Every business firm has to do expenses to operate business. Daily, weekly, monthly, quarterly, half yearly and yearly regular expenses are operating expenses.
Administrative expenses (office expenses, operating expenses)
All the costs related to management and administrative of the organization is known administrative expenses.
These expenses are incurred day-to-day office activities.
The main expenses are office salary, management expenses, office expenses, office rent etc.
It is debited in journal entry and profit and loss account.
Selling and distribution expenses
Expense which is incurred or paid to sales of goods or service providing is known selling expenses.
This expense also includes distribution expenses.
It is also known secondary packaging expenses.
The main selling and distribution expenses are godown (warehouse) rent, advertisement, expenses of delivery van etc.
This expense is debited in journal entry and profit and loss account.
Expenses Paid
Salary account |
Dr |
salary paid to person |
Increase in expenses |
Wages account |
Dr |
wages paid to person |
Increase in expenses |
Rent account |
Dr |
rent paid to house owner |
Increase in expenses |
Telephone and internet bill account |
Dr |
telephone and internet bill paid |
Increase in expenses |
Stationery account |
Dr |
stationery purchased |
Increase in expenses |
Electricity and water bill account |
Dr |
electricity and water bill paid |
Increase in expenses |
Interest and commission account |
Dr |
interest and commission paid |
Increase in expenses |
Other expenses account |
Dr |
other expenses paid |
Increase in expenses |
To Cash account |
|
paid in cash |
Decrease in assets |
To Bank account |
|
paid by cheque |
Decrease in assets |
(Being- ….expenses paid by) |
|
|
|
Journal Entry
In the book of …………
Date |
Particulars |
|
LF |
Amount Dr |
Amount Cr |
|
Salary account |
Dr |
|
xxxxx |
|
|
Wages account |
Dr |
|
xxxxx |
|
|
Rent account |
Dr |
|
xxxxx |
|
|
Telephone and internet bill account |
Dr |
|
xxxxx |
|
|
Stationery account |
Dr |
|
xxxxx |
|
|
Electricity and water bill account |
Dr |
|
xxxxx |
|
|
Interest and commission account |
Dr |
|
xxxxx |
|
|
Other operating expenses account |
Dr |
|
xxxxx |
|
|
To Cash account |
|
|
|
xxxxx |
|
To Bank account |
|
|
|
xxxxx |
|
(Being- ………….expenses paid by …………………….) |
|
|
|
|
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Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු =
PROBLEM: 9A
The following expenses are given you by KL Fancy House:
20 March, Stationery purchased for Rs 500.
30 March, Salary paid to staff for the month of Ashadh Rs 45,000.
30 March, Rent paid to house owner for the month of Ashadh Rs 12,000 by cheque.
Required: Journal entries
SOLUTION:
Journal Entry for American Style
Date |
|
|
Debit $ |
Credit $ |
Mar, 20 |
Stationary account |
|
150,000 |
|
|
To Cash account |
|
|
150,000 |
|
To record purchase of stationary for cash |
|
|
|
|
|
|
|
|
Journal Entry for European Style
Date |
|
|
€ |
€ |
Mar, 20 |
Stationary account |
Dr |
150,000 |
|
|
To Cash account |
|
|
150,000 |
|
To record purchase of stationary for cash |
|
|
|
|
|
|
|
|
Journal Entries
In the book of KL Fancy House
Date |
Particulars |
|
LF |
Amount Dr |
Amount Cr |
20 March |
Stationery account |
Dr |
|
500 |
|
|
To Cash account |
|
|
|
500 |
|
(Being- stationery purchased in cash) |
|
|
|
|
31 March |
Salary account |
Dr |
|
45,000 |
|
|
To Cash account |
|
|
|
45,000 |
|
(Being- salary paid to staff in cash) |
|
|
|
|
31 March |
Rent account |
Dr |
|
12,000 |
|
|
To Bank account |
|
|
|
12,000 |
|
(Being- rent paid to house owner by cheque) |
|
|
|
|
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු =
PROBLEM: 9B
The following expenses are given you by VK Suppliers:
28 April, Salary paid to Mr Prakash for the month of April Rs 15,000.
29 April, Rent paid to house owner Ms Sarita for the month of April Rs 10,000 by cheque.
30 April, Internet expenses paid to Broadlink Solution (P) Ltd Rs 1,500.
Required: Journal entries
Journal Entries
In the book of VK Suppliers
Date |
Particulars |
|
LF |
Amount Dr |
Amount Cr |
28 April |
Salary account |
Dr |
|
15,000 |
|
|
To Cash account |
|
|
|
15,000 |
|
(Being- salary paid to Mr Prakash in cash) |
|
|
|
|
29 April |
Rent account |
Dr |
|
10,000 |
|
|
To Bank account |
|
|
|
1,000 |
|
(Being- rent paid to house owner Ms Sarita by cheque) |
|
|
|
|
30 April |
Internet expenses account |
Dr |
|
1,500 |
|
|
To Cash account |
|
|
|
1,500 |
|
[Being- internet expenses paid to Broadlink Solution (P) Ltd] |
|
|
|
|
Keep in Mind (KIM)
Mr Prakash, Ms Sarita and Broadlink Solution (P) Ltd are personal accounts. |
Expenses paid to personal accounts are not debited. |
Because, expenses paid to person or organization does not affect personal accounts. |
Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු =
Basic Problem: 9 EXPENSES PAID
The following expenses are given you by KP Trading House:
(a) Salary paid to staff for the month of Ashadh Rs 35,000.
(b) Rent paid to house owner Rs 15,000 by cheque.
(c) Stationery purchased for Rs 500.
(d) Commission paid to Ms Arpita Rs 5,000 by cheque.
(d) Cash discount allowed to M/s Sharma Traders Rs 2,000.
(e) Electricity expenses paid to Nepal Electricity Authority Rs 1,600.
Required: Journal entries
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