ACCOUNT CURRENT
INTRODUCTION USE OF PRODUCTS (PRODUCT OF INDIVIDUAL TRANSACTION METHOD)
An Account Current is a statement of mutual transactions between two parties
for a given period of time, and includes interest payable to or receivable from FORMAT
the other party at an agreed rate. ….in Account Current with …For the period ……Rate of Interest = …% p.a. ….in
These statements are mostly used for rendering accounts between -
Date Particulars Due Days Products. Amt Date Particulars Due Days Products. Amt
Supplier and Customer Date Date Da
Lender and Borrower
Broker and Client
Principal and Agent
Head Office and Branch
Steps in the preparation of Account Current
Co-venturers
Step 1: Provide three additional columns on each side of the ledger account – One Step 1
for Due date, second for Days and third for 'Products' One fo
PARTIES IN ACCOUNT CURRENT Step 2: Calculate due date of each transaction and enter in due date column.
n
An Account Current has two parties — one who renders the account and the Step 2
Step 3: Calculate number of days from the due date of each transaction to the
other to whom the account is rendered. of nex
a
date of closing the account and enter the number of days in 'Days' column.
If X renders the account to Y, then in the books of X, the heading of the Step 4: Calculate the products by multiplying the amount of transaction by Step 3
h
account is written as 'Y in Account Current with X'. corresponding number of days and enter the product in product column. numbe
and th
Step 5: Calculate the balance of the product, enter such balance on the
B
METHODS OF PREPARATION ACCOUNT CURRENT appropriate side in the 'Product Column' and total up the Product Columns. Step 4
Step 6: Calculate the interest at the given rate of interest on the balance
Methods of Step 5
Account Current of the products for a single day.
d
at the
Step 7: Enter the interest on the appropriate side in the 'Amount Column'. This
entry is made on the side other than that on which the balance of product Step 6
n
Interest on Individual Product of Individual Product of Balance
Transaction Method Transaction Method Method 'Total
appears if the number of days is calculated from the due date of transaction to
a
the date of closing the account. Step 7
Forward Method Epoque Method and th
n
Daily Products = Amount (Rs.) x Number of days
Monthly Products = Amount (Rs.) x Number of months
INTEREST ON INDIVIDUAL TRANSACTION METHOD:
Products Balance (Dr.) = Interest receivable dr. side amount column
FORMAT (Cr.) = Interest Payable cr. Side amount column If
…..in Account Current with …For the period …Rate of Interest = ….% p.a. the
Daily Products 1
Date Particulars Due Days Int. Rs Date Particulars Due Days Int. Rs Interest = x x Rate of Interest In
Date Date 100 365 th
, ISSUE OF SHARES
Business Organisation Ownership Type Of Capital Liability Of Owners
Share Capita
Total Capital of a company is Dividend into a number of Small indivisible
Sole Proprietership Proprietor Capital Unlimited
Partnership Partners Partners Capital Unlimited Share Capi
Company Share Holder Share Capital Limited to issue Prize
Of Shares Held
Authorised Share Capital Issued Share Capital Subscribed Share Capital Calle
(Registered/Nominal)
Types Of Shares
Portion Of Share Part Of Issued Share portion
Maximum Amount of capital issued by Capital Which Is shares
Preference share Equity Shares Capital that a company the Company Subscribed by the Public has dem
-Cumulative Preference Shares. Do not enjoy any preferential rights Can raise Balance
-Non-Cumulative Preference Shares. in payment of Dividend or repayment uncalle
-Participating Preference Shares. of Capital Issued Capital + unissued Capital = Authorised Capital
-Non- Participating Preference Shares. Rate Of Dividend vary from
Paid up Capital + Calls in arrears is any Less Calls in Advance if any = Called U
-Redeemable Preference Shares. Year to Year
-Non-Redeemable Preference Shares. Reserve Capital Capital Reserve (Part of reserves & Surplus )
-Convertible Preference Shares.
-Non-Convertible Preference Shares. Joural entry Interest On Calls In
Priority in payment of Dividend and (1) Recd.
payment of Capital 1.For interest Due
Fixed Rate Of Dividend Cash / Bank Dr. XXX Int. on Calls-in-Adv A/c Dr.
To Eq. Application A/c XXX To shareholder’s A/c
Shares Issued at (2) Due. 2.For Payment of Interest
Eq Share App. Dr. XXX Shareholder’s A/c Dr.
Discount Par Premium To Eq. SC A/c XXX To Bank A/c
(3) Due.
Issue price is Less than the IP=FV Issue price is more Eq Share Allot. Dr. XXX Balance sheet
nominal or Par Value of Shares than the Face value To Eq. SC XXX Particulars Note
To security Premium XXX Equity & Liabilities
Issue of shares at discount shall (4) Recd. (1) Shareholder’s Fund
Premium amount is credited Share Capital 1
be void except in the ase of issue C/B Dr. XXX
to a separate account called Reserve And Surplus 2
of sweat equity shares (issued to To Eq. Share Allot XXX
“Securities premium Account”
employees and directors) (5) Due (2) Non Current Liab.
Eq. Share first call Dr. XXX (3) Current Liab.
Issued At Premium Issued At Par Accounting Treatment of To Eq. SC. XXX
Securities premium Assets
FV = 100 IP = 120 FV = 100 IP = 100 Securities Premium is not a part of (6) Recd. (1) Non Current Assets
20 App. 20 App. share capital. It represents a gain C/B Dr. XXX
20 20 (2) Current Assets
of Capital Nature to The Company
If nothing is
under the heading,“Reserves and To Eq. Share first Call XXX Cash & Cash Equipments
30 Allot. 50 said Premium 30 Allot. 30
Is included
in Allotment
Surplus”.However,'Reserves and (7) Due.
40 First 40 40 First 40 Surplus' is shown as 'shareholders Eq. Share final Call Dr. XXX
funds' in the Balance Sheet as per Notes To Accounts
Schedule III. To Eq. SC XXX
10 Final 10 10 Final 10
(8) Recd. 1. Share capital
Company Issue Shares (5,000) C/B Dr. XXX Authorised SC
, PARTNERSHIP
Accounting of Goodwill RETIREMENT OF PARTNER CONCEPT OF MINIMUM GUARANTEE
Goodwill Brought in cash Special Point -:
Cash / Bank A/c Dr. minimum guarantee
1 Where will be Balance of retiring
To Sacrificing Partners Capital A/c by A Rs. 100000
Partner will be transferred –
Goodwill is given Personally to partners A B C
Balance of retiring partner will
No Entry
be transferred to Loan A/c or paid 3 : 2 : 1
Goodwill is not brought in cash
a Loan – Case 1 –
Gaining Partners capital A/c Dr.
Retiring Partner's Capital A/c Dr. Profit Rs. 500000
To Sacrificing Partners Capital A/c
To Partner Loan A/c
b Paid - A B C
Common Adjustment Retiring partner's Capital A/c Dr. 2,50,000 1,66,667 85,333
To Cash/ bank A/c (-) 16,667 B (+) 16,667
Journal Entries
2,33,333 1,00,000
Revaluation of Assets & Liabilities
2 Joint Life Policy A guarantee given by A C
Assets ( ) Assets A/c Dr.
Accounting of JLP
To Revaluation A/c Case 2 –
Premium is charged to P&L A/c Profits Rs. 7,20,000
Assets ( ) Revaluation A/c Dr. [ JLP does not appear in B/s ]
To Assets A/c
JLP Premium A/c Dr. ( Exp ) 3,60,000 2,40,000 1,20,000
Liabilities ( ) Revaluation A/c Dr.
To Liability A/c To Cash Bank A/c C will get Rs. 1,00,000 or his share of
Profit whichever is more
Liabilities ( ) Liability A/c Dr.
To Revaluation A/c P&L A/c Dr. Case 3 –
Profits on Revaluation To JLP premium A/c Loss Rs. 1,80,000
Revaluation A/c Dr. IN OLD
PSR
To old partners Capital A/c Death Alive (90,000)
(90,000) (60,000)
Revaluation Loss
[Sum Assured] [ Surrendered Value ] (-) (1,80,000) (+) 1,80,000
Old Partners Capital A/c Dr. IN OLD
PSR 2,70,000 60,000 1,00,000
To Revaluation A/c Cash / Bank Dr. Cash / bank Dr.
A B C
New partner introduced Capital To JLP A/c To JLP A/c
Cash / Bank A/c Dr.
To Capital A/c JLP A/c Dr. JLP A/c Dr. Hidden Goodwill
Goodwill Withdrawn by Partners To old Partners To old partners Firm's Capital xxx
Withdrawing Partner's Capital A/c Dr. in Old PSR in old PSR (-) All partners Capital
To Cash / Bank A/c JLP is maintained at surrendered Value – [ appears in B/S ] A xxx
Accumulated Profits / Reserve's / Surplus B xxx
Balance sheet
Accumulated Reserve/Surplus A/c Dr. C xxx xxx
To Partners Capital A/c (Old PSR) JLP xxx
(-) Expenses & surplus xxx
Accumulated Losses Surrendered value
Hidden Goodwill xxx
Partners Capital A/c Dr. Only surplus will be distributed to old Partners in old PSR
To Accumulated Losses A/c (Old PSR)
INTRODUCTION USE OF PRODUCTS (PRODUCT OF INDIVIDUAL TRANSACTION METHOD)
An Account Current is a statement of mutual transactions between two parties
for a given period of time, and includes interest payable to or receivable from FORMAT
the other party at an agreed rate. ….in Account Current with …For the period ……Rate of Interest = …% p.a. ….in
These statements are mostly used for rendering accounts between -
Date Particulars Due Days Products. Amt Date Particulars Due Days Products. Amt
Supplier and Customer Date Date Da
Lender and Borrower
Broker and Client
Principal and Agent
Head Office and Branch
Steps in the preparation of Account Current
Co-venturers
Step 1: Provide three additional columns on each side of the ledger account – One Step 1
for Due date, second for Days and third for 'Products' One fo
PARTIES IN ACCOUNT CURRENT Step 2: Calculate due date of each transaction and enter in due date column.
n
An Account Current has two parties — one who renders the account and the Step 2
Step 3: Calculate number of days from the due date of each transaction to the
other to whom the account is rendered. of nex
a
date of closing the account and enter the number of days in 'Days' column.
If X renders the account to Y, then in the books of X, the heading of the Step 4: Calculate the products by multiplying the amount of transaction by Step 3
h
account is written as 'Y in Account Current with X'. corresponding number of days and enter the product in product column. numbe
and th
Step 5: Calculate the balance of the product, enter such balance on the
B
METHODS OF PREPARATION ACCOUNT CURRENT appropriate side in the 'Product Column' and total up the Product Columns. Step 4
Step 6: Calculate the interest at the given rate of interest on the balance
Methods of Step 5
Account Current of the products for a single day.
d
at the
Step 7: Enter the interest on the appropriate side in the 'Amount Column'. This
entry is made on the side other than that on which the balance of product Step 6
n
Interest on Individual Product of Individual Product of Balance
Transaction Method Transaction Method Method 'Total
appears if the number of days is calculated from the due date of transaction to
a
the date of closing the account. Step 7
Forward Method Epoque Method and th
n
Daily Products = Amount (Rs.) x Number of days
Monthly Products = Amount (Rs.) x Number of months
INTEREST ON INDIVIDUAL TRANSACTION METHOD:
Products Balance (Dr.) = Interest receivable dr. side amount column
FORMAT (Cr.) = Interest Payable cr. Side amount column If
…..in Account Current with …For the period …Rate of Interest = ….% p.a. the
Daily Products 1
Date Particulars Due Days Int. Rs Date Particulars Due Days Int. Rs Interest = x x Rate of Interest In
Date Date 100 365 th
, ISSUE OF SHARES
Business Organisation Ownership Type Of Capital Liability Of Owners
Share Capita
Total Capital of a company is Dividend into a number of Small indivisible
Sole Proprietership Proprietor Capital Unlimited
Partnership Partners Partners Capital Unlimited Share Capi
Company Share Holder Share Capital Limited to issue Prize
Of Shares Held
Authorised Share Capital Issued Share Capital Subscribed Share Capital Calle
(Registered/Nominal)
Types Of Shares
Portion Of Share Part Of Issued Share portion
Maximum Amount of capital issued by Capital Which Is shares
Preference share Equity Shares Capital that a company the Company Subscribed by the Public has dem
-Cumulative Preference Shares. Do not enjoy any preferential rights Can raise Balance
-Non-Cumulative Preference Shares. in payment of Dividend or repayment uncalle
-Participating Preference Shares. of Capital Issued Capital + unissued Capital = Authorised Capital
-Non- Participating Preference Shares. Rate Of Dividend vary from
Paid up Capital + Calls in arrears is any Less Calls in Advance if any = Called U
-Redeemable Preference Shares. Year to Year
-Non-Redeemable Preference Shares. Reserve Capital Capital Reserve (Part of reserves & Surplus )
-Convertible Preference Shares.
-Non-Convertible Preference Shares. Joural entry Interest On Calls In
Priority in payment of Dividend and (1) Recd.
payment of Capital 1.For interest Due
Fixed Rate Of Dividend Cash / Bank Dr. XXX Int. on Calls-in-Adv A/c Dr.
To Eq. Application A/c XXX To shareholder’s A/c
Shares Issued at (2) Due. 2.For Payment of Interest
Eq Share App. Dr. XXX Shareholder’s A/c Dr.
Discount Par Premium To Eq. SC A/c XXX To Bank A/c
(3) Due.
Issue price is Less than the IP=FV Issue price is more Eq Share Allot. Dr. XXX Balance sheet
nominal or Par Value of Shares than the Face value To Eq. SC XXX Particulars Note
To security Premium XXX Equity & Liabilities
Issue of shares at discount shall (4) Recd. (1) Shareholder’s Fund
Premium amount is credited Share Capital 1
be void except in the ase of issue C/B Dr. XXX
to a separate account called Reserve And Surplus 2
of sweat equity shares (issued to To Eq. Share Allot XXX
“Securities premium Account”
employees and directors) (5) Due (2) Non Current Liab.
Eq. Share first call Dr. XXX (3) Current Liab.
Issued At Premium Issued At Par Accounting Treatment of To Eq. SC. XXX
Securities premium Assets
FV = 100 IP = 120 FV = 100 IP = 100 Securities Premium is not a part of (6) Recd. (1) Non Current Assets
20 App. 20 App. share capital. It represents a gain C/B Dr. XXX
20 20 (2) Current Assets
of Capital Nature to The Company
If nothing is
under the heading,“Reserves and To Eq. Share first Call XXX Cash & Cash Equipments
30 Allot. 50 said Premium 30 Allot. 30
Is included
in Allotment
Surplus”.However,'Reserves and (7) Due.
40 First 40 40 First 40 Surplus' is shown as 'shareholders Eq. Share final Call Dr. XXX
funds' in the Balance Sheet as per Notes To Accounts
Schedule III. To Eq. SC XXX
10 Final 10 10 Final 10
(8) Recd. 1. Share capital
Company Issue Shares (5,000) C/B Dr. XXX Authorised SC
, PARTNERSHIP
Accounting of Goodwill RETIREMENT OF PARTNER CONCEPT OF MINIMUM GUARANTEE
Goodwill Brought in cash Special Point -:
Cash / Bank A/c Dr. minimum guarantee
1 Where will be Balance of retiring
To Sacrificing Partners Capital A/c by A Rs. 100000
Partner will be transferred –
Goodwill is given Personally to partners A B C
Balance of retiring partner will
No Entry
be transferred to Loan A/c or paid 3 : 2 : 1
Goodwill is not brought in cash
a Loan – Case 1 –
Gaining Partners capital A/c Dr.
Retiring Partner's Capital A/c Dr. Profit Rs. 500000
To Sacrificing Partners Capital A/c
To Partner Loan A/c
b Paid - A B C
Common Adjustment Retiring partner's Capital A/c Dr. 2,50,000 1,66,667 85,333
To Cash/ bank A/c (-) 16,667 B (+) 16,667
Journal Entries
2,33,333 1,00,000
Revaluation of Assets & Liabilities
2 Joint Life Policy A guarantee given by A C
Assets ( ) Assets A/c Dr.
Accounting of JLP
To Revaluation A/c Case 2 –
Premium is charged to P&L A/c Profits Rs. 7,20,000
Assets ( ) Revaluation A/c Dr. [ JLP does not appear in B/s ]
To Assets A/c
JLP Premium A/c Dr. ( Exp ) 3,60,000 2,40,000 1,20,000
Liabilities ( ) Revaluation A/c Dr.
To Liability A/c To Cash Bank A/c C will get Rs. 1,00,000 or his share of
Profit whichever is more
Liabilities ( ) Liability A/c Dr.
To Revaluation A/c P&L A/c Dr. Case 3 –
Profits on Revaluation To JLP premium A/c Loss Rs. 1,80,000
Revaluation A/c Dr. IN OLD
PSR
To old partners Capital A/c Death Alive (90,000)
(90,000) (60,000)
Revaluation Loss
[Sum Assured] [ Surrendered Value ] (-) (1,80,000) (+) 1,80,000
Old Partners Capital A/c Dr. IN OLD
PSR 2,70,000 60,000 1,00,000
To Revaluation A/c Cash / Bank Dr. Cash / bank Dr.
A B C
New partner introduced Capital To JLP A/c To JLP A/c
Cash / Bank A/c Dr.
To Capital A/c JLP A/c Dr. JLP A/c Dr. Hidden Goodwill
Goodwill Withdrawn by Partners To old Partners To old partners Firm's Capital xxx
Withdrawing Partner's Capital A/c Dr. in Old PSR in old PSR (-) All partners Capital
To Cash / Bank A/c JLP is maintained at surrendered Value – [ appears in B/S ] A xxx
Accumulated Profits / Reserve's / Surplus B xxx
Balance sheet
Accumulated Reserve/Surplus A/c Dr. C xxx xxx
To Partners Capital A/c (Old PSR) JLP xxx
(-) Expenses & surplus xxx
Accumulated Losses Surrendered value
Hidden Goodwill xxx
Partners Capital A/c Dr. Only surplus will be distributed to old Partners in old PSR
To Accumulated Losses A/c (Old PSR)
