Question

1000paid for machinery erection was debited to wages account..... tell me the adjustment in final accounts ​

Answer 1

This adjustment means that Rs.4000 spent on installing a new machinery has been debited to wages account instead of machinery account. Actually all expenses incurred in respect of a machine including its purchase price, taxes, transportation cost and installation cost are debited to machine account. In the present case the rectifying journal entry will be:

Machine A/c Dr. 4000

To Wages A/c 4000

The Impact of this journal entry will be at two places as described below:

1. Subtract Rs.4000 from the amount of wages in the Trading A/c.

2. In the Balance Sheet add Rs.4000 to the Machine A/c in the Balance Sheet.

3. While calculating depreciation on the Machine, remember to calculate depreciation on incre