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JournE
alnry
tQues
o
itnand
Answer

by Aekeshra
(Delhi, India)

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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 .
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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 and Answer
Click here to add your own comments

Journal Entry for Machinery

including Transport, Installation
and Repairs
by: Anonymous
Q: Purchase second hand
machinery from javed bro for rs
100000 against a cheque and rs
2000 on its transportation and
3000 on its installation and rs
6000 on its repairs. What are the
journal entries?

Dr Machinery (100,000 + 2,000 +

3,000) 105,000
Dr Repairs (expense) 6,000
Cr Bank 111,000

The cost of an asset includes all

necessary costs to get it to where
it is needed an in working form,
so transportation and installation
is part of its cost.

Repairs is not part of the cost of

an asset but rather an expense.

See the lesson on What are

Assets? for more details.

Hope that helps!

Best,
Michael C.

Rectification of Journal Entry

Error
by: Subham

Freight paid on a machine 5600

was posted to the freight a/c as
6500.

What will the rectified journal

entry be for this?

Hi Subham,

I would recommend that any

time you are doing a correction,
first try to figure out what the
original incorrect entry was.

The original incorrect entry here

was:

Dr Freight a/c (expense) 6,500

Cr Bank (asset) 6,500

Now we know the amount

should have been 5,600 because
this is what was actually paid. So
to correct this entry you simply
have to reduce the freight a/c
(and the bank a/c) down from
6,500 to 5,600. So we have to
reduce them by 900.

So the entry to rectify things

would be:

Dr Bank (asset) 900

Cr Freight a/c (expense) 900
By the way, the cost of freight for
an asset like a machine would
actually normally form part of
the machine's cost.

So if the bookkeeper or
accountant original debited the
Machine a/c (not the freight a/c),
then we would credit the
Machine a/c with 900 in the
correcting journal entry, not the
freight a/c.

Hope that helps!

Best,
Michael C.

Entry for Accrued Expenses

(Insurance Paid)
by: Rajesh

IF I paid insurance for the

amount of rs 10000 for the whole
year, then what would the entry
be for this...?

Hi Rajesh,

Actually this is not an entry for

"accrued expenses." This is an
entry for "prepaid expenses".
This is a big difference.

"Prepaid expenses" are also

known as "expenses paid in
advance."

The entry for prepaid expenses

(like the one above) would be:

Dr Prepaid Insurance (asset

account) 10000
Cr Bank 10000

The Prepaid Insurance account is

actually an asset account. All
prepayments are assets. This is
because they are like debtors - as
long as we've paid the insurance
in advance, it's like the insurance
company owes us.

When time passes and the

insurance is actually taking place,
for example, a month later, then
we record the actual insurance
expense occurring and reduce
the prepaid insurance.

For example, if the monthly

insurance is rs 1000 then we
record:

Dr Insurance (expense) 1000

Cr Prepaid Insurance (asset
account) 1000

We record the actual insurance

expense for 1 month (1000) and
now prepaid insurance has a
debit balance of 9000 (10000 -
1000).

Hope that makes sense!

Regards,
Michael Celender
Founder of accounting-basics-
for-students.com

Journal entry - Providing Services

by: Anonymous

Plz answer me: what is the

journal entry for company
provided services to X company
for ₹20000.

Hi there,

The entry would be:

Dr X company (debtor) ₹20000

Cr Services provided (income)
₹20000

See the following lessons:

- Define Income (basic income

received in cash transaction, no
journal entries yet)
- Define Income (cash
transaction, with journal entries)
- Accrued Income (Part 1 - no
journal entries yet) and
- Accrued Income (Part 1 - with
journal entries)

Hope that helps! All the best with

your studies!

Regards,
Michael Celender
Founder of accounting-basics-
for-students.com

Journal
by: Yeshoda

On 1 Oct 2018, Andrew Brown

opened Nundle Services, a small
business offering maintenance
services in New South Wales.
During the month of October,
the business incurred the
following transactions:

2 Oct, Andrew invested $50,000

cash in the business, which is
organised as a sole trader.
3 Oct, got a 5 year loan for
$30,000 from the ANZ bank,
interest is 5% pa.
4 Oct, purchased and paid for
equipment worth $51,000.
Monthly depreciation will be
$850.
5 Oct, purchased supplies for
$6,500 on credit.
8 Oct, paid Oct office rent of
$7,200.
10 Oct, Brown withdrew $2,000
for personal purposes.
17 Oct, paid an invoice of $4,500
for advertising
25 Oct, paid one year of
insurance for $5,600
Additional information at 31 Oct:

Supplies on hand was $3,100

Services revenue of $22,500 must
be accrued
Monthly payroll is $11,500 and
paid once a month on Friday
after the month ended. 31 Oct
2018 was on Wednesday.

Some customers advanced

$10,500 for maintenance
services to be provided next
month but this amount hasn’t
been recorded.

Journal Entries - Goods

Purchased and Returned
by: LegendaryAnonymous

1. Goods purchased from RAM

on credit 6,000
2. Goods returned to RAM 2,000

1. Dr Purchases 6,000
Cr Creditor 6,000

2. Dr Creditor 2,000
Cr Purchases Returns 2,000

- Michael (editor)

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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