Identify accounts involved & their nature
Purchased furniture from fancy furniture house for Rs. 1,50,000 on credit
Accounts and their nature:
Furniture A/c - Asset
Fancy furniture house - Liability
What are representative personal accounts? Give an example.
These are accounts which represent a person or a group of people.
Prepaid Rent
Outstanding salary
Accrued commission
Unearned interest Account
............ Dr 75,000
To......... 75,000
(Sale of personal car & money deposited into business)
Cash A/c Dr. 75,000
To Capital A/c 75,000
Rent of proprietor's house paid from account on cash will:
a) Decrease the profit
b) Increase the profit
c) Reduce the capital of business
d) Reduce the cash as well as capital of business
d) Reduce the cash as well as capital of business
Purchased an old Machinery for Rs.10,000 & spent Rs. 1,000 for its carriage and Rs. 2000 on its immediate repair. Pass the journal entry.
Also Name the type of expenditure
Machinery A/c Dr. 13,000
To bank A/c 13,000
Capital Expenditure
Goods stolen in transit (Sales price Rs. 8,000, cost Rs.6,000)
Loss of stock in transit A/c -Expense
Purchases A/c - Expense
Give one transaction which will increase assets and increase liabilities.
Purchase of an asset on credit
Loan taken from bank
Purchase of goods on credit
.......... Dr. 10,000
To.......... 10,000
(cheque of Rajan dishonored)
Rajan Dr. 10,000
To Bank A/c 10,000
What will be the amount of capital in opening entry, if the following balances appear in the books of SK sons?
Assets- Cash in hand Rs. 430; Cash at bank Rs.2675; sundry Debtors Rs. 7,495; Closing stock Rs.9,000; Machinery & Equipment Rs.6,000
Liabilities & Capital - Creditors Rs.5,600
a) Rs. 20,000 b) 10,600
c) Rs. 25,600 d) Rs.15,000
Rs. 20,000
Radha is declared insolvent, received first and final dividend from his official receiver 50 paise in a rupee against a debt of Rs. 5,000. Pass the journal entry
Bank A/c Dr. 25,00
Bad debts A/c Dr 25,00
To Radha 5,000
Paid income tax Rs.8,000 by cheque
Drawings A/c -Capital A/c
Bank A/c - Asset A/c
Distinguish between trade discount and cash discount?
Trade discount: It is the reduction in prices by the seller to the purchaser of goods when they buy goods of certain quantity or value.
Cash discount: Cash discount is discount allowed for timely payment of due amount. It is an expense for the party allowing discount and income for party receiving cash discount.
............. Dr 4,000
To ......... 4,000
(Interest due but not received)
Accrued interest A/c Dr. 4,000
To interest A/c 4,000
Amount Due from Raghav (Debtor) Rs. 50,000 and received a cheque from him in full & final settlement of his account after discount of 2%. Identify the correct entry from the following:
a) Raghav A/c Dr. 50,000
To discount received A/c 1,000
To Bank A/c 49,000
b) Bank A/c Dr 49,500
Discount allowed Dr. 500
To Raghav 50,000
c) Bank A/c Dr. 49,000
Discount allowed Dr. 1,000
To Raghav 50,000
d) Raghav A/c Dr. 50,000
To discount received A/c 500
To Bank A/c 49,500
Bank A/c Dr. 49,000
Discount allowed Dr. 1,000
To Raghav 50,000
Sold goods to Raman, Jaipur for Rs. 1,20,000 less than 10% trade discount plus IGST @ 18%.
Pass the journal entry.
Raman Dr. 1,27,440
To sales A/c 1,08,000
To Output IGST A/c 19,440
Salary paid Rs.8,000 and salaries outstanding Rs.20,000
Salary A/c - Expense A/c
Salary Outstanding A/c - Liability A/c
Bank A/c - Asset A/c
If debts written off as bad are recovered subsequently it should be credited to Debtors account. Do you agree? Pass journal entry also
No, it should be credited to Bad debts recovered A/c
Cash A/ c
To Bad debts recovered A/c
............ Dr. ............
To .......
(Bought shares in Colgate Ltd for Rs.50,000 & brokerage paid @2%. All the payment is made by cheque)
Investment A/c Dr. 51,000
To bank A/c 51,000
Purchased goods list price of Rs. 80,000 @ 10% trade discount and 2% cash discount 25% of amount paid immediately. The amount posted to cash account will be:
a) Rs. 16,760 b) Rs.17,460
c) Rs. 17,260 d) Rs. 17,640
Rs. 17,640
Goods worth Rs.200,000 were destroyed by fire. Insurance claim admitted & paid claim for 60% amount. Pass the journal entry
Loss by fire A/c Dr. 2,00,000
To purchases A/c 2,00,000
Insurance co. A/c Dr. 2,00,000
To Loss by fire A/c 2,00,000
Bank A/c Dr. 1,20,000
Loss by fire A/c Dr. 80,000
To insurance Co. A/c 2,00,000
Paid Rs.9,000 to Soham in settlement of his account for Rs. 10,000
Soham A/c- Liability A/c
Discount received A/c - Revenue A/c
Cash A/c - Asset A/c
Proprietor of the firm has withdrawn goods for his personal use. The accountant has recorded it as sale in the books of accounts. Is he correct in doing so?
Pass journal entry also.
No , accountant is not correct. The goods taken by proprietor should be credited to purchase instead of sales account because the goods taken for personal use are recorded at cost and not on sale price
Drawings A/c
To purchases A/c
Cash A/c Dr. .............
................ Dr. 225
To ...............
(Goods sold for Rs. 5,000 subjected to 10% trade discount and ...... % cash discount)
Cash A/c Dr. 4,275
Discount allowed A/c Dr. 225
To sales A/c 4,500
Goods Costing Rs. 30,000 supplied to Mohan at a profit of 25% of sales price less trade discount @ 5% will be credited to sales A/c with:
a) Rs. 35,625
b) Rs.34,200
c) Rs. 38,000
d) Rs. 37,500
c) Rs. 38,000
Sold goods costing Rs.60,000 to Devraj against cheque at a profit of 40% on cost less 20% trade discount and paid carriage Rs.500 (Not to be charged from customer). Pass the journal entry
Bank A/c Dr. 67,200
carriage A/c Dr. 500
To Cash A/c 500
To sales A/c 67,200