Question { 9578 }

My company has just bought a car. The breakdown is as below:

cost of the car = 50000
Interest = 15000
Registration fee = 500
Road tax (first year) = 1800

Please show me the correct entries in the books

Thank you

Answer

car a/c............................Dr 50500
(rgn fee can be added to tthe cost)
Interest a/c.......................Dr 15000
(not an element in the cost of the car)
Road tax a/c.......................Dr 1800
(Indirect xpns cant be added to fxd asset)

To Cash 67300

Question { 9081 }

WHY NOT SHOWING CLOSING STOCK IN TRAIL BALANCE

Answer

A trial balance is a list of all the ledger (general ledger)
accounts contained in the ledger of a business and there is
no ledger heading "stock", so..... (logical)

Closing stock is not a balancing figure of any ledger. Its
valued according to the company policy or the thumb rule (mkt
rate/ bought rate whichever is less), so.... (technical)

Question { HP, 14716 }

what is suspense account?

Answer

a suspense account is an account used temporarily to carry
doubtful receipts and disbursements or discrepancies pending
their analysis and permanent classification.

It can be a repository for monetary transactions (cash
receipts, cash disbursements & journal entries) entered with
invalid account numbers. The account specified may not exist,
or it may be deleted/frozen. If one of these conditions
exist, the transaction should be directed to a suspense
account.

Question { Capital IQ, 13906 }

what will be the entry for baddebts write off.
what will be the entry for baddebts write off recovered.

Answer

1. Bad debts a/c Dr
To S Debtors

2. S Debtors a/c Dr
To Bad debts (recovered)