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Anthony received goods which cost $250 from Brad on credit terms and Anthony subsequently paid by cheque. Anthony then discovered that the goods were faulty and cancelled the cheque before it was recorded and cashed by Brad.
What accounting entries should Anthony use to record the cancellation of the cheque in his books?A Debit Accounts payable, and Credit Returns outwards
B Debit Bank, and Credit Accounts payableThe other two answer were repeated therefore I erased.
The answer of question is A. I am unable to understand that question is asking for net impact or entry of cancellation of cheque?Originally, when the invoice was received:
Dr Purchases Cr Accounts payable
Then on issuing the cheque payment
Dr Accounts Payable Cr Cash.
The cheque was cancelled before being cashed, so the money won’t actually leave the account and the goods will be returned:
Dr Cash
Cr Returns outward
Neither of your answer seems correct.
Sir how can we do such type of questions. Do we have to tell the net effect.
Like I did a question but it did wrong. Please let me know how to do such questions.Chimwe purchased a new non-current asset, and paid for this by cheque. At the same time a bank loan was raised to provide some of the funds needed for the purchase.
What entry correctly records the purchase of the non-current asset?
a. Dr Non-current assets Cr Bank
b. Dr Bank loan Cr Non-current assets
c. Dr Bank Cr Non-current assets
d. Dr Non-current assets Cr Bank loanThe answer is A. I did D.
There are two transaction here:
1 – Raise a bank loan: Cr Loan, Dr cash or bank
2 – Purchase the NCA: Cr Cash or bank, Dr NCA
The question asked “What entry correctly records the purchase of the non-current asset?”, so it wants the second transaction./
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