a4accounting

(a) Purchase of supplies was wrongly debited to supplies expense account Rs.5,000. Step # 1: What was the double entry? Office supplies expense 5,000 Dr. and Cash 5,000 Cr. Step # 2: What should the double entry have been? Office supplies 5,000 Dr. and Cash 5,000 Cr. Step # 3: Correcting entry: Office supplies 5,000 Dr. and office supplies expense 5,000 Cr. (b) Purchase of supplies for cash Rs.580 was recorded as Rs.508. Step # 1: What was the double entry? Office supplies 508 Dr. and Cash 508 Cr. Step # 2: What should the double entry have been? Office supplies 580 Dr. and Cash 580 Cr. Step # 3: Correcting entry: Office supplies 72 Dr. and cash 72Cr. (c) Sales of typewriter credited to sales account Rs.800. Step # 1: What was the double entry? Cash 800 Dr. and Sales 800 Cr. Step # 2: What should the double entry have been? Cash 800 Dr. and Office equipment 800 Cr. Step # 3: Correcting entry: Sales 800 Dr. and Office equipment 800 Cr. (d) Repair of equipment was debited to equipment ac...

( a) ERROR OF OMISSION: Merchandise purchased was not recorded. The transaction was completely omitted from records. Step # 1: What was the double entry? No entry was made. Step # 2: What should the double entry have been? The entry for this transaction should have been as Purchases 10,000 debit and Cash 10,000 credit. Step # 3: Correcting entry: if an entry is completely omitted from accounting records, the correcting entry is same as the entry should have been recorded. so the correcting entry will be Purchases 10,000 debit and cash 10,000 credit. (b) ERROR OF COMMISSION: Salaries was wrongly recorded in wages account. Step # 1: What was the double entry? Company made the wrong entry as Wages expense 3,000 debit and cash 3,000 credit. Company should have been recorded salaries expense instead of wages expense. Step # 2: What should the double entry have been? The entry should have been recorded as Salaries expense 3,000 debit and cash 3,000 credit. Step # 3: Correcting entry: Company...

Sales Journal and Sales Return & Allowance Journal are given examples. Subsidiary ledger is required to prepare with the help of sales journal and sales return and allowance journal. There are two customers in these journals namely Fine Traders and Global Merchant. Subsidiary ledger is prepared for individual customer. So two subsidiary ledgers are prepared here. (1) Fine Traders: On January 1, sales made to fine traders. Subsidiary ledger shows the receivable of each customer (or payable of each supplier in case of purchase journal). Accounts receivable is debited in sales journal. Therefore 10,000 is recorded on debit side of subsidiary ledger and balance is 10,000. On January 03, sales return is recorded and accounts receivable is credited in return journal. So 1,000 is recorded on credit side and the remaining balance is 9,000 (10,000 - 1,000) On January 18, again sales were made, recorded on the debit side of ledger with 13,000 and balance is 22,000 (9,000 + 13,000). (2) Globa...

(1) Debit Balance of Cash Book: Bank account is an asset for company and asset has normally debit balance. Cash book shows that bank account has a debit balance it means it has a positive balance. (2) Debit Balance of Bank Statement: For banks, customer's account is a liability and liability has a credit balance. Here bank statement shows debit balance which means negative balance. (3) Error by Bank: Company deposited Rs.14,500 into bank account but ban wrongly added in the company's account only Rs.5,100. It means bank added less amount as deposited by the company. For correction, bank will add further amount Rs.9,400. So it will be added in bank statement. (4) Mark - up: Mark - up charged by the bank but not recorded in the company's book so it will be deducted from the cash book as decrease in bank account. (5) Dishonoured Cheque: Cheque returned by the bank so it will be deducted from the cash book. (6) Error by Company: Equipment purchased for Rs.4,000 but wrongly reco...

  It is necessary to understand the transaction relationship between bank and company. For company, bank account is an asset and increase in asset recorded as debit and decrease as credit. So whenever company makes deposit in the bank account, recorded as debit in company books (cash book) and whenever withdraw from bank, recorded as credit. While customer bank account is liability for the bank. So increase in liability recorded as credit and decrease as debit in bank records. Whenever customer deposits amount in the bank, bank recorded it as credit in their records (bank statement) due to increase in liability and in case of withdrawal of the amount from bank account by customer, bank records as debit. ITEMS REQUIRED TO ADD IN BANK STATEMENT: Uncleared cheque / Last day deposit / Late deposit / Deposited but not shown in bank statement. Deposit in transit Any error made by bank which result decrease in balance. ITEMS REQUIRED TO LESS FROM BANK STATEMENT: Unpresented cheque / Outst...

When money is received it is recorded on the receipt side and when money is paid, it is recorded on the payment side of cash book. Example # 1: Cash invested by the owner is the business Rs.400,000. In this example cash is increased or received in the business. It is recorded on the receipt side cash column as Rs.400,000. Example # 2: Purchased office furniture for Rs.20,000 cash. Cash is paid. It is recorded on the payment side cash column of cash book. Example # 3: Sold merchandise to a customer on credit Rs.20,000. In this transaction, cash neither received, nor paid. therefore, this transaction will not be recorded in cash book. Example # 4: Received a cheque from customer Rs.19,000 and allowed him a discount of Rs.1,000. In this transaction, cheque is received but not deposited into bank so it is treated as cash till it is not deposited into bank. It is recorded on the receipt side cash column as 19,000 and receipt side sales discount column as 1,000. CONTRA ENTRY Example # 5: Cus...

  4 ledger accounts are prepared (1) cash (2) capital (3) furniture (4) accounts payable. Left hand side of an account is debit and right side is credit. In the first entry, cash is debited so Rs.200,000 is posted on the left hand side of cash account and capital is credited so Rs.200,000 is posted on the right hand side of capital account. In the second entry, furniture is debited so posted on the left hand side of furniture account and accounts payable is credited so posted on right hand side of accounts payable account. In the third entry, accounts payable is debited so posted on the left hand side of payable account and cash is credited and posted on the right side of cash account. This step is known as posting means transferring data from journal to ledger (it is written in WHITE colour font). After posting, accounts totalled are required which side has a high total. cash account is debited with 200,000 and credited with 10,000 so debited side is more than credit side. debit t...