About journal entry

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Rajendra narayan sahoo

Rajendra narayan sahoo (Querist)
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09 January 2013 A bank loan of rs50000 against debtor under negotiation?

CA.Sourabh Sethia

CA.Sourabh Sethia (Expert)
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09 January 2013 pls clarify in detail about the transaction..?
it seems to be a non monetary transaction
if it is then there is no requirement of any entry
because in the accounts you have to only record the monetary transactions

Rajendra narayan sahoo

Rajendra narayan sahoo (Querist)
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10 January 2013 Please explain the meaning of the statement.

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Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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14 July 2024 The journal entry for a bank loan of Rs. 50,000 against a debtor under negotiation would typically be recorded as follows:

1. **For the bank loan received:**

**Debit:** Bank Loan Account (Liability side)

**Credit:** Bank Account (Asset side)

Explanation: This entry reflects the increase in liabilities (Bank Loan) and the corresponding increase in assets (Bank Account) as the loan amount is received from the bank.

2. **Regarding the debtor under negotiation:**

It seems there's an outstanding debtor involved in the transaction. If the bank loan is somehow linked to this debtor (possibly as collateral or for working capital purposes), the specific accounting treatment would depend on the details of the negotiation:

- If the debtor is being used as collateral for the loan, typically no direct journal entry related to the debtor would be made, but the loan agreement might specify the terms under which the debtor would be used as security.

- If the loan is not directly linked to the debtor and is a separate transaction, then the debtor's account would remain unaffected by the loan transaction.

### Example Scenario:

Let's illustrate with a hypothetical scenario:

- **Assume the following details:**
- Bank loan taken: Rs. 50,000
- Purpose: Against a debtor under negotiation

- **Journal Entry:**

**1. When the bank loan is received:**

**Debit:** Bank Loan Account (Liability)

**Credit:** Bank Account (Asset)

- This entry increases the liability of the company (Bank Loan) and increases the asset (Bank Account) by the loan amount received.

**2. If the loan is against a specific debtor:**

If the loan is secured against a specific debtor and the debtor's amount is being negotiated, the journal entry might reflect the arrangement of the loan agreement but typically not directly affect the debtor's account unless specified in the loan terms.

### Conclusion:

The accounting treatment of a bank loan against a debtor under negotiation involves recording the loan received as a liability and the corresponding increase in bank assets. If the debtor is involved as collateral or part of the loan agreement, the specific terms of the loan would dictate any additional accounting entries. It's crucial to follow accounting standards and consult with a professional accountant or financial advisor for specific guidance tailored to your company's circumstances.