d Accounts journal entries asked in interviews basic journal entries examples
  •  Accounts journal entries asked in interviews basic journal entries examples
  •  Accounts journal entries asked in interviews basic journal entries examples
  •  Accounts journal entries asked in interviews basic journal entries examples

Accounts journal entries asked in interviews Basic journal entries examples

Nature of Transactions

Bad Debts

When a debtor is unable to pay debts, the entire amount due from him is not realised. The unrealised amount is a loss to the business, the same is called Bad Debts. Entry of bad debts is:

Bad debts A/c …. Dr.
To Debtor’s Personal A/c Cr.

Banking Transactions  

Payment by cheque, cheque received, withdrawal of Cash from bank, deposited into bank, Cash withdrawn from bank for personal use, interest credited or debited by bank, bank charges charged by bank are examples of bank transactions.

Cash deposited into bank

Bank A/c … Dr.
To Cash A/c Cr.

Cash withdrawn from bank

Cash A/c …. Dr
To Bank A/c Cr.

Payment by cheque to supplier

Creditor’s Personal A/c… Dr
To Bank A/c Cr.

Withdrawn from Bank for personal use

Drawings A/c… Dr
To bank A/c Cr.

For interest credited by Bank

Bank A/c … Dr
To interest A/c Cr.

For commission charged by Bank

Commission A/c …. Dr
To bank A/c Cr.

Cash withdrawn or goods taken by proprietor for personal Use

Drawings A/c… Dr
To Cash A/c Cr. (if Cash is withdrawn)

In many states, VAT is paid on purchases which is adjusted against VAT collected on sales and balance is the liability payable to the Government. Journal entries passed are:

VAT is paid at the time of purchase

Purchases A/c…. Dr.
Input Vat A/c…… Dr.
To Cash/ Creditor Cr.

VAT is collected at the time of sale

Cash/ Debtor A/c … Dr.
To Sales
To Output VAT A/c Cr.

When VAT is paid to the Govt.

Output VAT A/c…. Dr.
To Input VAT A/c Cr.
To Bank A/c Cr.

Outstanding or payable expenses

Outstanding expenses are the expenses that relate to the current year but have not been paid till the year end.

Salary A/c…. Dr.
To Outstanding salary A/c Cr.

Prepaid Expenses

Normally payment of certain expenses like-Insurance, rent of shop, etc. is paid in advance. Such expenses are termed as advance or prepaid expenses.

Prepaid expenses A/c. Dr
To Insurance Expenses Cr.

Depreciation

Due to continuous use of fixed assets, value of these assets keeps on decreasing every year. This diminution in value is called the depreciation. This is a trading loss. Following journal entry is passed for recording depreciation:

Depreciation A/c … Dr
To Assets A/c Cr.

 

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