29May, 2021

How to make a journal entry of Sale in Accounting

Before we go further, we have to understand the what are goods. Goods are item which are purchased to be sold .

Sales accounts are made when goods purchase is sold.

Sales account is nominal by nature or some considered it as real account as goods can be feel and touch . So as per nominal account we credit all income and gains and sales are made by adding profit to the goods purchased . suppose we purchase goods for Rs. 400 and sold it for Rs 500 here we are adding profit of Rs 100 therefore sale is generally including profit.

Example Sold goods Rs 500.

Here we are selling goods which we have in business.

Journal entry of the above will be

Cash A/c

500

To sales A/c

5000

(being goods sold for cash)

When goods sold and it’s not mentioned how then the other account will be cash accounts as it assumes that goods sold are in cash .

Goods sold by adding profit 10% to its purchase price Rs. 1000.

Note : As we mention earlier goods are sold by adding profit means the goods which we have a value of Rs 1000 and if we add profit to it its value will be Rs 1100.therfore the journal entry of the above will be .

Cash A/c Dr.	1100
To sales A/c	1100
(being goods sold for cash)

Journal entry of goods sold on credit .

Its business practice to sold and purchase goods on credit .

Lets take an example here.

Sold goods to Mohan Rs 1000.

In this case we have to open two accounts Mohan and Sales A/c .

Mohan is Personal account by nature therefore as per Personal Account Mohan is debited because as per personal account Debit the receiver. Mohan is receiver of goods whereas

Sales is Nominal Account as per Nominal account credit all income and gain and Sales is income here.

Mohan Dr.	1000
To sales A/c	1000
(being goods sold to Mohan)

Journal entry of goods sold by cheque.

In Accounting when cheque is used Bank account need to be open .

Example .

Sold goods by cheque Rs 4000.

Note: Now two accounts need to be open sales account. and Bank Account.

Sales Account is Nominal and it’s a income therefore its credited as per rule of Nominal account.

Bank is Personal Account and therefore Debit the receiver therefore Bank is debited in the books of accounts.

Journal entry will be

Bank A/c Dr.	1000
To sales A/c	1000
(being goods sold by cheque no 1344)

Journal entry of sales return.

Sometime goods sold to party are return by them because of many reason such as goods are defective ,not as per specification and many such reason.

Under such condition we have prepare credit note which is enty of sales return as this credit note is give to the party to show that your accounts is debited in our books and you need not pay for the return goods and the buyer prepare debit note in his book .

Example :

Return goods by Mohan Rs 1000.

Now we have to open two accounts Sales return account and Mohan

Sale return is nominal accounts its our loss as we are not able to made sales and goods are return therefore, we debit Sales return account in our books.

Mohan is personal Account and here Mohan is giver therefore Mohan is credited in the books of accounts.

Journal entry for the above will be .

Sales return A/c Dr.	1000
To Mohan	1000
(being goods return by Mohan

26May, 2021

How to make Journal Entry of Purchase Accounts

Before we go further, we have to understand that what is purchase accounts. When goods are purchased by business to be sold are known as purchase and in accounting we have to write purchase as purchase accounts.

Purchase account is nominal accounts by nature means it’s an expense for the business .Therefore when goods are purchased, they are debited as per rule of nominal accounts we have debit all expenses and losses. Purchase account is expense for the firm.

Example . Mohan stationary purchase 100 box of pen for his shop in this case we have prepare Purchase accounts because Mohan purchase these boxes of pens to be sold .Note Purchase account can be considered as real account as we can feel and touch goods purchased .

Journal entry of purchase by cash.

When goods are purchased by cash under such condition, we have to open two accounts Purchase and Cash.

Example. Mohan Purchased 100 box of pens for Rs 10,000 for cash .

Accounts to be opened are Purchase A/c and Cash A/c and journal entry for the same will be .

Purchase A/c Dr.	10,000
To Cash A/c	10,000
(being goods purchase for cash

Note: Purchase Accounts is nominal account and debit all expense and losses as purchase is expense.

Cash is Real accounts as per Real account credit what goes our and in this entry cash goes out of businessr.

Journal entry of purchase by Cheque.

It’s a business practice to purchase goods by cheque during course of business.

When goods are purchased by Cheque under such condition, we have to open two accounts Purchase and Bank. (cheque are deposited and withdrawal from bank) as cheque effects our bank accounts.

Example. Mohan Purchased 100 box of pens for Rs 10,000 for Cheque .

Accounts to be opened are Purchase A/c and Bank A/c and journal entry for the same will be .

Purchase A/c Dr.	10,000
To Bank A/c	10,000
(being goods purchase for Cheque no 1256

Note: Purchase Accounts is nominal account and debit all expense and losses as purchase is expense.

Bank is personal accounts as per personal account credit the giver and in this entry bank is the giver.

Journal entry of purchase On credit.

Goods purchased journal entry

It’s a business practice to purchase goods on credit during the course of business.

When goods are purchased on credit under such conditions, we have to open two accounts Purchase and the name of the party from whom goods are purchased.

Example. Mohan Purchased 100 boxes of pens for Rs 10,000 from Suresh.

Accounts to be opened are Purchase A/c and Suresh and journal entries for the same will be.

Note: Accounts is not used after the name

Purchase A/c Dr.	10,000
To Suresh.	10,000
(being goods purchase for Cheque no 1256

Journal entry of purchase return in books of accounts .

journal entry of purchase return

Sometimes goods purchased from the party return to the party because of many reasons such as goods not in good conditions, Goods supplied not as per specification, Goods given are out o date or many such reasons under such conditions goods are returned to the party.

Under this process, a debit note is to be issued by the party to its supplier and make a journal entry of purchase return.

Example. Return goods to Suresh Rs 2000.

Accounts to be opened are Purchase Return A/c and Suresh and journal entry for the same will be .

Suresh Dr.	2,000
To Purchase return A/c	10,000
(being goods purchase for Cheque no 1256

Note : Suresh Account is debited as Suresh is personal accounts as per personal account Debit the receiver and here Suresh is the receiver.

Purchase return is credited because we take purchase return as Real Accounts Cr. What goes out and goods are going away in this entry or if we treat Purchase returns as Nominal accounts, we are reversing our expense entry of purchase here.

Special Entry of Purchase

When goods goods are given away as charity and loss by fire or taken by employee under such condition we have to credit purchase account and the other account in the books of accounts.

Goods given away as charity Rs 4000.

Charity A/c Dr.	4,000
To Purchase A/c	4,000
(being goods purchase for Cheque no 1256

Goods taken by the proprietor for his personal use Rs 4000

Drawing A/c Dr.	4,000
To Purchase A/c	4,000
(being goods purchase for Cheque no 1256

Goods loss by fire Rs Rs 6000.

Loss by fire A/c Dr.	6,000
To Purchase A/c	6,000
(being goods purchase for Cheque no 1256

In all these entry the goods are going out of business but we are not selling them as we are reducing our purchase in the business therefore purchase accounts is credited in the books of accounts.

Ledger of purchase Accounts

Purchase ledger is the ledger in which all the accounting transactions related to the purchase of goods or services by the company during a period of time is recorded, showing the lists of the purchases along with the amount which the company has paid to its supplier or the amount due to the supplier.

Date	Particular	Amount	Date	Particular	Amount
1-4-2021	To cash	10000		By drawing A/c	2000
11-4-21	To Mohan	12000		By loss by fire A/c	1000
				By advertisement a/c	2000
				By trading a/c	17,000
		22000			22000

Balance of ledger is transfer to trading account in this case it is Rs. 17,000

23May, 2021

How to make Interest on Capital Journal entry

Interest on capital Journal Entry

What is Interest on capital ?

A Business invested money is business in exchange of that he will earn profit or sometime it is also possible there can be any loss in the business .

If in some case it he not invested that money in business he will keep that money in Bank or invested in some securities and exchange of that he will get profit but now the business has invested money in business therefore he has taken some risk his business may run or his business may fail. To avoid such circumstances the business give some interest to Businessman which is known as Interest on Capital.

Interest on capital is expensive by nature, therefore, it is shown in the debit side of the Profit and loss account and on the other hand it will be added to capital in the liability side of the Balance sheet.

Note:

Interest on capital is just an accounting entry that affects the profit and loss accounts of the business. It does not mean that a business gives interest on capital to the owner in cash or through a bank.

It increases the capital of the businessman at the end of the accounting year.

This entry of interest on capita is only made if its given the deed how much interest on capital to be paid to the owner of the company it is generally in the percentage of capital invested in business

Example of Interest on capital

Example of interest on capital

Mr. Mohan Invested Rs . 100000 in business on 1 April 2000 and interest in capital @ 5% is paid at the end of the accounting period.

When business is started, the accounting entry will be

Cash A/c Dr 100000

To capital A/c 100000

(being business started with cash)

Now the end of the accounting year, which is 31 March 2021, an entry of interest on capital to be made.

interest on capital journal entry

Interest on Capital A/c 5000

To Capital A/c 5000

(being interest on capital to be given to owner)

Interest on capital Account in Profit and Loss Accounts

Particular	Amount	Particular	Amount
To interest on capital A/c	5000

Interest on capital Accounts is shown in the debit side of Profit and loss accounts as it is an expense for the business because it has to be paid to the owner as adding it to the capital of the businessman.

Interest on capital Account in Balance sheet

Liability

Amount

Assets

Amount

Capital A/c 100000

+

interest on capital A/c

5000

Interest on capital is added to the capital of business as it is given to the owner of the business

11Apr, 2021

HOW TO MAKE JOURNAL ENTRY OF LOAN IN ACCOUNTING

Loan is a liability for business hence f has to pay . It is accounting entry where loan is credited a sits liability to show in books of accounts and when loan is paid loan account is debited to adjust the loan paid

Example Amar Traders took a loan of Rs 100000 .

Journal entry for the same will be\

When Loan is taken from Bank

Particular	Amount
Bank A/c Dr	100000
To loan A/c	100000
Being loan taken from bank

Next when its installment will be due and paid

Now Amar pay the installment of loan is 12000 which include interest on loan Rs 7000 and Loan Rs 5000. Every month like in first month he pay Rs 5000 loan amount and Rs 7000 interest on loan therefore he has to first make due entry and then paid the interest and loan amount.

Loan and its interest payable entry

Particular	Amount
Loan A/c Dr.	5000
Interest on loan A/c Dr.	7000
To loan Payable A/c	5000
To Interest on Loan payable A/c	7000
(being on interest and loan due

After making a due entry when loan and interest is paid then in the books of accounts payble interest on loan and loan is debited so they are adjusted and payment is made.

Particular	Amount
loan Payable A/c	5000
Interest on loan Payable A/c Dr.	7000
To bank a/c	12000

(being on interest and loan due paid

Another example of understanding of loan .

Suppose A ltd took loan from bank on 1 Dec 2020 Rs 100000 and interest payable Rs. 12,000 financial year closed on 31 March 2021.

Case 1

If interest paid Rs 2000

Interest on Loan A/c Dr. 4000

To Bank A/c 2000.

To Interest on Loan payable A/c 2000

(Being interest on Loan paid)

Case 2

If Interest paid Rs 8000

Interest paid Rs 8000

Under such condition our liability is to paid Rs 4000 but we
paid Rs 8000 means we paid loan in advance under such condition journal entry
for the same will be.

Particular	Amount
Interest on loan A/c Dr.	8000
To bank a/c	8000


(being on interest and loan paid)

Particular	Amount
Prepaid Interest on loan A/c Dr.	4000
To Interest on loan	4000
(being on interest and loan paid)

here

Case 3

If No Interest paid

Under such condition we have to make a entry of Rs 4000 in our books as interest payable

Particular	Amount
Interest on loan A/c Dr.	8000
To Interest on loan payble	8000
(being on interest on loan payable)

23Feb, 2021

Journal Entry of fixed deposit in Accounting

What are fixed deposits?

When a fixed amount of money is deposited in the bank and the bank promises to pay the interest along with the fixed deposit amount to its customer this amount is called a fixed deposit.

Fixed deposit accounting Entry

Fixed Deposit A/c Dr . xxxx

To Bank A/c xxxxx

(being fixed deposit made with the bank)

In accounting Fixed deposit is an Asset by nature.

Rule when we increase our Asset we Debit it in Books of Accounts and when we decrease our Asset we Credit it in Books of Accounts.

Now understand it with its journal entry with the example given below.

Question:

Mr. Malik makes a Fixed Deposit with the bank on 1 April 2019 of Rs 100000 for 3 years and the bank promises to pay Rs 7,000 interest rate per annual.

Solution :

When a fixed deposit is made with the bank the following journal entry needs to pass

FD A/c Dr	100000
To Bank A/c	100000
Being fixed deposit made with bank

Fixed deposit is Asset hence we are adding Asset in Business year then We Debit Fixed Deposit accounts.

Bank accounts is credited because we use the money of bank to make Fixed Deposit .

Now in when we get accrued interest on Fixed deposit.

After end of accounting year on 31 march 2020

Journal entry needs to pass

Accrued Interest On FD A/c	7,000
To Interest On Fd	7,000

Note accrued Interest is interest earned but received it is Asset by nature therefore to increase our asset we debit the accounts.

After end of accounting year on 31 march 2021

Journal entry needs to pass

Accrued Interest On FD A/c	7,000
To Interest on FD.	7,000

Note: Similarly accrued Interest is interest earned but received it is Asset by nature therefore to increase our asset we debit the accounts.

After end of accounting year on 31 Marches 2021.We have to adjust the accrued interest and debit our bank accounts and credit our fixed deposit

Journal entry needs to pass

Bank A/c Dr	121,000
To Accrued Interest on Fd	14000
To interest on FD	7000
To Fixed Deposit accounts	100000

Note we adjust our Accrued Interest on FD accounts by Crediting it and interest on Fd for current year need to written and we closed our FD accounts by crediting it as our FD is matured and money is transfer to our Bank A/c.

Fixed deposit is Asset and Interest on Fixed Deposit is income .

Now in this entry we created new Asset Bank with balance Rs. 121000

and income or interest on Fixed deposit Rs. 21000 our Fixed deposit account is closed.

Example of Journal entry of Fixed Deposit

Another Example of Fixed Deposit in of FD.

Make fixed deposit with the bank on 1 Dec 2019 for Rs 100000 . Interest receivable Rs 12,000 per annual. Financial year close on 31 March 2020.

Case 1 Interest received Rs 2000.

Case 2. Interest received Rs 8000

Case 3. No interest received.

Case 1 Interest received Rs 2000.

In such case the journal entry will be at the end of accounting year will be

Bank A/c Dr.	2000
Accrued Interest On FD	2000
To Interest on FD	4000

Note : Interest on FD to be received is Rs 4000 as we made FD on 1 December 2019 and Financial Year Close on 31March therefore 12000/12 = 1000 is interest for one month for 4 months it is 4000. But we received on Rs. 2000 it means 2000 is accrued which is not received.

Case 1 Interest received Rs 8000.

In such case the journal entry will be at the end of accounting year will be

Bank A/c Dr.	8000
To Advance Interest On FD	4000
To Interest on FD	4000

Note : Interest on FD to be received is Rs 8000 as we made FD on 1 December 2019 and Financial Year Close on 31March therefore 12000/12 = 1000 is interest for one month for 4 months it is 4000. But we received on Rs. 8000 it means 4000 is advance Interest received which is not received.

Case 3 No Interest received Rs

In such case the journal entry will be at the end of accounting year will be


Accrued Interest On FD	4000
To Interest on FD	4000

Note : Interest on FD to be received is Rs 4000 as we made FD on 1 December 2019 and Financial Year Close on 31March therefore 12000/12 = 1000 is interest for one month for 4 months it is 4000. But we received no interest it means 4000 is accrued which is not received.

Journal Entry of Fixed Deposit With TDS

Mr. Malik makes a Fixed Deposit with the bank on 1 April 2019 of Rs 100000 for 3 years and the bank promises to pay a Rs 10,000 interest rate per annual and TDS @ 10% on interest.

In this case TDS is applicable on Interest on FD therefore It to be shown when interest is received.

Solution : When FD is made.

FD A/c Dr

100000

To Bank A/c

100000

Being fixed deposit made with the bank.

After the end of the accounting year on 31 March 2020.

Journal entry needs to pass.

FD A/c Dr.	9000
TDS Payable A/c Dr.	1000
To Interest on FD	10,000
(being interest Received on FD

After the end of the accounting year on 31 March 2021.

FD A/c Dr.	9000
TDS Payable A/c Dr.	1000
To Interest on FD	10,000
(being interest Received on FD

When FD is matured.

First This year interest on FD and TDS.

FD A/c Dr.	9000
TDS Payable A/c Dr.	1000
To Interest on FD	10,000
(being interest Received on FD

100000+9000+9000+9000

Maturity of FD entry

Bank A/c Dr.	127,000
To Fixed Deposit A/c	127,000
(being FD matured and paid into bank)

Fixed Deposit in Balance Sheet

Fixed Deposit is asset by nature therefore Fixed deposit is shown in the Asset side of balance sheet .

Liabilities	Amount	Asset	Amount
		Fixed Deposit	xxxx

Accrued interest on Fixed Deposit and intererst on Fixed Deposit .

Accrued interest on FIxed deposit is shown in the credit side of Profit and loss account and added to Interest on Fixed Deposit if given.

Particular

Amount

Particular

Amount

Interest on Fixed Deposit xxx

+ Accrued int on Fixed

Deposit xxx

xxxx

Accrued on fixed deposit is also shown in the Asset side of the Balance sheet.

FAQ

What is the difference between fixed deposit and recurring deposit?

In Fixed Deposit, we deposit an amount for a fixed period. A fixed deposit provides interest on the deposited amount. Whereas, in recurring deposits, the customer deposits fixed amounts in small intervals for a long period.It is also now as RD. The primary purpose of a RD is to develop the habit of saving regularly.

When TDS applies on fixed deposit financial year 2020-21 ?

The TDS rate on fixed deposits (FDs) is 10% This TDS deduction limit on FD has been increased to Rs. 40,000 annually, which applies in AY 2021-22

Key difference between Fixed Deposit and Loan

Aspect	Fixed Deposit	Loan
Nature of transaction	Investment	Borrowing
Journal entry for	When money is invested in a bank or financial institution.	When money is borrowed from a bank or lender.
	(Depositing money in a fixed deposit account)	(Taking a loan from a bank or lender).
Debit	Bank/Fixed Deposit Account	Loan Account
Credit	Cash/Bank	Cash/Bank
Purpose	To earn interest on the deposited amount.	To use the borrowed money for various purposes.
Interest	The interest earned is credited to the fixed deposit account.	The interest paid is debited to the loan account
Repayment	Upon maturity, the principal amount plus interest is credited to the bank account.	Repayment of the loan is done in installments over a specified period.
Accounting treatment	An asset is created, and cash is reduced.	A liability is created, and cash is increased.
Effect on balance sheet	Increases the asset side (cash and fixed deposit).	Increases the liability side (loan payable) and the asset side (cash)
Risk	Generally considered low-risk.	Depends on the borrower’s ability to repay; can be considered higher risk.

21Feb, 2021

Journal Entry of Interest on capital and Interest on Drawing in Accounting

18Feb, 2021

Journal Entry of Goods loss by fire in Accounting

Goods are Nominal by nature. When goods are lost by fire it means we have to reduce our purchase in the books of accounts as our goods are no more remains with the business and goods are loss by fire which means we lost our goods.

Rule of Nominal Accounts :

Debit all expenses and losses
Credit all income and gains

Note: We reduce our Purchase as goods are no more with the business so we need to deduct it and to deduct The accounts which we have Debited earlier need to be credited later Similary The account which we Credited earlier need to be Debited later..
Loss by fire is nominal Accounts and we have to follow the rule of Nominal Account with loss by fire.

.

When we purchase goods are nominal in nature therefore when they are purchased we debit purchase accounts because goods purchase is our expense and as per the Nominal rule we have to debit all expenses and losses.

When Goods are purchased

Purchase A/c Dr. XXXX

To Bank A/c XXXX

(being goods purchased)

Similarly, when we sell goods we Credit our sale accounts means we are adding profit to our purchase and sale to customer, and as per Nominal Accounts Credit all income and gain. .We are opening Sale Accounts in place of Purchase Accounts because Sale includes profit which is added to purchase and while selling we use Sale accounts.

Bank /Cash A/c Dr XXX

To Sale A/c XXX

(being goods sold)

In case of Goods loss by fire

This means the goods which we purchase witch are with use are no more with us and we got loss and as the loss is by Loss by Fire, therefore, new nominal Accounts Loss by fire need to be open and reduce the value of goods by crediting Purchase accounts in the books of accounts.

Note Purchase is also nominal accounts in this case we are reducing our purchase in Books of accounts. Loss by FIre is Nominal and here we follow the rule of Nominal Accounts

Loss By Fire A/c XXX

To Purchase A/c XXXX

(being Goods loss by fire)

Loss by fire in Trading Accounts

Loss by fire means our goods are destroyed therefore we have to deduct the value of goods in our Trading accounts and deduct it from the purchase

Particular

Amount

Particular

Amount

To Purchase XXX

– Loss by fire xxx

xxxx

Goods loss by Fire in Profit and loss Accounts

Loss of goods by fire is profit and loss Accounts

When goods are loss by fire they are loss by nature therefore they will be shown in the debit side of Profit and Loss Accounts

Particular	Amount	Particular	Amount
To Loss By fire A/c	XXXXXX

Insurance company claim in the loss by fire

Example suppose goods by fire on 10 May was Rs 50,000 and on 10 June Insurance company give claim of 50% of goods then the journal entry for the same will be

Example suppose goods by fire on 10 May 21was Rs 50,000 and on 10 June 21 Insurance company give claim of 50% of goods then the journal entry for the same will be

When goods are destroyed

Date	Particular	Amount	Amount
1 may 21	Loss by fire	50000
	To Purchase		5000
(being goods loss by fire)

When send for claim to Insurance company

Date	Particular	Amount	Amount
1 may 21	Insurance company	50000
	To loss by fire		50000
(Being goods loss by fire)

When insurance company give claim 50%.

Date	Particular	Amount	Amount
10 June 21	Bank A/c	25000
	Profit and Loss A/c	25000
	To Insurance Company		50,000
(being claim adjusted with profit and loss accounts)

Note here our actual loss is Rs 25000 which will be shown in profit and loss accounts and in trading accounts loss will be shown 50,000

Loss goods by fire Under GST Journal entry

Example :

Purchase good Rs 20,000 from local A ltd and GST paid Rs 5%.

Now the journal entry for the same will be

Purchase A/c Dr	20000
Input CGST	500
Input SGST	500
To A ltd	21,000
(being goods purchased from A Ltd
When goods are destroyed by fire ITC is not available on goods lost, stolen, destroyed, or written off
A New Loss by the fire under Nominal account is opened
Loss By Fire A/c Dr	21,000
To Purchase A/c	20000
To Input CGST	500
To Input SGST	500
(being goods destroy by fire and ITC not available as per Law)

FAQ

loss by fire is an example of__________

Ans: Abnormal Loss

What is Abnormal Loss ?

An abnormal loss refers to a situation where a business or firm is making profits below the normal limits.
In an abnormal loss situation the total revenue of a business does not cover total cost incurred for the business.
Example of Abnormal Loss
1. Loss by Fire
2. Loss by theft
3. Loss by breakage
4. loss on mishandling of goods

15Feb, 2021

Journal Entry of Capital Expenditure and Revenue Expenditure in Accounting

Capital Expenditure	Revenue Expenditure
Expenditure incurred for acquiring assets, to increase earning the capacity of an existing asset that results in increasing its lifespan	the expense incurred for maintaining the day-to-day operation activities of a business
The time of capital expenditure is long term	The time of revenue expenditure is short terms
It enhance the value addition of existing or new asset	It does not enhance value addition of any assets
IT generally have physical existence	IT does not have physical existence
These expenditure are not recurring in nature.	These expenditure are recurring in nature.
It does not effects company revenue as it is not shown in the profit and loss accounts	It effects company revenue as it is not shown in the profit and loss accounts
It gives long term benefits for the company	IT gives short term benefits for the company
It appears on the assets side of the balance sheet	It appears on the Profit and loss side in the expense side.

JOURNAL ENTRY OF CAPITAL EXPENDITURE

Capital Expenditure is that expenditure that is made while purchasing any asset or acquiring any asset in business.

Example suppose If we have Purchased a Machinery and paid its carriage and installation charges there are some expense which we made while purchasing an asset, therefore, they will be added to the cost of machinery.

Example Machinery Purchased Rs 100000 and paid Rs.4000 on its installation and paid Rs 6000 on cartage.

hence the nature of expense is Capital:

Journal entry for the same will be

Machinery A/c	110,000
To Cash A/c	` 110000
BEING MACHIENRY PURCHASED

Example:
Suppose we owned a Mutiplex cinema where we have arrangement of 100 seats if we want to incease the size of mutiplex by adding 50 more seats by investing Rs 100000 on chairs Rs 20,000 on installation Rs 40,000 on repairthen the journal entry for the same will be.

Furniture and Fixture A/c Dr	1,60,00
To Cash A/c	` 160000
BEING SEATS ADDED IN MUTIPLEX

JOURNAL ENTRY OF REVENUE EXPENDITURE

Revenue expenditure is expenditure which is our operations expense which occur day to day . They are recurring in nature..Thet are shown seperately in accounting transaction as they are at the end of accounting year shown on the Profit and loss accounts.

Example

Suppose we purchased goods worth Rs 10,000 and paid carriage Rs 2000.

Hence journal entry for the same will be

Purchase A/c Dr	10,000
Carriage A/c Dr.	2,000
To Cash	12,000
(BEING GOODS PURCHASED AND CASH PAID

9Feb, 2021

Journal Entry of Exchange of Fixed Assets in Accounting

Fixed Assets are treated as Real Accounts in Accounting therefore When Fixed Assets are purchased they are debited and when fixed asset are sold they are credited in Accounting.

Fixed Assets are also Assets in Accounting and as per Accounting law when Fixed assets added in business they are debited and when fixed assets are deducted they are credited in business accoutning.

Example of journal entry of Fixed assets exchange in Business.

Journal entry for exchange of old machinery

Example :

Purchase Machinery Rs 100000 from Mohan Brothers in exchange of old machinery Rs 40,000 whos book Value Rs 50,000.

Make journal entry of the above transaction

Here we are puchasing one machinery in exchanging of old machinery hence machinery purchased will be debited as that machinery is added to the business wheras old machiery will be credited as its exchange with new machinery and its going our of business.

The point to be noted we have given two cost of old machiney one its book value and the other its sale value but while making journal entry we have to take its book value under consideration.

The journal entry for the same will be:

Machinery A/c Dr.	100000
P/L A/c Dr	10,000
To old Machinery A/c	50,000
To Mohan Brother	60,000
(being machinery purchased in exchange of old machinery)

As we have to make the profit and loss accounts because we have sold that machinery with a value of 40,000 whereas its book value is 50,000..

This 10,000 is a loss in the books of accounts hence loss is debited as per the rule of nominal accounts that’s why loss is debited here.

Profit on sale of Assets in Journal Entry

Purchase Machinery Rs 100000 from Mohan Brothers in exchange of old machinery Rs 60,000 whos book Value Rs 50,000.

Here

This entry is similar to above entry but difference here is that we have sold the old machinery more than its book value so keeping all the rule in mind as mention above we have to make journal entry of the same in the book of accounts .

Machinery A/c Dr.	100000
To P/L A/c	10,000
To old Machinery A/c	50,000
To Mohan Brother	40,000
(being machinery purchased in exchange of old machinery)

The difference here is we sold the old machinery with a profit of 10,000 as per nominal accounts profit is credited in books of accounts

Journal entry of Advance received from Customer and advance paid to Supplier

7Feb, 2021

Interest on capital A/c Dr	XXXX
To Capital A/c	XXXX
(being interest on capital)

Drawing A/c Dr.	XXXX
To cash A/c	XXXX
(being interest on the drawing)

Drawing A/c Dr	XXXX
To Purchases A/c	XXXX
(Being goods taken by the owner for personal use)

Drawing A/c Dr	XXXX
To Computer A/c	XXXX
(Being goods taken by the owner for personal use)

Drawing A/c Dr	XXXX
To Interest on Drawing A/c	XXXX
(being interest in Drawing)

Category Archives: Journal Entry

How to make a journal entry of Sale in Accounting

Journal entry of goods sold on credit .

Journal entry of goods sold by cheque.

Journal entry of sales return.

How to make Journal Entry of Purchase Accounts

Journal entry of purchase by cash.

Journal entry of purchase by Cheque.

Journal entry of purchase On credit.

Journal entry of purchase return in books of accounts .

journal entry of purchase return

Special Entry of Purchase

Ledger of purchase Accounts

Interest on capital Journal Entry

Example of Interest on capital

interest on capital journal entry

Interest on capital Account in Profit and Loss Accounts

Interest on capital Account in Balance sheet

HOW TO MAKE JOURNAL ENTRY OF LOAN IN ACCOUNTING

When Loan is taken from Bank

Next when its installment will be due and paid

Loan and its interest payable entry

Another example of understanding of loan .

Another example of understanding of loan .

Journal Entry of fixed deposit in Accounting

Journal Entry of fixed deposit in Accounting

What are fixed deposits?

Fixed deposit accounting Entry

In accounting Fixed deposit is an Asset by nature.

Example of Journal entry of Fixed Deposit

Another Example of Fixed Deposit in of FD.

Journal Entry of Fixed Deposit With TDS

Fixed Deposit in Balance Sheet

Accrued interest on Fixed Deposit and intererst on Fixed Deposit .

FAQ

What is the difference between fixed deposit and recurring deposit?

When TDS applies on fixed deposit financial year 2020-21 ?

Key difference between Fixed Deposit and Loan

Journal Entry of Interest on Capital

What is Capital?

Interest on capital journal entry

Interest on capital On profit and loss Accounts

Interest on capital in Balance Sheet

Example of Interest on capital in case of partners

Journal Entry of Interest on drawing

journal entry for interest on drawing

Accounting Treatment of interest on Drawing

Some Accounting Treatment of interest on Drawing

Charge interest on drawings journal entry

Interest on Drawing in Profit and Loss Accounts

Interest on drawings

Interest on Drawing in Balance sheet

Example of interest on Drawings

Comparison of Journal entry

FAQ interest on Capital and Interest on Drawing

Why is Interest Charged on Capital?

What is the formula of interest on capital?

What is the purpose of charging interest on drawings of the partners?

Short MCQ

Journal Entry of Goods loss by fire in Accounting

Loss by fire in Trading Accounts

Goods loss by Fire in Profit and loss Accounts

Insurance company claim in the loss by fire

Loss goods by fire Under GST Journal entry

FAQ

loss by fire is an example of__________

What is Abnormal Loss ?

Journal Entry of Capital Expenditure and Revenue Expenditure in Accounting

Journal Entry of Capital Expenditure and Revenue Expenditure in Accounting

JOURNAL ENTRY OF CAPITAL EXPENDITURE

JOURNAL ENTRY OF REVENUE EXPENDITURE

Journal Entry of Exchange of Fixed Assets in Accounting

Example of journal entry of Fixed assets exchange in Business.

Journal entry for exchange of old machinery

Profit on sale of Assets in Journal Entry

Journal Entry of Outstanding salary and Prepaid Salary In Accounting

Journal Entry of Salary outstanding expense

Prepaid Salary Accounts

Journal Entry of Salay Prepaid expense

Outstanding and Prepaid Salary in Profit and loss account.