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

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 .