Personal Account Is An Account Of A Person Marketing Essay

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1st Jan 1970 Marketing Reference this

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1. Personal Account -Personal account is an account of a person. For the purpose of accounting a person is divided into three categories viz., natural person for e.g. Mr. Aditya, Mr. Vijay, Mrs.Reena etc., artificial person like partnership firms, companies or business organization for e.g. Reliance Industries Ltd., Cipla Ltd., Bank of India, etc. and representative personal account for e.g. debtors account, creditors account. Capital account, outstanding exp, prepaid expense

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2.. Real account. These are the accounts of properties and assets of the business. A separate account is prepared for each asset or property. These assets are of two types namely, tangible and intangible. Tangible assets are those assets which can be seen, touched, measured etc. fore.g. stock, machinery, furniture, building, goods etc. Intangible assets are those assets which can not be seen or touched but can be measured in terms of money and recorded in the books of accounts for e.g. goodwill, copy rights, trade marks, brand name, etc.

3. Nominal account: These are the accounts of expenses, losses, gains and incomes for e.g. interest account, discount account, commission account, salary account, wages account etc.

Illustration 1

Classify the following accounts into personal, real and nominal.

Goods A/C, Salary A/C, State Bank of India A/C, Printing and Stationery A/C, Discount Received A/C, Capital A/C, Vinay’s A/C, Carriage inward A/C, Stock A/C, Investment A/C, Loss goods by fire A/C, Tools A/C, Yashodhan Library A/C, Repairs to Machinery A/C, Manager Salary A/C, Copyright A/C, Patents A/C, Live Stock A/C, Sales Tax A/C, Audit fees. A/C, Bad debts A/C, Premises A/C, Leasehold Building A/C, Freehold Property A/C, Shreenaths Textile A/C, Stock of stationery A/C, Insurance premiumA/C, Gas and light-A/C, Debtors A/C, Creditors A/C, Trade expenses A/C, Royalty A/C, Goodwill A/C, Interest A/C, Railway freight A/C, Profit sale of Machinery A/C, Loss on sale of Investment A/C.

Solutions :

Personal Accounts

Real Accounts

Nominal Accounts

State Bank of India A/C

Goods A/C

Salary A/C

Capital A/C

Stock A/C

Printing and stationery A/C

Vinay A/C

Investment A/C

Discount A/C

Outstanding Expenses A/C

Tools A/C

Carriage Inward A/C

Prepaid Insurance A/C

Copyright A/C

Loss goods by fire A/C

Loan A/C

Patent A/C

Repairs to machinery A/C

“Yashodhan library A/C

Live stock A/C

Manager’s Salary A/C

Shreenath Textile A/C

Premises A/C

Sales Tax A/C

Debtors A/C

Leasehold building A/C

Audit fees A/C

Creditors A/C

Freehold building A/C

Bad debts A/C

Stock of stationery A/C

Insurance A/C

Goodwill A/C

Gas and light A/C

Trade expenses A/C

Royalty A/C

Interest A/C

Railway freight A/C

Profit on sale of Machinery A/C

Loss on sale of investment A/C

GOLDEN RULES OF ACCOUNTING

Personal Account

DEBIT THE RECEIVER

CREDIT THE GIVER

Real Account

DEBIT WHAT COMES IN

CREDIT WHAT GOES OUT

Nominal Account

DEBIT ALL EXPENSES AND LOSSES

CREDIT ALL GAINS AND INCOMES

CLASSIFICATION OF GOODS ACCOUNT

Goods is the commodity in which a trader or businessman is dealing. Groceries will be considered as goods for grocery merchant whereas furniture will be considered as goods for furniture merchant. Goods account is a real account as the stock of goods is a current asset. Though the goods is a single account, but for the purpose of recording into the journal the goods is subdivided into five subparts as per the transaction effect. These subparts are purchase account, sales account, purchase return account, sales return account and stock account.

Goods- 1.Purchases

2. Sales

3.Purchase Return

4.Sales Return

5.Stock

Because of such classification of the goods account, whenever the goods is purchased purchases account is debited instead of good account, goods sold then sales account is credited instead of goods account, for goods returned to suppliers purchase return account is credited instead of goods account and for goods returned by customer a sales return account is debited instead of goods account, finally goods lying unsold with the business is termed as Stock

Illustration

Journalize the following transactions in the books of Mr. Prathamesh. January 2010

1st Started business with cash of Rs. 10000

2nd Bought furniture for Rs. 20000 in cash

3rdBought goods for Rs. 25000 in cash

10th Sold .goods for Rs. 30000 in cash

15 th Paid Salary to staff Rs. 5000 in cash

20th Paid rent Rs. 2000 in cash

25th Bought goods for Rs. 10000 on credit from shyam

30th Sold goods for Rs. 10000 on credit to Sunil

Illustration 2:

On January 1, 2008 Mr. Mahadev started business in the name of M/s. Mahadev &. Sons by bringing in cash of Rs. 50,000 of which Rs. 15,000 deposited in the Canara Bank.

During the month of January 2008 the following transactions took place –

January 3. A loan of Rs. 50,000 taken from the Canara Bank.

January 5. Some materials worth Rs. 10,000 purchased from Mr. Sohanlal on credit

January 7. Furniture worth Rs. 17,500 and machinery worth Rs. 30,000 purchased in cash

January 9………… Rs. 1,000 paid towards telephone charges by cheque.

January 10. Some office equipments bought for Rs. 4,500 from M/s. Tiger & Sons on credit.

January 12. Goods worth Rs. 26,500 sold in cash

January 15. Goods worth Rs. 4,000 sold to Mr. Shiva on credit

January 16. 50 shares of Tata Steel Ltd. @ Rs. 280 per share purchased in cheque

January 18. Mr. Shiva returned goods worth Rs. 100 being defective.

January 20. Rs. 3,750 received from Mr. Shiva after allowing him Rs. 150 as discount.

January 21………..Goods worth Rs. 5,500 purchased on credit from Mr. Shyam and sold to Ravi Traders for Rs. 6,200 on credit

January 22………..Rs. 201 given as donation in cash

January 25. …….Rs. 5,300 paid as salaries to the staff members in cash

January 28………Rs. 2,100 received from a salesman in cash for the goods sold after deducting his travelling expenses of Rs. 175.

You are required to pass the journal entries in the journal of M/s. Mahadev & &. Sons

Illustration 3

The following transactions took place in the business of M/s. Nanavati & Co. during April 2009. You are required to journalise them

April 1 ……………Mr. Nanavati started business with Rs. 1,00,000 cash and a machine of Rs 25,000. Out of Rs. 1,00,000 Rs. 50,000 deposited in the State Bank of India.

April 2 …………….. Goods worth Rs. 3,300 purchased from Mr. Chimanlal. Cash paid to him Rs. 1,000.

April 4 Stationery worth Rs. 250 purchased on cash.

April 5 Goods sold to Padma Traders for Rs. 1,500 on credit

April 10 Goods purchased from Mr. Soneji for Rs. 1,500 on credit

April 11 Half of the goods purchased from Soneji sold to Mr. Kanji on credit on a profit of Rs. 125 .

April 12 Rs. 2,150 paid to Mr. Chimanlal in full and final settlement of Rs. 2,300.

April 18 Mr. Nanavati brought in additional capital of Rs. 25,000 in cash.

April 20………………Goods worth Rs. 3,000 sold to Mr. Raman at 10% trade and 5% cash discount. Mr. Raman paid cash immediately.

April 22……………….Mr. Kanji is declared insolvent and only 50 paise in a rupee could be recovered from him.

Illustration 4

Journalise the following transactions in the books of M/s. Rekha Traders

2009

November 1……..Started business with

Cash Rs. 5,00,000/‑

Land Rs. 6,00,000/‑

Machinery Rs. 1,50,000/-

Bank Rs 20,000/-

November2………. Paid rent to the landlord Rs. 1,450/- by cheque

November4 Sold goods to Dinar for Rs. 6,430/- on credit

November7 Purchased a building from Narendra for Rs. 2,00,000/-. Rs. 50,000 paid immediately. The balance is payable in three equal annual installments.

November9 Withdrew cash of Rs. 500/- for personal use.

November 11 Dinar returned goods worth Rs. 480/‑

November 15 Purchased furniture on credit from Randhir for Rs. 3,900/.

November20 Received Rs. 5,900/- from Dinar and allowed him a cash discount of Rs. 50/-

November 22 Rs. 3,800/- paid to Randhir in full settlement of Rs. 3,900/-

November25 Rs. 500/- received as commission in cash

November 27. Rs. 3000/- incurred on advertising in cash

November 28. Fire insurance premium of Rs. 1,200/- paid in cheque

November30…….. Goods sold on cash to rohan on Rs 5,000, 10 % Trade discount, 5 % cash discount

HOME WORK SECTION

Analyse and then journalise the following transactions in the books of Mr. B.

2009

Jan. 1 1. Started business with a capital of Rs. 7,500.

Jan. 1 2. Purchased goods from Mr. Z for Rs. 2,000 on credit

Jan. 1 3. Loan taken from W Rs. 300.

Jan. 1 4. Goods sold to Mr. L for cash Rs. 2,500.

Jan. 5 5. Cash paid to Mr. Z Rs. 2,000.

Jan. 5 6. Purchased Furniture for office Rs. 700.

Jan. 5 7. Paid Office Rent out of personal cash of B Rs. 400.

Solution

JOURNAL OF B

Date

2010

No.

Particulars

LF

Dr.

Amount.

Cr.

Amount

Jan. 1

1.

Cash A/c Dr.

To B’s Capital A/c

[Being cash brought in by B to start business]

7,500

7,500

2.

Purchase A/c Dr.

To Z’s A/c

[Being goods purchased from Z on credit]

2,000

2,000

3.

Cash A/c Dr.

To W’s A/c

[Being Loan received from W]

300

300

4.

Cash A/c Dr.

To Sales A/c

[Being goods sold to L for cash]

2,500

2,500

Jan.5

5.

Z’s A/c Dr.

To Cash A/c

[Being cash paid to Z for previous credit purchases]

2,000

2,000

6.

Furniture A/c Dr.

The Cash A/c

[Being furniture purchased for cash]

700

700

7.

Rent A/c Dr.

To capital a/c

(Being rent paid out of personal expenditure)

400

400

Total Rs.

15,400

15,400

Illustration 2 From the following particulars, prepare the journal of A.

2005 Rs.

Dec 1 Started business with cash 3,000

3 Purchased goods for cash 400

5 Advertisement expenses paid 250

7 Sold goods for cash 575

11 Further capital introduced 1,000

14 Paid to B, a creditor 900

17 Received commission from C in cash 600

19 Paid to D on account 175

22 Received from E, a debtor 2,000

29 Salary paid in cash 1,000

Solution:

Journal of A

Date

No.

Particulars

LF

Debit

Amount.

Credit

Amount

2005

Jan. 1

1.

Cash A/c Dr.

To Capital A/c

[For cash introduced as capital]

3,000

3,000

3

2.

Purchase A/c Dr.

To Cash A/c

[For cash purchases]

400

400

5

3.

Advertisement A/c Dr.

To Cash A/c

[For advertisement expenses paid]

250

250

7

4.

Cash A/c Dr.

To Sales A/c

[For cash sales]

575

575

11

5.

Cash A/c Dr.

To Capital A/c

[For additional capital]

1,000

1,000

14

6.

B’s A/c Dr.

To Cash A/c

[For paid against purchases]

900

900

17

7.

Cash A/c Dr.

To Commission A/c

[For commission from C]

600

600

19

8.

D’s A/c Dr.

To Cash A/c

[For cash paid on account]

175

175

22

9.

Cash A/c Dr.

To E’s A/c

[For receipt from E]

2,000

2,000

29

10.

Salary A/c Dr.

To Cash A/c

[For salaries paid]

1,000

1,000

Total Rs.

9,900

9,900

Illustration 3:

Journalise the following transactions:

2005

Jan. 1. B started business with cash worth Rs. 10,000,

Purchased goods for Rs. 15,000 in cash

Purchased goods from M for Rs. 3,0O0 on credit

Sold goods to Y for Rs. 4,000 on credit

Sold goods for Rs. 5,000 in cash

Y returned goods worth Rs. 1,000.

Returned goods to M worth Rs. 2,000.

B took away goods worth Rs. l,000 for personal purpose

Goods worth Rs. 2,000 were destroyed in fire.

Distributed goods worth Rs. 500 as free samples.

Solution:

Journal

Date

No.

Particulars

LF

Debit

Amount.

Credit

Amount

2005

Jan. 1

1.

Cash A/c Dr.

To B’s Capital A/c

[For goods brought in by B]

10,000

10,000

2

2.

Purchase A/c Dr.

To Cash A/c

[For cash purchases; see Note(1)]

15,000

15,000

2

3.

Purchase A/c Dr.

To M’s A/c

[For credit purchase from M]

3,000

3,000

3

4.

Y’s A/c Dr.

To Sales A/c

[For credit sale to Y]

4,000

4,000

3

5.

Cash A/c Dr.

To Sales A/c

[For goods returned by Y]

5,000

5,000

4

6.

Sales return A/c Dr.

To Y’s A/c

[For goods returned by Y]

1,000

1,000

4

7.

M’s A/c Dr.

To Purchase return A/c

[For goods returned to M]

2,000

2,000

5

8.

Drawings A/c Dr.

To Goods Taken By B A/c

[For goods taken by B]

1,000

1,000

5

9.

Loss of Fire A/c Dr.

To Goods Lost by Fire A/c

[For goods lost by fire ]

2,000

2,000

5

10.

Advertisement A/c Dr.

To Goods Given as Samples A/c

[For goods given as samples]

500

500

Total Rs.

43,500

43,500

Illustration 4:

Give Journal entries for the following transactions:

B started business by bringing in cash Rs. 3,000, goods worth Rs. 4,000 and vehicle worth Rs. 5,000.

B purchased goods worth Rs. 8,000 from X and paid him Rs. 2,000.

B sold goods worth Rs. 3,000 to A who paid him Rs. 1,000in cash immediately.

B took goods worth Rs. 1,000 and cash Rs. 2,500 for his own use.

Solution:

Journal of B

Date

No.

Particulars

LF

Debit

Amount.

Credit

Amount

1

1.

Cash A/c Dr.

Purchase A/c Dr.

Vehicle A/c Dr.

To B’s Capital A/c

[For items brought in by B to start business]

3,000

4,000

5,000

12,000

2

2.

Purchase A/c Dr.

To Cash A/c

To X’s A/c

[For purchases from X partly on cash,

partly on credit]

8,000

2,000

6,000

2

3.

Cash A/c Dr.

A’s A/c Dr.

To Sales A/c

[For sales to A partly on cash and

partly on credit]

1.000

2,000

3,000

3

4.

B’s Drawings A/c Dr.

To Goods Taken by BA/c

To Cash A/c

[ goods and cash taken by B]

3,500

1,000

2,500

Total Rs.

26,500

26,500

Illustration 5:

Journalise the following transactions in the books of both A and B.

2004

Jan. 1 Goods sold by A to B on Credit Rs. 3,000.

Goods returned by B to A Rs. 500.

Cash paid by B Rs. 2,500 to A.

Loan taken by A from B Rs. 10,000.

Furniture purchased by A from B worth Rs. 2,000 on credit

Solution:

Journal of A

Date

No.

Particulars

LF

Debit

Amount.

Credit

Amount

Jan. 1

1.

B’s A/c Dr.

To Sales

[Being goods sold to B on credit]

3,000

3,000

2

2.

Sales Returns A/c Dr.

To B’s A/c

[Being goods returned by B out of

Jan. 1 transaction]

500

500

15

3.

Cash A/c Dr.

To B’s A/c

[Being cash received from B against

credit sales]

2,500

2,500

20

4.

Cash A/c Dr.

To B’s Loan A/c

[Being loan taken from B]

10,000

10,000

21

5.

Furniture A/c Dr.

To B’s A/c

[Being furniture purchased from B on credit]

2,000

2,000

Total Rs.

18,000

18,000

Journal of B

Date

No.

Particulars

LF

Debit

Amount.

Credit

Amount

Jan. 1

1.

Purchase A/c Dr.

To A’s A/c

[Being goods purchased from A on credit]

3,000

3,000

2

2.

A’s A/c Dr.

To Purchase Returns A/c

[Being goods purchased on Jan. 1,

returned to A]

500

500

15

3.

A’s A/c Dr.

To Cash A/c

[Being cash paid to A against credit

purchases]

2,500

2,500

20

4.

Loan to A A/c Dr.

To Cash A/c

[Being loan given to A]

10,000

10,000

21

5.

A’s A/c Dr.

To Furniture A/c

[Being furniture sold to A on credit]

2,000

2,000

Total Rs.

18,000

18,000

Illustration 7:

B sold goods having a list price of Rs. 1,000 at 20% trade discount to Y on January 1, 2004. B allows cash discount of 10% if payment is received within 10 days. B receives cash from Y on January 8, 2004.

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B purchased goods having list price of Rs. 800 at 25% trade discount from X on January 10, 2004. X allows 5% cash discount, if payment is made within 20 days. B pays the amount due on 25th January, 2004.

On January 30, 2004 B sold goods having a list price of Rs. 4,000 at a trade discount of 20% and received the amount due immediately in cash subject to cash discount of 10%.

On January 30, 2004 B purchased goods having a list price of Rs. 9,000 at a trade discount of 30% and paid the amount due immediately in cash subject to cash discount of 10%.

On 30th January, 2004 B sold goods having a list price of Rs. 2,000 at 20% trade discount to M and received half the amount due in cash immediately after allowing 10% cash discount.

On 31st January, 2004 B purchased goods having a list price of Rs. 4,000 at 25% trade discount from C and paid 1/3rd amount in cash subject to 10% cash discount.

Pass necessary Journal Entries to record the above transactions.

Solution:

Journal of B

Date

No.

Particulars

LF

Debit

Amount.

Credit

Amount

Jan. 1

1.

Y’s A/c Dr.

To Sales

[For goods sold to Y: Rs. 1,000 less

20% trade discount]

800

800

8

2.

Cash A/c Dr.

Discount Allowed A/c Dr.

To Y’s A/c

[For cash received from Y : Rs. 800 –

10% cash discount]

720

80

800

10

3.

Purchase A/c Dr.

To X’s A/c

[For goods bought from X Rs. 800 –

25% trade discount]

600

600

25

4.

X’s A/c Dr.

To Cash A/c

To Discount Received A/c

[For cash paid to X: Rs. 600 – 5%

cash discount]

600

570

30

30

5.

Cash A/c Dr.

Discount Allowed A/c

To Sales A/c

[For goods sold for Rs. 4,000 less 20%

trade discount and cash received Rs. 3,200

less 10% cash discount]

2880

320

3,200

30

6.

Purchase A/c Dr.

To Cash A/c

To Discount Allowed A/c

[For goods bought Rs. 9,000 less 30%

trade discount and cash paid Rs. 6,300

less 10% cash discount]

6,300

5,670

630

30

7.

M’s A/c Dr.

To Sales A/c

[For goods sold to M; Rs. 2,000 – 20%

trade discount]

1,600

1,600

30

8.

Cash A/c Dr.

Discount Allowed A/c Dr.

To M’s A/c

[1/2 Amount paid by M Rs. 800 – 10%

cash discount]

720

80

800

5

9.

Purchase A/c Dr.

To C’s A/c

[For goods purchased from C Rs. 4,000-

25% trade discount]

3,000

3,000

5

10.

C’s A/c Dr.

To Cash A/c

To Discount Received A/c

[1/3 Amount paid to C: Rs. 1,000- 10%

cash discount

1,000

900

100

Total Rs.

18,700

18,700

Illustration 8: (Purchase & Purchase Returns with Trade Discounts)

Prepare Arohi’s Journal from the following details for January, 2005:

Jan. 1 Purchased goods of Rs. 50,000 from Suman.

2 Returned goods of Rs. 1,000 to Suman.

5 Purchased goods of Rs. 50,000 from Vimal @ 10% trade discount.

7 Returned goods having list price of Rs. 1,000 to Vimal.

16 Purchased goods of Rs. 1,00,000 from Naren on credit @ 10% trade discount.

26 Returned goods having list price of Rs. 10,000 to Naren.

31 Purchased goods for Rs. 12,000 @ 5% trade discount from Rakesh.

Illustration 9 (Sales and Sales Returns with Trade Discounts):

Prepare Sonia’s Journal from the following details for January, 2005:

Jan. 1 Sold goods of Rs. 5,000 to Monica.

2 Monica returned goods of Rs. 1,000.

5 Sold goods of Rs. 5,000 to Radhika @ 10% trade discount.

7 Radhika returned goods having list price of Rs. 1,000.

16 Sold goods of Rs. 10,000 to Namita on credit @ 10% trade discount.

26 Namita returned half the goods.

31 Sold goods for Rs. 12,000 @ 5% trade discount to Ruchita.

Illustration 10 (Cash and Cash Discount):

Enter the following transactions in Journal of A.

Dec. 1 Cash introduced in business Rs. 10,000.

3 Purchased goods for cash Rs. 2,700.

5 Received Rs. 2,500 from C and allowed discount of I 500.

7 Paid to B Rs. 450 and received a discount of Rs. 50.

11 Paid, wages to workers Rs. 4,300.

16 Paid for office rent Rs. 600

19 Received from A Rs. 1,800 after allowing him a discount of Rs. 200.

23 Received interest Rs. 150.

27 Received Rs. 2,400 from C for the balance due, the amount payable is Rs 3,000

Solution:

Journal of A

Date

No.

Particulars

LF

Debit

Amount.

Credit

Amount

2005

Dec. 1

1.

Cash A/c Dr.

To Capital A/c

[For cash introduced as capital]

10,000

10,000

3

2.

Purchases A/c Dr.

To Cash A/c

[For cash purchases)

2,700

2,700

5

3.

Cash A/c Dr.

Discount Allowed A/c Dr.

To C’s A/c

[For cash received and discount allowed]

2,500

500

3000

7

4.

B’s A/c Dr.

To Cash A/c

To Discount Received A/c

[For cash paid and discount received]

500

450

50

11

5.

Wages A/c Dr.

To Cash A/c

[For wages paid)

4,300

4,300

16

6.

Office Rent A/c Dr.

To Cash A/c

[For office rent paid]

600

600

19

7.

Cash A/c Dr.

Discount Allowed A/c Dr.

To A’s A/c

[ cash received and discount allowed)

1,800

200

2,000

23

8.

Cash A/c Dr.

To Interest A/c

[For receipt of interest)

150

150

27

9.

Cash A/c Dr.

Discount Allowed A/c Dr.

To C A/c

[For cash received and discount allowed]

2,400

600

3,000

Total Rs.

26,250

26,250

Illustration 11:

Record the following transactions in the books of D:

2004

Jan.1. Purchased machinery from B for Rs. 50,000. Expenses on transportation were Rs. 2,000. Installation charges came to Rs. 3,000.

Jan. 2 Purchased an office building for Rs. 75,000.

Feb. 20 Paid Rs. 3,000 for repairs on machinery and Rs. 4,000 on electricity, to run the machinery. Paid Insurance premium for office building Rs. 7,500.

Oct. 10 Sold office building to M for Rs. 90,000 on credit

Oct. 20 Sold machinery for Rs. 45,000 on cash

Solution:

Journal of D

Date

No.

Particulars

LF

Debit

Amount.

Credit

Amount

Jan. 1

1.

Machinery A/c Dr.

To B’s A/c

[For machinery purchased and expenses on transportation and installation )

55,000

55,000

2

3.

Office Building A/c Dr.

To Cash A/c

[For office building purchased vide agreement dated ….]

75,000

75,000

Feb. 20

4.

Machinery Repairs A/c Dr.

Electricity A/c Dr.

Building Insurance A/c Dr.

To Cash A/c

[For various expenses paid]

3,000

4,000

7.500

14,500

Oct. 10

5.

M’s A/c Dr.

To Office Building A/c

To Profit on Sale of Fixed Asset A/c

[For sale of office building to M at profit:

90,000 – 75,000]

90,000

75,000

15.000

20

6.

Cash A/c Dr.

Loss on Sale of Fixed Asset A/c Dr.

To Machinery A/c

[For sale of machinery at loss:

50,000 + 5,000 – 45,000]

45,000

10,000

55,000

Total Rs.

2,89,500

2,89,500

Illustration 12:

Record the following transactions in the books of C:

2004

Jan. 1 Purchased 100 Shares of BBC Limited having face value of Rs. 10 at Rs. 20 each. Paid brokerage at 1% of purchase price.

Oct. 10 BBC Limited declared and paid dividend at the rate of 15%.

Oct. 20 Sold the shares of BBC Limited at Rs. 25 each.

Solution:

Journal of C

Date

No.

Particulars

LF

Debit

Amount.

Credit

Amount

Jan. 1

1.

Investment in Shares A/c Dr.

To Cash A/c

[For purchase of 100 shares of BBC Ltd.

at Rs. 20 each: 100 20 and paid the brokerage of 1%)

2,020

2,020

Oct. 10

3.

Cash A/c Dr.

To Dividend A/c

[Dividend received on shares : at 15% of

Rs. 1,000]

150

150

20

4.

Cash A/c Dr.

To Investment in Shares A/c

To Profit on Sale of Investment A/c

[For profit on sale of shares in BBC Ltd.]

2,500

2,020

480

Total Rs.

4,670

4,670

1. Personal Account -Personal account is an account of a person. For the purpose of accounting a person is divided into three categories viz., natural person for e.g. Mr. Aditya, Mr. Vijay, Mrs.Reena etc., artificial person like partnership firms, companies or business organization for e.g. Reliance Industries Ltd., Cipla Ltd., Bank of India, etc. and representative personal account for e.g. debtors account, creditors account. Capital account, outstanding exp, prepaid expense

2.. Real account. These are the accounts of properties and assets of the business. A separate account is prepared for each asset or property. These assets are of two types namely, tangible and intangible. Tangible assets are those assets which can be seen, touched, measured etc. fore.g. stock, machinery, furniture, building, goods etc. Intangible assets are those assets which can not be seen or touched but can be measured in terms of money and recorded in the books of accounts for e.g. goodwill, copy rights, trade marks, brand name, etc.

3. Nominal account: These are the accounts of expenses, losses, gains and incomes for e.g. interest account, discount account, commission account, salary account, wages account etc.

Illustration 1

Classify the following accounts into personal, real and nominal.

Goods A/C, Salary A/C, State Bank of India A/C, Printing and Stationery A/C, Discount Received A/C, Capital A/C, Vinay’s A/C, Carriage inward A/C, Stock A/C, Investment A/C, Loss goods by fire A/C, Tools A/C, Yashodhan Library A/C, Repairs to Machinery A/C, Manager Salary A/C, Copyright A/C, Patents A/C, Live Stock A/C, Sales Tax A/C, Audit fees. A/C, Bad debts A/C, Premises A/C, Leasehold Building A/C, Freehold Property A/C, Shreenaths Textile A/C, Stock of stationery A/C, Insurance premiumA/C, Gas and light-A/C, Debtors A/C, Creditors A/C, Trade expenses A/C, Royalty A/C, Goodwill A/C, Interest A/C, Railway freight A/C, Profit sale of Machinery A/C, Loss on sale of Investment A/C.

Solutions :

Personal Accounts

Real Accounts

Nominal Accounts

State Bank of India A/C

Goods A/C

Salary A/C

Capital A/C

Stock A/C

Printing and stationery A/C

Vinay A/C

Investment A/C

Discount A/C

Outstanding Expenses A/C

Tools A/C

Carriage Inward A/C

Prepaid Insurance A/C

Copyright A/C

Loss goods by fire A/C

Loan A/C

Patent A/C

Repairs to machinery A/C

“Yashodhan library A/C

Live stock A/C

Manager’s Salary A/C

Shreenath Textile A/C

Premises A/C

Sales Tax A/C

Debtors A/C

Leasehold building A/C

Audit fees A/C

Creditors A/C

Freehold building A/C

Bad debts A/C

Stock of stationery A/C

Insurance A/C

Goodwill A/C

Gas and light A/C

Trade expenses A/C

Royalty A/C

Interest A/C

Railway freight A/C

Profit on sale of Machinery A/C

Loss on sale of investment A/C

GOLDEN RULES OF ACCOUNTING

Personal Account

DEBIT THE RECEIVER

CREDIT THE GIVER

Real Account

DEBIT WHAT COMES IN

CREDIT WHAT GOES OUT

Nominal Account

DEBIT ALL EXPENSES AND LOSSES

CREDIT ALL GAINS AND INCOMES

CLASSIFICATION OF GOODS ACCOUNT

Goods is the commodity in which a trader or businessman is dealing. Groceries will be considered as goods for grocery merchant whereas furniture will be considered as goods for furniture merchant. Goods account is a real account as the stock of goods is a current asset. Though the goods is a single account, but for the purpose of recording into the journal the goods is subdivided into five subparts as per the transaction effect. These subparts are purchase account, sales account, purchase return account, sales return account and stock account.

Goods- 1.Purchases

2. Sales

3.Purchase Return

4.Sales Return

5.Stock

Because of such classification of the goods account, whenever the goods is purchased purchases account is debited instead of good account, goods sold then sales account is credited instead of goods account, for goods returned to suppliers purchase return account is credited instead of goods account and for goods returned by customer a sales return account is debited instead of goods account, finally goods lying unsold with the business is termed as Stock

Illustration

Journalize the following transactions in the books of Mr. Prathamesh. January 2010

1st Started business with cash of Rs. 10000

2nd Bought furniture for Rs. 20000 in cash

3rdBought goods for Rs. 25000 in cash

10th Sold .goods for Rs. 30000 in cash

15 th Paid Salary to staff Rs. 5000 in cash

20th Paid rent Rs. 2000 in cash

25th Bought goods for Rs. 10000 on credit from shyam

30th Sold goods for Rs. 10000 on credit to Sunil

Illustration 2:

On January 1, 2008 Mr. Mahadev started business in the name of M/s. Mahadev &. Sons by bringing in cash of Rs. 50,000 of which Rs. 15,000 deposited in the Canara Bank.

During the month of January 2008 the following transactions took place –

January 3. A loan of Rs. 50,000 taken from the Canara Bank.

January 5. Some materials worth Rs. 10,000 purchased from Mr. Sohanlal on credit

January 7. Furniture worth Rs. 17,500 and machinery worth Rs. 30,000 purchased in cash

January 9………… Rs. 1,000 paid towards telephone charges by cheque.

January 10. Some office equipments bought for Rs. 4,500 from M/s. Tiger & Sons on credit.

January 12. Goods worth Rs. 26,500 sold in cash

January 15. Goods worth Rs. 4,000 sold to Mr. Shiva on credit

January 16. 50 shares of Tata Steel Ltd. @ Rs. 280 per share purchased in cheque

January 18. Mr. Shiva returned goods worth Rs. 100 being defective.

January 20. Rs. 3,750 received from Mr. Shiva after allowing him Rs. 150 as discount.

January 21………..Goods worth Rs. 5,500 purchased on credit from Mr. Shyam and sold to Ravi Traders for Rs. 6,200 on credit

January 22………..Rs. 201 given as donation in cash

January 25. …….Rs. 5,300 paid as salaries to the staff members in cash

January 28………Rs. 2,100 received from a salesman in cash for the goods sold after deducting his travelling expenses of Rs. 175.

You are required to pass the journal entries in the journal of M/s. Mahadev & &. Sons

Illustration 3

The following transactions took place in the business of M/s. Nanavati & Co. during April 2009. You are required to journalise them

April 1 ……………Mr. Nanavati started business with Rs. 1,00,000 cash and a machine of Rs 25,000. Out of Rs. 1,00,000 Rs. 50,000 deposited in the State Bank of India.

April 2 …………….. Goods worth Rs. 3,300 purchased from Mr. Chimanlal. Cash paid to him Rs. 1,000.

April 4 Stationery worth Rs. 250 purchased on cash.

April 5 Goods sold to Padma Traders for Rs. 1,500 on credit

April 10 Goods purchased from Mr. Soneji for Rs. 1,500 on credit

April 11 Half of the goods purchased from Soneji sold to Mr. Kanji on credit on a profit of Rs. 125 .

April 12 Rs. 2,150 paid to Mr. Chimanlal in full and final settlement of Rs. 2,300.

April 18 Mr. Nanavati brought in additional capital of Rs. 25,000 in cash.

April 20………………Goods worth Rs. 3,000 sold to Mr. Raman at 10% trade and 5% cash discount. Mr. Raman paid cash immediately.

April 22……………….Mr. Kanji is declared insolvent and only 50 paise in a rupee could be recovered from him.

Illustration 4

Journalise the following transactions in the books of M/s. Rekha Traders

2009

November 1……..Started business with

Cash Rs. 5,00,000/‑

Land Rs. 6,00,000/‑

Machinery Rs. 1,50,000/-

Bank Rs 20,000/-

November2………. Paid rent to the landlord Rs. 1,450/- by cheque

November4 Sold goods to Dinar for Rs. 6,430/- on credit

November7 Purchased a building from Narendra for Rs. 2,00,000/-. Rs. 50,000 paid immediately. The balance is payable in three equal annual installments.

November9 Withdrew cash of Rs. 500/- for personal use.

November 11 Dinar returned goods worth Rs. 480/‑

November 15 Purchased furniture on credit from Randhir for Rs. 3,900/.

November20 Received Rs. 5,900/- from Dinar and allowed him a cash discount of Rs. 50/-

November 22 Rs. 3,800/- paid to Randhir in full settlement of Rs. 3,900/-

November25 Rs. 500/- received as commission in cash

November 27. Rs. 3000/- incurred on advertising in cash

November 28. Fire insurance premium of Rs. 1,200/- paid in cheque

November30…….. Goods sold on cash to rohan on Rs 5,000, 10 % Trade discount, 5 % cash discount

HOME WORK SECTION

Analyse and then journalise the following transactions in the books of Mr. B.

2009

Jan. 1 1. Started business with a capital of Rs. 7,500.

Jan. 1 2. Purchased goods from Mr. Z for Rs. 2,000 on credit

Jan. 1 3. Loan taken from W Rs. 300.

Jan. 1 4. Goods sold to Mr. L for cash Rs. 2,500.

Jan. 5 5. Cash paid to Mr. Z Rs. 2,000.

Jan. 5 6. Purchased Furniture for office Rs. 700.

Jan. 5 7. Paid Office Rent out of personal cash of B Rs. 400.

Solution

JOURNAL OF B

Date

2010

No.

Particulars

LF

Dr.

Amount.

Cr.

Amount

Jan. 1

1.

Cash A/c Dr.

To B’s Capital A/c

[Being cash brought in by B to start business]

7,500

7,500

2.

Purchase A/c Dr.

To Z’s A/c

[Being goods purchased from Z on credit]

2,000

2,000

3.

Cash A/c Dr.

To W’s A/c

[Being Loan received from W]

300

300

4.

Cash A/c Dr.

To Sales A/c

[Being goods sold to L for cash]

2,500

2,500

Jan.5

5.

Z’s A/c Dr.

To Cash A/c

[Being cash paid to Z for previous credit purchases]

2,000

2,000

6.

Furniture A/c Dr.

The Cash A/c

[Being furniture purchased for cash]

700

700

7.

Rent A/c Dr.

To capital a/c

(Being rent paid out of personal expenditure)

400

400

Total Rs.

15,400

15,400

Illustration 2 From the following particulars, prepare the journal of A.

2005 Rs.

Dec 1 Started business with cash 3,000

3 Purchased goods for cash 400

5 Advertisement expenses paid 250

7 Sold goods for cash 575

11 Further capital introduced 1,000

14 Paid to B, a creditor 900

17 Received commission from C in cash 600

19 Paid to D on account 175

22 Received from E, a debtor 2,000

29 Salary paid in cash 1,000

Solution:

Journal of A

Date

No.

Particulars

LF

Debit

Amount.

Credit

Amount

2005

Jan. 1

1.

Cash A/c Dr.

To Capital A/c

[For cash introduced as capital]

3,000

3,000

3

2.

Purchase A/c Dr.

To Cash A/c

[For cash purchases]

400

400

5

3.

Advertisement A/c Dr.

To Cash A/c

[For advertisement expenses paid]

250

250

7

4.

Cash A/c Dr.

To Sales A/c

[For cash sales]

575

575

11

5.

Cash A/c Dr.

To Capital A/c

[For additional capital]

1,000

1,000

14

6.

B’s A/c Dr.

To Cash A/c

[For paid against purchases]

900

900

17

7.

Cash A/c Dr.

To Commission A/c

[For commission from C]

600

600

19

8.

D’s A/c Dr.

To Cash A/c

[For cash paid on account]

175

175

22

9.

Cash A/c Dr.

To E’s A/c

[For receipt from E]

2,000

2,000

29

10.

Salary A/c Dr.

To Cash A/c

[For salaries paid]

1,000

1,000

Total Rs.

9,900

9,900

Illustration 3:

Journalise the following transactions:

2005

Jan. 1. B started business with cash worth Rs. 10,000,

Purchased goods for Rs. 15,000 in cash

Purchased goods from M for Rs. 3,0O0 on credit

Sold goods to Y for Rs. 4,000 on credit

Sold goods for Rs. 5,000 in cash

Y returned goods worth Rs. 1,000.

Returned goods to M worth Rs. 2,000.

B took away goods worth Rs. l,000 for personal purpose

Goods worth Rs. 2,000 were destroyed in fire.

Distributed goods worth Rs. 500 as free samples.

Solution:

Journal

Date

No.

Particulars

LF

Debit

Amount.

Credit

Amount

2005

Jan. 1

1.

Cash A/c Dr.

To B’s Capital A/c

[For goods brought in by B]

10,000

10,000

2

2.

Purchase A/c Dr.

To Cash A/c

[For cash purchases; see Note(1)]

15,000

15,000

2

3.

Purchase A/c Dr.

To M’s A/c

[For credit purchase from M]

3,000

3,000

3

4.

Y’s A/c Dr.

To Sales A/c

[For credit sale to Y]

4,000

4,000

3

5.

Cash A/c Dr.

To Sales A/c

[For goods returned by Y]

5,000

5,000

4

6.

Sales return A/c Dr.

To Y’s A/c

[For goods returned by Y]

1,000

1,000

4

7.

M’s A/c Dr.

To Purchase return A/c

[For goods returned to M]

2,000

2,000

5

8.

Drawings A/c Dr.

To Goods Taken By B A/c

[For goods taken by B]

1,000

1,000

5

9.

Loss of Fire A/c Dr.

To Goods Lost by Fire A/c

[For goods lost by fire ]

2,000

2,000

5

10.

Advertisement A/c Dr.

To Goods Given as Samples A/c

[For goods given as samples]

500

500

Total Rs.

43,500

43,500

Illustration 4:

Give Journal entries for the following transactions:

B started business by bringing in cash Rs. 3,000, goods worth Rs. 4,000 and vehicle worth Rs. 5,000.

B purchased goods worth Rs. 8,000 from X and paid him Rs. 2,000.

B sold goods worth Rs. 3,000 to A who paid him Rs. 1,000in cash immediately.

B took goods worth Rs. 1,000 and cash Rs. 2,500 for his own use.

Solution:

Journal of B

Date

No.

Particulars

LF

Debit

Amount.

Credit

Amount

1

1.

Cash A/c Dr.

Purchase A/c Dr.

Vehicle A/c Dr.

To B’s Capital A/c

[For items brought in by B to start business]

3,000

4,000

5,000

12,000

2

2.

Purchase A/c Dr.

To Cash A/c

To X’s A/c

[For purchases from X partly on cash,

partly on credit]

8,000

2,000

6,000

2

3.

Cash A/c Dr.

A’s A/c Dr.

To Sales A/c

[For sales to A partly on cash and

partly on credit]

1.000

2,000

3,000

3

4.

B’s Drawings A/c Dr.

To Goods Taken by BA/c

To Cash A/c

[ goods and cash taken by B]

3,500

1,000

2,500

Total Rs.

26,500

26,500

Illustration 5:

Journalise the following transactions in the books of both A and B.

2004

Jan. 1 Goods sold by A to B on Credit Rs. 3,000.

Goods returned by B to A Rs. 500.

Cash paid by B Rs. 2,500 to A.

Loan taken by A from B Rs. 10,000.

Furniture purchased by A from B worth Rs. 2,000 on credit

Solution:

Journal of A

Date

No.

Particulars

LF

Debit

Amount.

Credit

Amount

Jan. 1

1.

B’s A/c Dr.

To Sales

[Being goods sold to B on credit]

3,000

3,000

2

2.

Sales Returns A/c Dr.

To B’s A/c

[Being goods returned by B out of

Jan. 1 transaction]

500

500

15

3.

Cash A/c Dr.

To B’s A/c

[Being cash received from B against

credit sales]

2,500

2,500

20

4.

Cash A/c Dr.

To B’s Loan A/c

[Being loan taken from B]

10,000

10,000

21

5.

Furniture A/c Dr.

To B’s A/c

[Being furniture purchased from B on credit]

2,000

2,000

Total Rs.

18,000

18,000

Journal of B

Date

No.

Particulars

LF

Debit

Amount.

Credit

Amount

Jan. 1

1.

Purchase A/c Dr.

To A’s A/c

[Being goods purchased from A on credit]

3,000

3,000

2

2.

A’s A/c Dr.

To Purchase Returns A/c

[Being goods purchased on Jan. 1,

returned to A]

500

500

15

3.

A’s A/c Dr.

To Cash A/c

[Being cash paid to A against credit

purchases]

2,500

2,500

20

4.

Loan to A A/c Dr.

To Cash A/c

[Being loan given to A]

10,000

10,000

21

5.

A’s A/c Dr.

To Furniture A/c

[Being furniture sold to A on credit]

2,000

2,000

Total Rs.

18,000

18,000

Illustration 7:

B sold goods having a list price of Rs. 1,000 at 20% trade discount to Y on January 1, 2004. B allows cash discount of 10% if payment is received within 10 days. B receives cash from Y on January 8, 2004.

B purchased goods having list price of Rs. 800 at 25% trade discount from X on January 10, 2004. X allows 5% cash discount, if payment is made within 20 days. B pays the amount due on 25th January, 2004.

On January 30, 2004 B sold goods having a list price of Rs. 4,000 at a trade discount of 20% and received the amount due immediately in cash subject to cash discount of 10%.

On January 30, 2004 B purchased goods having a list price of Rs. 9,000 at a trade discount of 30% and paid the amount due immediately in cash subject to cash discount of 10%.

On 30th January, 2004 B sold goods having a list price of Rs. 2,000 at 20% trade discount to M and received half the amount due in cash immediately after allowing 10% cash discount.

On 31st January, 2004 B purchased goods having a list price of Rs. 4,000 at 25% trade discount from C and paid 1/3rd amount in cash subject to 10% cash discount.

Pass necessary Journal Entries to record the above transactions.

Solution:

Journal of B

Date

No.

Particulars

LF

Debit

Amount.

Credit

Amount

Jan. 1

1.

Y’s A/c Dr.

To Sales

[For goods sold to Y: Rs. 1,000 less

20% trade discount]

800

800

8

2.

Cash A/c Dr.

Discount Allowed A/c Dr.

To Y’s A/c

[For cash received from Y : Rs. 800 –

10% cash discount]

720

80

800

10

3.

Purchase A/c Dr.

To X’s A/c

[For goods bought from X Rs. 800 –

25% trade discount]

600

600

25

4.

X’s A/c Dr.

To Cash A/c

To Discount Received A/c

[For cash paid to X: Rs. 600 – 5%

cash discount]

600

570

30

30

5.

Cash A/c Dr.

Discount Allowed A/c

To Sales A/c

[For goods sold for Rs. 4,000 less 20%

trade discount and cash received Rs. 3,200

less 10% cash discount]

2880

320

3,200

30

6.

Purchase A/c Dr.

To Cash A/c

To Discount Allowed A/c

[For goods bought Rs. 9,000 less 30%

trade discount and cash paid Rs. 6,300

less 10% cash discount]

6,300

5,670

630

30

7.

M’s A/c Dr.

To Sales A/c

[For goods sold to M; Rs. 2,000 – 20%

trade discount]

1,600

1,600

30

8.

Cash A/c Dr.

Discount Allowed A/c Dr.

To M’s A/c

[1/2 Amount paid by M Rs. 800 – 10%

cash discount]

720

80

800

5

9.

Purchase A/c Dr.

To C’s A/c

[For goods purchased from C Rs. 4,000-

25% trade discount]

3,000

3,000

5

10.

C’s A/c Dr.

To Cash A/c

To Discount Received A/c

[1/3 Amount paid to C: Rs. 1,000- 10%

cash discount

1,000

900

100

Total Rs.

18,700

18,700

Illustration 8: (Purchase & Purchase Returns with Trade Discounts)

Prepare Arohi’s Journal from the following details for January, 2005:

Jan. 1 Purchased goods of Rs. 50,000 from Suman.

2 Returned goods of Rs. 1,000 to Suman.

5 Purchased goods of Rs. 50,000 from Vimal @ 10% trade discount.

7 Returned goods having list price of Rs. 1,000 to Vimal.

16 Purchased goods of Rs. 1,00,000 from Naren on credit @ 10% trade discount.

26 Returned goods having list price of Rs. 10,000 to Naren.

31 Purchased goods for Rs. 12,000 @ 5% trade discount from Rakesh.

Illustration 9 (Sales and Sales Returns with Trade Discounts):

Prepare Sonia’s Journal from the following details for January, 2005:

Jan. 1 Sold goods of Rs. 5,000 to Monica.

2 Monica returned goods of Rs. 1,000.

5 Sold goods of Rs. 5,000 to Radhika @ 10% trade discount.

7 Radhika returned goods having list price of Rs. 1,000.

16 Sold goods of Rs. 10,000 to Namita on credit @ 10% trade discount.

26 Namita returned half the goods.

31 Sold goods for Rs. 12,000 @ 5% trade discount to Ruchita.

Illustration 10 (Cash and Cash Discount):

Enter the following transactions in Journal of A.

Dec. 1 Cash introduced in business Rs. 10,000.

3 Purchased goods for cash Rs. 2,700.

5 Received Rs. 2,500 from C and allowed discount of I 500.

7 Paid to B Rs. 450 and received a discount of Rs. 50.

11 Paid, wages to workers Rs. 4,300.

16 Paid for office rent Rs. 600

19 Received from A Rs. 1,800 after allowing him a discount of Rs. 200.

23 Received interest Rs. 150.

27 Received Rs. 2,400 from C for the balance due, the amount payable is Rs 3,000

Solution:

Journal of A

Date

No.

Particulars

LF

Debit

Amount.

Credit

Amount

2005

Dec. 1

1.

Cash A/c Dr.

To Capital A/c

[For cash introduced as capital]

10,000

10,000

3

2.

Purchases A/c Dr.

To Cash A/c

[For cash purchases)

2,700

2,700

5

3.

Cash A/c Dr.

Discount Allowed A/c Dr.

To C’s A/c

[For cash received and discount allowed]

2,500

500

3000

7

4.

B’s A/c Dr.

To Cash A/c

To Discount Received A/c

[For cash paid and discount received]

500

450

50

11

5.

Wages A/c Dr.

To Cash A/c

[For wages paid)

4,300

4,300

16

6.

Office Rent A/c Dr.

To Cash A/c

[For office rent paid]

600

600

19

7.

Cash A/c Dr.

Discount Allowed A/c Dr.

To A’s A/c

[ cash received and discount allowed)

1,800

200

2,000

23

8.

Cash A/c Dr.

To Interest A/c

[For receipt of interest)

150

150

27

9.

Cash A/c Dr.

Discount Allowed A/c Dr.

To C A/c

[For cash received and discount allowed]

2,400

600

3,000

Total Rs.

26,250

26,250

Illustration 11:

Record the following transactions in the books of D:

2004

Jan.1. Purchased machinery from B for Rs. 50,000. Expenses on transportation were Rs. 2,000. Installation charges came to Rs. 3,000.

Jan. 2 Purchased an office building for Rs. 75,000.

Feb. 20 Paid Rs. 3,000 for repairs on machinery and Rs. 4,000 on electricity, to run the machinery. Paid Insurance premium for office building Rs. 7,500.

Oct. 10 Sold office building to M for Rs. 90,000 on credit

Oct. 20 Sold machinery for Rs. 45,000 on cash

Solution:

Journal of D

Date

No.

Particulars

LF

Debit

Amount.

Credit

Amount

Jan. 1

1.

Machinery A/c Dr.

To B’s A/c

[For machinery purchased and expenses on transportation and installation )

55,000

55,000

2

3.

Office Building A/c Dr.

To Cash A/c

[For office building purchased vide agreement dated ….]

75,000

75,000

Feb. 20

4.

Machinery Repairs A/c Dr.

Electricity A/c Dr.

Building Insurance A/c Dr.

To Cash A/c

[For various expenses paid]

3,000

4,000

7.500

14,500

Oct. 10

5.

M’s A/c Dr.

To Office Building A/c

To Profit on Sale of Fixed Asset A/c

[For sale of office building to M at profit:

90,000 – 75,000]

90,000

75,000

15.000

20

6.

Cash A/c Dr.

Loss on Sale of Fixed Asset A/c Dr.

To Machinery A/c

[For sale of machinery at loss:

50,000 + 5,000 – 45,000]

45,000

10,000

55,000

Total Rs.

2,89,500

2,89,500

Illustration 12:

Record the following transactions in the books of C:

2004

Jan. 1 Purchased 100 Shares of BBC Limited having face value of Rs. 10 at Rs. 20 each. Paid brokerage at 1% of purchase price.

Oct. 10 BBC Limited declared and paid dividend at the rate of 15%.

Oct. 20 Sold the shares of BBC Limited at Rs. 25 each.

Solution:

Journal of C

Date

No.

Particulars

LF

Debit

Amount.

Credit

Amount

Jan. 1

1.

Investment in Shares A/c Dr.

To Cash A/c

[For purchase of 100 shares of BBC Ltd.

at Rs. 20 each: 100 20 and paid the brokerage of 1%)

2,020

2,020

Oct. 10

3.

Cash A/c Dr.

To Dividend A/c

[Dividend received on shares : at 15% of

Rs. 1,000]

150

150

20

4.

Cash A/c Dr.

To Investment in Shares A/c

To Profit on Sale of Investment A/c

[For profit on sale of shares in BBC Ltd.]

2,500

2,020

480

Total Rs.

4,670

4,670

===================================

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