JOURNAL ENTRY FOR MONTHLY PROVISIONS TO KNOW PROFIT OR LOSS

JOURNAL FOR MONTHLY PROVISIONS TO KNOW THE PROFIT OR LOSS

Here we are going to learn about monthly provision entry,and to pass the journal entry we have to arrange following data.
  1. Closing stock value of Raw material, Work in progress and finished goods for the month end.
  2. Salary payable.
  3. Purchase of material
  4. Other fixed expense payable.

  • Printing and stationery
  • Internet Charges
  • Provident fund(employer contribution)
  • ESI ( employer contribution)
  • Travelling charges
  • Conveyance
  • Staff welfare
  • AMC charges
  • Power Charges
  • Security Charges
  • Transport Charges
  • Professional Charges
  • Interest and bank Charges



After getting above data we need to pass a compound journal entry consist of many accounts. This entry will be passed every month end.

Journal Entry for Provision expense
PARTICULAR

L/F NO
DEBIT AMOUNT
CREDIT AMOUNT
 Purchase of Material                    
Dr

1000000

 Salary and wages                       
Dr

400000

 Printing and stationery                 
Dr

25000

 Internet Charges                        
Dr

1000

 Provident fund (employer                        contribution)
Dr

30000

 ESI (employer contribution)          
Dr

15000

 Travelling charges                     
Dr

18000

 Conveyance                            
Dr

12000

 Staff welfare                           
Dr

1000

 AMC charges                           
Dr

14000

 Power Charges                     
Dr

6000

 Security Charges              
Dr

20000

Transport Charges                      
Dr

40000

Professional Charges               
Dr

5000

Interest and bank Charges            
Dr

22000

 Closing Stock (asset)      
Dr

150000





      To Closing Stock (income)



150000
     To Salary Payable



400000
     To Other payables



1209000
Total


17,59,000
17,59,000


Rules for passing journal entry                     
In the above entry we assumed the other expenses as payable because the bills we are booked in the following month of existing month.
In the companies the closing stock entry will be passed by debiting the closing sock (asset) and crediting the closing stock (income) as we don’t prepare trading account in company as per Company Act Schedule III

The above provisional entry will be reversed in beginning of following month
                 
PARTICULAR

L/F NO
DEBIT
AMOUNT
CREDIT AMOUNT





Closing Stock (income) Dr
Dr

150000

Salary Payable                    
Dr

400000

Other payables
Dr

1209000






      To Purchase of Material



1000000
      To Salary and wages



400000
      To Printing and stationery



25000
      To Internet Charges



1000
       To Provident fund(employer contribution)          



30000
       To ESI (employer contribution)



15000
      To Travelling charges



18000
      To Conveyance



12000
      To Staff welfare



1000
      To AMC charges



14000
      To Power Charges



6000
     To Security Charges



20000
     To Transport Charges



40000
     To Professional Charges



5000
     To Interest and bank Charges



22000
     To Closing Stock (asset)



150000
TOTAL


17,59,000
17,59,000
Rules for passing journal entry                     

Every month at the beginning of the month the entry passed in previous month will be reversed. To cancel the provision provided in the books.

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