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Journalise the following Entries?
Outstanding salary of rs. 20000/-
Prepaid insurance of rs. 5000/-
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Answer / mudunoori
Dear Venkata Subbaiah garu It seems you answered it in a
hurry mood
1. Outstanding salary means Expenditure incurred but not
paid.Ex. March month salary paid in April. To know true
and correct profit You have to Debit salaries account and
credit Payables a/c . So the entry will be
Salaries a/c Dr 20,000/-
Outstanding salaries a/c 20,000/
(Being payable salary for the month brought into account)
2. Prepaid Insurance means A part of premium belongs to
next accounting year. So to take actual amount of insurance
expenditure into account you have to transfer such amount
which relates to next year. So the entry will be
Prepaid Insurance a/c Dr
To Insurance a/c
By crediting the expenditure we are reducing the
expenditure to the tune of next accounting year.
| Is This Answer Correct ? | 21 Yes | 2 No |
Answer / nidheesh
1, SALARY A/C DR 20000
TO SALARY OUTSTANDNG 20000 , HERE SALARYIS
OUTSTANDING SO THIS IS CURRENT LIABILITY , SALARY WILL GO
TO P&L A/C EXPENSE
2, PREPAID INSURANCE A/C DR
TO BANK / CASH , PREPAID INS. IS CURRENT ASSET
| Is This Answer Correct ? | 19 Yes | 3 No |
Answer / mudunoori
Sajeer saab You did a mistake in the second answer. Prepaid
insurance is an adjustment entry to be passed in the year
end. Insurance was already paid and entry was passed . with
your entry cash will be unnecessarily reduced to the tune
of 5000. So once again verify your answer and question. The
right answer is
Prepaid Insurance a/c Dr
Insurance a/c
(Prepaid insurance was created and reduced from insurance )
| Is This Answer Correct ? | 8 Yes | 3 No |
Answer / areena
mr mudnoori, ihave a doubt, can we credit an expense?,as
insurence is an expense.here mr sajeer may be cosidering
insurence paid on march, which belongs to april so his
entry is correct,otherwise entry will be pass as follows
prepaid insurence a/c dr..........
to cash/bank........cr
(being insurece paid for one year)
then monthly entry is
insurence a/c dr.........
to prepaid insurence.......cr
| Is This Answer Correct ? | 5 Yes | 2 No |
Answer / surabhi gupta
1
Salary A/C Dr. 20000
To Outstanding Salary A/C 20000
Note-
bcoz this salary relates to the current year, but not paid
during the C.Y so our liability increases and increase in
liability must be credited, therefore i have credited
outstanding salary a/C.
2.
Prepaid Insurance A/C Dr. 5000
To Insurance A/C 5000
Note-
This insurance exp. relates to the next year but we have
paid it in current yr in advance,so our asset increases and
increase in asset must be debit therefore I have debited
Prepaid Insurance A/C
| Is This Answer Correct ? | 2 Yes | 0 No |
Answer / baseer tawheedi
1.
Salary A/c Dr Rs 20,000
To Salary Outstanding A/c Cr Rs 20,000
( Being salary outstanding)
Note: since salary is anture of expese therefore debited
and salary outstanding means salary not yet paid therefore
is a current liability. thus will be credited.
2.
Prepaid insurance A/c Dr Rs 5,000
To cash/Bank A/c Cr Rs 5,000
( Being insurance paid in advance )
Note:- Since insurance is paid in advance therfore is a
current asset.Hence ill be debited and cash decreases or
goes out so will be credited.
| Is This Answer Correct ? | 3 Yes | 2 No |
Very interesting discussion between you and Mudunoori.
Prepaid Insurance is an asset and will on assets side of
Balance Sheet. But according to you Prepaid insurance was
closed. So thin well before answering any question. Another
thing I want to comment is the Question is not properly put
| Is This Answer Correct ? | 2 Yes | 3 No |
Answer / smart
salary a/c dr. 20000
to outstanding or salary payable a/c 20000
Prepaiad insurance a/c dr. 5000
to insurace Premium a/c 5000
| Is This Answer Correct ? | 3 Yes | 4 No |
Answer / mudunoori
Areena very good question put by you. Insurance is not
related to Aprils expenditure. Generally Genaral insurance
will be paid for a period of one year. It is quite usual to
pass an adjustment entry for the expenses which benifits
more than a year.More over to reduce the ependiture or
income we have to reverse the natural poostion of ledger
accounts.So crediting expenditure is quite justifiable. To
confirm my answer you can refer any practicing person or
our commerce books. Another example for recersing entry is
about fixed assets. The natural position of fixed assets
are always DEbit. While creating depreciation on asset we
are reversing the natural position into credit
I think you may be satisfied with my answer.Pl refer
if any thing thru this or with my mail
id.satyaki_raju@yahoo.co.in
| Is This Answer Correct ? | 1 Yes | 3 No |
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