CREDITORS SHOWING DEBIT BALANCE . PROPRIETOR SAID BILL WAS ALREADY SET OFF , BUT STILL SHOWING DEBIT BALANCE . WHAT TO DO ?
yasaswi gomes
(My grammar is 💯 good I)
(7290 Points)
Replied 01 September 2021
This is nice, what will happen if it is transferred to capital account? It will reduce a further amount in liabilities isn’t it?
yasaswi gomes
(My grammar is 💯 good I)
(7290 Points)
Replied 01 September 2021
Tax expense a/c 100
To Tax payable a/c 100
then,
Tax payable a/c 100
To Bank a/c 100
the debit balance must go away and if it is still there and debiting it to capital account will reduce liabilities by 100 understating the balance sheet liabilities. Correct me if I am wrong
yasaswi gomes
(My grammar is 💯 good I)
(7290 Points)
Replied 01 September 2021
Sorry use Purchases entry instead. The output is the same. Lol couldn’t see the question on my mobile while typing
Rohit Bhikchandani
(11 Points)
Replied 01 September 2021
yasaswi gomes
(My grammar is 💯 good I)
(7290 Points)
Replied 01 September 2021
Sounds plausible and hard to do both within the framework. The auditor has to remember this particular transaction. Better change the software.
Vasant
(Accountant)
(75 Points)
Replied 02 September 2021
As written over earlier reply
1st write off (it will treate as income as creditor a/c. dr to s.balances written off cr ) also it will not look correct why there is debit balance and why not done followup for bill/or reimburment of amount.
2nd adjust with capital account but it reduce capital balance
3rd ask proprietor to do follow up with supplier for bill if bill not recorded or ask supplier to return the advance he received as only 2 possibilities 1) bill not booked 2) excess amount is transferred against bill he generated or any discount you have considered which he not given/short record of bill ( on this point you can c/f balance to next year as advance to supplier/creditor with justification)
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