APRIL 25,2020...To Cash A/c. 20,000 2.Received Rs.10,000 from Mohan Cash A/c Dr. 10,000 ... Advance...

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SUBODH PUBLIC SCHOOL, RAMBAGH CROSSING,JAIPUR

APRIL 25,2020

HOLIDAY

PARSHURAM JAYANTI

* REVISE THE PREVIOUS TOPIC --

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APRIL 26,2020

HOLIDAY

SUNDAY


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Chapter 7 :-Double Entry System

LEARNING OUTCOMES

After studying this chapter, you should be able to understand:-

* Meaning of Double Entry System

*Classification of Accounts

*Stages or Parts of Double Entry System

*Advantages of Double Entry System

*Disadvantages of Double Entry System

REFERENCES-- 1. N.C.E.R.T

2.Extramarks

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APRIL 27,2020 Go through content given in chapter seven Double entry system from extramarks

learning app if content is not available then please refer to the following for detailed

understanding.

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“Every transaction involving money or money’s worth has a two fold aspect ---the receiving of a

value on the one hand and the giving of the same value on the other .This two fold nature in all

transactions must be recorded in the books, and this gives rise to the Double Entry Book-Keeping “.

---- Munro and Palmer

Double entry system is the most progressive ,scientific and complete system of recording the

financial transactions of a business. According to this system there are two accounts involved in every

business transaction. One of them is debited and other is credited.

A book on the double entry system was ,first of all ,written in 1494 by “Luca Pacioli”. ,a resident of

the city of Venice in Italy. Afterwards ,the book was translated into English by Huge Old Castle in 1544

.Later on ,many changes were incorporated in the system and finally a complete book named as “

English System of Book –Keeping” was written on this system by Edward Jones in 1785.

Meaning of Double Entry System --

According to this system every business transaction affects at least two accounts in opposite directions.

According to J.R. Batlibol -- “ Every business transaction has a two-fold effect and that it affects two

accounts in opposite directions and if a complete record were to be made of each such transaction, it

would be necessary to debit one account and credit another account .It is this according of the two fold

effect of every transaction that has given rise to the term Double Entry System.”

Principles or Characteristics of Double Entry System ---

1.Every business transaction affects two accounts

2.Recording of both personal and impersonal aspects

3.Recording is made according to certain specified rules

4.Preparation of Trial Balance

Classification of Accounts---

(A) PERSONAL ACCOUNTS—The accounts which relate to an individual ,firm ,company or an institution

are called personal accounts. Account of Mohan, Account of D.C.M. Limited ,Bank Account etc.

RULE-- “Debit the receiver, Credit the giver “

Example –1. Paid Rs. 20,000 to Hari.

Hari ‘s Dr. 20,000

To Cash A/c. 20,000

2.Received Rs.10,000 from Mohan

Cash A/c Dr. 10,000

To Mohan ‘s 10,000

Classification of Personal Accounts—

1.Natural Personal Accounts-- Account of ‘Natural Persons ‘ means the accounts of human beings. For

example ,Mohan’s Account, Drawings Account, Proprietor’s Account etc.

2.Artificial Personal Accounts—These accounts do not have physical existence as human beings but they

work as personal accounts. For example, any Firm’s account, any limited company’s account, any

institution’s account etc.

3.Representative Personal Accounts – When an account represent a particular person or group of

persons ,it is termed as a representative personal account. For example –Prepaid Insurance Account

Account ,Accrued Interest Account etc.

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understanding.

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(B)REAL ACCOUNTS – The accounts of all those things whose value can be measured in terms of money

and which are the properties of the business are termed as Real Accounts. Such as, Cash Accounts,

Furniture Accounts ,Machinery Accounts etc.

RULE-“ Debit what comes in ,Credit what goes out “

Example –Furniture for Rs.10,000 purchased for cash .

Furniture A/c Dr. 10,000

To Cash A/c. 10,000

Classification of Real Accounts--

1.Tangible Real Account—Tangible real accounts are the accounts of those things which can be touched,

felt ,measured ,purchased, sold etc. Examples of such accounts are Cash Account, Stock account etc.

2.Intangible Real Account –These accounts represent such things which cannot be touched. but ,of

course, their value can be measured in terms of money. Example are –Goodwill account, Patents

accounts, Copyrights accounts etc.

(C )NOMINAL ACCOUNT –These accounts include the accounts of all expenses and incomes. For

example – Salary paid, Rent paid, Discount allowed, Commission received, Discount received etc.

RULE – “Debit the expenses and losses and Credit incomes and gains “.

Examples- 1. Paid Rs.20,000 for salaries.

Salary A/c Dr. 20,000

To Cash A/c 20,000

2.Received Rs.5,000 for Commission.

Cash A/c Dr. 5,000

To Commission A/c 5,000

*IMPORTANT NOTE --When any word (as a prefix or as a suffix )is added to a Nominal Account ,it

becomes a Personal Account.

S.No. Nominal Account Personal Account

1. 2. 3. 4.

Rent A/c Salary A/c Commission A/c Interest A/c

Outstanding Rent A/c, Prepaid Rent A/c Outstanding Salaries A/c, Salaries Prepaid A/c. Commission Outstanding A/c, Commission Received in Advance A/c Interest Outstanding A/c, Interest Accrued A/c

* Stages or Parts Of Double Entry System--

1.Original Records

2.Classification

3.Summary

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*Advantages of Double Entry System or Causes of its Popularity --

1.Scientific System

2.Complete record of every transaction

3.Preparation of Trial Balance

4.Preparation of Trading and Profit &Loss Account

5.Knowledge of financial position of the business

6.Knowledge of various informations

7.Lesser possibility of frauds

8.Legal Approval

9.Comparative Study

10.Helps management in Decision making

11.Suitable for all types of Businessman

*Disadvantages of Double Entry System --

1.Number of books are to be kept under this system, as such ,the system is quite expensive.

2.It is quite difficult to apply the rules of debit and credit.

3.Only the arithmetical accuracy of the accounts is checked by preparing a trial balance under the

double entry system.

Q. Classify the following accounts into Personal ,Real or Nominal accounts :--

1. Machinery 2.Capital 3.Stock 4.Bad –Debts 5.Goodwill 6.Sales

7.Drawings 8.Salary 9.Outstanding Salary 10.Insurance

11.Prepaid Insurance 12.Interest Received

Answer—Personal Accounts –2,7,9,11

Real Accounts—1,3,5

Nominal Accounts—4,6,8,10,12

---------------------------------------------------------------

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WORK-SHEET

*Very Short Answer Questions -

1.What is Double Entry System of Book-Keeping ?

2.State the Types of Accounts.

3.What are Personal Accounts ?

4.What are Real Accounts ?

5.What are Nominal Accounts?

6.What are Natural Personal Accounts ?Give one example.

7.What is the rule of recording transactions in Personal Accounts ?

8.What is the rule of recording transactions in Real Accounts?

9.What is the rule of recording transactions in Nominal Accounts?

10.What are Artificial Personal Accounts ?Give one example .

* Practical Questions --

Q. Classify the following accounts under personal ,real or nominal accounts ---

1.Commission Paid 2.Commission Received

3.Commission Accrued 4.Prepaid Salaries

5.Leasehold Property A/c 6.Discount Allowed

7.Carriage Inwards A/c 8.Salaes A/c

9.Debtors 10.Bank Overdraft

11.Drawings A/c 12.Rent Received in Advance

13.Life Insurance Corporation of India

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Chapter 9-Books of Original Entry --JOURNAL

LEARNING OBJECTIVES

After studying this chapter, you should be able to understand : -

* Names of Books of Original Entry

*Meaning and format of Journal

*Features of Journal

*Advantages and Limitations of Journal

*Rules of Journalising

*Recording of Entries in Journal

REFERENCES-- 1. N.C.E.R.T

2.Extramarks

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understanding.

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The book in which a transactions are recorded for the first time from a source document are

called “Books of Original Entry “.Journal is one of the basic books of original entry in which transactions

are originally recorded in a chronological order according to the principles of double entry system.

When the size of the business is a small one ,then it is possible to enter each and every transaction in

the journal .But when the size of the business grows, it becomes no longer possible to record each and

every transaction in the Journal. As such, the Journal is sub-divided into a number of Sub-Journals

known as special Purpose subsidiary books or books of original entry. Each type of transaction is

recorded in a separate subsidiary book. The subsidiary books may be enumerated as under :-

1. Cash Book 2.Purchases Book 3.Sales Book 4.Purchase Return Book

5.Sales Return Book 6.Bills Receivable Book 7.Bills Payable Book 8.Journal Proper

These books are termed as “books of original entry “because transactions are first of all

recorded in these books .A businessman need not maintain all of the above mentioned subsidiary

books, but he may maintain any of the above books according to the need and requirements of the

business .

JOURNAL

Definition: A journal or book of original entry is the place where journal entries are recorded

before they are posted to the ledger accounts. A journal is a record of all the transactions a

company has recorded.

“Journal is a book of original entry in which the transactions are recorded first of all, as and when

they take place.”

Features or Characteristics of a Journal --

Journal has the following features:

1.Journal is the first successful step of the double entry system. A transaction is recorded first of all in

the journal. So the journal is called the book of original entry.

2.A transaction is recorded on the same day it takes place. So, journal is called Day Book.

3.Transactions are recorded chronologically, So, journal is called chronological book

4.For each transaction the names of the two concerned accounts indicating which is debited and which

is credited, are clearly written in two consecutive lines. This makes ledger-posting easy. That is why

journal is called “Assistant to Ledger” or “subsidiary book”

5.Narration is written below each entry.

6. The amount is written in the last two columns – debit amount in debit column and credit amount in

credit column.

Advantages of a Journal -

1.As transactions in Journal are entered as and when they take place ,the possibility of omission of a

transaction of a transactions in the books of accounts is minimized.

2.As transactions in Journal are recorded in chronological order, it is very easy to locate a particular

transactions when required.

3.By analyzing each transaction into debit and credit aspects, the journal facilitates the posting into

ledger.

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4.Each entry in the Journal carries narration which gives a brief explanation of the transaction. Hence

,postings in the ledger can be made without explanation.

5.Journal facilitates cross checking of ledger accounts in case a trial balance does not agree.

6.Since entire transaction is recorded at one place in the journal, the identity of each transaction is

maintained on a permanent basis.

7.Once the transaction is recorded in journal ,posting in the ledger can be made as and when

convenient.

Limitations of Journal --

1.When the number of transactions is large ,it is not possible to record all the transactions in Journal .It

will become bulky and voluminous .Hence ,the usual practice is to have separate journals or books for

different classes of transactions such as purchase book, sales book etc.

2.Many transactions are repetitive in nature and if all transactions are recorded in journal it will involve

debiting and crediting the same accounts time and again .It will involve repetitive posting labour also.

3.In order to ascertain cash balance everyday, cash transactions are usually recorded in a separate book

Called “ Cash book”. Thus cash transactions need not be recorded in journal.

4.Journal does not provide the required information on prompt basis.

Format of Journal --

Date Particulars L.F. Amount ( Rs.) Amount (Rs.)

Q, What is a Journal?

Ans. A Journal is a book of original entry in which transactions are recorded in the order in which they

occur i.e., in chronological order.

Q. What is Journalising ?

Ans. The process of recording transactions in the Journal is called Journalising.

Q. What is Narration ?

Ans. After each entry ,a brief explanation of the ledger account where the posting has been made from

the journal. This page number of the ledger is recorded in the journal.

Q. What is Ledger Folio or L.F.?

Ans. Ledger Folio or L.F.is the page number of the ledger account where the posting has been made

from the journal .This page number of the ledger is recorded in the journal.

Q. Why is the Journal called a book of Original entry ?

Ans. A Journal is called a book of Original (Or Primary )entry because all transactions are entered first in

this book.

Q. Give one advantages of Journal

Ans. As transactions in journal are entered as and when they take place, the possibility of omission of a

transaction in the books of account is minimised.

Q. Give one limitations of Journal.

Ans. When the number of transactions is large ,it is not possible to record all the transactions in Journal.

It will becomes bulky and voluminous.

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APRIL 30,2020

Go through content given in chapter seven Double entry system from extramarks


understanding.

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*Meaning of Goods --

Goods are those things which are purchased for resale. For example –goods are the commodities in

which the business deals.

Question 1:

Enter the following transactions in the Journal of Manohar Lal & Sons.:-

2019 Rs,

March 1 Manohar Lal & Sons started business with cash 60,000

2 Purchased furniture for cash 10,000

4 Purchased goods for cash 25,000

5 Bought goods from Kamlesh 15,000

10Paid cash to Kamlesh 15,000

16 Purchased goods from Sohan 6,000

18 Purchased goods from Sohan for cash 8,000

20 Paid rent for the office 1,000

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Ans.1. Journal

In the Books of Manohar Lal

Date Particulars L.F. Debit Amount (Rs.) Credit Amount (Rs.)

2019 Mar. 01

Cash A/c Dr. 60,000

To Capital A/c 60,000 ( Started business

with cash)

Mar. 02


To Cash A/c 10,000 (Furniture purchased

for cash)

Mar. 04

Purchases A/c Dr. 25,000

To Cash A/c 25,000 ( Goods purchased

for cash)

Mar. 05


To Kamlesh’s A/c 15,000 (Goods purchased

from Kamlesh)

Mar. 10

Kamlesh’s A/c Dr. 15,000

To Cash A/c 15,000 (Cash paid to

Kamlesh)

Mar. 16


To Sohan’s A/c 6,000 (Goods purchased

from Sohan)

Mar. 18


To Cash A/c 8,000 (Goods purchased

from Sohan for cash)

Mar. 20

Rent A/c Dr. 1,000

To Cash A/c 1,000 (Paid office rent)

TOTAL 1,40,000 1,40,000

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Question.2. Enter the following transactions in the Journal of M/s Tripathi Bros. :-

2019 Rs.

Jan. 6 Sold goods for cash 36,000

8 Sold goods to Hari 30,000

14 Received cash from Hari 18,000

26 Received Commission 750

27 Paid Salary to Gopal 1,200

28 Received cash from Hari 12,000

29 Withdrew cash from office for personal use 4,000

30 Wages paid 7,200

30 Bought Machinery for Cash 8,000

ANS.

Journal

Date Particulars L.F.

Debit

Amount

(Rs.)

Credit

Amount

(Rs.)

2019

Jan 06 Cash A/c Dr. 36,000

To Sales A/c 36,000

(Sold goods for cash)

Jan 08 Hari A/c Dr. 30,000

To Sales A/c 30,000

(Sold goods to Hari)


To Hari A/c 18,000

(Received cash from Hari)

Jan 26 Cash A/c Dr. 750

To Commission A/c 750

(Received commission)

Jan 27 Salary A/c Dr. 1,200

To Cash A/c 1,200

(Paid salary to Gopal)


To Hari A/c 12,000

(Received cash from Hari)

Jan 29 Drawings A/c Dr. 4,000

To Cash A/c 4,000

(Drew cash for personal use)

Jan 30 Wages A/c Dr. 7,200

To Cash A/c 7,200

(Paid wages)

Jan 30 Machinery A/c Dr. 8,000

To Cash A/c 8,000

(Purchased machinery)

1,17,150 1,17,150

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Question 3-Enter the following transactions in the Journal of Sahil Bros. :

2018 Rs.

October 1 Purchased goods from Anil for Cash 40,000

3 Purchased goods from Atul 75,000

6 Returned goods to Atul 3,000

8 Paid cash to Atul 50,000

10 Sold goods to Charu 1,00,000

12 Charu returned 20% of goods

15 Paid rent 2,000

20 Sahil withdrew for personal use 10,000

ANSWER:

Journal

In the Books of Sahil


2018 Oct. 01 Purchases A/c Dr. 40,000

To Cash A/c 40,000 (Goods purchased from Anil for cash)

Oct. 03 Purchases A/c Dr. 75,000 To Atul’s A/c 75,000 (Goods purchased from Atul)

Oct. 06 Atul’s A/c Dr. 3,000 To Purchases Return A/c 3,000 (Goods returned to Atul)

Oct. 08 Atul’s A/c Dr. 50,000 To Cash A/c 50,000 (Cash paid to Atul)

Oct. 10 Charu’s A/c Dr. 1,00,000 To Sales A/c 1,00,000 ( Goods sold to Charu)

Oct. 12 Sales Return A/c Dr. 20,000 To Charu’s A/c 20,000 (Goods returned to Charu)

Oct. 15 Rent A/c Dr. 2,000 To Cash A/c 2,000 (Rent paid)

Oct. 20 Drawings A/c Dr. 10,000 To Cash A/c 10,000 (Cash withdrawn for personal use) TOTAL 3,00,000 3,00,000

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MAY 01,2020



understanding.

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Chapter 9-Books of Original Entry --JOURNAL Discount—Discount are of two types—

(1)Trade Discount (2)Cash Discount

Most businesses operate in a competitive environment today. This necessitates that they offer their products and services at competitive prices, to be able to sustain good sales volume. This is why vendors are often seen offering discounts to their customers. Any reduction in price offered by vendors to their customers is termed as ‘discount’. Discounts are offered at different stages in the distribution cycle of a product – from manufacturer/trader to wholesaler to distributor to retailer to the ultimate consumer.

Trade discount:

A trade discount is the price reduction offered on the list price of the products, at the wholesale stage of the distribution cycle of a product. This may be offered by a manufacturer/trader or a wholesaler or a distributor. Trade discounts are offered on bulk purchases by traders, wholesalers, distributors or retailers and not to the end consumers. Manufacturers or traders generally have a list/catalog price which is recommended as final sale price to the end consumer, a trade discount is offered to resellers on this list price. This allows resellers to earn profits on their retail sales to consumers by purchasing at a price below list price and selling at list price to the end consumers. Trade discounts are generally offered at varied rates depending on the volume of sale i.e., generally, the larger the purchase volume by the buyer, the higher the discount % offered by the seller. Neither the seller offering the trade discount (manufacturer, wholesaler or trader) nor the buyer receiving the discount, neither records the same in its books of accounts. This means that it records the sales at the price net of discount. For example, M/s XYZ has sold 100 cartons of juice to its distributor. Each carton is priced at $50, and a trade discount of 20% is offered for sales exceeding 50 cartons. Total sales value (at gross price): 100 × 50= $5,000 Trade discount @ 20%: $1,000 (= $5,000 × 20%) Net sales value = 5000-1000= $4,000 This net sales value/purchase value, after considering impact of trade discount is recorded in the books of accounts of M/s XYZ and distributor would be as follows: Books of M/s XYZ: Accounts receivable 4000 [Dr.] Sales 4000 [Cr.] Books of distributor:

Purchases 4000 [Dr.]

Accounts payable a/c 4000 [Cr.]

Cash discount:

A cash discount is the price reduction offered on the invoice price of the products, to encourage early payment for the products. This can be offered by a manufacturer, trader, wholesaler, distributor or even a retailer. Sellers often allow credit period to buyers to pay for their purchases. Sellers offer cash discounts to their buyers as an incentive to encourage early payment i.e., payment of dues by the buyers in a time frame shorter than the credit period. This helps sellers realize their sales dues earlier as well as saves them from the administrative hassle of following up for settling dues.

https://www.termscompared.com/difference-between-sales-and-advertising/

https://www.termscompared.com/difference-between-brand-and-product/

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For example, a wholesaler offering a credit period of 30 days to the retailer, may offer a cash discount of say 2% in case the retailer pays the invoice earlier, say within 10 days. Cash discount is recorded in the books of accounts by both the seller and the buyer. The seller accounts for this as sales discount and the buyer accounts for it as purchase discount. Continuing the above example, say M/s XYZ offers a cash discount of 2% to the distributor for immediate payment of dues. The additional entry made by M/s XYZ and the distributor in their books of accounts would be as follows: Books of M/s XYZ: Bank 3200 [Dr.] Sales discount 800 [Dr.] Accounts receivable 4000 [Cr.] Books of distributor: Accounts payable 4000 [Dr] Bank 3200 [Cr.] Purchase discount 800 [Cr.] *Difference between Trade Discount and Cash Discount ---

The difference between trade discount and cash discount has been detailed below:

1. Meaning

A trade discount is a discount offered on the list prices of products on wholesale purchases.

A cash discount also termed as ‘early payment discount’ is the discount offered on the billed price of

products to incentivize early clearance of dues.

2. Purpose

Higher trade discounts are generally offered on higher sales volume, increasing the scope for higher

profit margins when the resellers ultimately sell the products to the end buyer. The purpose of trade

discount is to thus encourage bulk purchases by resellers.

The purpose of offering cash discount is to encourage early payment of sales price by the buyer.

3. Offered on

Trade discount is offered on bulk or whole sale product purchases, at their list prices.

Cash discount can be offered on all purchases, at their invoice prices.

4. Offered by

Trade discount is offered by sellers who sell in bulk – mainly manufacturers, traders, wholesalers or

distributors. Retailers who sell to end consumers do not offer trade discount.

Cash discount can be offered by any sellers who wishes to encourage early payment, including retailers.

5. Received by

Trade discount is received by buyers who purchase in bulk – this can include traders, wholesalers,

distributors or retailers.

Cash discount can be received by all buyers who agree to make early payments for their purchases.

6. Timing

Trade discount is offered at the time of purchase itself.

Cash discount is offered at the time of payment.

7. Accounting impact

Trade discount is not recorded in the books of accounts, either by the sellers or buyers i.e., sales are

accounted for at value net of trade discount.

Cash discount is recorded in the books of accounts as sales discount by sellers and purchase discount by

buyers.

8. Dependent on

Trade discount varies with and is dependent on volume of purchases.

Cash discount, on the other hand varies depending on how early the payment for purchases is made.

9. Quantum

Trade discounts are generally offered at higher percentages (5,10,20% etc).

Cash discounts are typically offered at lower percentage 1 to 2 %.

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MAY 02,2020



understanding.

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*Compound Journal Entries -- Compound journal entry is an accounting entry which affects three or more account heads. A simple journal entry has just two rows i.e. one debit and one credit, whereas a compound journal entry has three or more rows. A compound entry is actually a combination of two or more simple journal entries but instead of recording numerous separate journal entries, it is better to merge multiple journal entries of a single accounting event into a single compound entry because it saves time and keeps the related debits and credits in one place in the journal. Example The following examples illustrate the format of a compound journal entry: Example 1 On Jan 1, 20X3 Company T purchased a computer costing $1,000 from a supplier and issued a check of $3,400. The excess amount fully settles a previous amount owed by the company to the supplier. Since the total payment of $3,400 comprised of $1,000 for computer and the remaining $2,400 for past payable, this transaction may be recorded in two separate journal entries: Debit Equipment and Credit Cash for $1,000 each; and Debit Payables and Credit Cash for $2,400 each. Alternatively, it is much faster and intuitive if we record the above transaction as a single compound entry as follows: Date Account Debit Credit Jan 1, 2013 Equipment 1,000 Accounts Payable 2,400 To Cash 3,400 Example 2 FGH Company obtained a loan of $10,000 @12% interest on July 1, 20X2. The loan was repaid on Dec 31, 20X2, the year-end of FGH Company. Interest expense on loan = $10,000 × 6/12 × 12% = $600. The repayment can be recorded using the following compound journal entry: Date Account Debit Credit Dec 31, 2012 Loan Payable 10,000 Interest Expense 600 To Cash 10,600

Question 4:

Enter the following transactions in the Journal of Ganesh Bros. : 2017 Rs.

March 3 Sold goods to Dev 1,00,000

5 Received from Dev in full settlement of his account 98,000

6 Sold goods to Manmohan 80,000

8 Manmohan returned goods 1,000

15 Received from Manmohan in full settlement of his account 78,200

16 Received cash from Ram 19,500

and discount allowed 500

20 Paid cash to Pawan 4,700

and discount received from him 300

25 Sold goods to Varun of the list price of Rs. 25,000 at 20%

trade discount

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ANSWER:

Journal

In the Books of Ganesh

Date Particulars L.F. Debit Amount (Rs) Credit Amount (Rs)

2017

Mar. 03 Dev’s A/c Dr. 1,00,000

To Sales A/c 1,00,000

(Goods sold to Dev)

Mar. 05 Cash A/c Dr. 98,000

Discount Allowed A/c Dr. 2,000

To Dev’s A/c 1,00,000

(Cash received from Dev in full

settlement of his account)

Mar. 06 Manmohan’s A/c Dr. 80,000

To Sales A/c 80,000

(Goods sold to Manmohan)

Mar. 08 Sales Return A/c Dr. 1,000

To Manmohan’s A/c 1,000

(Goods returned to Manmohan)


Discount Allowed A/c Dr. 800

To Manmohan’s A/c 79,000

(Cash received from Manmohan in full




To Ram’s A/c 20,000

(Cash received from Ram and discount

allowed)

Mar. 20 Pawan’s A/c Dr. 5,000

To Cash A/c 4,700

To Discount Received A/c 300

(Cash paid to Pawan and received

discount)

Mar. 25 Varun’s A/c Dr. 20,000

To Sales A/c 20,000

(Goods sold @ 20% trade discount)

TOTAL 4,05,000 4,05,000

25


Chapter 9 -Books of Original entry--- JOURNAL

MAY 03,2020

HOLIDAY

SUNDAY


Double entry system

Journal

26



MAY 04,2020



understanding.

27



Question 5.Pass Journal entries in the books of Hari Shankar & Co. from the following:

2017 Rs.

April 1 Commenced business with cash 50,000

2 Purchased goods from Subhash 20,000

4 Sold goods to Ramnath 15,000

6 Ramnath returned defective goods 1,000

10 Received cash from Ramnath and 13,800

Discount allowed 200

12 Gopal sold goods to us 10,000

14 Paid to Gopal in full settlement of his account after deducting 5% discount.

15 Paid Rent 10,000

16 Paid Rent of Hari Shankar's residence 5,000

18 Purchased goods for cash from Govind for Rs. 6,000 at 20% trade discount.

20 Purchased goods from Govind for Rs. 10,000 at 20% trade discount.

24 Paid to Govind Rs. 7,850 in full settlement of his account.

25 Paid to Subhash Rs. 4,750; discount received Rs. 250.

30 Paid Wages Rs. 400; Salaries Rs. 4,000; Advertisement expenses Rs. 800 and Trade

expenses Rs. 1,000.

ANSWER:

Journal

In the Books of Hari Shankar & Co.


2017

Apr. 01 Cash A/c Dr. 50,000

To Capital A/c 50,000

(Started business with cash)

Apr. 02 Purchases A/c Dr. 20,000

To Subhash’s A/c 20,000

(Goods purchased from Subhash)

Apr. 04 Ramnath’s A/c Dr. 15,000

To Sales A/c 15,000

(Goods sold to Ramnath)

Apr. 06 Sales Return A/c Dr. 1,000

To Ramnath’s A/c 1,000

(Goods returned to Ramnath)

Apr. 10 Cash A/c Dr. 13,800


To Ramnath’s A/c 14,000

(Cash received from Ramnath and allowed

discount)


To Gopal’s A/c 10,000

(Goods purchased from Gopal)

Apr. 14 Gopal’s A/c Dr. 10,000

28

To Cash A/c 9,500

To Discount Received

A/c

500

(Cash paid to Gopal in full settlement of his

account)

Apr. 15 Rent A/c Dr. 10,000

To Cash A/c 10,000

(Rent paid)

Apr. 16 Drawings A/c Dr. 5,000

To Cash A/c 5,000

(Rent paid for Hari Shankar’s

residence)


To Cash A/c 4,800

(Goods purchased for cash at 20% trade

discount)


To Govind’s A/c 8,000

(Goods purchased from Govind at 20% trade

discount)

Apr. 24 Govind’s A/c Dr. 8,000

To Cash A/c 7,850


A/c

150

(Cash paid to Govind in full settlement of his

account)

Apr. 25 Subhash’s A/c Dr. 5,000

To Cash A/c 4,750


A/c

250

(Cash paid to Subhash in full settlement of his

account)

Apr. 30 Wages A/c Dr. 400

Salaries A/c Dr. 4,000

Advertisement Expenses A/c Dr. 800

Trade Expenses A/c Dr. 1,000

To Cash A/c 6,200

(Expenses paid)

TOTAL 1,67,000 1,67,000

Question 6--Pass Journal Entries for the following transactions: 2017

Jan 6 Sold goods to Muskan of the list price of Rs. 2,00,000 at trade

discount of 20%.

8 Muskan returned goods of the list price of Rs. 5,000.

15 Received from Muskan the full payment under a cash

discountof 4%.

29



ANSWER:

Question 7: Give Journal Entries for the following transactions in the books of Raja Ram & Co. :

2017

March3 Bought goods for cash of the list price of Rs. 80,000 at 10% trade discount and2 ½ % cash discount.

5 Sold goods for cash of the list price of Rs. 1,00,000 at 15% trade discount and 3% cash discount.

6 Sold goods to Nagpal of the list price of Rs. 50,000 at 20% trade discount. 8 Nagpal returned one-fourth of the above goods.

10 Nagpal settled the account by paying cash under a discount of 5%. ANSWER: Journal

In the Books of Raja Ram


Debit

Amount

(Rs)

Credit

Amount (Rs)

2017

Mar. 03 Purchases A/c Dr. 72,000

To Cash A/c 70,200

To Discount Received A/c 1,800

(Goods purchased for cash and received cash

discount)

Journal

In the Books of …

Date Particulars L. F.

Debit Amount (Rs) Credit Amount (Rs)

2017 Jan. 06

Muskan’s A/c Dr. 1,60,000

To Sales A/c 1,60,000 (Goods sold to Muskan at trade discount of

20%)

Jan. 08

Sales Return A/c 4,000

To Muskan’s A/c 4,000 (Goods returned by Muskan

deducting trade discount of 20%)

Jan. 15

Cash A/c Dr. 1,49,760

Discount Allowed A/c Dr. 6,240 To Muskan’s A/c 1,56,000 (Cash received from Muskan in full

settlement of her account)

3,20,000 3,20,000

30



To Sales A/c 85,000

(Goods sold for cash and allowed cash discount)

Mar. 06 Nagpal’s A/c Dr. 40,000

To Sales A/c 40,000

(Goods sold to Nagpal)

Mar. 08 Sales Return A/c Dr. 10,000

To Nagpal’s A/c 10,000

(Goods returned by Nagpal)



To Sales A/c 30,000

(Cash received in full settlement)

TOTAL 2,37,000 2,37,000

Question 8:Journalise the following transactions: 2019

March5 Sold goods to Shruti for Rs. 80,000 at 15% trade discount and 4% cash discount.

Received 75% amount immediately through a cheque.

10

Purchased goods from Richa for Rs. 60,000 at 10% trade discount and 5% cash

discount. 60% amount paid by cheque immediately.

ANSWER-

Working Notes: 1. Amount of goods sold would be Rs 68,000 (80,000 - 15% of 80,000) and cash discount would

be Rs 2,040, it would be calculated on amount received Rs 51,000 i.e., 75% of Rs 68,000. 2. Amount of goods purchased would be Rs 54,000 (60,000 - 10% of 60,000) and cash discount

would be Rs 1,620, it would be calculated on amount paid Rs 32,400 i.e., 60% of Rs 54,000

Journal

Date Particulars L.F. Debit

Amount (Rs.)

Credit Amount

(Rs.)

2019

Mar.05 Shruti Dr. 68,000

To Sales A/c 68,000 (Goods sold to Shruti at 15% trade discount)

Mar.05 Bank A/c Dr. 48,960 Discount Allowed A/c Dr. 2,040

To Shruti 51,000 (Payment received and cash discount

allowed)

Mar.10 Purchases A/c Dr. 54,000 To Richa 54,000 (Goods purchased from Richa at 10% trade

discount)

Mar.10 Richa Dr. 32,400 To Bank A/c 30,780 To Discount Received A/c 1,620 (Payment made and cash discount received)

31



MAY 05,2020



understanding.

32



*Recording of Banking transactions --

S.No. Transactions Entry

1. When cash is deposited into bank Bank A/c Dr. To Cash A/c.

2. When Cash is withdrawn from bank

Cash A/c Dr. To Bank A/c.

3. When cheques ,drafts etc. received from the customers are deposited into the bank on the same day.

Bank A/c Dr. To Customer’s Personal A/c

4. When cheques , drafts etc. received from the customers are not sent to bank on the same day.

Cheques in Hand A/c Dr. To Customer’s Personal A/c.

5. On the date when above cheques ,drafts etc. are sent to the bank.

Bank A/c Dr. To Cheques in Hand A/c

6. When a customer directly deposits the amount in our bank account.

Bank A/c Dr. To Customer’s Personal A/c

7. When a cheque previously deposited into the bank is dishonoured.

Customer’s Personal A/c Dr. To Bank A/c.

8.A When a cheque is received from a customer and discount is allowed to him ,and if the cheque is deposited into the bank on the same day.

Bank A/c Dr. Discount Allowed A/c. Dr. To Customer’s Personal A/c.

B In case the above cheque is dishonoured ,the discount allowed to the customer will also be withdrawn.

Customer’s Personal A/c Dr. To Bank A/c To Discount Allowed A/c.

9. When payment is made by issue of a cheque.

Personal A/c Dr. To Bank A/c

10. When expenses are paid by the issue of a cheque.

Expenses A/c Dr To Bank A/c

11. When cash is withdrawn from the bank for the personal use of the proprietor.

Drawings A/c Dr. To Bank A/c

12. A.

When interest is charged by the bank. Interest A/c Dr. To Bank A/c

B. When interest is allowed by the bank.

Bank A/c Dr To Interest A/c

13. When bank charges some amount for the services rendered by the bank.

Bank Charges A/c Dr. To Bank A/c

*OPENING ENTRY -

The Opening Entries is the balance sheet amount which is brought forward at the beginning of an accounting period from the end of previous accounting. The opening balance consists of Assets, Capital & Liabilities of the company brought from previous year’s Balance sheet.

In a going concern, the closing balance of previous accounting period becomes the opening balance for the beginning of the next accounting year. The opening balance is transferred to a new ledger books for new accounting period, or in a new folio in the same ledger. But most of the organisations prefer new ledger for transferring opening entry. This balance are appeared on the credit or debt side of the ledger.

The opening entry is passed by debiting all the assets of the company shown on the balance sheet and crediting all liabilities including capital. If the amount of Capital is not given, then this can be determined by accounting equation: Assets = Liabilities + Capital

Capital = Assets – Liabilities

33

Opening Entries for new Business & Running Business When a new business is commenced, the assets and liabilities brought into the business are to be incorporated in the books of accounts by an opening entry passed through the General Journal by debiting the assets and crediting the liabilities brought in and also crediting the Capital Account with the excess of assets over liabilities.

In case of running business, opening entry is necessary at the beginning of a new accounting period when new books of accounts are introduced to record the balance of assets, liabilities and capital brought forward from a previous period.

Again, a firm keeping accounts under single entry system may decide to convert into double entry system. An opening entry is required on the date of such conversion.

Example of Opening Entries On 1st January,2019, Imperial Plc’s assets and liabilities are:

Assets: Cash in Hand Rs. 6,000, Cash at Bank Rs. 17,000, Stock Rs. 3,000, Account Receivable Rs. 7,000; Building Rs. 500,000, Investment Rs. 35,000; Furniture Rs 40,000. Liabilities: Accounts Payable 50,000, Loan A/c Rs 130,000 Pass on Opening Journal Entry.

Solution :

Date Particulars L.F Debit Credit

Cash in hand A/c ……… DR…. 6,000

Cash at Bank A/c ………. DR… 17,000

Stock A/c……………………..DR… 3,000

Account receivable A/c…DR… 7,000

Building A/c………………… DR… 500,000

Investment A/c……………..DR… 35,000

Furniture A/c ……………….DR … 40,000

To Accounts Payable ….CR……. 50,000

To Loan A/c ………………….. CR ….. 130,000

To Capital A/c (Balance) …. CR … 428,000

608,000

608,000

Being Opening Assets and Liabilities are transferred to new

Ledger.

*BAD—DEBTS --

Bad debt is an expense that a business incurs once the repayment of credit previously extended

to a customer is estimated to be uncollectible. Bad debt is a contingency that must be

accounted for by all businesses who extend credit to customers, as there is always a risk that

payment will not be received.

For Example --Ravi who owed us Rs.10,000 is declared insolvent and 30 paise in a rupee is received

from his estate. The journal entry will be :

Date Particulars L.F. Amount (Dr.) Amount (Cr.)

Cash A/c Dr. Bad Debts A/c Dr To Ravi (30 Paise in the rupee received from Ravi on his insolvency )

3,000 7,000

10,000

https://www.investopedia.com/terms/u/uncollected-funds.asp

34



MAY 06,2020



understanding.

35



*Some Special Entries --

(1)Bad Debts Recovered --Sometimes ,it so happens that the bad debts previously written off are

subsequently recovered .In such cases, the following entry is passed --

Cash A/c Dr

To Bad Debts Recovered A/c

(2)Outstanding Expenses –It is quite common for a business enterprise to be left with some expenses

which are yet to be paid at the end of the accounting year due to one reason or the other. Such

expenses are termed as Outstanding expenses. These are the expenses which should have been paid

during the current year but which have not been paid.

Expenses A/c Dr

To Outstanding Expenses A/c

Outstanding Expenses Account is a liability. It has been credited because it is a representative

personal account, representing the employees to whom expenses are to be paid.

(3)Prepaid Expenses—There are certain expenses which are related to the next year but have been paid

during the current year in advance. These are called prepaid expenses. The benefit of such expenses

Will be received during the next accounting year.

Prepaid Expense A/c Dr

To Expenses A/c

Prepaid Expenses Account is an assets. It has been debited because it is a representative personal

account and represents those persons to whom payment has been made in advance.

(4)Depreciation –It is the permanent and continuing decrease in the value of an asset on account of

wear and tear and passage of time. It is a business expense though it is not paid in cash .Depreciation is

a nominal account since it represents a loss and hence is debited. Asset account will be credited as its

value is reduced due to depreciation .Journal Entry will be :

Depreciation A/c Dr

To Asset A/c

(5)Interest on Capital --- In order to ascertain the true efficiency of the business it is a normal practice

to charge business with interest on owner’s capital .Profits left after charging the amount of such

interest are the real profits earned by the business. Such interest is a loss from the point of view of the

business and therefore according to the rule of nominal accounts .Interest A/c is debited in the Journal

entry. The amount of such interest is a gain from the point of view of the proprietor. His capital is

increased by the amount of interest and therefore the capital account is credited in the Journal entry.

(6)Interest on Drawings --If the firm allows interest on capital it should also charge interest on drawings

made by the proprietor .Such an interest is an expense for the proprietor and a gain to the business.

Hence an entry is made by debiting the drawings account and crediting interest account.

36



MAY 07,2020



understanding.

37



Question 9 - Journalise the following transactions: 2017 Rs.

Jan. 1 Paid into bank for opening a Current Account 10,000

3 Goods sold for Rs. 50,000 and the amount was deposited into the bank

7 Amount withdrawn from bank 20,000

10 Goods sold for Cash 15,000

12 Amount deposited into bank 12,000

14 Goods purchased and payment made by cheque. 25,000

ANSWER: Journal

In the Books of …


2017

Jan. 01 Bank A/c Dr. 10,000

To Cash A/c 10,000

(Payment made to open current

account)


To Sales A/c 50,000

(Goods sold and amount deposited

into bank)

Jan. 07 Cash A/c Dr. 20,000

To Bank A/c 20,000

(Cash withdrawn from Bank)

Jan. 10 Cash A/c Dr. 15,000

To Sales A/c 15,000

(Goods sold for cash)


To Cash A/c 12,000

(Cash deposited into bank)

Jan. 14 Purchases A/c Dr. 25,000

To Bank A/c 25,000

(Goods purchased and payment

made by cheque)

TOTAL 1,32,000 1,32,000

Question -10.Journalise the following transactions in the books of Kanishk Traders:

(i) Sold goods costing Rs.1,20,000 to Charu at a profit of 33 1 / 3% on cost less 15% Trade

Discount.

(ii) Sold goods costing Rs.80,000 to Arun against cheque at a profit of 25% on cost less 15%

Trade Discount.

(iii) Paid by cheque Rs. 8,400 as insurance premium for a period of 12 months starting 1st

August 2016. Financial year closes on 31st March every year.

38



ANSWER:

Journal

In the Books of Kanishk


i) Charu’s A/c Dr. 1,36,000


(Goods sold to Charu)

ii) Bank A/c Dr. 85,000

To Sales A/c 85,000

(Goods sold to Arun)

iii) Insurance A/c Dr. 8,400

To Bank A/c 8,400

(Insurance premium paid through cheque)

Prepaid Insurance A/c Dr. 2,800

To Insurance A/c 2,800

(Insurance premium paid in advance for

four months)

TOTAL 2,32,200 2,32,200

39



MAY 08,2020



understanding.

40



Question 11. Journalise the following transactions in the Journal of Navin Gupta & Sons.:-

1. Out of Insurance premium paid this year, Rs.15,000 is related to next year.

2. Credit purchases from Ram & Co. for Rs.50,000. Cash discount will be received at 5% on

payment of bill within 10 days.

3. Cash paid to Ram & Co. and discount availed of.

4. Paid Income Tax Rs. 20,000 by cheque.

5. Goods costing Rs. 2,00,000 sold for cash at a profit of 10%.

6. Purchased iron safe for Rs. 2,00,000 filing cabinet for Rs.50,000. and Computer for

Rs.1,00,000.

ANSWER:

Journal

In the Books of Sh. Navin Gupta


1) Prepaid Insurance A/c Dr. 15,000


(Prepaid insurance recorded)

2) Purchases A/c Dr. 50,000

To Ram & Co. 50,000

(Goods purchased on credit from Ram & Co.)

3) Ram & Co. Dr. 50,000

To Cash A/c 47,500


(Cash paid to Ram & Co. in full settlement)

4) Drawings A/c Dr. 20,000

To Cash A/c 20,000

(Paid income tax)

5) Cash A/c Dr. 2,20,000


(Goods sold for cash including profit of 10%)

6) Office Equipment A/c Dr. 3,50,000

To Cash A/c 3,50,000

(Office equipment purchased)

TOTAL 7,05,000 7,05,000

Question 12. Pass Journal Entries for the following transactions:−

1. Provide depreciation on Furniture Rs. 500 and on Machinery Rs. 2,000.

2. Received cash Rs. 1,000 for bad-debts written off last year.

3. Ajay Singh was declared bankrupt. He owed Rs.2,500 to us. Nothing could be recovered from

his estate.

4. Rs.20,000 for wages and Rs.4,000 for salaries are outstanding.

5. Purchased furniture for Rs. 6,000 for the proprietor and paid the amount by cheque.

6. Provide 9% interest on capital amounting to Rs. 2,00,000.

7. Charge interest on drawings Rs. 1,000.

41



ANSWER:

Journal

In the Books of …


1. Depreciation A/c Dr. 2,500

To Furniture A/c 500

To Machinery A/c 2,000

(Depreciation charged on furniture and

machinery)

2. Cash A/c Dr. 1,000

To Bad Debts Recovered A/c 1,000

(Bad debts recovered)

3. Bad Debts Dr. 2,500

To Ajay Singh’s A/c 2,500

(Bad debts written-off)

4. Wages A/c Dr. 20,000


To Outstanding Wages A/c 20,000

To Outstanding Salaries A/c 4,000

(Wages and Salaries were

outstanding)

5. Drawings A/c Dr. 6,000

To Bank A/c 6,000

(Furniture purchased for personal use)

6. Interest on Capital A/c Dr. 18,000


(Interest on capital provided)


To Interest on Drawings A/c 1,000

(Interest on drawings charged)

TOTAL 55,000 55,000

42



MAY 09,2020



understanding.

43



Question.13.-- State the accounts to be credited along with the amount for payment to Aaron of Rs.5,000 by cheque in full settlement of 6,000.

Answer--

Full settlement of Rs. 6,000

Paid amount 6,000

Less:Paid cheques by Aaron 5,000

Discount Received 1,000

Date Particulars L.F Dr.

Rs.

Cr.

Rs.

Aaron A/c Dr.

To Bank A/c

To discount received A/c

(Being full settlement of Rs 6,000)

6,000 5,000

1,000

*Expenditure on the installation of Machinery and on the erection of Building ---

Machinery and Building are the assets of the business .As such ,any expenditure incurred on the

carriage and installation of machinery such as freight ,transit expenses ,installation expenses ,wages

paid for the installation etc.is treated as capital expenditure and is debited to the Machinery Account

.Similarly ,any expenditure incurred for the construction of a building such as the purchase of materials

and the payment of wages are also treated as capital expenditure and as such debited to the Building

Account .However ,repair charges incurred on an assets which is already appearing in the books are

debited to repairs account.

44



MAY 10,2020

HOLIDAY

SUNDAY


* PRACTICAL QUESTIONS OF JOURNAL

45



MAY 11,2020



understanding.

46



* SPECIAL TRANSACTIONS RELATING TO GOODS ---

(1)Drawings in Goods --- Sometimes the proprietor withdraws goods from the business for his personal

use. The entry for recording this transaction will be :--

Drawings A/c Dr.

To Purchases A/c

(Goods taken for personal use )

Purchase account is credited because as a result of the transaction the net amount of purchase of

the business is reduced .Sales account should not be credited since the sale has not taken place. Also

When the goods go out of business at cost price , purchase account should be credited and not Sales

account.

(2)Goods given away as charity --Charity is an expense of the business, as such charity account will be

debited .Goods are going out of the business at cost price, hence purchases are reduced to that extent

and as such ,purchases account will be credited .The entry will be ---

Charity A/c Dr.

To Purchases A/c

(Goods given away as charity )

(3)Goods distributed as free sample ---Sometimes the goods are distributed as free samples to the

potential buyers in order to promote sales .As such ,free samples can legitimately be treated as

expenses on advertisement .The entry will be --

Advertisement Expenses A/c Dr.

To Purchases A/c

(Goods distributed as free samples )

(4)Loss of goods by theft or loss by fire : The entry will be :-

Loss by theft A/c Dr.

Loss by fire A/c Dr.

To Purchases A/c

(Goods lost by theft and goods destroyed by fire )

*In case goods were insured ---

Insurance Company Dr.

To Loss by Theft or Loss by Fire

*If the full amount of claim is received from the Insurance Company --

Bank A/c Dr.

To Insurance Company

*If the Insurance Company does not admit full claim ---

Bank A/c Dr.

Profit and Loss A/c Dr.

To Insurance Company A/c

* V.P.P (Value Payable Post ) --- Under this system seller sends the goods through Post Office .Buyer

pays the value of goods to the Post Office and gets the delivery of goods from Post Office.

47



MAY 12,2020



understanding.

48



WORK -- SHEET

Very Short Answer Questions ---

1.What is a Journal ?

2.Why is the Journal called a book of Original entry ?

3.What is Journalising ?

4.Give one advantage of Journal .

5.Give one limitations of Journal.

6.What is Narration ?

7.What is Ledger Folio or L.F.?

8.What is Compound Journal Entry ?

9.What is Opening Entry?

10.What entry is passed for withdrawing of goods by the proprietor for personal use ?

11.Which account should be debited ,if wages are paid for installation of a machine ?

49



MAY 13,2020



understanding.

50

SUBODH PUBLIC SCHOOL, RAMBAGH CROSSING,JAIPUR Chapter 9-Books of Original Entry --JOURNAL

Question—14. Following balances appeared in the books of Radhika Traders as on 1st April, 2017:− Assets: Cash Rs. 8,000; Cash at Bank Rs. 7,000; Stock Rs. 30,000; Debtors : Rs.36,000 (Mohan Rs. 10,000; Sohan Rs. 12,000; Dinesh Rs. 14,000); Furniture Rs. 5,000; Building Rs.25,000. Liabilities: Creditors− X Rs. 5,000; Y Rs.6,000. In April, 2017, the following transaction took place:

2017 Rs.

April 2

Bought goods of the list price of Rs. 6,000 from Khanna Brothers

less 15% trade discount and 2% cash discount and paid 40%

price at the same time.

3 Received a draft from Mohan in full settlement and deposited it

into Bank 9,750

5 Purchased goods from Suresh of the list price of Rs. 8,000 at

20% trade discount and paid him by cheque.

8 Sold goods and received a cheque 25,000

10 Deposited the above cheque into Bank

12 Sohan deposited in our Bank A/c 4,000

16 Paid Income Tax by Cheque 5,600

20 Received a cheque from Sohan and sent to Bank 7,800

Discount allowed 200

21 Withdrew from Bank−for office 2,000

for private use 4,000

23 Sent a cheque to X in full settlement of his A/c 4,900

27 Cheque of Sohan returned by the bank as dishonoured.

28 Dinesh was declared insolvent and a payment of 60 paise in a

Rs.received from his estate by a Cheque

30 Bank allowed Interest 350

Paid for Rent by cheque 1,500

Paid for traveling expenses by cheque 500 Pass Journal entries for the above transactions.

Answer--

Journal In the Books of Radhika Traders

Date Particulars L.

F. Debit Amount (Rs) Credit Amount (Rs)

2017

April 01 Cash in Hand A/c Dr. 8,000

Cash at Bank A/c Dr. 7,000

Stock A/c Dr. 30,000

Mohan’s A/c Dr. 10,000

Sohan’s A/c Dr. 12,000

Dinesh’s A/c Dr. 14,000


Building A/c Dr. 25,000

To X’s A/c 5,000

To Y’s A/c 6,000

To Capital A/c

(Balancing figure)

1,00,000

(Balances of previous year brought

forward)

April 02 Purchases A/c Dr. 5,100

To Khanna Brothers 3,060

51

To Cash A/c 1,999


A/c

41

(Goods purchased and received

discount on cash payment)

April 03 Bank A/c Dr. 9,750


To Mohan 10,000

(Draft received from Mohan

deposited into bank)

April 05 Purchases A/c Dr. 6,400

To Bank A/c 6,400

(Goods purchased and payment

made by cheque)

April 08 Cheques-in-Hand A/c Dr. 25,000

To Sales A/c 25,000

(Goods sold and received

a cheque)


To Cheques-in-Hand A/c 25,000

(Cheque deposited into

bank)


To Sohan’s A/c 4,000

(Amount deposited by

Sohan)

April 16 Drawings A/c Dr. 5,600

To Cash A/c 5,600

(Income tax paid)



To Sohan’s A/c 8,000

(Banked cash received from Sohan

in full settlement)

April 21 Drawings A/c Dr. 4,000

Cash A/c Dr. 2,000

To Bank A/c 6,000

(Amount withdrawn for office and

personal use)

April 23 X Dr. 5,000

To Bank A/c 4,900


A/c

100

(Cheque issued to X in full


April 27 Sohan’s A/c Dr. 8,000

To Bank A/c 7,800

To Discount Allowed

A/c

200

(Cheque received from Sohan gets

dishonoured)

52

April 28 Cash A/c Dr. 8,400

Bad Debts A/c Dr. 5,600

To Dinesh’s A/c 14,000

(Cash received and bad-debts

written off)

April 30 Bank A/c Dr. 350

To Interest A/c 350

(Interest allowed by bank)

April 30 Rent A/c Dr. 1,500

Travelling Expenses A/c Dr. 500

To Bank A/c 2,000

(Expenses paid through

cheque)

TOTAL 2,35,450 2,35,450

Question---15.

Pass Journal Entries for the following transactions:−

1. Provide depreciation on Furniture Rs. 500 and on Machinery Rs.2,000.

2. Received cash Rs. 1,000 for bad-debts written off last year.

3. Ajay Singh was declared bankrupt. He owed Rs. 2,500 to us. Nothing could be recovered

from his estate.

4. Rs.20,000 for wages and Rs. 4,000 for salaries are outstanding.

5. Purchased furniture for Rs. 6,000 for the proprietor and paid the amount by cheque.

6. Provide 9% interest on capital amounting to Rs.2,00,000.

7. Charge interest on drawings Rs.1,000.

ANSWER:

Journal

In the Books of …


1. Depreciation A/c Dr. 2,500

To Furniture A/c 500

To Machinery A/c 2,000

(Depreciation charged on furniture and

machinery)

2. Cash A/c Dr. 1,000

To Bad Debts Recovered A/c 1,000

(Bad debts recovered)

3. Bad Debts Dr. 2,500

To Ajay Singh’s A/c 2,500


4. Wages A/c Dr. 20,000



To Outstanding Salaries A/c 4,000

(Wages and Salaries were

outstanding)


To Bank A/c 6,000

53

(Furniture purchased for personal use)

6. Interest on Capital A/c Dr. 18,000




To Interest on Drawings A/c 1,000

(Interest on drawings charged)

TOTAL 55,000 55,000

54



MAY 14,2020



understanding.

55



Question---16. Pass journal entries for the following: Jan.

5

Purchased goods for Cash Rs.10,000 and spent Rs. 200 for their

carriage.

Jan.

10

Purchased machinery for Cash Rs. 50,000 and spentRs. 500 for its

carriage.

Jan.

15

Paid Rs. 20,000 for cement, Rs.10,000 for timber and Rs. 5,000 as

wages for the construction of building.

Jan.

17

Purchased an old machinery for Rs. 20,000 and spent Rs. 2,500 on its

immediate repairs.

Jan.

20 Paid Rs. 500 for repairing some other machinery.

ANSWER:

Journal

In the Books of …


Jan.

05


Carriage A/c Dr. 200

To Cash A/c 10,200

(Goods purchased for cash and paid

carriage)

Jan.

10

Machinery A/c Dr. 50,500

To Cash A/c 50,500

(Machinery purchased for cash and

carriage paid)

Jan.

15

Building A/c Dr. 35,000

To Cash A/c 35,000

(Payment made for construction of

building)

Jan.

17

Machinery A/c Dr. 22,500

To Cash A/c 22,500

(Machinery purchased and expenses

paid)

Jan.

20

Repairs A/c Dr. 500

To Cash A/c 500

(Payment made for repairs)

TOTAL 1,18,700 1,18,700

56



Question 17-- Journalise the following transactions of Raj Kumar Traders, timber

merchants:-

1. Purchased timber from Kuldeep Kumar, for cashRs.2,000 and credit Rs. 10,000.

2. Paid to Kuldeep Kumar in full settlement of his account Rs. 9,950.

3. Paid rent in advance Rs. 10,000.

4. Purchased machinery for Rs. 1,00,000 by cheque and carriage Rs. 2,000 and installation

charges Rs. 1,000 paid in Cash.

5. Purchased goods for Rs. 50,000 from Govind and sold it to Manohar for Rs. 65,000.

ANSWER:

Journal

In the Books of Raj Kumar



To Cash A/c 2,000

To Kuldeep Kumar’s A/c 10,000

(Goods purchased for cash and

credit)

2) Kuldeep Kumar’s A/c Dr. 10,000

To Cash A/c 9,950

To Discount Received A/c 50

(Cash paid to Kuldeep Kumar in

full settlement)

3) Prepaid Rent A/c Dr. 10,000

To Cash A/c 10,000

(Rent paid in advance)

4) Machinery A/c Dr. 1,03,000

To Bank A/c 1,00,000

To Cash A/c 3,000

(Machinery purchased and

expenses paid)


To Govind’s A/c 50,000

(Goods purchased from Govind)

Manohar Lal’s A/c Dr. 65,000

To Sales A/c 65,000

(Goods sold to Manohar Lal)

TOTAL 2,50,000 2,50,000

57



MAY 15,2020



understanding.

58



Questions—18. Pass Journal entries for the following transactions:−

1. Purchased Machinery for Rs. 20,000 and paid Rs.200 for its carriage.

2. Received a cheque fo Rs. 4,850 from X in full settlement of his account of Rs. 5,000.

Cheque was immediately deposited into bank.

3. Received by cheque a first and final payment of 60 paise in a Rs. from Y who owed us

Rs. 10,000.

4. Sold goods to Z for Rs. 10,000 at a trade discount of 20%. Next day a cheque was

received from him after deducting 5% cash discount. Cheque was immediately deposited

into Bank.

5. Goods costing Rs. 20,000 sold to Manoj at a profit of 20% on cost less 10% trade

discount.

ANSWER: Journal

In the Books of …


1) Machinery A/c Dr. 20,200

To Cash A/c 20,200

(Machinery purchased and paid for

carriage)

2) Bank A/c Dr. 4,850


To X’s A/c 5,000

(Cheque received from X in full

settlement)

3) Cash A/c Dr. 6,000

Bad Debts A/c Dr. 4,000

To Y’s A/c 10,000

(Cash received and bad debts written-

off)

4) Z’s A/c Dr. 8,000

To Sales A/c 8,000

(Goods sold to Z on credit)

Bank A/c Dr. 7,600


To Z’s A/c 8,000

(Cheque received in full settlement)

5) Manoj’s A/c Dr. 21,600

To Sales A/c 21,600

(Goods sold to Manoj)

TOTAL 72,800 72,800

59



MAY 16,2020



understanding.

60


Chapter 9-Books of Original Entry --JOURNAL Question -19. Journalise the following transactions:−

(i) Sold goods to Brijesh of the list price of Rs. 10,000 at trade discount of 5%. Received full

payment in cash.

(ii) Goods given away as charity Rs. 1,000.

(iii) Charge interest on capital of Rs. 5,00,000 @ 7% p.a.

(iv) Outstanding wages Rs. 3,000.

(v)Rs. 5,000 due from Sunny are now bad debts.

(vi) Rs.50,000 cash sales (of goods costing Rs. 40,000).

ANSWER:

Journal

In the Books of …


1) Cash A/c Dr. 9,500

To Sales A/c 9,500

(Goods sold for cash to Brijesh)

2) Charity A/c Dr. 1,000

To Purchases A/c 1,000

(Goods given away as charity)

3) Interest on Capital A/c Dr. 35,000



4) Wages A/c Dr. 3,000


(Outstanding wages provided)

5) Bad Debts A/c Dr. 5,000

To Sunny’s A/c 5,000


6) Cash A/c Dr. 50,000

To Sales A/c 50,000

(Goods sold for cash)

TOTAL 1,03,500 1,03,500

Question--20 Journalise the following transactions in the Journal of Navin Gupta &

Sons.:-

1. Out of Insurance premium paid this year, Rs.15,000 is related to next year.

2. Credit purchases from Ram & Co. for Rs. 50,000. Cash discount will be received at 5%

on payment of bill within 10 days.

3. Cash paid to Ram & Co. and discount availed of.

4. Paid Income Tax Rs. 20,000 by cheque.

5. Goods costing Rs. 2,00,000 sold for cash at a profit of 10%.

6. Purchased iron safe for Rs.2,00,000 filing cabinet for Rs. 50,000 and Computer for Rs.

1,00,000.

61



ANSWER:

Journal

In the Books of Sh. Navin Gupta


1) Prepaid Insurance A/c Dr. 15,000


(Prepaid insurance recorded)


To Ram & Co. 50,000

(Goods purchased on credit from Ram &

Co.)

3) Ram & Co. Dr. 50,000

To Cash A/c 47,500


(Cash paid to Ram & Co. in full settlement)

4) Drawings A/c Dr. 20,000

To Cash A/c 20,000

(Paid income tax)

5) Cash A/c Dr. 2,20,000


(Goods sold for cash including profit of

10%)

6) Office Equipment A/c Dr. 3,50,000

To Cash A/c 3,50,000

(Office equipment purchased)

TOTAL 7,05,000 7,05,000

62



WORK-SHEET

MULTIPLE CHOICE QUESTIONS---

Question 1

Which of these best explains fixed assets?

A) Are bought to be used in the business B) Are expensive items bought for the business C) Are items which will not wear out quickly D) Are of long life and are not purchased specifically for resale

Answer: D

Question 2

Discounts received are:

A) Deducted by us when we pay our accounts B) Deducted when we receive cash C) Given by us when we sell goods on credit D) None of these

Answer: A

Question 3

If we take goods for own use we should:

A) Debit Drawings Account, Credit Purchases Account B) Debit Drawings Account: Credit Stock Account C) Debit Sales Account: Credit Stock Account D) Debit Purchases Account: Credit Drawings Account

Answer: A

State whether the following statements are true or false --

1.Goods bought for resale are referred to as sales.

2.Sales Account is always credited.

3.Opening entry is passed for the first transactions of each day.

4.The system of recording transactions on the basis of their two –fold aspect is called double account

System.

5.Real accounts generally show debit balance.

6.Purchase Account is always debited.

Fill in the blanks--

1.Sale of goods to X for cash will be Credited to __________ A/c.

2.Loss of goods by fire should be credited to ___________ A/c.

3.Outstanding rent will be debited to _________________ A/c.

4.Premium paid on the life insurance policy of the proprietor will be debited to ______________ A/c.

63


Chapter 9-Books of Original Entry --JOURNAL 5. For goods returned by customer ___________ A/c is debited.

Practical Questions ---

1. Journalise the following transactions:

(i) Bought goods from Arun for Rs. 2,00,000 at a trade discount of 15% and cash

discount of 2%. Paid 80% amount immediately.

(ii) Purchased foods for Rs. 20,000 from X and supplied it to Y for Rs. 26,000.

(iii) Cash withdrawn from bank Rs. 5,000 for personal use and Rs. 25,000 for office

use.

(iv) Goods destroyed by fire : Cost Price Rs. 40,000.

(v) Provide 20% depreciation on machinery costing Rs.50,000.

(vi) Out of insurance paid this year, Rs.3,000 is related to next year.

(vii) Allow Rs. 5,000 as interest on capital and charge Rs. 1,000 as interest on

drawings.

(viii) Sohan who owed us Rs. 25,000 was declared insolvent and a cheque of 40

paise in a Rs. is received from him in full settlement.

(ix) Paid Income Tax Rs. 10,000 by cheque.

(x) Salary paid Rs.80,000 and Salary Outstanding Rs. 20,000.

2. Journalise the following transactions in the books of Prakash:

(i) Opened a current account with Punjab National Bank Rs. 1,00,000.

(ii) Received a cheque of Rs. 12,900 from Chandradev and allowed discount Rs.300 to him.

The cheque was deposited into Bank on the same day.

(iii) Purchased machinery for Rs. 1,00,000, payment made by cheque. Installation charge of

machinery Rs. 6,000 paid in cash.

(iv) Purchased a horse for business for Rs. 20,000.

(v) Sold goods to Gokul at a list price of Rs. 4,000. Trade discount 10% and cash discount

5%. He paid the amount on the same day and availed the cash discount.

(vi) Purchased goods for Rs. 10,000 and paid Rs. 400 for carriage on these goods.

(vii) Additional cash introduced by the proprietor Rs. 40,000.

(viii) Purchased stationery Rs. 800 and postal stamps Rs. 100.

(ix) Withdrawn from bank Rs. 20,000.

(x) Received an order to supply goods of Rs. 40,000 from Manu and received Rs. 10,000 as

an advance together with the order.

(xi) Cash Rs. 10,000 and goods worth Rs. 4,000 were stolen.

(xii) Purchased goods from Devendra for Rs. 40,000 and the payment was made by

cheque.

(xiii) Sold 1/4th of the above goods at a profit of 25% on cash.


1. Purchased a Motor Car for Rs. 3,00,000 and paid Rs. 25,000 for its repair and

renewal.Entire payment is made by cheque.

2. Received Rent Rs. 5,000.

3. Goods worth Rs. 20,000 were distributed as free sample.

4. Charge depreciation on Motor Car Rs. 32,500.

5. Rent due to Landlord Rs. 10,000 and Salary due to Clerks Rs. 80,000.

6. Charge interest on Capital Rs. 20,000.

7. Rs. 5,000 due from Sanjay Gupta are bad-debts.

64



8. Goods worth Rs. 50,000 were destroyed by fire. 9. Cash Rs. 5,000 and goods worth Rs. 20,000 were stolen by an employee.

4. Journalise the following trasactions:−

(Rs.)

1. Charge depreciation on Machinery 20,000

2. Salary due to Office Clerks 1,00,000

3. Received cash for Bad-Debts written off last year 5,000

4. Purchased goods from Ashok & Co. for Rs. 50,000 at 20% Trade

Discount. Half the payment was made in cash.

5. Issued cheque to Ashok & Co. in full settlement 19,500

6. Paid Life Insurance Premium by cheque 6,000

7. Proprietor used goods for household purposes 20,000

8. Goods given free to a hospital out of business 10,000


(a) Goods destroyed by Fire for Rs. 5,000.

(b) Paid by cheque Rs. 25,000 as wages on installation of a Machinery.

(c) Issued a cheque in favour of M/s Parmatma Saran & Sons on account of purchase of

goods Rs. 75,000.

(d) Goods sold costing Rs. 60,000 to M/s Kalu Sons at an invoice price 10% above cost

less 5% Trade discount.


2018

April 1 Purchased goods for Rs. 1,00,000 from Manoj and availed discount of Rs.

10,000.

2 Paid amount due to Manoj by cheque and availed discount of Rs. 4,500.

5 Cash Rs. 5,000 paid to Desai and discount allowed by him Rs. 200.

10 Cash Rs. 10,000 received from Govardhan and allowed him discount Rs.

500.

12 Sold personal Car of the proprietor for Rs. 80,00 against cheque, which was

deposited into the firm's bank account.

16 Sold personal Car of the proprietor for Rs. 1,50,000 against cheque, which

was deposited into the proprietor's personal bank account.

20 Sold goods to Gaurav costing Rs. 1,00,000 at a profit of 40% and allowed

him 10% trade discount and paid for cartage Rs. 3,000 not to be charged

from him.

24 Placed an order with Rudra & Co. for supply of goods of Rs. 80,000 and a

cheque for 40% amount is sent to them as an advance.

65



7. Journalise the following:

(i) Received a V.P.P. from Mohan Lal for Rs. 25,000. Sent a

peon to collect it who paid Rs. 200 as cartage.

(ii) Received Rs. 1,000 from sales of old newspapers and Rs.

5,000 from sales of old chairs.

(iii) Goods given away as charity goods costing Rs. 7,000.

(iv) Received Cash from a debtor written off as bad-debt last

year Rs. 20,000.

(v) Sold goods costing Rs. 50,000 to Ashok on credit at a

profit of 20% on cost.

(vi) Sold goods costing Rs. 1,00,000 for Rs. 1,40,000.

(vii) Provide Rs. 50,000 as interest on Capital.

(viii) Paid rent of building Rs. 60,000 by cheque. Half the

building is used by the proprietor for residential purpose.

(ix) Outstanding salary at the end of the year Rs. 30,000.

8. Journalise the following:

1. Purchased goods for Rs. 25,000 for Cash and paid Rs. 200 for carriage on these goods.

2. Purchased goods for Rs. 40,000 on Credit from Sudhir and paid Rs. 500 for carriage on

these goods.

3. Purchased machinery for Rs. 20,000 and spent Rs. 500 on its carriage and Rs. 300 on its

installation.

4. Purchased goods from Anil for Rs. 15,000.

5. Sold 1313rd of the above goods at a profit of 20% on cost.

6. Goods costing Rs. 12,000 sold to Mr. X, issued invoice at 25% above cost less 10%

trade discount.

7. Provide 20% depreciation on furniture costing Rs. 10,000.

8. Gave as charity − Cash Rs. 500 and Goods Rs. 2,000.

9. Journalise the following:−

2017

March 4

Purchased building for Rs. 1,50,000 and incurred expenses of Rs. 10,000 on its

purchase.

March 10

Satish who owed us Rs. 20,000 is declared insolvent and 60 paise per Rs. is

received from his estate.

March 15 Paid Rs. 500 for repairing the office furniture.

March 18

Proprietor withdrew for his personal use cash Rs. 5,000 and goods worth Rs.

2,000.

March 20 Purchased the following items for business:

Iron Safe Rs. 15,000; Filing Cabinet Rs. 5,000; Computer Rs. 12,000; Postage

Rs. 200 and Stationery Rs. 150.

March 28 Paid electricity charges Rs. 1,600.

March 31

Charge depreciation on Machinery @ 10% for one year (Machinery Rs.

75,000).

March 31 Outstanding wages at the end of the year Rs. 6,000.

66



10. Prepare journal from the transactions given below:−

(a) Proprietor withdrew for private use Rs. 10,000 from bank.

(b) Goods costing Rs. 50,000 were burnt by fire.

(c) Purchased machinery for cash Rs. 1,50,000 and paid Rs. 2,000 on its installation.

(d) Charge 5% depreciation on building costing Rs. 2,00,000 and 8% depreciation on

furniture costing Rs. 5,000.

(e) Prepaid salary Rs. 2,000.

(f) Kapil who owed us Rs. 20,000 becomes insolvent and nothing is received from his

estate.

11. Enter the following transactions in the Journal of Arun Govil & Co. :

2018

June 1 Arun Govil & Co. paid into bank as capital Rs. 6,00,000.

June 3

Purchased goods from Mukesh of the list price of Rs. 2,00,000 at 10%

trade discount.

June 4

One-fourth of the above goods returned to Mukesh for not being upto

specifications.

June 6

Issued a cheque to Mukesh for the amount due to him after deducting 2%

as cash discount.

June 7

Withdrew from bank Rs. 2,50,000 for office use and Rs. 10,000 for

personal use.

June

10

Purchased a machinery for Rs. 1,00,000 and spent Rs. 5,000 on its

installation. Payment for machinery was made by cheque and installation

expenses were paid in cash.

June

12 Sold goods for Rs. 1,00,000 to Amar.

June

13

Amar clears his account by giving a cheque of Rs. 98,500. Cheque is

immediately sent to bank.

June

15

Purchased stationery for personal use Rs. 3,000 and for office use Rs.

5,000.

June

20

Purchased land for Rs. 2,00,000 and paid 1% as brokerage and Rs. 15,000

as registration charges on it. Entire payment is made by Cheque.

June

30 Wages due to labourers Rs. 20,000 and salary due to the clerk Rs. 30,000.

12. Pass journal entries for the following:

Jan.

5

Purchased goods for Cash Rs. 10,000 and spent Rs. 200 for their

carriage.

Jan.

10

Purchased machinery for Cash Rs. 50,000 and spent Rs. 500 for its

carriage.

Jan.

15

Paid Rs. 20,000 for cement, Rs. 10,000 for timber and Rs. 5,000 as

wages for the construction of building.

Jan.

17

Purchased an old machinery for Rs. 20,000 and spent Rs. 2,500 on

its immediate repairs.

Jan.

20 Paid Rs. 500 for repairing some other machinery.

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13. Following was the position of Harish & Co. as on 1st April, 2017 :−

Cash in Hand Rs. 10,000; Cash at Bank Rs. 16,800; Furniture Rs. 8,000; Stock Rs. 50,000;

Debtors− Ram Rs. 8,000; Shyam Rs. 12,000; Creditors− Anil Rs. 4,000; Sunil Rs. 5,000.

Following transactions took place during April, 2017 :−

2017

April

2

Received a cheque from Ram in full settlement of his account

after deducting 5% cash discount.

4 Deposited the above cheque into Bank.

5 Goods purchased for Rs. 20,000 at 10% trade discount and

5% cash discount. Payment made by cheque.

6

Received a cheque from Shyam for Rs. 3,860 and discount

allowed to him Rs. 140. Cheque deposited into the bank on

the same day.

10 Cash paid to Anil after deducting 2% cash discount.

15 Old furniture sold for Rs. 800.

16 Sold goods to Shiv Parshad of the list price of Rs. 10,000 at a

trade discount of 15%.

18 Shiv Parshad returned goods of the list price of Rs. 1,000.

20 Paid for furniture repairs to Bahadur Singh Rs. 100.

25 Received a cheque from Shiv Parshad after deducting 4%

cash discount. Cheque was deposited into bank.

28 Bank charged Rs. 50 for 'Bank Charges'.

30 Received Commission Rs. 200.

14. Pass Journal entries in the books of Raghunath Bros. from the following transactions:- 2016

June 01 Raghunath Bros. started business with cash Rs. 80,000; Goods Rs. 40,000 and

furniture Rs. 20,000.

June 02 Sold goods to Nandlal of the list price of Rs. 20,000 at trade discount of 10%.

June 04 Nandlal returned goods of the list price of Rs. 4,000.

June 08 Received from Nandlal Rs. 14,150 in full settlement of his account.

June 10 Purchased goods from Brij Mohan of the list price of Rs. 10,000 at 15% trade

discount.

June 13 Returned goods to Brij Mohan of the list price of Rs. 1,000.

June 16 Settled the account of Brij Mohan by paying cash, under a discount of 4%.

June 18 Purchased goods from Anil Rs. 5,000; Sunil Rs. 10,000.

June 19 Paid cash to Anil Rs. 1,900 and discount received Rs. 100.

June 20 Paid Rs. 9,800 to Sunil in full settlement of his account.

June 20 Bought a 'Table Fan' for Rs. 8,000 for the domestic use of Raghunath.

June 25 Sold goods for cash of the list price of Rs. 8,000 at 10% trade discount and 3% cash

discount.

June 30 Paid Rent Rs. 8,000; Trade Expenses Rs. 7,000 and Travelling Expenses Rs. 3,800.

68



15. Give the journal entries corresponding to the narration given below:-

S.

No. Particulars L.F.

Amount

Dr.

(Rs.)

Amount

Cr.

(Rs.)

(i) Dr.

Dr.

To

(Goods of the list price of Rs. 5,000 sold at 10%

trade discount and 2% cash discount)

(ii)

(The purchase of Motor Car for Rs. 80,000

and the payment of Rs. 5,000 as repairs

charges on it. Entire payment is made by

cheque)

(iii) Chaturvedi’s Dr. 5,000

To Cash A/c

To

(Chaturvedi’s account settled, cash discount three

percent)

(iv) Bank A/c Dr.

Dr.

To 8,400

(70 paise per rupee received from the estate of

Ashok on his insolvency)

(v) Dr. 3,000

To 3,000

(For goods used by proprietor for personal

use)

(vi) Dr. 2,000

To 2,000

(For Rent due to landlord)

16. Rectify the following entries assuming that the narration in each case is correct:


Amount

Dr.

(Rs)

Amount

Cr.

(Rs)

2017

May 04 Building A/c Dr. 5,00,000

Brokerage A/c Dr. 10,000

To Bank A/c 5,10,000

(Purchase of building and payment of brokerage on its

purchase)

May 10 Drawings A/c Dr. 12,000

To Sales A/c 12,000

(Goods taken away by the proprietor for personal use)

69

May 16 Filing Cabinet A/c Dr. 4,000

Electric Fan A/c Dr. 2,500

To Cash A/c 6,500

(Purchase of filing cabinet and an electric fan)

May 18 Cash A/c Dr. 8,730

To Sales A/c 8,730

(Goods worth Rs. 10,000 sold at 10% trade discount and

3% cash discount)

May 20 Bank A/c Dr. 10,000

To Naresh 10,000

(Receipt of 25 paise per rupee from the estate of Naresh

who is declared insolvent)

May 31 Bank Charges A/c Dr. 150

To Cash A/c 150

(Charges made by bank for its services)

17. Enter the following transactions in the Journal of Arun Govil & Co. :

2018

June 1 Arun Govil & Co. paid into bank as capital Rs. 6,00,000.

June 3

Purchased goods from Mukesh of the list price of Rs. 2,00,000 at 10% trade

discount.

June 4

One-fourth of the above goods returned to Mukesh for not being upto

specifications.

June 6

Issued a cheque to Mukesh for the amount due to him after deducting 2%

as cash discount.

June 7

Withdrew from bank Rs. 2,50,000 for office use and Rs. 10,000 for personal

use.

June

10

Purchased a machinery for Rs. 1,00,000 and spent Rs. 5,000 on its

installation. Payment for machinery was made by cheque and installation

expenses were paid in cash.

June

12 Sold goods for Rs. 1,00,000 to Amar.

June

13

Amar clears his account by giving a cheque of Rs. 98,500. Cheque is

immediately sent to bank.

June

15 Purchased stationery for personal use Rs. 3,000 and for office use Rs. 5,000.

June

20

Purchased land for Rs. 2,00,000 and paid 1% as brokerage and Rs. 15,000

as registration charges on it. Entire payment is made by Cheque.

June

30 Wages due to labourers Rs. 20,000 and salary due to the clerk Rs. 30,000.

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APRIL 25,2020...To Cash A/c. 20,000 2.Received Rs.10,000 from Mohan Cash A/c Dr. 10,000 ... Advance...

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Transcript of APRIL 25,2020...To Cash A/c. 20,000 2.Received Rs.10,000 from Mohan Cash A/c Dr. 10,000 ... Advance...