4.Primary Books
Transcript of 4.Primary Books
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Unit 4 Primary Books
Structure:
4.1 Introduction
Objectives
4.2 Introduction to Primary books
Self Assessment Questions 1
4.3 Journal
Self Assessment Questions 2
4.4 Ground rules of journal entry
Self Assessment Questions 3
4.5 Types of journalSelf Assessment Questions 4
4.6 Purchases Day book
Self Assessment Questions 5
4.7 Sales day book
Self Assessment Questions 6
4.8 Return Outward book
Self Assessment Questions 7
4.9 Return inward book
Self Assessment Questions 8
4.10 Bills receivable book
Self Assessment Questions 9
4.11 Bills payable book
Self Assessment Questions 10
4.12 Cash book
Self Assessment Questions 11
Self Assessment Questions 12
Terminal Questions
Answer to SAQs and TQs
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4.1 Introduction
The accounting process actually begins with recording the transactions in an accounting book.
This book of original recording is called primary book and of course all transactions are recorded
basing on certain documents like invoices, vouchers or receipts etc., All transactions should
invariably be entered through the primary accounting books. Other wise, the final results of the
business concern project a distorted position or end up in preparing unreliable statements. So
making entries in the primary books is the basis for further accounting treatment such as posting
to ledger, preparation of trial balance etc.,
Learning Objectives:
After studying this unit, you should be able to understand the following
1. To know the various primary books, containing original entries.
2. To record transactions in General Journal adopting debit and credit principles.
3. To know in brief about subsidiary books
4. To open purchases day book and Purchase Returns Book.
5. To open Sales day book and Sales Returns Book.
6. To know about Bill Transactions.
7. To prepare Bills Receivable Book and Bills Payable Book.
8. To open Cash Book with Cash column only.
9. To understand the preparation of Cash Book with Cash and Bank Columns.10. To understand the preparation of Cash Book with cash, bank and discount columns.
11. To know the preparation of Petty Cash Book.
12. To know how to prepare ledger accounts from individual subsidiary books.
4.2 Introduction to Primary Books
Journal is a book of original entry. In French, jour means a day. Therefore journal is basically a
day book in which transactions are first entered in a systematic manner adopting the principles of
debit and credit. If a business organization is very small and the number of transactions taking
place each day are limited, then all the transactions can easily be recorded in the journal. But i t is
not so, in case of organizations of large scale, where hundreds of transactions take place. To
facilitate convenient way of entering transactions, journal is subdivided into several books of
original entry, namely purchases, sales, cash, bills receivable, bills payable, returns inwards,
returns outwards books. They are also regarded as primary books or subsidiary books. When
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once the transactions are recorded in the journal or other subsidiary books, posting is made to
ledger. It is also possible that entries are made directly to ledger accounts without bringing them
to journal at all. However, to help in cross checking, both journal and ledger accounts are
prepared.
Self Assessment Questions1:
1. Book of original entry is called ______________________________.
2. Do you regard subsidiary books as primary books of original entry?
3. Transactions are first recorded in the journal and later posted to ____________________.
4.3 Journal
It is a book containing systematic recording of transactions. The entry made is known as journal
entry and the process of writing the journal entry is called journalizing. Each page of the journal is
numbered and it is called journal folio (JF). Entries are made date wise and they reflect what
account is debited and what account is credited. The form of a journal is given below.
JOURNAL
Date ParticularsLedgerFolio
Debit
Rs.
Credit
Rs.
2-4-2005 Cash A/c Dr
To Capital A/c
(Being capital brought in cash)
100000
100000
3-4-2005 Furniture A/c Dr
To cash A/c(Being furniture purchased for cash)
20000
20000
The ledger folio mentioned in the third column indicates the number of page in the ledger book
where the respective account summary is stated. For instance, the cash account is separately
mentioned in page number 120 of the ledger book, then the ledger folio is 120. Similarly the folio
number is given to other accounts. Usually the entry is read as cash account debtor to capital
account and so on. For every journal entry, narration is given to briefly describe the transaction.
Self Assessment Questions2:
1. What is journal?
2. What does a Ledger folio indicate ?
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To Cash A/c
(Being wages paid to daily workers)
300
97300 97300
Note:
1. The fourth transaction is a credit transaction and so the name of the debtor, Kanthilal is
debited and the goods account is credited because goods are going out and it is real account
2. The fifth transaction involves an expense and wages account is a nominal account. It is thus
debited and since cash account is real account and it is going out and therefore it is credited.
3. At the end of accounting period, the total of debits should be equal to total of credits.
Self Assessment Questions3:
1. All assets should be debited and all liabilities should be ___________________.
2. When interest is received in cash, Cash account is debited and _____ account is credited
3. If bank overdraft is raised, the overdraft account is ________ and cash account is _____.
4. When creditors are paid out, ______is debited and _____________ account is credited.
5. If furniture is bought for cash from X Co Ltd., the company account is not credited. Why?
6. If wages are paid for construction of business premises, ___________ A/c is debited and
_____________ A/c is credited.
7. Write the journal entries for the following transactions in the books of Y Co Ltd.,
i) Advance of Rs. 500000 received from Damodar & Bros for the supply of goods.
ii) Sales tax paid Rs. 40000
iii) Amount drawn from Bank of Baroda for miscellaneous expenses Rs. 5000.
4.5 Types of Journal
Journal is a book of original entry and only one journal is maintained if the business is very small
in size and the transactions are limited. However, if the transactions are multifarious, then
subsidiary books which are known as books of original entry are prepared. The types of journal
include purchases book, sales book, purchase returns book, sales returns book, bills receivable
book, bills payable book, cash book and journal proper. The entries are made in these books
straight without recording in usual journal. From the respective books, posting is made to ledger.
In fact, from the entries made in the subsidiary books, journalizing can be done. A detailed note isgiven in the following paragraphs on each of the subsidiary books.
Self Assessment Questions 4: State True or False
1. All subsidiary books are also journal because they are books of original entry.
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2. All such transaction which cannot be included under different subsidiary books are entered in
journal proper.
3. Can we post the transactions to ledger accounts from the entries made in subsidiary books ?
4. The purpose of subsidiary books is to classify enumerable transactions into various functionalactivities.
4.5 Purchases Book/purchases day book
Purchases book is also called purchases journal. Only credit purchases of goods are recorded in
this journal. Goods mean items or commodities procured for resale. Cash purchases are
recorded in cash book and credit purchases are recorded in purchases book. The form of a
purchases book is given below.
Purchases Book of Johnson and Johnson Co
Date Name of Supplier Ledger FolioInwardInvoice No
Amount
Rs.
2006
August 5
8
16
Rao Bros, Bangalore
Snow white Co,
Best & Company
Total
567
87
146
36,000
45,000
29,000
1,10,000
Inward invoice is the document sent by the supplier while selling the goods. Every invoice
received is numbered and this number is stated in the purchases book for reference. From the
above entries made in the purchases book, it is possible to record journal entries. Whenever,
purchases are made, goods account is debited because it is real account and the suppliers
account is credited because the supplier is the giver and it is personal account. The journal
entries for the above transactions appear as under:
Journal entries in the books Johnson and Johnson Co.,
Date Particulars LFDebit
Rs.
Credit
Rs.
5-8-06 Goods A/c Dr
Rao Bros A/c
(Being goods purchased on credit)
36,000
36,000
8-8-06 Goods A/c Dr
Snow White Co A/c
(Being Goods purchased on Credit)
45,000
45,000
16-8-06 Goods A/c Dr 29,000
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To Best & Co A/c 29,000
Total 1,10,000 1,10,000
Observe that in every case of credit purchase, the suppliers account is credited and goods
account is debited.
At the end of the day or week or month, the total of purchases is transferred to one ledger
account known as Purchases account in the ledger.
Self Assessment Questions 5:
State True or False
1. All purchases cash or credit are entered into purchases day book.
2. Purchases of goods and other assets can also be recorded in purchase book.
3. Inwards Invoice is a document to verify the quantity, price and other details of goods
purchased.4. Purchases made from Mr. Ganesh an credit Rs 6000, entered in the purchases book. What is
the journal entry ?
4.7 Sales book or Sales Day book
Sales book or sales day book contains the details of credit sales of goods made during a
particular period. The total of the sales book is transferred to ledger to an account called sales
account. The parties to whom credit sales are made are known as trade debtors. All debtors are
classified as personal accounts and for each party, ledger account is prepared in the ledger.
Sales account shows credit balance and debtors account shows debit balance. A pro forma of
sales book is as given under.
Sales book of Raghu Medicals
Date Name of customer/debtorLedgerFolio
OutwardInvoice No.
Amount
Rs.
4-3-05 French Medicals 476 6,800
18-3-05 Mandara stores 477 19,200
28-3-05 Shaw Medical and GeneralStores
478 85,000
Total 1,11,000
Outward Invoice number is the number of the invoice issued by the businessman to the customer.
The total of Rs. 1,11,000 will be transferred to sales account in the ledger. Similarly the
respective ledger accounts of the customers will be prepared in the ledger.
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Self Assessment Questions 6:
1. Sales day book contains only credit sales of goods made.
2. Sale of any other asset other than goods is also recorded in sales day book.
3. Persons to whom sales are made on credit are called ________.
4. Outward invoice is a document issued to customer, when the goods are sold on credit.
4.8 Purchase Returns Book
When the businessman purchases the goods and finds that the goods are not as per the
specifications or the goods are damaged or for any other valid reason, he may decide to return
the goods to the supplier from whom the goods were purchased. All such purchase returns are
recorded in a journal called purchase returns book. Normally the suppliers account is credited
when the purchases are made. If the goods are returned, then a debit note will be sent and the
number of debit note is recorded in the purchase returns book.
Purchase Returns Book of Johnson and Johnson Co.,
Date Name of supplier Ledger folioDebit
note No.
Amount
Rs.
2006 August, 12 Snow White Co 25 5000
24 Best & Co 26 7000
Total 12,000
The total of the book is transferred to ledger to an account called purchase returns account,
which shows credit balance. The respective personal accounts of the suppliers/creditors are
debited in their respective ledger accounts.
Self Assessment Questions 7:
1. Purchase returns are also called returns outwards.
2. Purchase returns take place when the goods bought are not as for the specification.
3. When goods, bought, are returned, suppliers account is _________ and purchase return
account is _____________.
4. Debit note is a document to slow the supplies account being debited.
4.9 Sales Returns Book
Just as goods which do not conform with specifications are sent back to suppliers, our customers
may also send the goods sold to them back to us owing to similar reasons. Then a credit note is
prepared to show that the customers/debtors account is credited to the extent of the value of the
goods returned by them to us. Goods are received from the customers and a credit note is sent to
them.
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Sales Returns Book of Raghu Medicals
Date Name of customer/debtor LFCredit Note
No.
Amount
Rs.
10-3-05 French Medicals 56 2,000
30-3-05 Shaw Medicals and Gen. Stores 57 4,000
Total 6,000
As usual the total of the book is transferred to an account called sales returns account in the
ledger and this account shows debit balance. The respective personal accounts of the customers
are credited with the value of the goods returned by them.
Self Assessment Questions 8
1. Sales return are also called returns inwards.
2. Credit not is a document to indicate that the goods are recived as returned by customers.
3. Credit noted is sent by _____________ to __________.
4.10 Bills Receivable Book
When a businessman sells goods on credit, he does not receive cash immediately. But the
businessman requires cash for which he draws a bill of exchange against the customer and the
customer accepts it. Such a bill of exchange can be discounted with a banker for commission.
The businessman who draws the bill is called drawer and the customer on whom it is drawn is
drawee or acceptor. So bill of exchange is a document in writing, promising to pay a certain sum
of money or moneys worth to the drawer at a certain date for value received. The businessmanmaintains a journal/ subsidiary book containing the details of the bills receivable. The bills
receivable account shows debit balance and the amount receivable against them is an asset.
Bills Receivable Book of Sham Sundar & Co.,
No. ofthe bill
Date ofReceipt
Date ofthe bill
FromWhom
receivedAcceptor
Wherepayable
Term ofthe bill
Due Date LFAmount
Rs.Remarks
1 04-7-04 04-7-04 Mr.X Mr. X Delhi 3 mths 7-10-04 7,000
2 1-8-04 01-8-04 Mr. Y Mr. Y Noida 4 mths 4-12-04 9,000
3 9-9-04 09-9-04 Mr. A Mr. A Agra 3 mths 12-12-04 12,000
4 10-9-04 10-9-04 Mr. B Mr. B Delhi 4 mnth 13-1-05 10,00038,000
For every bill the due date is calculated after adding three days of grace. The person from whom
the bill is received and the person who accepted the bill could be the same person or different
persons. The total of the bill receivable is transferred to bills receivable account in the ledger.
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Self Assessment Questions 9:
1. A bill is an instrument in writing similar to that of a promissory note.
2. Who is a drawer of a bill of exchange in a business ?
3. Who is the acceptor of a bill of exchange in a business ?4. Bills Receivable account shows _____________- balance.
5. Can bills receivable be discounted ?
4.11 Bills Payable Book
What is bills receivable for a drawer, is bills payable to the drawee. In a business concern,
proprietor draws bills on debtors and accepts bills drawn by trade creditors. All such bills
accepted by the proprietor are recorded in a separate book called bills payable book. The sum of
the value of bills payable for a period ending will be transferred to the ledger. Usually bills
payable account shows credit balance and hence is a liability. The form of bills payable book is
given here under.
Bills Payable Book of Sun Shine Co.,
No. ofthebill
Date of thebill
To whomgiven
Drawer PayeeWhere
payableTerm ofthe bill
Duedate
LFAmount
Rs
Datepaid
Re-marks
1 2000
June 07
Ram & Co Ram & Co Ram & Co. Agra 3 months 2000
Sept 10
56,000
2 June 12 Sundaram Sundaram Sundaram Delhi 4 months Oct 15 72,000
3 June 20 KV & Co KV & Co KV & Co Chennai 5 months Nov 23 50,000
Total 1,78,000
Self Assessment Questions 10:
1. Bills accepted by the proprietor of the business and drawn by supplies are called _________.
2. Every bill has ________ number of grace days .
3. Bill payable account shows _________ balance.
4. Bill payable represent ________.
5. when bills payable account is credited ________ account is debited.
4. 12 Cash BookCash book is an important subsidiary book and a book of original entry. It is a record of cash
receipts and cash payments made during a particular period. On the right hand side, receipts are
recorded and on the left hand side, payments are recorded. A simple cash book has two sides,
receipts side and payment side. The receipts are on debit side and the payments are on credit
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side. Just as a ledger account, the words To and By are used. Cash book may also contain
cash column and bank column. Cash column represents cash in the business and bank column
represents cash kept in the bank. Bank column of cash book is a reflection of bank pass book.
In this connection, it is important to note that in a few transactions, affecting both cash and bank
accounts, contra entries are drawn. For example, cash is deposited in the bank is a transaction in
which cash goes out and bank is the receiver. In cash account, it is recorded as payment and in
bank account it is treated as a receipt. Similarly when cash is withdrawn from bank for office
purpose, contra entry is drawn, debiting cash account and crediting bank account.
Cash book containing cash and bank columns is known as two column cash book. In the case of
three column cash book, on the receipt side, cash, bank and discount allowed columns are
stated. On the credit side, cash, bank and discount received columns are mentioned.
Single column Cash Book of Rekha & Bros
Date Receipts Cash
Rs.
Date Payments Cash
Rs.
2003
July 1
4
10
20
2830
To Balance b/d
To Sales
To Interest on FD
To Commission
To Sale of goodsTo Balagopalan
4,500
8,050
2,000
4,000
10,0005,000
2003
July 1
3
14
20
2831
By Rent of shop
By Postage
By Purchases
By Stationery
By wagesBy Narasimhan
By balance c/d
500
50
7,000
800
2,0009,000
13,800
33,550 33,550
Two-Column Cash Book of Sampson Co.,
Date ReceiptsCash(Rs.)
Bank(Rs.)
Date PaymentsCash(Rs)
Bank(Rs)
2003
Apr 5
6
7
11
20
To Balance b/d
To Sales
To Ashok Co
To Beta Co
To Sales
1,500
900
500
13,000
2,000
2,350
2003
April 2
5
8
15
30
By Wages
By Electricity
By repairs
By Yenki Ltd
By Balance c/d
50
400
2,350
400
10,800
6,150
2,800 17,350 2,800 17,350
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Three-Column Cash Book of Janardhan Works
Date Receipts
Discount
Rs
Cash
Rs
Bank
RsDate Payments
Discount
Rs
Cash
Rs
Bank
Rs
2002Jan 2
5
10
15
30
31
To balance b/d
To Patel
To Neelima
To Bank C
To Cash C
To Dividend from X Co
100
3,700
2,400
3,000
4,500
6,000
1,000
2,000
2002Jan 6
3
15
22
30
31
31
By wages
By Agarwal
By Cash C
By drawings
By Bank C
By rent
By bal c/d
50
1,550
950
1,000
5,600
3,000
2,000
1,500
7,000
100 9,100 13,500 50 9,100 13,500
Note the following points from the above illustration:
a) Discount column on the debit side represents discount allowed and on the credit side, it
represents discount received. Balancing is not done for these columns for a simple reason to
find out separately the discount allowed and received.
b) There are two contra entries each on 15th and 30th. On 15th the transaction is cash withdrawn
from bank Rs. 3,000. It is a payment from bank and it is receipt to business cash. Similarly on
30th Cash is deposited to bank Rs.1000. It is a receipt to the bank account and payment from
cash account.
c) To indicate contra entry, C is mentioned against the entry.
d) Drawings represent the amount withdrawn from bank for business purposes.
e) Dividend from X Co is received by cheque and the company should have remitted the
dividend directly to the bank account of the businessman.
f) The balance c/d is the closing balance for the month of January 2002 and this becomes
opening balance for February, 2002.
Self Assessment Questions 11:
State True or False
1. Cash book and cash account are one and the same.2. Cash book may be single column, two column or three column are.
3. Trade discount allowed to customers or received from suppliers are not recorded in cash
book.
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4. cash discount allowed to customers appears an ____ side of cash book. Cash discount
received appears are ____ side of cash book.
5. discount columns are independently totaled and not balanced.
6. Bank columns of cash book indicates Bank transations made by business man.7. contra entry is an entry where both cash account and bank account are affected.
4.12 (a) Petty Cash Book
In large organizations, petty expenses like stationery, postage, stamps, refreshments, carriage,
cartage, daily wages etc are incurred day in and day out. All these expenses are more in number
and very insignificant in value. To look after payment of such expenses, a separate petty cashier
is appointed, who obtains a definite sum of money at the beginning of a month and gives a
statement of account at the end of the period to the chief cashier. To record such payments, a
separate book, known as petty cash book is maintained.
There is a distinct method, namely imprest system which is adopted in maintaining such petty
cash book. Under this system, at the beginning of a month, a definite sum of money is given by
chief cashier to petty cashier for petty expenses. At the commencement of the next period, the
petty cashier receives money equal to what is spent during the earlier period. For instance, in the
beginning of January, 2004, a sum of Rs.10000 is given to petty cashier assuming that such
miscellaneous expenses may be to the order of Rs.10000. By the end of January, it may be
found that the actual expenses are only Rs.9000. Then the chief cashier will reimburse Rs.9000
so that the opening balance for the month of February will be Rs.10000. This is also called
analytical petty cash book.
Self Assessment Questions 12:
State True or False
1. Petty cash book is maintained in case of petty organization.
2. Imprest system of cash book is a system where the expenses paid are reimbursed.
3. The closing balance in case of imprest system of petty cash book always remains the same .
4. Imprest system of cash book is also called analytical cash book.
Illustration:
Enter the following transactions in an analytical petty cash book.
2005
November 1st . Received a cheque for petty cash Rs.1000
2nd . Paid bus fare to messengers Rs50
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4th . Paid auto fare Rs.70
10th . Postal stamps purchased Rs.80
12th . Paid for stationery Rs90
15th
. Paid for carriage Rs.6016th . Purchased envelopes Rs.50
20th . Wages paid Rs 100 .
25th . Tips given to driver Rs.50
30th . Telephone calls paid Rs. 20
Amt
Recd
Rs
CBF Date ParticularsV
No
Total
Payments
Rs
Analysis of payments LFLedger
A/cs
1,000 Nov
1st
2nd
4th
10th
12th
15th
16th
20th
25th
30th
Nov
30th
Dec 1st
To Bank
By bus fare
ByAutofare
By postal
By Stationery
By Carriage
By Envelopes
By Wages
By tipsBy Telegram
By Balance C/d
50
70
80
90
60
50
100
5020
570
430
1,000
Tra
Rs
Post
Rs
Carr
Rs
P&S
Rs
Wages
Rs
SundryExpsRs
50
70
___120
80
____80
60
20
80
90
50
140
100
____
100
50
_____
50
Note:1. CBF stands for cash book folio
2. V.No stands for Voucher No
3. Tra stands for Travelling expenses
4. Carr indicates Carriage expenses
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5. P & S stands for printing and stationery
Terminal Question
1. Purchases book records___________________ purchases.
2. Cash purchases are recorded on-_____________ side of cash book..
3. Credit sales are entered in ____________________________ book.
4. Record a journal entry for drawings made for personal purposes of the businessman.
5. If drawings are made from bank for office purpose, what is the entry?
6. During the year, if the total owners equity of Beta Co increased from Rs50,000 to Rs60000, it
is because of earnings made during the year. Is this statement necessarily true?
7. Complete the following matrix by entering either debit or credit in each cell.
Item Increases Decreases
Assets
Liabilities
Owners equity
Income
Expenses
8. Listed below a number of transactions. Identify which account to be debited and which
account to be credited, as shown for the first transaction.
Transaction Debit Credit
Paid to Gopal, a creditor Gopal account Cash account
Paid rent in advance for the next year
Purchased stationery
Paid rent for the proprietors house
Purchases machinery on part payment
Charged customers for services provided
Collected cash for the services provided
Received a cheque from customer on account
Paid dividend
Paid wages for construction of business premises
Paid interest charges on loan
Electricity bill paid
Salaries paid
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9. Journalise the following transactions in the books of Harinam Singh for the month of April,
2005.
Rs.
1
st
Harinam Singh started business with cash 60,0002
ndPurchased furniture for cash 10,000
4th
Purchased goods for cash 25,000
5th
Bought goods from Karmesh 25,000
7th
Sold goods for cash 44,000
9th
Sold goods to Ramesh 30,000
10th
Paid cash Kamalnath 15,000
11th
Received cash from Ramanath 10,000
18th
Purchased goods from Sohan Kumar 12,000
25th
Purchased computers on credit from Shivshankar 28,000
29th Paid salaries 7,000
30th
Withdrew cash for personal use from the office 10,000
30th
Paid wages 5,500
10. Record the following transactions in the subsidiary books of Ramachandra and Sons of
Chennai and show the totals of each book for the month of January, 2000.
Date Transaction Amount (Rs.)
Jan 1 Bought goods from Das Gupta 20,000
2 Sold to Sen Gupta 12,500
3 Sold goods to Ramesh 30,000
5 Bought goods from Suresh 15,0007 Sold goods to Anand 13,000
8 Received goods returned by Sen Gupta 5,500
9 Purchased goods from Shyam Sundar 16,000
10 Roy bought goods from us 25,000
11 Roy returned goods to us 3,000
14 Sold goods to Ram 45,000
16 Bought goods from Naresh 20,000
20 Returned goods to Naresh 4,000
22 Purchased furniture from Vibhu 10,000
30 Sold goods on cash to Khadju 9,00030 Paid cash to Suresh 10,000
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11. Enter the following transactions in the single column cash book of Gopichand.
March, 2003
1st .Commenced business with cash 20000
2nd
Bought goods for cash 50003rd . Sold goods for cash 4000
4th . Goods purchased from Ravi Kumar 10000
10th .Paid to Ravi Kumar 7000
14th . Cash sales 8000
18th . Purchased furniture for office 4000
22nd . Paid wages 500
25th . Paid rent 600
30th . Received Commission 4000
30th . Withdrew for personal purpose 1000
31st . Paid salary 900
12. Record the following transactions in two column cash book(Cash and Bank)in the books of
Soft Silk Co., for the month of July, 2004.Find out the closing balances.
July, 2004 Rs.
01st . Opening balance b/d(Cash) 14,500
(Bank) 7,000
04th
. Cash purchases 6,70005th . Rent for June month paid by cheque 2,500
09th . Cash sales 15,200
12th . Dividend received from X Co and paid it into bank 4,350
15th . Cash deposited into bank 5,000
18th . cash paid to Rahim Bros to settle his account 10,000
20th . Repairs paid 1,000
22nd . Commission paid by cheque 2,000
23rd . Customer, Deepak remitted to our bank account 20,000
25th
. Cash withdrawn from bank for office use 5,00027th . Drawings made from business cash for personal purposes 2,000
28th . Purchased stationery by cash 3,000
30th . Cash withdrawn for personel use from bank 1,400
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13. Enter the following transactions in the cash book with discount, cash and bank columns
May 1st . Balance of cash in hand Rs. 14000; bank overdraft at bank Rs.5000
4th Invested further capital Rs. 10000 out of which Rs.6000 was deposited in the bank.
6th . Sold goods for cash Rs. 30000
6th Collected from debtors of last year Rs. 80000; Discount allowed to them Rs. 2000.
10th . Purchased goods for cash Rs. 55,000
11th . Paid Ram Vilas, our creditor Rs. 25,000; discount allowed by him Rs.650
13th . Commission paid to our agent Rs. 5,300
14th . Office furniture purchased for cash Rs. 2,000
14th . Rent paid Rs 400; electricity charges paid Rs. 1,000
14th . Drew cheque for personal use Rs. 7,000
17th . Cash sales Rs. 25,000
18th . Collection from Atal Bihari Rs.40,000, deposited in the bank on 19th April.
19th
. Drew from the bank for office use Rs.5,00022nd . Drew cheque for petty expenses Rs.1,500
24th . Dividend received by cheque Rs.500, deposited in the bank on the same day.
25th . Commission received by cheque Rs.2,300, de[posited in the bank on 28th April
29th . Drew from the bank for salary of the office staff Rs15,000
30th . Deposited cash in the bank Rs.10,000.
Answer for Self Assessment Questions
Self Assessment Questions 1:
1. Journal
2. Yes
3. Ledger
Self Assessment Questions 2:
1. It is a book containing the entry of transactions
2. It indicates the pages number in which the summary of respective account is found in ledger.
Self Assessment Questions 3:
1. credited
2. Interest
3. Credited, debited
4. Creditors account, cash
5. Because it is cash transaction and X co is insignificant.
6. Business premises, cash
7. i. Cash A/c Dr 5,00,000 to damodar & Bros 5,00,000 ( Being advance received )
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ii. Sales Tax A/c 40,000, To cash A/c 40,000 ( sales Tax paid )
iii. Cash A/c the 5000 To BOB A/c 5000 ( cash drawn for mis.expenses )
Self Assessment Questions 4:
1. True
2. True
3. Yes
4. True
Self Assessment Questions 5:
1. False
2. False
3. True
4. Purchases A/c Dr To Ganesh account ( Being purchases made )
Self Assessment Questions 6:
1. True
2. False
3. Debtors
4. True
Self Assessment Questions 7:
1. True
2. True
3. Debited, Credited
4. True
Self Assessment Questions8:
1. True
2. True
3. Business, Customer.
Self Assessment Questions9:
1. True
2. Owner of the business who is the seller3. Customer / debtor
4. Debit
5. Yes
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Self Assessment Questions 10:
1. Bills payable
2. Three
3. Credit4. Liability
5. Suppliers account / Creditors account
Self Assessment Questions 11:
1. True
2. True
3. True
4. Debit, Credit
5. True
6. True
7. True.
Self Assessment Questions12:
1. False
2. True
3. False
4. True
Answer for Terminal Questions:
Answer
1. Credit
2. Credit
3. Sales Day
4. Drawing are A/c , Dr To Cash a/c
5. Cash account Dr To bank account.
6. The statement is true if additional capital is not brought in during the year. Owners equity
increases if profits are added or additional capital is brought in.
7.
Debit Credit
Credit Debit
Credit Debit
Credit Debit
Debit Credit
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8.
9.
1 1st
Cash a/c Debited Capital a/c Credited
2 2nd
Furniture a/c Debited Cash a/c Credited
3 4th
Goods a/c Debited Cash a/c Credited
4 5th
Purchases a/c Debited Kamalesh a/c Credited
5 7th
Cash a/c Debited Goods a/c Credited
6 9th
Ramesh a/c Debited Sales a/c Credited
7 10th
Kamel nath a/c Debited Cash a/c Credited
8 11
th
Cash a/c Debited Kamanath a/c Credited9 18
thPurchases a/c Debited Sohan Kuma Credited
10 25th
Computers a/c Debited Shiva Shankar Credited
11 29th
Salaries a/c Debited Cash a/c Credited
12 30th
Drawings a/c Debited Cash a/c Credited
10.
Total of Purchases Day book:
Das Gupta Rs. 20,000
Suresh Rs. 15,000
Shyan sunda Rs. 16,000
Naresh Rs. 4,000
Rs. 55,000
Purchase Returns Book
Prepaid Expenses Cash
Stationery Cash
Drawings CashMachinery Supplier
Customers Services
Cash Customers
Cash Customers
Dividend Cash
Business Premises Cash
Interest on loan Cash
Electricity Cash
Salaries Cash
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Naresh Rs. 4,000
Sales Returns Book
Sen Gupta Rs. 5,500
Roy Rs. 3000
Rs. 8,500
Total sales Day book
Sen Gupts Rs. 12,500
Ramesh Rs. 30,000
Anand Rs. 13,000
Ray Rs. 25,000
Ram Rs. 45,000
Rs. 1,25,50011. Cash Book
To Capital 20,000 By Goods 5000
To Sales 4,000 By Ravi Kumar 7000
To Sales 8,000 By office furniture 4000
To Commission 4,000 By wages 500
By rent 600
By drawings 1000
By salary 900
By bal c/d 17,000
36,000 36,000
Hint: Goods Purchased from Ravi Kumar is a credit purchase.
12.
Cash Bank Cash Bank
To Opening bal b/d 14,500 7000 By Purchases 6700
To Sales 15,200 By Rent 2500
To Cash 5000 By dividend 4350
To Deepak 20,000 By bank 5000
To Bank ( c ) By Rahim & Bus 10,000
By repairs 1000
By commission paid 2000
By cash ( c ) 5000
By drawings 2000
By stationery 3000
By drawings 1400
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By bal c/o 7000 16750
24,700 32,000 24,700 32,000
To Bal b/d 7,000 16,750
13. Cash Book
DiscountRs
CashRs
BankRs
DiscountRs
CashRs
BankRs
To bal b/d 14,000 By purchase 55,000
To bal b/d ( OD) 5000 By Ram vilas 650 25,000
To Capital 4000 6000 By commission 5,300
To Sales 30,000 By office furniture 2000
To Debtors 2000 80,000 By rent 400
To Sales 25,000 By electricity 1000To Atal Bihari 40,000 By drawings 7000
To Cash ( c) 4,000 By banks ( c) 40,000
To Bank 5,000 By cash ( c) 5,000
To Dividend 500 By petty expenses 1,500
To Commission 2300 By bank ( c) 2,300
To Cash ( c) 2300 By salary 15,000
To Cash ( c) 15,000 By bank ( c) 15,000
By c/d 54,300 40,300
Total 2000 2,00,300 68,800 Total 650 2,00,300 68,800