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Partnership accounts

jahanvi (none) (75 Points)

13 August 2013

"rs 2000 paid for the license fees for the year ending 30th september,2001 had been written off".(accounting year 1/4/00-31/3/01).what are the necessary journal entries to be passed for the above??(partnership accounts)...plz help!!

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(Guest)

Profit and Loss Account Dr.

To License fees

jahanvi (none) (75 Points)
Replied 14 August 2013

but in the practice module it is given that

prepaid license fee a/c dr 1000

to P & L adjustment a/c 1000

how and plz explain???

N.Naveena Maheswara Rao (Assistant manager for accounts) (1096 Points)
Replied 23 August 2013

licencefee prepaid is for 6 months (1/4/2001 to 30/09/2001 - belongs to next year)

Amount of prepaid licencefee - Rs.1,000 which is an asset & not expenditure

At the time of payment of licencefee, entry passed in the books is

1. licencefee A/c...Rs.2,000

To cashA/c....2,000

2. P&L A/c...Dr 2,000

To licencefee....Cr 2,000

But now as this is a mistake, rectify the entry in P&L Adjustment account.

Prepaid licencefee A/c...Dt.Rs. 1,000 (Asset)

To P&L Adj A/c.......Rs.1000 (Reverse the P&L A/c wrongly debited earlier)

Hope you understand

1 Like

jahanvi (none) (75 Points)
Replied 23 August 2013

I understood....thanks a lot for solving my query.

Shivani (Learner) (1881 Points)
Replied 10 September 2013

Dear Naveena Sir

When at the time of paying license fee we know that part of it is related to next year, then can we pass the following entry at the time of payment of licensee fee

License Fee 1000

Prepaid License Fee 1000

To Cash 2000

Thanks

Shivani