PDC Cheque


Accounting Education reader Accountant from XYZ Co. put a query about handling PDC cheques  in Journal. To put his problem he says,

"I want to ask what will be the journal entry for PDC cheques issued to supplier.... let suppose we purchase office furniture from FURNITURE HOUSE on dated 25-5-2010. for amount Rs 50000/- and we issued 5 cheques on same day each cheque amount is Rs 10000/- starting date of payment is 1-10-2010 ... now what will be the entry for this in our books and the same time what entry will pass the FURNITURE HOUSE in his books of account?


First of all you and other reader should learn about the meaning of PDC Cheque.

Meaning of PDC Cheque

PDC Cheque means post dated cheque. In USA it is called Post-Dated Check. In banking, post-dated or PDC refers to checks or cheque which have been written for a date in the future. In above example, XYZ company purchased Furniture and issued.

Journal Entry of PDC Cheque

On 25-5-2010

No need to enter any post date cheque in journal as payment because your supplier will get money on 1-10-2010. You just have to enter the journal entry of furniture purchased on credit.  No need to do any journal entry in the books of Furniture house. Furniture house will just enter the journal entry of furniture sold on credit.

On 1-10-2010

you will pass

Furniture A/C Dr.
Bank Cr.

Furniture house will pass

Bank Account Dr.

Furniture A/C Cr.

Or use any good accounting software and when software, when you have to deal the PDC cheque, you have  just  click the post dated option and pass the voucher entry in 25-5-2010,  you will see that balance sheet of 1-5-2010 to 30-9-2010 will not show above and on 1-10-2010, it will  automatically show the effect of post dated voucher entry in balance sheet on 1-10-2010 which we already passed in 25-5-2010. That's simple. I see you in next problem's solution. Ok.



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Accounting Education: PDC Cheque
PDC Cheque
Accounting Education
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