Respected CA's
Somebody gave 1 lac rupees in trust as a unsecured loan by cheque, and in next year he has decided and told to trust management that now i don't want this amount and his wish to pay this amount as a donation..so my query is that what's account entry in books after convert unsecured amount to donation..
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Unsecured loan (creditors) to donation
Replies (2)
Quick Summary
J .E in the Books of Trust
When loan received by trust
1) Bank A/c Dr 100000/-
To unsecured loan A/c Cr 100000/-
( Being loan received by trust )
In the next year unsecured loan will be converted in to Donation so entry will be
2) Unsecured loan A/c Dr 100000/-
Donation A/c Cr 100000/-
( Unsecured loan converted in to non repayable Donation )
3) Then we transfer this donation amount to Income & Expenditure account as this donation is our Income . entry will be
Donation A/c Dr 100000/-
To Income & Expenditure A/c Cr 100000/-
( Donation as income transfer to Income & expenditure )
Note - if trust want to capitalize this amount then Capital fund account will be credited .
Thanks for reply. but doner want to receipt against 1 lac to get benefit in their itr. then one receipt will be made ag. one lac or 10000 X10 receipt will be made in next year. meanwhile 1 short receipt can make or their any amount limit for donation receipt
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