"rs 2000 paid for the license fees for the year ending 30th september,2001 had been written off".(accounting year 1/4/00-31/3/01).what are the necessary journal entries to be passed for the above??(partnership accounts)...plz help!!
6 Replies
jahanvi
(none)
(75 Points)
Replied 14 August 2013
but in the practice module it is given that
prepaid license fee a/c dr 1000
to P & L adjustment a/c 1000
how and plz explain???
N.Naveena Maheswara Rao
(Assistant manager for accounts)
(1096 Points)
Replied 23 August 2013
licencefee prepaid is for 6 months (1/4/2001 to 30/09/2001 - belongs to next year)
Amount of prepaid licencefee - Rs.1,000 which is an asset & not expenditure
At the time of payment of licencefee, entry passed in the books is
1. licencefee A/c...Rs.2,000
To cashA/c....2,000
2. P&L A/c...Dr 2,000
To licencefee....Cr 2,000
But now as this is a mistake, rectify the entry in P&L Adjustment account.
Prepaid licencefee A/c...Dt.Rs. 1,000 (Asset)
To P&L Adj A/c.......Rs.1000 (Reverse the P&L A/c wrongly debited earlier)
Hope you understand
jahanvi
(none)
(75 Points)
Replied 23 August 2013
I understood....thanks a lot for solving my query.
Shivani
(Learner)
(1881 Points)
Replied 10 September 2013
Dear Naveena Sir
When at the time of paying license fee we know that part of it is related to next year, then can we pass the following entry at the time of payment of licensee fee
License Fee 1000
Prepaid License Fee 1000
To Cash 2000
Thanks
Shivani
N.Naveena Maheswara Rao
(Assistant manager for accounts)
(1096 Points)
Replied 10 September 2013
Yes, we can pass at the time of payment itself...
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