If the cheque once deposited is returned by bank and requested to be re -deposited what should be done about the discount amount?

Cash book with bank and discount columns.

asked Aug 16, 2015 in Subsidiary Books by Mahima (23 points) 1,090 views

1 Answer

0 votes
If a cheque is returned by bank and is supposed to be redeposited in the bank, you have two options:

Option I: Pass two journal entries at the time of receipt of cheque from bank and one entry at the time of deposit of cheque in bank.

1. Debtor A/c     Dr.      (with the amount of cheque in Cash Bookon receipt of cheque)

       To Bank A/c

2. Debtor A/c     Dr.      (in the journal for the discount amount on the receipt of cheque)

       To Discount A/c

3. Bank A/c     Dr.       (in the cash book in Triple column Cash Book on deposit of cheque)

    Discount A/c  Dr.     

       To Debtor A/c

Option II: Since this cheque is not to be returned to the debtor but redeposited, hence a new account called 'Cheque to be Redeposited' may be opened and in that case two entries will be passed:

1.  Cheque to be Redeposited A/c   Dr.  (with the amount of cheque in the cash book on receipt of cheque from bank)

        To Bank A/c

2.  Bank A/c    Dr.        (In the cash book at the time of deposit of cheque)

        To Cheque to be Redeposited A/c
answered Aug 16, 2015 by jbsclasses (3,971 points)