While talking, laughing, laughing, laughing, thinking, we
have reached the last topic, the journal entries.
Put them in a little more place and the main thing is that
the importance of the chapter which matters a lot, is now
slowly increasing.
We are moving towards them.
Coming to the journal entries means that we have reached
the core of the chapter.
We have come to the main part of the chapter.
Look, we have to do our journal entries from time to time.
I will tell you.
Take this.
Journal entries have to be done from time to time.
Like, first of all, we buy machinery.
Sir, why are you taking machinery everywhere?
We have to take the example of one PP.
I am taking 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, on March 31, 2021, we apply depreciation.
So, at that time, we have to pass the depreciation entry.
Absolutely right.
There is no problem, sir.
Okay? Okay, sir.
Then? 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 have machinery.
We bought machinery.
So, 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.
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.
The people 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.
Whenever anyone asks you the entry of depreciation.
Don't answer him directly.
Whenever anyone asks you the entry of depreciation.
Don't answer him directly.
Depreciation account, debit to machinery account.
Before that, ask from.
2 cases of depreciation entry can be there.
Entry of depreciation depends on which case you are filing.
Case no.1, no provision for depreciation account is opened.
Case no.2, provision for depreciation account is opened.
If any provision for depreciation account is not being
opened, then the entry of depreciation account, debit to
machinery account will be easily and lovingly.
But if provision for depreciation account is being opened,
then the entry will be depreciation account, debit to
provision for depreciation account.
There is a provision for depreciation account in this case
which means instead of crediting to the machinery account,
we will credit this provision for depreciation account.
What exactly is provision for depreciation account? what
the hell is this the provision for depreciation account see
friends, now I will tell you in detail listen very
carefully, listen with a lot of thought and it is very
important and practical thing
I even took off the watch to explain it right, right sir
see this just a while ago I showed you that the book value
of machinery is decreasing as soon as we apply depreciation
as soon as we apply depreciation the 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 this is the effect of
depreciation that it decreases the value of the asset if
your organization wants that in the balance
in the balance sheet
machinery worth 5 lakh should always be worth 5 lakh until
it is not baked
they want that machinery decreases from 5 lakh to 4, 10
then 3, 20 then 2, 30 then 1, 40
then 50 it was worth 5 lakh it is worth 5 lakh and it
should always be worth 5 lakh it should be seen on the same
value in the balance sheet 5 lakh 5 lakh 5 lakh this is a
very wrong thing then why are you teaching us this topic of
depreciation then you have not applied depreciation if you
apply depreciation then the value will fall and if you are
saying that the value should be 5 lakh then you are saying
that you don't have to apply depreciation then the matching
principle of accounts will be
the whole accounting will be violated 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 some conditions you
have to achieve some target that depreciation should be
applied and in the balance sheet the value of machinery
should not fall down snake should die and the stick should
not break you have to do something like this snake should
die and the stick should 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 how to
achieve this objective that
should be applied and the value of machinery should not
fall this is how it is achieved this is the entry which
helps to achieve this goal depreciation account to
provision for depreciation account if you don't credit
machinery account then how will the value fall when you
credit machinery account in the case above then only the
value of machinery asset falls if you don't credit it then
you will create a new account provision for deption account
then the value of machinery will not fall and you
debiting depreciation so the objective is achieved
depreciation account and depreciation account has been
debugged and provisioning for depreciation account has been
credited depreciation account has been debugged and
prohibition for depreciation account has also been credited
means you did not credit the machinery so have given
depreciation and the value of machinery has also been saved
from falling if you understand like this machinery was
screaming was calling someone to save me from
someone help me save me from depreciation, depreciation
comes and credits me and lowers my value.
But my boss wants that my value should not fall in the
balance sheet.
So someone please save me from depreciation, someone save
me from getting credit.
In the meantime, a voice comes from behind, whose?
Provision for depreciation account.
He says, machinery, machinery, I am there.
I am gonna save you from the powers of depreciation.
I am gonna prevent you from the hitting of depreciation.
I will get credit instead of you.
Provision for depreciation account is the old lover of
machinery.
He loves machinery a lot.
He says, credit instead of you.
I will get credit, don't worry.
In today's world, instead of someone else's account, if
someone gets credit, 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 after applying it.
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 made no PD means
provision for depreciation account when do you make
provision for depreciation account? company said we don't
have any problem we don't have to keep machinery at 5 lakh
even if it goes down no problem they didn't made PD and
asset disposal is also not there what is asset disposal? we
will see when it comes in this case, entry will be bank
account debit to machinery account no PD, no AD
will be bank account debit to machinery account sir, one
more thing when you do your technique sir, machinery
account debit to bank account sir machinery account debit
to bank account you say, entry will be bank account debit
to machinery account sell-off entry will be bank account
debit to machinery account bank account debit to machinery
account machinery account is reverse sell price will be
reverse ok 2nd Case
What else could have happened during the sale?
AD has not come yet
Asset disposal is not there yet
But the company had passed the depreciation entry
So they had opened a provision for depreciation account
Means The depreciation amount
Till now
Till the machinery was sold
The depreciation amount was borne by the provision for
depreciation account
He had saved the machinery account
He was getting credit for the depreciation amount
He was bearing the depreciation amount
Say who?
Provision for depreciation account
But today
Look at the situation today
The same machinery is leaving the provision
Sale means it is leaving
And we can't stop it by saying
You are going, you are not going
It is going
The organization has decided
If you want to sell the machinery, then you have to sell
the machinery
Now it is not needed
You have to buy another updated machinery
Or its life is not capable of doing good production
Whatever it is, it is time to sell it
So now the provision is getting angry
The provision is getting angry
The provision is saying
Machinery, machinery
Because of you, I was still bearing the depreciation amount
For you, I was sacrificing myself
I was crediting myself
Today you are leaving me
Provision is getting angry
And provision is not a soft lover
That he says, okay, I forgive you
You stay happy in your life
I will take care of myself
Whatever will happen
Provision is not a soft lover
He will take revenge
Provision is a villain type
Not a villain type lover
I don't know which type of lover should be said
He will take revenge
Provision will take revenge
Okay So provision will say
Machinery, machinery
I saved you from getting credit
And instead of you, I was getting credit
Till now
Today when you are leaving me
So it is 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
Was getting saved from getting credit
Instead of that, provision was getting credit
So provision is saying
I will get debit
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 a little logically
What does this entry want to say logically
Listen logically
Why do you need a provision account?
To save machinery from depreciation
So that you don't have to create a machinery account
So that the value of machinery
Does not fall below the balance sheet
Keep showing intact
Keep looking the same
Five times five
But today
So you are selling machinery
Now it will not remain in the balance sheet
So what is the meaning of maintaining its value at five
lakhs
So there is no question left
The thing that is not going
The thing that is going
We don't have to maintain its value
It will be finished
Zero will disappear from the balance sheet
So what is the need for a provision account?
Provision saves machinery from depreciation
If machinery is going
Then the need for provision is also over
So whatever you have credited provision so far
By applying depreciation in the last few years
In this entry
Depreciation account debit
To provision for depreciation account
With the same amount
Debit the provision account and finish it
The provision account will be zero after debiting
Because we don't need it now
And also credit the machinery account
Because machinery is going
Credit the machinery account
Machinery is going now
Okay okay
And this entry will be there
If money comes
Bank account debit to machinery
This entry will be there
So this is the entry in return of provision
And this is the entry to get money
Provision for depreciation account
Debit to machinery
And bank account debit to machinery
Okay Okay sir
Next case
Provision was not made
But asset disposal has 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
Then whatever is sold
We write it here
While selling
Whatever is profit or loss
We write it here
If loss is there, we write it here
If profit is there, we write it here
There is an account
Asset disposal account
In which machinery sale
And related to it
Profit or loss is recorded
Means When machinery account is sold
When machinery is sold
So to maintain the book according to its sale
We make an account
Whose name is 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 profit or loss
We see and write
The book of accounts during the machinery sale
How much was sold
Profit or loss
In one place
The name of the account to be maintained is
Asset disposal account
In one place
The name of the account to be maintained is
Asset disposal account
Okay sir
So what will happen
We will pick up the machinery
And put it in 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 in how much it was sold
On it
Profit or loss
We will see in a while
Entry of profit or loss
We will see in a while
Okay sir
So You understand it like this
You understand it like this
You picked up the machinery
And put a new account in asset disposal
And you are saying
We will sell it here
And sold it from there
Okay What is the entry of sale
What is the entry of sale
You tell
In normal case
In the first case tell
Entry of sale
Bank account
Debit to machinery
So in this entry
The third case
If you see the combined effect of these two entries
Then this is coming
Bank account
Debit to machinery account
This is coming
Asset disposal account
Debit once
And asset disposal account
Credit once
So the effect is the same
You see
Bank account
Debit And machinery account
Credit Bank account
Debit to machinery account
The effect is exactly the same
What is the normal entry of the sale
The effect is exactly the same
Yes that's it 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 this
the asset disposal account debit to machinery and bank
account debit to asset disposal same thing which we saw in
c case same thing which we saw in c case asset disposal
account debit to machinery and bank to asset disposal in c
case there was not a provision but in fourth provision was
also being made so when provision is made when provision
was made so provision came to take revenge so entry for
provisional revenge will come if there was provision so
they tolerated depreciation so today they
take revenge from machinery so the entry for revenge will
come sir entry for the revenge is
Provision for debt sharing account debt to machinery
This entry will come.
Provision for deptian lockout debit no
Provision for debt share account debit too asset disposal
This entry will come to asset disposal.
why? As you have put machinery in debt sharing account
Then Provision has to go to get back
Provision for debt sharing account debt to asset disposal
account
The provision has to go there to take back
This is it, sir. This is it, not this.
Oh, listen.
You put the machinery in the asset disposal.
The machinery reached the asset disposal's house.
And the provision...
The provision was saying, you are leaving me.
I will take revenge. I will do this, I will do that.
The machinery reached the asset disposal's house.
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, your damn provision.
I am sitting happily in the asset disposal's house.
If you have the guts, you can do anything.
The machinery thought that 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 it.
Sir, the machinery should not have been told that he is
there.
We are talking in our imagination.
In reality, this is the game of entries.
If the machinery's account has gone to the asset disposal,
then the provision will also be closed in that account.
Okay? Okay, sir.
Okay.
These are the entries of the sale.
We have four cases.
Remember it very well, friend.
For profit and loss on sale.
We have reached the last point.
What will be the entry when there is a profit?
At the time of sale.
And if there is a loss, then what will be the entry at the
time of sale?
Look, it is a simple thing.
Simple thing, no nonsense.
Drink Sprite, be clear.
If there is a profit, then P&L account will be credited.
Absolutely right, sir.
If there is a loss, then P&L account will be debit.
Okay.
And if there is not an asset disposal account.
Then machinery will come on other site.
If the asset disposal account is not maintained.
To complete the double entry.
And if the asset disposal account was opened.
So to complete the double entry.
The asset disposal account will come.
To complete the double entry.
The asset disposal account will come.
This is it.
First see.
If there is a profit, then P&L account will be credited.
If there is no asset disposal bank then machinery will be
credit
If it has asset disposal account then also asset disposal
account
Same if there is loss on sale then P&L account will be Debit
and what will be the credit
If there is no asset disposal bank and if there is asset
disposal bank then What will be the credit?
Asset Disposal Account
Ok ok
You are making that account
To have full account asset disposal and there will be entry
for profit and loss
You are making a disposal account for all the accounts of
the sale So all the accounts of the sale will be there
How much was the sale, what was the profit, what was the
loss, everything will be there
There are 3 promises
Promise number 1
Promise number 2
Promise number 3
Swear and say
Smile and say
Say yes, say yes
I love you
That's all you have to say What do you have to say, sir?
You have to say that we will keep these 3 promises in mind
Close your eyes, extend your hands and swear 3 times back
to back
Dish, dish, dish Like Ekta Kapoor's serial 3 promises back
to back
First promise
Remember to charge depreciation from first day of year up
to the date of sale
Sir, we didn't understand this
I will explain it to you now
You bought a machinery on 1st April 2020
The first year ended on 31st May 2021
The second year started on 1st April 2021
Ended on 31st May 2022
Then from 1st April 2022 to 31st May 2023
It had a life span of 5 years
From 1st April 2023 to 31st May 2024
And then from 1st April 2024 to 31st May 2025
You entered the first year to buy machinery
You entered depreciation here
And then in the middle of the third year
For example, here on 1st September
On 1st September 2022
You sold it So friends, remember
From 1st April 2022
And date of sale
That is 1st September 2022
Depreciation will be charged for these 6 months
Machinery was with you for these 6 months
So don't forget to charge depreciation for these 6 months
What do children do?
They think that depreciation is charged on the last day of
the year
And we sold it on 1st September So we start entering the
sale
We take out the profit loss on the sale
And then we enter it accordingly
But they forget That from the first day of the year
And you have to charge depreciation till the date of sale
Second oath
Don't forget the P&L to Deption entry Now this oath becomes
irrelevant
Because teleprime itself gives it
So sir, why have you written it? I will tell you why it is
written
What do I teach you?
I teach you that you know the concept
Your office should work
And third thing People should see your knowledge
If small boys and girls
Hold your hand and ask
What is the entry of depreciation
And you told them before
Deption to machinery So first I corrected that mistake
Again counter question Ask them that listen
Is there provision or not?
In full style If there is provision, then entry will be
Deption to provision If not, then entry will be
Deption to machinery And then you have to show off
That there is one more entry
In both cases P&L account debit to depreciation
Entry to transfer depreciation to P&L
P&L account debit to depreciation
P&L account will be replaced by
P&L statement of profit or loss
In case of companies
Forms of business Individual, sole proprietor
Yes sir
Partnership firm
More than 2 or 2 people
And then our biggest form of business Biggest organization
company
Biggest organization is company
Right? Biggest organization company Now friends, do you
know what happens?
Partnership firm
Individual and partnership firm
Make P&L account But companies
Don't make P&L account
Companies change P&L account name
SPL Statement of profit or loss
It is same But on companies
Companies act 2013 We will keep P&L account
Statement of profit or loss
We will make P&L like statement
Name changes
Everything is same from inside
Name just changes So keep these 3 things in mind
First Depreciation from 1st day of the year to date of sale
Don't forget
Showing P&L to Depreciation
Don't forget
SPL will replace P&L account
If you are working in a company Not doing accounting of any
individual or partnership firm
You are doing accounting of a company Right?
Friends Friends Depreciation ends
All entries end All topics end
Right? According to me The knowledge I gave you in these
classes
Conceptually complete knowledge Meaning Method General
entries
What happens if method changes
Revival
Everything will be explained
Everything will be useful
Coming classes
Practical approach
Teleprime All entries
Purchase Adaption P&L Everything All entries
We will show you
We will make cases
We will make solutions
Thank you
Bye Bye
Take care those two.