Passing journal entries by understanding three golden accounting principles part- 2

three golden accounting principles
Hi , this is continuation of part- 1 of passing journal entries by understanding three golden accounting principles
Click here for part- 1


Entry 1:

Salary payable Rs. 15000/- is paid

SL.NO
PARTICULAR
DEBIT
CREDIT
1
Salary payable A/c      Dr
            To cash  A/c
15000

15000
                  
(Being salary for the previous month is payable is paid)

Rule for passing entry
On business side: - The salary payable is settled by paying and cash is going out of business.
Debit
Salary payable is representative person. The personal account rule is applicable:- Debit the receiver account, here salary payable is treated as representative person because it represents salary of many persons. So, it is debited.
Credit
Cash is treated as asset. The real account rule is applicable:-Credit what goes out of business, here cash is going out of business. So, it is credited.



Entry 2 :- 
                         
Salary paid in advance Rs.5000/-


SL.NO
PARTICULAR
DEBIT
CREDIT
1
Salary advance A/c      Dr
         To cash  A/c
5000

5000
             
(Being salary paid in advance)

Rule for passing entry
On business side:- It is paying for expense in advance and cash is going out of business.
Debit
Salary advance paid is treated as representative person. The personal account rule is applicable:- Debit the receiver account, here salary paid in advance is treated as representative person because it represents salary of person. So, it is debited.
Credit
Cash is treated as asset. The real account rule is applicable:-Credit what goes out of business, here cash is going out of business. So , it is credited.


Entry 3 :-

Salary expense Rs.15000/-(including adjustment of advance)


SL.NO
PARTICULAR
DEBIT
CREDIT
1
Salary  A/c      Dr
         To Salary Advance  A/c
         To Cash A/c 
15000

 5000
10000
   
(Being salary for the previous month is paid by adjusting the advance)

Rule for passing entry

Debit
Salary paid is treated as Expense for business. The Nominal account rule is applicable:-Debit all expense or loss, here salary paid is expense. So, it is debited.
Credit
Salary advance paid is treated as representative person. The personal account rule is applicable:- Credit the giver account, here salary paid in advance is treated as representative person because it represents salary of person. So, it is credited.
Credit
Cash is treated as asset. The real account rule is applicable: - Credit what goes out of business, here cash is going out of business. So, it is credited.

Entry 4:-

Interest received in advance of Rs.3000/-

SL.NO
PARTICULAR
DEBIT
CREDIT
1
Cash A/c      Dr
         To advance income  A/c
3000

3000
                
(Being Interest received in advance)

Rule for passing entry

Debit
Cash is treated as asset. The real account rule is applicable:-Debit what comes into business, here Cash is coming into business. So, it is debited.
Credit
Advance income is treated as representative person. The personal account rule is applicable:- Credit the giver account, here interest received in advance is treated as representative person . So, it is credited.


Entry 5:-

Interest received of Rs.5000/-


SL.NO
PARTICULAR
DEBIT
CREDIT
1
Cash A/c                   Dr
Advance income A/c   Dr
                 To Interest income  A/c
2000
3000


5000

(Being interest received and advance adjusted)

Rule for passing entry

Debit
Cash is treated as asset. The real account rule is applicable:-Debit what comes into business, here Cash is coming into business. So, it is debited.
Credit
As Advance income are treated as representative person. The personal account rule is applicable:- Debit the receiver account, here interest received in advance is treated as representative person . So, it is debited.
As Interest Income are treated as income.
The Nominal account rule is applicable:- Credit all income or gains, here commission income is received by business. So , it is credited.

Entry 6:-

Interest receivable of Rs.2000/-


SL.NO
PARTICULAR
DEBIT
CREDIT
1
Interest receivable A/c      Dr
         To Interest Income  A/c
2000

2000
         
(Being Interest receivable for the previous month)

Rule for passing entry

Debit
As Interest receivable are treated as representative person. The personal account rule is applicable:- Debit the receiver account,  So, it is debited.
Credit

As Interest Income are treated as income. The Nominal account rule is applicable:- Credit all income or gains, here commission income is received by business. So , it is credited.


In Next topic we are going to have detailed explanation on different type of sales in practical scenarios .

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