Journal proper refer to the special types of journals which occur occasionally.
These are also known by subsidiary journals.
There are certain types of transactions which are not recorded in other subsidiary books but for the systematic recording.
Systematic recording of all such transactions are made under journal proper by following rules of double entry system of book-keeping.
Some examples of such transactions can be given as below:
Opening entries
Closing entries
Transfer entries
Adjustment entries (outstanding, prepaid, accrued, advance income)
Rectification entries
No special journal (free sample, loss by fire etc)
Rare transaction
Sometimes organization can receive some income in advance. It is not income till work complete.
Revenue received in advance before actually performing is called unearned income or revenue.
It is liability till the organization completes the task.
Receipts are considered as income only if they are earned in particular accounting year.
Some unearned or advance revenue are commission and rent.
There are two situations:
The entire amount received is credited to the profit and loss account
The entire amount received is credited to a liability account like unearned revenue account.
PROBLEM: 8A
You have following data:
Unearned rent received for the year Rs 12,000.
Required: (1) Journal entry; (2) Show in balance sheet
Journal Entries
Date |
Particulars |
|
LF |
Amount |
Amount |
|
Cash account To Advance rent account (Being- unearned rent received)
|
Dr
|
|
12,000
|
12,000
|
Profit and Loss Account
Particulars |
|
Amount |
Particulars |
|
Amount |
|
|
|
|
|
|
Balance Sheet
Liabilities |
|
Amount |
Assets |
|
Amount |
Current liabilities: Advance rent
|
|
12,000 |
|
|
|
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PROBLEM: 8B
Out of commission earn Rs 25,000; advance commission is Rs 8,000.
Required: (1) Journal entry; (2) Show in profit and loss account and balance sheet
Journal Entries
Date |
Particulars |
|
LF |
Amount |
Amount |
|
Cash account To Advance commission account To Commission earned account (Being- commission earned and advance received) |
Dr
|
|
25,000
|
8,000 17,000
|
Profit and Loss Account
Particulars |
|
Amount |
Particulars |
|
Amount |
|
|
|
By Commission received Less: Unearned |
25,000 (8,000) |
17,000
|
Balance Sheet
Liabilities |
|
Amount |
Assets |
|
Amount |
Current liabilities: Unearned or advance commission |
|
8,000 |
Current asset: Accrued interest
|
|
|
*******
PROBLEMS AND ANSWERS |
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු =
Basic Problem: 8 UNEARNED OR ADVANCE INCOMES
Modi Traders has following extracted data:
(a0 Out of the commission received Rs 30,000 includes Rs 5,000 received in advance.
(b) Advance rent received Rs 6,000; now the entire amount of advance rent received is earned.
(c) Out of the advance commission received Rs 20,000; this month advance commission earned Rs 15,000.
Required: (1) Journal entry; (2) Show in profit and loss account and balance sheet
***********
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