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Most Difficult Journal Entries

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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  1. Dear Sir,

    Hello sir hows you, before reading your article my knowledge is not up to the mark,
    but now after reading your articles i am able to solves some difficult journal entries.
    thank you so much for publishing your knowledgeable article, can you please provide some guidance in relation to New form of making balance sheet as per schedule III of Companies Act, 2013.


    Warm Regards...
    Sameer Chandorkar

  2. , I apologize to say that I have just achieved my one year Diploma in Business Administration but , frankly telling you...before seeing your answer I realized how the entry should be recorded and posted to ledger.... it was so easy such as a piece of CAKE.

  3. Thank u so much.... Its really helpful

  4. Thanks for this article with easy understanding methods.. Expecting more from your side. It is very helpful for me. I learn accounts in my school days, but i am 45 years old and no touch in accounts. Your article guided me very well. i am very eager learn more in accounts..

  5. Thanks Sir, Your article is very helpful and outstanding.

  6. it is very useful. thank u so much

  7. Thanks Sir, This article is so helpful

  8. Very good job please give some more difficult

  9. sir/ma'am, this article was very helpful for us. but i have some issues in other entries.
    in tally, there is a voucher named journal, when it is used.
    Please help me sir.

  10. Purchase a running business for rupees 15000

  11. I want know about TD trade discount. So please help me.with journal entries and how to solve it . with cash discount fy BMS books have problems

    1. There is no record made of trade discount, just it's deducted from the list price at the time of bargaining. Means not recorded......

      For cash discount, when payment is made , separate entries are passed in buyer and seller book...

      Buyer book.....

      A/C payable Dr
      Cash Cr
      Discount received Cr

      Seller book...

      Cash Dr
      Discount Allowed Dr
      A/Receivable Cr...

  12. The following transactions are related to Cargo Wings private limited for the year 2020.
    Owner started business with cash $12 000, building $10 000 and Bank $8 000
    Aug. 01
    Bought Machinery on credit from XY & Co. $10 000
    Aug. 01
    Borrowed $12 000 from bank.
    Aug. 02
    Repaid part of the loan taken from bank $5 000 by cheque.
    Aug. 03
    Owner paid pårt of bank loan of S2 000 from his personal bank account
    Aug. 04
    Purchased two vehicles for $10 000, Ts was settled by cheque and remainder paid in cash
    Aug. 04
    paid in cash.
    Aug. 05
    Cash amounting to $2 000 deposited into bank
    Aug. 05
    Sold one vehicle for $5 000 on cash
    Aug. 07
    Cash withdrawn by the owner for his personal use S800
    Sep. 02 Purchased equipment for $5 000 and paid by cheque
    Sep. 03
    Purchased Building for $20 000 from ABC & Co. one fourth was paid immediately by cheque
    Sep. 04 Cash withdrawn from the bank for office use $2 000
    Sep. 05
    Sep. 05 Purchased a vehicle costing $2 000 and paid by the owner from his personal resources
    Sep. 06 Lent $2 000 cash to Mr. C.
    Sep. 06 Sold some equipment for cash $500
    Sep. 06 Owner withdrew cash for his personal use $400
    Sep. 07
    Sep. 07 Received a cheque of $500 from Mr. C as part payment of the loan
    1. Pass the journal entries (double entries) of above transactions (according to the proper format
    as shown in lecture)
    2. Prepare a ledger with the help of journal prepared in part 1.
    3. Prepare a Trial Balance

  13. When goods are sold on credit you Dr the receivables Account and credit the sales Account right?
    When payment for such goods is made in cash/bank. Is it right to enter the repayment amount in the cash book as at that date as sales?

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Accounting Education: Most Difficult Journal Entries
Most Difficult Journal Entries
Accounting Education
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