Question

Journalise the following transaction with reason as per american system
1.salary outstanding
2.goods destroyed by fire

Answer 1

Hope you will understand it.

Explanation:

1.   Salary A/c Dr.

  To outstanding salary A/c

Here the salary account is debited as salary is the expense of the business. Outstanding salary account is credited which is a representative personal account represent those to whom salary is outstanding.

2. Loss by fire A/c Dr.

         To Purchase A/c

Loss by fire is debited as it was the expense foe the business. Purchase account is credited as due to the loss by fire there is decrease in the amount of purchases.