Journal entry of capital losses
This query is : Resolved
18 August 2011
Dear Sir/Mam,
Kindly inform me about the journal entry of the following :-
Q. Once A Businessman was going with his hors-cart to bring some goods for his day-to-day transaction of his business. In the way, the Horse died, so he decided to sell his cart & finally sold it for Rs. 5000/-
(Original cost price of Horse is Rs. 8000/- & of Cart is Rs. 7000/-)
Kindly give the journal entry.
Thanking you,
Kindly inform me about the journal entry of the following :-
Q. Once A Businessman was going with his hors-cart to bring some goods for his day-to-day transaction of his business. In the way, the Horse died, so he decided to sell his cart & finally sold it for Rs. 5000/-
(Original cost price of Horse is Rs. 8000/- & of Cart is Rs. 7000/-)
Kindly give the journal entry.
Thanking you,
19 August 2011
Loss on death of horse 8000 Dr
Loss on sale of cart 2000 Dr
Cash 5000 Dr
To Horse 8000 Cr
To Cart 7000 Cr
Loss on sale of cart 2000 Dr
Cash 5000 Dr
To Horse 8000 Cr
To Cart 7000 Cr
Message likes :
1 times
19 August 2011
Dear Philip Sir,
Thank you so much but on this regard, I like to saying you that,
Cash A/c 5000 Dr
P/L A/c 10,000 Dr
To capital a/c 10,000 cr
To cart a/c 5,000 cr
(Kindly inform me is it right or not ?, & the horse & cart are the capital assets ,so the loss on it,how it will be treated in accounting )
Thank you so much but on this regard, I like to saying you that,
Cash A/c 5000 Dr
P/L A/c 10,000 Dr
To capital a/c 10,000 cr
To cart a/c 5,000 cr
(Kindly inform me is it right or not ?, & the horse & cart are the capital assets ,so the loss on it,how it will be treated in accounting )
19 August 2011
crediting capital account is not correct for this. credit should be to the asset account. regarding debiting p/l, technically correct but debiting the accountwoould be more correct.
Message likes :
1 times
19 August 2011
Horse in a non appreciable asset and you should not have kept it under fixed assets. Anyhow, if you have done it then for accounting entries Mr Philip has given correct answer but from income tax point of view the loss for death of horse shall not be considered. So you can credit horse account and debit your capital account for loss of horse. For loss on sale of cart, it is a capital loss. If you have claimed depreciation then it is a short term loss or otherwise you have to claim in P & L but no credit will be allowed for income tax purpose and the loss will be added in your income.
Message likes :
1 times
19 August 2011
Thanking you so much Respected Sir S.S.Agarwal Ji... I am too grateful to you for the learning ,Hope, in future I may learn more from you. Thanks for your co-operation.
20 August 2011
"But from income tax point of view the loss for death of horse shall not be considered" I do not agree with the statement of Mr.Agarwal, since the same needs to be considered under section 36(1)(vi). If i am wrong pls correct me.
Considering this, the entry I have given is correct under IT Act and Accounting practice.
Considering this, the entry I have given is correct under IT Act and Accounting practice.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Is Aadhar PAN linking required for opening bank account?
- Applicability
- Where to show the RCM on Rent paid to unregistered landlord
- CPC Processing IT Return for AY 2023-24 without recognizing the Taxation Option under New Regime
- Application of 115BAC
- Gst Sales of FY 2023-24
- GSTR-3B - Do I file nil when there is no sale but I've bought raw materials
- TDS NUMBER SURRENDER
- Legal heir raised refund , but refund issued to the closed account of deceased.
- RCM - commercial rent paid to URP under GST
- Whether still royalty
- 20% OF DEMAND PAYMENT IN APPEAL
- Issue of gst e invoice
- Interchangeable words in accounts
- Adjusted profit/Loss in the case of LLP and Pvt. Ltd.company
- How to adjusted advances given or receipt
- Foreign vendor without PAN unable to to register due to non receipt of OTP on foreign number ?
- 133(6) DIN INVALID format error - ->WHERE TO REPLY 133(6) notice?
- Query for dubts
- Regarding Resignation by Auditor from Pvt. Ltd.
Trending Online Classes
-
Excel Mastery Program
CA Rishabh Pugalia
CAclubindia
