Chapter 3 Recording of Transactions I Solutions

Question - 21 : - Rohit has the following transactions:

Rs

(a)

Commenced business with cash

1,50,000

(b)

Purchased machinery on credit

40,000

(c)

Purchased goods for cash

20,000

(d)

Purchased car for personal use

80,000

(e)

Paid to creditors in full settlement

38,000

(f)

Sold goods for cash costing Rs 5,000

4,500

(g)

Paid rent

1,000

(h)

Commission received in advance

2,000

Prepare the Accounting Equation to show the effect of the above transactions on the assets, liabilities and capital.

Answer - 21 : -

S.No.

Explanation

Assets

Liabilities

Capital

Cash

Machinery

Stock

Creditors

Unaccrued Income

(a)

Increase in cash

1,50,000

Increase in capital

1,50,000

NIL

1,50,000

(b)

Increase in machinery

40,000

Increase in creditors

40,000

1,50,000

40,000

1,50,000

(c)

Increase in stock

20,000

Decrease in cash

(20,000)

1,30,000

40,000

20,000

40,000

1,50,000

(d)

Decrease in cash

(80,000)

Decrease in capital (Drawings)

(80,000)

50,000

40,000

20,000

40,000

70,000

(e)

Decrease in creditors

(40,000)

Decrease in cash

(38,000)

Increase in capital

(Discount received)

2,000

12,000

40,000

20,000

NIL

72,000

(f)

Increase in cash

4,500

Decrease in stock

(5,000)

Decrease in capital (Loss)

(500)

16,500

40,000

15,000

NIL

71,500

(g)

Decrease in cash

(1,000)

Decrease in capital (Expense)

(1,000)

15,500

40,000

15,000

NIL

70,500

(h)

Increase in cash

2,000

Increase in unaccrued income

2,000

17,500

40,000

15,000

NIL

2,000

70,500

Question - 22 : -
Use accounting equation to show the effect of the following transactions of M/s Royal Traders:

(a)

Started business with cash

1,20,000

(b)

Purchased goods for cash

10,000

(c)

Rent received

5,000

(d)

Salary outstanding

2,000

(e)

Prepaid Insurance

1,000

(f)

Received interest

700

(g)

Sold goods for cash (costing Rs 5,000)

7,000

(h)

Goods destroyed by fire

500

Answer - 22 : -

S.No.	Explanation	Assets					=	Liabilities	+	Capital
S.No.	Explanation	Cash	+	Stock	+	Prepaid Expenses		Outstanding Expenses
(a)	Increase in cash	1,20,000
	Increase in capital									1,20,000
		1,20,000					=	NIL	+	1,20,000
(b)	Increase in stock			10,000
	Increase in cash	(10,000)					=
		1,10,000	+	10,000			=	NIL	+	1,20,000
(c)	Increase in cash	5,000
	Increase in capital (Profit)									5,000

		1,15,000	+	10,000			=	NIL	+	1,25,000
(d)	Increase in outstanding expenses						=	2,000
	Decrease in capital (Expense)									(2,000)
		1,15,000	+	10,000			=	2,000	+	1,23,000
(e)	Increase in prepaid expenses					1,000
	Decrease in cash	(1,000)
		1,14,000	+	10,000	+	1,000	=	2,000	+	1,23,000
(f)	Increase in cash	700
	Increase in capital (Profit)									700
		1,14,700	+	10,000	+	1,000	=	2,000	+	1,23,700
(g)	Increase in cash	7,000
	Decrease in stock			(5,000)
	Increase in capital (Profit)									2,000
		1,21,700	+	5,000	+	1,000	=	2,000	+	1,25,700
(h)	Decrease in stock			(500)
	Decrease in capital (Loss)						=			(500)
		1,21,700	+	4,500	+	1,000	=	2,000	+	1,25,200

Question - 23 : - Show the accounting equation on the basis of the following transaction:

(a)

Udit started business with:

Rs

(i)

Cash

5,00,000

(ii)

Goods

1,00,000

(b)

Purchased building for cash

2,00,000

(c)

Purchased goods from Himani

50,000

(d)

Sold goods to Ashu (Cost Rs 25,000)

36,000

(e)

Paid insurance premium

3,000

(f)

Rent outstanding

5,000

(g)

Depreciation on building

8,000

(h)

Cash withdrawn for personal use

20,000

(i)

Rent received in advance

5,000

(j)

Cash paid to Himani on account

20,000

(k)

Cash received from Ashu

30,000

Answer - 23 : -

S.No.	Explanation	Assets							=	Liabilities					+	Capital
S.No.	Explanation	Cash	+	Stock	+	Building	+	Debtors		Creditors	+	Outstanding Expenses	+	Unaccrued Income
(a)	Increase in cash	5,00,000
	Increase in stock			1,00,000
	Increase in capital															6,00,000
		5,00,000	+	1,00,000					=	NIL					+	6,00,000
(b)	Increase in building					2,00,000
	Decrease in cash	(2,00,000)							=
		3,00,000	+	1,00,000	+	2,00,000			=	NIL					+	6,00,000
(c)	Increase in stock			50,000
	Increase in creditors								=	50,000
		3,00,000	+	1,50,000	+	2,00,000			=	50,000					+	6,00,000
(d)	Increase in debtors							36,000
	Decrease in stock			(25,000)
	Increase in capital (Profit)															11,000
		3,00,000	+	1,25,000	+	2,00,000	+	36,000	=	50,000					+	6,11,000
(e)	Decrease in cash	(3,000)
	Decrease in capital (Expense)															(3,000)
		2,97,000	+	1,25,000	+	2,00,000	+	36,000	=	50,000	+				+	6,08,000
(f)	Decrease in capital (Expense)											5,000
	Increase in liabilities															(5,000)
		2,97,000	+	1,25,000	+	2,00,000	+	36,000	=	50,000	+	5,000			+	6,03,000
(g)	Decrease in building					(8,000)
	Decrease in capital															(8,000)
		2,97,000	+	1,25,000	+	1,92,000	+	36,000	=	50,000	+	5,000			+	5,95,000
(h)	Decrease in cash	(20,000)
	Decrease in capital															(20,000)
		2,97,000	+	1,25,000	+	1,92,000	+	36,000	=	50,000	+	5,000			+	5,75,000
(i)	Increase in cash	5,000
	Increase in liability													5,000
		2,82,000	+	1,25,000	+	1,92,000	+	36,000	=	50,000	+	5,000	+	5,000	+	5,75,000
(j)	Decrease in creditors									(20,000)
	Decrease in cash	(20,000)
		2,62,000	+	1,25,000	+	1,92,000	+	36,000	=	30,000	+	5,000	+	5,000	+	5,75,000
(k)	Increase in cash	30,000
	Decrease in debtors							(30,000)
		2,92,000	+	1,25,000	+	1,92,000	+	6,000	=	30,000	+	5,000	+	5,000	+	5,75,000

Question - 24 : - Show the effect of the following transactions on Assets, Liabilities and Capital through accounting equation:

(a)

Started business with cash

1,20,000

(b)

Rent received

10,000

(c)

Invested in shares

50,000

(d)

Received dividend

5,000

(e)

Purchase goods on credit from Ragani

35,000

(f)

Paid cash for house hold Expenses

7,000

(g)

Sold goods for cash (costing Rs 10,000)

14,000

(h)

(i)

Cash paid to Ragani

Deposited into bank

35,000

20,000

Answer - 24 : -

S.No.

Explanation

Assets

Liabilities

Capital

Cash

Stock

Investment

Bank

Creditors

(a)

Increase in cash

1,20,000

Increase in capital

1,20,000

NIL

1,20,000

(b)

Increase in cash

10,000

Increase in capital (Income)

10,000

1,30,000

NIL

1,30,000

(c)

Decrease in investment

50,000

Decrease in cash

(50,000)

80,000

50,000

NIL

1,30,000

(d)

Increase in cash

5,000

Increase in capital (Income)

5,000

85,000

50,000

NIL

1,35,000

(e)

Increase in stock

35,000

Increase in creditor (Ragani)

35,000

85,000

35,000

50,000

35,000

1,35,000

(f)

Decrease in capital

(7,000)

Decrease in cash

(7,000)

78,000

35,000

50,000

35,000

1,28,000

(g)

Increase in cash

14,000

Decrease in stock

(10,000)

Increase in capital (Profit)

4,000

92,000

25,000

50,000

35,000

1,32,000

(h)

Decrease in creditors (Ragani)

(35,000)

Decrease in cash

(35,000)

57,000

25,000

50,000

NIL

1,32,000

(i)

Decrease in cash

(20,000)

Increase in bank

20,000

37,000

25,000

50,000

20,000

NIL

1,32,000

Question - 25 : - Show the effect of following transaction on the accounting equation:

Rs

(a)

Manoj started business with

(i) Cash

₹2,30,000

(ii) Goods

₹1,00,000

(iii) Building

₹2,00,000

(b)

He purchased goods for cash

₹50,000

(c)

He sold goods(costing Rs 20,000)

₹35,000

(d)

He purchased goods from Rahul

₹55,000

(e)

He sold goods to Varun (Costing Rs 52,000)

₹60,000

(f)

He paid cash to Rahul in full settlement

₹53,000

(g)

Salary paid by him

₹20,000

(h)

Received cash from Varun in full settlement

₹59,000

(i)

Rent outstanding

₹3,000

(j)

Prepaid Insurance

₹2,000

(k)

Commission received by him

₹13,000

(l)

Amount withdrawn by him for personal use

₹20,000

(m)

Depreciation charge on building

₹10,000

(n)

Fresh capital invested

₹50,000

(o)

Purchased goods from Rakhi

₹10,000

Answer - 25 : -

S.No.

Explanation

Assets

Liabilities

Capital

Cash

Stock

Building

Debtors

Prepaid Expenses

Creditors

Outstanding Expenses

(a)

Increase in cash, stock and building

2,30,000

1,00,000

2,00,000

Increase in capital

5,30,000

2,30,000

1,00,000

2,00,000

5,30,000

(b)

Increase in stock

50,000

Decrease in cash

(50,000)

1,80,000

1,50,000

2,00,000

5,30,000

(c)

Increase in cash

35,000

Decrease in stock

(20,000)

increase in capital (Profit)

15,000

2,15,000

1,30,000

2,00,000

5,45,000

(d)

Increase in stock

55,000

Increase in creditors

55,000

2,15,000

1,85,000

2,00,000

55,000

5,45,000

(e)

Increase in debtors

60,000

Decrease in stock

(52,000)

Increase in capital (Profit)

8,000

2,15,000

1,33,000

2,00,000

60,000

55,000

5,53,000

(f)

Decrease in creditors

(55,000)

Decrease in cash

(53,000)

Increase in capital (Discount received)

2,000

1,62,000

1,33,000

2,00,000

60,000

NIL

5,55,000

(g)

Decrease in cash

(20,000)

Decrease in capital

(20,000)

1,42,000

1,33,000

2,00,000

60,000

NIL

5,35,000

(h)

Increase in cash

59,000

Decrease in capital (Discount allowed)

(1,000)

Decrease in debtors

60,000

2,01,000

1,33,000

2,00,000

NIL

5,34,000

(i)

Increase in outstanding Expenses

3,000

decrease in capital (Expense)

(3,000)

2,01,000

1,33,000

2,00,000

NIL

3,000

5,31,000

(j)

Decrease in prepaid expenses

2,000

Decrease in cash

(2,000)

1,99,000

1,33,000

2,00,000

NIL

2,000

NIL

3,000

5,31,000

(k)

Increase in cash

13,000

increase in capital (Income)

13,000

2,12,000

1,33,000

2,00,000

NIL

2,000

NIL

3,000

5,44,000

(l)

Decrease in capital

(20,000)

Decrease in cash

(20,000)

1,92,000

1,33,000

1,90,000

NIL

2,000

NIL

3,000

5,24,000

(m)

Decrease in capital

(10,000)

Decrease in building

(10,000)

1,92,000

1,33,000

1,90,000

NIL

2,000

NIL

3,000

5,14,000

(n)

Increase in cash

50,000

Increase in capital

50,000

2,42,000

1,33,000

1,90,000

NIL

2,000

NIL

3,000

5,64,000

(o)

Increase in stock

10,000

Increase in creditors

10,000

2,42,000

1,43,000

1,90,000

NIL

2,000

10,000

3,000

5,64,000

Question - 26 : -
Transactions of M/s. Vipin Traders are given below.
Show the effects on Assets, Liabilities and Capital with the help of accounting Equation.

Rs

(a)

Business started with cash

1,25,000

(b)

Purchased goods for cash

50,000

(c)

Purchase furniture from R.K. Furniture

10,000

(d)

Sold goods to Parul Traders (costing Rs 7,000 vide bill no. 5674)

9,000

(e)

Paid cartage

100

(f)

Cash Paid to R.K. furniture in full settlement

9,700

(g)

Cash sales (costing Rs 10,000)

12,000

(h)

Rent received

4,000

(i)

Cash withdrew for personal use

3,000

Answer - 26 : -

S.No.

Explanation

Assets

Liabilities

Capital

Cash

Stock

Furniture

Debtors

Creditors

(a)

Increase in cash

1,25,000

Increase in capital

1,25,000

NIL

1,25,000

(b)

Increase in stock

50,000

Decrease in cash

(50,000)

75,000

50,000

NIL

1,25,000

(c)

Increase in furniture

10,000

Increase in creditors

10,000

75,000

50,000

10,000

1,25,000

(d)

Increase in debtors

9,000

Decrease in stock

(7,000)

Increase in capital (Profit)

2,000

75,000

43,000

10,000

9,000

10,000

1,27,000

(e)

Decrease in capital (Cartage Expenses)

(100)

Decrease in cash

(100)

74,900

43,000

10,000

9,000

10,000

1,26,900

(f)

Decrease in creditors

(10,000)

Decrease in cash

(9,700)

Increase in capital (Discount-received)

300

65,200

43,000

10,000

9,000

NIL

1,27,200

(g)

Increase in cash

12,000

Decrease in stock

(10,000)

Increase in capital (Profit)

2,000

77,200

33,000

10,000

9,000

NIL

1,29,200

(h)

Increase in cash

4,000

Increase in capital (Income)

4,000

81,200

33,000

10,000

9,000

NIL

1,33,200

(i)

Decrease in capital

(3,000)

Decrease in cash

(3,000)

78,200

33,000

10,000

9,000

NIL

1,30,200

Question - 27 : -
Bobby opened a consulting firm and completed these transactions during November, 2005:
(a) Invested Rs 4,00,000 cash and office equipment with Rs 1,50,000 in a business called Bobbie Consulting.
(b) Purchased land and a small office building. The land was worth Rs 1,50,000 and the building worth Rs 3,50,000. The purchase price was paid with Rs 2,00,000 cash and a long term note payable for Rs 8,00,000.
(c) Purchased office supplies on credit for Rs 12,000.
(d) Bobbie transferred title of motor car to the business. The motor car was worth Rs 90,000.
(e) Purchased for Rs 30,000 additional office equipment on credit.
(f) Paid Rs 75,00 salary to the office manager.
(g) Provided services to a client and collected Rs 30,000
(h) Paid Rs 4,000 for the month’s utilities.
(i) Paid supplier created in transaction (c).
(j) Purchase new office equipment by paying Rs 93,000 cash and trading in old equipment with a recorded cost of Rs 7,000.
(k) Completed services of a client for Rs 26,000. This amount is to be paid within 30 days.
(l) Received Rs 19,000 payment from the client created in transaction (k).
(m) Bobby withdrew Rs 20,000 from the business.
Analyse the above stated transactions and open the following T-accounts:
Cash, client, office supplies, motor car, building, land, long term payables, capital, withdrawals, salary, expense and utilities expense.

Answer - 27 : -

Thetransaction (a) increases assets by Rs 5,50,000 (cash Rs 4,00,000 and officeequipment Rs 1,5,000) it will be debited and on the other hand it will increasethe capital by Rs 5,50,000, so it will be credited in capital account.

Cash Account

Office Equipment Account

Capital Account

Dr.

Cr.

Dr.

Cr.

(a)

Rs 4,00,000

(a)

Rs 1,50,000

(a)

Rs 4,00,000

(a)

Rs 1,50,000

Purchaseof land and small office building are assets. On one hand, the purchase ofthese items will increase their individual accounts and this will increase thetotal amount of the assets in the business; so, both the accounts will bedebited. On the other hand, payment in cash on the purchase of these assetswill decrease the cash balance, so cash account will be credited to the extentof amount paid. After payment for building in cash, the balance of buildingaccount will be transferred to creditors for building account. This willincrease the amount of the creditors, which in turn will increase the totalliabilities of the business. Long term payables are regarded as loan to thebusiness that will increase both cash balance (due to intake of loan) as wellas liabilities of the business.

Land Account		Building Account
Dr.	Cr.	Dr.	Cr.
(b)	Rs 1,50,000	(b)	Rs 3,50,000

Cash Account				Long Term Payable Account
Dr.	Cr.			Dr.	Cr.
(a)	Rs 4,00,000	(b)	Rs 1,50,000			(b)	Rs 3,00,000
(b)	Rs 3,00,000	(b)	Rs 50,000

Creditors for Building Account
Dr.		Cr.
	(b)	Rs 3,00,000

Here‘office supplies’ is an expense. So, according to the golden rule, ‘Allexpenses are debited’, it will be debited on one hand while on the other hand,office supplies has been purchased on credit, so it will increase theliability, on account of which, supplier’s account will be credited.

Office Supplies Account			Supplier's Account (Creditors)
Dr.		Cr.	Dr.		Cr.
(c)	Rs 12,000			(c)	Rs 12,000

Amountinvested (motor car) by the proprietor in the business would increase both thecapital and assets.

Motor Car Account			Capital Account
Dr.		Cr.	Dr.		Cr.
(d)	Rs 90,000			(a)	Rs 4,00,000
				(a)	Rs 1,50,000
				(d)	Rs 90,000

Purchaseof additional equipment increases the assets; hence, offices equipment accountwill be debited.

Furtheras the office equipment was purchased on credit, it increases the amount of thecreditors for office equipment and the creditors account will be credited.

Office Equipment Account			Creditors for Office Equipment Account
Dr.		Cr.	Dr.		Cr.
(a)	Rs 1,50,000			(e)	Rs 30,000
(e)	Rs 30,000

Salaryis an expense and as all the expenses are debited, so the payment of salary tothe manager will be debited to the salary account. And on the other hand thepayment of the salary in cash decreases the cash balance (Assets) so the cashaccount would be credited (as decrease in assets is credited).

Salary Account			Cash Account
Dr.		Cr.	Dr.			Cr.
(f)	Rs 7,500		(a)	Rs 4,00,000	(b)	Rs 1,50,000
			(b)	Rs 8,00,000	(b)	Rs 50,000
					(f)	Rs 7,500

Amountreceived or receivable from services rendered to the client is revenue for thebusiness. All revenues are to be credited so client service account will becredited.

Onthe other hand, cash received in exchange of services would increase the cashbalance. It would be debited to the cash account.

Client Services Account (Revenue)			Cash Account
Dr.		Cr.	Dr.			Cr.
	(g)	Rs 30,000	(a)	Rs 4,00,000	(b)	Rs 1,50,000
			(b)	Rs 8,00,000	(b)	Rs 50,000
			(g)	Rs 30,000	(f)	Rs 7,500

The‘utilities’ has been treated as a revenue expense. All expenses are to bedebited. Amount paid for utilities would be debited to Utilities account.

Utilitieshave been paid in cash so the cash account will be credited (as this decreasesassets).

Utilities Account			Cash Account
Dr.		Cr.	Dr.			Cr.
(h)	Rs 4,000		(a)	Rs 4,00,000	(b)	Rs 1,50,000
			(b)	Rs 8,00,000	(b)	Rs 50,000
			(g)	Rs 30,000	(f)	Rs 7,500
					(h)	Rs 4,000

Paymentto the supplier (creditors) will be debited. It results in the decrease inliabilities. Further as the payment has been made in cash, so it results indecrease in the cash balance (assets) and hence the cash account will becredited.

Supplier's Account (Creditors)				Cash Account
Dr.			Cr.	Dr.			Cr.
(h)	Rs 12,000	(c)	Rs 12,000	(a)	Rs 4,00,000	(b)	Rs 1,50,000
				(b)	Rs 8,00,000	(b)	Rs 50,000
				(g)	Rs 30,000	(f)	Rs 7,500
						(h)	Rs 4,000
						(i)	Rs 12,000

Purchaseof the equipments will be debited in the Equipment Account (as there isincrease in the assets). Also as the equipments of worth Rs 1,00,000 andRs 93,000 have been purchased for cash and old equipments of worth Rs 7,000have been exchanged so the purchase of the equipments will be debited in theOffice Equipment account and equipment of Rs 7,000 will be credited in the sameaccount.

Office Equipment Account				Cash Account
Dr.			Cr.	Dr.			Cr.
(a)	Rs 1,50,000	(j)	Rs 7,000	(a)	Rs 4,00,000	(b)	Rs 1,50,000
(e)	Rs 30,000			(b)	Rs 8,00,000	(b)	Rs 50,000
(j)	Rs 1,00,000			(g)	Rs 30,000	(f)	Rs 7,500
						(h)	Rs 4,000
						(i)	Rs 12,000
						(j)	Rs 93,000

Receiptfrom ‘Client services’ is revenue. All revenues are credited. The clientservices account will be credited and client is considered as debtors, so theclient account will be debited.

Client Services Account (Revenue)			Client’s Account (Debtor)
Dr.		Cr.	Dr.		Cr.
	(g)	Rs 30,000	(k)	Rs 26,000
	(k)	Rs 26,000

Theclient has been considered as Debtors. The amount received from the client willlead to the decrease in the debtors balance and the client account will becredited. Receipts from the client will increase the cash balance (asset), andhence the cash account will be debited.

Client’s Account (Debtors)				Cash Account
Dr.			Cr.	Dr.			Cr.
(k)	Rs 26,000	(l)	Rs 19,000	(a)	Rs 4,00,000	(b)	Rs 1,50,000
				(b)	Rs 8,00,000	(b)	Rs 50,000
				(g)	Rs 30,000	(f)	Rs 7,500
				(l)	Rs 19,000	(h)	Rs 4,000
						(i)	Rs 12,000
						(j)	Rs 93,000

Theamount withdrawn by the proprietor is considered as ‘drawings’. According tothe Business Entity Concept, drawings decrease the owner’s capital,) Thus thedrawings account will be debited (as decrease in capital is debited). On theother hand as drawings have been made in cash, decrease in cash means cashaccount will be credited with the amount of drawings.

Drawings Account			Cash Account
Dr.		Cr.	Dr.			Cr.
(m)	Rs 20,000		(a)	Rs 4,00,000	(b)	Rs 1,50,000
			(b)	Rs 8,00,000	(b)	Rs 50,000
			(g)	Rs 30,000	(f)	Rs 7,500
			(l)	Rs 19,000	(h)	Rs 4,000
					(i)	Rs 12,000
					(j)	Rs 93,000
					(m)	Rs 20,000

T – Accounts

Capital Account
Dr.							Cr.
S. No.	Particulars	J.F.	Amount Rs	S. No.	Particulars	J.F.	Amount Rs
				(a)	Cash		4,00,000
				(a)	Office Equipment		1,50,000
				(d)	Motor Car		90,000

Office Equipment Account
Dr.							Cr.
S. No.	Particulars	J.F.	Amount Rs	S. No.	Particulars	J.F.	Amount Rs
(a)	Capital		1,50,000
(e)	Creditors for office equipment		30,000
(j)	Cash (1,00,000 – 7,000)		93,000

Cash Account
Dr.							Cr.
S. No.	Particulars	J.F.	Amount Rs	S. No.	Particulars	J.F.	Amount Rs
(a)	Capital		4,00,000	(b)	Land		1,50,000
(b)	Long term payable		3,00,000	(b)	Building		50,000
(g)	Client Services		30,000	(f)	Salaries		7,500
(i)	Client		19,000	(h)	Utilities		4,000
				(i)	Suppliers		12,000
				(j)	Office Equipment		93,000
				(m)	Drawings		20,000

Land Account
Dr.							Cr.
S. No.	Particulars	J.F.	Amount Rs	S. No.	Particulars	J.F.	Amount Rs
(b)	Cash		1,50,000

Building Account
Dr.							Cr.
S. No.	Particulars	J.F.	Amount Rs	S. No.	Particulars	J.F.	Amount Rs
(b)	Cash		50,000
(b)	Creditors for Building		3,00,000

Office Supplies Account (Expenses)
Dr.							Cr.
S. No.	Particulars	J.F.	Amount Rs	S. No.	Particulars	J.F.	Amount Rs
(c)	Supplier		12,000

Motor Car Account
Dr.							Cr.
S. No.	Particulars	J.F.	Amount Rs	S. No.	Particulars	J.F.	Amount Rs
(d)	Capital		90,000

Supplier's Account (Creditors)
Dr.							Cr.
S. No.	Particulars	J.F.	Amount Rs	S. No.	Particulars	J.F.	Amount Rs
(i)	Cash		12,000	(c)	Office Supplies		12,000

Creditors for Office Equipment
Dr.							Cr.
S. No.	Particulars	J.F.	Amount Rs	S. No.	Particulars	J.F.	Amount Rs
				(e)	Office equipment		30,000

Salaries Account
Dr.							Cr.
S. No.	Particulars	J.F.	Amount Rs	S. No.	Particulars	J.F.	Amount Rs
(f)	Cash		7,500

Client Services Account
Dr.											Cr.
S. No.	Particulars		J.F.		Amount Rs		S. No.	Particulars	J.F.		Amount Rs
							(g)	Cash			30,000
							(k)	Client			26,000

Utilities Account (Expenses)
Dr.										Cr.
S. No.		Particulars		J.F.		Amount Rs	S. No.	Particulars	J.F.	Amount Rs
(h)		Cash				4,000

Client Accounts (Debtors)
Dr.							Cr.
S. No.	Particulars	J.F.	Amount Rs	S. No.	Particulars	J.F.	Amount Rs
(k)	Client Services		26,000	(l)	Cash		19,000

Drawings Account
Dr.							Cr.
S. No.	Particulars	J.F.	Amount Rs	S. No.	Particulars	J.F.	Amount Rs
(m)	Cash		20,000

Long Term Payable Account
Dr.							Cr.
S. No.	Particulars	J.F.	Amount Rs	S. No.	Particulars	J.F.	Amount Rs
				(b)	Cash		3,00,000

Creditors for Building Account
Dr.							Cr.
S. No.	Particulars	J.F.	Amount Rs	S. No.	Particulars	J.F.	Amount Rs
				(b)	Building		3,00,000

Question - 28 : - Journalise the following transactions in the books of Himanshu:

2017

Rs

Dec.01

Business started with cash

75,000

Dec.07

Purchased goods for cash

10,000

Dec.09

Sold goods to Swati

5,000

Dec.12

Purchased furniture

3,000

Dec.18

Cash received from Swati in full settlement

4,000

Dec.25

Paid rent

1,000

Dec.30

Paid salary

1,500

Answer - 28 : -

Books of Himanshu Journal
Date	Particulars			L.F.	Debit Amount Rs	Credit Amount Rs
2017
Dec.01	Cash A/c		Dr.		75,000
		To Capital A/c				75,000
	(Started business with cash)

Dec.07	Purchases A/c		Dr.		10,000
		To Cash A/c				10,000
	(Goods purchased for cash)

Dec.09	Swati		Dr.		5,000
		To Sales A/c				5,000
	(Goods sold on credit)

Dec.12	Furniture A/c		Dr.		3,000
		To Cash A/c				3,000
	(Furniture purchased for cash)

Dec.18	Cash A/c		Dr.		4,000
	Discount Allowed A/c		Dr.		1,000
		To Swati				5,000
	(Cash received from Swati and discount allowed)

Dec.25	Rent A/c		Dr.		1,000
		To Cash A/c				1,000
	(Rent paid in cash)

Dec.30	Salaries A/c		Dr.		1,500
		To Cash A/c				1,500
	(Salary paid in cash)
		Total			1,00,500	1,00,500

Question - 29 : - Enter the following Transactions in the Journal of Mudit :

2017

Rs

Jan.01

Commenced business with cash

1,75,000

Jan.01

Building

1,00,000

Jan.02

Goods purchased for cash

75,000

Jan.03

Sold goods to Ramesh

30,000

Jan.04

Paid wages

500

Jan.06

Sold goods for cash

10,000

Jan.10

Paid for trade expenses

700

Jan.12

Cash received from Ramesh

29,500

Discount allowed

500

Jan.14

Goods purchased for Sudhir

27,000

Jan.18

Cartage paid

1,000

Jan.20

Drew cash for personal use

5,000

Jan.22

Goods use for house hold

2,000

Jan.25

Cash paid to Sudhir

26,700

Discount allowed

300

Answer - 29 : -

	Books of Mudit Journal
Date	Particulars				L.F.	Debit Amount Rs	Credit Amount Rs
2017
Jan.01	Building A/c			Dr.		1,00,000
	Cash A/c			Dr.		1,75,000
		To Capital A/c					2,75,000
	(Commenced business with cash and building)

Jan.02	Purchases A/c			Dr.		75,000
		To Cash A/c					75,000
	(Goods purchased for cash)

Jan.03	Ramesh			Dr.		30,000
		To Sales A/c					30,000
	(Goods sold to Ramesh)

Jan.04	Wages A/c			Dr.		500
		To Cash A/c					500
	(Wages paid in cash)

Jan.06	Cash A/c			Dr.		10,000
		To Sales A/c					10,000
	(Goods sold for cash)

Jan.10	Trade Expenses A/c			Dr.		700
		To Cash A/c					700
	(Trade expenses paid in cash)

Jan.12	Cash A/c			Dr.		29,500
	Discount Allowed A/c			Dr.		500
		To Ramesh					30,000
	(Cash received from Ramesh and discount allowed to him)

Jan.14	Purchases A/c			Dr.		27,000
		To Sudhir					27,000
	(Goods purchased from Sudhir on credit)

Jan.18	Cartage A/c			Dr.		1,000
		To Cash A/c					1,000
	(Cartage paid in cash)

Jan.20	Drawings A/c			Dr.		5,000
		To Cash A/c					5,000
	(Cash drawn for personal use)

Jan.22	Drawings A/c			Dr.		2,000
		To Purchases A/c					2,000
	(Goods drawn from business for households use)

Jan.25	Sudhir			Dr.		27,000
		To Cash A/c					26,700
		To Discount Received A/c					300
	(Cash paid to Sudhir and discount received)
			Total			4,83,200	4,83,200

Question - 30 : - Journalise the following transactions:

2017

Rs

Dec. 01

Hema started business with cash

1,00,000

Dec. 02

Open a bank account with SBI

30,000

Dec. 04

Purchased goods from Ashu

20,000

Dec.06

Sold goods to Rahul for cash

15,000

Dec.10

Bought goods from Tara for cash

40,000

Dec.13

Sold goods to Suman

20,000

Dec.16

Received cheque from Suman

19,500

Discount allowed

500

Dec.20

Cheque given to Ashu on account

10,000

Dec.22

Rent paid by cheque

2,000

Dec.23

Deposited into bank

16,000

Dec.25

Machine purchased from Parigya

10,000

Dec.26

Trade expenses

2,000

Dec.28

Cheque issued to Parigya

10,000

Dec.29

Paid telephone expenses by cheque

1,200

Dec.31

Paid salary

4,500

Answer - 30 : -

	Books of Hema
	Journal
Date	Particulars			L.F.	Debit Amount Rs	Credit Amount Rs
2017
Dec.01	Cash A/c		Dr.		1,00,000
		To Capital A/c				1,00,000
	(Started business with cash)

Dec.02	Bank A/c		Dr.		30,000
		To Cash A/c				30,000
	(Bank account opened with SBI)

Dec.04	Purchases A/c		Dr.		20,000
		To Ashu				20,000
	(Goods purchased from Ashu)

Dec.06	Cash A/c		Dr.		15,000
		To Sales A/c				15,000
	(Goods sold for cash)

Dec.10	Purchases A/c		Dr.		40,000
		To Cash A/c				40,000
	(Goods purchased for cash)

Dec.13	Suman		Dr.		20,000
		To Sales A/c				20,000
	(Goods goods to Suman)

Dec.16	Bank A/c		Dr.		19,500
	Discount Allowed A/c		Dr.		500
		To Suman				20,000
	(Cheque received from Suman and discount allowed)

Dec.20	Ashu		Dr.		10,000
		To Bank A/c				10,000
	(Cheque forwarded to Ashu)

Dec.22	Rent A/c		Dr.		2,000
		To Bank A/c				2,000
	(Rent paid by cheque)

Dec.23	Bank A/c		Dr.		16,000
		To Cash A/c				16,000
	(Cash deposited into bank)

Dec.25	Machinery A/c		Dr.		10,000
		To Parigya				10,000
	(Machinery purchased from Parigya)

Dec.26	Trade Expenses A/c		Dr.		2,000
		To Cash A/c				2,000
	(Trade expenses paid)

Dec.28	Parigya		Dr.		10,000
		To Bank A/c				10,000
	(Cheque issued to Parigya)

Dec.29	Telephone Expenses A/c		Dr.		1,200
		To Bank A/c				1,200
	(Telephone expenses paid through cheque)

Dec.30	Salaries A/c		Dr.		4,500
		To Cash A/c				4,500
	(Salary paid)
		Total			3,00,700	3,00,700

Free - Previous Years Question Papers

		Rs
(a)	Commenced business with cash	1,50,000
(b)	Purchased machinery on credit	40,000
(c)	Purchased goods for cash	20,000
(d)	Purchased car for personal use	80,000
(e)	Paid to creditors in full settlement	38,000
(f)	Sold goods for cash costing Rs 5,000	4,500
(g)	Paid rent	1,000
(h)	Commission received in advance	2,000

(a)	Started business with cash	1,20,000
(b)	Purchased goods for cash	10,000
(c)	Rent received	5,000
(d)	Salary outstanding	2,000
(e)	Prepaid Insurance	1,000
(f)	Received interest	700
(g)	Sold goods for cash (costing Rs 5,000)	7,000
(h)	Goods destroyed by fire	500

(a)	Udit started business with:		Rs
	(i)	Cash	5,00,000
	(ii)	Goods	1,00,000
(b)	Purchased building for cash		2,00,000
(c)	Purchased goods from Himani		50,000
(d)	Sold goods to Ashu (Cost Rs 25,000)		36,000
(e)	Paid insurance premium		3,000
(f)	Rent outstanding		5,000
(g)	Depreciation on building		8,000
(h)	Cash withdrawn for personal use		20,000
(i)	Rent received in advance		5,000
(j)	Cash paid to Himani on account		20,000
(k)	Cash received from Ashu		30,000

		Rs
(a)	Manoj started business with
	(i) Cash	₹2,30,000
	(ii) Goods	₹1,00,000
	(iii) Building	₹2,00,000
(b)	He purchased goods for cash	₹50,000
(c)	He sold goods(costing Rs 20,000)	₹35,000
(d)	He purchased goods from Rahul	₹55,000
(e)	He sold goods to Varun (Costing Rs 52,000)	₹60,000
(f)	He paid cash to Rahul in full settlement	₹53,000
(g)	Salary paid by him	₹20,000
(h)	Received cash from Varun in full settlement	₹59,000
(i)	Rent outstanding	₹3,000
(j)	Prepaid Insurance	₹2,000
(k)	Commission received by him	₹13,000
(l)	Amount withdrawn by him for personal use	₹20,000
(m)	Depreciation charge on building	₹10,000
(n)	Fresh capital invested	₹50,000
(o)	Purchased goods from Rakhi	₹10,000

		Rs
(a)	Business started with cash	1,25,000
(b)	Purchased goods for cash	50,000
(c)	Purchase furniture from R.K. Furniture	10,000
(d)	Sold goods to Parul Traders (costing Rs 7,000 vide bill no. 5674)	9,000
(e)	Paid cartage	100
(f)	Cash Paid to R.K. furniture in full settlement	9,700
(g)	Cash sales (costing Rs 10,000)	12,000
(h)	Rent received	4,000
(i)	Cash withdrew for personal use	3,000

2017		Rs
Dec. 01	Hema started business with cash	1,00,000
Dec. 02	Open a bank account with SBI	30,000
Dec. 04	Purchased goods from Ashu	20,000
Dec.06	Sold goods to Rahul for cash	15,000
Dec.10	Bought goods from Tara for cash	40,000
Dec.13	Sold goods to Suman	20,000
Dec.16	Received cheque from Suman	19,500
	Discount allowed	500
Dec.20	Cheque given to Ashu on account	10,000
Dec.22	Rent paid by cheque	2,000
Dec.23	Deposited into bank	16,000
Dec.25	Machine purchased from Parigya	10,000
Dec.26	Trade expenses	2,000
Dec.28	Cheque issued to Parigya	10,000
Dec.29	Paid telephone expenses by cheque	1,200
Dec.31	Paid salary	4,500

Chapter 3 Recording of Transactions I Solutions

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