Advance Accounting B.Com 2

ADVANCED FINANCIAL ACCOUNTING
B.COM 2
Rooh-Ullah Khan (M.Com)

0333-87 86 389
THE STANDARD GIRLS COLLEGE SIALKOT

Advanced Financial Accounting Page |1
CHAPTER # 1
ISSUANCE OF SHARES
Issuance of Shares
Shares can be issued to following parties
1. General public
2. Directors
3. Underwriters
4. Promoters
Journal Entries for Issuance of shares
General Public
(i) Applications received
Bank A/c………... Dr.

Shares applications A/c……. Cr.
(ii) Shares issued / Allotted
Shares applications A/c……. Dr.

Shares capital A/c…………… Cr.
(iii) Excess money refunded
Shares applications A/c…….. Dr.

Bank A/c……………………. Cr.
Directors / Underwriters
Bank A/c………………………. Dr.

Shares Capital A/c……………………… Cr.
Shares issued to promoters against preliminary expenses
Preliminary expenses…………… Dr.

Shares Capital A/c…………… Cr.
Rooh ullah Khan (M.Com) 0333-87 86 389 Lecturer: The Standard College
ISSUANCE OF SHARE AT PREMIUM
1. To General Public
Bank A/c…………….. Dr.

Shares Applications A/c…….. Cr.
(ii) Shares issued
Shares Applications A/c…….. Dr.

Shares Capital………… Cr.
Shares Premium……… Cr.
(iii) Excess Money refunded

Bank A/c…………….. Cr.
2. Directors / Underwriters
Bank A/c………………………. Dr.

Shares Capital A/c……………… Cr.
Share Premium ………………… Cr.
3. Shares issued to promoters against preliminary expenses

Share Premium ……………… Cr.
ISSUANCE OF SHARE AT DISCOUNT
1. To General Public
Bank A/c…………….. Dr.

Shares Applications A/c…….. Cr.
(ii) Shares issued
Shares Applications A/c…….. Dr.

Shares Discount A/c………… Dr.
Shares Capital………… Cr.
(iii) Excess Money refunded

Bank A/c…………….. Cr.
2. Directors / Underwriters
Bank A/c………………………. Dr.

Shares Discount A/c………...… Dr.
Shares Capital A/c……………… Cr.
3. Shares issued to promoters against preliminary expenses

Shares Discount A/c………… Dr.
ISSUANCE OF SHARES OTHER THAN CASH

If an asset or a running business is purchased and shares issued in lieu of cash it is called
issuance of shares other than cash.
Journal entries for Purchase of Asset and Issuance of shares
1. Asset purchased
Assets A/c……………. Dr.

Vendor A/c…………….. Cr.
2. Issuance of shares to vendor
(i) At Par
Vendor A/c…………... Dr.

Share Capital A/c……… Cr.
(ii) At Premium

Share Premium ………... Cr.
(iii) At Discount

Shares Discount……… Dr.
Journal Entries for Purchase of Running Business and Issuance of Shares
1. Business Purchased
Assets A/c…………… Dr.

Liabilities A/c…………. Cr.
Vendor A/c……………. Cr.
2. Issuance of Shares
(i) At Par

(ii) At Premium

Share Premium ………... Cr.
(iii) At Discount

Shares Discount……… Dr.
CHAPTER # 2
BONUS SHARES AND RIGHT SHARES

BONUS SHARES
Journal Entries for issuance of shares
1. Declaration of bonus shares
Reserve fund A/c……… Dr.

Share premium A/c…… Dr.
Profit and loss A/c…….. Dr.
General Reserve A/c…...Dr.
Bonus to shareholders A/c…… Cr.
2. Issuance of Bonus shares (At par)
Bonus to shareholders A/c…. Dr.

Share Capital ……………… Cr.
3. Issuance of Bonus shares (At premium)
Bonus to shareholders A/c…. Dr.

Share Capital ……………… Cr.
Share premium…………….. Cr.
RIGHT SHARES
Journal Entries for issuance of shares
1. Right shares offered
Sundry Shareholders A/c…… Dr. (Market price / offered price / par value)
Share Capital………...Cr. (Always par value)
Share Premium………Cr. (Difference)
2. Amount Received from shareholders
Bank A/c……. Dr. (Offered price / par value)

Sundry Shareholder’s A/c…Cr.
3. Closing Sundry Shareholders A/c
Bonus Shares Dividend A/c…… Dr. (Difference between M.P and O.P)
Sundry Shareholder’s A/c…. Cr.
CHAPTER # 3
DEBENTURE
Issuance of Debentures
1. At Par
Bank A/c…….. Dr.

Debenture……...… Cr.
2. At Premium
Bank A/c……. Dr.

Debenture A/c………….. Cr.
Debenture Premium…….Cr.
3. At Discount
Bank A/c……………….. Dr.

Debenture Discount……. Dr.
Debenture A/c…………… Cr.
ISSUANCE OF DEBENTURES OTHER THAN CASH

If an asset or a running business is purchased and debentures are issued in lieu of cash it is
called issuance of debentures other than cash.
Journal Entries for Purchase of Running Business and Issuance of Debentures
1. Business Purchased
Assets A/c…………… Dr.

Liabilities A/c…………. Cr.
Vendor A/c……………. Cr.
2. Issuance of Debentures
(i) At Par

Debentures A/c……… Cr.
(ii) At Premium

Debenture Premium…. Cr.
(iii) At Discount
Vendor A/c………………. Dr.

Debenture Discount……… Dr.
ISSUANCE OF DEBENTURE AS COLLATERAL SECURITY

Debentures issued as a security to obtain loan are called collateral security. If the company
fail to return the loan lender will sell the debentures in market and will recover their amount.
If the loan is repaid as per the term of agreement, debentures obtained as security are to be
returned by the lender.
Journal Entries
1st Method
1. Loan obtain from Bank
Bank A/c………. Dr.

Bank Loan…………. Cr.
2nd Method
1. Loan obtain from Bank
Bank A/c………. Dr.

Bank Loan…………. Cr.
2. Debentures issued as collateral security
Debenture Suspense…… Dr.

Debenture A/c………. Cr.
INTEREST ON DEBENTURES
Interest on debenture is usually payable half-yearly. Interest on debenture is payable even if
the company suffers a loss or does not earn profit.
Journal Entries
1. Interest become due
Debenture interest……. Dr.

Interest payable A/c…….. Cr.
2. Interest paid
Interest payable………. Dr.

Bank A/c…………………Cr.
3. Interest become due and paid
Debentures Interest…… Dr.

Bank A/c………………… Cr.
REDEMPTION OF DEBENTURES
Sources of Redemption
1. Profit
2. Capital
3. Provision made for redemption
4. By Conversion of debentures into shares
1. Redemption out of Profit
(i) Transfer of profit to redemption reserve
Profit & Loss Appropriation A/c……. Dr.

Debenture redemption reserve A/c…… Cr.
(ii) Amount of debentures repaid
Debenture A/c…………. Dr.

Bank A/c………………. Cr.
2. Redemption out of Capital
Debenture A/c…………. Dr.

Bank A/c………………. Cr.
3. Redemption by Conversion
(i) If debentures issued at par and Discount
Debenture A/c………….. Dr.

Share Capital………………. Cr.
(ii) If debentures issued at premium
Debenture A/c…………. .Dr.

Share Premium…………. Dr.
Share Capital……………….. Cr.
CHAPTER # 4
FINAL ACCOUNT
Name
Trading and profit and Loss Account
For the period ended….
Particulars Rs. Particulars Rs.
Opening stock Sales
Purchases Less: Sales return
Less: Purchases return Closing stock
Wages
Carriage
Freight
Transportation
Custom duty
Octori duty
Clearing charges
Factory expenses
Manufacturing expenses
Coal, gas and water
Dock charges
Rent Rent received

Interest Interest received
Commission Commission received
Discount allowed Discount received
Salaries Dividend received
Advertising Gain on sale of investment
Printing and stationary Gain on sale of asset
Postage and telegram Interest on investment
Depreciation
Bad debts
Trade expenses
General expenses
Interest on loan
Interest on debentures
Interest on overdraft
Interest on mortgage
Loss on sale of investment
Loss on sales of asset
Audit expenses
Auditor’s remuneration
Director remuneration
Manager’s commission
Advanced Financial Accounting P a g e | 10
Profit & Loss Appropriation Account

Interim Dividend Last year profit
Transfer to General Reserve Current year profit
Tr. to Div. Equalization Reserve Excess provision not required
Tr. to Debenture Redemption Reserve
Proposed Dividend
Final Dividend
Provision for taxation
Name
Balance Sheet
As on ….
Liabilities Rs. Assets Rs.
Authorized Capital Fixed Assets
Land
Issued, subscribed & Building
Paid Up capital Machinery
Furniture
Reserve Motor vehicles
General Reserve Freehold property
Profit & Loss App. A/c Leasehold property
Share Premium Goodwill
Copy right
Long Term Liabilities Patent
Debentures Trade mark
Loan Long Term Investment
Mortgage Loan Investment
Current Liabilities Deferred cost

Sundry creditors Preliminary expenses
Accounts Payable Discount on shares
Bills Payable Discount on debentures
Outstanding expenses Technical know how
Unearned income
Provision for taxation Current Assets
Final dividend Cash
Proposed Dividend Bank
Sundry Debtors
Closing stock
Investment (Short term)
Marketable securities
Prepaid expenses
Outstanding income
Adjustments and their effects
Adj # Adjustment T & P & L A/c Balance Sheet

1 Outstanding expenses + Related expenses C/L
2 Outstanding Income + Related income C/A
3 Prepaid Expenses - Related Expenses C/A
4 Unearned Income - Related income C/L
5 Depreciation Expense - Fixed Assets
6 Drawings - Purchases - Capital
7 Interest on Capital Expense + Capital
8 Interest on Drawings Income - Capital
9 Reserve for discount on debtors Expense - Debtors
10 Reserve for discount on creditors Income - Creditors
11 New Bad Debts + Old bad debts - Debtors
12 New Provision for Bad Debts + Old bad debts - Debtors
CHAPTER # 5
RATION ANALYSIS
Current Assets Current Liabilities Fixed Assets

Cash in hand Sundry Creditors Land & Building
Cash at bank Trade Creditors Plant & Machinery
Stock / Inventories Accounts Payable Furniture & Fixture
Sundry Debtors Bills Payable Loose Tools
Accounts Receivables Notes payable Freehold property
Trade Receivables Bank overdraft Leasehold property
Book Debts Outstanding expenses Goodwill
Bills Receivables Provision for tax Trade mark
Notes Receivables Proposed dividend Copy right
Investment (Short term) Unclaimed dividend Patents
Marketable securities Final dividend
Prepaid expenses
Advances (Short term)
Long term Liabilities / Debts Equity / Shareholders Fund/ Proprietor funds

% Debentures Share capital
Bank loan Reserve
Mortgage Loan General Reserve
Secured Loan Dividend equalization Reserve
Unsecured Loan Debenture Redemption Reserve
Mortgage Share premium
Profit & Loss A/c
Total
Less: Preliminary Expenses
FORMULAS
1. Current Ratio / Working capital ratio
2. Quick Ratio / Liquid Ratio / Acid-test Ration
Liquid Assets or Quick Assets = Current Assets – Stock – Prepaid Expenses
3. Stock Turnover Ratio / Inventory turnover rate
Working
Cost of Goods sold = Sales – Gross profit
Cost of Goods sold = Opening stock + Purchases – Purchases return + Direct Expenses – Closing
Stock
Average Stock
4. Debtors Turnover Ratio

Net Credit Sales
Total / Gross Sales
Less: Cash sales
Less: Sales return
Less: Sales discount & allowances
Average Debtors
5. Debt-Equity Ratio
6. Proprietory Ratio
7. Fixed Assets Ratio
Long term funds = Total liabilities – Current Liabilities

Net Fixed Assets = Fixed Assets – Depreciation
8. Return on equity ratio / Return on shareholders fund
9. Net profit ratio
Net sales = Total sales – Sales return – sales discount & allowances
10. Fixed asset turnover ratio
11. Capital gearing ratio
12. Working capital turnover ratio
Net working capital = Current assets – Current liabilities
13. Earning per shares
14. Interest coverage ratio / Debt Service ratio
Operating income = Gross profit – Operating expenses
Operating expenses
All expenses other than interest and losses are operating expenses.
15. Price / Earnings ratio
16. Creditors turnover ratio
Net Credit Purchases

Total purchases
Less: Cash purchases
Less: Purchases return
Less: Purchases discount & allowance
Average Creditors
17. Gross profit ratio
18. Operating profit ratio
19. Operating ratio
20. The ratio of current assets to total assets
21. The ratio of cash to current liabilities
22 Debtors collection period / Average collection period
23. Average payment period
24. Finished goods turnover ratio
25. Goods in process turnover ratio
26. Raw materials turnover ratio
27. Age of the inventory
28. Return on capital employed
Net capital employed = Current assets – Current Liabilities + Fixed assets – Investment (short term)
CHAPTER # 7
BRANCH ACCOUNT
Branch Account
Date Particulars Rs. Date Particulars Rs.
Balance b/d (Opening Assets) Balance b/d (Op. Liab.)
Stock Creditors
Debtors Outstanding expenses
Cash Bank A/c
Prepaid expenses Cash Sales
Goods sent to Branch Collection from debtors
Bank A/c (Cash sent by H.O.) Direct Payment by deb.
Salaries Goods Sent to Branch
Rent (return)
Insurance Goods in Transit
Petty expenses Abnormal loss
Balance c/d (Closing Liab.) Balance c/d (Clos Assets)
Outstanding expenses Stock
Creditors Debtors
General profit & loss A/c Cash
Prepaid expenses
Following accounts will not be recorded in Branch Account

Normal Loss, Pilferage, Credit Sales, Bad Debts, Return by customers (Sales Return),
Discount allowed to Customers, Branch expenses paid by branch, Asset Purchased by branch
Memorandum Branch Debtors A/C
Memorandum Branch Debtors A/C will be prepared if any two or three Accounts from the
following are given
1- Opening Debtors
2- Closing Debtors
3- Collection from Debtors/Customers
4- Credit Sales
Memorandum Branch Debtors A/C

Balance b/d Cash
Sales (Credit) Bad Debts
Sales return
Discount Allowed
Allowances to Customer
Balance c/d
Petty Cash Account
Petty Cash Account will be prepared if any two or three of following accounts are given.
1- Petty cash opening
2- Petty cash closing
3- Petty expenses paid by branch
4- Cash sent by H.O. for petty expense
Petty Cash Account

Balance b/d Petty expenses
Cash (Cash sent by H.O.) Balance c/d
Closing Stock
If following tow accounts are given the closing stock will be calculated
1. Goods sent to branch

2. Sales (Cash sales, Credit Sales)
Closing Stock = Opening Stock + Goods sent to branch – Sales
Branch Cash Account
If
1. Cash Sales or
2. Collection from debtors or both are given
With cash sent to Head office or Cash remitted to H.O
Then Brach Cash Account will be prepared to check cash closing balance
Branch Cash Account

Opening cash balance Bank (Cash sent to H.O)
Cash sales Petty expenses paid by bran.
Debtors (Collection) Asset purchased by bran.
Closing cash balance
Unloading Entries
If Goods sent to branch on Invoice price / selling price/ Cost plus profit the unloading
entries will be passed.
1- Opening Stock
2- Closing Stock
3- Goods sent to Branch
4- Goods return to Branch
5- Abnormal Loss
6- Goods in transit
Journal
Date Details L/F Rs. Rs.

Branch A/c……………..Dr.
Branch Stock A/c……….. Cr.
Branch Debtors A/c………Cr.
Branch Petty cash A/c……Cr.
(Opening assets transferred to branch)
Creditors…………….. Dr.
Outstanding expenses...Dr.
Branch A/c……………… Cr.
(Opening liab. Transferred to branch)
Branch A/c………… Dr.
Goods sent to Branch A/c… Cr.
(Goods sent to branch)
Goods sent to branch….. Dr.
Branch A/c……………… Cr,
(Goods returned by branch)
Daska Brach A/c…. Dr.
Bank A/c…………… Dr.
(Cash sent to branch to meet expenses)
Bank……….. Dr.
Daska Branch A/c….. Dr.
(Cash received from branch)
Abnormal loss
Branch A/c
(Loss of stock with branch)
Branch Stock A/c
Branch Petty cash A/c
Branch Debtors A/c
Branch A/c
(Closing assets transferred from branch)
Creditors
Outstanding expenses
Branch A/c
(Closing liab. Transf. from branch)
Daska Branch A/c
General Profit & Loss A/c
(Profit transferred to general Profit &
loss A/c)
CHAPTER # 8
CONSIGNMENT ACCOUNT
Journal Entries
Consignor Book Consignee Book
1. When goods are send to consignee

Consignment……..Dr.
Goods sent on consignment……..Cr.
2. Expenses paid by consignor

Consignment……..Dr.
Cash……………….Cr.
3. Expenses paid by consignee

Consignment………Dr. Consignor……Dr.
Consignee……….Cr. Cash………..Cr.
4. Advance send by consignee

Cash/Bank/Bills Receivable….Dr. Consignor…… Dr.
Consignee………..Cr. Cash/Bank/Bills Payable… Cr.
5. Consignment sold by consignee

Consignee………..Dr. Cash/Accounts Receivable…Dr.
Consignment………….Cr. Consignor…….Cr.
6. Commission charged by consignee

Consignment A/c……. Dr. Consignor A/c…… Dr.
Consignee A/c….. Cr. Commission A/c….. Cr.
7. Goods taken by consignee for personal

use Purchases…Dr.
Consignee…….Dr. Consignor……….Cr.
Consignment……..Cr.
8. Amount send / remitted by consignee to

consignor Consignor………..Dr.
Cash/Bank/Bills Receivable…..Dr. Cash/Bank/Bills Payable…..Cr.
Consignee……….Cr.
9. Closing Stock (only when consignment

remain unsold with consignee)
Consignment stock….Dr.
Consignment…..Cr.
10. Profit on consignment

Consignment…..Dr.
Profit and loss…….Cr.
11. Loss on consignment

Profit and loss….Dr.
Consignment…….Cr.
12. Closing the books of accounts

Goods sent on consignment….Dr.
Trading………Cr.
LEDGER ACCOUNT / NECESSARY LEDGERS / DIFFEENCT ACCOUNTS
IN THE BOOK OF CONSIGNOR

1. Consignment A/c
2. Consignee A/c
3. Goods sent on consignment A/c
IN THE BOOKS OF CONSINGEE

4. Consignor A/c
IN THE BOOKS OF CONSIGNOR
Consignment A/C
Reference Rs. Reference Rs.
Goods sent on consignment Consignee A/c (Sales) X
Cash A/C (consignor Consignment Stock X
expenses)
Rent X
Insurance X
Freight X
Railway charges X X
Transportation etc. X
Consignee A/c
Loading charges X
Unloading charges X
Selling expenses X
Warehousing charges X
Bad debts X X
Commission X X
Profit & Loss Account (profit)
X X
Consignee A/c
Consignment A/C (Sales) X Consignment A/c
(Consignee Expenses)
Loading charges X
Unloading charges X
Selling expenses X
Warehousing charges X
Bad debts X
Commission X X
Cash / Bank / B/R (Advance) X
Cash A/c (remittances) X
Balance c/d X
X X
Goods sent on Consignment A/c

Trading A/c Consignment A/c
IN THE BOOKS OF CONSIGNEE
Consignor A/c
Cash A/c: Cash / A/R (Sales) X
(Consignee Expenses)
Loading charges X
Unloading charges X
Selling expenses X
Warehousing charges X X
A/R (Bad debts ) X
Commission A/c X
Cash / Bank / B/P (Advance) X
Cash A/c (Remittances) X
Balance c/d X
X X
Closing Stock
Consignor
= X
Consignee
= X
Closing Stock X
Direct Expenses
1. Wages
2. Carriage
3. Freight
4. Transportation
5. Custom duty
6. Octori duty
7. Railway charges
8. Clearing charges
9. Loading & Unloading
CHAPTER # 9 (CONTRACT ACCOUNT)

Contract
An agreement, enforceable by law, between two or more persons to do a certain work for
consideration.
Parties
Contractor
Contractee
There are different types of contract but this chapter is related to construction contract.
1- Contractor
The person who agrees to do certain work for someone is called contractor.
2- Contractee
The person for whom work is done is called Contractee.
3- Work Certified
Work approved by contractee’s architect/engineer/surveyor is called work certified
4- Work Uncertified
Work which has been completed but not approved by architect.
Types of Contract
Completed Contract
Contract in Process
1- Completed Contract
Contract Account

Material Contractee Account
Material issued from storeroom Closing material
Material delivered by supplier Material loss
Wages / Wages on site Material return to storeroom
Salaries
Foremen
Depreciation
Labor/Labor on site
Business charges
Establishment charges
Overhead charges
Hire of Plant
Profit & Loss A/c
2- Contract in Process
Contract Account

Material Work in Progress
Material issued from storeroom Work certified
Material delivered by supplier Work uncertified
Wages / Wages on site Closing material
Salaries Material loss
Foremen Material return to storeroom
Depreciation
Labor/Labor on site
Business charges
Establishment charges
Overhead charges
Hire of Plant
Profit c/d
Profit & loss A Profit b/d

Reserve for contingencies
Working
Profit & Loss A/c = or
% of work certified to contract price =
If up to 24% then no profit will be taken
If 25-49% then 1/3
If 50% and more then 2/3

Contractee A/C

Balance c/d Cash A/C
Work-in-Progress A/C

Contract A/C (work certified) Contract A/C (Reserve)
Contract A/C (work uncertified)
Balance Sheet
Liabilities Rs. Assets Rs.
Profit & Loss A/C Work in progress
Less: Loss of material Work certified ---
Loss of asset Work uncertified ---
Outstanding expenses ---
Less: Cash received ---
---
Less: Reserve for
Contingencies ---
Closing Material
Fixed Asset
Less: Depreciation
CHAPTER # 10
HIRE PURCHASE AND INSTALLMENT

PURNCHASE
1. Hire Purchases
It is a system of purchase of in which buyer take the possession of asset but amount is paid in
certain (fixed) number of installments. Possession of asset is transferred to the buyer but
ownership is not transferred until the last payment is made by the buyer. If the buyer is
unable to pay the installment the vendor has a right to repossessed the goods.
2. Hire Purchaser
Hire purchaser is a person who acquires (purchased) the possession of goods from the seller
under hire purchase agreement.
3. Hire Vendor
Hire vendor is a person who delivered the goods to the hire purchaser with intention to sell
the goods under hire purchase agreement.
4. Cash price
Cash price means the price at which the goods may be purchased by the hire purchaser for
immediate cash payment.
5. Down payment
Initial amount paid by the hire purchaser at the time of signing the hire purchase agreement.
6. Hire Purchase Price

Hire purchase price means the total amount payable by the hire purchaser under a hire
purchase agreement.
Hire purchase price = Cash Price + Interest
Or
Hire purchase price =( Installment × No. of installment) + Down payment
7. Hire purchase charges or Interest

It means the difference between hire purchase price and cash price
Interest = Hire purchase price – Cash price
8. Installment
Fixed amount paid after a fixed interval is called installment. Each installment included
principal amount (cash price) and interest.
9. Repossession
If hire purchase is unable to pay the installment then the hire vendor has a right to recover the
possession of the asset, it is call repossession.
10. Installment Purchase System

Under this system, possession and ownership is transferred to the buyer immediately but the
payment is made in certain number of installment. In this system if buyer is unable to pay the
installment the vendor has no right to repossess the goods.
JOURNAL ENTRIES UNDER HIRE PURCHASE SYSTEM
Hire Purchases Book Hire Vendor Book
Particulars Rs. Rs. Particulars Rs. Rs.

Asset Hire Purchaser
Hire Vendor H.P Sales
(Asset purchased on H.P system) (Goods sold on H.P system)
Hire Vendor Bank A/c
Bank A/c Hire Purchaser
(Being down payment paid) (Down payment received)
Interest Hire Purchaser
Hire Vendor Interest
(Interest become due) (Interest become due)
(1st installment paid) (1st installment received)
Depreciation
Asset A/c
(Depreciation charged)
Profit & Loss Interest
Interest Profit & Loss
Depreciation (Income transferred to PLS)
(Exp. Transferred to PLS A/c)
Ledger Accounts / Necessary Ledgers / Various Ledgers
Hire Purchased Book
1. Asset
2. Vendor
3. Interest
4. Depreciation
Hire Vendor Book
1. Hire Purchaser Account
Formula to Calculate Cash price and Amount of installment

This formula can be applies only if amount of installment is same otherwise back calculation
method will be used
Cash Price = + Down Payment
a = Amount of installment
i = Interest rate
n = Number of installments
Goods Repossessed
If hire purchaser does not pay the installment then the vendor has a right to repossessed the
goods.
Journal Entries for Repossession
Hire Purchases Book Hire Vendor Book
Hire Vendor A/c Goods repossessed

Profit & Loss Hire Purchaser
Asset A/c (Goods repossessed)
(Asset is repossessed by vendor)
Goods repossessed
Cash
(Repair of goods repossessed)
\
Cash
Goods repossessed
Profit & Loss
(Goods repossessed resold)
INSTALLMENT PURCHASE SYSTEM
JOURNAL ENTRIES UNDER INATALLMENT PURCHASE SYSTEM
Purchases Book Vendor Book

Asset Hire Purchaser
Interest Suspense A/c H.P Sales
Hire Vendor Interest Suspense
(Asset purchased on H.P system) (Goods sold on H.P system)
(Being down payment paid) (Down payment received)
Interest Interest Suspense A/c
Interest Suspense A/c Interest
(Interest become due) (Interest become due)
(1st installment paid) (1st installment received)
Depreciation
Asset A/c
(Depreciation charged)
Profit & Loss Interest
Interest Profit & Loss
Depreciation (Income transferred to PLS
(Exp. Transferred to PLS A/c) A/c)

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ADVANCED FINANCIAL ACCOUNTING

Rooh-Ullah Khan (M.Com)

THE STANDARD GIRLS COLLEGE SIALKOT

Journal Entries for Issuance of shares

(i) Applications received

Bank A/c………... Dr.

(ii) Shares issued / Allotted

Shares applications A/c……. Dr.

(iii) Excess money refunded

Shares applications A/c…….. Dr.

Bank A/c………………………. Dr.

Shares issued to promoters against preliminary expenses

Preliminary expenses…………… Dr.

ISSUANCE OF SHARE AT PREMIUM

(i) Applications received

Bank A/c…………….. Dr.

(ii) Shares issued

Shares Applications A/c…….. Dr.

(iii) Excess Money refunded

Shares applications A/c……. Dr.

Bank A/c………………………. Dr.

3. Shares issued to promoters against preliminary expenses

Preliminary expenses…………… Dr.

ISSUANCE OF SHARE AT DISCOUNT

(i) Applications received

Bank A/c…………….. Dr.

(ii) Shares issued

Shares Applications A/c…….. Dr.

(iii) Excess Money refunded

Shares applications A/c……. Dr.

Bank A/c………………………. Dr.

3. Shares issued to promoters against preliminary expenses

Preliminary expenses…………… Dr.

ISSUANCE OF SHARES OTHER THAN CASH

Journal entries for Purchase of Asset and Issuance of shares

Assets A/c……………. Dr.

2. Issuance of shares to vendor

Vendor A/c…………... Dr.

Vendor A/c…………... Dr.

Vendor A/c…………... Dr.

Journal Entries for Purchase of Running Business and Issuance of Shares

Assets A/c…………… Dr.

Vendor A/c…………... Dr.

Vendor A/c…………... Dr.

Vendor A/c…………... Dr.

BONUS SHARES AND RIGHT SHARES

Journal Entries for issuance of shares

1. Declaration of bonus shares

Reserve fund A/c……… Dr.

2. Issuance of Bonus shares (At par)

Bonus to shareholders A/c…. Dr.

3. Issuance of Bonus shares (At premium)

Bonus to shareholders A/c…. Dr.

Journal Entries for issuance of shares

1. Right shares offered

2. Amount Received from shareholders

Bank A/c……. Dr. (Offered price / par value)

3. Closing Sundry Shareholders A/c

Bank A/c…….. Dr.

Bank A/c……. Dr.

Bank A/c……………….. Dr.

ISSUANCE OF DEBENTURES OTHER THAN CASH

Journal Entries for Purchase of Running Business and Issuance of Debentures