Question

Wages paid to mohan rs 500 for building construction

Answer 1

Assuming it to be a revenue expenditure

The Current transaction affects two accounts wages account(it is a nominal account;all losses Gains income expenses come under nominal account; wages is an expense),, Bank/cash account.. because wages is paid in Cheque/cash ...(it is a Real account; all assets and Liabilities come under Real account; bank balance/cash balance is an asset) ..


The Three golden rules of accounting are....

Personal Account: Debit the receiver, credit the giver

Nominal account: Debit All expenses and losses, credit All incomes and gains

Real Account: Debit what comes in ,credit what goes out

In contention with the above rules...

wages should be debited (it is a nominal account/its an expense)

Bank/cash account should be credited (it is a Real account/cash from bank is Going out)

The Journal Entry will be....

wages a/c Dr xxxxx

To cash/Bank a/c. xxxx

(Being wages paid)

Answer 2

Journal Entry :

Building A/C   Dr     Rs.500

    To Cash A/C    Rs.500

(being Wages paid to Mohan for building construction)

Note : Wages paid here should be capitalized  here along with the building cost since the wages are paid for the construction of the building. Any expenses incurred to make the asset ready for it's intended use, needs to be capitalized.