Journalising 130831021137

Journalizing
Sarat Kumar Budumuru, Consutant

BD, SynchroServe Goba Soutons,
Vzag,
saratkumar.budumuru@gma.com
Points to be Noted Before Journalising:

Nomna Accounts:-
Debt a Expenses
Credt a gans
Persona Accounts:-
Debt the recever
Credt the gver
Rea Accounts:-
Debt what comes n
Credt what goes out
Date Particulars L.
F
Dr.
Amount
Cr.
Amount
|une 1
st

2011
Cash Account
Dr.
To Capta Account
(Beng cash brought
nto start busness)
45000
45000
Capital Account.
If the propretor has
ntroduced cash or
goods or property n
busness, t s known
as capta. It shoud
be debted to
Cash/Stock of
Goods/Property
Account and credted
to the Propretors
Capta Account. It
must be ceary
understood that the
entty of the
propretor s totay
dherent from the
busness
|une 1, 2011 Started busness wth
cash Rs. 45000
Accordng to Rea Account rues cash
s beng provded by the owner so
cash comes nto the busness so we
debited Cash account
Accordng to Persona Account rues
Capta account represents Owner so
we credited the gier
Vzag,
Nomna Accounts:-
Debt a Expenses
Credt a gans
Persona Accounts:-
Debt the recever
Credt the gver
Rea Accounts:-
Debt what comes n
Credt what goes out
Date Particulars L.
F
Dr.
Amount
Cr.
Amount
|une
2nd201
1
Drawngs Account
Dr.
To Bank Account
(Beng Cash wthdrawn
from bank persona
use.)
1000
1000
Dra!ings Account
It shoud be debted
to Drawngs Account
and credted to the
Cash/Purchases
Account.
|une2, 2011 Wthdrew from bank for
prvate use Rs. 1000
Accordng to Nomna Account rues
cash wthdrew by owner s expense
to the busness so we debited
dra!ings
bank s a person and here t s gvng
money so we credited the gier
Vzag,
Nomna Accounts:-
Debt a Expenses
Credt a gans
Persona Accounts:-
Debt the recever
Credt the gver
Rea Accounts:-
Debt what comes n
Credt what goes out
Cash"Credit
#ransactions.
When goods are sod
or purchased for
cash, t s known as a
cash transacton. If
the goods are
purchased or sod on
credt t w be a
credt transacton.
$f nothing is
mentioned
!hether it is
credit or cash
transaction then it
should be treated
as a credit
transaction.
If t s saes It shoud
be debted to Cash
Account and credted
to the Saes Account.
If t s purchases It
shoud be debted to
Purchases Account
and credted to
Cash/Persons
Account.
Date Particulars L.
F
Dr.
Amount
Cr.
Amount
|une 3
rd

2011
Cash Account
Dr.
To Saes Account
(Beng goods sod for
cash.)
8500
8500
|une 3
rd

2011
Purchases Account
Dr.
To Amrt a
Account
(Beng goods
purchased from Amrt
a)
7000
7000
|une3, 2011 Sod goods for cash Rs.
8500
|une 3, 2011 Goods purchased from
Amrt a Rs. 7000 Case-I: Accordng to Rea Account rues cash comes
nto busness by seng goods so we debited cash
account
Accordng to Rea Account rues goods s gong out n
the form of saes so we credited the %ales
account.
Case-II: Accordng to Rea Account rues goods s
comng nto busness so we debited the Purchases
account
Accordng to Persona Account rues Amrt a s
gvng goods so we credited the &ier 'Amrit lal
account(
Vzag,
Nomna Accounts:-
Debt a Expenses
Credt a gans
Persona Accounts:-
Debt the recever
Credt the gver
Rea Accounts:-
Debt what comes n
Credt what goes out
). Casts and Carr* For!ards. When |ourna entres
extend to severa pages of the |ourna, the totas are cast
(done) at the end of each page. At the end of each page
the words Tota C/f (C/f stand of carred forward) are
wrtten n the partcuars coumn aganst the debt and
credt and credt totas. On the next page, n the
begnnng the words, Tota b/f (B/f stands for brought
forward) are wrtten n the partcuars coumn aganst the
debt and credt totas. At the end of a speced perod or
on the ast age, the grand tota s cast.
Vzag,
Nomna Accounts:-
Debt a Expenses
Credt a gans
Persona Accounts:-
Debt the recever
Credt the gver
Rea Accounts:-
Debt what comes n
Credt what goes out
+. &oods gien
A!a* as Charit*.
$f some goods
from the business
are gien a!a* as
charit* to a
particular person
or institution, it
shoud be debted to
Charty account and
credted to
Purchases Account.
Date Particulars L.
F
Dr.
Amount
Cr.
Amount
|une 4
th

2011
Charty Account
Dr.
To purchases
Account
(Beng goods donated
to chartabe trust.)
10000
10000
charty s recevng goods from
busness so we debited charit*
account
Accordng to Rea Account rues
goods are gong out from busness so
we credited Purchases account.
|une 4, 2011 Donated goods of Rs.
10000 to Amma chartabe trust
Vzag,
Nomna Accounts:-
Debt a Expenses
Credt a gans
Persona Accounts:-
Debt the recever
Credt the gver
Rea Accounts:-
Debt what comes n
Credt what goes out
-. Compound
Journal .ntr*. If
there are two are
more transactons of
a smar nature
occurrng on the
same day and ether
Dr. or Cr. Account s
common, such
transactons can be
convenenty
recorded n the form
of one |ourna entry
nstead of makng a
separate entry for
each transacton.
Such entry s known
as compound
Journal .ntr*
Date Particulars L.
F
Dr.
Amount
Cr.
Amount
|une 5
th

2011
Drawngs Account
Dr.
Cash Account
Dr.
To Bank Account
(Beng cash wthdrawn
from bank for persona
use and for use n the
busness.)
1000
5000
6000
|une 5
th
, 2011 Wthdrew from bank for
prvate use 1000
Wthdrew from bank for use n the
busness 5000
Case-I:Accordng to Nomna Account rues cash
wthdrew by owner s expense to the busness so we
debited dra!ings
Case-II:Accordng to Rea Account rues cash s beng
provded by the owner that means cash comes nto
busness so we debted the Cash Account
Accordng to Persona Account rues bank s a person
and here t s gvng money so we credited the gier
Vzag,
Nomna Accounts:-
Debt a Expenses
Credt a gans
Persona Accounts:-
Debt the recever
Credt the gver
Rea Accounts:-
Debt what comes n
Credt what goes out
-. /pening .ntr*.
The baances of the
prevous year are
brought forward n
the begnnng of the
year by means of an
entry n a gong
concern. Such entry
s made on the bass
o f accountng
equaton .e. by
deductng a assets
and credtng
abtes and capta
account.
Date Particulars L.
F
Dr.
Amount
Cr.
Amount
2010
Apr 1
Furnture Account
Dr.
Machnery Account
Dr.
Debtors Account
Dr.
Bs Recevabe
Account Dr.
Cash Account
Dr.
To Bank Account
To Bs payabe
To Credtors
Account
(Beng openng entry.)
4000
18000
12000
9000
2000
30000
5000
10000
Foowng baances appeared n the books of Patnayak on 31
st
March,
2010. Pass the necessary openng entry for 2010-11:
Credit Balances: Capta Rs. 30,000; Bs Payabe Rs.5,000; Credtors
Rs. 10,000.
Debit Balances: Furnture Rs.4000; Machnery Rs. 18,000; Debtors Rs.
12,000; B/R Rs.9,000; Cash Rs. 2,000.
Vzag,
Nomna Accounts:-
Debt a Expenses
Credt a gans
Persona Accounts:-
Debt the recever
Credt the gver
Rea Accounts:-
Debt what comes n
Credt what goes out
-. Cash Discount.
Ths dscount s
aowed by a debtor
when the atter pays
the amount of goods
purchased by hm
ether mmedatey
or wthn a speced
perod. It s an
ncentve gven to a
debtor for makng an
eary payment. Thus
f the seer aows
2% dscount for
payment wthn a
month. On a b of
Rs.20000 the
customer woud pay
Rs. 19000 f the
payment s made n
the books of
accounts and a
separate account s
opened n the b.
Ths dscount s
recorded n books of
accounts and a
separate account s
mantaned n the
edger.
Date Particulars L.
F
Dr.
Amount
Cr.
Amount
|une 6
th

2011
Cash Account
Dr.
Dscount Account
Dr.
To Maheshs
Account
(For cash receved and
dscount aowed.)
1900
100
2000
|une 6
th

2011
Suresh Account
Dr.
To Cash Account
To Dscount
Account
(Cash pad and
dscount receved)
20000
19600
400
() |une 6
th
2011 Cash receved from Mahesh
Rs.1900 and aowed dscount Rs.100
() Pad to Suresh Rs. 2000 ess 2% cash
dscount
Case-1: Accordng to Rea Account rues cash comes nto
busness by recevng form Mahesh so we debited cash
account & Accordng to Nomna Account aowed dscount
means ts oss to company so we debted Discount
Account.
Accordng to Persona Account rues Mahesh s gier so
we credited the gier '0ahesh1s Account(
Vzag,
Case-II: Accordng to Persona Account rues
Suresh s beng pad by busness so we
debted %uresh Account
Accordng to Persona Account rues busness
s gvng money to Suresh so, we credted
Cash Account
and
Suresh aowed us to pay ony Rs. 19600
nstead of payng 20000 by aowng dscount
to us that means t s gan for Busness so we
credted Dscount account.
Nomna Accounts:-
Debt a Expenses
Credt a gans
Persona Accounts:-
Debt the recever
Credt the gver
Rea Accounts:-
Debt what comes n
Credt what goes out
Vzag,
Nomna Accounts:-
Debt a Expenses
Credt a gans
Persona Accounts:-
Debt the recever
Credt the gver
Rea Accounts:-
Debt what comes n
Credt what goes out
2. #rade Dicscount. It s a dscount on the gross vaue or st prce of
goods aowed by the manufacturer to the whoesaer or a whoesaer
to a retaer n order to enabe them to se the goods further at st
prce to the consumer and yet earn a prot.
Suppose, a manufacturer produced an artce for Rs. 40 may x Rs. 100
as st prce and aows 35% dscount to the whoesaer. The whoesaer
w thus get t at Rs. 65 and may se to the retaer at 20% trade
dscount. The retaer woud thus get t for Rs. 15 and the retaer Rs.
20.
The |ourna entry w be passed wth the net vaue of goods.
E.g.,
|une 6th, 2011 bought goods worth Rs. 6000 from Ram ess 20%
trade dscount
Date Particulars L.
F
Dr.
Amount
Cr.
Amount
|une
7th
2011
Purchases Account
Dr.
To Rams Account
(For goods purchased
from Ram.)
4800
4800
Vzag,
Some tmes the purchaser may get the benet of both dscounts. In
such case, rsty trade dscount s cacuated on the gross vaue of
goods sod and then cash dscount s cacuated on the net vaue of
goods (.e. gross vaue of goods - trade dscount).
|une 7th, 2011 Purchased goods worth Rs. 5000 ess 20% trade dscount
and 5% cash dscount
Date Particulars L.F Dr.
Amount
Cr.
Amount
|une
7th
2011
Purchases Account Dr.
To Cash Account
To Dscount Account
(Beng goods worth Rs. 5000
bought for cash ess 20% trade
dscount and 5% cash dscount.
Trade dscount s not shown n
the books but cash dscount s
shown n the books)
4000
3800
200
Nomna Accounts:-
Debt a Expenses
Credt a gans
Persona Accounts:-
Debt the recever
Credt the gver
Rea Accounts:-
Debt what comes n
Credt what goes out
Accordng to Rea account rues , debt what comes n goods are comng nto
the busness so we debit Purchases account. Cash s gong out n the form
of purchases so accordng to Rea Account rues we credited Cash account.
Accordng to nomna account rues dscount s gan to a busness so we
credted Discount account.
Vzag,
Nomna Accounts:-
Debt a Expenses
Credt a gans
Persona Accounts:-
Debt the recever
Credt the gver
Rea Accounts:-
Debt what comes n
Credt what goes out
34. Purchase of %hares. When shares or securtes are purchased,
the entry s made at market vaue and not at face vaue. Brokerage
pad on the purchase of such nvestment s aso added n the amount
of nvestment.
|une 8th, 2011 Shares of Rs. 50000 are purchased at Rs 90 and Rs.200 s
pad as brokerage.
The purchase prce woud be Rs. 45,200 (.e., Rs. 50000 X 90/100 + Rs.
200).
It s debted to Investment Account and credted to Cash Account
Date Particulars L.
F
Dr.
Amount
Cr.
Amount
|une
7th
2011
Investment Account
Dr.
To Cash Account
(For shares purchased)
45200
45200
Accordng to Persona Account rues, as an nvestor we are recevng
nvestment so we are recever here so inestment account is being
debited.
Accordng to Rea Account rues cash s gong out n the form of
nvestment so we credited cash account.
Vzag,
Nomna Accounts:-
Debt a Expenses
Credt a gans
Persona Accounts:-
Debt the recever
Credt the gver
Rea Accounts:-
Debt what comes n
Credt what goes out
33. %ale of %hares. If shares or securtes are sod, the entry shoud
be passed at market vaue ess brokerage, f any, pad on such shares.
|une 8th, 2011 Sod Rs. 50000 shares at Rs.95 at 2% brokerage
It s debted to cash account and credted to nvestment
Date Particulars L.
F
Dr.
Amount
Cr.
Amount
|une
7th
2011
Cash Account Dr.
To Investment
Account
(For shares purchased)
46500
46500
Accordng to Rea Account rues cash comes nto busness
by seng shares so we debited cash account.
Accordng to Persona Account rues nvestment account
represents nvestors and they are nvestng money nto the
busness so we credted Investment Account (credted the
gvers account).
Vzag,
Nomna Accounts:-
Debt a Expenses
Credt a gans
Persona Accounts:-
Debt the recever
Credt the gver
Rea Accounts:-
Debt what comes n
Credt what goes out
35. .6penses $ncidental to the Purchase of Fi6ed Assets. If
some expenses are ncurred on the purchases of a xed asset, these
shoud be added to the cost of the asset to the buyer. Such expenses
shoud be debted the asset account and not to any expense account.
|une 9
th
, 2011 Repars made to Budng Rs. 20000
|une 9
th
2011 pad Rs 500 n cash as wages on nstaaton of machne
Date Particulars L.
F
Dr.
Amount
Cr.
Amount
|une
9th
2011
Budng Account
Dr.
To Cash Account
(Beng repars made to
Budng)
20000
20000
|une
9th
2011
Machnery Account
Dr.
To Cash Account
(Wages pad on
nstaaton of
machne)
500
500
Case I: Repars to budng
s an expense. Accordng to
Nomna Account rues !e
debited building
account.
Cash s gong out n the
form of repars so,
accordng to Rea Account
rues !e credited Cash
Account.
Case II: Wages pad on
machnery s aso an
expense so, as per
Nominal account rules
!e debited machiner*
account.
As stated above cash s
gong out n the form of
wages so !e credited
cash account.
Vzag,
Nomna Accounts:-
Debt a Expenses
Credt a gans
Persona Accounts:-
Debt the recever
Credt the gver
Rea Accounts:-
Debt what comes n
Credt what goes out
37. $nsurance of Life Polic*. Premum pad on the propretors fe
nsurance pocy s debted to the Drawngs Account and not to
nsurance premum account. It s a persona expense and not reatng
to the operaton of the busness.
|une 10th, 2011 Pad Lfe Insurance Rs. 10000
Date Particulars L.
F
Dr.
Amount
Cr.
Amount
|une
9th
2011
Drawngs Account
Dr.
To Cash Account
(Beng Lfe Insurance
premum pad)
10000
10000
Propretors fe nsurance premum s hs persona
expendture. Drawngs account represents owner, so as
per Personal account rules !e debited Dra!ings
account.
Accordng to Rea account rues, we credted Cash account
due to cash s gong out.
Vzag,
Nomna Accounts:-
Debt a Expenses
Credt a gans
Persona Accounts:-
Debt the recever
Credt the gver
Rea Accounts:-
Debt what comes n
Credt what goes out
3). Carriage Paid on Bu*er1s Account . When goods are sod sand
carrage/freght etc. s pad on buyers behaf, t shoud be debted to
buyers persona account and not to carrage/freght account.
|une 11th, 2011 Pad Rs. 100 as carrage to Ram on sae of goods.
Date Particulars L.
F
Dr.
Amount
Cr.
Amount
|une
11th
2011
Ram Account Dr.
To Cash Account
(Beng carrage pad)
100
100
Payng carrage on account of buyer s an expense to
busness so, as per Nominal account rules !e debited
8am account
Accordng to Rea account rues, we credted Cash account
due to cash s gong out.
Vzag,
Date Particulars L.
F
Dr.
Amount
Cr.
Amount
|une
11th
2011
Advertsement Account
Dr.
To Purchases
Account
(Goods dstrbutes as
free sampes)
20000
20000
Nomna Accounts:-
Debt a Expenses
Credt a gans
Persona Accounts:-
Debt the recever
Credt the gver
Rea Accounts:-
Debt what comes n
Credt what goes out
3+. &oods distributed as Free %amples. If goods are dstrbuted as
free sampes to promote the sae of busness. It shoud be debted to
Advertsement Account and credted to Purchases account
Dstrbutng sampes means busness s promotng ts product. So, t
comes under advertsement and t s an expense. As per Nominal
account rules !e debited Adertisement account.
Goods dstrbuted as sampe, goods ost, goods taken for persona use and
dstrbuted for charty are aways recorded at cost. %o it is better to
credit #rading a"c or purchases account nstead of Saes account.
Entry s made at cost.
Ths s so because these transactons are not made wth any ntenton to
earn prot.
|une 12th, 2011 Goods worth Rs. 20000 dstrbutes as free sampes
Vzag,
Date Particulars L.
F
Dr.
Amount
Cr.
Amount
|une
13th
2011
Bad debts Account Dr.
To Mr. Rams
Account
(Mr. Ram s beng
decared as nsovent )
15000
15000
Nomna Accounts:-
Debt a Expenses
Credt a gans
Persona Accounts:-
Debt the recever
Credt the gver
Rea Accounts:-
Debt what comes n
Credt what goes out
3-. Bad Debts. When an amount s rrecoverabe from a customer
because of hs nsovency or otherwse, t s a oss for the busness. It
shoud be debted to Bad Debts Account and credted to Customers
Account.
Bad debts are oss to busness. So !e debited Bad Debts account as
per Nomna Accounts rues.
Though, a person s an nsovent we must consder her/hm as gver
because he woud have pad the money f he snt become nsovent by
any reason. So, we credited 8am1s Account.
|une 13th, 2011 Mr. Ram has taken oan worth Rs.15000 and s decared
as nsovent
Vzag,
Nomna Accounts:-
Debt a Expenses
Credt a gans
Persona Accounts:-
Debt the recever
Credt the gver
Rea Accounts:-
Debt what comes n
Credt what goes out
39. $nterest Due on Loans. When a oan s taken from a person and
nterest s yet to be pad, t shoud be debted to nterest account and
credted to oan account.
Vzag,
Nomna Accounts:-
Debt a Expenses
Credt a gans
Persona Accounts:-
Debt the recever
Credt the gver
Rea Accounts:-
Debt what comes n
Credt what goes out
3:. Loss of %toc; . If some stock s ost by re, t shoud be debted
to oss of stock by re and credted to purchase account. If any part of
such oss s recoverabe from nsurance company, t shoud be debted
to Insurance Cam Account and credted to Loss of Stock by Fre
account.
|une 14
th
2011, goods destroyed by re costng Rs. 300.
|une 14
th
2011, goods destroyed by re costng Rs. 300. but nsurance
company setted cam for Rs.280
Date Particulars L.
F
Dr.
Amount
Cr.
Amount
|une
14
th

2011
Loss of Stock Account
Dr.
To Purchases
Account
(oss of stock n re
accdent)
300
300
|une
14
th

2011
Insurance Co. Account
Dr.
Loss of Stock Account
Dr.
To Loss of stock
Account
280
20
300
Case I: Accordng to
Nomna Account rues !e
debited Loss of stoc;
account as it is Loss.
Goods dstrbuted as
sampe, goods ost, goods
taken for persona use and
dstrbuted for charty are
aways recorded at cost.
Vzag,
Nomna Accounts:-
Debt a Expenses
Credt a gans
32. Commission. When a busness rm receves any amount from
any person n respect of any servces rendered to hep them for
ncreasng the sae or hepng n purchase of goods or reatng to other
matters, then ths recept w be treated as commsson receved.
It shoud be debted to Cash Account and Credted to Commsson
receved Account
Date Particulars L.
F
Dr.
Amount
Cr.
Amount
|une
14
th

2011
Cash Account Dr.
To Commsson
receved Account
(commsson receved)
200
200
Rea Accounts:-
Debt what comes n
Credt what goes out
Persona Accounts:-
Debt the recever
Credt the gver
|une 15
th
2011, Commsson receved 200.
Money s comng nto busness n the form of commsson so !e debited
Cash account as per 8eal Account rules.
Commsson receved s gan or ncome to any busness so !e credited
Commission receied account as per Nominal Account rules.
Vzag,
http://www.cacubnda.com/forum/|ourna-entry-54274.asp#.
UBpPn_aHFw
http://www.cacubnda.com/experts/|ourna-entry-33276.asp#.
UOVn_4tqw
Fnanca Accountng, 1
st
year B.Com - K.L Narang
& SP |an.
B$BL$/&8AP<=
Vzag,
Vzag,

Journalising 130831021137

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Journalizing

Sarat Kumar Budumuru, Consutant

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