Assets are the economic resources reported in the balance sheet.
Assets represent probable future economic benefits.
The values of tangible assets are also known as fixed assets.
They have their physical substance.
Fixed assets are land and building, plant and machinery, furniture and fitting, vehicle, equipment etc.
They are purchased to generate profit and make convenience for work.
By using assets, depreciation is charged on it.
After using asset for long time, it becomes out of order; then it is sold.
At the time of asset selling, there may be capitalized profit or loss.
The values of intangible assets are also known as fictitious asset but there are some differences.
Intangible assets do not have physical substance.
They are goodwill, licence, trademarks, patents, copyrights, brand equity etc.
They are purchased or invested for product design, sales promote and brand equity of the firm.
Assets or Fixed Assets
Plant and machinery account |
Dr |
Value of assets |
Increase assets |
Land and building account |
Dr |
Value of assets |
Increase assets |
Furniture and fitting account |
Dr |
Value of assets |
Increase assets |
Equipment account |
Dr |
Value of asset |
Increase assets |
Vehicle account |
Dr |
Value of asset |
Increase assets |
Computer/laptop account |
Dr |
Value of asset |
Increase assets |
To Cash account |
|
Cash given |
Decrease in assets |
To Bank account |
|
Cheque given |
Decrease in assets |
To XYZ Suppliers account |
|
Credit purchased from firm |
Increase in liabilities |
To Bills payable account |
|
Credit purchased and bill accepted |
Increase in liabilities |
(Being- assets purchased ……………. |
|
|
|
Keep in Mind (KIM)
We assume trader purchases and sales single or similar types of goods. |
|
For computer trader, computers are goods. |
For computer trader, shoes are not goods. |
For shoes trader, shoes are goods. |
For shoes trader, furniture is not goods. |
For cloth merchant, cloth is goods. |
For cloth merchant, car is not goods. |
For furniture trader, furniture is goods. |
For furniture trader, cloth is not goods. |
For stationer, stationery is goods. |
For stationer, furniture is not goods. |
For car vendor, car is goods. |
For car vendor, computer is not goods |
For grocery vendor, rice, sugar, soap etc are goods. |
For grocery vendor, furniture is not goods. |
Journal Entry
In the book of …………
Date |
Particulars |
|
LF |
Amount Dr |
Amount Cr |
|
Plant and machinery |
Dr |
|
xxxxx |
|
|
Land and building |
Dr |
|
xxxxx |
|
|
Furniture and fitting account |
Dr |
|
xxxxx |
|
|
Equipment account |
Dr |
|
xxxxx |
|
|
Vehicle account |
Dr |
|
xxxxx |
|
|
Other assets account |
Dr |
|
xxxxx |
|
|
To Cash account |
|
|
|
xxxxx |
|
To Bank account |
|
|
|
xxxxx |
|
To XYZ Suppliers account |
|
|
|
xxxxx |
|
To Bills payable account |
|
|
|
xxxxx |
|
(Being- asset (name of asset) purchased………… |
|
|
|
Journal Entry
In the book of …………
Date |
Particulars |
|
LF |
Amount Dr |
Amount Cr |
|
Goodwill account |
Dr |
|
xxxxx |
|
|
Trademark account |
Dr |
|
xxxxx |
|
|
Patents account |
Dr |
|
xxxxx |
|
|
Copyrights account |
Dr |
|
xxxxx |
|
|
To Cash account |
|
|
|
xxxxx |
|
To Bank account |
|
|
|
xxxxx |
|
(Being- intangible assets purchased |
|
|
|
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු =
PROBLEM: 4A
SK Book Supplier purchased furniture worth Rs 60,000
Required: Journal entry
[Answer: Asset = Rs 60,000]
SOLUTION:
Journal Entry
In the book of SK Book Supplier
Date |
Particulars |
|
LF |
Amount Dr |
Amount Cr |
|
Furniture account |
Dr |
|
60,000 |
|
|
To Cash account |
|
|
|
|
|
(Being- furniture purchased in cash) |
|
|
60,000 |
Journal Entry for American Style
Date |
|
|
Debit $ |
Credit $ |
|
Furniture account |
|
60,000 |
|
|
To Cash account |
|
|
60,000 |
|
To record furniture purchased for cash |
|
|
|
Journal Entry for European Style
Date |
|
|
|
€ |
€ |
|
Furniture account |
Dr |
|
60,000 |
|
|
To Cash account |
|
|
|
60,000 |
|
To record furniture purchased for cash |
|
|
|
|
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු =
PROBLEM: 4B
Ajay Cold Store purchased deep-freezer for Rs 45,000 and furniture for Rs 25,000 by cheque.
Required: Journal entry
[Answer: Assets = 70,000]
SOLUTION:
Journal Entries
In the book of Ajay Cold Store
Date |
Particulars |
|
LF |
Amount Dr |
Amount Cr |
|
Deep-freezer account |
Dr |
|
45,000 |
|
|
To Cash account |
|
|
|
45,000 |
|
(Being- deep-freezer purchased in cash) |
|
|
|
|
|
Furniture account |
Dr |
|
25,000 |
|
|
To Bank account |
|
|
|
25,000 |
|
(Being- furniture purchased by cheque) |
|
|
|
|
Or
Journal Entry
In the book of Ajay Cold Store
Date |
Particulars |
|
LF |
Amount Dr |
Amount Cr |
|
Deep-freezer account |
Dr |
|
45,000 |
|
|
Furniture account |
Dr |
|
25,000 |
|
|
To Cash account |
|
|
|
45,000 |
|
To Bank account |
|
|
|
25,000 |
|
(Being- deep-freezer and furniture purchased in cash) |
|
|
|
|
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු =
PROBLEM: 4C
JK Soap Industry has purchased following assets:
Computer by cheque Rs 30,000
Printer for cash Rs 10,000
Furniture Rs 7,000 from Sharma Furniture Traders
Required: Journal entry
[Answer: Assets = 47,000]
SOLUTION
Journal Entries
In the book of JK Soap Industry
Date |
Particulars |
|
LF |
Amount Dr |
Amount Cr |
|
Computer account |
Dr |
|
30,000 |
|
|
To Cash account |
|
|
|
30,000 |
|
(Being- computer purchased and cheque issued) |
|
|
|
|
|
Printer account |
Dr |
|
10,000 |
|
|
To Cash account |
|
|
|
10,000 |
|
(Being- printer purchased in cash) |
|
|
|
|
|
Furniture account |
Dr |
|
7,000 |
|
|
To Sharma Furniture Traders |
|
|
|
7,000 |
|
(Being- furniture purchased on credit) |
|
|
|
|
Or
Journal Entry
In the book of JK Soap Industry
Date |
Particulars |
|
LF |
Amount Dr |
Amount Cr |
|
Computer account |
Dr |
|
30,000 |
|
|
Printer account |
Dr |
|
10,000 |
|
|
Furniture account |
Dr |
|
7,000 |
|
|
To Cash account |
|
|
|
30,000 |
|
To Bank account |
|
|
|
10,000 |
|
To Sharma Furniture Traders |
|
|
|
7,000 |
|
(Being- sundry assets purchased in cash and on credit) |
|
|
|
|
|
|
|
|
|
|
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු =
PROBLEM: 4D
Saleways Departmental Store has following information:
July 2, Took trademark from Saleways Departmental Store by paying Rs 55,500 by cheque.
July 3, Mini truck purchased from Sipardi Auto at Rs 800,000.
July 12, Air conditioner purchased for Rs 80,000 and cheque issued.
July 18, Furniture purchased worth Rs 25,000 by cash.
July 31, Ceiling fans purchased from Bipin Rs 10,000.
Required: Journal entries
SOLUTION
Journal Entries
In the book of Saleways Departmental Store
Date |
Particulars |
|
LF |
Amount Dr |
Amount Cr |
July 2 |
Trademark account |
Dr |
|
55,500 |
|
|
To Bank account |
|
|
|
55,500 |
|
(Being- trademark purchased by cheque) |
|
|
|
|
July 3 |
Mini truck account |
Dr |
|
800,000 |
|
|
To Sipardi Auto account |
|
|
|
800,000 |
|
(Being- mini truck purchased on credit) |
|
|
|
|
July 12 |
Air conditioner account |
Dr |
|
80,000 |
|
|
To Bank account |
|
|
|
80,000 |
|
(Being- air conditioner purchased by cheque) |
|
|
|
|
July 18 |
Furniture account |
Dr |
|
25,000 |
|
|
To Cash account |
|
|
|
25,000 |
|
(Being- furniture purchased in cash) |
|
|
|
|
July 31 |
Ceiling fans account |
Dr |
|
10,000 |
|
|
To Bipin’s account |
|
|
|
10,000 |
|
(Being- furniture purchased on credit) |
|
|
|
|
|
|
|
|
|
|
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු =
PROBLEM: 4E
Chaudhary Group (CG) has following extracted information:
(a) Patent purchased from LG Electronics, South Korea by paying Rs 25,00,000 through Nabil Bank online banking.
(b) Copyrights purchased from Turkcell Telecommunication, Turkey to operate CG Lifecell mobile network service of Rs 50,00,000 by online payment.
SOLUTION
Journal Entries
In the book of Chaudhary Group
Date |
Particulars |
|
LF |
Amount Dr |
Amount Cr |
(a) |
Patents account |
Dr |
|
25,00,000 |
|
|
To Nabil Bank account |
|
|
|
25,00,000 |
|
(Being- patents purchased from LG Electronics through |
|
|
|
|
|
online payment) |
|
|
|
|
(b) |
Copyrights account |
Dr |
|
50,00,000 |
|
|
To Bank account |
|
|
|
50,00,000 |
|
(Being- copyrights purchased from |
|
|
|
|
|
Turkcell Telecommunication through online payment) |
|
|
|
|
|
|
|
|
|
|
######
PROBLEMS AND ANSWERS |
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු =
PROBLEM: 4
DHL Cargo Nepal has following extracted information:
July 1, Took copyrights from DHL Global Network by paying Rs 75,300 by online banking.
July 3, Office furniture purchased in cash Rs 55,000.
July 18, Computer purchased from RB Tech Rs 25,000.
July 20, Canon Printer purchased from SB Computer House of Rs 15,000 by paying Rs 5,000 partial payment.
July 31, Iron safe purchased on credit worth Rs 18,000.
Aug 12, Air conditioner purchased for Rs 60,000 by cheque
Aug 15, Delivery van purchased of Rs 12,00,000 and bill accepted.
Required: Journal entries
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