[targetacca]

I will give an attempt at this, not sure if its correct

Cash Book

Balance -113
+90 (difference of 760-670)
-428 (bank charges)
-320 ( Note iii)
-850( Note v)
+1629 (Note vi)

Total 8

Bank Statement

228
-220 ( Note iv)

Total 8

[targetacca]

Unearned revenue or deffered revenue is the collection of cash before a good or service is provided to a client. In some instances, clients may prepay for a good or service to receive a sales discount or to meet the terms of a contractual obligation. Any collections of cash for a good or service not yet provided will be recorded as unearned (deferred) revenue. For a company to recognize the receipt of cash as revenue, it must fully earn that revenue. The receipt of cash alone does not signify that income was earned and can be recognized as such. Since this receipt of cash has not been fully earned, the unearned revenue is recorded as a liability. A liability is typically considered to be an obligation to make a monetary payment in the future, but it can also refer to the future provision of goods or services.

Entries
Dr cash
Cr unearned revenue

and when services or goods are provided

Dr unearned revenue
Cr Sales

[targetacca]

Thanks for the reply. yes carriage inwards is part of the purchase cost, but in perpetual inventory accounting entries, we dont have to do anything with the purchase account, as seen from my entries. pls someone help me with the entries

[targetacca]

so items worth 10000 have been omitted from the records.

which inludes an item of 7000 at cost.

But inventory should be valued at lower of cost and NRV

Cost : 7000
NRV: Selling Price less cost to sell ( 6000-500) = 5500

so the new value of invetory which cost 7000 is now 5500

and balnce of 1000-7000= 3000

so 3000+5500 = 8500, inventory should be increased by 8500. Im not sure if am correct , pls check with other forum friends

[targetacca]

Since the question is about purchases, dont worry about the receivables part of the question.

create a T account for trade payables

on the debit side u have
302800 Cash paid to suppliers
2,960 Discounts received
2000 Contra between payables and receivables ledger
84000 Trade payables Closing balance

and on the credit side u have the opening balance of TP which is 60000

Add all the figures on the debit side and minus it from the 60000 on the credit side and u have the figure for purchases 331760

[targetacca]

difference between cr 24100 and dr 23200 is 900. debit is lower , so to balance, u debit suspense a/c by 900. so initial suspense a/c balance is 900.

1. correct entry should be
dr cash 2300
cr receivables 2300

entry recorded was
dr cash 2300
cr receivables 3200
(here the cr is more than debit by 900, hence we put debit suspense as 900 so both sides r equal that is
dr cash 2300
dr suspense 900
cr receivables 3200

Now to remove the suspense balance we pass the entry
dr receivables 900 (now the receivables has got the correct balance ie cr 3200 – dr 900 = cr 2300)
cr suspense 900 ( to remove the suspense balance)

2. correct enty should be
dr car 8000
cr cash 8000

entry recorded was
cr cash 8000
cr motor repair 8000
now there is only cr side for this equation which is 16000 and no debit side , so we put 16000 dr on the suspense a/c

dr suspense 16000
cr cash 8000
cr motor repair 8000

to remove suspense balance the entry wud b
dr car 8000
dr repair 8000(this offsets the earlier cr balance on repair a/c)
cr suspense 16000(this offsets the dr balance on suspense a/c)

so suspense a/c balance will be dr 900 (opening balance)
cr 900 (from error 1)
cr 16000( from error 2)

so final balance on suspense a/c will be cr 16000. correct me if am wrong.

[targetacca]

No one to help out?…..?

[targetacca]

so what will be the entry on jan 31 and feb 28, and march 3. Thanks

[targetacca]

So, in the income statement for that month , will the repair expense be 5000, though we have paid only 3000??

[targetacca]

Vipin, For the first qn, ur final equation is closing value=284,700-32,000+28,500=281,200.ans.

why r u minusing 32000 and adding 28500.

[targetacca]

The salary will be paid from the company’s account

[targetacca]

Shayan, one more doubt, what happens if another set of three post dated cheques are given, covering nine months from sept. Coz in forum i read that PDC should be treated as Accounts Receivable in the balance sheet.. Should i record only one cheque that covers oct to dec, or should other two cheques also and if so, at what dates ?

[targetacca]

Thanks a lot shayan, that was so helpful.:)

[targetacca]

ramonacraciun , thanks buddy, i need a little more clarification regarding the entries for rent each month,

[targetacca]

My frIends, thanks for the explanation. But the answer is 256000 for A, 162000 for B , 62000 for C.

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