ABC Ltd. makes payments to its Sundry Creditors through cheques and the Cash Discount received on these payments is recorded in the Triple-columnar Cash Book. In the event of dishonour of any such cheques, the discount so received should be written back through
(i) A debit to discount column of the Cash Book
(ii) A credit to discount column of the Cash Book
(iii) A credit to bank column of the Cash Book
(iv) A debit to Discount Account through Journal Proper
(v) A credit to Creditor's Account through Journal Proper

Question

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When a cheque is dishonoured, the discount received earlier must be reversed. This is done by debiting the Discount Account to cancel out the earlier credit entry (reflecting the discount received), and crediting the Creditor's Account to restore the creditor's balance to its original amount before the discount was applied. These entries are made through the Journal Proper since they involve adjustments rather than direct cash or bank transactions.

ABC Ltd Makes Payments to Its Sundry Creditors Through Cheques and and the Cash