Journal entry and Capital Expenditure

[jigga]

<BR>I have been working some past papers and i am not sure about a few things please help me.<BR><BR>What is the entry for Provision for doubtful debts in journal entry format , and also Depreciation?<BR><BR>Should capital Expenditure be charged to Overhead Account ? <BR>Please give reasons for answers thanks.<BR><BR>

[Melanie]

1. Provision for doubtful debts:<BR><BR>Debit Provision for doubtful debts (expense) account £2,500<BR>either<BR>Credit Trade debtors £2,500<BR>or<BR>Credit Doubtful debts (asset) account £2,500<BR><BR>If a Doubtful debts (asset) account is used, then this is set against trade debtors in the balance sheet.<BR><BR>2. Depreciation<BR><BR>Debit Depreciation (expense) account £150<BR>Credit Accumulated depreciation (fixed asset) account £150<BR><BR>3. Capital expenditure<BR><BR>This is not an overhead, but expenditure on a fixed asset, and so gets posted to the fixed asset account(s) in the balance sheet, and slowly depreciated (and charged to the P&L, and so overheads) over the expected life of the asset.<BR><BR>Hope this helps ;)

[jigga]

Thank's a lot for your help Melanie.May God be with you in your upcoming Exams.