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“ABC Company has expanded its operations and purchased some furniture for its recently rented show room situated in north of the city, which is expected to have useful life of five years. During the same year the company purchased furniture and other home accessories from renowned designers and sold it to customers from its show room.

You are required to identify the account heads in which the above purchases of furniture will be recorded and why?  You need to give valid reasons to support your answer.”

 

Need the solution for above.

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THIS MAY HELP YOU BUT FIND THE ANSWER YOURSELF COPYING WILL GET YOU ZERO MARKS.MAKE CHANGES IN YOUR ANSWER>

Special Journals

In a typical 2-column manual accounting system, transactions are entered as debits to one (or more) account and balancing credits to one (or more) account. If you consider some recurring transactions (such as sales) that will hopefully occur many times during an accounting cycle,all this double entry can add up to a lot of work. That's where special journals come into play.

Special journals are designed as a simple way to record a single type of frequently occurring transaction. The types of special journals depends on the nature of the business, but a few types are frequently seen in businesses that rely on manual accounting procedures:

  • Sales Journal
  • Cash Receipts Journal
  • Purchases Journal
  • Cash Payments Journal

Purchases Journal

The Purchases journal is used for recording credit purchases such as merchandise for resale to customers, business supplies, equipment, and other such purchases. (Cash purchases are not recorded here, they belong in the cash payments journal)

Purchases Journal Examples

In Figure A below, you'll see five credit purchase transactions posted to the Purchasing Journal. Note that each transaction reflects a credit to Accounts Payable, and a debit to one or more debit accounts depending on the transaction.

(To see Figure A, click the A button in the flash progran at the bottom of this page. This is where you'll find all the figures for this tutorial.) 

Posting from the Purchasing Journal

When you record credit purchases in your Purchasing Journal, the column values are posted like so:

  • Accounts Payable should be posted as a single credit total in your general ledger, as shown in Figure B.
  • Purchases recorded in the journal should be posted as a single debit total in your general ledger, as shown in Figure B.
  • Store Supplies and Office Supplies should be posted as single debit totals to your general ledger, as shown in Figure C.
  • All other transactions in the Other Accounts column should be posted individually in the general ledger, as shown in Figure D. (The posting reference column reflects the appropriate general ledger account number.)

Purchases Returns and Allowances

When merchandise purchased is subsequently returned, or the seller grants an adjustment to price, this entry is recorded in the general journal.

(Remember, the purchases journal is used for recording credit purchases only. Purchases returns are not credit purchases, and do not fit into any of the special journals, so they go in the general journal.)

The credit portion of the transaction is recorded in the Purchases Returns and Allowances account in the general journal, while the debit portion is recorded in the Accounts Payable account (as shown inFigure E below).

In the case of a non-merchandise return or allowance, Accounts Payable is credited. The account that was credited in the original transaction is debited (as shown in Figure E below).

Purchases Journal Illustrations

The Purchases Journal is a special journal designed to record a single type of frequently occurring transaction — in this case, credit purchases. This tutorial cover the concept of the purchases journal from the original transactions through the posting process.

bhai jaaan mujha nahi samajh a rahi accounting or na hi is question ki samajh ai ha. so plz tell me clearly ka is ka answer kia ho ga . i shall be very thank full to u.

nadeem 

same here

thanks :)

Solution:


ABC Company has expanded its operations and purchased some furniture for its recently rented show room situated in north of the city, which is expected to have useful life of five years. 
This furniture is not meant for resale; therefore, it should be capitalized and depreciated under "Property, Plant, and Equipment". 

During the same year the company purchased furniture and other home accessories from renowned designers and sold it to customers from its show room.
This furniture is meant for resale; therefore, it should be listed under "Inventory"

Moreover we can say that:
1. The furniture purchased for the rented show room will be recorded as “Fixed Assets” because it’s not for sale.
2. The furniture and other home accessories will be recorded as “Goods purchased” because these items are purchased for selling. Further we can say that these are "current assets" related to “Inventory items”.

Semester “Spring 2012”
“Financial Accounting (MGT101)”

This is to inform that Graded Discussion Board (GDB)

has been opened according to the following schedule.

Schedule
Opening Date and Time
April 25, 2011 At 12:01 A.M. (Mid-Night)
Closing Date and Time
April 27, 2011 At 11:59 P.M. (Mid-Night)
Note: No extra or bonus/grace period is available for attempting GBD.
“Discussion Question”
“ABC Company has expanded its operations and purchased some furniture for its recently rented show room situated in north of the city, which is expected to have useful life of five years. During the same year the company purchased furniture and other home accessories from renowned designers and sold it to customers from its show room.
You are required to identify the account heads in which the above purchases of furniture will be recorded and why? You need to give valid reasons to support your answer.”
Note: Your comments should not exceed 6-8 lines

Solution:


ABC Company has expanded its operations and purchased some furniture for its recently rented show room situated in north of the city, which is expected to have useful life of five years. 
This furniture is not meant for resale; therefore, it should be capitalized and depreciated under "Property, Plant, and Equipment". 

During the same year the company purchased furniture and other home accessories from renowned designers and sold it to customers from its show room.
This furniture is meant for resale; therefore, it should be listed under "Inventory"

My Advice to accountant of the organization regarding the depreciation of building
“ALFA–I” is, treated the depreciation of Building “ALFA–I” as indirect manufacturing
expenses
Reasons:
Depreciation of building is an indirect manufacturing expense because indirect
manufacturing expenses are the factory cost that is associated with manufacturing process
but it can not be directly identified as a part of the cost of Finished Goods.
· Depreciation of “ALFA-1” reported in “Indirect Costs or Factory Overheads”
Head of income statement
· Depreciation of “ALFA–II” reported in “Administration Expenses” Head of the
Income Statement.

GDB of MGT 101

1. The furniture purchased for the rented show room will be recorded as “Fixed Assets” because it’s not for sale.
2. The furniture and other home accessories will be recorded as “Goods purchased” because these items are purchased for selling. Further we can say that these are "current assets" related to “Inventory items”.

suppose, you are General Manager of Banana Computer Company (BCC) which is a large computer manufacturing company in Pakistan. BCC sells computer systems and peripherals in local and foreign markets. Major components used in assembling the computer systems are imported from foreign countries especially China.

In the coming federal budget, the government is deciding either to reduce the corporate income tax or increase the import tariffs to relief the local industry. Being the GM of BCC you are required to briefly explain the impact of each step on BCC business as local seller, importer and exporter. is ka soulation chihuahua

This is irrelevant Post M. Tariq Bhai :(

In 1st Transaction Furniture can't go in purchase account because purchases are only those things or material, purchased for selling purposes. 
It will go to Fixed assets to capitalized.

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