ECONOMICS,COMMERCE AND MANAGEMENT: LEARN JOURNAL ENTRY WITH IN FIVE MINUTES PART 5 PLUS ONE ACCOUNT/CA/CS FOUNDATION ACCOUNTS

Saturday, August 17, 2019

LEARN JOURNAL ENTRY WITH IN FIVE MINUTES PART 5

PLUS ONE ACCOUNT/CA/CS FOUNDATION ACCOUNTS

WITH THE HELP OF FIXED ASSETS, BUSINESS IS CARRIED ON. LIKE BUILDING,PLANT MACHINERY ETC
DEPRECIATION IS THE WEAR AND TEAR OF THE ASSETS
PERMANENT DECREASE IN THE VALUE OF THE ASSET
DEPRECIATION IS TREATED AS BUSINESS EXPENDITURE
DEPRECIATION IS DEBITED AND VALUE OF THE ASSET IS CREDITED

TREATMENT OF DEPRECIATION
TREATMENT OF DEPRECIATION CHARGED ON FIXED ASSETS ;-
DEPRECIATION ACCOUNT DR
TO FIXED ASSETS
( BEING DEPRECIATION CHARGED ON THE ASSET)
ENTRY FOR DEPRECIATION
MACHINERY PURCHASED FOR 1,00,000 AND RATE OF DEPRECIATION 10% FOR FULL YEAR ON ORIGINAL COST
CALCULATION OF DEP = 1,00,000X10/100=10000
THE ENTRY WILL BE
DEPRECIATION A/C DR =10,000
TO MACHINERY = 10,000
( BEING DEPRECIATION CHARGED AT 10%)

PROFIT OR LOSS ON SALE
PROFIT/LOSS ON THE SALE OF GOODS IS NOT DEALT SEPARATELY FOR EVERY TRANSACTIONS
GOODS COSTING RS 4500 SOLD FOR RS 5000
CASH A/C ------DR 5,000
TO SALES A/C 5,000
( BEING GOODS SOLD )
PROFIT OR LOSS ON SALE
PROFIT AND LOSS ON THE SALE OF ASSETS
ANY PROFIT OR LOSS ON THE SALE OF ASSET OR INVESTMENT IS TRANSFERRED TO SEPARATE ACCOUNT
FURNITURE COSTING RS 20,000 IS SOLD FOR 18,000
THERE IS LOSS OF RS 2,000 AND IT WILL BE SHOWN SEPARATELY
THE ENTRY WILL BE :

· CASH A/C ---------DR 18.000

· LOSS ON THE SALE OF FURNITURE DR 2.000

· TO FURNITURE A/C 20,000

· ( BEING FURNITURE COSTING 20,000 SOLD FOR RS 18,000)

SHARES PURCHASED FOR RS 12,000 SOLD FOR 15,000 AND BROKERAGE ON SALE RS 700
WORKING NOTE= NET RECEIPT= 15000-700=14,300
PROFIT = 14300-12000=2300
CASH A/C -----------14,300
TO INVESTMENT A/C 12,000
TO PROFIT ON THE SALE OF INVESTMENT 2300
( BEING INVESTMENT WORTH 12,000 SOLD FOR 15,000 AND BROKERAGE PAID RS 700)
TREATMENT OF GOODS GIVEN AS CHARITY/ADVERTISEMENT
GOODS GIVEN AS FREE SAMPLE TO ADVERTISE ITS PRODUCTS AND GOODS MAY BE DISTRIBUTED AS CHARITY. BOTH ARE EXPENSE AND SHOULD BE DEBITED
CHARITY GOODS COSTING RS 10,000 AND CASH 5100
THE ENTRY WILL BE
CHARITY A/C DR =15100
TO PURCHASES A/C = 10,000
TO CASH A/C = 5100
( BEING GOODS AND CASH GIVEN AS CHARITY)
TREATMENT OF GOODS LOST ACCIDENT/FIRE
WHEN THERE IS NO INSURANCE
LOSS BY FIRE A/C DR
TO PURCHASES A/C
( BEING GOODS DESTROYED BY FIRE)
GOODS DESTROYED BY ACCIDENT RS 25000
LOSS BY ACCIDENT A/C DR =25,000
TO PURCHASES A/C = 25,000
( BEING GOODS DESTROYED BY ACCIDENT)
CASH EMBEZZLED BY CASHIER 12000
LOSS BY EMBEZZLEMENT A/C DR =12,000
TO CASH A/C =12,000
( BEING CASH EMBEZZLED BY CASHIER)

TREATMENT OF GOODS LOST ACCIDENT/FIRE
WHEN THERE IS INSURANCE
PARTIAL INSURANCE :-
GOODS DESTROYED BY FLOODS RS 46000 INSURANCE COMPANY ADMITTED THE CLAIM UP TO 34000
LOSS BY FLOOD A/C DR =12,000
INSURANCE COMPANY A/C DR =34,000
TO PURCHASES A/C = 46,000
FULL INSURANCE :-
INSURANCE COMPANY A/C DR =46000
TO PURCHASES A/C =46,000
MISCELLANEOUS TREATMENTS
INTEREST ON CAPITAL
THE ENTRY WILL BE :- INTEREST ON CAPITAL A/C ---DR
TO CAPITAL A/C
INTEREST ON DRAWINGS :- THE ENTRY WILL BE DONE IN THE FOLLOWING MANNER
DRAWINGS OR CAPITAL A/C ---DR
TO INTEREST ON DRAWINGS A/C
BANK CHARGES:- THE ENTRY WILL BE DONE IN THE FOLLOWING MANNER
BANK CHARGES A/C DR
TO BANK A/C
PROBLEM

GOODS DESTROYED IN TRANSIT RE 45,000 AND INSURANCE COMPANY PAID THE CLAIM
GOODS DESTROYED BY RAIN RS 30,000 AND INSURANCE COMPANY ADMITTED THE CLAIM 25,000
MACHINERY PURCHASED FOR RS 41,000,FREIGHT ON PURCHASE PAID RS 1000
OFFICE EQUIPMENT WORTH RS 9,000 AND SOLD FOR RS 11000
OFFICE TABLE WORTH 18,000 ,SOLD FOR 15,000 AND SELLING EXPENSES 1000
DEPRECIATE ON MACHINERY COSTING 30,000 ,10% RATE OF DEPRECIATION
RECEIVED RS 6860 FROM SANTOSH ALLOWING HER 2% DISCOUNT