Most Difficult Journal Entries

>> February 20, 2011


After deeply study accounting, anybody may be able to make most difficult journal entries. Actually, journal entries are not difficult but to understand the transactions  may be difficult for you. When students see the journal entries of difficult transactions, they think that these journal entries are most difficult to solve. So, they don't face with difficulties. This is not good.

Today, I searched my all old accounting books and saw the difficult accounting questions which I could not understand due to difficult journal entries. It was my habit that when any question could not be solved by me, I marked  Not on that question, that is the reason, I can easily find the question which were most difficult for me.

Before study the solution of  most difficult journal entries, please learn to pass the difficult journal entries with advance tips of Prof. Augustins at here.

Following are some examples of most difficult transactions and its journal entries. Its analysis is done on the basis of rules of double entry system:

1. A machinery of Rs. 4000 was sold for Rs. 5200. Depreciation provision to date was Rs. 400; and commission paid to selling agent was Rs. 320 and wages paid to the worker for removing the machine was Rs. 50.

(a) What comes in business will be debited


→ Cash from sale of machinery comes, so, cash account will be debited.
→ Depreciation Provision is the loss of business, but we will debited for calculating net machinery cost.

Depreciation Account Dr. 400

Machinery Account Cr. 400

With this cost of  machinery will be 4000 -400 = 3600

→ Commission paid to sale agent is also selling expenses but relating to this capital item sale. So, it will also debit.

→ Wages is also expenses of business and it will be debit.

Commission Account Dr. 320
Wages Account Dr. 50

To Cash Account Cr. 370

Now, its effect on net cash proceeds from sale of machinery = 5200 - 320 -50 = 4830

(b) What goes from business, machinery goes from business, so machinery account will credit.
→ Net profit from this transaction will also credit.

Journal Entry

Cash Account Debit 4830

Machinery Account Credit 3600
Profit and Loss Account 1230

* Calculation of net profit from this deal

net cost of machinery = 4000 - 400 = 3600
Net Sale proceed = 5200 - 320 - 50 = 4830
-------------------------------------------------
Net profit from sale of machinery = Rs. 1230
-------------------------------------------------

its Wrong Combined Entry




2. Goods amounting to Rs. 75 were sold to Mohan for cash. It was correctly recorded in the cash book but was wrongly credited to Mohan's account also.

(Note: This is rectify entry and you must remember what entry should be done? But what entry has been passed? and in rectification procedure, how to rectify it so that past mistake's effect can be adjusted. )

Its Correct entry should be

Cash Account Dr. 75

Sale Account Cr. 75

Wrong entry was passed

Cash Account Dr. 75

Mohan Account Cr. 75

Rectify Entry should be passed

Mohan Account Dr. 75  ( With this, we cancel the credit amount relating to Mohan Account)

Sale Account Cr. 75  ( With this, sale account shows correct balance)




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Related : Journal Entries Example





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