Q4. XYZ Company entered into following transaction in the year 2019. (5 marks)
a. Paid rent of $100,000.
b. Services are provided to customers for $50,000 out of which $37,700 received in cash.
c. Purchased goods from Arya limited of $80,000 and received 10% trade discount.
d. Commission received of $15,000.
e. Depreciation on machinery (purchased on 1st Jan 2016 for $200,000 having useful life of 5 years) is recorded.
Record the journal entries in the books of Arya limited.
Answers
Answer:
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Journal Entries for the given transactions
Explanation:
There is a slight mistake in the question.In the last line,"In the books of Arya" should be replaced with "In the books of XYZ".
In the Books of XYZ Co.
Journal Entries:
a) Rent A/c Dr. $100,000
To Cash A/c $100,000
(Being rent paid)
b) Cash A/c Dr. $37,700
Customers A/c Dr. $12300
To Service Revenue A/c $50,000
(Being cash received and debtors created for providing services)
c) Purchases A/c Dr. $72,000
To Arya Ltd. $72,000
(Being Goods purchased on credit and trade discount @10% received)
*Trade discount is not shown in journal entries.
d) Cash A/c Dr. $15,000
To Commission A/c $15,000
(Being commission received)
e) Depreciation A/c Dr. $40,000
To Machinery A/c $40,000
(Being Depreciation recorded)
*Depreciation = $200,000/5 = $40,000