Question

What adjusting entries would you record for the following?

(a) Depreciation

(b) Discount on debtors

(c) Interest on capital

(d) Manager’s commission

Answer 1

(a)

Dr.			Cr.
Particulars	Amount	Particulars		Amount		Liabilities	Amount	Assets		Amount
Depreciation								Assets
									Less: Depreciation

(b)

Dr.			Cr.
Particulars	Amount	Particulars		Amount		Liabilities	Amount	Assets		Amount
Discount on Debtors								Debtors
									Less: New Provision
									Less: Further Bad Debts
									Less: Discount on Debtors

(c)

Dr.			Cr.
Particulars	Amount	Particulars		Amount		Liabilities		Amount	Assets		Amount
Interest on Capital						Capital
							Add: Interest on Capital

(d) Manager’s commission

There are two cases in manager’s commission.

Case 1: Manager’s commission based on profits before charging the manager’s commission.

Dr.			Cr.
Particulars	Amount	Particulars		Amount		Liabilities	Amount	Assets		Amount
Manager’s Commission						Outstanding Manager’s
						Commission

Case 2: Manager’s commission based on profits after charging the manager’s commission.

­

Dr.			Cr.
Particulars	Amount	Particulars		Amount		Liabilities	Amount	Assets		Amount
Net Profit before						Outstanding Manager's
Manager's Commission						Commission
O/S Manager's Commission
Net Profit after
Manager’s Commission