JOURNALIZE THE FOLLOWING ENTRIES IN THE BOOKS OF GUPTA BROS.
paid Rs 300 for expenses on goods sold to Goyal Bros. This amount to be realised from Goyal Bros.
pls tell the journal entry
8 Replies
SAURABH DILIP JOSHI
(N.A.)
(74 Points)
Replied 05 July 2012
selling exp. a/c Dr
To cash
being amt spend on behalf of .... broth.
selling exp receivable a/c Dr
To selling exp
Being prov for reimbersument of selling exp frm debtor
cash a/c Dr
To selling exp receivable
being reveipt of exp frm debtor
Abheer
(student)
(217 Points)
Replied 05 July 2012
in my book it is written goyal bros a/c dr. TO cash a/c.....
what now??
MAHESH GARG
(AUDIT EXECUTIVE)
(334 Points)
Replied 05 July 2012
It is perfectly correct written in your book
Since you have incurred expenses on behalf of your debtor you will have to raise the debtor balance as the amount is to be re imbursed by the debtor.
That means debtor will be debited for the payment to be received by you from him.
And as cash has been paid it will be credited.
Just remember the golden rule of accounting
It will help you
indraneel
(student)
(39 Points)
Replied 05 July 2012
ya thats right
goyal bros a/c dr
to cash
being amount spent on behalf of goyal bros
hera as and when you pay the amount which is payable by goyal bros, he becomes debtor of guptha, and after realising the amount
cash a/c dr
to goyal bros a/c
debit what comes in cr what goes out , as you recieve cash debit cash a/c as you are recieving them from goyal bros cr them so prioe debit stands cancelled
Abheer
(student)
(217 Points)
Replied 05 July 2012
thank you mahesh garg,. i m totally satisfied with your answer..
Abheer
(student)
(217 Points)
Replied 05 July 2012
but there is one problem. as i have understood the thing that cash is going so it would be credited. but i m confused whether goyal bros a/c will be debited or selling expenses a/c will be debited?? how the golden rule of account apply here??
MAHESH GARG
(AUDIT EXECUTIVE)
(334 Points)
Replied 05 July 2012
To pass any journal Entry just identify the various account which should be affected or raised.
Let's take your example:
in the transaction explained by you just think you are the TV set seller
Now think that if you are paying a rickshaw Rs. 300 to deliver the TV at the customer's site
Now it's not an expense of yours
You have just made payment on behalf of your customer which will be reimbursed to u when you receive the full payment.
You will mention the transporting charges in your bill when u provide it to the customer.
Thus the two account affected here is of
1) Debtor (and not selling expenses)
and
2) Cash
I think it is clear now
Just give yourself a chance to analyse the transaction
Make it a habit and soon you will not face any problem in passing Entries. It's very easy
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