Ad-Free CAclubindia and Daily Updates on your mobile. Subscribe Now!

bank guarantee

saurav (Tax practicner) (117 Points)

06 July 2017

entry for bank guarantee in the book of account

Reply
Follow
Share

3 Replies

RAJA P M ("Do the Right Thing...!!!") (127921 Points)
Replied 06 July 2017

under "LOANS & ADVANCES"

Upgrade to CAclubindia Pro. Subscribe Now!

saurav (Tax practicner) (117 Points)
Replied 06 July 2017

journal entry for bank guarantee with eg

saurav (Tax practicner) (117 Points)
Replied 06 July 2017

Company wanted to apply for a Government Contract with Railway Mininstry

where company would sell goods to Government of Rs 100 lacs

To secure contract,Bank Guarantee of 40.00,000 was required.

Company took this Bank Guarantee from PNB Bank of Rs 4000000 for 3 months

Bank took 2 % Commission p.a. and Asked for 25% Margin money in the form of a FD

Interest earned on FD was 8% p.a

Government Contract completed and money received from government

Bank Guarantee revoked

FD Returned including Interest on FD

Pass Entries in books of company