Question

Cheque of Mohan for 1000 was dishonoured and it was debited to allowance account. Pass the rectifying entry.

Answer 1

Bank account... Dr.
To, Allowance account

Since, the company has already passed an entry for payment towards allowance to Mohan. So, the reverse entry will be passed for rectification

Answer 2

Bank A/c….Dr               1000

To Allowance A/c                  1000

(Being dishonored cheque debited to allowance a/c)

Explanation:

A cheque is said to be valid or honored, if the bank gave the sum amount to the payee. While, if the bank won't pay the sum to the payee, the check is said to be invalid or dishonored. As it were, dishonor of cheque is a condition wherein bank will not pay the amount to the payee.

Since, the company has already passed a journal entry for payment towards allowance to Mohan. So, the entry will be reverser so that it will be rectified and be passed properly.

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