Record the following adjustments on 31st March, 2016 : () Rent for 3 months amounting to 7 900 je outstanding. Gi) Salary for the months of February and March amounting to 700 is unpaid. (in Outstanding wages amounting to 7 200. (iv) Local Taxes unpaid * 125. (v) Charge depreciation at 5% machinery worth 2 5,000 and at 10% on buildings worth 20,000. (vi) Allow interest on capital of 7 20,000 at 5%. (vii) Charge interest on drawings of 7 800 at the rate of 5%.
Answers
Answer:
Explanation:
In the following way, the adjustment of entry are as under:-
i) Rent A/c Dr Rs.7900.00
To Outstanding Expenses A/c (Rent)
You will add in Rent account Rs.7900.00 & will show in Liabilities of Outstanding Rent Rs7900.00
ii) Salary A/c Dr Rs.700.00
To outstanding Expenses A/c (Salaries) 700.00
You will add in Salaries A/c Rs.700.00 and will also add in Liabilities Rs700.00 on account of outstanding salary for Feb and March Rs.700.00
iii) Wages A/c Dr Rs.7200.00
To outstanding expenses A/c (wages) 7,200.00
You will add in Wages A/c Rs.7,200.00 and will also add in Liabilities Rs7,200.00 on account of outstanding wages
iv) Local Taxes A/c 125.00
To outstanding Expense A/c (Taxes) 125.00
You will add in Taxes A/c Rs.125.00 and will also add in Liabilities Rs125.00 on account of outstanding Taxes
v) Depreciation A/c Dr 3,250.00
To Machinery 1,250.00
To Building 2,000.00
You will show Depreciation of Rs. 3,250.00 in Debit side of P & L account and deduct Rs 1250.00 & 2000.00 from the value of Machinery and Building respectively.
vi) Intt on capital A/c Dr Rs.36,000.00
To Capital A/c 36,000.00
One side you will show Rs.36000.00 as expenses in P&L a/c and will add in current account or capital account of the proprietor A/c
vii) Drawings A/c Dr 390.00
To Interest 390.00
(being Interest of Rs.390.00 due on account of interest on capital and will also be treated as Drawings. Otherwise if the current account of Proprietor is being maintained then You can debit the current account instead of debiting drawings