The company lent 500,000 yen of company funds to one of its directors by transfer from the ordinary deposit account. Which account is most appropriate for the debit side?
Loans receivable from officers (役員貸付金)
Loans payable to officers (役員借入金)
Loans receivable from employees (従業員貸付金)
Advances paid (立替金)
AnswerA. Loans receivable from officers (役員貸付金)
A director is an officer, so money lent to them is recorded as Loans receivable from officers (役員貸付金), an asset. Loans payable to officers is used when the company borrows from an officer. Loans receivable from employees is for employees. Advances paid is for paying something on another person's behalf, not for lending money.
Q2 | [Journal] Making a loan
The company lent 600,000 yen to a business partner for 9 months at an annual interest rate of 4%, paying by transfer from the ordinary deposit account. Interest will be received with the principal on the repayment date. Which journal entry is correct?
When lending, debit the increase in Loans receivable (asset) and credit the decrease in the ordinary deposit. Interest is received on the repayment date, so nothing is recorded for it now. The reversed entry would mean the deposit increased, as if money were borrowed. Loans payable is the borrower's liability, not the lender's. Recording 18,000 yen of interest income now recognizes interest not yet received, and the transfer amount would not match the actual 600,000 yen.
Q3 | [Journal] Repaying a loan with monthly interest
The repayment date arrived for a 1,200,000-yen bank loan (term 5 months, annual interest rate 3%), and the principal and interest were paid from the ordinary deposit account. Interest is calculated monthly. Which journal entry is correct?
Interest is 1,200,000 × 0.03 × 5 ÷ 12 = 15,000 yen. The principal is a decrease in Loans payable (liability) and the interest is Interest expense, recorded separately. Including the interest in Loans payable reduces the loan by more than its balance and records no expense. 36,000 yen is a full year of interest, not prorated by month. Loans receivable is the lender's asset and is not used to repay borrowed money.
Q4 | [Journal] Buying non-merchandise on credit
The company bought a computer for office use for 250,000 yen and will pay at the end of the month. (Ignore consumption tax.) Which journal entry is correct?
Dr Equipment (備品) 250,000 / Cr Accounts payable (買掛金) 250,000
Dr Purchases (仕入) 250,000 / Cr Accounts payable - other (未払金) 250,000
Dr Equipment (備品) 250,000 / Cr Accounts payable - other (未払金) 250,000
Dr Accounts payable - other (未払金) 250,000 / Cr Equipment (備品) 250,000
AnswerC. Dr Equipment (備品) 250,000 / Cr Accounts payable - other (未払金) 250,000
A computer for office use is Equipment (asset), not merchandise. The obligation to pay later for non-merchandise is Accounts payable - other (未払金), a liability. Accounts payable (買掛金) is only for unpaid merchandise purchases. Purchases is for goods bought for resale, not items the company uses itself. The reversed entry would mean equipment and the payable both decreased.
Q5 | [Account] Selling non-merchandise on credit
The company sold land it held for business use at its book value and will receive the money next month. Which account is most appropriate for the right to receive the money?
Accounts receivable (売掛金)
Accounts receivable - other (未収入金)
Loans receivable (貸付金)
Advances received (前受金)
AnswerB. Accounts receivable - other (未収入金)
Land is not merchandise, so the right to receive payment later is Accounts receivable - other (未収入金), an asset. Accounts receivable (売掛金) is only for merchandise sold on credit. Loans receivable is for money lent, not for sale proceeds. Advances received is a liability for money received in advance, the opposite of this case where nothing has been received.
Q6 | [Journal] Paying on behalf of an employee
The company paid 8,000 yen in cash for an insurance premium that an employee should pay personally. Which journal entry is correct?
Dr Insurance expense (保険料) 8,000 / Cr Cash (現金) 8,000
Dr Deposits received from employees (従業員預り金) 8,000 / Cr Cash (現金) 8,000
Dr Cash (現金) 8,000 / Cr Advances paid for employees (従業員立替金) 8,000
Dr Advances paid for employees (従業員立替金) 8,000 / Cr Cash (現金) 8,000
AnswerD. Dr Advances paid for employees (従業員立替金) 8,000 / Cr Cash (現金) 8,000
The company paid what the employee should pay, so it records the right to be repaid as Advances paid for employees (従業員立替金), an asset. Insurance expense is the company's own expense; an employee's personal premium is not. Deposits received from employees is a liability for money held for employees, which is not the case here. The reversed entry would mean cash increased.
Q7 | [Journal] Paying salaries with withholdings
From total employee salaries of 300,000 yen, the company deducted 12,000 yen of withheld income tax and 15,000 yen of social insurance premiums (employee share), and transferred the rest from the ordinary deposit account. Which journal entry is correct?
Dr Salaries (給料) 300,000 / Cr Income tax withheld (所得税預り金) 12,000, Social insurance premiums withheld (社会保険料預り金) 15,000, Ordinary deposit (普通預金) 273,000
Dr Salaries (給料) 273,000 / Cr Ordinary deposit (普通預金) 273,000
Dr Salaries (給料) 273,000, Statutory welfare expenses (法定福利費) 15,000, Taxes and dues (租税公課) 12,000 / Cr Ordinary deposit (普通預金) 300,000
AnswerA. Dr Salaries (給料) 300,000 / Cr Income tax withheld (所得税預り金) 12,000, Social insurance premiums withheld (社会保険料預り金) 15,000, Ordinary deposit (普通預金) 273,000
Salaries are debited at the gross amount of 300,000 yen. The deducted income tax and social insurance are held to be paid later on the employees' behalf, so they are Income tax withheld and Social insurance premiums withheld (liabilities). The transfer is 300,000 − 12,000 − 15,000 = 273,000 yen. Recording salaries at the net amount leaves out the 27,000-yen obligation. Advances paid is a right (asset) from paying for someone, not money held. The entry with Statutory welfare expenses and Taxes and dues treats the employees' share as company expenses, and the transfer of 300,000 yen does not match the actual amount.
Q8 | [Account] Withholding resident tax
When paying an employee's salary, the company deducted the resident tax that the employee owes. Which account is most appropriate for the deducted amount?
Taxes and dues (租税公課)
Advances paid (立替金)
Resident tax withheld (住民税預り金)
Accounts payable - other (未払金)
AnswerC. Resident tax withheld (住民税預り金)
The deducted resident tax is money the company holds to pay later on the employee's behalf, so it is Resident tax withheld (住民税預り金), a liability listed in column A of the Level 3 account table. Taxes and dues is an expense for taxes the company itself bears. Advances paid is a right (asset) from paying for someone, the opposite of holding money. Accounts payable - other is for unpaid amounts for non-merchandise purchases.
Q9 | [Journal] Paying social insurance premiums
The company paid, from the ordinary deposit account, the 15,000 yen of social insurance premiums withheld from employees' salaries together with the company's share of 15,000 yen. Which journal entry is correct?
Dr Social insurance premiums withheld (社会保険料預り金) 30,000 / Cr Ordinary deposit (普通預金) 30,000
Dr Social insurance premiums withheld (社会保険料預り金) 15,000, Salaries (給料) 15,000 / Cr Ordinary deposit (普通預金) 30,000
Dr Social insurance premiums withheld (社会保険料預り金) 15,000, Statutory welfare expenses (法定福利費) 15,000 / Cr Ordinary deposit (普通預金) 30,000
AnswerD. Dr Social insurance premiums withheld (社会保険料預り金) 15,000, Statutory welfare expenses (法定福利費) 15,000 / Cr Ordinary deposit (普通預金) 30,000
The withheld employee share reduces Social insurance premiums withheld (liability), and the company share is Statutory welfare expenses. Reducing the full amount from the withheld account removes 15,000 yen that was never withheld. Expensing the full amount leaves the withheld liability on the books. The company's share of social insurance is Statutory welfare expenses, not Salaries.
Q10 | [Journal] Settling a suspense payment
Before a business trip, the company gave an employee 50,000 yen in cash as an estimate for travel costs and recorded it as a suspense payment. On return, the employee reported travel expenses of 43,000 yen and returned the rest in cash. Which journal entry is correct?
Dr Travel and transportation expenses (旅費交通費) 43,000, Cash (現金) 7,000 / Cr Suspense payments (仮払金) 50,000
Dr Travel and transportation expenses (旅費交通費) 50,000 / Cr Suspense payments (仮払金) 43,000, Cash (現金) 7,000
Dr Travel and transportation expenses (旅費交通費) 43,000, Cash (現金) 7,000 / Cr Suspense receipts (仮受金) 50,000
Dr Suspense payments (仮払金) 50,000 / Cr Travel and transportation expenses (旅費交通費) 43,000, Cash (現金) 7,000
AnswerA. Dr Travel and transportation expenses (旅費交通費) 43,000, Cash (現金) 7,000 / Cr Suspense payments (仮払金) 50,000
Clear the full 50,000-yen suspense payment (asset) on the credit side. The actual cost of 43,000 yen is Travel and transportation expenses, and the 50,000 − 43,000 = 7,000 yen returned increases cash. Recording 50,000 yen of expenses overstates the cost, clears only part of the suspense payment, and shows cash decreasing. Suspense receipts is for money received, not for settling money paid out. The reversed entry would increase the suspense payment and reduce expenses.
Q11 | [Journal] Identifying a suspense receipt
Earlier, an unidentified deposit of 120,000 yen arrived in the ordinary deposit account and was recorded as a suspense receipt. It turned out to be 80,000 yen collected on a customer's accounts receivable and a 40,000-yen down payment for a merchandise order. Which journal entry is correct?
AnswerC. Dr Suspense receipts (仮受金) 120,000 / Cr Accounts receivable (売掛金) 80,000, Advances received (前受金) 40,000
Now that the content is known, debit Suspense receipts (liability) to clear it. The collection reduces Accounts receivable, and the down payment is Advances received (liability) because goods must be delivered later. Crediting the whole amount to Accounts receivable reduces it by the down payment as well. Debiting the ordinary deposit records the deposit twice and leaves the suspense receipt. Advance payments is an asset for money the company paid in advance, not for a down payment received.
Q12 | [Journal] Renting a store and guarantee deposits
The company signed a lease for a building to use as a store and paid from the ordinary deposit account a security deposit of 200,000 yen, an agent's commission of 100,000 yen, and one month's rent of 100,000 yen. Which journal entry is correct?
The security deposit will be returned at the end of the lease, so it is Guarantee deposits paid (asset). The agent's commission is not returned, so it is Commission expense; the rent is Rent expense. Debiting everything to Rent expense expenses the returnable deposit. Debiting Buildings treats a rented building as the company's own asset. Including the commission in Guarantee deposits paid treats a non-returnable fee as an asset.
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