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What is the accounting treatment for excessive payment

Joseph Samuel (Accountant) (75 Points)

02 January 2020

Dear Sir/Madam, Amount payable by client was Rs. 2,25,725/-. Client made the payment. But the amount transferred by client is Rs. 2,25,730/-. Excessive of Rs. 5/- is paid. The client is no longer to be with the company now. And the client doesn't have any problem with that excessive of Rs. 5/-. So in this case what should be the accounting treatment?

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RAJA P M ("Do the Right Thing...!!!") (128091 Points)
Replied 02 January 2020

If You can maintain balance then You can continue...

If You want to close the balance then book the excess amount as "MISC INCOME" into PandL account.

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prasad Nilugal ( GST Practitioner & Accounts ) (14811 Points)
Replied 02 January 2020

You pass following entries in the Books of Accounts

1) you first entry for Sales

Sundry Debtors A/c DR 2,25,725 .00

To Sales A/c CR 2,25,275 .00

( Booking of sales entry )

2) When you received excess payment of Rs 5/- from Debtors entry will be

Bank A/c DR 2, 25, 730 .00

To Sundry Debtors A/c CR 2 , 25, 725 .00

To Mics Income A/c CR 5 .00

( Being payment received )

Note - Mics Income will be under Indirect Income ( Profit & Loss A/C )

2 Like

RAJA P M ("Do the Right Thing...!!!") (128091 Points)
Replied 02 January 2020

Originally posted by : prasad Nilugal
	You pass following entries in the Books of Accounts 1) you first entry for Sales Sundry Debtors A/c DR 2,25,725 .00 To Sales A/c CR 2,25,275 .00 ( Booking of sales entry ) 2) When you received excess payment of Rs 5/- from Debtors entry will be Bank A/c DR 2, 25, 730 .00 To Sundry Debtors A/c CR 2 , 25, 725 .00 To Mics Income A/c CR 5 .00 ( Being payment received ) Note - Mics Income will be under Indirect Income ( Profit & Loss A/C )

VERY WELL DEAR...

1 Like

Joseph Samuel (Accountant) (75 Points)
Replied 03 January 2020

Well explanation to the core. Thank you so much. But sorry for not asking this question before, if the payment is less by Rs. 2/- or something then what should to do? can we debit the mis. income? That is:

Bank A/C 'Dr' 2,00,000

Mis. Income A/C 'Dr' 2

To Sundry Debtor A/C 2,00,002

Can I pass a journal entry like this? or does it require different approach?