06 September 2010
A ltd is company received amount of 100000 from B with Purchase Order but wrongly made the banking & sales entry in the books of C of 100000.Now C has been sold goods worth 20000.So he is not in condition to return the goods to A Ltd and he has also not sufficient balance to pay to A ltd.Now C requested to A ltd. to bill the same goods to him for the same value(Rs.20000).Now he returned all the goods(Rs.100000) to B and gave the declaration to A ltd that he has been received the goods of the same amount from C so he will not claim for the same amount in future. The question is :-B and C settled their matter personally but wrong impact showing in the books of B & C. Pls give the solution.
06 September 2010
Very tricky Amit. The answer is as follows:
In the books of A A recd amount from B - Cash Debit and B Credit Value Rs. 100,000 A sent goods wrongly to C - C Debit and Sales Credit Value Rs. 20,000 C asks A to bill the same value - But remember that A's original entry is incorrect and it has to be corrected. So a further "rectification" entry is required which is C Debit and Sales Credit Value Rs. 80,000 C sends goods to B - B Debit and C Credit Rs. 100,000 End Result Cash Debit and Sales Credit Value Rs. 100,000
In the books of C Goods received from A - Debit Purchases and Credit A Rs. 20,000 Goods sent to B (on behalf of A) - Debit A and Credit Purchase(returns) Rs. 20,000 End result - NIL
In the books B Cash paid to A - Debit A and Credit Cash Goods received from C (on behalf of A) - Debit Purchases and Credit A End Result - Purchases Debit and Credit Cash.
CAclubindia
