Journal Entry Question

by Aekeshra
(Delhi, India)

India Gate, Delhi<br>(national monument)

India Gate, Delhi
(national monument)

Q: What's the entries for the following:


1 - Business started with cash 8,000 and plant & machinery 3,000.
2 - Stock purchase for sale (cash purchase)= 3,000, credit purchase = 5,000
3 - Wages paid 120,000 (including 20,000 relating to a future year).
4 - Salaries paid 200,000 but due 110,000.
5 - Sales made for cash 600,000 & on credit 800,000.
6 - Depreciation 10 percent on plant & machinery.
7 - Goods costing 20,000 destroyed by fire.
8 - Payment made to creditors to the value of 200,000 at 10 percent discount.


plant and machinery Solution:

1. Dr Cash 8,000
Dr Plant and machinery 3,000
Cr Capital 11,000

2. Dr Purchases 8,000
Cr Cash 3,000
Cr Creditors 5,000

3. Dr Wages (expense) 100,000
Dr Prepaid Wages (asset*) 20,000
Cr Cash 120,000


*Note that this is called a
prepayment . A prepayment of a future expense is an asset and is counted as part of debtors - this is because you paid the expense before you should have, so it's like your business is owed the money right now for paying to early.

Note that prepayments are not really covered on this website, but I do go over them in my
accounting books .

4. Dr Salaries (200,000 + 110,000) 310,000
Cr Cash 200,000
Cr Salaries owing 110,000


As far as I understand, for journal 4 above, the salaries of 200,000 were actually paid but another 110,000 are still outstanding (salaries "due" means "owed" or "outstanding").

perpetual inventory accounting 5. Dr Cash 600,000
Dr Debtors 800,000
Cr Sales 1,400,000

6. Dr Depreciation (3,000 x 0.1) 300
Cr Accumulated Depreciation 300

7. Dr Loss due to fire (expense) 20,000
Cr Purchases/Cost of Goods Sold 20,000


In the journal entry above, an expense has to be recorded to show the loss. And as a contra entry against this, we have to reduce our purchases account (it is purchases for the
periodic system of inventory ) or inventory account (for the perpetual system ).

In the end of the day the debit to purchases or inventory both mean less
cost of goods sold to be shown in the income statement .

8. Dr Creditors 200,000
Cr Cash 180,000
Cr Discount Received (200,000 x 0.1) 20,000


The 10% discount which comes to 20,000 is counted as an income for the business. Of course, only 180,000 is actually paid. This cancels out the entire debt to creditors of 200,000.

Greatful thanks to Manish Kothari and other contributors below for helping to solve this question.

- Michael Celender
Founder of Accounting-Basics-for-Students.com

Find more exercises like this on the
Full Accounting Questions and Answers page.

Comments for Journal Entry Question

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What is the journal entry for when an owner purchased furniture for cash for business use from his own pocket?
by: Anonymous

What is the journal entries for when the owner purchased furniture for cash Rs.5000 for business use from his own pocket?

Dr Cash 5,000
Cr Capital 5,000
Owner investing cash in business.

Dr Furniture (asset) 5,000
Cr Cash 5,000
Cash purchase of furniture.

You can also combine the 2 journal entries above into 1 complex entry:

Dr Cash 5,000
Cr Capital 5,000
Owner investing cash in business.

Dr Furniture (asset) 5,000
Cr Capital 5,000
Purchase of furniture using personal funds (the cash debit and credit balances out to zero).

- Michael Celender
Founder of Accounting Basics for Students

Answers
by: Anonymous

Cash a/c Dr.10000
Goods a/c Dr.5000
Capital a/c Cr. 15000

Is Purchase Debited with Capital when Introducing Goods?
by: Anonymous

purchases a/c ...dr
to capital a/c
(introducing goods to the business)

Is this the correct entry?

Yes, correct.

- Michael Celender
Founder of Accounting Basics for Students

good costing 20000 destory by fire
by: Anonymous

Loss by Fire a/c Dr, 20,000
To Purchase a/c 20,000

(For goods destroyed by fire)

Correct.

And for the 1st entry only
by: Anonymous

Answer
1) Cash A/C....(Dr)
Plant and machinery

A /C........(Dr)
To Capital A/C

Appreciate
by: Anonymous

You are doing very well I like it.
By the way, I'm from Pakistan

Thanks for the positive feedback!

Journal
by: Anonymous

Answer for sent cheque to Ramesh and bros in full settlement of 9000

A: Dr Ramesh and bros 9000
Cr Bank 9000

journal entry
by: manish kothari

1. cash a/c 8,000
plant and machinery a/c 3,000
n capital a/c 11,000

2. purchase a/c 8,000
cash a/c 3,000
creditors a/c 5,000

3. wages a/c 100,000
wages for the year a/c 20,000
cash a/c 120,000

4. salary a/c 200,000
cash a/c 90,000
credit a/c 110,000

5. cash a/c 600,000
creditors a/c 800,000
sale a/c 1,400,000

6. depreciation a/c 300
cash a/c 300

8. creditors a/c 200,000
cash a/c 180,000
dis a/c 20,000

journal
by: avinash kumar

Q.1

CASH A/C.................. 8000
PLANT & MACHINERY......... 3000
TO CAPITAL A/C........ 11000

(BEING: BUSINESS STARTED BY CASH AND FIXED ASSETS)

What is the journal entry for?
by: Deepak Jain

Q: Bought a horse for Rs. 1500 and a cart for Rs.2000 for delivering goods to the customers.

A: Horse 1500
Cart 2000
Cash 3500

Please reply fast
by: deepak jain

Q: What is the entry for a check amounting to Rs.500 deposited in the bank was returned dishonored.

A: Debtor 500
Bank Account 500

very interersting
by: Anonymous

thanks for the basic knowledge

Welcome!

Journal Entry - Cash Downpayment Plus Balance Owing
by: Anonymous

Acquired office equipment from Tower company for $6,200. Made a cash downpayment of $1,500. Balance to be paid within 30 days...?

So this is basically two transactions in one - part cash and part credit.

When we purchase the office equipment we record the following:

Dr Office equipment (asset) $6,200
Cr Bank/cash $1,500
Cr Creditors (liability) $4,700 ($6,200 - $1,500)


This means we are recording the full value of the office equipment asset in our records when we buy it. And we record the amount paid in cash and the amount owing (creditors).

When we pay off the balance owing we record:

Dr Creditors (liability) $4,700
Cr Bank/cash $4,700


We are thus cancelling out the debt owing and recording that this was paid through bank/cash decreasing.

Hope that makes sense. All the best!
Michael Celender

journal
by: vishal

Virender sold to suresh Rs. 1000

Dr Bank 1000
Cr Sale 1000

Digital Asset Subscription Entry
by: Anonymous

Hello I am a Graphic Designer and I keep my own books. I have a digital subscription for digital assets that may be used in a project for clients.

Do I put this expense in as a Subscription, Supplies or another category?


Hi graphic designer,

If you pay on a monthly or other regular basis for the subscription then you would probably just count it as an expense as it is simply a regular cost of doing business.

If you paid a lump sum upfront for the digital asset subscription and it will give your business lasting benefits into the future then you could classify this as an asset.

However, if you paid a lump sum upfront and do not see it providing lasting benefits into the future then you would classify it as an expense.

I would recommend to classify it as expense (if you can) as this would then be tax-deductible and could save you a bit on tax.

Best,
Michael Celender

4. Salary paid 200,000 but due 110,000.
by: Suman Mridha

Salary a/c DR.---310,000
Cash a/c CR.---200,000
Outstanding salary a/c CR.---110,000

Journal
by: Anonymous

1 - Business started with cash 8,000 and plant & machinery 3,000.
Dr Cash 8,000
Dr Machinery 3,000
Cr Capital 11,000

2 - Stock purchase for sale (cash purchase)=
Dr Purchase
Cr Cash

2 - Credit purchase = 5,000
Dr Purchase 5,000
Cr Creditor 5,000

3 - Wages paid 120,000 (including 20,000 of
future year).
Dr Wages 100,000
Dr Prepayment (asset) 20,000
Cr Bank 120,000


4 - Salary paid 200,000 but due 110,000.
Dr Salary 110,000
Dr Prepayment 90,000
Cr Bank 200,000

5 - Sale made for cash 600,000 & on credit 800,000.
Dr Cash 600,000
Cr Sales 600,000

Dr Debtor 800,000
Cr Sales 800,000

6 - Depreciation 10 percent on plant & machinery.


7 - Goods costing 20,000 destroyed by fire.


8 - Payment made to creditor of 200,000 at 10
percent discount.
Dr Creditor 200,000
Cr Bank 180,000
Cr Discount received 20,000

Doubt....
by: Rahul Goel

What is the journal entry if..
1-A person started a business for Rs.100000 by borrowing money from MR X. at a interest of 10% p.a.

2-He purchased machinery for business by investing money from his own pocket, not using money of business...

Plss anyone...rply soon....

1-
Dr Bank 100000
Cr Loan (liability) 100000

2-
Dr Machinery ___
Cr Capital ___

- Michael Celender

Journal Question
by: mohiuddin

Sale to X rs 8000, discount allowed 200. He paid rs 4000 via cheque & cash 3800...

Dr Bank 7800 (cheque + cash)
Dr Discount Allowed (expense) 200
Cr Sale 8000

- Michael Celender


journal entry of salary due 110000 and paid 200000
by: shyam

salary a/c dr. 110000
advance salary a/c dr. 90000
to cash a/c 200000

Salary Entry
by: Asif Zahoor (Gujranwala Pakistan)

Total Salary Payable 310,000 less paid 200,000 and Balance 110,000 Due.

Journal (Double Entry)
Salary A/C Debit :310,000
Cash A/C Credit:200,000
Salary A/C Credit:110,000 (Liabilities)

Journal Entry
by: Krishna

1.Cash a/c Dr. 8000
P & M a/c Dr. 3000
To Capital a/c. 11000

2.Purchase a/c Dr. 8000
To Cash 3000
To Creditors. 5000

3.Wages a/c Dr. 100000
Adv. Wages Dr. 20000
To Cash. 120000

4.Salary a/c Dr. 310000
To Cash. 200000
To O/S. 110000

5.Cash a/c Dr. 600000
Debtors a/c Dr.800000
To Sales. 1400000

7 - Goods costing 20,000 destroyed by fire.
by: Anonymous

7 - Goods costing 20,000 destroyed by fire.

Loss by Fire a/c Dr, 20,000
To Purchase a/c 20,000

(For goods destroyed by fire)

1st entry
by: Aadish jain

Cash A/c Dr. 8000
Plant and Machinery A/c Dr 3000
To CapitalA/c 11000

2- purchases
by: boby

purchases A/C Dr. rs. 5000/
To ,cash A/C. / rs.5000
purchases A/C Dr. rs.3000/
To,creditors A/C / rs.3000

5-sales
by: Utsav

cash a/c dr. 600,000
debtors a/c dr. 800,000

to sales a/c cr. 1,400,000

8- creditors entry
by: utsav

creditors a/c dr. 200,000

to cash a/c 180,000
to discount received a/c 20,000

Journal Entry
by: Sumit

1.Cash A/c Dr
Plant & Machinry A/c dr
to Capital A/c

3.Salary A/c

to Employee(Current Liblity)
to O/S salary


Employee dr.
to Cash cr.

3.Loss by Fire A/c
to Purchase A/c

entry for salary
by: shishma

salary a/c Dr. 110,000
Salary in advance a/c Dr. 90,000
To cash 200,000

journal entry of salary
by: Anonymous

Salary a/c dr 310,000
. To cash a/c 200,000
. To outstanding salary a/c 110,000

Answers
by: Anonymous

1. Cash A/c Dr 8000
Plant and machinery A/c Dr 3000
To capital A/c 11000

2. Purchases A/c Dr 8000
To Cash A/c 3000
To Creditors A/c 5000

3. Wages A/c Dr 100000
Advance Wages A/c Dr 20000
To Cash A/c 120000

Accounts
by: Anonymous

salary A/c....Dr 200000
To cash A/c 90000
To salary A/c 110000
(Being salary paid but due)


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