accounting entry for utilisation of a development fund

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pkkapoor (Querist)
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09 July 2008 In case of an educational Institution a development fund is created and it can be used for purchase of a machinery. The credit balance in the development fund is represented by an equal debit balance in a separate bank balance.

A machine has been purchased. The normal accounting entry would be, debit fixed asset and credit bank account.Now the question arises how to reduce the Development fund ledger balance as bank balance has already reduced due to payment made for purchase of a machine.

so query is:

If we debit Development Fund, which account is to be credited.

Rajesh Kumar Gupta

Rajesh Kumar Gupta (Expert)
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11 July 2008 Development fund is gradually decrease by the amount of Depriciation and P/L a/c will be decreased by the amount of depreciation.
There are two ways to solve this problem
Ist Approach is Additive Approach
IInd is Deductive approach
You should refer CA final Study Material

pkkapoor

pkkapoor (Querist)
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27 July 2008 In case of an educational Institution a development fund is created and it can be used for purchase of a machinery. The credit balance in the development fund is represented by an equal debit balance in a separate bank balance.

A machine has been purchased. The normal accounting entry would be, debit fixed asset and credit bank account.Now the question arises how to reduce the Development fund ledger balance as bank balance has already reduced due to payment made for purchase of a machine.

so query is:

If we debit Development Fund, which account is to be credited.