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SUBODH PUBLIC SCHOOL, RAMBAGH CROSSING,JAIPUR
APRIL 25,2020
HOLIDAY
PARSHURAM JAYANTI
* REVISE THE PREVIOUS TOPIC --
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SUBODH PUBLIC SCHOOL, RAMBAGH CROSSING,JAIPUR
APRIL 26,2020
HOLIDAY
SUNDAY
* REVISE THE PREVIOUS TOPIC --
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SUBODH PUBLIC SCHOOL, RAMBAGH CROSSING,JAIPUR
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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SUBODH PUBLIC SCHOOL, RAMBAGH CROSSING,JAIPUR
Chapter 7 :-Double Entry System
APRIL 27,2020 Go through content given in chapter seven Double entry system from extramarks
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SUBODH PUBLIC SCHOOL, RAMBAGH CROSSING,JAIPUR
Chapter 7 :-Double Entry System
“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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SUBODH PUBLIC SCHOOL, RAMBAGH CROSSING,JAIPUR
Chapter 7 :-Double Entry System
.
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SUBODH PUBLIC SCHOOL, RAMBAGH CROSSING,JAIPUR
Chapter 7 :-Double Entry System
(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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SUBODH PUBLIC SCHOOL, RAMBAGH CROSSING,JAIPUR
Chapter 7 :-Double Entry System
*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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SUBODH PUBLIC SCHOOL, RAMBAGH CROSSING,JAIPUR
Chapter 7 :-Double Entry System
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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SUBODH PUBLIC SCHOOL, RAMBAGH CROSSING,JAIPUR
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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SUBODH PUBLIC SCHOOL, RAMBAGH CROSSING,JAIPUR
Chapter 9-Books of Original Entry --JOURNAL
APRIL 29,2020 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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SUBODH PUBLIC SCHOOL, RAMBAGH CROSSING,JAIPUR
Chapter 9-Books of Original Entry --JOURNAL
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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SUBODH PUBLIC SCHOOL, RAMBAGH CROSSING,JAIPUR
Chapter 9-Books of Original Entry --JOURNAL
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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SUBODH PUBLIC SCHOOL, RAMBAGH CROSSING,JAIPUR
Chapter 9-Books of Original Entry --JOURNAL
APRIL 30,2020
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SUBODH PUBLIC SCHOOL, RAMBAGH CROSSING,JAIPUR
Chapter 9-Books of Original Entry --JOURNAL
*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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SUBODH PUBLIC SCHOOL, RAMBAGH CROSSING,JAIPUR
Chapter 9-Books of Original Entry --JOURNAL
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
Furniture A/c Dr. 10,000
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
Purchases A/c Dr. 15,000
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
Purchases A/c Dr. 6,000
To Sohan’s A/c 6,000 (Goods purchased
from Sohan)
Mar. 18
Purchases A/c Dr. 8,000
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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SUBODH PUBLIC SCHOOL, RAMBAGH CROSSING,JAIPUR
Chapter 9-Books of Original Entry --JOURNAL
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)
Jan 14 Cash A/c Dr. 18,000
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)
Jan 28 Cash A/c Dr. 12,000
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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SUBODH PUBLIC SCHOOL, RAMBAGH CROSSING,JAIPUR
Chapter 9-Books of Original Entry --JOURNAL
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
Date Particulars L.F. Debit Amount (Rs.) Credit Amount (Rs.)
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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SUBODH PUBLIC SCHOOL, RAMBAGH CROSSING,JAIPUR
Chapter 9-Books of Original Entry --JOURNAL
MAY 01,2020
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understanding.
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SUBODH PUBLIC SCHOOL, RAMBAGH CROSSING,JAIPUR
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.
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SUBODH PUBLIC SCHOOL, RAMBAGH CROSSING,JAIPUR
Chapter 9-Books of Original Entry --JOURNAL
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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SUBODH PUBLIC SCHOOL, RAMBAGH CROSSING,JAIPUR
Chapter 9-Books of Original Entry --JOURNAL
MAY 02,2020
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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SUBODH PUBLIC SCHOOL, RAMBAGH CROSSING,JAIPUR
Chapter 9-Books of Original Entry --JOURNAL
*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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SUBODH PUBLIC SCHOOL, RAMBAGH CROSSING,JAIPUR
Chapter 9-Books of Original Entry --JOURNAL
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)
Mar. 15 Cash A/c Dr. 78,200
Discount Allowed A/c Dr. 800
To Manmohan’s A/c 79,000
(Cash received from Manmohan in full
settlement of his account)
Mar. 16 Cash A/c Dr. 19,500
Discount Allowed A/c Dr. 500
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
SUBODH PUBLIC SCHOOL, RAMBAGH CROSSING,JAIPUR
Chapter 9 -Books of Original entry--- JOURNAL
MAY 03,2020
HOLIDAY
SUNDAY
* REVISE THE PREVIOUS TOPIC --
Double entry system
Journal
26
SUBODH PUBLIC SCHOOL, RAMBAGH CROSSING,JAIPUR
Chapter 9-Books of Original Entry --JOURNAL
MAY 04,2020
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.
27
SUBODH PUBLIC SCHOOL, RAMBAGH CROSSING,JAIPUR
Chapter 9-Books of Original Entry --JOURNAL
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.
Date Particulars L.F. Debit Amount (Rs.) Credit Amount (Rs.)
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
Discount Allowed A/c Dr. 200
To Ramnath’s A/c 14,000
(Cash received from Ramnath and allowed
discount)
Apr. 12 Purchases A/c Dr. 10,000
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)
Apr. 18 Purchases A/c Dr. 4,800
To Cash A/c 4,800
(Goods purchased for cash at 20% trade
discount)
Apr. 20 Purchases A/c Dr. 8,000
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
To Discount Received
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
To Discount Received
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
SUBODH PUBLIC SCHOOL, RAMBAGH CROSSING,JAIPUR
Chapter 9-Books of Original Entry --JOURNAL
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
Date Particulars L.F.
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
Mar. 05 Cash A/c Dr. 82,450
Discount Allowed A/c Dr. 2,550
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)
Mar. 10 Cash A/c Dr. 28,500
Discount Allowed A/c Dr. 1,500
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
SUBODH PUBLIC SCHOOL, RAMBAGH CROSSING,JAIPUR
Chapter 9-Books of Original Entry --JOURNAL
MAY 05,2020
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.
32
SUBODH PUBLIC SCHOOL, RAMBAGH CROSSING,JAIPUR
Chapter 9-Books of Original Entry --JOURNAL
*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
34
SUBODH PUBLIC SCHOOL, RAMBAGH CROSSING,JAIPUR
Chapter 9-Books of Original Entry --JOURNAL
MAY 06,2020
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.
35
SUBODH PUBLIC SCHOOL, RAMBAGH CROSSING,JAIPUR
Chapter 9-Books of Original Entry --JOURNAL
*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
SUBODH PUBLIC SCHOOL, RAMBAGH CROSSING,JAIPUR
Chapter 9-Books of Original Entry --JOURNAL
MAY 07,2020
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learning app if content is not available then please refer to the following for detailed
understanding.
37
SUBODH PUBLIC SCHOOL, RAMBAGH CROSSING,JAIPUR
Chapter 9-Books of Original Entry --JOURNAL
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 …
Date Particulars L.F. Debit Amount (Rs) Credit Amount (Rs)
2017
Jan. 01 Bank A/c Dr. 10,000
To Cash A/c 10,000
(Payment made to open current
account)
Jan. 03 Bank A/c Dr. 50,000
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)
Jan. 12 Bank A/c Dr. 12,000
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
SUBODH PUBLIC SCHOOL, RAMBAGH CROSSING,JAIPUR
Chapter 9-Books of Original Entry --JOURNAL
ANSWER:
Journal
In the Books of Kanishk
Date Particulars L.F. Debit Amount (Rs.) Credit Amount (Rs.)
i) Charu’s A/c Dr. 1,36,000
To Sales A/c 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
SUBODH PUBLIC SCHOOL, RAMBAGH CROSSING,JAIPUR
Chapter 9-Books of Original Entry --JOURNAL
MAY 08,2020
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learning app if content is not available then please refer to the following for detailed
understanding.
40
SUBODH PUBLIC SCHOOL, RAMBAGH CROSSING,JAIPUR
Chapter 9-Books of Original Entry --JOURNAL
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
Date Particulars L.F. Debit Amount (Rs.) Credit Amount (Rs.)
1) Prepaid Insurance A/c Dr. 15,000
To Insurance A/c 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
To Discount Received A/c 2,500
(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
To Sales A/c 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
SUBODH PUBLIC SCHOOL, RAMBAGH CROSSING,JAIPUR
Chapter 9-Books of Original Entry --JOURNAL
ANSWER:
Journal
In the Books of …
Date Particulars L.F. Debit Amount (Rs) Credit Amount (Rs)
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
Salaries A/c Dr. 4,000
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
To Capital A/c 18,000
(Interest on capital provided)
7. Drawings A/c Dr. 1,000
To Interest on Drawings A/c 1,000
(Interest on drawings charged)
TOTAL 55,000 55,000
42
SUBODH PUBLIC SCHOOL, RAMBAGH CROSSING,JAIPUR
Chapter 9-Books of Original Entry --JOURNAL
MAY 09,2020
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learning app if content is not available then please refer to the following for detailed
understanding.
43
SUBODH PUBLIC SCHOOL, RAMBAGH CROSSING,JAIPUR
Chapter 9-Books of Original Entry --JOURNAL
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
SUBODH PUBLIC SCHOOL, RAMBAGH CROSSING,JAIPUR
Chapter 9-Books of Original Entry --JOURNAL
MAY 10,2020
HOLIDAY
SUNDAY
* REVISE THE PREVIOUS TOPIC --
* PRACTICAL QUESTIONS OF JOURNAL
45
SUBODH PUBLIC SCHOOL, RAMBAGH CROSSING,JAIPUR
Chapter 9-Books of Original Entry --JOURNAL
MAY 11,2020
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learning app if content is not available then please refer to the following for detailed
understanding.
46
SUBODH PUBLIC SCHOOL, RAMBAGH CROSSING,JAIPUR
Chapter 9-Books of Original Entry --JOURNAL
* 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
SUBODH PUBLIC SCHOOL, RAMBAGH CROSSING,JAIPUR
Chapter 9-Books of Original Entry --JOURNAL
MAY 12,2020
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SUBODH PUBLIC SCHOOL, RAMBAGH CROSSING,JAIPUR
Chapter 9-Books of Original Entry --JOURNAL
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 ?
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SUBODH PUBLIC SCHOOL, RAMBAGH CROSSING,JAIPUR
Chapter 9-Books of Original Entry --JOURNAL
MAY 13,2020
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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
Furniture A/c Dr. 5,000
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
To Discount Received
A/c
41
(Goods purchased and received
discount on cash payment)
April 03 Bank A/c Dr. 9,750
Discount Allowed A/c Dr. 250
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)
April 10 Bank A/c Dr. 25,000
To Cheques-in-Hand A/c 25,000
(Cheque deposited into
bank)
April 12 Bank A/c Dr. 4,000
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)
April 20 Bank A/c Dr. 7,800
Discount Allowed A/c Dr. 200
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
To Discount Received
A/c
100
(Cheque issued to X in full
settlement of his account)
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 …
Date Particulars L.F. Debit Amount (Rs) Credit Amount (Rs)
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
Salaries A/c Dr. 4,000
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
53
(Furniture purchased for personal use)
6. Interest on Capital A/c Dr. 18,000
To Capital A/c 18,000
(Interest on capital provided)
7. Drawings A/c Dr. 1,000
To Interest on Drawings A/c 1,000
(Interest on drawings charged)
TOTAL 55,000 55,000
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SUBODH PUBLIC SCHOOL, RAMBAGH CROSSING,JAIPUR
Chapter 9-Books of Original Entry --JOURNAL
MAY 14,2020
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SUBODH PUBLIC SCHOOL, RAMBAGH CROSSING,JAIPUR
Chapter 9-Books of Original Entry --JOURNAL
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 …
Date Particulars L.F. Debit Amount (Rs) Credit Amount (Rs)
Jan.
05
Purchases A/c Dr. 10,000
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
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SUBODH PUBLIC SCHOOL, RAMBAGH CROSSING,JAIPUR
Chapter 9-Books of Original Entry --JOURNAL
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
Date Particulars L.F. Debit Amount (Rs.) Credit Amount (Rs.)
1) Purchases A/c Dr. 12,000
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)
5) Purchases A/c Dr. 50,000
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
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SUBODH PUBLIC SCHOOL, RAMBAGH CROSSING,JAIPUR
Chapter 9-Books of Original Entry --JOURNAL
MAY 15,2020
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SUBODH PUBLIC SCHOOL, RAMBAGH CROSSING,JAIPUR
Chapter 9-Books of Original Entry --JOURNAL
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 …
Date Particulars L.F. Debit Amount (Rs) Credit Amount (Rs)
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
Discount Allowed A/c Dr. 150
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
Discount Allowed A/c Dr. 400
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
SUBODH PUBLIC SCHOOL, RAMBAGH CROSSING,JAIPUR
Chapter 9-Books of Original Entry --JOURNAL
MAY 16,2020
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60
SUBODH PUBLIC SCHOOL, RAMBAGH CROSSING,JAIPUR
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 …
Date Particulars L.F. Debit Amount (Rs) Credit Amount (Rs)
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
To Capital A/c 35,000
(Interest on capital provided)
4) Wages A/c Dr. 3,000
To Outstanding Wages A/c 3,000
(Outstanding wages provided)
5) Bad Debts A/c Dr. 5,000
To Sunny’s A/c 5,000
(Bad debts written-off)
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.
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SUBODH PUBLIC SCHOOL, RAMBAGH CROSSING,JAIPUR
Chapter 9-Books of Original Entry --JOURNAL
ANSWER:
Journal
In the Books of Sh. Navin Gupta
Date Particulars L.F. Debit Amount (Rs.) Credit Amount (Rs.)
1) Prepaid Insurance A/c Dr. 15,000
To Insurance A/c 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
To Discount Received A/c 2,500
(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
To Sales A/c 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
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SUBODH PUBLIC SCHOOL, RAMBAGH CROSSING,JAIPUR
Chapter 9-Books of Original Entry --JOURNAL
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.
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SUBODH PUBLIC SCHOOL, RAMBAGH CROSSING,JAIPUR
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.
3. Journalise the following transactions:
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.
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Chapter 9-Books of Original Entry --JOURNAL
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
5. Journalise the following transactions:
(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.
6. Journalise the following transactions:
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.
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Chapter 9-Books of Original Entry --JOURNAL
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.
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Chapter 9-Books of Original Entry --JOURNAL
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.
67
SUBODH PUBLIC SCHOOL, RAMBAGH CROSSING,JAIPUR
Chapter 9-Books of Original Entry --JOURNAL
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
SUBODH PUBLIC SCHOOL, RAMBAGH CROSSING,JAIPUR
Chapter 9-Books of Original Entry --JOURNAL
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:
Date Particulars L.F.
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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