While talking, laughing, laughing, thinking, thinking, we
have reached the last topic.
Journal entries.
Let's put them in a little more place and the main thing
that is the importance of the chapter, which matters a lot,
is now slowly increasing.
We are walking towards them.
Coming to the general entries means we have reached the
core of the chapter.
We have come to the main part of the chapter.
Look, we have to do our general entries from time to time.
I will tell you.
Take this.
General entries have to be done from time to time.
Like, first of all, we buy machinery.
Sir, why are you walking with machinery everywhere?
I have to take the example of one PP.
I am walking with machinery everywhere.
The same thing applies to furniture, building, every PP.
Don't worry.
So, first of all, I have to do the entry here.
While buying machinery.
Yes, sir, absolutely right.
Then what happens?
Then we use machinery all year round.
And on the last day of the year, March 31, 2021, we apply
depreciation.
So, at that time, we have to pass the entry of depreciation.
Absolutely right.
There is no problem, sir.
Okay, sir.
Then what happens?
After some time, it is possible that we keep the entire use
with us.
Then the entry of depreciation will continue in the coming
years.
But it is possible that we sell it in between.
Then we will have to do the entry of the sale.
Absolutely right.
And at the time of the sale, it may be a profit for us.
Or it may be a loss for us.
Profit and loss on sale.
It may be a profit at the time of the sale.
Or it may be a loss at the time of the sale.
Profit and loss on sale.
We have to do the entry of that.
So, first of all, we have to do the entry of buying
machinery.
We have to do the entry of depreciation.
We have to do the entry of sale.
And we have to do the entry of profit or loss on sale.
Profit or loss on sale.
Come on.
Let's see how these entries will be.
On purchase of machinery.
First of all, when we buy machinery, what will we do?
Machinery account debit to bank account.
With cost price of machinery.
Because look.
Debit what comes in.
You have heard this rule.
Debit what comes in.
Whatever we get, we debit it.
Debit what comes in.
We bought machinery, so machinery came.
That's why we will debit the machinery account.
And wherever the payment is coming from, we credit that
account.
If we are paying in cash, then we credit the cash account.
And if money is being paid from the bank, then we credit
the bank account.
Credit bank account.
Okay, sir.
Okay, okay.
After buying machinery, we keep using it in the year.
And at the end of the year, we put depreciation.
We charge depreciation.
Now listen.
Those who know a little or have studied a little.
Do you know what they will say?
They would say.
We have heard the entry of depreciation.
Depreciation account, debit to machinery account.
And we know this entry.
And we don't need to teach much.
So let me tell you one thing.
You have a lot of information.
You have a lot of information, my dear.
This can also be the entry of depreciation.
Depreciation account, debit to machinery account.
And this can also be the entry of depreciation.
Depreciation account, debit to.
Provision for depreciation account.
Never give the answer directly to any person asking you the
entry of depreciation.
Never give the answer directly to any person asking you the
answer of depreciation.
Never answer directly that this will be the entry of
depreciation.
Depreciation account, debit to machinery account.
Before that, ask what is the case?
There can be two cases of depreciation entry.
Depreciation entry depends on which case is being filed.
Case number 1, no provision for depreciation account is
opened.
And case number 2, provision for depreciation account is
opened.
If any account called provision for depreciation is not
being opened,
Entry will be done properly and easily,
But if the provision for deprecation code is available then
Entry will be due to depreciation account debit to
provision for depreciation account.
It means instead of crediting to the machinery account,
they will credits provision for depreciation account.
Sir, what is provision for depreciation account?
What the hell is this provision for depreciation account?
Now I will tell you in detail.
Listen carefully.
Think carefully.
It is very important and practical thing.
I have removed the watch to explain it.
Right? Right sir.
See this.
A while ago I have shown you that book value of machinery
decreases as we apply depreciation.
As we apply depreciation, book value of machinery decreases.
4, 10, then 3, 20, then 2, 30, then 1, 40, then 50.
This is the effect of depreciation.
This is not the meaning of depreciation.
What is this?
This is the effect of depreciation.
That it decreases the value of the asset.
If your organization wants that in the balance sheet, in
the balance sheet, machinery of 5 lakhs should always be of
5 lakhs until it is sold.
They want that machinery should decrease from 5 lakhs to 4,
10, 3, 20, 2, 30, 1, 40, 50.
It was of 5 lakhs.
It is of 5 lakhs.
And it should always be of 5 lakhs.
It should be shown on the same value in the balance sheet.
5 lakhs.
So sir, this is a very wrong thing.
Then why are you teaching us this whole topic of
depreciation?
Then you have not applied depreciation.
You see, if you apply depreciation, the value will fall
down.
And if you are saying that no, no, the value should be of 5
lakhs, it means that you are trying to say that you don't
have to apply depreciation.
Then the matching principle of the accounts will be
violated.
Then it will be a very big mistake.
The entire accounting will be ruined.
This is what I am trying to explain.
Listen to the whole thing.
Listen, be patient.
I want to say that you have to create such a situation.
You have to achieve such a target that depreciation is also
applied.
And in the balance sheet, the value of the machinery should
not fall below.
Even if the snake dies, and the stick does not break, you
have to do something like this.
Even if the snake dies, and the stick does not break, you
have to do something like this, friends.
Okay, this is the thing, sir.
Yes.
Sir, if depreciation is applied, then the value will fall
below.
How to achieve this objective?
That depreciation is also applied and the value of the
machinery should not fall below.
This is how it is achieved.
This is the entry that helps in achieving this objective.
Depreciation account debit to provision for depreciation
account.
If you do not credit the machinery account, then how will
the value fall below?
When you credit the machinery account in the above case,
that is why the value of the machinery asset falls below.
If you do not credit it, you will open a new account
instead of it.
Provision for Depreciation Account
Then the thing will be done.
The value of the machinery will not fall below.
And you are debiting the depreciation.
You are debiting the depreciation.
So the objective is achieved.
Depreciation is also applied.
Depreciation account is also debited.
And provision for depreciation account is credited.
Depreciation account is also debited.
And provision for depreciation account is also credited.
That means machinery is not credited.
Depreciation is also applied.
Machinery value is saved from falling below.
You understand it like this.
Machinery was shouting.
It was shouting.
It was saying that someone save me from depreciation.
Someone save me from depreciation.
Depreciation comes, credits me and drops my value below.
But my owner wants that my value should not fall below in
the balance sheet.
So someone please save me from depreciation.
Someone save me from being credited.
In this, a voice comes from behind.
Whose? Provision for Depreciation Account.
He says, machinery, machinery, I am there.
I am going to save you from the powers of depreciation.
I am going to prevent you from the hitting of depreciation.
I will be credited instead of you.
Provision for Depreciation Account is the old lover of
machinery.
He loves machinery a lot.
He says, I will be credited instead of you.
Don't worry.
In today's world, instead of someone else's account, if
someone is credited, where do you get such accounts?
Say, Provision for Depreciation Account.
Jai.
And friends, friends, friends, brothers and their sisters.
P&L Account Debit to Depreciation Account.
This entry will come together in both the cases.
This is the entry to transfer depreciation to P&L.
So don't leave the depreciation empty.
and transfer it to P&L as well even if there is any case
depreciation is directly hitting the machinery organization
or company does not want that the value of machinery is
always 5 lakhs they say reducing will be seen in our
balance sheet we do not have any problem so they will enter
deption to machinery and P&L to depreciation but if you
want the value of machinery save from falling you want to
maintain 5 lakhs as it is in books then the entry will be
deption to provision for deption and P&L
depreciation do you know the fun part? the fun part is when
you enter teleprime when you run teleprime and you will
pass these entries in teleprime do you know what will
happen? as soon as you create an account called
depreciation by pressing alt c and you will take its
heading as indirect expense because depreciation is an
indirect expense so it will automatically send it to P&L
teleprime so P&L to deption entry will be sent to you by
teleprime automatically because you know you have seen so
teleprime that you just do general entry and laser, trial
balance, trading P&L, balance sheet who does all this work?
teleprime does all this work that's what I am saying
teleprime will make all this do not worry about that
teleprime will make all this
ok sir, no problem no problem so P&L to depreciation entry
teleprime will do it let's write here automatic
automatically
passed by teleprime
automatically passed by teleprime
let's move ahead now what will be the entry in sale case?
when we will do sale of machinery on sale of machinery see
there are 4 cases
I will tell you full form of PD and full form of AD
PD means here provision for depreciation that account which
comes to save machinery from depreciation old lover of
machinery provision for depreciation and AD full form of AD
is asset disposal full form of AD is asset disposal account
PD provision for depreciation account AD asset disposal
account first case company did not make no PD means
provision for depreciation account when they make provision
for depreciation account? The company said that we don't
have any problem
We don't want to keep machinery at 5 lakhs
Even if it goes down, there will be no problem
So they didn't make PD
And asset disposal is also not present
Sir, what is asset disposal?
We will see when it comes
If it is not present, then leave it
So in this case, the entry will be
Bank Account Debit to Machinery Account
No PD, No AD
Entry will be Bank Account Debit to Machinery Account
Tell me the entry to buy
Entry to buy machinery
You have entered two minutes ago
Sir, machinery account debit to bank account
See this
Machinery account debit to bank account
So the entry to sell will be
Bank Account Debit to Machinery Account
Entry to sell will be
Bank Account Debit to Machinery Account
Okay Entry will be reversed
Sale price
Okay This is the second case
What else can happen at the time of sale
AD has not come yet
Asset disposal is not there yet
But the company passed the entry of depreciation
So they opened a provision for depreciation account
Means Depreciation Until the machinery was sold
Depreciation Provision for depreciation account
He had saved the machinery account
Depreciation The machinery was getting credit
Depreciation Who Who Provision for depreciation account
But today
See the situation today
The same machinery is leaving the provision
Sale means it is going
And we
Like in the movie
You are going, you are not going
Can't stop
Organization has decided
If you want to sell the machinery
Then you have to sell the machinery
Now there is no need
To buy any other updated machinery
Or its life is not worth it
To do good production
The time has come to sell it
So now the provision is getting angry
Provision is getting angry
Provision is saying
Machinery Because of you I was still tolerating depreciation
I was sacrificing myself for you
Today you are leaving me
Provision is getting angry
And provision is not a soft lover
That he says okay
Go, I forgive you, you be happy in your life
I will see myself
Provision is not a soft lover
He will take revenge
Provision is a
Villain type, not a villain type lover
Hmm I don't know which type of lover should be said
He will take revenge
Okay So provision will say
Machinery I saved you from getting credit
And I was getting credit instead of you
Today when you are leaving me
So it's my time to get debit
I will get debit
Provision for depreciation
Account debit
And I will credit you
To machinery account
The machinery that was still getting credit
Instead of getting credit
Provision was getting credit
Provision is saying that I will get debit
Now you will get credit
Provision for depreciation account
Debit to machinery account
Whatever depreciation has been applied so far
This entry will be passed with the same amount
Sir, now this is a joke
Tell me logically
Listen logically
Why do you need a provision account
To get machinery out of depreciation
So that the machinery account does not have to be credited
So that the value of machinery does not fall in the balance
sheet
But today
You are selling machinery
Now it will not remain in the balance sheet
So what is the meaning of maintaining its value at 5 lakhs
There is no question left
The thing that is not going
We don't have to maintain its value
It will disappear from the balance sheet
So what is the need of a provision account
Provision saves machinery from debt
If machinery is going, then the need for provision is also
over
So as much as you have credited provision
By applying depreciation in the last few years
In this entry
Provision account debit to provision for debtion account
Debit the provision account with the same amount
And finish it
The provision account will be zero after debiting
Because we don't need it
And credit the machinery account
Because machinery is going
And this entry will definitely happen
If money comes, then bank account debit to machinery
This entry will definitely happen
So this is the entry for the exchange of provision
And this is the entry to get money
Provision for debtion account debit to machinery
Next case
Provision was not made
But asset disposal is to be made
Now listen
What is asset disposal
Asset disposal is such an account
My dear friends
Which is opened during the sale of machinery
Which is opened while selling machinery
In asset disposal account
We transfer the machinery
We write the amount of sale here
And while selling
We write the profit or loss here
We write the loss here and the profit here
There is an account
Asset disposal account
In which the sale of machinery
And related profit or loss is recorded
Means when machinery is sold
When machinery is sold
Then to maintain the book according to its sale
We make an account
Which is called asset disposal account
We put the value of machinery in it
In how much it is sold, we compare it
Book value with selling price and then
We see the profit or loss and write it
The account book during the sale of machinery
How much was it
How much was sold, profit or loss
The name of the account to be maintained at one place
Is asset disposal account
The name of the account to be maintained at one place
Is asset disposal account
So what will happen
We will put the machinery in the asset disposal account
Asset disposal account debit to machinery
And we will sell it there
Bank account debit to asset disposal account
Bank account debit to
Asset disposal account
Now I have taught you this entry
Asset disposal to machinery by bank
Means how much was the machinery and how much did it sell
On that profit or loss
We will see in a while
So you understand it like this
You understand it like this
You picked up the machinery
You put a new account in the asset disposal
And you are saying that we will sell it here
And sold it from there
What is the entry of sale
In the first case
Bank account debit to machinery
The third case in this entry
If you see the combined effect of these two entries
Bank account debit to machinery
Asset disposal account
Bank account debit
And machinery account credit
Bank account debit to machinery
The effect is very same
Which is of the normal entry of sale
The effect is very same that we give birth to an account in
the middle and do the account book there that's why once we
give birth to the asset disposal to machinery asset
disposal account and then bank to asset disposal from there
we sell the machinery this is the thing this is the thing
alright the effect will be the same just for the account
book in a small side we opened a temporary account
next thing my dear friends
there was provision fourth and last case there was provision
to save machinery from depreciation provision account was
made till now and today the company wants when machinery is
being sold for its account book separate asset disposal
account is also made which the company didn't want in first
and second case no AD today the company wants that in third
and fourth case that see the account book for machinery
sale show in separate account and provision was also made
provision was also made so see as soon as we open asset
disposal account so we enter
fourth we opened asset disposal account debit to machinery
and bank account debit to asset disposal this we have seen
in C case this we have seen in C Case asset disposal
account debit to machinery and bank data disposal now in C
case provision was not made in fourth provision was also
made so when provision is made when provision was made so
provision comes to take revenge so there will be another
entry for the revenge of provision if there was provision
then he tolerated the brunt of
then today he will take revenge from machinery so there
will be return entry sir, my Kings
Listen, you put the machinery in the asset disposal, the
machinery reached the asset disposal and the provision, the
provision was saying that you are leaving me, I will take
revenge, I will do this, I will do that.
The machinery reached the asset disposal, the provision
called the machinery, hello hello, I want to hit you, I
want to take revenge from you, where are you?
The machinery is saying that your provision, I am sitting
in the house of asset disposal, if you have the courage,
you can do anything, put the machinery, no one can come
there.
Now the provision reached there, the provision went there
and hit the machinery, provision for deposition account
debit to asset disposal account, this is the thing.
Sir, the machinery should not have been told that he is
there, we are talking in the imagination, in reality, this
is the game of entries, if the machinery account has gone
to asset disposal, then the provision will also be closed
in the same account.
Okay, this is the entry of the sale, we have four cases,
remember it very well.
For profit and loss on sale, we have reached the last thing
that when there is a profit, what will be the entry at the
time of sale and if there is a loss, what will be the entry
at the time of sale?
If there is a profit, then the P&L account will be
credited, and if there is a loss, then the P&L account will
be debited, and if there is no asset disposal account, then
machinery will come at the other place.
And if the asset disposal account was opened, then the
asset disposal account will come to complete the double
entry, this is it, first see that if there is a profit,
then the P&L account will be credited.
What will be the debit? If there is no asset disposal
account, then the machinery account, if there is an asset
disposal account, then the asset disposal account, if there
is a loss on sale, then the P&L account will be debited,
and what will be the credit?
If there is no asset disposal account, then the machinery
account will be credited, and if there is an asset disposal
account, then the asset disposal account will be credited.
Now you are making that account, if you want to keep the
whole account, then the P&L entry will also be there, you
are making an account called asset disposal for the entire
account of the sale, then the entire account will be there,
what was the sale, what was the profit, what was the loss,
everything will be there.
There are three oaths, oath number 1, oath number 2, oath
number 3, say by eating oath, say by smiling, say yes, say
yes, I love you, just don't say this, what to say?
To say that we will keep these three things in mind, close
your eyes, take your hand forward and eat three oaths back
to back with me, like Ekta Kapoor's cereal, three oaths
back to back, the first oath, remember to charge
depreciation from the first day of year up to the date of
sale.
You bought a machinery on April 1, 2020, the first year
ended on May 31, 2021, the second year started on April 1,
2021, ended on May 31, 2022, then April 1, 2022 to May 31,
2023, its life was 5 years, April 1, 2023 to May 31, 2024,
and then April 1, 2024 to May 31, 2025.
You have entered the first year to buy machinery, you have
entered the depreciation here, you have entered the
depreciation here, and then in the middle of the third
year, for example, you sold it on September 1, September 1,
2022.
So friends, remember, from April 1, 2022, that is, from the
first day of the year to the date of sale, that is,
September 1, 2022, depreciation will also be applied for
these 6 months.
You had this machinery for 6 months, so don't forget to put
depreciation on the machinery for these 6 months.
What do children do? They think that depreciation is
applied on the last day of the year, and we sold it on
September 1, so we start entering the sale directly, we
take out the profit loss on the sale, then we enter it
accordingly.
Although they forget that you have to apply depreciation
from the first day of the year to the date of sale.
Don't forget the P&L to Deption entry, now this oath
becomes irrelevant, because teleprime does it by itself, so
sir, why have you written it, I will tell you why it is
written, tomorrow a small child will ask you.
What do I teach you? I teach you that you know the concept,
your office work is going on, and the third thing is that
people should also see your knowledge.
Small boys and girls in the street, if they hold your hand
and ask what is the entry of depreciation, and you had told
them earlier that there is a Deption to Machinery, so first
I corrected that mistake of yours.
Ask them again, there can be two entries of Deption, so
first tell the case whether there is a provision or not.
If there is a provision, then the entry will be Deption to
Provision, if not, then the entry will be Deption to
Machinery.
And at the same time, you have to show off that there is
one more entry, in both the cases, no matter which case it
is, one more entry comes.
P&L account debit to depreciation, the entry to transfer
the depreciation to P&L, P&L account debit to depreciation
account.
P&L account will be replaced by a statement of profit or
loss in case of companies.
I have told you about the forms of business, one
individual, one sole proprietor, one partnership firm, more
than two people do business together.
And then our biggest form of business, biggest organization
company, biggest organization is company.
Now friends, do you know what happens? Individual and
partnership firms make P&L account, but companies do not
make P&L account.
Companies change the name of P&L account to SPL, Statement
of Profit or Loss.
It is exactly the same.
The thing is exactly the same.
But on companies, Companies Act 2013 is applied and it says
that we will keep P&L account as Statement of Profit or
Loss.
We will make P&L like a statement.
So the name changes, the thing is the same.
Everything is the same from inside, only the name changes.
So keep these three things in mind.
First thing, do not forget the depreciation from the first
day of the year to the date of sale.
Do not forget to show the entry of P&L to Deption.
And instead of P&L account, SPL will come if you are
working in a company.
You are not accounting for any individual or partnership
firm.
You are accounting for a company in teleprime.
Friends, friends, friends, depreciation ends.
All entries end.
All topics end.
According to me, the knowledge I gave you in these classes
is the complete knowledge of depreciation conceptually.
I told you the meaning, I told you the method, I told you
the general entries.
I told you what happens if the method changes.
What happens if life is revised, revolution happens.
And some important things to keep in mind separately.
Everything was told to you, everything will be useful to
you.
The coming classes that will be ours will be towards the
practical approach.
Now we will get you entries in teleprime.
All entries will be made in teleprime.
Purchase, adaption, sale, P&L, asset disposal, everything.
Everything.
We will make all the entries and show you.
We will make cases and do solutions in front of you.
Then we will meet you in the coming lectures.
Wait, the coming portion is going to be very interesting.
Thank you for now, bye bye and take care.
those two.