Thread: accounting questions to be done first
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Old Friday, January 04, 2013
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Quote:
Originally Posted by seher bano View Post
Seniors, please solve my problem regarding adjusting entries...
i am expert in making adjusting entries, but i through out my academic career studied meigs and meigs. adjusting entries in meigs and meigs and that of M.A Ghani ( in final accounts is different).

I am confused about the entries of both of these books.

e.g... we have paid rent in advance(as per meigs and meigs) at the time of financial statments, our entries would be this:

Rent expence(dr)................... Rs. 1000
Prepaid Rent(cr).................................Rs. 1000.

However, as per M.A ghani( in final accouts) our entries would be this:

Prepaid Rent A/c(dr)......................Rs. 1000
To Rent A/c(cr).............................Rs. 1000
Please guide in this regard. There are many other entries of the same kind.

when prepaid rent was paid last year ..entry was

Prepaid Rent ..............Rs 1000
........Cash .........................Rs 1000

This Year adjustment entry would be

Rent A/C ..................Rs 1000
.........Prepaid rent...................Rs 1000

Rent A/c is Rent expense for this year, which will go in income statement...and Prepaid rent was assets of last year, which would be Zero this year....
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seher bano (Friday, January 04, 2013)