Goods used to make an Asset: When goods are used to make/construct an asset, the value of the asset is increased. Therefore, Asset Account is debited:
Illustration 10. Journalise the following in the books of a timber merchant:
(i) Goods costing ₹ 500 were used by the proprietor for domestic purposes.
(ii) ₹ 200 due from Hari are bad debts.
(iii) Goods costing ₹ 3,000 were destroyed by fire. They were not insured.
(iv) Goods damaged by fire ₹ 1,000 and Insurance Co. accepted claim of ₹ 800.
(v) Goods costing ₹ 500 given as charity (Sales Price ₹ 600).
(vi) Paid landlord ₹ 1,500 for rent. One third of the premises is occupied by the proprietor for his own residence.
(vii) Sold household furniture for ₹ 5,000 in cash and paid the money into business.
(viii) Wood used for making office furniture ₹ 2,000.
In the Book of …
JOURNAL
Discover more from WebComm.in
Subscribe to get the latest posts to your email.
This is very good website for getting the Right Knowledge at one place in the filed of commerce specialized in Account.