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32.4 Which one of the following journal entries is correct according to its narrative?
Mr Smith personal accountDEBIT
To Directors remuneration( credit )Bonus allocated to account of managing director (Mr Smith)
B
Purchases dr 14000
Wages dr 24000
To Repairs to buildings cr 38000
(Transferring cost of repairs to buildings carried out by company’s own employees, using materials from inventory.)
C
Sales returns 2800
Purchases returns 2800
(Correction of error: sales returns incorrectly debited to purchases returns account)
Suspense account 20000
To Rent receivable 10000
To rent payable 10000Correction of error: rent received credited in error to rent payable account.
What is the correct journal entry for A and B
For A we are paying bonus so to Mr Smith so Mr Smith alc dr
To remuneration
Bcz we dr the personal alc ,dr the receiver ,cr the giver and for b while correcting why are wages and purchases creditedFor A they should debit directors remuneration and credit the personal account.
For B they should debit repairs and credit both purchases and wages.
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Sir for a we are paying to director so directors alc should be debited
And for b we have credited wages and repairs bcz building repairs are financed from employees wages and companys inventory I.e purchases so they wages and purchases are reducing so crFor A, they are not paying anything. They are showing it as owing to the director and so credit the directors account (and debit the expense account of directors remuneration).
For B what you have written is correct.
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Thank u so much sir really appreciate ur efforts
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