Rahim (Businessperson) (460 Points)
02 September 2012I am slightly confused regarding the date of passing journal entries:
Scene-1: Suppose I draw a cheque dated 25-03-12 in favour of XYZ Ltd, but the company presented it for payment only on 3-04-12 in the bank. Which date should i pass the payment, 25th or 3rd Apr, in my books? How will i account for the difference in the Bank Statement then?
StarShines
(Student CA Final )
(35 Points)
Replied 02 September 2012
| Originally posted by : Rahim | ||
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I am slightly confused regarding the date of passing journal entries: Scene-1: Suppose I draw a cheque dated 25-03-12 in favour of XYZ Ltd, but the company presented it for payment only on 3-04-12 in the bank. Which date should i pass the payment, 25th or 3rd Apr, in my books? How will i account for the difference in the Bank Statement then? |
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Asalam-o-Alaikum Rahim Bhai !
You would pass journal entry on 25th March 2012 when you issued the cheque. You would pass this simple entry:
XYZ Limited...Dr Rs.5,000 [liability account]
Bank Account...Cr Rs,5,000 [asset account]
If the check is presented to the bank on 3rd April 2012 by XYZ Limited, that is not our concern. Also note kindly that bank reconciliation is simply a reconciliation statement between the balance of cash book (bank account column) and pass book (or bank account statement). The difference would not create the need for a journal entry. That would be for your help only.
So for example, before issuing the cheque to XYZ Limited, your account balance is Rs.50,000. After issuing the cheque, you would pass the above entry. If on 2nd April 2012, you check your account statement and your balance is still Rs.50,000 then that means XYZ Limited has not issued it for presentment in the bank.
Hope that helps.
Profound Regards,
StarShines
CAclubindia
