VIDYANJALI EDUCATION ACCOUNTS FOR 11 TH, 12 TH, B.COM. (P/H), B.B.A., M.B.A., C.P.T.

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1 Ramesh Singh: & VIDYANJALI EDUCATION ACCOUNTS FOR 11 TH, 12 TH, B.COM. (P/H), B.B.A., M.B.A., C.P.T. Journal and Ledger Journal: It is a book in which transactions are recorded in chronological order i.e. in which they occur. It is also known as books of original entry. Transaction are recorded in the journal with the help of accounting voucher which is prepared on the basis of source documents, i.e., cash memo, invoices, purchase bill etc. Ledger: It is a book by which we can obtain all the accounting information related to a specific account. For ex. A/C record all the information related to. It is also known as Principle Book. Important Note: We post entries to the Ledger with the help of Journal. Point to be Remember before preparing Journal: Journal 1. Every transaction has double effect, i.e. every has an equal 2. Find the accounts that are affected. 3. Find the nature of account. 4. Apply Rules of and 5. We can use either Traditional Approach or Modern Approach of Rules of and Journal Entry: An entry recorded in Journal is called Journal Entry. Simple Entry: This is an entry in which only two accounts are affected i.e. only two accounts are or For example: Goods purchased from Sohan for cash Rs.10, 000. In this transaction only two accounts are affected i.e. A/c and Purchase A/c. So we the Purchase A/c and the A/c. Compound Entry: This is an entry in which more than two accounts are affected i.e. more than two accounts are or For example: Goods purchased from Sohan for Rs.10, 000 and received cash discount of Rs.500. In this transaction more than two accounts are affected i.e. A/c, Discount Received A/c and Purchase A/c. So we the Purchase A/c and the A/c and Discount Received A/c. Journalising: The process of recording transactions is known as Journalising. Posting: Transfer of journal entry to a Ledger is known as Posting.

2 Basic for journal entries, Using Traditional Approach No. Transaction Accounts Nature of accounts Reasons or 1. Mr. X started business with A/C Comes in cash Rs. 10,000 Capital A/C Personal Account Giver 2. Purchased furniture on credit from Furniture Personal Account Comes in Giver 3. Salary paid Salary Nominal Account Expenses Goes out 4. deposited into Bank Bank Personal Account Receiver Goes out 5. paid to (Creditor) Personal Account Receiver Goes out 6. paid to (Creditor) in full settlement Dis. Rec. Personal Account Nominal Account Receiver Goes Out Income Basic for journal entries, Using Modern Approach No. Transaction Accounts Nature of accounts Reasons or 1. Mr. X started business with A/C cash Rs. 10,000 Capital A/C Capital 2. Purchased furniture on credit from Furniture Liabilities 3. Salary paid Salary Expenses Decrease 4. deposited into Bank Bank Decrease 5. paid to (Creditor) Liability Decrease Decrease 6. Goods sold for cash Sales Income 7. paid to (Creditor) in full settlement Dis. Rec. Liability Income Decreases Decreases s

3 Some Special Entries: 1. For Bad Debt (i) When the amount is irrecoverable: Bad Debt A/c To Debtor A/c (ii) When only a part of Debt is recoverable: or Bank A/c Bad Debt A/c To Debtor A/c 2. For Bad Debt Recovered or Bank A/c To Bad Debt Recovered 3. For Drawing (i) Goods Withdrawn (ii) Withdrawn To A/c 4. For Discount (i) Receiving Trade Discount on Purchase Purchase A/c To Creditor A/c (ii) Receiving Discount on Purchase Purchase A/c To A/c To Discount Received A/c (iii) Allowing Trade Discount on Sales Debtor A/c To Sales A/c (iv) Allowing Discount on Sales A/c Discount Allowed A/c To Sales A/c Important Note: Do not record trade discount. It is deducted from Invoice Price.

4 5. For Different treatment of goods: (i) Goods taken for Personal Use (ii) Goods given as Charity Charity A/c (iii) Goods distributed as Free Sample Free Sample A/c (iv) Goods loss by theft or fire Loss by theft or fire A/c (a) If Goods are not insured Profit and Loss A/c To Loss by theft or fire A/c (b) If Goods are insured Insurance Co. A/c (with the amt. of ins. claim) Profit and Loss A/c (loss amount) To Loss by theft or fire A/c (v) Goods used to make an Asset A/c 6. For Depreciation on Fixed such as Machinery, Furniture, Building etc. Depreciation A/c To A/c 7. For Appreciation on Fixed such as Real, Gold Ornament etc. A/c To Appreciation A/c 8. Interest on Capital Interest on Capital A/c To Capital A/c 9. Interest on Drawing To Interest on 10. Outstanding Expenses i.e. expenses incurred but not paid Expenses A/c To Outstanding Expenses A/c

5 11. Prepaid Expenses i.e. expenses paid in advance Prepaid Expenses A/c To or Bank A/c 12. Closing Stock at the end Closing Stock A/c To Trading A/c 13. Value Added Tax (VAT) (i) When VAT is paid at the time of Purchase Purchase A/c VAT Paid A/c To / Bank/ Creditors A/c (ii) When VAT is collected at the time of sales / Bank/ Debtors A/c To Sales A/c To VAT Collected A/c (ii) Depositing balance VAT to the Government VAT Collected A/c To VAT Paid A/c To / Bank A/c 14. Central Sales Tax (CST) (i) For Sales and receiving CST / Bank/ Debtors A/c To Sales A/c To CST A/c (ii) Depositing CST to Government CST A/c To / Bank A/c 15. For Income Tax (i) For Sole Proprietorship To / Bank A/c (ii) For Sole Partnership, Company Income Tax A/c To / Bank A/c 16. For Banking Transaction (i) Cheque/ Demand Draft received from Debtor and Depositing into Bank on the same day Bank A/c To Debtor A/c

6 (ii) Cheque / Demand Draft received from Debtor and not depositing into Bank on the same day A/c To Debtor A/c (iii) Above Cheque or Demand Draft depositing on next day Bank A/c To A/c (iv) Depositing Cheque returned dishonoured Debtor A/c To Bank A/c (v) Transfer of funds from Ist Account to 2nd Account Bank A/c (2nd Account) To Bank (Ist Account) (vi) Transfer of funds from PNB Bank to SBI Bank Bank A/c (SBI Bank) To Bank (PNB Bank) (vii) Interest charged by the Bank Interest A/c To Bank A/c (viii) Interest allowed by the Bank Bank A/c To Interest Received A/c Q. 1 Pass Journal Entries in the following Situation: (1) Purchased goods from vijay Rs. 40,000 on 10% Trade discount and 5% cash discounts 60% of the amount paid at the time of purchase. (2) Sold goods to Anil for Rs. 20,000 allowed 10% trade discount and 10% cash discount. Received 40% of amount by cash and balances paid by cheque within specified time. (3) Received an order for goods from Mahesh Rs. 5,000. (4) Received an order for goods from Mahesh Rs. 5,000 and received 1,000 as advance. (5) Supplied goods costing Rs. 1, 000 to Mohan at 10% above cost, less 5% trade discount. (6) Sale jaspal of 10 calculators to Ayur in January 2009 at the Rate Rs. 70, Trade discount 2%. Record transaction in the books of both (Ayur and Jaspal). (7) 20 calculators were returned by Ayur. Record transaction in the books of both (Ayur and Jaspal). (8) An old machine with book value of Rs. 80,000 is exchange for new machine Rs. 2, 40,000. The old machine is value at Rs. 50,000 for exchange purpose by Machine Krish Limited. (9) Sold goods costing Rs. 40,000 to Ashok at a profit of 25% on cost less 20% trade discount and charged 8% sales tax and paid cartage Rs. 200 (cartage not to be charged from the customer).

7 (10) Sold goods costing Rs. 40,000 to Ashok at a profit of 25% on cost less 20% trade discount and charged 8% sales tax and paid cartage Rs. 200 (cartage charged from the customer). Q. 2 Record the following transactions in journal: (1) Bank collected dividend Rs.10, 000. (2) Paid income tax by the sole proprietorship Rs. 2,000. (3) Paid income tax by the partnership Rs. 2,000. (4) Horse Purchased for Rs. 20,000. (5) Elephant died Cost Rs. 25,000 and realised Rs. 10,000. (6) Paid for repairs on building Rs. 5,000. (7) Salary due to Ram but not paid Rs. 7,500. (8) Rent paid in advance Rs. 5, 000. (9) Purchased Car Rs. 3, 00,000 by taking loan for Rs. 2, 50,000 from Bank. (10) Paid Rs. 500 for the Life Insurance perineum of Proprietor. Q. 3 Journalising the following (1) Paid land lord Rs. 1,500 for Rent 1/3rd of promises is occupied by the proprietor for his own residence. (2) Goods damaged by fire for Rs. 10,000(goods are not insured). (3) Goods damaged by fire for Rs. 10,000 and insurance claim excepted by company Rs. 8,000. (4) Received first and final dividend of 60p in rupee from the official receivers of Suresh who owed us Rs. 1,000. (5) Received cash for Bad debt return off last year Rs (6) Provide 10% interest on Capital, Capital amount Rs. 1, 00,000. (7) Charge interest on drawing Rs. 1,000. (8) Cheque received from Mohan Rs. 10, 000. (9) Deposited Mohan Cheque. (10) Mohan Cheque returned dishonoured.

8 Q. 4 Journalising the following (1) Purchased goods from Rahul Rs. 25,000 less trade discount of 20% plus 10%. (2) Sold goods costing 6, 000 to Nikhil for Rs. 7, 500 plus (3) Sold the balance goods for Rs. 20,000 and charges 10% against Cheque. (4) VAT was deposited in to government Account on due date. VIDYANJALI EDUCTION CLASSES FOR 11 th, 12 th, B.COM. (P/H), B.B.A., M.B.A., C.P.T. FINANCIAL A/CING, COMPANY A/C, COSTING, FINANCIAL MANAGEMENT, INCOME TAX