21 Toughest Journal Entries Interview Questions and Answers in 12 Min | @CorporateWala Ankit Yadav

Summary

The video presents 21 practical record-to-report journal-entry scenarios commonly used in accounting interviews and day-to-day work. The examples cover accruals, provisions, adjustments, reclassifications, asset disposal, intercompany transactions, and revenue recognition.

The central lesson is to identify what has happened economically, then record the correct expense, income, asset, or liability in the appropriate period.

The 21 Scenarios and Entries

1. Accrued audit fees — ₹40,000 The expense has been incurred, but the invoice has not arrived.

   • Dr Audit Fees Expense ₹40,000
   • Cr Accrued Audit Fees / Audit Fees Payable ₹40,000

This recognizes the expense in the period it relates to.

1. Reverse an audit-fee accrual that is no longer needed — ₹40,000
   • Dr Accrued Audit Fees ₹40,000
   • Cr Audit Fees Expense ₹40,000

This removes the liability and reverses the expense.

1. Prepaid rent — ₹1,20,000 for six months
   • At payment: Dr Prepaid Rent ₹1,20,000; Cr Cash/Bank ₹1,20,000
   • Monthly adjustment: ₹1,20,000 ÷ 6 = ₹20,000
   • Dr Rent Expense ₹20,000; Cr Prepaid Rent ₹20,000

This transfers the portion used each month from an asset to an expense.

1. Transfer year-end net profit to retained earnings — ₹3,50,000
   • Dr Profit and Loss Account ₹3,50,000
   • Cr Retained Earnings ₹3,50,000

This closing entry transfers profit into accumulated earnings.

1. Provision for doubtful debts — 5% of debtors of ₹4,00,000
   • Provision: 5% × ₹4,00,000 = ₹20,000
   • Dr Bad Debts Expense / Provision Expense ₹20,000
   • Cr Provision for Doubtful Debts ₹20,000

The provision is a contra-asset that reduces the reported value of receivables.

1. Unrealized foreign-exchange gain on receivables — ₹6,000
   • Dr Accounts Receivable ₹6,000
   • Cr Foreign-Exchange Gain ₹6,000

This increases the receivable’s value when the exchange-rate movement is favorable.

1. Reclassify an expense booked to the wrong account — ₹50,000
   • Dr Information Technology Expenses ₹50,000
   • Cr Office Expenses ₹50,000

This corrects the classification without changing total expenses.

1. Year-end income-tax provision — ₹2,00,000
   • Dr Income Tax Expense ₹2,00,000
   • Cr Income Tax Payable / Tax Provision ₹2,00,000

This records the tax expense and liability.

1. Clear a suspense balance identified as a salary payment — ₹25,000
   • Dr Salary Expense ₹25,000
   • Cr Suspense Account ₹25,000

This reclassifies the item to its correct account and clears suspense.

1. Dispose of a fixed asset - Cost: ₹1,00,000 - Accumulated depreciation: ₹60,000 - Sale proceeds: ₹1,20,000 - Book value: ₹1,00,000 − ₹60,000 = ₹40,000 - Gain: ₹1,20,000 − ₹40,000 = ₹80,000 - Dr Cash ₹1,20,000 - Dr Accumulated Depreciation ₹60,000 - Cr Fixed Asset ₹1,00,000 - Cr Gain on Sale of Asset ₹80,000

   This removes the asset and its accumulated depreciation, records the proceeds, and recognizes the gain.

2. Monthly software amortization — ₹60,000 over 12 months - Monthly amount: ₹60,000 ÷ 12 = ₹5,000 - Dr Software Amortization Expense ₹5,000 - Cr Accumulated Amortization—Software ₹5,000

   The entry is posted monthly for 12 months.

3. Accrued interest income not yet received — ₹8,000 - Dr Interest Receivable / Accrued Interest ₹8,000 - Cr Interest Income ₹8,000

   This recognizes income earned before cash collection.

4. Utility provision of ₹30,000; actual bill is ₹28,500 The speaker first considers reversing the provision and booking the actual invoice, then gives a direct adjustment:

   - **Dr Utility Bills Payable / Provision ₹30,000**
   - **Cr Accounts Payable ₹28,500**
   - **Cr Utilities Expense ₹1,500**
   

   This clears the original provision, records the actual bill, and reduces expense by the unused ₹1,500.

5. Reverse an unutilized bonus provision — ₹70,000 - Dr Bonus Provision / Bonus Payable ₹70,000 - Cr Bonus Expense ₹70,000

   This removes a liability that is no longer required and reverses the related expense.

6. Transfer a reconciled clearing-account balance to freight inward — ₹25,000 - Dr Freight Inward ₹25,000 - Cr General Receipts/Invoice Receipt Clearing ₹25,000

   This reclassifies the cleared amount to its correct expense account.

7. Record an intercompany expense for services received — ₹1,50,000 - Dr Relevant Service Expense ₹1,50,000 - Cr Intercompany Payable / Due to Group Company A ₹1,50,000

   This records the expense and the amount owed to the group company.

8. Record bank charges found during reconciliation — ₹2,500 - Dr Bank Charges Expense ₹2,500 - Cr Bank ₹2,500

   This recognizes the charge and reduces the bank balance.

9. Write off an old other-current-liability balance — ₹18,000 If confirmation shows that the balance is no longer payable:

   - **Dr Other Current Liabilities ₹18,000**
   - **Cr Miscellaneous Income / Other Income ₹18,000**
   

   The credit account depends on the nature of the liability.

10. Record an interest invoice from the parent company — ₹10,000 - Dr Interest Expense ₹10,000 - Cr Intercompany Payable / Due to Parent Company ₹10,000

    This records the interest cost and the amount owed to the parent company.

11. Recognize deferred subscription revenue — ₹1,20,000 received for an annual subscription - Revenue recognized monthly: ₹1,20,000 ÷ 12 = ₹10,000 - Monthly entry: Dr Deferred Revenue ₹10,000; Cr Subscription Revenue ₹10,000

    This recognizes revenue as it is earned rather than when the advance is received.

12. Accrued telephone expense with no invoice yet — ₹8,000 - Dr Telephone Expense ₹8,000 - Cr Accrued Telephone Expense / Telephone Expenses Payable ₹8,000

    This records the expense in the appropriate period despite the missing invoice.

Speakers and Sources Featured

• Interviewer/presenter: Asks the accounting questions, comments on the answers, and delivers the closing remarks.
• Candidate/respondent: Provides the journal entries and explains the accounting treatment.
• Identifiable source: The video is presented under Corporate Wala and identifies Ankit Yadav in its title/context. The subtitles do not separately identify the two role-play voices by name.