Buildings account DR (87000)
Purchase account CR (38000)
Wages account CR(49000)
Labour and materials used in construction of extension to factory...
Hi Mr John...Could you explain these entries? Many thanks.
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Journal entries
10y ago#1Initially, purchases and wages would have been debited to the relevant accounts because they are usually expenses.
Because some of them were used to build a factory, those costs should be recorded as a non-current asset and not as expenses.
So remove them from expenses by crediting purchases and wages, and record them as a non-current asset instead by debiting Buildings.
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