Endorsement of cheque means changing the ownership of cheque or bill.
To endorse cheque, payee puts signature on back side of the cheque.
He/she allows permission to pay amount of cheque to endorsed person.
Suppose Manju Chaudhary received a cheque from Manoj Sharma $/₹/Rs 8,000 endorsed to Rekha Thapa with proper notice is called endorsement.
There are three types of cheque; bearer, order and crossed cheque.
Bearer cheque does not need to endorse.
Crossed cheque cannot endorse.
Only order cheque is endorsed.
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Currency of your country
Journal Entry
In the book on Manju Chaudhary
Cheque received from Manoj |
Cheque endorse to Rekha |
|||||||||||
Bank account |
Dr |
8,000 |
|
Rekha Thapa |
Dr |
8,000 |
|
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To Manoj Sharma |
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|
8,000 |
To Bank account |
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|
8,000 |
|||||
(Being- cheque received from Manoj Sharma) |
(Being- cheque received from Manoj Sharma |
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|
endorsed to Rekha Thapa) |
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|
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|
If bank entry eliminated |
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Rekha Thapa |
Dr |
8,000 |
|
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To Manoj Sharma |
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|
8,000 |
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(Being- cheque endorsed to Rekha Thapa) |
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Note: In above journal entry, Manju Chaudhary is payee or endorser and Rekha Thapa is endorsee.
Example
Extracted data is given by Manju Chaudhary:
Nov 5, Cheque received from Manoj Sharma of Rs 8,000.
Nov 6, Cheque received from Manoj Sharma endorsed to Rekha Thapa.
Required: Show in cash book
SOLUTION
Double Column Cash Book (Cash and Bank)
Date |
Receipt |
LF |
Cash |
Bank |
Date |
Payment |
LF |
Cash |
Bank |
Nov 5 |
To Manoj Sharma |
|
– |
8,000 |
Nov 6 |
By Rekha Thapa |
|
– |
8,000 |
|
|
|
|
|
|
(endorsed) |
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#######
Click on link for YouTube videos topic wise : |
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Accounting Equation |
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Basic Journal Entries in Nepali |
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Basic Journal Entries |
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Journal Entry and Ledger |
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Ledger Account |
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Subsidiary Book |
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Cash Book |
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Trial Balance and Adjusted Trial Balance |
|
Bank Reconciliation Statement (BRS) |
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Depreciation |
|
Click on link for YouTube videos chapter wise: |
|
Financial Accounting and Analysis (All videos) |
|
Accounting Process |
|
Accounting for Long Lived Assets |
|
Analysis of Financial Statement |
#######
There are different types of endorses like general, special and restrictive, partial endorsement etc.
Blank or general endorsement
When payee or endorser put simple signature on the back of the cheque, it is known as blank or general endorsement.
It can be endorsed to anybody.
Payee Manju Chaudhary does not write anything on back side of cheque, there is only signature of payee.
Manju Chaudhary
Full or Special endorsement
When payee or endorser write endorsee’s name with his signature on the back of the cheque, it is known as special endorsement.
Payee Manju Chaudhary writes on back side of cheque “Pay to Rekha Thapa”
Manju Chaudhary
Restrictive endorsement
When payee of endorser puts the signature on the back of the cheque referred person, it is known as restrictive endorsement.
It is written on back side of cheque “Pay to Rekha Thapa only”
Manju Chaudhary
Partial endorsement
Suppose value of cheque is Rs 8,000.
Payee puts signature on back side of cheque “Pay to Rekha Thapa Rs 5,000 only”
Manju Chaudhary
This is a partial endorsement and invalid for the purpose of negotiation.
Cheque is a written order.
This order is given to bank by an account holder.
When cheque presents for payment but there is not sufficient amount in the bank account, it is called dishonor of a cheque.
There are lots of reasons for dishonour of cheque.
Some major reasons are:
There is not sufficient amount at bank,
Date is not written correctly,
Name of payee is not written,
Amount of words and figure does not match,
Drawer’s signature does not match with computer or signature specification card,
Cheque is overwritten, spoiled, torn and spotted,
Drawer has given order to stop payment etc.
Cheque received |
Cheque dishonoured |
||||||
Bank account |
Dr |
|
|
Maya’s account |
Dr |
Dr |
|
To Maya’s account |
|
|
|
To Bank account |
|
|
|
(Being- cheque received from Maya) |
(Being- cheque received from Maya dishonoured) |
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Currency of your country
Example: 1
Extracted data is given by SB Traders:
Sep 5, Cheque received from Maya Rs 3,700.
Sep 12, Cheque received from Maya dishonoured.
Required: Show in cash book
SOLUTION
Double Column Cash Book (Cash and Bank)
Date |
Receipt |
LF |
Cash |
Bank |
Date |
Payment |
LF |
Cash |
Bank |
Sep 5 |
To Maya’s account |
|
– |
3,700 |
Sep 12 |
By Maya’s account |
|
– |
3,700 |
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|
(dishonoured) |
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