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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.
Initially, 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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