Double Entry

System 3

DR CR
 Objectives
At the end of the lesson, students should be able to :

• know what are Purchases, Sales, Returns

Inwards and Returns Outwards.

• know what are Expense and Revenue items.

• know how to record them into Journals and

post to the Ledger Accounts.
Expenses and Revenues
Purchases:
Purchase of goods for resale purpose.
(Cost price)  expense for the firm

Sales:
Sale of goods to customers.
(Selling price)  revenue for firm
Expenses: Money that the firm spent in
the process of operating the business to
earn revenue.
Examples:

Rent Insurance Wages Advertising Transport

Revenues: Items that generate profits

and income for the firm.
Examples:

Rent Revenue Interest Revenue Commission

 EXPENSES

DEBIT CREDIT

REVENUES

DEBIT CREDIT
 SO HOW DO YOU
RECORD EXPENSES
AND REVENUES?
a) John purchased goods at $6000 on
credit
from ABC Ltd on 26 November
2000. Double Entry

Date Particulars Debit Credit

2000 $ $

Nov 26 Purchases 6000

Creditors-ABC 6000

Purchases worth $6000 from ABC

Ltd.
b) John sold goods at $9000 on credit

to PCK Ltd on 8 July 2000.

Double Entry

Date Particulars Debit Credit

2000 $ $

July 8 Debtors-PCK 9000

Sales 9000

Sales worth $9000 to PCK Ltd.

c) The firm incurred the following
expenses:
19 March - Rent $2000
8 May - Double
Wages Entry
$10,000

Date Particulars Debit Credit

2000 $ $
Mar 19 Rent expense 2000

Cash 2000
Record rent expense of $2,000.
May 8 Wage expense 10,000

Cash 10,000
Record wages of $10,000.
d) The firm received the following
revenues:
27 March - Rent $3000
19 June - Double
Interest
Entry
$500

Date Particulars Debit Credit

2000 $ $
Mar 27 Cash 3000

Rent revenue 3000

Record rent revenue of $3,000.
June 19 Cash 500

Interest revenue 500

Record interest revenue of $500.
e) The firm returned some damaged
goods to supplier (ABC) worth $2000
on 10 July.
Double Entry

Date Particulars Debit Credit

2000 $ $

July 10 Creditors-ABC 2000

Returns Outwards 2000

Record returns outwards of $2,000.
f) A customer, XYZ returned some
damaged goods to the firm worth
$1500 on 8 August.
Double Entry

Date Particulars Debit Credit

2000 $ $

Aug 8 Returns Inwards 1500

Debtors-XYZ 1500
Record returns inwards of $1,500.
It is common for the owner to draw money or
goods from the firm for personal use anytime.
According to the Accounting Entity concept,
we must record the event even though he is
the owner of the firm.

What do you
call this?
Click me!
It is common for the owner to draw money or
goods from the firm for personal use anytime.
According to the Accounting Entity concept,
we must record the event even though he is
the owner of the firm.

DRAWINGS
Whataboutdrawingsof

goods?
g) The owner withdrew goods worth
$2000 for
his personal use on 10 April 2000.
General Journal

Date Particulars Debit Credit

2000 $ $

April 10 Drawings 2000

Purchases 2000

To record drawings of goods worth

$2000.