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If a paid to b rs.1000 on behalf of c what is the entries in
The books of a,b,c pls pass the entries
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Answer Posted / jayesh eay
A is paying to B , on behalf of C.
Therefore in the books of A
1) B's a/c ....Dr ( Receiver)
To Cash/ Bank..cr ( Cash out )
2) Need to reclass the previous entry , because he is not paying for himself . He is paying on behalf of C. So it is like an advance to C., hence
Reclass journal
2) C's a/c .....Dr
To B's a/c......cr
In the books of B
1) Cash/ Bank .. A/c ........Dr
To A's. a/c.......,.............cr
( Being Cash received from A)
Again similarly B would also need to reclass as the payment is not from A, it is from C, hence
2) A's a/c ..........Dr
To C's a/ ...........Cr
In the books of C.
C's liability has reduced for B, ( As the payment was made ) similarly C's liability has increased towards A( As A paid is as an advance towards C)
Hence by the American Golden rule .
Liability increase .....Cr
Liability decrease Dr
1) B's .....a/c ..........Dr
To A's a/c .........cr
Thanks
.
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