Question

Journal entry for bank overdraft

Answer 1

The bank overall is the facilities that are given to the special customers that have an account in a respective bank that gets an extension of the credits from the bank and then the account reached the zero.

With the help of an overdraft, an individual can continue to withdraw the money without even funds in the account.

• When payment is made to bank overdraft:

Bank overdraft A/c Dr

To cash (being money deposited )

• When Money is withdrawal from the bank:

Note: bank Overdraft is a liability for the firm.

Cash A/c Dr

To Bank Overdraft A/c

• When payment is made to the creditor

creditor A/c Dr

To bank overdraft A/c

(being payment is made to the creditor)

• When goods are purchased from a Bank Account:

Purchased A/c Dr

To Bank overdraft A/c

Answer 2

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