a Company's books they have cancelled a cheque and issued payment but the latter is not presented for payment so this is not reflected as payment in bank books... so this item appears in BRS for the past 1 year... when sufficient reason is there that payment will not be collected in order to avoid it appearing in subsequent month BRS the entry needs to be reversed... what is the correct entry to reverse the payment

For instance 1st entry is:  

Bank a/c Dr   10000

  To Cheque cancellation   10000  (Amt cleared)

2nd entry is payment:

Cheque cancellation a/c dr  10000

  To bank                                               10000

so wat is the correct 3rd entry in order to reverse the payment and reconcile the same amount????

Replies (1)

Entry you have done is up to chq cancellation

Now When you make payment to party and accounting entry will be:

Party A/c OR Expenses A/c     DR.

   To bank A/c

At the time of reverse the payment the entry will be

Bank A/c    DR.

       TO  Party A/c OR Expenses A/c

 

>> Rajesh

 

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