What will be the journal entry?

Mr.Babban,

When cheque is dishonour the journal entry will be as follows:

Debit the Debtor or party name

Credit the Bank account

Narration of the transaction is Being the cheque no:.......dt:........is dishonoured by the bank.

A) When the cheque is endorsed-

Creditors A/c ... dr

   to Debtors A/c

Reasosn Being- u receive cheque from X & give to y. No bank balance of urs is incerasing or decreasing. Simply the balances of X & Y are affected. In narration u will write " Being cheque received from Mr. X is endorsed to Mr. Y".

B) When the cheque is dishonured-

Debtors A/c

  to Bank A/c

Reason being - the cheque is dishonured so our bank balance does nt increases & due from debtor is not realised . So the opposite entry of being cheque received from debtors.

(a)When the cheque is endorsed 

Creditor a/c Dr

  To  Cash a/c

Reason is that when a cheque is received it is treated as cash if not deposited into bank on the same day 

Hence when we endorse the cheque to a creditor  we are giving assuming that we are giving cash 

Here my answer is based on that the cheque is not endorsed to the creditor on the same day 

(b) for dishonor of a cheque I agree with Mr. Rohit

thnku guys...it  helps me a lot