PDA

View Full Version : Cash Book and Journal Entries


Espri
Apr 12, 2007, 12:12 AM
Furniture is sold and the debtor pays by cheque. I am assuming that first of all this entry will be reflected in the Cash Receipts Journal.
As at the end of the month, the cheque is returned unpaid.
1. This first transaction will go in the Cash Receipts Journal (Ledger acc DR Bank/CR Furniture)
2. Does the reversal reflect in the Cash Receipts or Cash Payments Journal (Ledger acc DR Furniture/CR Bank)?
3. Does it then get entered into the Debtors Journal (Ledger acc DR Debtor/CR Furniture)?

Will appreciate any feedback on this question. Thanks

goldenbutterfly
Apr 12, 2007, 05:12 AM
I am assuming that the reason the cheque is not yet paid at the end of the month is because it is postdated. Postdated checks are like promissory notes to be paid at a later date. So it would be safer to put in under Notes Receivable first and record it in the Cash Receipts Journal on maturity date.

Espri
Apr 12, 2007, 10:44 PM
Hi Goldenbutterfly

The cheque is not postdated. It is returned due to insufficient funds.

goldenbutterfly
Apr 12, 2007, 11:14 PM
In actual practice, as far as I know, a bank usually accepts for deposit a check drawn against insufficient funds only once after it bounces. So if I deposit a check and it bounces, I have another chance to redeposit the check again to see if the check has been fully funded.

However, for homework purposes, you have to revert it back to Accounts Receivable.

dr. Accounts Receivable xx
Cr. Cash in Bank xx