Question

11 Advertisement charges paid from bank Rs. 10,000/- & in cash 5,000/-. DE ( 12 Goods distributed as free sample Rs. 2.000/- & goods taken at home Rs. 3.000/-​

Answer 1

Answer:

Transaction 11: Advertisement charges paid from bank Rs. 10,000/- & in cash 5,000

   Journal Entry:

          Advertisement A/c ---------------------------Dr           15000

                          To Bank A/c                                                        10000

                          To Cash A/c                                                          5000

         (Being advertisement charges paid)

   Explanation:

• The above transaction is cash transaction.
• Advertisement is indirect expenses. As per nominal account rule all expenses must be debited.

Transaction 12: Goods distributed as free sample Rs. 2.000/- & goods taken at home Rs. 3.000/

   Journal Entry:

          Advertisement A/c ---------------------------Dr           2000

          Drawings         A/c-----------------------------Dr           3000

                         To Purchases A/c                                                  2000

         (Being advertisement charges paid)

   Explanation:

• As per business entity concept. Business and personal uses are different. Any goods used for personal purpose is drawings.
• Distribution of free sample is advertisement and are considered indirect expenses. As per nominal account rule, all expenses must be debited.