If you are accountant in any company or any other organisation, you will surely face this problem. You or your company pays the expenses but it is on the behalf of other person. You are just representative for other. For example, you can pay the expenses of your boss, your friend employee, your customer or your supplier. What will its journal entry?
Some will do the mistake by making it expense of business and debit the expense injournal entry which is totally wrong. Sometime, there may be lack of money in the pocket of your boss. He will say to you to pay his electricity bill or any other bill. It is the personal expense of that party not your business expense. So, expense accountnever debit.
So, how can you pass the journal entries, we will learn with two following examples.
Example of Transaction No. 1
Generally we used to pay various taxes on behalf of our client through online and after that collect the cheque of that same amount so in this regard please advise the best journal entry for these type of payment of expenses. Ex Suppose we paid Rs. 100 of Mr. Ram as Income Tax Payment and subsequently takes a cheque of Rs. 100 from Mr. Ram so what type of entry has to passed. Please guide
Example of Transaction No. 2
Suppose I am an Accountant in a firm and our firm is dealing in Cars, (Sale Purchase) our creditor has told to me, you are publish my add in news paper for advertising the cars, i have done this job, then we want to received the funds from the Creditors, so what will be the entry pass, for both the entries.
Journal entries will be same of both type of examples
In both examples, we are seeing that accountant is paying on the behalf of customer or creditor. It means, both expenses is not the business of accountant. So, income tax or advertising expense is not the business expense. So, we will never debit these expense account. We will pass the journal entry with following way
1. When you have paid Income Tax or advertisement on the behalf of your Client or creditor
Name of Your Client Creditor ( In this transaction, he is actually your borrower) Account Debit
Cash / Bank Account Credit
Logic : Now amount which you have to take from your client or creditor, will be your asset or increase in your total asset. Every increase in your business asset must be debited. Cash/ Bank is decrease of your asset, so we have credited it. If your client or creditor do not pay you this payment. You can help court to get this amount because this entry is the proof which you can show.
2. When You will get your payment back from your Client or creditor
Cash/ Bank account Debit
Name of Your Client or Creditor ( In this transaction, he is actually your borrower) Account Credit
Logic : Because your cash or bank asset has increased, so it will debit. Other side your asset of investment in loan ( you have also right to take interest on this amount) has decrease, so it will be credited.
I got lots queries relating to journal entries on day basis. For providing you single solution of your all journal entries problems, I have written eBook and Printed Book whose name is Journal Entries Made Easy whose cost is Rs. 1000 each. I recommend you to buy it from me. You can buy it from our online shop or you can buy it from me by sending email personally to me at my email vinod@svtuition.org
It will surely strong your basics of accounting and journal entries. With this, you can pass the journal entry of every type of transaction. If you will be interested to buy it please reply on same email. After payment, this E-book (in PDF form), you will get within few minutes and by reading it, you can solve your all queries relating to journal entries.
Thank You
Some will do the mistake by making it expense of business and debit the expense injournal entry which is totally wrong. Sometime, there may be lack of money in the pocket of your boss. He will say to you to pay his electricity bill or any other bill. It is the personal expense of that party not your business expense. So, expense accountnever debit.
So, how can you pass the journal entries, we will learn with two following examples.
Example of Transaction No. 1
Generally we used to pay various taxes on behalf of our client through online and after that collect the cheque of that same amount so in this regard please advise the best journal entry for these type of payment of expenses. Ex Suppose we paid Rs. 100 of Mr. Ram as Income Tax Payment and subsequently takes a cheque of Rs. 100 from Mr. Ram so what type of entry has to passed. Please guide
Example of Transaction No. 2
Suppose I am an Accountant in a firm and our firm is dealing in Cars, (Sale Purchase) our creditor has told to me, you are publish my add in news paper for advertising the cars, i have done this job, then we want to received the funds from the Creditors, so what will be the entry pass, for both the entries.
Journal entries will be same of both type of examples
In both examples, we are seeing that accountant is paying on the behalf of customer or creditor. It means, both expenses is not the business of accountant. So, income tax or advertising expense is not the business expense. So, we will never debit these expense account. We will pass the journal entry with following way
1. When you have paid Income Tax or advertisement on the behalf of your Client or creditor
Name of Your Client Creditor ( In this transaction, he is actually your borrower) Account Debit
Cash / Bank Account Credit
Logic : Now amount which you have to take from your client or creditor, will be your asset or increase in your total asset. Every increase in your business asset must be debited. Cash/ Bank is decrease of your asset, so we have credited it. If your client or creditor do not pay you this payment. You can help court to get this amount because this entry is the proof which you can show.
2. When You will get your payment back from your Client or creditor
Cash/ Bank account Debit
Name of Your Client or Creditor ( In this transaction, he is actually your borrower) Account Credit
Logic : Because your cash or bank asset has increased, so it will debit. Other side your asset of investment in loan ( you have also right to take interest on this amount) has decrease, so it will be credited.
Single Solution of All Your Journal Entries Problems
I got lots queries relating to journal entries on day basis. For providing you single solution of your all journal entries problems, I have written eBook and Printed Book whose name is Journal Entries Made Easy whose cost is Rs. 1000 each. I recommend you to buy it from me. You can buy it from our online shop or you can buy it from me by sending email personally to me at my email vinod@svtuition.org
It will surely strong your basics of accounting and journal entries. With this, you can pass the journal entry of every type of transaction. If you will be interested to buy it please reply on same email. After payment, this E-book (in PDF form), you will get within few minutes and by reading it, you can solve your all queries relating to journal entries.
Thank You
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