Journal Entries

Kindly Note:
While preparing the journal entries, it has been assumed that all the payments have been made through
'Bank' unless specifically mentioned.

Sr. No Particulars L/F Debit (Rs) Credit (Rs)

1 Fees paid to S/W consultant
S/W Consulting Fees A/c xxx
To Bank A/c xxx

2 Salary advance to an employee

Salary Advance A/c xxx
To Bank A/c xxx

3 Fees to 2 Directors who are also the promoters

Director's Sitting Fees A/c xxx
To Bank A/c xxx

4 50% of capital withdrawn with no intention of returning

Capital A/c xxx
To Bank A/c xxx

5 Deduction from XYZ & Co supplier for poor quality stationery supplies
XYZ & Co Supplier A/c xxx
To Stationery A/c xxx
OR, if he pays cash immediately
Cash A/c xxx
To Stationery A/c xxx

6 Part of Profit distributed to owners (Accumulated in Profit & Loss A/c)

Profit & Loss A/c (Accumulated profits) xxx
To Bank A/c xxx

7 Part of Profit to be given as bonus to staf

Staff Bonus Expense A/c xxx
To Bonus Payable A/c xxx
(Note: Since the term used is 'to be paid' and not 'paid'.)

8 Wages deducted for work absence

Wages Payable A/c xxx
To Wages A/c xxx

Note: It has been assumed that the wages have still not been paid. In case it is assumed that
they have been paid 'Wages Recoverable A/c' (Asset) would get debited.
9 Web maintenance
Web Maintenance charges A/c xxx
To Bank A/c xxx

10 Income tax due for the current year

Income Tax Expense A/c xxx
To Income Tax Payable (or Provision for Income Tax) A/c xxx

11 Advance received from ABC & Co customer against project

Bank A/c xxx
To Advance from ABC & Co A/c xxx

12 Work done on a S/W project but not yet billed

Unbilled Revenue A/c (Asset) xxx
To Income from Services A/c xxx

13 Insurance paid in advance

Prepaid Insurance A/c (Asset) xxx
To Bank A/c xxx

14 Amount spent on construction of building

Building under construction A/c xxx
To Bank A/c xxx

15 Loan taken for construction of building

Bank A/c xxx
To Loan A/c xxx

16 Sales made with GST

Customer (name) A/c xxx
To Sales A/c
To GST Payable A/c xxx

17 Sales returned made with GST

Sales Returns A/c xxx
GST Payable A/c
To Customer (name) A/c xxx

18 Monthly provision for pending bills

Rent A/c xxx
Electricity A/c
 Office Maintenance A/c
Security Charges A/c
Legal Fees A/c
etc. etc…..
To Monthly expenses payable A/c xxx

19 Commission due on sales

Sales commission A/c xxx
To Sales commission payable A/c xxx

20 Goods in Transit
Goods-in-Transit A/c xxx
To Supplier (name) A/c xxx
(If bought on credit, otherwise Credit Bank)

21 Cost of Goods sold

Cost of Goods Sold A/c xxx
To Purchases A/c xxx

22 Raw material purchases

Raw Materials purchase A/c xxx
To Supplier (name) A/c xxx

23 Raw Material Purchase returns

Supplier (name) A/c xxx
To Raw Materials Returns A/c xxx

24 10 months deposit for office space

Office Security Deposit A/c xxx
To Bank A/c xxx

25 Bank deposit placed

Term Deposit with Bank A/c xxx
To Bank A/c xxx

26 Interest due on bank deposit

Interest accrued and due on Deposits A/c xxx
To Interest on Term Deposit A/c xxx
27 Interest earned on deposit but not yet due
Interest accrued, but not due on Deposits A/c xxx
To Interest on Term Deposit A/c xxx

28 Inventory thef
Loss of Inventory A/c xxx
To Inventory (or Purchases) A/c xxx

29 Insurance claim filed

Normally, there will be no entry untill the claim is accepted
and a probable claim amount is indicated by the insurance co.
Insurance claim receivable A/c xxx
To (Relevant asset) A/c xxx

30 Insurance claim received

Bank A/c xxx
To Insurance claim receivable A/c xxx

31 Share capital raised

Bank A/c xxx
To Equity Share Capital A/c xxx

32 Shares bought back

Equity Share Capital A/c xxx
To Bank A/c xxx

33 Bank charges
Bank charges A/c xxx
To Bank A/c xxx

34 Car invested as Capital

Car A/c xxx
To Capital A/c xxx

35 Goods withdrawn for personal use

 Drawings A/c xxx
To Inventory or Goods or Purchases A/c xxx

36 Invested in shares of another company

Shares in XYZ Pvt. Ltd. A/c xxx
To Bank A/c xxx

transaction
Fees to S/W consultant
Salary advance to an employee
Fees to 2 Directors who are also the promoters
50% of capital withdrawn with no intention of returning
Deduction from supplier for poor quality supplies
Part of Profit distributed to owners
Part of Profit to be given as bonus to staff
TASK FOR ALL STUDENTS
IN EACH OF THE JOURNAL ENTRY,
IDENTIFY THE TYPE OF ACCOUNT i.e.
ASSET, LIABILITY, EQUITY (CAPITAL),
INCOME, EXPENSE. THEN UNDERSTAND
WHY IT IS DEBIITED OR CREDITED - REF
TO THE TABLE GIVING RULES OF DEBIT &
CREDIT
1 Part of Profit distributed to owners
2 Part of Profit to be given as bonus to staff
3 Wages deducted for work absence
4 Web maintenance
5 Income tax due for the current year
6 Advance received from customer against project
7 Work done on a S/W project but not yet billed
8 Insurance paid in advance
9 Amount spent on construction of building
10 Loan taken for construction of building
expense hai , yeh expense increase hua to debit

income tax payable will be a liability so credit , so income tax expense a/c will be debit

advance received from abc in bank so this is asset increase debit advance bank account mein jayega ,advance from customer d

kaam hoga to business own karta hai to asset debit , income credit

insurance will be paid from bank so bank credit hence insurance a/c will be debit as it is increased

bank se paisa nikega so credit in bank and debit hoga construction a/c

bank a/c mein paisa add hoga

sale hua hai to sales a/c increase in income GIRL KA I so credit

GST PAYABLE HOGA SO ITS CREDIT TO BUSINESS
CUSTOMER NAME DEBIT

ULTA AS PREVIOUS

all expenses means increase in debit

mer against project
ut not yet billed
ga ,advance from customer decrease in Asset so credit
 26-Jun-19

1 Define Asset, Liability and Equity

2 Define Expense and Income
3 Classify the following as Expense, Liability, Income, Equity, Asset
(Also state the accounting principle)
1 Fees to S/W consultant
2 Salary advance to an employee
3 Fees to 2 Directors who are also the promoters
4 50% of capital withdrawn with no intention of returning
5 Deduction from supplier for poor quality supplies
6 Part of Profit distributed to owners
7 Part of Profit to be given as bonus to staff
8 Wages deducted for work absence
9 Web maintenance
10 Income tax due for the current year
11 Advance received from customer against project
12 Work done on a S/W project but not yet billed
13 Insurance paid in advance
14 Amount spent on construction of building
15 Loan taken for construction of building
4 What is the name given to Sole Proprietorship, Partnership
5 What are the owners called in Partnership, LLP, Company
6 What is the capital called in each of the above forms of business
7 What is the difference between profit and earnings
8 What is residual profit
9 What are retained earnings
10 What all determine how accounting must be done
11 Receivables, Payables
12 Sales made with GST
13 Sales returns after the above
14 Monthly provision for pending bills
15 Commission due on sales
16 Unfinished work on a project
17 Goods in Transit and INCO terms
18 Cost of Goods sold
19 Raw material purchases
20 Raw Material Purchase returns
21 10 months deposit for office space
22 Bank deposit placed
23 Interest due on bank deposit
24 Interest earned on deposit but not yet due
25 Inventory theft
26 Insurance claim filed
27 Insurance claim received
28 Share capital raised
29 Shares bought back
30 Bank charges
31 Car invested as Capital
32 Goods withdrawn for personal use
33 Invested in shares of another company