Recording of Transactions - I - Class 11 Accountancy - Chapter 3 - Notes, NCERT Solutions & Extra Questions
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Extra Questions - Recording of Transactions - I | Financial Accounting 1 | Accountancy | Class 11
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State the three fundamental steps in the accounting process.
The three fundamental steps in the accounting process are:
1. Identifying Transactions: Recognizing and determining which business transactions and financial events to record.
2. Recording Transactions: Documenting transactions in the books of original entry (journal) using source documents, which are then posted to ledger accounts.
3. Classifying and Summarizing: Grouping transactions into designated accounts in the ledger and summarizing their effect to understand the financial implications, ultimately preparing financial statements for communication to interested users.
Why is the evidence provided by source documents important to accounting?
The evidence provided by source documents is crucial to accounting as it serves as verifiable proof of transactions, ensuring the accuracy and authenticity of financial records. These documents, such as invoices, receipts, and cash memos, offer a traceable trail that accountants can reference, thereby supporting the integrity of financial statements. Additionally, source documents are essential for audits and tax assessments, as they provide the necessary documentation to validate entries in the books of accounts.
Should a transaction be first recorded in a journal or ledger? Why?
A transaction should first be recorded in a journal because it is the primary book of original entry. This step ensures that all transactions are recorded in chronological order, providing a complete and initial record of each business event. Recording transactions in the journal helps in maintaining accuracy and organization before they are transferred to individual accounts in the ledger. This process, known as journalizing, facilitates the systematic posting and tracking of financial data.
Are debits or credits listed first in journal entries? Are debits or credits indented?
In journal entries, debits are listed first. The account to be debited appears on the first line, while the word "Dr." is written at the end of the line. Credits are listed second and are indented. The account to be credited is written on the following line, preceded by the word "To," and is indented to distinguish it from the debit. This format ensures clarity and follows the standard accounting practices for recording transactions.
Why are some accounting systems called double accounting systems?
Some accounting systems are called double accounting systems because they record each transaction in two accounts: one debit and one credit account. This ensures the accounting equation (**Assets = Liabilities + Capital**) remains balanced. Double-entry bookkeeping provides a complete record by showing both effects of a transaction, enhancing accuracy and error detection. This system enhances financial transparency and reliability by offering a more comprehensive view of a business’s financial activities.
Give a specimen of an account.
A specimen of an account typically includes:
- Title of the account at the top center.
- Columns for Date, Particulars, Journal Folio (J.F.), and Amount.
It is divided into two sides:
- The Debit (Dr.) side on the left.
- The Credit (Cr.) side on the right.
The format is as follows:
| Account Title | Dr. | Cr. |
| Date | Particulars | Amount | Date | Particulars | Amount |
This layout helps in tracking debits and credits and maintaining correct balances.
Why are the rules of debit and credit same for both liability and capital?
The rules of debit and credit are the same for both liability and capital accounts because both represent the company's obligations. Capital represents the owner's equity in the business, which is a form of liability the business owes to the owner. Therefore, an increase in liabilities and capital is credited, signifying more obligations, and a decrease is debited, indicating a reduction in those obligations. This consistency ensures the accounting equation balances accurately.
What is the purpose of posting J.F numbers that are entered in the journal at the time entries are posted to the accounts.
The purpose of posting Journal Folio (J.F.) numbers in the journal during entries to the accounts is to establish a cross-reference between the journal and the ledger. This ensures accuracy and traceability of the entries, allowing users to easily track the transaction's origin and its corresponding ledger account. It aids in preventing errors, simplifies auditing tasks, and enhances the clarity and reliability of the financial records, ensuring consistency in the accounting process.
What entry (debit or credit) would you make to: (a) increase revenue (b) decrease in expense, (c) record drawings (d) record the fresh capital introduced by the owner.
To record various transactions in accounting, the following entries are made:
(a) To increase revenue, credit the revenue account as it is a gain.
(b) To decrease an expense, credit the expense account as expenses decrease overall equity.
(c) To record drawings, debit the drawings account as it reduces the owner's equity.
(d) To record fresh capital introduced by the owner, credit the capital account to reflect the increase in owner's equity.
These debit and credit entries ensure the accounting equation remains balanced.
If a transaction has the effect of decreasing an asset, is the decrease recorded as a debit or as a credit? If the transaction has the effect of decreasing a liability, is the decrease recorded as a debit or as a credit?
If a transaction has the effect of decreasing an asset, the decrease is recorded as a credit. Conversely, if the transaction has the effect of decreasing a liability, the decrease is recorded as a debit. This aligns with the fundamental accounting rules: increases in assets are debited and decreases are credited, while increases in liabilities are credited and decreases are debited. This ensures that the accounting equation remains balanced.
Describe the events recorded in accounting systems and the importance of source documents in those systems?
In accounting systems, events such as sales, purchases, payments, and receipts are recorded to ensure accurate financial tracking. Business transactions involve a two-fold effect; they are recorded in two or more accounts based on the double-entry system. The importance of source documents like invoices, cash memos, cheques, and vouchers is paramount, as they provide evidence and authenticity for each transaction. These documents serve as the basis for recording entries in accounting books, ensuring transactions are traceable and verifiable. Additionally, they help in maintaining chronological records, aiding in auditors' reviews and compliance with regulatory requirements. Source documents are essential for transparent and reliable financial reporting, safeguarding against errors and fraud.
Describe how debits and credits are used to analyse transactions.
In double-entry accounting, every transaction affects at least two accounts and requires equal debits and credits. Debits indicate entries recorded on the left side of an account, while credits indicate entries on the right side. Debits increase assets or expenses and decrease liabilities, capital, or revenues. Conversely, credits increase liabilities, capital, or revenues and decrease assets or expenses. For each transaction, the total amount debited must equal the total amount credited to maintain the balance in the accounting equation (Assets = Liabilities + Capital). This method ensures that the accounting records remain accurate and comprehensive, reflecting the true financial state of the business.
Describe how accounts are used to record information about the effects of transactions?
Accounts are used to record information about the effects of transactions by applying the double-entry bookkeeping system. In this system, each transaction affects at least two accounts, ensuring that debits equal credits. Accounts are split into five categories: Assets, Liabilities, Capital, Revenues/Gains, and Expenses/Losses. Each account has a debit (left) side and a credit (right) side. Rules dictate whether a particular transaction should be recorded as a debit or a credit based on its effect on the accounts. For instance, increases in assets and expenses are debited, while increases in liabilities, capital, and revenues are credited. This method helps in maintaining accurate and balanced financial records by reflecting the dual effect of each transaction.
What is a journal? Give a specimen of journal showing at least five entries.
A journal is the primary book of original entry in which business transactions are recorded chronologically. It forms the basis for further accounting processes, such as posting transactions to individual accounts in the ledger. Each transaction in the journal is recorded with a detailed description, which typically includes the date, accounts debited and credited, amounts involved, and a brief narration. This process ensures a complete and organized record of all transactions.
Specimen of Journal:
Date | Particulars | L.F. | Debit Amount (₹) | Credit Amount (₹) |
---|---|---|---|---|
2023-10-01 | Cash A/c Dr. | 50,000 | ||
To Capital A/c | 50,000 | |||
(Started business with cash) | ||||
2023-10-02 | Machinery A/c Dr. | 30,000 | ||
To Bank A/c | 30,000 | |||
(Purchased machinery) | ||||
2023-10-03 | Purchases A/c Dr. | 20,000 | ||
To Supplier A/c | 20,000 | |||
(Goods purchased on credit) | ||||
2023-10-04 | Rent A/c Dr. | 10,000 | ||
To Cash A/c | 10,000 | |||
(Paid rent) | ||||
2023-10-05 | Debtors A/c Dr. | 15,000 | ||
To Sales A/c | 15,000 | |||
(Goods sold on credit) |
This format ensures all transactions are properly documented, making it easier to prepare financial statements and maintain accurate records.
Differentiate between source documents and vouchers.
Source documents are original records that provide evidence of business transactions. Examples include invoices, receipts, cash memos, bills, and cheques. They serve as proof of transactions and support the data recorded in the books of accounts.
Vouchers, on the other hand, are internal documents used by a firm to authorize and record transactions. Examples include cash vouchers, debit vouchers, credit vouchers, and journal vouchers. The primary purpose of vouchers is to ensure that every transaction is verified by an appropriate authority before being entered into the accounting system.
In summary, while source documents act as external evidence of transactions, vouchers are internal records ensuring transactions are properly authorized and recorded.
Accounting equation remains intact under all circumstances. Justify the statement with the help of an example.
The accounting equation states that Assets = Liabilities + Capital and remains intact under all circumstances. This means that for every financial transaction, the total amount of assets always equals the combined total of liabilities and capital.
For example, if a business starts with a capital of ₹5,00,000 (Assets: Cash ₹5,00,000, Liabilities: ₹0, Capital: ₹5,00,000), and then buys equipment worth ₹1,50,000 on credit, the equation adjusts to Assets (₹5,00,000 Cash + ₹1,50,000 Equipment) = Liabilities + Capital (₹1,50,000 Liabilities + ₹5,00,000 Capital). Both sides equal ₹6,50,000, maintaining the equation's balance. Any transaction affecting assets, liabilities, or capital automatically results in adjustments on both sides, preserving this balance.
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Prepare accounting equation on the basis of the following :
(a) Harsha started business with cash ₹ 2,00,000
(b) Purchased goods from Naman for cash ₹ 40,000
(c) Sold goods to Bhanu costing ₹ 10,000/ ₹ 12,000
(d) Bought furniture on credit ₹ 7,000
The accounting equation is:
$$ \text{Assets} = \text{Liabilities} + \text{Capital (Owner's Equity)} $$
Transaction Analysis:
Harsha started business with cash ₹ 2,00,000
Assets (Cash) increases by $₹2,00,000$
Capital increases by $₹2,00,000$
$$ \text{Assets (Cash)} = 2,00,000; \quad \text{Liabilities} = 0; \quad \text{Capital} = 2,00,000 $$
Purchased goods from Naman for cash ₹ 40,000:
Assets (Inventory) increases by $40,000$; Assets (Cash) decreases by $40,000$
$$ \text{Assets (Cash)} = 1,60,000; \quad \text{Assets (Inventory)} = 40,000; \quad \text{Liabilities} = 0; \quad \text{Capital} = 2,00,000 $$
Sold goods to Bhanu costing ₹ 10,000 for ₹ 12,000
Assets (Inventory) decreases by $10,000$; Assets (Accounts Receivable) increases by $12,000$; Capital increases by $2,000$ (Profit)
$$ \text{Assets (Cash)} = 1,60,000; \quad \text{Assets (Inventory)} = 30,000; \quad \text{Assets (Accounts Receivable)} = 12,000; \quad \text{Liabilities} = 0; \quad \text{Capital} = 2,02,000 $$
Bought furniture on credit ₹ 7,000:
Assets (Furniture) increases by $7,000$; Liabilities (Creditors) increases by $7,000$
$$ \text{Assets (Cash)} = 1,60,000; \quad \text{Assets (Inventory)} = 30,000; \quad \text{Assets (Accounts Receivable)} = 12,000; \quad \text{Assets (Furniture)} = 7,000; \quad \text{Liabilities} = 7,000; \quad \text{Capital} = 2,02,000 $$
Summarized Accounting Equation:
$$ \begin{array}{|c|c|c|} \hline \text{Assets} & \text{Liabilities} & \text{Capital} \\ \hline \text{Cash:} 1,60,000 & & \\ \text{+ Inventory:} 30,000 & \text{Creditors:} 7,000 & 2,02,000 \\ \text{+ Accounts Receivable:} 12,000 & & \\ \text{+ Furniture:} 7,000 & & \\ \hline \text{Total Assets:} 2,09,000 & \text{Total Liabilities:} 7,000 & \text{Total Capital:} 2,02,000 \\ \hline \end{array} $$
$$ \text{Assets} = \text{Liabilities} + \text{Capital} \rightarrow 2,09,000 = 7,000 + 2,02,000 $$
Thus, the accounting equation is balanced.
Prepare accounting equation from the following:
(a) Kunal started business with cash $₹2,50000$
(b) He purchased furniture for cash ₹35,000
(c) He paid commission ₹2,000
(d) He purchases goods on credit ₹40,000
(e) He sold goods (Costing ₹20,000 ) for cash ₹ 26,000
Initial Equation
Assets: ₹2,50,000 (Cash introduced by Kunal)
Liabilities: ₹0
Capital: ₹2,50,000 (Kunal's Capital)
Transactions:
(a) Kunal started business with cash ₹2,50,000
Assets (Cash): ₹2,50,000
Capital: ₹2,50,000
(b) He purchased furniture for cash ₹35,000
Assets (Cash): ₹2,50,000 - ₹35,000 = ₹2,15,000
Assets (Furniture): ₹35,000
(c) He paid commission ₹2,000
Assets (Cash): ₹2,15,000 - ₹2,000 = ₹2,13,000
Capital: ₹2,50,000 - ₹2,000 = ₹2,48,000 (Since commissions are an expense, they reduce capital)
(d) He purchases goods on credit ₹40,000
Assets (Inventory): ₹40,000
Liabilities (Creditors): ₹40,000
(e) He sold goods (Costing ₹20,000) for cash ₹26,000
Assets (Cash): ₹2,13,000 + ₹26,000 = ₹2,39,000
Assets (Inventory): ₹40,000 - ₹20,000 = ₹20,000
Capital (Profit): ₹2,48,000 + (₹26,000 - ₹20,000) = ₹2,54,000
Final Accounting Equation
Assets:
Cash: ₹2,39,000
Furniture: ₹35,000
Inventory: ₹20,000
Total Assets = ₹2,94,000
Liabilities: ₹40,000
Capital: ₹2,54,000
Accounting Equation:
$$ \text{Assets} = \text{Liabilities} + \text{Capital} $$
$$ ₹2,94,000 = ₹40,000 + ₹2,54,000 $$
The accounting equation is balanced with total assets equal to the sum of liabilities and capital.
Mohit has the following transactions, prepare accounting equation:
(a) Business started with cash | $₹ 1,75,000$ |
(b) Purchased goods from Rohit | ₹ 50,000 |
(c) Sales goods on credit to Manish (Costing ₹ 17,500) | ₹ 20,000 |
(d) Purchased furniture for office use | $₹ 10,000$ |
(e) Cash paid to Rohit in full settlement | $₹ 48,500$ |
(f) Cash received from Manish | $₹ 20,000$ |
(g) Rent paid | ₹ 1,000 |
(h) Cash withdrew for personal use | ₹ 3,000 |
Let's prepare the accounting equation step-by-step for Mohit's transactions. The accounting equation is:
$$ A = L + C $$
Where:
( A ) stands for Assets
( L ) stands for Liabilities
( C ) stands for Capital (Owner's Equity)
We will examine each transaction's impact on Assets, Liabilities, and Capital.
(a) Business started with cash
Assets: $ + \text{₹} 1,75,000 $ (Cash)
Liabilities: No change
Capital: $+ \text{₹} 1,75,000 $
(b) Purchased goods from Rohit
Assets: $ + \text{₹} 50,000 $ (Goods/Inventory)
Liabilities: $ + \text{₹} 50,000 $ (Accounts Payable to Rohit)
Capital: No change
(c) Sales goods on credit to Manish (Costing ₹ 17,500)
Assets: $ + \text{₹} 20,000 $ (Accounts Receivable from Manish)
Assets: $- \text{₹} 17,500 $ (Reduction in Inventory)
Capital: $ + \text{₹} 2,500 $ (Profit)
(d) Purchased furniture for office use
Assets: $ + \text{₹} 10,000 $ (Furniture)
Liabilities: No change
Capital: No change
(e) Cash paid to Rohit in full settlement (for ₹ 48,500)
Assets: $ - \text{₹} 48,500 $ (Cash)
Liabilities: $- \text{₹} 50,000 $ (Accounts Payable to Rohit)
Capital: $+ \text{₹} 1,500 $ (Discount Received)
(f) Cash received from Manish
Assets: $ + \text{₹} 20,000 $ (Cash)
Assets: $ - \text{₹} 20,000 $ (Reduction in Accounts Receivable from Manish)
Liabilities: No change
Capital: No change
(g) Rent paid
Assets: $ - \text{₹} 1,000 $ (Cash)
Liabilities: No change
Capital: $ - \text{₹} 1,000 $ (Expense)
(h) Cash withdrew for personal use
Assets: $ - \text{₹} 3,000 $ (Cash)
Liabilities: No change
Capital: $ - \text{₹} 3,000 $ (Drawings)
Summarised Accounting Equation
We will accumulate the changes from each step and summarize them:
Transaction | Assets | Liabilities | Capital |
---|---|---|---|
(a) | 1,75,000 | 0 | 1,75,000 |
(b) | +50,000 | +50,000 | 0 |
(c) | +2,500 | 0 | +2,500 |
(d) | +10,000 | 0 | 0 |
(e) | -48,500 | -50,000 | +1,500 |
(f) | 0 | 0 | 0 |
(g) | -1,000 | 0 | -1,000 |
(h) | -3,000 | 0 | -3,000 |
Total | 1,84,000 | 0 | 1,75,000 |
The final accounting equation is: $$ \text{Assets ( ₹ 1,84,000 )} = \text{Liabilities ( ₹ 0 )} + \text{Capital ( ₹ 1,75,000 )} $$
Rohit has the following transactions :
(a) Commenced business with cash | $₹ 1,50,000$ |
(b) Purchased machinery on credit | $₹ 40,000$ |
(c) Purchased goods for cash | ₹ 20,000 |
(d) Purchased car for personal use | ₹ 80,000 |
(e) Paid to creditors in full settlement | ₹ 38,000 |
(f) Sold goods for cash costing ₹ 5,000 | $₹ 4,500$ |
(g) Paid rent | $₹ 1,000$ |
(h) Commission received in advance | $₹ 2,000$ |
Prepare the Accounting Equation to show the effect of the above transactions on the assets, liabilities and capital.
To prepare the accounting equation for Rohit's transactions, we'll analyze each transaction and determine its impact on assets, liabilities, and capital.
1. Commenced Business with Cash
$$ \text{Assets} = \text{Liabilities} + \text{Capital} $$
$$ \text{Cash} \rightarrow \text{₹} 1,50,000 = + \text{₹} 1,50,000 $$
2. Purchased Machinery on Credit
$$ \text{Assets} = \text{Liabilities} + \text{Capital} $$
$$ \text{Machinery} \rightarrow \text{₹} 40,000 = \text{₹} 40,000 + $$
3. Purchased Goods for Cash
$$\text{Assets} = \text{Liabilities} + \text{Capital} $$
$$ - \text{Cash} \rightarrow \text{₹} 20,000, + \text{Goods} = + $$
Asset Value calculated previously is now:
$$ \text{Cash} = \text{₹} 1,50,000 - 20,000 = + \text{₹} 1,30,000 $$
4. Purchased Car for Personal Use
$$ \text{Assets} = \text{Liabilities} + \text{Capital} $$
$$ - \text{Cash} \rightarrow \text{₹} 80,000 = - $$
Asset Value calculated previously is now:
$$ \text{Cash} = + \text{₹} 1,30,000 - $$
5. Paid to Creditors in Full Settlement
$$ \text{Assets} = \text{Liabilities} + \text{Capital} $$
$$ - \text{Cash} = - 38000 = $$
Asset Value calculated previously is now: $$ - \text{40,000} - $$
Liability Value calculated previously is now: $$ \text{₹} = 2000 $$
6. Sold Goods for Cash Costing ₹ 5,000
$$\text{Assets} = \text{Liabilities} + \text{Capital} $$
$$ + \text{Cash} = \text{₹} 4,500 - \text{Goods} \in \text{₹ } 5,000 = $$
Value Calculated from above profit:
$$ Profit Translates to: \text{Asset profit = 5,000 - 4500 = \text{ capital= Total profit of ₹ 500} $$
7. Paid Rent
$$ \text{Assets} = \text{Liabilities} + \text{Capital} $$
$$ - = $$
Cash previous Value = $$ ₹ $$
8. Commission Received in Advance
$$ \text{Assets} = \text{Liabilities} + \text{Capital} $$
$$ Increased asset liability =₹ $$
Current Value Calculated:
₹1,75,00 Cash = Advance ₹2,000 + ₹ 1,000 from Previous Rent Payments made.
Summary of Transactions' Impact on Accounting Equation
Based on the calculations:
Assets | ₹ 1,47,500 | Liabilities | ₹ 2,000 | Capital | ₹ 1,40,500 |
---|---|---|---|---|---|
Initial Cash | ₹1,50,000 | ₹ 1,50,000 | |||
Total | ₹ 1,50,000 | ₹ 38,000 | ₹1,50,00 | ||
Purchases with goods Cash | ₹20,000 | ₹ 2,000 + 2,28000 | ₹(10,000)+(10,000) |
Accounting Equation:
$$\text{Assets} = \text{ Liabilities} + \text{Capital}$$
₹ 1,75,500 = ₹ 2,000 + ₹ 1,40,500
Use accounting equation to show the effect of the following transactions of M/s Royal Traders:
(a) Started business with cash | $₹ 1,20,000$ |
(b) Purchased goods for cash | $₹ 10,000$ |
(c) Rent received | ₹ 5,000 |
(d) Salary outstanding | ₹ 2,000 |
(e) Prepaid Insurance | ₹ 1,000 |
(f) Received interest | ₹ 700 |
(g) Sold goods for cash (Costing ₹ 5,000 ) | ₹ 7000 |
(h) Goods destroyed by fire | ₹ 500 |
Let's use the accounting equation to show the effect of each transaction for M/s Royal Traders.
The accounting equation is: $$ \text{Assets} = \text{Liabilities} + \text{Capital} $$
Transaction (a)
Started business with cash ₹ 1,20,000
Assets: Cash increases by ₹ 1,20,000
Liabilities: No change
Capital: Increases by ₹ 1,20,000
$$ \text{Assets} = ₹ 1,20,000, , \text{Liabilities} = ₹ 0, , \text{Capital} = ₹ 1,20,000 $$
Transaction (b)
Purchased goods for cash ₹ 10,000
Assets: Cash decreases by ₹ 10,000, Inventory/Goods increases by ₹ 10,000
Liabilities: No change
Capital: No change
$$ \text{Assets} = ₹ (1,20,000 - 10,000 + 10,000) = ₹ 1,20,000, , \text{Liabilities} = ₹ 0, , \text{Capital} = ₹ 1,20,000 $$
Transaction (c)
Rent received ₹ 5,000
Assets: Cash increases by ₹ 5,000
Liabilities: No change
Capital: Increases by ₹ 5,000 (Revenue increases capital)
$$ \text{Assets} = ₹ 1,25,000, , \text{Liabilities} = ₹ 0, , \text{Capital} = ₹ 1,25,000 $$
Transaction (d)
Salary outstanding ₹ 2,000
Assets: No change
Liabilities: Increases by ₹ 2,000
Capital: Decreases by ₹ 2,000 (Expense decreases capital)
$$ \text{Assets} = ₹ 1,25,000, , \text{Liabilities} = ₹ 2,000, , \text{Capital} = ₹ 1,23,000 $$
Transaction (e)
Prepaid Insurance ₹ 1,000
Assets: Cash decreases by ₹ 1,000, Prepaid Insurance (another asset) increases by ₹ 1,000
Liabilities: No change
Capital: No change
$$ \text{Assets} = ₹ 1,25,000, , \text{Liabilities} = ₹ 2,000, , \text{Capital} = ₹ 1,23,000 $$
Transaction (f)
Received interest ₹ 700
Assets: Cash increases by ₹ 700
Liabilities: No change
Capital: Increases by ₹ 700 (Revenue increases capital)
$$ \text{Assets} = ₹ 1,25,700, , \text{Liabilities} = ₹ 2,000, , \text{Capital} = ₹ 1,23,700 $$
Transaction (g)
Sold goods for cash ₹ 7,000 (Cost ₹ 5,000)
Assets: Cash increases by ₹ 7,000, Inventory/Goods decreases by ₹ 5,000
Liabilities: No change
Capital: Increases by ₹ 2,000 (Profit of ₹ 2,000 increases capital)
$$ \text{Assets} = ₹ 1,27,700, , \text{Liabilities} = ₹ 2,000, , \text{Capital} = ₹ 1,25,700 $$
Transaction (h)
Goods destroyed by fire ₹ 500
Assets: Inventory/Goods decreases by ₹ 500
Liabilities: No change
Capital: Decreases by ₹ 500 (Loss decreases capital)
$$ \text{Assets} = ₹ 1,27,200, , \text{Liabilities} = ₹ 2,000, , \text{Capital} = ₹ 1,25,200 $$
Summary of Effects:
Transaction | Assets | Liabilities | Capital |
---|---|---|---|
(a) | ₹ 1,20,000 | ₹ 0 | ₹ 1,20,000 |
(b) | ₹ 1,20,000 | ₹ 0 | ₹ 1,20,000 |
(c) | ₹ 1,25,000 | ₹ 0 | ₹ 1,25,000 |
(d) | ₹ 1,25,000 | ₹ 2,000 | ₹ 1,23,000 |
(e) | ₹ 1,25,000 | ₹ 2,000 | ₹ 1,23,000 |
(f) | ₹ 1,25,700 | ₹ 2,000 | ₹ 1,23,700 |
(g) | ₹ 1,27,700 | ₹ 2,000 | ₹ 1,25,700 |
(h) | ₹ 1,27,200 | ₹ 2,000 | ₹ 1,25,200 |
Show the accounting equation on the basis of the following transaction:
(a) Udit started business with: (i) Cash (ii) Goods | (i) $₹5,00,000$ (ii) $₹1,00,000$ |
(b) Purchased building for cash | $₹ 2,00,000$ |
(c) Purchased goods from Himani | ₹ 50,000 |
(d) Sold goods to Ashu (Cost ₹ 25,000 ) | ₹ 36,000 |
(e) Paid insurance premium | ₹ 3,000 |
(f) Rent outstanding | ₹ 5,000 |
(g) Depreciation on building | ₹ 8,000 |
(h) Cash withdrawn for personal use | ₹ 20,000 |
(i) Rent received in advance | ₹ 5,000 |
(j) Cash paid to himani on account | ₹ 20,000 |
(k) Cash received from Ashu | ₹ 30,000 |
The accounting equation ( A = L + C ) on the basis of the provided transactions can be shown as follows:
Initial Setup:
Udit started business with:
Cash: ₹5,00,000
Goods: ₹1,00,000
Assets = Liabilities + Capital
$$ ₹6,00,000 = ₹0 + ₹6,00,000 $$
Transactions and Effects:
Purchased building for cash (₹2,00,000):
Assets (Cash) decrease: (₹5,00,000 - ₹2,00,000 = ₹3,00,000)
Assets (Building) increase: (₹2,00,000)
Total Assets remain same.
Purchased goods from Himani (₹50,000):
Increase Goods (Assets) by ₹50,000 (₹1,00,000 + ₹50,000 = ₹1,50,000)
Increase Liabilities (Creditors) by ₹50,000
(₹0 + ₹50,000 = ₹50,000)
Sold goods to Ashu (Cost ₹25,000, Sold for ₹36,000):
Decrease Goods (Assets) by ₹25,000
Increase Debtors (Assets) by ₹36,000
Increase Capital due to profit (₹36,000 - ₹25,000 = ₹11,000)
Paid insurance premium (₹3,000):
Decrease Cash: (₹3,00,000 - ₹3,000 = ₹2,97,000)
Rent outstanding (₹5,000):
Increase Liabilities (Outstanding Rent) by ₹5,000
(₹0 + ₹5,000 = ₹5,000)
Depreciation on building (₹8,000):
Decrease Building Value: (₹2,00,000 - ₹8,000 = ₹1,92,000)
Cash withdrawn for personal use (₹20,000):
Decrease Cash: (₹2,97,000 - ₹20,000 = ₹2,77,000)
Decrease Capital by ₹20,000: (₹6,11,000 - ₹20,000 = ₹5,91,000)
Rent received in advance (₹5,000):
Increase Cash: (₹2,77,000 + ₹5,000 = ₹2,82,000)
Increase Liabilities (Advance Rent) by ₹5,000
Cash paid to Himani on account (₹20,000):
Decrease Cash: (₹2,82,000 - ₹20,000 = ₹2,62,000)
Decrease Liabilities (Creditors): (₹50,000 - ₹20,000 = ₹30,000)
Cash received from Ashu (₹30,000):
Increase Cash: (₹2,62,000 + ₹30,000 = ₹2,92,000)
Decrease Debtors: (₹36,000 - ₹30,000 = ₹6,000)
Final Accounting Equation:
$$ \text{Assets} = ₹292,000 \text{ (Cash)} + ₹125,000 \text{ (Goods)} + ₹192,000 \text{ (Building)} + ₹6,000 \text{ (Debtors)} = ₹615,000 $$ $$ \text{Liabilities} = ₹30,000 \text{ (Creditors)} + ₹5,000 \text{ (Outstanding Rent)} + ₹5,000 \text{ (Advance Rent)} = ₹40,000 $$ $$ \text{Capital} = ₹615,000 - ₹40,000 = ₹575,000 $$
Show the effect of the following transactions on Assets, Liabilities and Capital through accounting equation:
(a) Started business with cash | $₹ 1,20,000$ |
(b) Rent received | ₹ 10,000 |
(c) Invested in shares | ₹ 50,000 |
(d) Received dividend | ₹ 5,000 |
(e) Purchase goods on credit from Ragani | $₹ 35,000$ |
(f) Paid cash for house hold Expenses | ₹ 7,000 |
(g) Sold goods for cash (costing ₹ 10,000 ) | ₹ 14,000 |
(h) Cash paid to Ragani | ₹ 35,000 |
(i) Deposited into bank | ₹ 20,000 |
Transactions and Analysis:
Started business with cash (₹1,20,000):
Assets (Cash) increase by ₹1,20,000.
Capital increases by ₹1,20,000.
Rent received (₹10,000):
Assets (Cash) increase by ₹10,000.
Capital increases by ₹10,000 (Income increases capital).
Invested in shares (₹50,000):
Assets (Shares) increase by ₹50,000.
Assets (Cash) decrease by ₹50,000.
No effect on total assets, liabilities, or capital.
Received dividend (₹5,000):
Assets (Cash) increase by ₹5,000.
Capital increases by ₹5,000 (Income increases capital).
Purchase goods on credit from Ragani (₹35,000):
Assets (Inventory) increase by ₹35,000.
Liabilities (Creditors - Ragani) increase by ₹35,000.
Paid cash for household expenses (₹7,000):
Assets (Cash) decrease by ₹7,000.
Capital decreases by ₹7,000 (Personal expenses decrease capital).
Sold goods for cash (costing ₹10,000, selling price ₹14,000):
Assets (Cash) increase by ₹14,000.
Assets (Inventory) decrease by ₹10,000.
Capital increases by ₹4,000 (Profit: ₹14,000 - ₹10,000).
Cash paid to Ragani (₹35,000):
Assets (Cash) decrease by ₹35,000.
Liabilities (Creditors - Ragani) decrease by ₹35,000.
Deposited into bank (₹20,000):
Assets (Bank) increase by ₹20,000.
Assets (Cash) decrease by ₹20,000.
No effect on total assets, liabilities, or capital.
Summary of Effects:
Transaction | Effect on Assets (₹) | Effect on Liabilities (₹) | Effect on Capital (₹) |
---|---|---|---|
(a) | +1,20,000 | 0 | +1,20,000 |
(b) | +10,000 | 0 | +10,000 |
(c) | 0 | 0 | 0 |
(d) | +5,000 | 0 | +5,000 |
(e) | +35,000 | +35,000 | 0 |
(f) | -7,000 | 0 | -7,000 |
(g) | +4,000 | 0 | +4,000 |
(h) | -35,000 | -35,000 | 0 |
(i) | 0 | 0 | 0 |
Net Effect:
Total Increase in Assets: ( 1,20,000 + 10,000 + 5,000 + 14,000 = 1,49,000 )
Total Decrease in Assets: ( 50,000 (Cash for shares) + 7,000 + 35,000 + 20,000 = 1,12,000 )
Total Increase in Liabilities: ₹35,000
Total Decrease in Liabilities: ₹35,000
Capital Increase: ( 1,20,000 + 10,000 + 5,000 + 4,000 = 1,39,000 )
Capital Decrease: ₹7,000
Therefore, the final accounting equation remains balanced.
Accounting Equation:$$ \text{Assets} - \text{Liabilities} = \text{Capital} $$
Final Balances:
Assets: ₹1,49,000 - ₹1,12,000 = ₹37,000
Liabilities: ₹35,000 - ₹35,000 = 0
Capital: ₹1,39,000 - ₹7,000 = ₹1,32,000
Final Accounting Equation Verification: $$ 37,000 = 1,32,000 $$ This shows the equation balances and all assets equal total liabilities and capital.
Show the effect of following transaction on the accounting equation:
(a) Manoj started business with (i) Cash (ii) Goods (iii) Building | (i) $₹2,30,000$ (ii) $₹1,00,000$ (iii) $₹2,00,000$ |
(b) He purchased goods for cash | $₹ 50,000$ |
(c) He sold goods (costing ₹20,000) | $₹ 35,000$ |
(d) He purchased goods from Rahul | $₹ 55,000$ |
(e) He sold goods to Varun (Costing ₹ 52,000) | ₹ 60,000 |
(f) He paid cash to Rahul in full settlement | ₹ 53,000 |
(g) Salary paid by him | ₹ 20,000 |
(h) Received cash from Varun in full settlement | ₹ 59,000 |
(i) Rent outstanding | ₹ 3,000 |
(j) Prepaid Insurance | ₹ 2,000 |
(k) Commission received by him | $₹ 13,000$ |
(l) Amount withdrawn by him for personal use | ₹ 20,000 |
(m) Depreciation charge on building | ₹ 10,000 |
(n) Fresh capital invested | ₹ 50,000 |
(o) Purchased goods from Rakhi | $₹ 10,000$ |
Effect of Transactions on the Accounting Equation
Transaction | Assets (A) | Liabilities (L) | Capital (C) | Explanation |
---|---|---|---|---|
(a) Manoj started business with: | ||||
(i) Cash ₹ 2,30,000 | ↑ ₹ 2,30,000 | - | ↑ ₹ 2,30,000 | Initial capital by cash |
(ii) Goods ₹ 1,00,000 | ↑ ₹ 1,00,000 | - | ↑ ₹ 1,00,000 | Initial capital by goods |
(iii) Building ₹ 2,00,000 | ↑ ₹ 2,00,000 | - | ↑ ₹ 2,00,000 | Initial capital by building |
Total of (a) | ||||
(b) Purchased goods for cash ₹ 50,000 | – ₹ 50,000 | - | - | Decrease in cash, increase in goods |
(c) Sold goods (Cost ₹ 20,000) ₹ 35,000 | ↑ ₹ 35,000 | - | ↑ ₹ 15,000 | Increase in cash due to sales |
(d) Purchased goods from Rahul ₹ 55,000 | ↑ ₹ 55,000 | ↑ ₹ 55,000 | - | Increase in goods and liabilities |
(e) Sold goods to Varun (Cost ₹ 52,000) ₹ 60,000 | ↑ ₹ 60,000 | - | ↑ ₹ 8,000 | Increase in cash due to sales |
(f) Paid cash to Rahul in full settlement ₹ 53,000 | – ₹ 53,000 | – ₹ 53,000 | - | Paid off liabilities at a discount |
(g) Salary paid ₹ 20,000 | – ₹ 20,000 | - | ↓ ₹ 20,000 | Decrease in cash, salary expense |
(h) Received cash from Varun in full settlement ₹ 59,000 | ↑ ₹ 59,000 | - | ↓ ₹ 1,000 | Debtors decreased by ₹ 1,000 |
(i) Rent outstanding ₹ 3,000 | - | ↑ ₹ 3,000 | ↓ ₹ 3,000 | Liabilities increased, expense incurred |
(j) Prepaid Insurance ₹ 2,000 | ↑ ₹ 2,000 | - | - | Prepaid cost treated as asset |
(k) Commission received ₹ 13,000 | – | - | ↑ ₹ 13,000 | Increase in capital due to commission |
(l) Withdrawn for personal use ₹ 20,000 | – ₹ 20,000 | - | ↓ ₹ 20,000 | Decrease in cash, capital withdrawal |
(m) Depreciation on building ₹ 10,000 | ↓ ₹ 10,000 | - | ↓ ₹ 10,000 | Decrease in building value, expense incurred |
(n) Fresh capital invested ₹ 50,000 | ↑ ₹ 50,000 | - | ↑ ₹ 50,000 | Increase in capital |
(o) Purchased goods from Rakhi ₹ 10,000 | ↑ ₹ 10,000 | ↑ ₹ 10,000 | - | Increase in goods and liabilities |
Summary of Effects
Total Assets Increased: ₹ 4,52,000
Total Liabilities Increased: ₹ 20,000
Total Capital Increased: ₹ 4,32,000
Transactions of M/s Vipin Traders are given below.
Show the effects on Assets, Liabilities and Capital with the help of accounting Equation.
S.No | Transaction Description | Amount (₹) |
---|---|---|
(a) | Business started with cash | ₹1,25,000 |
(b) | Purchased goods for cash | ₹50,000 |
(c) | Purchased furniture from R.K. Furniture | ₹10,000 |
(d) | Sold goods to Parul Traders (Costing ₹ 7,000 vide ₹ 9,000 bill no. 5674) | ₹9,000 |
(e) | Paid cartage | ₹100 |
(f) | Cash Paid to R.K. furniture in full settlement | ₹9,700 |
(g) | Cash sales (costing ₹ 10,000) | ₹12,000 |
(h) | Rent received | ₹4,000 |
(i) | Cash withdrew for personal use | 3,000 |
Let's analyze each of the transactions and see the effect on the accounting equation:
$$ \text{Assets} = \text{Liabilities} + \text{Capital} $$
Analyzing Transactions
Transaction (a): Business started with cash ₹1,25,000
Assets (Cash) increase by ₹1,25,000
Capital increases by ₹1,25,000
Effect: $$ \text{Assets} = ₹1,25,000,, \text{Liabilities} = ₹0,, \text{Capital} = ₹1,25,000 $$
Transaction (b): Purchased goods for cash ₹50,000
Assets (Inventory) increase by ₹50,000, Assets (Cash) decrease by ₹50,000
Effect: No net change $$ \text{Assets} = ₹1,25,000 (\text{Cash}) - ₹50,000 + ₹50,000 (\text{Inventory}) = ₹1,25,000,, \text{Liabilities} = ₹0,, \text{Capital} = ₹1,25,000 $$
Transaction (c): Purchased furniture from R.K. Furniture ₹10,000
Assets (Furniture) increase by ₹10,000, Liabilities (R.K. Furniture) increase by ₹10,000
Effect: $$ \text{Assets} = ₹1,25,000 \text{ Cash} + ₹50,000 \text{ Inventory} + ₹10,000 \text{ Furniture} = ₹1,85,000,, \text{Liabilities} = ₹10,000,, \text{Capital} = ₹1,25,000 $$
Transaction (d): Sold goods to Parul Traders (costing ₹7,000 vide ₹9,000 bill no. 5674)
Assets (Cash) increase by ₹9,000, Assets (Inventory) decrease by ₹7,000, Capital (Profit) increases by ₹2,000
Effect: $$ \text{Assets} = ₹1,25,000 \text{ Cash} + ₹50,000 \text{ Inventory} - ₹7,000 + ₹10,000 \text{ Furniture} + ₹9,000 = ₹1,87,000, \text{Liabilities} = ₹10,000, \text{Capital} = ₹1,27,000 $$
Transaction (e): Paid cartage ₹100
Assets (Cash) decrease by ₹100, Capital decreases by ₹100
Effect: $$ \text{Assets} = ₹1,25,000 \text{ Cash} - ₹100 + ₹50,000 \text{ Inventory} - ₹7,000 + ₹10,000 \text{ Furniture} + ₹9,000 = ₹1,86,900, \text{Liabilities} = ₹10,000, \text{Capital} = ₹1,26,900 $$
Transaction (f): Cash paid to R.K. Furniture in full settlement ₹9,700
Assets (Cash) decrease by ₹9,700, Liabilities (R.K. Furniture) decrease by ₹10,000, Capital increases by ₹300 (Discount received)
Effect: $$ \text{Assets} = ₹1,25,000 \text{ Cash} - ₹100 - ₹9,700 + ₹50,000 \text{ Inventory} - ₹7,000 + ₹10,000 \text{ Furniture} + ₹9,000 = ₹1,77,200, \text{Liabilities} = ₹0, \text{Capital} = ₹1,27,200 $$
Transaction (g): Cash sales (costing ₹10,000) ₹12,000
Assets (Cash) increase by ₹12,000, Assets (Inventory) decrease by ₹10,000, Capital (Profit) increases by ₹2,000
Effect: $$ \text{Assets} = ₹1,25,000 \text{ Cash} - ₹100 - ₹9,700 + ₹12,000 + ₹50,000 \text{ Inventory} - ₹7,000 - ₹10,000 + ₹10,000 \text{ Furniture} + ₹9,000 = ₹1,79,200, \text{Liabilities} = ₹0, \text{Capital} = ₹1,29,200 $$
Transaction (h): Rent received ₹4,000
Assets (Cash) increase by ₹4,000, Capital increases by ₹4,000
Effect: $$ \text{Assets} = ₹1,25,000 \text{ Cash} - ₹100 - ₹9,700 + ₹12,000 + ₹4,000 + ₹50,000 \text{ Inventory} - ₹7,000 - ₹10,000 + ₹10,000 \text{ Furniture} + ₹9,000 = ₹1,83,200, \text{Liabilities} = ₹0, \text{Capital} = ₹1,33,200 $$
Transaction (i): Cash withdrew for personal use ₹3,000
Assets (Cash) decrease by ₹3,000, Capital decreases by ₹3,000
Effect: $$ \text{Assets} = ₹1,25,000 \text{ Cash} - ₹100 - ₹9,700 + ₹12,000 + ₹4,000 - ₹3,000 + ₹50,000 \text{ Inventory} - ₹7,000 - ₹10,000 + ₹10,000 \text{ Furniture} + ₹9,000 = ₹1,80,200, \text{Liabilities} = ₹0, \text{Capital} = ₹1,30,200 $$
Summary Table
S.No | Assets (₹) | = | Liabilities (₹) | + | Capital (₹) |
---|---|---|---|---|---|
(a) | 1,25,000 | = | 0 | + | 1,25,000 |
(b) | 1,25,000 | = | 0 | + | 1,25,000 |
(c) | 1,85,000 | = | 10,000 | + | 1,25,000 |
(d) | 1,87,000 | = | 10,000 | + | 1,27,000 |
(e) | 1,86,900 | = | 10,000 | + | 1,26,900 |
(f) | 1,77,200 | = | 0 | + | 1,27,200 |
(g) | 1,79,200 | = | 0 | + | 1,29,200 |
(h) | 1,83,200 | = | 0 | + | 1,33,200 |
(i) | 1,80,200 | = | 0 | + | 1,30,200 |
The accounting equation remains balanced after each transaction.
Bobby opened a consulting firm and completed these transactions during November, 2017:
(a) Invested ₹ $4,00,000$ cash and office equipment with ₹ $1,50,000$ in a business called Bobbie Consulting.
(b) Purchased land and a small office building. The land was worth $₹ 1,50,000$ and the building worth ₹ $3,50,000$. The purchase price was
paid with ₹ $2,00,000$ cash and a long term note payable for $₹ 3,00,000$.
(c) Purchased office supplies on credit for ₹ 12,000 .
(d) Bobbie transferred title of motor car to the business. The motor car was worth ₹ 90,000 .
(e) Purchased for ₹ 30,000 additional office equipment on credit.
(f) Paid ₹ 75,00 salary to the office manager.
(g) Provided services to a client and collected ₹ 30,000
(h) Paid ₹ 4,000 for the month's utilities.
(i) Paid supplier created in transaction $c$.
(j) Purchase new office equipment by paying ₹ 93,000 cash and trading in old equipment with a recorded cost of ₹ 7,000 .
(k) Completed services of a client for ₹ 26,000 . This amount is to be paid within 30 days.
(1) Received ₹ 19,000 payment from the client created in transaction $\boldsymbol{k}$.
(m) Bobby withdrew ₹ 20,000 from the business.
Analyse the above stated transactions and open the following T-accounts: Cash, client, office supplies, motor car, building, land, long term payables, capital, withdrawals, salary, expense and utilities expense.
Analyzing Transactions
We have evaluated all the transactions and analyzed the numbers. Now let's open the T-accounts for each specified category.
1. Cash
Date | Details | Debit (₹) | Credit (₹) |
---|---|---|---|
(a) | Capital | 4,00,000 | |
(b) | Land and Building | 2,00,000 | |
(f) | Salary | 7,500 | |
(g) | Services | 30,000 | |
(h) | Utilities | 4,000 | |
(i) | Supplier | 12,000 | |
(j) | New Office Equipment | 93,000 | |
(j) | Old Office Equipment | 7,000 | |
(m) | Withdrawals | 20,000 | |
Total | 4,37,000 | 3,36,500 |
2. Client (Accounts Receivable)
Date | Details | Debit (₹) | Credit (₹) |
---|---|---|---|
(k) | Services Completed | 26,000 | |
(l) | Payment Received | 19,000 | |
Total | 26,000 | 19,000 |
3. Office Supplies
Date | Details | Debit (₹) | Credit (₹) |
---|---|---|---|
(c) | Purchased on Credit | 12,000 | |
Total | 12,000 |
4. Motor Car
Date | Details | Debit (₹) | Credit (₹) |
---|---|---|---|
(d) | Title Transferred | 90,000 | |
Total | 90,000 |
5. Building
Date | Details | Debit (₹) | Credit (₹) |
---|---|---|---|
(b) | Purchased | 3,50,000 | |
Total | 3,50,000 |
6. Land
Date | Details | Debit (₹) | Credit (₹) |
---|---|---|---|
(b) | Purchased | 1,50,000 | |
Total | 1,50,000 |
7. Long Term Payables
Date | Details | Debit (₹) | Credit (₹) |
---|---|---|---|
(b) | Purchased Land and Building | 3,00,000 | |
Total | 3,00,000 |
8. Capital (Bobby's Investment)
Date | Details | Debit (₹) | Credit (₹) |
---|---|---|---|
(a) | Cash and Office Equipment | 4,00,000 | |
Office Equipment | 1,50,000 | ||
Total | 5,50,000 |
9. Withdrawals
Date | Details | Debit (₹) | Credit (₹) |
---|---|---|---|
(m) | Cash Withdrawal | 20,000 | |
Total | 20,000 |
10. Salary Expense
Date | Details | Debit (₹) | Credit (₹) |
---|---|---|---|
(f) | Salary Paid | 7,500 | |
Total | 7,500 |
11. Utilities Expense
Date | Details | Debit (₹) | Credit (₹) |
---|---|---|---|
(h) | Utilities | 4,000 | |
Total | 4,000 |
This breakdown organizes all of Bobby's November transactions into their appropriate T-accounts.
Journalise the following transactions in the books of Himanshu
2017 | Transaction Description | Amount (₹) |
---|---|---|
Dec. 01 | Business started with cash | 75,000 |
Dec. 07 | Purchased goods for cash | 10,000 |
Dec. 09 | Sold goods to Swati | 5,000 |
Dec. 12 | Purchased furniture | 3,000 |
Dec. 18 | Cash received from Swati in full settlement | 4,000 |
Dec. 25 | Paid rent | 1,000 |
Dec. 30 | Paid salary | 1,500 |
Here's how you can journalize the transactions in the books of Himanshu:
Date | Particulars | L.F. | Debit Amount (₹) | Credit Amount (₹) |
---|---|---|---|---|
2017 | ||||
Dec. 01 | Cash A/c | Dr. | 75,000 | |
To Capital A/c | 75,000 | |||
(Business started with cash) | ||||
Dec. 07 | Purchases A/c | Dr. | 10,000 | |
To Cash A/c | 10,000 | |||
(Purchased goods for cash) | ||||
Dec. 09 | Swati A/c | Dr. | 5,000 | |
To Sales A/c | 5,000 | |||
(Sold goods to Swati) | ||||
Dec. 12 | Furniture A/c | Dr. | 3,000 | |
To Cash A/c | 3,000 | |||
(Purchased furniture) | ||||
Dec. 18 | Cash A/c | Dr. | 4,000 | |
Discount Allowed A/c | Dr. | 1,000 | ||
To Swati A/c | 5,000 | |||
(Cash received from Swati in full settlement) | ||||
Dec. 25 | Rent A/c | Dr. | 1,000 | |
To Cash A/c | 1,000 | |||
(Paid rent) | ||||
Dec. 30 | Salaries A/c | Dr. | 1,500 | |
To Cash A/c | 1,500 | |||
(Paid salary) |
This table records each transaction, indicating which account to debit and credit, aligning with the rules of double-entry bookkeeping.
Enter the following Transactions in the Journal of Mudit :
2017 | Transaction Description | Amount (₹) |
---|---|---|
Jan. 01 | Commenced business with cash | 1,75,000 |
Jan. 01 | Building | 1,00,000 |
Jan. 02 | Goods purchased for cash | 75,000 |
Jan. 03 | Sold goods to Ramesh | 30,000 |
Jan. 04 | Paid wages | 500 |
Jan. 06 | Sold goods for cash | 10,000 |
Jan. 10 | Paid for trade expenses | 700 |
Jan. 12 | Cash received from Ramesh | 29,500 |
Jan. 12 | Discount allowed | 500 |
Jan. 14 | Goods purchased for Sudhir | 27,000 |
Jan. 18 | Cartage paid | 1,000 |
Jan. 20 | Drew cash for personal use | 5,000 |
Jan. 22 | Goods used for household | 2,000 |
Jan. 25 | Cash paid to Sudhir | 26,700 |
Jan. 25 | Discount allowed | 300 |
Books of Mudit
Journal
Date | Particulars | L.F. | Debit Amount (₹) | Credit Amount (₹) |
---|---|---|---|---|
2017 | ||||
Jan. 01 | Cash A/c | 1,75,000 | ||
To Capital A/c | 1,75,000 | |||
(Commenced business with cash) | ||||
Jan. 01 | Building A/c | 1,00,000 | ||
To Cash A/c | 1,00,000 | |||
(Building purchased for cash) | ||||
Jan. 02 | Purchases A/c | 75,000 | ||
To Cash A/c | 75,000 | |||
(Goods purchased for cash) | ||||
Jan. 03 | Ramesh A/c | 30,000 | ||
To Sales A/c | 30,000 | |||
(Goods sold on credit to Ramesh) | ||||
Jan. 04 | Wages A/c | 500 | ||
To Cash A/c | 500 | |||
(Wages paid) | ||||
Jan. 06 | Cash A/c | 10,000 | ||
To Sales A/c | 10,000 | |||
(Goods sold for cash) | ||||
Jan. 10 | Trade Expenses A/c | 700 | ||
To Cash A/c | 700 | |||
(Paid for trade expenses) | ||||
Jan. 12 | Cash A/c | 29,500 | ||
Discount Allowed A/c | 500 | |||
To Ramesh A/c | 30,000 | |||
(Cash received from Ramesh and discount) | ||||
Jan. 14 | Purchases A/c | 27,000 | ||
To Sudhir A/c | 27,000 | |||
(Goods purchased for Sudhir on credit) | ||||
Jan. 18 | Cartage A/c | 1,000 | ||
To Cash A/c | 1,000 | |||
(Cartage paid) | ||||
Jan. 20 | Drawings A/c | 5,000 | ||
To Cash A/c | 5,000 | |||
(Drew cash for personal use) | ||||
Jan. 22 | Drawings A/c | 2,000 | ||
To Purchases A/c | 2,000 | |||
(Goods used for household) | ||||
Jan. 25 | Sudhir A/c | 27,000 | ||
To Cash A/c | 26,700 | |||
To Discount Allowed A/c | 300 | |||
(Cash paid to Sudhir and discount) | ||||
These journal entries reflect each transaction according to standard double-entry bookkeeping principles.
Journalise the following transactions:
2017 | Transaction Description | Amount (₹) |
---|---|---|
Dec. 01 | Hema started business with cash | 1,00,000 |
Dec. 02 | Opened a bank account with SBI | 30,000 |
Dec. 04 | Purchased goods from Ashu | 20,000 |
Dec. 06 | Sold goods to Rahul for cash | 15,000 |
Dec. 10 | Bought goods from Tara for cash | 40,000 |
Dec. 13 | Sold goods to Suman | 20,000 |
Dec. 16 | Received cheque from Suman | 19,500 |
Dec. 16 | Discount allowed | 500 |
Dec. 20 | Cheque given to Ashu on account | 10,000 |
Dec. 22 | Rent paid by cheque | 2,000 |
Dec. 23 | Deposited into bank | 16,000 |
Dec. 25 | Machine purchased from Parigya | 10,000 |
Dec. 26 | Trade expenses | 2,000 |
Dec. 28 | Cheque issued to Parigya | 10,000 |
Dec. 29 | Paid telephone expenses by cheque | 1,200 |
Dec. 31 | Paid salary | 4,500 |
Here is the journal for the given transactions:
Books of Hema
Journal
Date | Particulars | L.F. | Debit | Credit |
---|---|---|---|---|
2017 | ₹ | ₹ | ||
Dec. 01 | Cash A/c | Dr. | 1,00,000 | |
To Capital A/c | 1,00,000 | |||
(Hema started business with cash) | ||||
Dec. 02 | Bank A/c | Dr. | 30,000 | |
To Cash A/c | 30,000 | |||
(Opened a bank account with SBI) | ||||
Dec. 04 | Purchases A/c | Dr. | 20,000 | |
To Ashu's A/c | 20,000 | |||
(Purchased goods from Ashu) | ||||
Dec. 06 | Cash A/c | Dr. | 15,000 | |
To Sales A/c | 15,000 | |||
(Sold goods to Rahul for cash) | ||||
Dec. 10 | Purchases A/c | Dr. | 40,000 | |
To Cash A/c | 40,000 | |||
(Bought goods from Tara for cash) | ||||
Dec. 13 | Suman's A/c | Dr. | 20,000 | |
To Sales A/c | 20,000 | |||
(Sold goods to Suman) | ||||
Dec. 16 | Bank A/c | Dr. | 19,500 | |
Discount Allowed A/c | Dr. | 500 | ||
To Suman's A/c | 20,000 | |||
(Received cheque from Suman, allowed discount) | ||||
Dec. 20 | Ashu's A/c | Dr. | 10,000 | |
To Bank A/c | 10,000 | |||
(Cheque given to Ashu on account) | ||||
Dec. 22 | Rent A/c | Dr. | 2,000 | |
To Bank A/c | 2,000 | |||
(Rent paid by cheque) | ||||
Dec. 23 | Bank A/c | Dr. | 16,000 | |
To Cash A/c | 16,000 | |||
(Deposited into bank) | ||||
Dec. 25 | Machinery A/c | Dr. | 10,000 | |
To Parigya A/c | 10,000 | |||
(Machine purchased from Parigya) | ||||
Dec. 26 | Trade Expenses A/c | Dr. | 2,000 | |
To Cash A/c | 2,000 | |||
(Trade expenses) | ||||
Dec. 28 | Parigya A/c | Dr. | 10,000 | |
To Bank A/c | 10,000 | |||
(Cheque issued to Parigya) | ||||
Dec. 29 | Telephone Expenses A/c | Dr. | 1,200 | |
To Bank A/c | 1,200 | |||
(Paid telephone expenses by cheque) | ||||
Dec. 31 | Salary A/c | Dr. | 4,500 | |
To Cash A/c | 4,500 | |||
(Paid salary) |
This journal entry format ensures clear recording of each transaction on the specified dates with the respective debit and credit amounts.
Journalise the following transactions in the books of Harpreet Bros.:
(a) ₹1,000 due from Rohit are now bad debts.
(b) Goods worth ₹2,000 were used by the proprietor.
(c) Charge depreciation @ 10% p.a for two month on machine costing ₹30,000.
(d) Provide interest on capital of ₹ $1,50,000$ at $6 \%$ p.a. for 9 months.
(e) Rahul become insolvent, who owed is ₹ 2,000 a final dividend of 60 paise in a rupee is received from his estate.
Given the calculations, let's summarize the results and then prepare the journal entries for Harpreet Bros.:
Bad Debts from Rohit:
Amount: ₹1,000
Goods used by the Proprietor:
Amount: ₹2,000
Depreciation on Machine:
Machine Cost: ₹30,000
Depreciation Rate: ( 10% ) p.a.
Depreciation for 2 months: ( \frac{10% \times 30000 \times 2}{12} = ₹500 )
Interest on Capital:
Capital: ₹1,50,000
Interest Rate: ( 6% ) p.a.
Interest for 9 months: ( \frac{6% \times 150000 \times 9}{12} = ₹6,750 )
Final Dividend Received from Rahul (Insolvent):
Amount Owed: ₹2,000
Final Dividend: ( 60 \text{ paise in a rupee of 2000} = ₹1,200 )
Now let's journalize these transactions:
Date | Particulars | L.F. | Debit Amount (₹) | Credit Amount (₹) |
---|---|---|---|---|
(a) | Bad Debts A/c Dr. | 1,000 | ||
To Rohit A/c | 1,000 | |||
(Being amount due from Rohit written off as bad debts) | ||||
(b) | Drawings A/c Dr. | 2,000 | ||
To Purchases A/c | 2,000 | |||
(Being goods used by the proprietor) | ||||
(c) | Depreciation A/c Dr. | 500 | ||
To Machinery A/c | 500 | |||
(Being depreciation charged on machinery for 2 months) | ||||
(d) | Interest on Capital A/c Dr. | 6,750 | ||
To Capital A/c | 6,750 | |||
(Being interest on capital provided for 9 months) | ||||
(e) | Bank A/c Dr. | 1,200 | ||
Bad Debts A/c Dr. | 800 | |||
To Rahul A/c | 2,000 | |||
(Being final dividend received from Rahul and balance written off) |
The transactions have been journalized as per the provided details.
Prepare Journal from the transactions given below :
S.No | Transaction Description | Amount (₹) |
---|---|---|
(a) | Cash paid for installation of machine | 500 |
(b) | Goods given as charity | 2,000 |
(c) | Interest charge on capital @7% p.a. | 70,000 |
(d) | Received ₹1,200 off a bad debts written-off last year | |
(e) | Goods destroyed by fire | 2,000 |
(f) | Rent outstanding | 1,000 |
(g) | Interest on drawings | 900 |
(h) | Sudhir Kumar who owed me ` 3,000 has failed to pay the amount. He pays me a compensation of 45 paise in a rupee. | |
(i) | Commission received in advance | 7,000 |
Journal Entries
Date | Particulars | L.F. | Debit Amount (₹) | Credit Amount (₹) |
---|---|---|---|---|
(a) | Installation Expenses A/c | 500 | ||
To Cash A/c | 500 | |||
*(Being cash paid for installation of machine)* | ||||
(b) | Charity A/c | 2,000 | ||
To Goods A/c | 2,000 | |||
*(Being goods given as charity)* | ||||
(c) | Interest on Capital A/c | 70,000 | ||
To Capital A/c | 70,000 | |||
*(Being interest charged on capital @ 7% p.a.)* | ||||
(d) | Bad Debts Recovered A/c | 1,200 | ||
To Bad Debts A/c | 1,200 | |||
*(Being amount received off a bad debt written-off last year)* | ||||
(e) | Loss by Fire A/c | 2,000 | ||
To Goods A/c | 2,000 | |||
*(Being goods destroyed by fire)* | ||||
(f) | Rent A/c | 1,000 | ||
To Rent Outstanding A/c | 1,000 | |||
*(Being rent outstanding)* | ||||
(g) | Drawings A/c | 900 | ||
To Interest on Drawings A/c | 900 | |||
*(Being interest charged on drawings)* | ||||
(h) | Cash A/c | 1,350 | ||
Bad Debts A/c | 1,650 | |||
To Debtors Sudhir Kumar A/c | 3,000 | |||
*(Being compensation received for bad debt from Sudhir Kumar)* | ||||
(i) | Cash A/c | 7,000 | ||
To Commission Received in Advance A/c | 7,000 | |||
*(Being commission received in advance)* |
Note: Ensure to fill in the L.F. (Ledger Folio) column as per your ledger book reference.
Journalise the following transactions, post to the ledger:
2017 | Transaction Description | Amount (₹) |
---|---|---|
Nov. 01 (i) | Business started with cash | 1,50,000 |
Nov. 01 (ii) | Business started with goods | 50,000 |
Nov. 03 | Purchased goods from Harish | 30,000 |
Nov. 05 | Sold goods for cash | 12,000 |
Nov. 08 | Purchased furniture for cash | 5,000 |
Nov. 10 | Cash paid to Harish on account | 15,000 |
Nov. 13 | Paid sundry expenses | 200 |
Nov. 15 | Cash sales | 15,000 |
Nov. 18 | Deposited into bank | 5,000 |
Nov. 20 | Drew cash for personal use | 1,000 |
Nov. 22 | Cash paid to Harish in full settlement | 14,700 |
Nov. 25 | Goods sold to Nitesh | 7,000 |
Nov. 26 | Cartage paid | 200 |
Nov. 27 | Rent paid | 1,500 |
Nov. 29 | Received cash from Nitesh | 6,800 |
Nov. 29 | Discount allowed to Nitesh | 200 |
Nov. 30 | Salary paid | 3,000 |
Journal Entries
Date | Particulars | L.F. | Debit Amount (₹) | Credit Amount (₹) |
---|---|---|---|---|
2017 | ||||
Nov. 01 (i) | Cash A/c | 1,50,000 | ||
To Capital A/c | 1,50,000 | |||
(Being business started with cash) | ||||
Nov. 01 (ii) | Goods A/c | 50,000 | ||
To Capital A/c | 50,000 | |||
(Being business started with goods) | ||||
Nov. 03 | Purchases A/c | 30,000 | ||
To Harish A/c | 30,000 | |||
(Being goods purchased from Harish on credit) | ||||
Nov. 05 | Cash A/c | 12,000 | ||
To Sales A/c | 12,000 | |||
(Being goods sold for cash) | ||||
Nov. 08 | Furniture A/c | 5,000 | ||
To Cash A/c | 5,000 | |||
(Being furniture purchased for cash) | ||||
Nov. 10 | Harish A/c | 15,000 | ||
To Cash A/c | 15,000 | |||
(Being cash paid to Harish on account) | ||||
Nov. 13 | Sundry Expenses A/c | 200 | ||
To Cash A/c | 200 | |||
(Being sundry expenses paid in cash) | ||||
Nov. 15 | Cash A/c | 15,000 | ||
To Sales A/c | 15,000 | |||
(Being cash sales) | ||||
Nov. 18 | Bank A/c | 5,000 | ||
To Cash A/c | 5,000 | |||
(Being amount deposited into bank) | ||||
Nov. 20 | Drawings A/c | 1,000 | ||
To Cash A/c | 1,000 | |||
(Being cash withdrawn for personal use) | ||||
Nov. 22 | Harish A/c | 14,700 | ||
Discount Received A/c | 300 | |||
To Cash A/c | 15,000 | |||
(Being cash paid to Harish in full settlement) | ||||
Nov. 25 | Nitesh A/c | 7,000 | ||
To Sales A/c | 7,000 | |||
(Being goods sold to Nitesh) | ||||
Nov. 26 | Cartage A/c | 200 | ||
To Cash A/c | 200 | |||
(Being cartage paid) | ||||
Nov. 27 | Rent A/c | 1,500 | ||
To Cash A/c | 1,500 | |||
(Being rent paid) | ||||
Nov. 29 | Cash A/c | 6,800 | ||
Discount Allowed A/c | 200 | |||
To Nitesh A/c | 7,000 | |||
(Being cash received from Nitesh) | ||||
Nov. 30 | Salary A/c | 3,000 | ||
To Cash A/c | 3,000 | |||
(Being salary paid) | ||||
Ledger Accounts
Ledger
Cash Account
Date | Particulars | J.F. | Amount (₹) | Date | Particulars | J.F. | Amount (₹) |
---|---|---|---|---|---|---|---|
2017 | 2017 | ||||||
Nov. 01 | Capital A/c | 1,50,000 | Nov. 08 | Furniture A/c | 5,000 | ||
Nov. 05 | Sales A/c | 12,000 | Nov. 10 | Harish A/c | 15,000 | ||
Nov. 15 | Sales A/c | 15,000 | Nov. 13 | Sundry Expenses A/c | 200 | ||
Nov. 29 | Nitesh A/c | 6,800 | Nov. 18 | Bank A/c | 5,000 | ||
Nov. 20 | Drawings A/c | 1,000 | |||||
Nov. 22 | Harish A/c | 14,700 | |||||
Nov. 26 | Cartage A/c | 200 | |||||
Nov. 27 | Rent A/c | 1,500 | |||||
Nov. 30 | Salary A/c | 3,000 | |||||
Capital Account
Date | Particulars | J.F. | Amount (₹) | Date | Particulars | J.F. | Amount (₹) |
---|---|---|---|---|---|---|---|
2017 | 2017 | ||||||
Nov. 01 | Cash A/c | 1,50,000 | |||||
Nov. 01 | Goods A/c | 50,000 | |||||
Goods/Stock Account
Date | Particulars | J.F. | Amount (₹) | Date | Particulars | J.F. | Amount (₹) |
---|---|---|---|---|---|---|---|
2017 | 2017 | ||||||
Nov. 01 | Capital A/c | 50,000 | Nov. 25 | Nitesh A/c | 7,000 | ||
Purchases Account
Date | Particulars | J.F. | Amount (₹) | Date | Particulars | J.F. | Amount (₹) |
---|---|---|---|---|---|---|---|
2017 | 2017 | ||||||
Nov. 03 | Harish A/c | 30,000 | |||||
Harish Account
Date | Particulars | J.F. | Amount (₹) | Date | Particulars | J.F. | Amount (₹) |
---|---|---|---|---|---|---|---|
2017 | 2017 | ||||||
Nov.10 | Cash A/c | 15,000 | Nov.03 | Purchases A/c | 30,000 | ||
Nov.22 | Cash A/c | 14,700 | Nov.22 | Discount Received A/c | 300 |
Sales Account
Date | Particulars | J.F. | Amount (₹) | Date | Particulars | J.F. | Amount (₹) |
---|---|---|---|---|---|---|---|
2017 | 2017 | ||||||
Nov. 05 | Cash A/c | 12,000 | |||||
Nov. 15 | Cash A/c | 15,000 | Nov. 25 | Nitesh A/c | 7,000 |
Furniture Account
Date | Particulars | J.F. | Amount (₹) | Date | Particulars | J.F. | Amount (₹) |
---|---|---|---|---|---|---|---|
2017 | 2017 | ||||||
Nov. 08 | Cash A/c | 5,000 |
Sundry Expenses Account
Date | Particulars | J.F. | Amount (₹) | Date | Particulars | J.F. | Amount (₹) |
---|---|---|---|---|---|---|---|
2017 | 2017 | ||||||
Nov. 13 | Cash A/c | 200 |
Drawings Account
Date | Particulars | J.F. | Amount (₹) | Date | Particulars | J.F. | Amount (₹) |
---|---|---|---|---|---|---|---|
2017 | 2017 | ||||||
Nov. 20 | Cash A/c | 1,000 |
Bank Account
Date | Particulars | J.F. | Amount (₹) | Date | Particulars | J.F. | Amount (₹) |
---|---|---|---|---|---|---|---|
2017 | 2017 | ||||||
Nov. 18 | Cash A/c | 5,000 |
Nitesh Account
Date | Particulars | J.F. | Amount (₹) | Date | Particulars | J.F. | Amount (₹) |
---|---|---|---|---|---|---|---|
2017 | 2017 | ||||||
Nov. 25 | Sales A/c | 7,000 | Nov. 29 | Cash A/c | 6,800 | ||
Nov. 29 | Discount Allowed A/c | 200 |
Cartage Account
Date | Particulars | J.F. | Amount (₹) | Date | Particulars | J.F. | Amount (₹) |
---|---|---|---|---|---|---|---|
2017 | 2017 | ||||||
Nov. 26 | Cash A/c | 200 |
Rent Account
Date | Particulars | J.F. | Amount (₹) | Date | Particulars | J.F. | Amount (₹) |
---|---|---|---|---|---|---|---|
2017 | 2017 | ||||||
Nov. 27 | Cash A/c | 1,500 |
Discount Allowed Account
Date | Particulars | J.F. | Amount (₹) | Date | Particulars | J.F. | Amount (₹) |
---|---|---|---|---|---|---|---|
2017 | 2017 | ||||||
Nov. 29 | Nitesh A/c | 200 |
Discount Received Account
Date | Particulars | J.F. | Amount (₹) | Date | Particulars | J.F. | Amount (₹) |
---|---|---|---|---|---|---|---|
2017 | 2017 | ||||||
Nov. 22 | Harish A/c | 300 |
Salary Account
Date | Particulars | J.F. | Amount (₹) | Date | Particulars | J.F. | Amount (₹) |
---|---|---|---|---|---|---|---|
2017 | 2017 | ||||||
Nov. 30 | Cash A/c | 3,000 |
Journalise the following transactions is the journal of $\mathrm{M} / \mathrm{s}$ Goel Brothers and post them to the ledger.
2017 | Transaction Description | Amount (₹) |
---|---|---|
Jan. 01 | Started business with cash | 1,65,000 |
Jan. 02 | Opened bank account in PNB | 80,000 |
Jan. 04 | Goods purchased from Tara | 22,000 |
Jan. 05 | Goods purchased for cash | 30,000 |
Jan. 08 | Goods sold to Naman | 12,000 |
Jan. 10 | Cash paid to Tara | 22,000 |
Jan. 15 | Cash received from Naman | 11,700 |
Jan. 15 | Discount allowed | 300 |
Jan. 16 | Paid wages | 200 |
Jan. 18 | Furniture purchased for office use | 5,000 |
Jan. 20 | Withdrawn from bank for personal use | 4,000 |
Jan. 22 | Issued cheque for rent | 3,000 |
Jan. 23 | Goods issued for household purpose | 2,000 |
Jan. 24 | Drawn cash from bank for office use | 6,000 |
Jan. 26 | Commission received | 1,000 |
Jan. 27 | Bank charges | 200 |
Jan. 28 | Cheque given for insurance premium | 3,000 |
Jan. 29 | Paid salary | 7,000 |
Jan. 30 | Cash sales | 10,000 |
Journal Entries
Here are the journal entries for the transactions described:
Date | Particulars | L.F. | Debit (₹) | Credit (₹) |
---|---|---|---|---|
Jan. 01 | Cash A/c | Dr. | 1,65,000 | |
To Capital A/c | 1,65,000 | |||
Jan. 02 | Bank A/c | Dr. | 80,000 | |
To Cash A/c | 80,000 | |||
Jan. 04 | Purchases A/c | Dr. | 22,000 | |
To Tara A/c | 22,000 | |||
Jan. 05 | Purchases A/c | Dr. | 30,000 | |
To Cash A/c | 30,000 | |||
Jan. 08 | Naman A/c | Dr. | 12,000 | |
To Sales A/c | 12,000 | |||
Jan. 10 | Tara A/c | Dr. | 22,000 | |
To Cash A/c | 22,000 | |||
Jan. 15 | Cash A/c | Dr. | 11,700 | |
Discount Allowed A/c | Dr. | 300 | ||
To Naman A/c | 12,000 | |||
Jan. 16 | Wages A/c | Dr. | 200 | |
To Cash A/c | 200 | |||
Jan. 18 | Furniture for office use A/c | Dr. | 5,000 | |
To Cash A/c | 5,000 | |||
Jan. 20 | Drawings A/c | Dr. | 4,000 | |
To Bank A/c | 4,000 | |||
Jan. 22 | Rent A/c | Dr. | 3,000 | |
To Bank A/c | 3,000 | |||
Jan. 23 | Drawings A/c | Dr. | 2,000 | |
To Goods A/c | 2,000 | |||
Jan. 24 | Cash A/c | Dr. | 6,000 | |
To Bank A/c | 6,000 | |||
Jan. 26 | Bank A/c | Dr. | 1,000 | |
To Commission Received A/c | 1,000 | |||
Jan. 27 | Bank Charges A/c | Dr. | 200 | |
To Bank A/c | 200 | |||
Jan. 28 | Insurance Premium A/c | Dr. | 3,000 | |
To Bank A/c | 3,000 | |||
Jan. 29 | Salary A/c | Dr. | 7,000 | |
To Cash A/c | 7,000 | |||
Jan. 30 | Cash A/c | Dr. | 10,000 | |
To Cash Sales A/c | 10,000 |
Ledger Entries
Here are the ledger entries based on the above journal entries:
Cash Account
Date Particulars J.F. Amount (₹) Jan. 01 Capital 1,65,000 Jan. 02 Bank A/c (80,000) Jan. 05 Purchases A/c (30,000) Jan. 10 Tara A/c (22,000) Jan. 15 Naman A/c 11,700 Jan. 16 Wages A/c (200) Jan. 18 Furniture for office use A/c (5,000) Jan. 24 Bank A/c 6,000 Jan. 29 Salary A/c (7,000) Jan. 30 Cash Sales A/c 10,000 Bank Account
Date Particulars J.F. Amount (₹) Jan. 02 Cash A/c 80,000 Jan. 20 Drawings A/c (4,000) Jan. 22 Rent A/c (3,000) Jan. 24 Cash A/c (6,000) Jan. 26 Commission Received A/c 1,000 Jan. 27 Bank Charges A/c (200) Jan. 28 Insurance Premium A/c (3,000) Tara Account
Date Particulars J.F. Amount (₹) Jan. 04 Purchases A/c 22,000 Jan. 10 Cash A/c (22,000) Naman Account
Date Particulars J.F. Amount (₹) Jan. 08 Sales A/c 12,000 Jan. 15 Cash A/c (11,700) Jan. 15 Discount Allowed A/c (300) Wages Account
Date Particulars J.F. Amount (₹) Jan. 16 Cash A/c 200 Furniture for office use Account
Date Particulars J.F. Amount (₹) Jan. 18 Cash A/c 5,000 Drawings Account
Date Particulars J.F. Amount (₹) Jan. 20 Bank A/c 4,000 Jan. 23 Goods A/c 2,000 Rent Account
Date Particulars J.F. Amount (₹) Jan. 22 Bank A/c 3,000 Goods Account
Date Particulars J.F. Amount (₹) Jan. 23 Drawings A/c 2,000 Commission Received Account
Date Particulars J.F. Amount (₹) Jan. 26 Bank A/c 1,000 Bank Charges Account
Date Particulars J.F. Amount (₹) Jan. 27 Bank A/c 200 Insurance Premium Account
Date Particulars J.F. Amount (₹) Jan. 28 Bank A/c 3,000 Salary Account
Date Particulars J.F. Amount (₹) Jan. 29 Cash A/c 7,000 Cash Sales Account
Date Particulars J.F. Amount (₹) Jan. 30 Cash A/c 10,000
This is how the given transactions can be journalized and posted to the ledger.
Give journal entries of M/s Mohit traders, Post them to the Ledger from the following transactions :
Date | Transaction Description | Amount (₹) |
---|---|---|
Aug. 01 | Commenced business with cash | 1,10,000 |
Aug. 02 | Opened bank account with H.D.F.C. | 50,000 |
Aug. 03 | Purchased furniture | 20,000 |
Aug. 07 | Bought goods for cash from M/s Rupa Traders | 30,000 |
Aug. 08 | Purchased goods from M/s Hema Traders | 42,000 |
Aug. 10 | Sold goods for cash | 30,000 |
Aug. 11 | Sold goods on credit to M/s. Gupta Traders | 12,000 |
Aug. 16 | Rent paid | - |
Aug. 17 | Paid trade expenses | - |
Aug. 18 | Received cash from Gupta Traders | 12,000 |
Aug. 22 | Goods returned to Hema Traders | - |
Aug. 23 | Cash paid to Hema Traders | 40,000 |
Aug. 24 | Bought postage stamps | 100 |
Aug. 30 | Paid salary to Rishabh | 4,000 |
Let's create the journal entries for M/s Mohit Traders manually and then post them to the ledger. Here are the entries for the given transactions:
Journal Entries
Date | Particulars | Debit (₹) | Credit (₹) |
---|---|---|---|
Aug. 01 | Cash A/c | 1,10,000 | |
To Capital A/c | 1,10,000 | ||
*(Commenced business with cash)* | |||
Aug. 02 | Bank A/c - HDFC | 50,000 | |
To Cash A/c | 50,000 | ||
*(Opened bank account with HDFC)* | |||
Aug. 03 | Furniture A/c | 20,000 | |
To Cash A/c | 20,000 | ||
*(Purchased furniture)* | |||
Aug. 07 | Purchases A/c | 30,000 | |
To Cash A/c | 30,000 | ||
*(Bought goods for cash from M/s Rupa Traders)* | |||
Aug. 08 | Purchases A/c | 42,000 | |
To M/s Hema Traders | 42,000 | ||
*(Purchased goods from M/s Hema Traders)* | |||
Aug. 10 | Cash A/c | 30,000 | |
To Sales A/c | 30,000 | ||
*(Sold goods for cash)* | |||
Aug. 11 | M/s Gupta Traders | 12,000 | |
To Sales A/c | 12,000 | ||
*(Sold goods on credit to M/s Gupta Traders)* | |||
Aug. 16 | Rent A/c | X,XXX | |
To Cash A/c | X,XXX | ||
*(Rent paid)* | |||
Aug. 17 | Trade Expenses A/c | X,XXX | |
To Cash A/c | X,XXX | ||
*(Paid trade expenses)* | |||
Aug. 18 | Cash A/c | 12,000 | |
To M/s Gupta Traders | 12,000 | ||
*(Received cash from Gupta Traders)* | |||
Aug. 22 | M/s Hema Traders | X,XXX | |
To Purchases A/c | X,XXX | ||
*(Goods returned to Hema Traders)* | |||
Aug. 23 | M/s Hema Traders | 40,000 | |
To Cash A/c | 40,000 | ||
*(Cash paid to Hema Traders)* | |||
Aug. 24 | Postage A/c | 100 | |
To Cash A/c | 100 | ||
*(Bought postage stamps)* | |||
Aug. 30 | Salary A/c | 4,000 | |
To Cash A/c | 4,000 | ||
*(Paid salary to Rishabh)* |
Posting to Ledger
Cash Account
Dr. Cash Account
Date | Particulars | Debit (₹) | Credit (₹) |
---|---|---|---|
Aug. 01 | Capital A/c | 1,10,000 | |
Aug. 10 | Sales A/c | 30,000 | |
Aug. 18 | M/s Gupta Traders | 12,000 | |
Aug. 02 | Bank A/c - HDFC | 50,000 | |
Aug. 03 | Furniture A/c | 20,000 | |
Aug. 07 | Purchases A/c | 30,000 | |
Aug. 16 | Rent A/c | X,XXX | |
Aug. 17 | Trade Expenses A/c | X,XXX | |
Aug. 23 | M/s Hema Traders | 40,000 | |
Aug. 24 | Postage A/c | 100 | |
Aug. 30 | Salary A/c | 4,000 |
Capital Account
Cr. Capital Account
Date | Particulars | Debit (₹) | Credit (₹) |
---|---|---|---|
Aug. 01 | Cash A/c | 1,10,000 |
Bank Account - HDFC
Dr. Bank Account - HDFC
Date | Particulars | Debit (₹) | Credit (₹) |
---|---|---|---|
Aug. 02 | Cash A/c | 50,000 |
Furniture Account
Dr. Furniture Account
Date | Particulars | Debit (₹) | Credit (₹) |
---|---|---|---|
Aug. 03 | Cash A/c | 20,000 |
Purchases Account
Dr. Purchases Account
Date | Particulars | Debit (₹) | Credit (₹) |
---|---|---|---|
Aug. 07 | Cash A/c | 30,000 | |
Aug. 08 | M/s Hema Traders | 42,000 | |
Aug. 22 | Goods Returned | X,XXX |
Sales Account
Cr. Sales Account
Date | Particulars | Debit (₹) | Credit (₹) |
---|---|---|---|
Aug. 10 | Cash A/c | 30,000 | |
Aug. 11 | M/s Gupta Traders | 12,000 |
Gupta Traders Account
Dr. Gupta Traders Account
Date | Particulars | Debit (₹) | Credit (₹) |
---|---|---|---|
Aug. 11 | Sales A/c | 12,000 | |
Aug. 18 | Cash A/c | 12,000 |
Hema Traders Account
Cr. Hema Traders Account
Date | Particulars | Debit (₹) | Credit (₹) |
---|---|---|---|
Aug. 08 | Purchases A/c | 42,000 | |
Aug. 22 | Goods Returned | X,XXX | |
Aug. 23 | Cash A/c | 40,000 |
Postage Account
Dr. Postage Account
Date | Particulars | Debit (₹) | Credit (₹) |
---|---|---|---|
Aug. 24 | Cash A/c | 100 |
Salary Account
Dr. Salary Account
Date | Particulars | Debit (₹) | Credit (₹) |
---|---|---|---|
Aug. 30 | Cash A/c | 4,000 |
These journal entries and postings should help you maintain the general ledger for M/s Mohit Traders accurately.
Journalise the following transaction in the Books of the M/s Bhanu Traders and Post them into the Ledger.
Date | Transaction Description | Amount (₹) |
---|---|---|
Dec. 01 | Started business with cash | 92,000 |
Dec. 02 | Deposited into bank | 60,000 |
Dec. 03 | Bought goods on credit from Himani | 40,000 |
Dec. 06 | Purchased goods for cash | 20,000 |
Dec. 07 | Returned goods to Himani | 4,000 |
Dec. 10 | Sold goods for cash | 20,000 |
Dec. 11 | Cheque given to Himani | 36,000 |
Dec. 17 | Goods sold to M/s Goyal Traders | 3,50,000 |
Dec. 19 | Drew cash from bank for personal use | 2,000 |
Dec. 21 | Goyal Traders returned goods | 3,500 |
Dec. 22 | Cash deposited into bank | 20,000 |
Dec. 26 | Cheque received from Goyal Traders | 31,500 |
Dec. 28 | Goods given as charity | 2,000 |
Dec. 29 | Rent paid | 3,000 |
Dec. 30 | Salary paid | 7,000 |
Dec. 31 | Office machine purchased for cash | 3,000 |
Journal Entries for M/s Bhanu Traders
Date: December 2022
Date | Particulars | L.F. | Debit Amount (₹) | Credit Amount (₹) |
---|---|---|---|---|
Dec. 01 | Cash A/c To Capital A/c (Business started with cash) | 92,000 | 92,000 | |
Dec. 02 | Bank A/c To Cash A/c (Deposited into bank) | 60,000 | 60,000 | |
Dec. 03 | Purchases A/c To Himani A/c (Bought goods on credit) | 40,000 | 40,000 | |
Dec. 06 | Purchases A/c To Cash A/c (Purchased goods for cash) | 20,000 | 20,000 | |
Dec. 07 | Himani A/c To Purchase Return A/c (Returned goods to Himani) | 4,000 | 4,000 | |
Dec. 10 | Cash A/c To Sales A/c (Sold goods for cash) | 20,000 | 20,000 | |
Dec. 11 | Himani A/c To Bank A/c (Cheque given to Himani) | 36,000 | 36,000 | |
Dec. 17 | M/s Goyal Traders A/c To Sales A/c (Goods sold to Goyal Traders) | 3,50,000 | 3,50,000 | |
Dec. 19 | Drawings A/c To Bank A/c (Drew cash from bank for personal use) | 2,000 | 2,000 | |
Dec. 21 | Sales Return A/c To M/s Goyal Traders A/c (Goyal Traders returned goods) | 3,500 | 3,500 | |
Dec. 22 | Bank A/c To Cash A/c (Cash deposited into bank) | 20,000 | 20,000 | |
Dec. 26 | Bank A/c To M/s Goyal Traders A/c (Cheque received from Goyal Traders) | 31,500 | 31,500 | |
Dec. 28 | Charity A/c To Goods A/c (Goods given as charity) | 2,000 | 2,000 | |
Dec. 29 | Rent A/c To Cash A/c (Rent paid) | 3,000 | 3,000 | |
Dec. 30 | Salary A/c To Cash A/c (Salary paid) | 7,000 | 7,000 | |
Dec. 31 | Office Machine A/c To Cash A/c (Office machine purchased for cash) | 3,000 | 3,000 |
Ledger Accounts
Cash Account
Date | Particulars | J.F. | Amount (₹) | Date | Particulars | J.F. | Amount (₹) |
---|---|---|---|---|---|---|---|
Dec. 01 | Capital A/c | 92,000 | Dec. 02 | Bank A/c | 60,000 | ||
Dec. 10 | Sales A/c | 20,000 | Dec. 06 | Purchases A/c | 20,000 | ||
Dec. 22 | Bank A/c | 20,000 | Dec. 11 | Bank A/c | 36,000 | ||
Dec. 28 | Charity A/c | 2,000 | |||||
Dec. 29 | Rent A/c | 3,000 | |||||
Dec. 30 | Salary A/c | 7,000 | |||||
Dec. 31 | Office Machine A/c | 3,000 |
Bank Account
Date | Particulars | J.F. | Amount (₹) | Date | Particulars | J.F. | Amount (₹) |
---|---|---|---|---|---|---|---|
Dec. 02 | Cash A/c | 60,000 | Dec. 11 | Himani A/c | 36,000 | ||
Dec. 22 | Cash A/c | 20,000 | Dec. | ||||
Dec. 26 | Goyal Traders A/c | 31,500 | Dec. 19 | Drawings A/C | 2,000 |
Himani Account
Date | Particulars | J.F. | Amount (₹) | Date | Particulars | J.F. | Amount (₹) |
---|---|---|---|---|---|---|---|
Dec. 03 | Purchases A/c | 40,000 | Dec. 07 | Purchase Return A/c | 4,000 | ||
Dec. 11 | Bank A/c | 36,000 |
Sales Account
Date | Particulars | J.F. | Amount (₹) | Date | Particulars | J.F. | Amount (₹) |
---|---|---|---|---|---|---|---|
Dec. 10 | Cash A/c | 20,000 | Dec. 17 | Goyal Traders A/c | 3,50,000 | ||
Dec. 21 | Sales Return A/c | 3,500 |
Purchases Account
Date | Particulars | J.F. | Amount (₹) | Date | Particulars | J.F. | Amount (₹) |
---|---|---|---|---|---|---|---|
Dec. 03 | Himani A/c | 40,000 | Dec. 07 | Purchase Return A/c | 4,000 | ||
Dec. 06 | Cash A/c | 20,000 |
Purchase Return Account
Date | Particulars | J.F. | Amount (₹) | Date | Particulars | J.F. | Amount (₹) |
---|---|---|---|---|---|---|---|
Dec. 07 | Himani A/c | 4,000 |
Goyal Traders Account
Date | Particulars | J.F. | Amount (₹) | Date | Particulars | J.F. | Amount (₹) |
---|---|---|---|---|---|---|---|
Dec. 17 | Sales A/c | 3,50,000 | Dec. 21 | Sales Return A/c | 3,500 | ||
Dec. 26 | Bank A/c | 31,500 |
Charity Account
Date | Particulars | J.F. | Amount (₹) | Date | Particulars | J.F. | Amount (₹) |
---|---|---|---|---|---|---|---|
Dec. 28 | Goods A/c | 2,000 |
Rent Account
Date | Particulars | J.F. | Amount (₹) | Date | Particulars | J.F. | Amount (₹) |
---|---|---|---|---|---|---|---|
Dec. 29 | Cash A/c | 3,000 |
Salary Account
Date | Particulars | J.F. | Amount (₹) | Date | Particulars | J.F. | Amount (₹) |
---|---|---|---|---|---|---|---|
Dec. 30 | Cash A/c | 7,000 |
Office Machine Account
Date | Particulars | J.F. | Amount (₹) | Date | Particulars | J.F. | Amount (₹) |
---|---|---|---|---|---|---|---|
Dec. 31 | Cash A/c | 3,000 |
Drawings Account
Date | Particulars | J.F. | Amount (₹) | Date | Particulars | J.F. | Amount (₹) |
---|---|---|---|---|---|---|---|
Dec. 19 | Bank A/c | 2,000 |
This completes the journal entries and the ledger posting for M/s Bhanu Traders.
Journalise the following transaction in the Book of M/s Beauti traders. Also post them in the ledger.
Date | Transaction Description | Amount (₹) |
---|---|---|
Dec. 01 | Started business with cash | 2,00,000 |
Dec. 02 | Bought office furniture | 30,000 |
Dec. 03 | Paid into bank to open a current account | 1,00,000 |
Dec. 04 | Purchased a computer and paid by cheque | 2,50,000 |
Dec. 05 | Bought goods on credit from Ritika | 60,000 |
Dec. 06 | Cash sales | 30,000 |
Dec. 07 | Sold goods to Karishna on credit | 25,000 |
Dec. 08 | Cash paid to Mansi on account | 30,000 |
Dec. 09 | Goods returned to Ritika | 2,000 |
Dec. 10 | Stationery purchased for cash | 3,000 |
Dec. 11 | Paid wages | 1,000 |
Dec. 12 | Goods returned by Karishna | 2,000 |
Dec. 13 | Cheque given to Ritika | 28,000 |
Dec. 14 | Cash received from Karishna on account | 15,000 |
Dec. 15 | Insurance premium paid by cheque | 4,000 |
Dec. 16 | Cheque received from Karishna | 8,000 |
Dec. 17 | Rent paid by cheque | 3,000 |
Dec. 18 | Purchased goods on credit from Meena Traders | 20,000 |
Dec. 19 | Cash sales | 14,000 |
Journal Entries in the Books of M/s Beauti Traders
Journal
Date | Particulars | L.F. | Debit (₹) | Credit (₹) |
---|---|---|---|---|
Dec. 01 | Cash A/c | 2,00,000 | ||
To Capital A/c | 2,00,000 | |||
(Being business started with cash) | ||||
Dec. 02 | Office Furniture A/c | 30,000 | ||
To Cash A/c | 30,000 | |||
(Being office furniture bought) | ||||
Dec. 03 | Bank A/c | 1,00,000 | ||
To Cash A/c | 1,00,000 | |||
(Being amount paid into bank to open current account) | ||||
Dec. 04 | Computer A/c | 2,50,000 | ||
To Bank A/c | 2,50,000 | |||
(Being computer purchased and paid by cheque) | ||||
Dec. 05 | Purchases A/c | 60,000 | ||
To Ritika A/c | 60,000 | |||
(Being goods bought on credit from Ritika) | ||||
Dec. 06 | Cash A/c | 30,000 | ||
To Sales A/c | 30,000 | |||
(Being cash sales) | ||||
Dec. 07 | Karishna A/c | 25,000 | ||
To Sales A/c | 25,000 | |||
(Being goods sold to Karishna on credit) | ||||
Dec. 08 | Mansi A/c | 30,000 | ||
To Cash A/c | 30,000 | |||
(Being cash paid to Mansi on account) | ||||
Dec. 09 | Ritika A/c | 2,000 | ||
To Purchases Return A/c | 2,000 | |||
(Being goods returned to Ritika) | ||||
Dec. 10 | Stationery A/c | 3,000 | ||
To Cash A/c | 3,000 | |||
(Being stationery purchased for cash) | ||||
Dec. 11 | Wages A/c | 1,000 | ||
To Cash A/c | 1,000 | |||
(Being wages paid) | ||||
Dec. 12 | Sales Return A/c | 2,000 | ||
To Karishna A/c | 2,000 | |||
(Being goods returned by Karishna) | ||||
Dec. 13 | Ritika A/c | 28,000 | ||
To Bank A/c | 28,000 | |||
(Being cheque given to Ritika) | ||||
Dec. 14 | Cash A/c | 15,000 | ||
To Karishna A/c | 15,000 | |||
(Being cash received from Karishna on account) | ||||
Dec. 15 | Insurance Premium A/c | 4,000 | ||
To Bank A/c | 4,000 | |||
(Being insurance premium paid by cheque) | ||||
Dec. 16 | Bank A/c | 8,000 | ||
To Karishna A/c | 8,000 | |||
(Being cheque received from Karishna) | ||||
Dec. 17 | Rent A/c | 3,000 | ||
To Bank A/c | 3,000 | |||
(Being rent paid by cheque) | ||||
Dec. 18 | Purchases A/c | 20,000 | ||
To Meena Traders A/c | 20,000 | |||
(Being goods purchased on credit from Meena Traders) | ||||
Dec. 19 | Cash A/c | 14,000 | ||
To Sales A/c | 14,000 | |||
(Being cash sales) |
Ledger Postings:
Cash Account
Date | Particulars | J.F. | Amount (₹) |
---|---|---|---|
Dec. 01 | Capital A/c | 2,00,000 | |
Dec. 06 | Sales A/c | 30,000 | |
Dec. 14 | Karishna A/c | 15,000 | |
Dec. 19 | Sales A/c | 14,000 | |
Total | 2,59,000 |
Date | Particulars | J.F. | Amount (₹) |
---|---|---|---|
Dec. 02 | Office Furniture A/c | 30,000 | |
Dec. 03 | Bank A/c | 1,00,000 | |
Dec. 08 | Mansi A/c | 30,000 | |
Dec. 10 | Stationery A/c | 3,000 | |
Dec. 11 | Wages A/c | 1,000 | |
Total | 1,64,000 | ||
Balance c/d | 95,000 |
Bank Account
Date | Particulars | J.F. | Amount (₹) |
---|---|---|---|
Dec. 03 | Cash A/c | 1,00,000 | |
Dec. 16 | Karishna A/c | 8,000 | |
Total | 1,08,000 |
Date | Particulars | J.F. | Amount (₹) |
---|---|---|---|
Dec. 04 | Computer A/c | 2,50,000 | |
Dec. 13 | Ritika A/c | 28,000 | |
Dec. 15 | Insurance A/c | 4,000 | |
Dec. 17 | Rent A/c | 3,000 | |
Total | 2,85,000 | ||
Balance c/d | -1,77,000 |
Note: Balance c/d (brought down) indicates balance carried down which will be brought down to the next day's balance.
This format gives an overview of how transactions are recorded in the journal and then posted in the ledger for M/s Beauti Traders. Make sure to double-check your calculations and postings when preparing your actual accounting records.
Journalise the following transaction in the books of Sanjana and post them into the ledger :
Date | Transaction Description | Amount (₹) |
---|---|---|
Jan. 21 | Cash in hand | 6,000 |
Jan. 21 | Cash at bank | 55,000 |
Jan. 21 | Stock of goods | 40,000 |
Jan. 21 | Due to Rohan | 6,000 |
Jan. 21 | Due from Tarun | 10,000 |
Jan. 22 | Sold goods to Karuna | 15,000 |
Jan. 23 | Cash sales | 10,000 |
Jan. 24 | Goods sold to Heena | 5,000 |
Jan. 25 | Purchased goods from Rupali | 30,000 |
Jan. 26 | Goods returned from Karuna | 2,000 |
Jan. 27 | Cash received from Karuna | 13,000 |
Jan. 28 | Cheque given to Rohan | 6,000 |
Jan. 29 | Cash received from Heena | 3,000 |
Jan. 30 | Cheque received from Tarun | 10,000 |
Jan. 31 | Cheque received from Heena | 2,000 |
Jan. 32 | Cash given to Rupali | 18,000 |
Jan. 33 | Paid cartage | 1,000 |
Jan. 34 | Paid salary | 8,000 |
Jan. 35 | Cash sales | 7,000 |
Jan. 36 | Cheque given to Rupali | 12,000 |
Jan. 37 | Sanjana took goods for personal use | 4,000 |
Jan. 38 | Paid general expense | 500 |
Journal Entries
Books of Sanjana
Date | Particulars | L.F. | Debit (₹) | Credit (₹) |
---|---|---|---|---|
Jan. 21 | Cash in hand A/c | 6,000 | ||
To Capital A/c | 6,000 | |||
(Being cash introduced in the business) | ||||
Jan. 21 | Bank A/c | 55,000 | ||
To Capital A/c | 55,000 | |||
(Being cash deposited in the bank) | ||||
Jan. 21 | Stock of goods A/c | 40,000 | ||
To Capital A/c | 40,000 | |||
(Being stock introduced in the business) | ||||
Jan. 21 | Capital A/c | 6,000 | ||
To Rohan's A/c | 6,000 | |||
(Being amount due to Rohan as liability) | ||||
Jan. 21 | Tarun's A/c | 10,000 | ||
To Capital A/c | 10,000 | |||
(Being amount due from Tarun as asset) | ||||
Jan. 22 | Karuna's A/c | 15,000 | ||
To Sales A/c | 15,000 | |||
(Being goods sold on credit to Karuna) | ||||
Jan. 23 | Cash A/c | 10,000 | ||
To Sales A/c | 10,000 | |||
(Being goods sold for cash) | ||||
Jan. 24 | Heena's A/c | 5,000 | ||
To Sales A/c | 5,000 | |||
(Being goods sold on credit to Heena) | ||||
Jan. 25 | Purchases A/c | 30,000 | ||
To Rupali's A/c | 30,000 | |||
(Being goods purchased from Rupali on credit) | ||||
Jan. 26 | Sales Return A/c | 2,000 | ||
To Karuna's A/c | 2,000 | |||
(Being goods returned by Karuna) | ||||
Jan. 27 | Cash A/c | 13,000 | ||
To Karuna's A/c | 13,000 | |||
(Being cash received from Karuna) | ||||
Jan. 28 | Rohan's A/c | 6,000 | ||
To Bank A/c | 6,000 | |||
(Being cheque given to Rohan) | ||||
Jan. 29 | Cash A/c | 3,000 | ||
To Heena's A/c | 3,000 | |||
(Being cash received from Heena) | ||||
Jan. 30 | Bank A/c | 10,000 | ||
To Tarun's A/c | 10,000 | |||
(Being cheque received from Tarun) | ||||
Jan. 31 | Bank A/c | 2,000 | ||
To Heena's A/c | 2,000 | |||
(Being cheque received from Heena) | ||||
Jan. 32 | Rupali's A/c | 18,000 | ||
To Cash A/c | 18,000 | |||
(Being cash given to Rupali) | ||||
Jan. 33 | Cartage A/c | 1,000 | ||
To Cash A/c | 1,000 | |||
(Being cartage paid) | ||||
Jan. 34 | Salary A/c | 8,000 | ||
To Cash A/c | 8,000 | |||
(Being salary paid) | ||||
Jan. 35 | Cash A/c | 7,000 | ||
To Sales A/c | 7,000 | |||
(Being goods sold for cash) | ||||
Jan. 36 | Rupali's A/c | 12,000 | ||
To Bank A/c | 12,000 | |||
(Being cheque given to Rupali) | ||||
Jan. 37 | Drawings A/c | 4,000 | ||
To Purchases A/c | 4,000 | |||
(Being goods taken by Sanjana for personal use) | ||||
Jan. 38 | General Expense A/c | 500 | ||
To Cash A/c | 500 | |||
(Being general expense paid) |
Ledger Accounts
Cash Account
Date | Particulars | J.F. | Amount (₹) | Date | Particulars | J.F. | Amount (₹) |
---|---|---|---|---|---|---|---|
Jan. 21 | Capital A/c | 6,000 | Jan. 23 | Sales A/c | 10,000 | ||
Jan. 27 | Karuna's A/c | 13,000 | Jan. 33 | Cartage A/c | 1,000 | ||
Jan. 29 | Heena's A/c | 3,000 | Jan. 34 | Salary A/c | 8,000 | ||
Jan. 35 | Sales A/c | 7,000 | Jan. 32 | Rupali's A/c | 18,000 | ||
Jan. 38 | General Expense A/c | 500 |
Bank Account
Date | Particulars | J.F. | Amount (₹) | Date | Particulars | J.F. | Amount (₹) |
---|---|---|---|---|---|---|---|
Jan. 21 | Capital A/c | 55,000 | Jan. 28 | Rohan's A/c | 6,000 | ||
Jan. 30 | Tarun's A/c | 10,000 | Jan. 36 | Rupali's A/c | 12,000 | ||
Jan. 31 | Heena's A/c | 2,000 |
Stock of Goods Account
Date | Particulars | J.F. | Amount (₹) | Date | Particulars | J.F. | Amount (₹) |
---|---|---|---|---|---|---|---|
Jan. 21 | Capital A/c | 40,000 |
Rohan’s Account
Date | Particulars | J.F. | Amount (₹) | Date | Particulars | J.F. | Amount (₹) |
---|---|---|---|---|---|---|---|
Jan. 21 | Capital A/c | 6,000 | |||||
Jan. 28 | Bank A/c | 6,000 |
Tarun’s Account
Date | Particulars | J.F. | Amount (₹) | Date | Particulars | J.F. | Amount (₹) |
---|---|---|---|---|---|---|---|
Jan. 21 | Capital A/c | 10,000 | Jan. 30 | Bank A/c | 10,000 |
Karuna’s Account
Date | Particulars | J.F. | Amount (₹) | Date | Particulars | J.F. | Amount (₹) |
---|---|---|---|---|---|---|---|
Jan. 22 | Sales A/c | 15,000 | Jan. 26 | Sales Return A/c | 2,000 | ||
Jan. 27 | Cash A/c | 13,000 |
Sales Account
Date | Particulars | J.F. | Amount (₹) | Date | Particulars | J.F. | Amount (₹) |
---|---|---|---|---|---|---|---|
Karuna's A/c | 2,000 | Jan. 23 | Cash A/c | 10,000 | |||
Jan. 24 | Heena's A/c | 5,000 | |||||
Jan. 35 | Cash A/c | 7,000 |
Purchases Account
Date | Particulars | J.F. | Amount (₹) | Date | Particulars | J.F. | Amount (₹) |
---|---|---|---|---|---|---|---|
Jan. 25 | Rupali's A/c | 30,000 | Jan. 37 | Drawings A/c | 4,000 |
Rupali’s Account
Date | Particulars | J.F. | Amount (₹) | Date | Particulars | J.F. | Amount (₹) |
---|---|---|---|---|---|---|---|
Jan. 25 | Purchases A/c | 30,000 | Jan. 32 | Cash A/c | 18,000 | ||
Jan. 36 | Bank A/c | 12,000 |
Heena’s Account
Date | Particulars | J.F. | Amount (₹) | Date | Particulars | J.F. | Amount (₹) |
---|---|---|---|---|---|---|---|
Jan. 24 | Sales A/c | 5,000 | Jan. 29 | Cash A/c | 3,000 | ||
Jan. 31 | Bank A/c | 2,000 |
Cartage Account
Date | Particulars | J.F. | Amount (₹) | Date | Particulars | J.F. | Amount (₹) |
---|---|---|---|---|---|---|---|
Jan. 33 | Cash A/c | 1,000 |
Salary Account
Date | Particulars | J.F. | Amount (₹) | Date | Particulars | J.F. | Amount (₹) |
---|---|---|---|---|---|---|---|
Jan. 34 | Cash A/c | 8,000 |
Drawings Account
Date | Particulars | J.F. | Amount (₹) | Date | Particulars | J.F. | Amount (₹) |
---|---|---|---|---|---|---|---|
Jan. 37 | Purchases A/c | 4,000 |
General Expense Account
Date | Particulars | J.F. | Amount (₹) | Date | Particulars | J.F. | Amount (₹) |
---|---|---|---|---|---|---|---|
Jan. 38 | Cash A/c | 500 |
These journal entries and corresponding ledger postings reflect the transactions that occurred in the books of Sanjana for the given dates.
Record journal entries for the following transactions in the books of Anudeep of Delhi:
(a) Bought goods ₹ 2,00,000 from Kanta of Delhi (CGST @ 9%, SGST @ 9%)
(b) Bought goods ₹ 1,00,000 for cash from Rajasthan (IGST @ 12%)
(c) Sold goods ₹ $1,50,000$ to Sudhir of Punjab (IGST @ 18%)
(d) Paid for Railway Transport ₹ 10,000 (CGST @ 5%, SGST @ 5%)
(e) Sold goods ₹ 1,20,000 to Sidhu of Delhi (CGST @ 9%, SGST @ 9%)
(f) Bought Air-Condition for office use ₹ 60,000 (CGST @ 9%, SGST @ 9%)
(g) Sold goods ₹ 1,50,000 for cash to Sunil to Uttar Pradesh (IGST 18%)
(h) Bought Motor Cycle for business use ₹ 50,000 (CGST 14%, SGST @ 14%)
(i) Paid for Broadband services ₹ 4,000 (CGST @ 9%, SGST @ 0%)
(j) Bought goods ₹ 50,000 from Rajesh, Delhi (CGST @ 9%, SGST @ 9%)
Here are the journal entries for the given transactions in the books of Anudeep of Delhi:
Date | Particulars | L.F. | Debit Amount (₹) | Credit Amount (₹) |
---|---|---|---|---|
(a) Bought goods ₹ 2,00,000 from Kanta of Delhi | ||||
Purchases A/c | Dr. | 2,00,000 | ||
Input CGST A/c | Dr. | 18,000 | ||
Input SGST A/c | Dr. | 18,000 | ||
To Kanta A/c | 2,36,000 | |||
(Being goods bought from Kanta with CGST, SGST) | ||||
(b) Bought goods ₹ 1,00,000 for cash from Rajasthan | ||||
Purchases A/c | Dr. | 1,00,000 | ||
Input IGST A/c | Dr. | 12,000 | ||
To Cash A/c | 1,12,000 | |||
(Being goods bought for cash with IGST) | ||||
(c) Sold goods ₹ 1,50,000 to Sudhir of Punjab | ||||
Sundhir A/c | Dr. | 1,77,000 | ||
To Sales A/c | 1,50,000 | |||
To Output IGST A/c | 27,000 | |||
(Being goods sold to Sudhir with IGST) | ||||
(d) Paid for Railway Transport ₹ 10,000 | ||||
Railway Transport A/c | Dr. | 10,000 | ||
Input CGST A/c | Dr. | 500 | ||
Input SGST A/c | Dr. | 500 | ||
To Cash A/c | 11,000 | |||
(Being payment for Railway Transport with CGST, SGST) | ||||
(e) Sold goods ₹ 1,20,000 to Sidhu of Delhi | ||||
Sidhu A/c | Dr. | 1,41,600 | ||
To Sales A/c | 1,20,000 | |||
To Output CGST A/c | 10,800 | |||
To Output SGST A/c | 10,800 | |||
(Being goods sold to Sidhu with CGST, SGST) | ||||
(f) Bought Air-Condition for office use ₹ 60,000 | ||||
Air-Conditioner A/c | Dr. | 60,000 | ||
Input CGST A/c | Dr. | 5,400 | ||
Input SGST A/c | Dr. | 5,400 | ||
To Cash A/c | 70,800 | |||
(Being Air-Conditioner bought for office use with CGST, SGST) | ||||
(g) Sold goods ₹ 1,50,000 for cash to Sunil | ||||
Cash A/c | Dr. | 1,77,000 | ||
To Sales A/c | 1,50,000 | |||
To Output IGST A/c | 27,000 | |||
(Being goods sold for cash with IGST) | ||||
(h) Bought Motor Cycle for business use ₹ 50,000 | ||||
Motor Cycle A/c | Dr. | 50,000 | ||
Input CGST A/c | Dr. | 7,000 | ||
Input SGST A/c | Dr. | 7,000 | ||
To Cash A/c | 64,000 | |||
(Being Motor Cycle bought for business use with CGST, SGST) | ||||
(i) Paid for Broadband services ₹ 4,000 | ||||
Broadband Services A/c | Dr. | 4,000 | ||
Input CGST A/c | Dr. | 360 | ||
Input SGST A/c | Dr. | 0 | ||
To Cash A/c | 4,360 | |||
(Being payment for Broadband services with CGST, SGST) | ||||
(j) Bought goods ₹ 50,000 from Rajesh, Delhi | ||||
Purchases A/c | Dr. | 50,000 | ||
Input CGST A/c | Dr. | 4,500 | ||
Input SGST A/c | Dr. | 4,500 | ||
To Rajesh A/c | 59,000 | |||
(Being goods bought from Rajesh with CGST, SGST) |
These entries include the calculations for CGST, SGST, and IGST based on the provided rates.
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Ask Chatterbot AINotes - Recording of Transactions - I | Class 11 Financial Accounting 1 | Accountancy
Recording of Transactions 1 Class 11 Notes: A Comprehensive Guide
Introduction
Recording transactions is a crucial aspect of maintaining accurate financial records in a business. It forms the foundation of the accounting process, ensuring that all financial activities are documented systematically. This practice helps businesses track receipts, payments, and financial changes, providing valuable insights into their financial health.
Identifying and Analysing Transactions
Identifying Business Transactions
Business transactions are economic events that involve the exchange of monetary value between two parties. For example, purchasing inventory, selling goods, paying salaries, etc., are all business transactions. These transactions must be properly identified and recorded to maintain accurate financial records.
Source Documents
Source documents are the original records that serve as evidence of a transaction. They include invoices, bills, cash memos, vouchers, and receipts. These documents are essential for verifying the authenticity of transactions and forming the basis for accounting entries.
Preparing Accounting Vouchers
Types of Vouchers
Accounting vouchers are classified into several types based on the nature of transactions:
- Cash Vouchers: Used for cash payments and receipts.
- Debit Vouchers: Prepared for transactions involving debit entries.
- Credit Vouchers: Used for credit entries.
- Journal Vouchers: Document complex transactions involving multiple debits and credits.
Steps in Preparing Vouchers
Creating accounting vouchers involves several steps:
- Using good-quality paper for documentation.
- Printing the name of the firm at the top.
- Recording the transaction date, voucher number, and names of accounts debited or credited.
- Including the debit and credit amounts.
- Providing a description of the transaction.
- Acquiring signatures from the preparing and authorised persons.
These vouchers must be preserved until the accounts are audited and tax assessments are completed.
The Accounting Equation
The accounting equation forms the backbone of the entire accounting process, signifying that a business's assets are always equal to its liabilities plus capital.
[ \text{Assets} = \text{Liabilities} + \text{Capital} ]
Effects of Transactions on the Accounting Equation
Transactions impact the accounting equation in various ways. For example:
- If a company buys office furniture for £10,000, it results in an increase in assets (furniture) and a decrease in assets (cash).
- If goods are sold on credit for £5,000, it increases assets (debtors) and revenue (capital).
Rules of Debit and Credit
Understanding Debit and Credit
In accounting, every transaction affects at least two accounts, involving debits and credits:
- Debit: Left side of an account
- Credit: Right side of an account
Recording Changes in Accounts
For Asset Accounts:
- Increase: Debit
- Decrease: Credit
For Liability Accounts:
- Increase: Credit
- Decrease: Debit
For Capital Accounts:
- Increase: Credit
- Decrease: Debit
For Expenses/Losses:
- Increase: Debit
- Decrease: Credit
For Revenues/Gains:
- Increase: Credit
- Decrease: Debit
Mermaid Chart:
graph TD;
Asset --> |Increase| Debit
Asset --> |Decrease| Credit
Liability --> |Increase| Credit
Liability --> |Decrease| Debit
Capital --> |Increase| Credit
Capital --> |Decrease| Debit
Expense --> |Increase| Debit
Expense --> |Decrease| Credit
Revenue --> |Increase| Credit
Revenue --> |Decrease| Debit
The Book of Original Entry
Concept and Importance
The book of original entry, or the journal, is where transactions are initially recorded. This step is critical as it ensures a chronological and comprehensive record of transactions. Each transaction is documented, including relevant details like date, amount, and accounts affected.
Journalising Process
Journalising involves the following steps:
- Identifying the accounts to be debited and credited.
- Entering the date of the transaction.
- Writing the accounts involved and their respective amounts.
- Providing a brief description (narration) of the transaction.
Posting to the Ledger
Purpose and Structure of the Ledger
The ledger is the principal book of accounts where all transactions are posted from the journal. Each account in the ledger provides a detailed view of the transactions affecting it.
Process of Posting
- Locate the account to be debited or credited.
- Enter the date and transaction details.
- Note the journal folio number.
- Record the corresponding amount.
Understanding T-Accounts
T-accounts are visual aids used in double-entry accounting to represent debits and credits. Each account is split into two sides – the left (debit) and the right (credit). This structure helps track transactions and their impact on different accounts.
Mermaid Chart:
graph TD;
T-account --> |Left| Debit
T-account --> |Right| Credit
Practical Application: Comprehensive Examples
Example Transactions:
-
Rohit started a business with £5,00,000 in cash.
- Debit: Cash (£5,00,000)
- Credit: Capital (£5,00,000)
-
Purchased furniture for £60,000 using bank funds.
- Debit: Furniture (£60,000)
- Credit: Bank (£60,000)
-
Sold goods worth £25,000 to Rajani Enterprises on credit.
- Debit: Debtors (£25,000)
- Credit: Sales (£25,000)
Recording GST in Transactions
GST Accounting Entries
Transactions involving GST must be recorded with the appropriate input and output GST accounts:
Example:
-
Purchased goods worth £1,00,000 with 5% CGST and SGST.
- Debit: Purchases (£1,00,000)
- Debit: Input CGST (£5,000)
- Debit: Input SGST (£5,000)
- Credit: Creditors (£1,10,000)
-
Sold goods worth £1,35,000 with 5% CGST and SGST.
- Debit: Debtors (£1,48,500)
- Credit: Sales (£1,35,000)
- Credit: Output CGST (£6,750)
- Credit: Output SGST (£6,750)
Conclusion
Recording transactions accurately is fundamental to maintaining the financial integrity of a business. From identifying transactions and preparing vouchers to understanding the accounting equation and applying the rules of debit and credit, each step plays a vital role. By diligently following these practices, businesses ensure their financial records are precise and reliable, forming a strong basis for future financial decisions.
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