11 August 2009
An individual is running a firm, he needs cash,to deposit in bank againt loan,he took 84000 cash from sarof(financer) and gave him post dated a/c payee cheque of firm name. how to display this entry in firm books?
12 August 2009
Treat it as loan from Sarof( financer)in firm's book. issue him post dated cheques from firm. Rs. 84000 treat as Drawing of the partner from the firms.
31 July 2024
When dealing with cash transactions and loans from financers, it's crucial to maintain proper records and ensure that entries in the firm's books accurately reflect the transactions. Here’s how to display the entry in the firm’s books and handle a potential scrutiny scenario:
### Journal Entry for Cash Loan from Financer
**Step 1: Record the receipt of cash from the financer**
When the firm receives cash from the financer, it should be recorded as a loan in the firm's books. The entry would be:
``` Date: [Date of Transaction]
Cash A/c Dr. ₹84,000 To Loan from Financer A/c ₹84,000 (Being cash received from financer as a loan) ```
**Step 2: Record the issuance of the post-dated cheque**
The post-dated cheque issued to the financer should be recorded as a liability until the cheque is actually presented and honored. The entry would be:
``` Date: [Date of Issuance]
Loan from Financer A/c Dr. ₹84,000 To Post-Dated Cheque Issued A/c ₹84,000 (Being post-dated cheque issued to the financer against the loan) ```
Once the cheque is honored, the following entry would be made on the date the cheque is presented and cleared:
``` Date: [Date of Cheque Clearance]
Post-Dated Cheque Issued A/c Dr. ₹84,000 To Bank A/c ₹84,000 (Being post-dated cheque cleared and amount debited from the bank account) ```
### Handling Potential Scrutiny
1. **Documentation and Evidence:** - **Loan Agreement:** Ensure that you have a written agreement or promissory note with the financer detailing the loan amount, terms, and repayment conditions. - **Cheque Details:** Keep a copy of the post-dated cheque issued to the financer. - **Bank Statements:** Maintain bank statements showing the clearance of the post-dated cheque.
2. **Alternative Documentation:** - **Affidavit or Declaration:** If the financer is unwilling to provide confirmation, obtain an affidavit or declaration from your side detailing the transaction. - **Cash Receipt Voucher:** Prepare a cash receipt voucher signed by the financer acknowledging the receipt of ₹84,000 as a loan.
3. **Communication with Financer:** - **Written Communication:** Maintain any written communication (emails, letters) with the financer about the loan transaction. - **Follow-Up:** If possible, follow up with the financer to try to obtain a confirmation or at least an acknowledgment of the transaction.
4. **Professional Assistance:** - **Chartered Accountant (CA):** Engage a CA to review the transaction and provide a certification or guidance on the proper recording and presentation of the loan in your firm's books. - **Legal Advice:** If the financer refuses to cooperate, seek legal advice to understand the implications and possible ways to substantiate the transaction.
### Scrutiny Response
If scrutiny arises and the financer does not provide confirmation, you can respond with the following:
- **Transaction Details:** Provide all transaction details, including dates, amounts, and the nature of the transaction. - **Supporting Documents:** Submit the loan agreement, copies of the post-dated cheque, bank statements, and any alternative documentation you have prepared. - **Affidavit/Declaration:** Include an affidavit or declaration detailing the transaction from your side. - **CA Certification:** A certification from your CA regarding the transaction can also strengthen your case.
### Conclusion
Proper documentation and accurate recording of transactions are crucial to handle scrutiny effectively. While it’s challenging if the financer is uncooperative, maintaining comprehensive records and seeking professional advice can help mitigate risks and provide clarity to tax authorities.
CAclubindia
