Question

Give journal entry for:

Expenses incurred on installation of plant.

• A. Profit & loss A/c Dr.
  To Bank A/c
• B. Plant A/c Dr.
  To Bank A/c
• C. Bank A/c Dr.
  To Profit & loss A/c
• D. Bank A/c Dr.
  To Plant A/c

Answer 1

Answer: (B)

Plant A/c Dr.

To Bank A/c
All the incidental expense incurred for purchase of an asset should be debited to the respective asset as these are capital expenditure. This includes all such expense incurred on the asset to make the same as "put to use".

Expense incurred on installation of a plant of Rs.4500, below journal entry will be passed:

Plant A/c Dr.

To Bank A/c