# Journal Entry Question

by Aekeshra
(Delhi, India)

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.

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").

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

 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 5,000Cr Capital 5,000Owner investing cash in business.Dr Furniture (asset) 5,000Cr Cash 5,000Cash purchase of furniture.You can also combine the 2 journal entries above into 1 complex entry:Dr Cash 5,000Cr Capital 5,000Owner investing cash in business.Dr Furniture (asset) 5,000Cr Capital 5,000Purchase of furniture using personal funds (the cash debit and credit balances out to zero).- Michael CelenderFounder of Accounting Basics for Students

 Answers by: Anonymous Cash a/c Dr.10000Goods a/c Dr.5000Capital 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 CelenderFounder of Accounting Basics for Students

 good costing 20000 destory by fire by: Anonymous Loss by Fire a/c Dr, 20,000To Purchase a/c 20,000(For goods destroyed by fire)Correct.

 And for the 1st entry only by: Anonymous Answer1) 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 9000A: 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 11,0002. purchase a/c 8,000 cash a/c 3,000 creditors a/c 5,0003. wages a/c 100,000 wages for the year a/c 20,000 cash a/c 120,0004. salary a/c 200,000 cash a/c 90,000 credit a/c 110,0005. cash a/c 600,000 creditors a/c 800,000 sale a/c 1,400,0006. depreciation a/c 300 cash a/c 3008. creditors a/c 200,000 cash a/c 180,000 dis a/c 20,000

 journal by: avinash kumar Q.1 CASH A/C.................. 8000PLANT & 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) \$6,200Cr Bank/cash \$1,500Cr 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) \$4,700Cr Bank/cash \$4,700We 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. 1000Dr Bank 1000Cr 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.---310,000Cash a/c CR.---200,000Outstanding salary a/c CR.---110,000

 Journal by: Anonymous 1 - Business started with cash 8,000 and plant & machinery 3,000.Dr Cash 8,000Dr Machinery 3,000Cr Capital 11,0002 - Stock purchase for sale (cash purchase)= Dr PurchaseCr Cash2 - Credit purchase = 5,000Dr Purchase 5,000Cr Creditor 5,0003 - Wages paid 120,000 (including 20,000 of future year).Dr Wages 100,000Dr Prepayment (asset) 20,000Cr Bank 120,0004 - Salary paid 200,000 but due 110,000.Dr Salary 110,000Dr Prepayment 90,000Cr Bank 200,0005 - Sale made for cash 600,000 & on credit 800,000.Dr Cash 600,000Cr Sales 600,000Dr Debtor 800,000Cr Sales 800,0006 - 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 200,000Cr Bank 180,000Cr 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 100000Cr Loan (liability) 1000002-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) 200Cr Sale 8000- Michael Celender

 journal entry of salary due 110000 and paid 200000 by: shyam salary a/c dr. 110000advance 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 :310,000Cash A/C Credit:200,000Salary 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. 110002.Purchase a/c Dr. 8000 To Cash 3000 To Creditors. 50003.Wages a/c Dr. 100000 Adv. Wages Dr. 20000 To Cash. 1200004.Salary a/c Dr. 310000 To Cash. 200000 To O/S. 1100005.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. 8000Plant 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.5000purchases A/C Dr. rs.3000/ To,creditors A/C / rs.3000

 5-sales by: Utsav cash a/c dr. 600,000debtors a/c dr. 800,000to sales a/c cr. 1,400,000

 8- creditors entry by: utsav creditors a/c dr. 200,000to cash a/c 180,000to discount received a/c 20,000

 Journal Entry by: Sumit 1.Cash A/c Dr Plant & Machinry A/c dr to Capital A/c3.Salary A/c to Employee(Current Liblity) to O/S salaryEmployee dr. to Cash cr.3.Loss by Fire A/c to Purchase A/c

 entry for salary by: shishma salary a/c Dr. 110,000Salary 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 110002. Purchases A/c Dr 8000 To Cash A/c 3000 To Creditors A/c 50003. 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)