What is check withdrawal?
Check maturity is the method of calculating the actual maturity of a number of checks with different amounts and on different dates.
Suppose we want to pay one million riyals for the next 30 days in a transaction using checks with different amounts and dates. be
There are two uses of checking check:
One is for the time when we want to receive the payment of an invoice and we make an appointment with the customer to give us the payment of the invoice, for example, in 30 days.
And the other when we convert checks/cheques to cash before maturity. That is, we sell checks. For example, we have a check or several checks with a future due date, and we give them to a market and receive cash. In this case, we deduct a percentage of the money as a discount.
Examples of check endorsements
Example 1: On 01/10/1994, we sell some goods for the amount of one million rials and we agree to receive their amount from the buyer within 30 days. In this case, we can receive money from the customer in the following ways.
The first case – we get a check for one million rials from the customer dated 30 days later
or that:
The second case – receive three checks from the customer on the following dates and amounts:
Check No. 1 dated 20/01/94 in the amount of 400 thousand Rials
Check No. 2 dated 02/20/1994 in the amount of 400 thousand Rials
Check No. 3 dated 02/27/1994 in the amount of 200 thousand Rials
The top checks are made as follows.
We calculate the difference in days between the date of the invoice and the check and multiply it by the amount of the check.
We add the obtained numbers together to get a total number
We divide the total number obtained by the amount of the invoice to get the number of checks based on the number of days.
With this method we have:
Check number 1 – 10 days is different from the date of the invoice and the amount of the check is 400 thousand rials, so the number is obtained:
400,000 * 10 = 4,000,000
Check 2 – 41 days is different from the date of the invoice and the amount of the check is 400 thousand rials, so the number is obtained:
400,000 * 41 = 16,400,000
For check number 3 we also have:
200,000 * 48 = 9,600,000
Therefore, the total sum will be equal to the following number:
4,000,000 + 16,400,000 + 9,600,000 = 30,000,000
If we divide the obtained number by the amount of one million Rials, the number is 30. It means that we will receive the amount of one million Rials in 30 days.
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Nazanin @eslami
This post is written by Slmaccounting2112