Journal Entries

How many journal entries are there?
Here we detail about the seven important types of journal entries used in accounting, i.e., (i)
Simple Entry, (ii) Compound Entry, (iii) Opening Entry, (iv) Transfer Entries, (v) Closing Entries, (vi)
Adjustment Entries, and (vii) Rectifying Entries
Special Journals
Look at the following transactions of Fooz Ball Town:
 July 5 Sold $5,000 of merchandise inventory, terms 1/15, n 30, FOB Destination with a cost of
goods sold of $3,000 to Robby Red.
 July 6 Paid shipping cost of $200 on merchandise sold on July 5.
 July 10 Sold $1,500 of merchandise inventory for cash, FOB Shipping Point, with a cost of
goods sold of $1,000.
 July 12 Purchased $10,000 of merchandise inventory, terms 2/15, n 45, FOB Destination from
Gus Grass.
 July 15 Received payment from Robby Red from July 5 sale less the discount.
 July 16 Returned $2,500 of merchandise damaged in shipment from July 12 purchase.
 July 20 Paid the utility bill for $300.
 July 25 Paid for the July 15 purchase less the return and discount.
 July 30 Sold $7,000 of merchandise inventory, terms 1/15, n 30, FOB Shipping point with cost of
goods sold $5,000 to Bobby Blue.
You can see how these journal entries (using the perpetual inventory method) would be recorded in the
general ledger as by clicking fooz ball town to save space.
Note: The entries would be slightly different under the periodic inventory method as cost of goods sold
and merchandise inventory are not updated until the end of the period instead of with each sale or
purchase.
The list of entries for these 9 transactions is long…can you imagine what it would look like when a
company has hundreds of transactions a day? It will be overwhelming so there needs to be a better
way. Special journals are a quicker and more efficient way to enter transactions. Remember, we have
5 special journals:
 a sales journal to record ALL CREDIT SALES

 a purchases journal to record ALL CREDIT PURCHASES
 a cash receipts journal to record ALL CASH RECEIPTS
 a cash disbursements journal to record ALL CASH PAYMENTS; and
 a general journal to record adjusting and closing entries and any other entries that do not fit in
one of the special journals.
Now we will classify Fooz Ball Town’s transactions into the proper special journals:
Date Transaction Summary Special Journal
July 5 Sold to Robby Red on credit. Sales Journal
July 6 Paid shipping cost. Cash Disbursements Jo
July 10 Sold inventory for cash. Cash Receipts Journal
July 12 Purchased inventory on credit. Purchases Journal
July 15 Received payment from Robby Red. Cash Receipts Journal
July 16 Returned damaged merchandise to supplier . General Journal
July 20 Paid utility bill. Cash Disbursements Jo
July 25 Paid for July 15 purchase. Cash Disbursements Jo
July 30 Sold to Bobby Blue on credit. Sales Journal
The July 10 sales is not recorded in the sales journal — why not? It was a cash sale and not on credit.
The discussion continues by looking at each special journal in detail.
Sales Journal
Mr. Nirmal has the following transactions in the month of April.
Write Journal Entries for the transactions.
10th April : Commenced business with a capital of 1,00,000

11th April : Purchased goods from Veeru for 20,000
13th April : Purchased Goods for Cash 15,000
14th April : Purchased Goods from Abhiram for cash 9,000
16th April : Bought Goods from Shyam on credit 12,000
17th April : Sold goods worth 15,000 to Tarun
19th April : Sold goods for cash 20,000
20th April : Sold goods to Utsav for cash 6,000
21st April : Sold goods to Pranav on credit 17,000
22nd April : Returned goods to Veeru 3,000
23rd April : Goods returned from Tarun 1,000
25th April : Goods taken by the proprietor for personal use 1,000
26th April : Bought Land for 50,000
27th April : Purchased machinery for cash 45,000
28th April : Bought computer from Intel Computers for 25,000
28th April : Cash sales 15,000
29th April : Cash purchases 22,000
30th April : Bought furniture for proprietor's residence and paid cash 10,000
Journal in the books of Mr. Nirmal for the period from 1st to 30th April
V/
Amount Amount
Date R Particulars L/F
(Dr) (Cr)
No.
April 10th – Cash a/c Dr – 1,00,000

To Capital a/c – 1,00,000
[Being the amount received from Mr. Nirmal in cash, the

proprietor as his capital contribution vide receipt no:__
dated:__]
11th – Goods/Stock a/c Dr – 20,000

To Veeru a/c – 20,000
[Being the value of stock purchased from Mr. Veeru on credit

vide bill no:___ dated:__]

To Cash a/c – 15,000
[Being the value of stock purchased for cash from M/s ___ vide
bill no:___ dated:__]

[Being the value of stock purchased for cash from Mr. Abhiram

To Shyam a/c – 12,000
[Being the value of stock purchased from Mr. Shyam on credit
17th – Tarun a/c Dr – 15,000

To Goods/Stock a/c – 15,000
[Being the value of stock sold on credit to Mr. Tarun vide

invoice no:___ dated:__]
19th – Cash a/c Dr – 20,000

[Being the value of goods sold for cash vide receipt no:___
dated:__]
20th – Cash a/c Dr – 6,000

[Being the value of stock sold to Mr. Utsav for cash vide receipt
no:___ dated:__]
21st – Pranav a/c Dr – 17,000

[Being the value of stock sold to Mr. Pranav on credit vide bill
no:___ dated:__]
22nd – Veeru a/c Dr – 3,000

[Being the value of goods returned to Mr. Veeru vide returns

23rd – Goods/Stock a/c Dr – 1,000

To Tarun a/c – 1,000
[Being the value of stock returned by Mr. Tarun vide returns bill
no:___ dated:__]
25rd – Drawings a/c Dr – 1,000

[Being the value of stock taken by the proprietor vide bill

no:___ dated:__]
26th – Land a/c Dr – 50,000
[Being the amount paid for land purchased on:__]
27th – Machinery a/c Dr – 45,000

[Being the amount paid for the purchase of machinery vide bill
no:___ dated:__]
28th – Computers a/c Dr – 25,000

To Intel Computers a/c – 25,000
[Being the value of a computer purchased from M/S Intel

Computers on credit vide bill no:___ dated:__]
29th – Cash a/c Dr – 15,000

[Being the value of stock sold for cash vide receipt no:___
dated:__]

[Being the value of stock purchased for cash vide bill no:___
dated:__]
30th – Drawings a/c Dr – 10,000

[Being the amount of cash paid for furniture purchased for

proprietor's residence vide bill no:___ dated:__]
Problem - 2
Journalise the following transactions in the books of Rama & Sons
3rd May : Cash deposited into bank 60,000
4th May : Loan given to Bhuvan 20,000

4th May : Paid cash to Veeru 20,000
5th May : Paid to Veeru by cheque 15,000
5th May : Cash received from Tarun 12,000
5th May : Took loan from Anush 15,000
6th May : Cheque received from Pranav 15,000
6th May : Paid to Intel Computers by cheque 17,000
6th May : Withdrew from bank 5,000
7th May : Withdrew from bank for office use 8,000
7th May : Cash received from Bhuvan on loan account 10,000
8th May : Withdrew from bank for personal use 1,000
8th May : Cash taken by proprietor for personal use 3,000
9th May : Bought furniture and paid by cheque 15,000
9th May : Paid to Anush by cheque on loan account 5,000
9th May : Brought additional capital of 25,000
Solution hide
Journal in the books of M/s Rama & Sons
for the period from 1st May to 10th May
Amoun
V/R Amount
Date Particulars L/F t
No. (Cr)
(Dr)
May – Bank a/c Dr – 60,000

3rd – 60,000
To Cash a/c
[Being the amount of cash deposited into bank vide voucher no:___ dated:__]
4th – Loan to Bhuvan a/c Dr – 20,000

Amoun
V/R Amount
No. (Cr)
(Dr)
[Being the amount of cash given as loan to Bhuvan vide voucher no:___ dated:__]
4th – Veeru a/c Dr – 20,000

– 20,000
To Cash a/c
[Being the amount of cash paid to Veeru vide voucher no:___ dated:__]
5th – Veeru a/c Dr – 15,000

– 15,000
To Bank a/c
[Being the amount paid to veeru on account by cheque no. ___ dated ___]
5th – Cash a/c Dr – 12,000

– 12,000
To Tarun a/c
[Being the amount of cash received from Tarun vide cash receipt no:___
dated:__]
5th – Cash a/c Dr – 15,000

– 15,000
To Loan from Anush a/c
[Being the amount of loan taken from Anush on:__]
6th – Bank a/c Dr – 15,000

– 15,000
To Pranav a/c
[Being the amount received by cheque no. ____ date ____from Pranav]
Amoun
V/R Amount
No. (Cr)
(Dr)
6th – Intel Computers a/c Dr – 17,000

– 17,000
To Bank a/c
[Being the amount paid by cheque no. ____ date ____to Intel Computers]
6th – Cash a/c Dr – 5,000

– 5,000
To Bank a/c
[Being the amount of cash withdrawn from bank]

– 8,000
To Bank a/c
[Being the amount of cash withdrawn from bank vide bill no:___ dated:__]
7th – Cash a/c Dr – 10,000

– 10,000
To Loan to Bhuvan a/c
[Being the amount of cash received from Bhuvan as loan vide cash receipt no:___
dated:__]

– 1,000
To Bank a/c
[Being the amount of withdrawn from bank for personal use vide cheque no:___
dated:__]

Amoun
V/R Amount
No. (Cr)
(Dr)
[Being the amount of cash taken by the proprietor for personal purposes vide
voucher no:___ dated:__]
9th – Furniture a/c Dr – 15,000

– 15,000
To Bank a/c
[Being the amount paid by cheque no ____ date ____ towards the purchase of
furniture vide bill no:___ dated:__]
9th – Loan from Anush a/c Dr – 5,000

– 5,000
To Bank a/c
[Being the amount paid by cheque no ____ date ____ towards repayment of loan
from Anush vide voucher no:___ dated:__]
9th – Cash a/c Dr – 25,000

– 25,000
To Capital a/c
[Being the amount received from proprietor as capital vide cash receipt no:___
dated:__]
Problem - 3
Write journal entries in the books of Chikky & Bros.
10th June : Paid wages 12,000
11th June : paid rent by cheque 10,000

13th June : Paid salary to Mr. Charan 12,000
14th June : Purchased stationery from Kagaz & Co. and paid by cheque 5,000
15th June : Received interest 14,000
17th June : Received commission by cheque 6,000
18th June : Rent received from Mr. Mody 8,000
19th June : Interest received from Mr.Bijju by cheque 10,000
20th June : Carriage paid on purchase of goods 3,000
22nd June : Carriage paid on sale of goods 2,000
Solution hide
Journal in the books of M/s Chikky & Bros.
for the period from 1st June to 30th June
Amoun
V/R Amount
No. (Cr)
(Dr)
June – Wages a/c Dr – 12,000

th
10 – 12,000
To Cash a/c
[Being the amount of cash paid towards wages vide voucher no:___ dated:__]
11th – Rent paid a/c Dr – 10,000

– 10,000
To Bank a/c
[Being the amount paid by cheque no.____ date ____ towards rent vide voucher
no:___ dated:__]
13th – Salaries a/c Dr – 12,000

– 12,000
To Cash a/c
Amoun
V/R Amount
No. (Cr)
(Dr)
[Being the amount of cash paid towards Salary to Mr. Charan vide voucher
no:___ dated:__]
14th – Stationery a/c Dr – 5,000

– 5,000
To Bank a/c
[Being the amount paid by cheque no.____ date ____ towards stationery
purchased from Kagaz & co. vide voucher no:___ dated:__]
15th – Cash a/c Dr – 14,000

– 14,000
To Interest Received a/c
[Being the amount of cash received towards interest vide receipt no:___
dated:__]
17th – Bank a/c Dr – 6,000

– 6,000
To Commission Received a/c
[Being the amount received by cheque no. ____ date____ towards commission
vide receipt no:___ dated:__]
18th – Cash a/c Dr – 8,000

– 8,000
To Rent Received a/c
[Being the amount of cash received towards rent from Mr. Mody vide receipt
no:___ dated:__]
19th – Bank a/c Dr – 10,000

– 10,000
Amoun
V/R Amount
No. (Cr)
(Dr)
[Being the amount received by cheque no. ____ date____ towards interest from
Bijju vide receipt no:___ dated:__]
20th – Carriage Outwards a/c Dr – 3,000

– 3,000
To Cash a/c
[Being the amount of cash paid towards carriage on goods purchased vide
22nd – Carriage Inwards a/c Dr – 2,000

– 2,000
To Cash a/c
[Being the amount of cash paid towards carriage on goods sold vide voucher
no:___ dated:__]
To avoid ambiguity regarding what information the account head provides, it is always
appropriate to use additional words to specify the nature of information.
Note such usage in case of the following above
 Rent may indicate either rent received or rent paid

 Commission may indicate either commission received or commission paid
 Interest may indicate either interest received or interest paid
Where we do not specify by using a suffix, we assume that account head to represent an
expenditure. This is just a convention and not a rule.
 Advertisement, since not specified is treated as an expenditure.

Simple Compound (Combined) Journal Entries - Problems
and Solutions
Problem - 1
Journalise the following transactions by combining the related transactions into a compound
entry, post them into the ledger and prepare a trial balance
July 1st : Ajit started business by investing

Cash 3,00,000
Goods and 1,00,000
Furniture 50,000
3rd : Purchased building 1,00,000
3rd : Purchased goods for cash 30,000
3rd : Purchased goods on credit from Sujit 25,000
3rd : Sold goods for cash 25,500
5th : Sold goods for cash to Avtar 24,000
5th : Sold goods to Mahendra on credit 40,650
5th : Deposited cash into bank 32,000
6th : Withdrew from bank for office use 15,000
8th : Withdrew from bank for private use 5,000
10th : Paid freight 1,200
10th : Paid cartage 2,000
10th : Paid salary 14,600

Solution hide
Journal in the books of Mr. Ajit
for the period from July 1st, _5 to July 10th, _5
V/ Amoun
Amount
Date R Particulars L/F t
(Cr)
No. (Dr)
July – Cash a/c Dr – 3,00,000

st
1 Purchases a/c Dr – 1,00,000
Furniture a/c Dr – 50,000
– 4,50,000
To Capital a/c
[Being the amount of assets received from Mr. Ajit, the proprietor towards his
capital contribution]
3rd – Buildings a/c Dr – 1,00,000

– 1,00,000
To Cash a/c
[Being the amount paid for purchase of Building vide voucher no:___ dated:__]
3rd – Purchases a/c Dr – 55,000

– 30,000
To Cash a/c
– 25,000
To Sujit a/c
[Being the value of stock purchased for cash and on credit from Mr. Sujit vide
5th – Cash a/c Dr – 49,500

Mahendra a/c Dr – 40,650
– 90,105
To Sales a/c
[Being the value of stock sold for cash 25,500 vide receipt no:__, to avatar for
24,000 vide receipt no:___ and on credit to Mr. Mahendra vide bill no:___
dated:__]
Journal in the books of Mr. Ajit
for the period from July 1st, _5 to July 10th, _5
V/ Amoun
Amount
(Cr)
No. (Dr)
6th – Bank a/c Dr – 32,000

– 32,000
To Cash a/c
[Being the amount of cash deposited into bank]
8th – Cash a/c Dr – 15,000

Drawings a/c Dr – 5,000
– 20,000
To Bank a/c
[Being the amount of cash withdrawn from bank for office use and personal use
vide cheque no:___ dated:__]
10th – Freight a/c Dr – 1,200

Cartage a/c Dr – 2,000
Salaries a/c Dr – 14,600
– 17,800
To Cash a/c
[Being the amount of cash paid for frieght, cartage and salaries vide voucher
no:___ dated:__]
General Ledger
[Books of Mr. Ajith]
Cash a/c
DrCr
J/ J/
Date Particulars Amount Date Particulars Amount
F F
01/07/_5 To Capital a/c – 3,00,000 03/07/_5 By Buildings a/c – 1,00,000

05/07/_5 To Sales a/c – 49,500 03/07/_5 By Purchases a/c – 30,000
08/07/_5 To Bank a/c – 15,000 06/07/_5 By Bank a/c – 32,000
10/07/_5 By Freight a/c – 1,200
10/07/_5 By Cartage a/c – 2,000
10/07/_5 By Salaries a/c – 14,600
10/07/_5 By Balance c/d – 1,84,700
tl 3,64,500 tl 3,64,500
11/07/_5 To Balance b/d – 1,84,700
Purchases a/c
DrCr
J/
Date Particulars Amount Date Particulars J/F Amount
F
01/07/_5 To Capital a/c – 1,00,000 10/07/_5 By Balance c/d – 1,55,000

03/07/_5 To Cash a/c – 30,000
03/07/_5 To Sujit a/c – 25,000
tl 1,55,000 tl 1,55,000
11/07/_5 To Balance b/d – 1,55,000

Furniture a/c
DrCr
J/
F
01/07/_5 To Capital a/c – 50,000 10/07/_5 By Balance c/d – 50,000
tl 50,000 tl 50,000
11/07/_5 To Balance b/d – 50,000
Capital a/c
DrCr
J/
F
10/07/_5 To Balance c/d – 4,50,000 01/07/_5 By Cash a/c – 3,00,000

01/07/_5 By Purchases a/c – 1,00,000
01/07/_5 By Furniture a/c – 50,000
tl 4,50,000 tl 4,50,000
11/07/_5 By Balance b/d – 4,50,000
Buildings a/c
DrCr
J/
F
03/07/_5 To Cash a/c – 1,00,000 10/07/_5 By Balance c/d – 1,00,000
tl 1,00,000 tl 1,00,000
11/07/_5 To Balance b/d – 1,00,000

Sujit a/c
DrCr
J/
F
10/07/_5 To Balance c/d – 25,000 03/07/_5 By Purchases a/c – 25,000
tl 25,000 tl 25,000
11/07/_5 By Balance b/d – 25,000
Mahendra a/c
DrCr
J/
F
05/07/_5 To Sales a/c – 40,650 10/07/_5 By Balance c/d – 40,650
tl 40,650 tl 40,650
11/07/_5 To Balance b/d – 40,650
Sales a/c
DrCr
J/ J/
F F
10/07/_5 To Balance – 90,150 05/07/_5 By Cash a/c – 49,500

c/d 05/07/_5 By Mahendra – 40,650
a/c
tl 90,150 tl 90,150
11/07/_5 By Balance b/d – 90,150

Bank a/c
DrCr
J/ J/
F F
06/07/_5 To Cash a/c – 32,000 08/07/_5 By Cash a/c – 15,000

08/07/_5 By Drawings a/c – 5,000
10/07/_5 By Balance c/d – 12,000
tl 32,000 tl 32,000
11/07/_5 To Balance b/d – 12,000
Drawings a/c
DrCr
J/
F
08/07/_5 To Bank a/c – 5,000 10/07/_5 By Balance c/d – 5,000
tl 5,000 tl 5,000
11/07/_5 To Balance b/d – 5,000
Freight a/c
DrCr
J/
F
10/07/_5 To Cash a/c – 1,200 10/07/_5 By Balance c/d – 1,200
tl 1,200 tl 1,200
11/07/_5 To Balance b/d – 1,200

Cartage a/c
DrCr
J/
F
tl 2,000 tl 2,000
11/07/_5 To Balance b/d – 2,000
Salaries a/c
DrCr
J/
F
tl 14,600 tl 14,600
11/07/_5 To Balance b/d – 14,600
Trial Balance
[Modern Method]
Trial Balance of Mr. Ajith as on 11/07/_5
Amount Amount
Particulars L/F
(Dr) (Cr)
Cash a/c – 1,84,700 –

Purchases a/c – 1,55,000 –
Furniture a/c – 50,000 –
Capital a/c – – 4,50,000
Buildings a/c – 1,00,000 –
Trial Balance of Mr. Ajith as on 11/07/_5
Amount Amount
Particulars L/F
(Dr) (Cr)
Sujit a/c – – 25,000

Mahendra a/c – 40,650 –
Sales a/c – – 90,150
Bank a/c – 12,000 –
Drawings a/c – 5,000 –
Freight a/c – 1,200 –
Cartage a/c – 2,000 –
Salaries a/c – 14,600 –
Total 5,65,150 5,65,150
Problem - 2
Surendra commenced business on 1st March, 20_5. His transactions for the month are given
below. Record them in the journal, post into the ledger and prepare a trial balance at the end
of the month.
Mar 1st : Started business with 80,000

out of which paid into bank 20,000
5th : Bought goods of Ram Chand 12,000
5th : Bought goods from Ramesh & Co. 10,000
7th : Sold goods to Rajesh 8,000
7th : Sold goods to Mahesh Chand 10,000
10th : Received cheque from Rajesh 6,800

discount allowed 200
12th : Paid into bank 8,000
14th : Paid to Ramesh & Co. 9,000

discount received 200
17th : Sold goods to Jagdish 7,200
17th : Sold goods to Rajesh 2,600
17th : Sold goods to Mahesh Chand 6,500
21st : Payment received by cheque from 5,200

Jagdish
25th : Paid to Ram Chand by cheque 6,800

discount 200
26th : Received cheque from Jagadish Chand

in full settlement of his account 1,800
27th : Mahesh Chand returned goods

not up to the sample 2,000
28th : Bought goods for cash 15,000
31st : Paid wages in cash 1,000
31st : Paid office expenses in cash 5,000
31st : Paid salaries for the month 12,500
Solution hide
Journal in the books of Mr. Surendra
for the period from March 1st _5 to March 31th _5
Amoun
V/R Amount
No. (Cr)
(Dr)
Mar – Cash a/c Dr – 60,000

st
1 Bank a/c Dr – 20,000
– 80,000
To Capital a/c
[Being the amount brought in by Mr. Surendra, the proprietor, as his capital
contribution in cash vide receipt no:___ dated:__ and a cheque no. __ dated __]
5th – Purchases a/c Dr – 22,000

Amoun
V/R Amount
No. (Cr)
(Dr)
To Ram Chand a/c – 12,000

To Ramesh & Co. a/c – 10,000
[Being the value of stock purchased on credit from Mr. Ram Chand & Co.vide bill
no:___ dated:__ and M/s Ramesh & Co.vide bill no:___ dated:__]
7th – Rajesh a/c Dr – 8,000

Mahesh Chand a/c Dr – 10,000
– 18,000
To Sales a/c
[Being the value of stock sold on credit to Mr. Rajesh vide invoice no:___ dated:__
& Mr. Mahendra Chandra vide invoice no:___ dated:__]
10th – Bank a/c Dr – 6,800

Discount Allowed a/c Dr – 200
– 7,000
To Rajesh a/c
[Being the amount received from Mr. Rajesh after allowing a discount by cheque
no:___ dated:____]
12th – Bank a/c Dr – 8,000

– 8,000
To Cash a/c
[Being the amount of cash deposited into bank]
14th – Ramesh & Co. a/c Dr – 9,200

– 9,000
To Cash a/c
– 200
To Discount Received a/c
Amoun
V/R Amount
No. (Cr)
(Dr)
[Being the amount of cash paid to M/s Ramesh & Co. after receiving a discount
vide voucher no:___ dated:__]
17th – Jagadish a/c Dr – 7,200

Rajesh a/c Dr – 2,600
Mahesh Chand a/c Dr – 6,500
– 16,300
To Sales a/c
[Being the value of stock sold on credit to Mr Jagdish vide bill no:___ dated:__,
Mr. Rajesh vide bill no:___ dated:__ & Mr. Mahendra Chandra vide bill no:___
dated:__]
21st – Bank a/c Dr – 5,200

– 5,200
To Jagadish a/c
[Being the amount received from Jagdish on account by cheque no:____

dated:____]
25th – Ram Chand a/c Dr – 7,000

– 6,800
To Bank a/c
– 200
[Being the amount of cash paid to M/s Ram Chand after receiving a discount vide
Cheque no:___ dated:__]
26th – Bank a/c Dr – 1,800

– 2,000
To Jagadish a/c
Amoun
V/R Amount
No. (Cr)
(Dr)
[Being the amount received from Mr. Jagadish after allowing a discount by
cheque no:___ dated:____]
27th – Sales Returns a/c Dr – 2,000

– 2,000
To Mahesh Chand a/c
[Being the value of stock returned by Mr. Mahesh Chand vide credit note no:___
dated:__]

– 15,000
To Cash a/c
[Being the value of stock purchased for cash vide bill no:___ dated:__]
31st – Wages a/c Dr – 1,000

Office Expenses a/c Dr – 5,000
Salaries a/c Dr – 12,500
– 18,500
To Cash a/c
[Being the amount of cash paid for frieght, cartage and salaries vide voucher
no:___ dated:__]
General Ledger
[Books of Mr.Surendra]
Cash a/c
DrCr
J/
F
01/03/_5 To Capital a/c – 60,000 12/03/_5 By Bank a/c – 8,000

14/03/_5 By Ramesh & Co. a/c – 9,000
28/03/_5 By Purchases a/c – 15,000
31/03/_5 By Wages a/c – 1,000
31/03/_5 By Office Expenses a/c – 5,000
31/03/_5 By Salaries a/c – 12,500
31/03/_5 By Balance c/d – 9,500
tl 60,000 tl 60,000
1/04/_5 To Balance b/d – 9,500
Bank a/c
DrCr
Date Particulars J/F Amount Date Particulars J/F Amount
01/03/_5 To Capital a/c – 20,000 25/03/_5 By Ram Chand a/c – 6,800

10/03/_5 To Rajesh a/c – 6,800 31/03/_5 By Balance c/d – 35,000
12/03/_5 To Cash a/c – 8,000
21/03/_5 To Jagadish a/c – 5,200
26/03/_5 To Jagadish a/c – 1,800
tl 41,800 tl 41,800
1/04/_5 To Balance b/d – 35,000

Capital a/c
DrCr
Amoun
Date Particulars J/F Date Particulars J/F Amount
t
31/03/_5 To Balance c/d – 80,000 01/03/_5 By Cash a/c – 60,000

01/03/_5 By Bank a/c – 20,000
tl 80,000 tl 80,000
1/04/_5 By Balance – 80,000

b/d
Purchases a/c
DrCr
Amoun J/
Date Particulars J/F Date Particulars Amount
t F
05/03/_5 To Ram Chand a/c – 12,000 31/03/_5 By Balance c/d – 37,000

05/03/_5 To Ramesh & Co. a/c – 10,000
28/03/_5 To Cash a/c – 15,000
tl 37,000 tl 37,000
1/04/_5 To Balance b/d – 37,000
Ram Chand a/c
DrCr
25/03/_5 To Bank a/c – 6,800 05/03/_5 By Purchases a/c – 12,000

25/03/_5 To Discount Received – 200
31/03/_5 a/c – 5,000
To Balance c/d
Ram Chand a/c
DrCr
tl 12,000 tl 12,000
1/04/_5 By Balance b/d – 5,000
Ramesh & Co. a/c
DrCr
14/03/_5 To Cash a/c – 9,000 05/03/_5 By Purchases a/c – 10,000

31/03/_5 a/c – 800
To Balance c/d
tl 10,000 tl 10,000
1/04/_5 By Balance b/d – 800
Rajesh a/c
DrCr
Amoun
t
07/03/_5 To Sales a/c – 8,000 10/03/_5 By Bank a/c – 6,800

17/03/_5 To Sales a/c – 2,600 10/03/_5 By Discount Allowed – 200
31/03/_5 a/c – 3,600
By Balance c/d
tl 10,600 tl 10,600
1/04/_5 To Balance – 3,600

Rajesh a/c
DrCr
Amoun
t
b/d
Mahesh Chand a/c
DrCr
Amoun J/
t F
07/03/_5 To Sales a/c – 10,000 27/03/_5 By Sales Returns a/c – 2,000

tl 16,500 tl 16,500
1/04/_5 To Balance – 14,500

b/d
Sales a/c
DrCr
J/
F
31/03/_5 To Balance c/d – 34,300 07/03/_5 By Rajesh a/c – 8,000

07/03/_5 By Mahesh Chand – 10,000
17/03/_5 a/c – 7,200
17/03/_5 By Jagadish a/c – 2,600
17/03/_5 By Rajesh a/c – 6,500
By Mahesh Chand
a/c
tl 34,300 tl 34,300
Sales a/c
DrCr
J/
F
1/04/_5 By Balance b/d – 34,300
Discount Allowed a/c
DrCr
J/
F
10/03/_5 To Rajesh a/c – 200 31/03/_5 By Balance – 400

26/03/_5 To Jagadish a/c – 200 c/d
tl 400 tl 400
1/04/_5 To Balance b/d – 400
Discount Received a/c
DrCr
31/03/_5 To Balance – 400 14/03/_5 By Ramesh & Co. a/c – 200

c/d 25/03/_5 By Ram Chand a/c – 200
tl 400 tl 400
1/04/_5 By Balance b/d – 400

Jagadish a/c
DrCr
J/ Amoun J/
Date Particulars Date Particulars Amount
F t F

26/03/_5 By Bank a/c – 1,800
26/03/_5 By Discount Allowed a/c – 200
tl 7,200 tl 7,200
Sales Returns a/c
DrCr
J/
F
27/03/_5 To Mahesh Chand a/c – 2,000 31/03/_5 By Balance – 2,000

c/d
tl 2,000 tl 2,000
1/04/_5 To Balance b/d – 2,000
Wages a/c
DrCr
J/
F
tl 1,000 tl 1,000
1/04/_5 To Balance b/d – 1,000

Office Expenses a/c
DrCr
J/
F
tl 5,000 tl 5,000
1/04/_5 To Balance b/d – 5,000
Salaries a/c
DrCr
J/
F
tl 12,500 tl 12,500
1/04/_5 To Balance b/d – 12,500
Trial Balance
[Modern Method]
Trial Balance of Mr. Surendra as on 31/03/_5
Amount Amount
Particulars L/F
(Dr) (Cr)
Cash a/c – 9,500 –

Bank a/c – 35,000 –
Capital a/c – – 80,000
Purchases a/c – 37,000 –
Ram Chand a/c – – 5,000
Trial Balance of Mr. Surendra as on 31/03/_5
Amount Amount
Particulars L/F
(Dr) (Cr)
Ramesh & Co. a/c – – 800

Rajesh a/c – 3,600 –
Mahesh Chand a/c – 14,500 –
Sales a/c – – 34,300
Discount Allowed a/c – 400 –
Discount Received – – 400
a/c – – –
Jagadish a/c – 2,000 –
Sales Returns a/c – 1,000 –
Wages a/c – 5,000 –
Office Expenses a/c – 12,500 –
Salaries a/c
Total 1,20,500 1,20,500
Complex Compound Journal Entries - Problems and

Solutions
Problem - 1
Journalise the following transactions.
Jun 5th : Acquired the running business of Max, for cash 50, 000 by taking over the following assets and liabilities at
values stated against them:
Stock of Goods 15,000; Cash 25,000; Furniture 10,000; Debtors 7,000; Machinery 8,000 & Creditors
15,000.
6th : Opened a bank account with 5,000
7th : Bought goods worth 6, 000 from Usha & Co. & paid half the amount in cash.
8th : Sold to Bee & Co. goods worth 5,000 and a cheque received for the due
14th : Sold private car for 4,000 and bought a new one for business with the proceeds plus 5,000 from office cash.
16th : Bought furniture worth 4,000 of which, those worth 1,000 are for office use and the balance for stock.
18th : Sold goods to Arial & Co. 8,000 and to Wheel & Co. 7,000
19th : Payment made to Creditors 4,500
20th : Cash received from Debtors 5,800
25th : Paid Rent by cheque 2,500
30th : Commission received 3,000
Solution hide
 Jun 5th
Assets taken over:

Stock of Goods 15,000
Cash 25,000
Furniture 10,000
Debtors 7,000
Machinery 65,000
8,000
- Liabilities taken over:
15,000
Creditors
15,000 50,000
Net Assets (Capital) (?)
 Jun 7th
Total value of goods 6,000

bought 3,000
- Paid in cash
3,000
Bought on credit (?)
 Jun 14th
Realisation from sale of private car 4,000

+ Office cash used for purchase 5,000
Value of car bought (?)
9,000
 Jun 16th
Value of Furniture bought 4,000

- Furniture for office 1,000
Value of Furniture bought for goods
3,000
(?)
Journal in the books of M/s ___

for the period from June. 5th, _5 to June. 30th, _5
Amoun
V/R Amount
No. (Cr)
(Dr)
June – Goods/Stock a/c Dr – 15,000

5th Cash a/c Dr – 25,000
Debtors a/c Dr – 7,000
Machinery a/c Dr – 8,000
– 15,000
To Creditors a/c
– 50000
To Capital a/c
[Being the amount of assets and liabilities acquired from Mr. Max]
6th – Bank a/c Dr – 5,000

– 5,000
To Cash a/c
[Being the amount of cash deposited into bank on:__]

– 3,000
To Cash a/c
– 3000
To Usha & Co. a/c
[Being the value of stock purchased from M/s. Usha & Co on credit and paid half
the amount in cash vide bill no:___, voucher no:___ dated:__]
8th – Bank a/c Dr – 5,000

– 5,000
To Sales a/c
[Being the value of stock sold to M/s. Bee & Co. and received amount due by
Amoun
V/R Amount
No. (Cr)
(Dr)
cheque no:___ dated:__]
14th – Car a/c Dr – 9,000

– 4,000
To Capital a/c
– 5,000
To Cash a/c
[Being the amount paid for car purchase for office from private cash and business
cash vide voucher no:___ dated:__]

– 4,000
To Cash a/c
[Being the value of furniture purchased for office decoration and for stock vide
18th – Arial & Co. a/c Dr – 8,000

Wheel & Co. a/c Dr – 7,000
– 15,000
To Sales a/c
[Being the value of stock sold to M/s Arial & Co. and M/s Wheel & Co. on credit
vide invoice nos:___ dated:__]
19th – Creditors a/c Dr – 4,500

– 4,500
To Cash a/c
[Being the amount paid to creditors vide voucher no:___ dated:__]
20th – Cash a/c Dr – 5,800

Amoun
V/R Amount
No. (Cr)
(Dr)
To Debtors a/c – 5,800
[Being the amount of cash received from debtors vide cash receipt no:___
dated:__]
25th – Rent paid a/c Dr – 2,500

– 2,500
To Bank a/c
[Being the amount paid for rent vide cheque no:___ dated:__]
30th – Cash a/c Dr – 3,000

– 3,000
To Commission Received a/c
[Being the amount of cash received for commission vide cash receipt no:___
dated:__]
General Ledger
[Books of __]
Goods/Stock a/c
DrCr
J/
F
05/06/_5 To Sundry Accounts – 15,000 30/06/_5 By Balance – 15,000

c/d
tl 15,000 tl 15,000
Goods/Stock a/c
DrCr
J/
F
01/07/_5 To Balance b/d – 15,000
Cash a/c
DrCr
Amoun J/
t F
05/06/_5 To Sundry Accounts – 25,000 06/06/_5 By Bank a/c – 5,000

20/06/_5 To Debtors a/c – 5,800 07/06/_5 By Purchases a/c – 3,000
30/06/_5 To Commission Received – 3,000 14/06/_5 By Car a/c – 5,000
a/c 16/06/_5 By Purchases a/c – 3,000
16/06/_5 By Furniture a/c – 1,000
19/06/_5 By Creditors a/c – 4,500
30/06/_5 By Balance c/d – 12,300
tl 33,800 tl 33,800
01/07/_5 To Balance b/d – 12,300
Furniture a/c
DrCr
J/
F

16/06/_5 To Cash a/c – 1,000 c/d
tl 11,000 tl 11,000
Furniture a/c
DrCr
J/
F
01/07/_5 To Balance b/d – 11,000
Debtors a/c
DrCr
J/
F
05/06/_5 To Sundry Accounts – 7,000 20/06/_5 By Cash a/c – 5,800

30/06/_5 By Balance – 1,200
c/d
tl 7,000 tl 7,000
01/07/_5 To Balance b/d – 1,200
Machinery a/c
DrCr
J/
F

c/d
tl 8,000 tl 8,000
01/07/_5 To Balance b/d – 8,000

Creditors a/c
DrCr
19/06/_5 To Cash a/c – 4,500 05/06/_5 By Sundry Accounts – 15,000

30/06/_5 To Balance – 10,500
c/d
tl 15,000 tl 15,000
01/07/_5 By Balance b/d – 10,500
Capital a/c
DrCr
30/06/_5 To Balance – 54,000 05/06/_5 By Sundry Accounts – 50,000

c/d 14/06/_5 By Car a/c – 4,000
tl 54,000 tl 54,000
01/07/_5 By Balance b/d – 54,000
Bank a/c
DrCr
J/ J/
F F
06/06/_5 To Cash a/c – 5,000 25/06/_5 By Rent paid a/c – 2,500

tl 10,000 tl 10,000
01/07/_5 To Balance b/d – 7,500

Purchases a/c
DrCr
J/ J/
F F

07/06/_5 To Usha & Co. a/c – 3,000
16/06/_5 To Cash a/c – 3,000
tl 9,000 tl 9,000
01/07/_5 To Balance b/d – 9,000
Usha & Co. a/c
DrCr
J/
F
30/06/_5 To Balance c/d – 3,000 07/06/_5 By Purchases a/c – 3,000
tl 3,000 tl 3,000
01/07/_5 By Balance b/d – 3,000
Sales a/c
DrCr
30/06/_5 To Balance – 20,000 08/06/_5 By Bank a/c – 5,000

c/d 18/06/_5 By Arial & Co. a/c – 8,000
18/06/_5 By Wheel & Co. a/c – 7,000
tl 20,000 tl 20,000
01/07/_5 By Balance b/d – 20,000

Car a/c
DrCr
J/
F

14/06/_5 To Cash a/c – 5,000
tl 9,000 tl 9,000
01/07/_5 To Balance b/d – 9,000
Arial & Co. a/c
DrCr
J/
F
tl 8,000 tl 8,000
01/07/_5 To Balance b/d – 8,000
Wheel & Co. a/c
DrCr
J/
F
tl 7,000 tl 7,000
01/07/_5 To Balance b/d – 7,000

Rent paid a/c
DrCr
J/
F
tl 2,500 tl 2,500
01/07/_5 To Balance b/d – 2,500
Commission Received a/c
DrCr
Amoun
t
tl 3,000 tl 3,000
01/07/_5 By Balance – 3,000

b/d
Trial Balance
[Modern Method]
Trial Balance of __ as on 30/06/_
Amount Amount
Particulars L/F
(Dr) (Cr)
Goods/Stock a/c – 15,000 –

Cash a/c – 12,300 –
Debtors a/c – 1,200 –
Trial Balance of __ as on 30/06/_
Amount Amount
Particulars L/F
(Dr) (Cr)
Machinery a/c – 8,000 –

Creditors a/c – – 10,500
Bank a/c – 7,500 –
Usha & Co. a/c – – 3,000
Sales a/c – – 20,000
Car a/c – 9,000 –
Arial & Co. a/c – 8,000 –
Wheel & Co. a/c – 7,000 –
Rent paid a/c – 2,500 –
Commission Received a/c – – 3,000
Total 90,500 90,500
Deriving greater information

The following two methods will help in deriving greater information in case of recording complex compound
journal entries. In both the cases, the postings in the ledger accounts involved in the complex compound entry
vary. However, there will not be any change in the ledger account balance.
 Replacing the complex compound entry with Simple Compound entries

The transactions involved in the complex compound entry relating to purchase of assets and liabilities of
Mr. Max can be interpreted to form two or more simple compound entries to provide clear information as
follows :
Acquired the running business of Max, by taking over the following
 Assets
Stock of Goods 15,000

Cash 25,000
Furniture 10,000
Debtors 7,000
Machinery 8,000
 Liabilities
Creditors 15,000
Journal in the books of __ for the period from __ to __
V/R Amount Amount

Particulars L/F
No. (Dr) (Cr)
– Goods/Stock a/c Dr – 15,000

Cash a/c Dr – 25,000
– 65000
To Capital a/c
[Being the value of assets of Mr. Max taken over by the business.]
– Capital a/c Dr – 15,000

– 15,000
To Creditors a/c
[Being the value of liabilities of Mr. Max taken over by the business.]
This will result in detailed posting in the Capital account. The single posting by name Sundry Accounts
would be replaced by postings indicating all the assets and liabilities taken over.
Capital a/c
DrCr
J/ J/
F F
05/06/_5 To Creditors a/c – 15,000 05/06/_5 By Sundry Accounts – 50000

30/06/_5 To Balance c/d – 50,000 05/06/_5 By Goods/Stock a/c – 15,000
05/06/_5 By Furniture a/c – 10,000
05/06/_5 By Debtors a/c – 7,000
05/06/_5 By Machinery a/c – 8,000
05/06/_5 By Cash a/c – 25,000
tl 65,000 tl 65,000
01/07/_5 By Balance b/d – 50,000
Capital a/c takes the place of Sundry Accounts in all other accounts reperesenting the assets and liabilities
taken over.
Goods/Stock a/c
DrCr
J/
F
05/06/_5 To Sundry Accounts 30/06/_5 By Balance – 15,000

– 15,000 c/d
Capital a/c
tl 15,000 tl 15,000
01/07/_5 To Balance b/d – 15,000
Are they being taken over from outsiders or do they belong to the owners? This method would not provide
information that gives an answer to such a question.
Even the owners of the business can bring in assets towards their capital contribution or the organisation
may take over some of the owners liabilities thereby reducing their capital.
 Using additional Ledger Accounts
The more the information we need the more the accounting heads we need to maintain.
The transactions involved in the complex compound entry can be recorded using additional ledger
accounts to give a clear picture of the happenings.
Business Purchase a/c is used here.
Amoun
Amount
Particulars L/F t
(Cr)
(Dr)
Goods/Stock a/c Dr – 15,000

– 65,000
To Business Purchase a/c
[Being the value of assets of Mr. Max taken over by the business.]
Business Purchase a/c Dr – 15,000

– 15,000
To Creditors a/c

– 50,000
To Capital a/c
Business Purchase a/c appears in place of Sundry Accounts in the earlier postings.

Goods/Stock a/c
DrCr
J/ Amoun J/
F t F
05/06/_5 To Sundry Accounts 30/06/_5 By Balance c/d – 15,000

– 15,000
Business Purchase a/c
tl 15,000 tl 15,000
01/07/_5 To Balance b/d – 15,000
Creditors a/c
DrCr
J/ J/
F F
19/06/_5 To Cash a/c – 4,500 05/06/_5 By Sundry Accounts

30/06/_5 To Balance c/d – 10,500 – 15,000
tl 15,000 tl 15,000
01/07/_5 By Balance b/d – 10,500
Capital a/c
DrCr
J/ J/
F F
30/06/_5 To Balance c/d – 54,000 05/06/_5 By Sundry Accounts

– 50,000
14/06/_5 – 4,000
By Car a/c
Capital a/c
DrCr
J/ J/
F F
tl 54,000 tl 54,000
01/07/_5 By Balance b/d – 54,000
This will give a clear idea of the postings in the ledger accounts. The following conclusions can be drawn.
 Assets and liabilities changed on account of assets and liabilities relating to another business taken over.
 The net value of business purchase has been paid up by allocating capital.
An additional account appears in the books of accounts.
DrCr
J/ J/
F F
05/06/_5 To Creditors a/c – 15,000 05/06/_5 By Goods/Stock – 15,000

05/06/_5 To Capital a/c – 50,000 05/06/_5 a/c – 10,000
05/06/_5 By Furniture a/c – 7,000
05/06/_5 By Debtors a/c – 8,000
05/06/_5 By Machinery a/c – 25,000
By Cash a/c
tl 65,000 tl 65,000
Problem - 2
Mr. Madhav acquired the business of Mr. Gowrav on 1st April, 20_5. Record the following transactions in the
journal and post them into the ledger of Mr. Madhav. Also prepare a trial balance as on that date.
Apr 1st : Debit Balances on the date of acquisition:
Cash in hand 8,000, Cash at Bank 25,000, Stock of goods 20,000, Furniture 2,000, Buildings 10,000.
Sundry Debtors – Vijay 2,000, Anil 1,000 & Madhu 2,000.
Credit Balances on the date of acquisition:
Sundry creditors – Anand 5,000, Loan from Bablu 10,000
Following were further transactions in the month of April, 20_5;

4th : Sold household furniture for 2,000 and paid the money into business cash.
5th : Cash received from Vijay 1,980 in full settlement of his account.
6th : Paid landlord 1,200 for rent. One – third of the premises is occupied by the proprietor for his own residence.
7th : Goods sold to Anil for 3,000 and to Madhu for 5,000
8th : Sold some furniture for 1,300 (proceeds being received as 700 by cheque and balance in cash)
11th : Interest received from Madhu 200.
12th : Paid to Bablu towards interest 500
13th : Sold goods for cash 5,000.
14th : Cash paid to Anand 2,000
15th : Withdrew goods from business for personal use 2,000.
Solution hide
 Apr 1st
Assets taken over:

Cash 8,000
Bank 25,000
Goods/Stock 20,000
Furniture 2,000
Buildings 10,000
Vijay 2,000
Anil 1,000
Madhu 70,000
2,000
- Liabilities taken over:
Anand 5,000 15,000

Loan from Bablu
10,000 55,000
Net Assets (capital)
 Apr 5th
Total due 2,000

- cash 1,980
received
20
Discount
 Apr 6th
Rent 1,200
+ one-third for proprietors
residence 400
attributable to business
800
 Apr 8th
Sale proceeds of office equipment 1,300

- received by cheque 700
received in cash
600

for the period from April. 1st, 20_5 to April. 15th, 20_5
Amoun
V/R Amount
No. (Cr)
(Dr)
April – Cash a/c Dr – 8,000

st
1 Bank a/c Dr – 25,000
Buildings a/c Dr – 10,000
Vijay a/c Dr – 2,000
Anil a/c Dr – 1,000
Madhu a/c Dr – 2,000
– 5000
To Anand a/c
Amoun
V/R Amount
No. (Cr)
(Dr)
To Loan from Bablu a/c – 10,000

To Capital a/c – 55,000
[Being the amount of assets and liabilities of Mr. Gowrav's business acquired]

– 2,000
To Capital a/c
[Being the amount of cash received from selling personal furniture brought into
business vide receipt no:___ dated:__]

– 2,000
To Vijay a/c
[Being the amount of cash received from Mr. Vijay in full settlement of his due on
account vide receipt no:___ dated:__]
6th – Rent a/c Dr – 800

Drawings a/c Dr – 400
– 1,200
To Cash a/c
[Being the amount of cash paid for rent of office and personal premises of the
proprietor vide voucher no:___ dated:__]
7th – Anil a/c Dr – 3,000

– 8,000
To Sales a/c
Amoun
V/R Amount
No. (Cr)
(Dr)
[Being the value of goods sold on credit to Anil vide invoice No: __ dated:___ and
to Madhu vide invoice No:___ dated:____]
8th – Cash a/c Dr – 600

Bank a/c Dr – 700
– 1,300
To Furniture a/c
[Being the amount of equipment sold and part payment was deposited into
personal bank a/c vide bill no:___ dated:__]
11th – Cash a/c Dr – 200

– 200
[Being the amount of cash received as interest from Mr. Madha vide cash receipt
no:___ dated:__]
12th – Interest paid a/c Dr – 500

– 500
To Cash a/c
[Being the amount of cash paid to Mr. Bablu as interest vide voucher no:___
dated:__]
13th – Cash a/c Dr – 5,000

– 5,000
To Sales a/c
[Being the value of stock sold for cash vide cash receipt no:___ dated:__]
14th – Anand a/c Dr – 2,000

– 2,000
To Cash a/c
Amoun
V/R Amount
No. (Cr)
(Dr)
[Being the amount paid to Anand vide voucher no:___ dated:__]

– 2,000
To Purchases a/c
[Being the value of goods taken by the proprietor for personal use vide on:__]
General Ledger
[Books of Mr. Madhav]
Cash a/c
DrCr
Amoun J/
t F
01/04/_5 To Sundry Accounts – 8,000 06/04/_5 By Rent a/c – 800

04/04/_5 To Capital a/c – 2,000 06/04/_5 By Drawings a/c – 400
05/04/_5 To Vijay a/c – 1,980 12/04/_5 By Interest paid a/c – 500
08/04/_5 To Furniture a/c – 600 14/04/_5 By Anand a/c – 2,000
11/04/_5 To Interest Received a/c – 200 15/04/_5 By Balance c/d – 14,080
13/04/_5 To Sales a/c – 5,000
tl 17,780 tl 17,780
16/04/_5 To Balance b/d – 14,080

Bank a/c
DrCr
J/
F

08/04/_5 To Furniture a/c – 700 c/d
tl 25,700 tl 25,700
16/04/_5 To Balance b/d – 25,700
Goods/Stock a/c
DrCr
J/
F

c/d
tl 20,000 tl 20,000
16/04/_5 To Balance b/d – 20,000
Furniture a/c
DrCr
J/
F
01/04/_5 To Sundry Accounts – 2,000 08/04/_5 By Cash a/c – 600

08/04/_5 By Bank a/c – 700
15/04/_5 By Balance – 700
c/d
Furniture a/c
DrCr
J/
F
tl 2,000 tl 2,000
16/04/_5 To Balance b/d – 700
Buildings a/c
DrCr
J/
F

c/d
tl 10,000 tl 10,000
16/04/_5 To Balance b/d – 10,000
Vijay a/c
DrCr
J/
F
01/04/_5 To Sundry Accounts – 2,000 05/04/_5 By Cash a/c – 1,980

05/04/_5 By Discount Allowed a/c – 20
tl 2,000 tl 2,000
Anil a/c
DrCr
J/
F

07/04/_5 To Sales a/c – 3,000 c/d
tl 4,000 tl 4,000
16/04/_5 To Balance b/d – 4,000
Madhu a/c
DrCr
J/
F

07/04/_5 To Sales a/c – 5,000 c/d
tl 7,000 tl 7,000
16/04/_5 To Balance b/d – 7,000
Anand a/c
DrCr
14/04/_5 To Cash a/c – 2,000 01/04/_5 By Sundry Accounts – 5,000

15/04/_5 To Balance – 3,000
c/d
tl 5,000 tl 5,000
16/04/_5 By Balance b/d – 3,000

Loan from Bablu a/c
DrCr

c/d
tl 10,000 tl 10,000
16/04/_5 By Balance b/d – 10,000
Capital a/c
DrCr

c/d 04/04/_5 By Cash a/c – 2,000
tl 57,000 tl 57,000
16/04/_5 By Balance b/d – 57,000
DrCr
J/
F
05/04/_5 To Vijay a/c – 20 15/04/_5 By Balance c/d – 20
tl 20 tl 20
16/04/_5 To Balance b/d – 20

Rent a/c
DrCr
J/
F
06/04/_5 To Cash a/c – 800 15/04/_5 By Balance c/d – 800
tl 800 tl 800
16/04/_5 To Balance b/d – 800
Drawings a/c
DrCr
J/
F
06/04/_5 To Cash a/c – 400 15/04/_5 By Balance – 2,400

15/04/_5 To Purchases a/c – 2,000 c/d
tl 2,400 tl 2,400
16/04/_5 To Balance b/d – 2,400
Sales a/c
DrCr
Amoun
t
15/04/_5 To Balance c/d – 13,000 07/04/_5 By Anil a/c – 3,000

07/04/_5 By Madhu a/c – 5,000
13/04/_5 By Cash a/c – 5,000
tl 13,000 tl 13,000
16/04/_5 By Balance – 13,000

Sales a/c
DrCr
Amoun
t
b/d
Interest Received a/c
DrCr
Amoun
t
15/04/_5 To Balance c/d – 200 11/04/_5 By Cash a/c – 200
tl 200 tl 200
16/04/_5 By Balance – 200

b/d
Interest paid a/c
DrCr
J/
F
tl 500 tl 500
16/04/_5 To Balance b/d – 500

Purchases a/c
DrCr
15/04/_5 To Balance c/d – 2,000 15/04/_5 By Drawings – 2,000

a/c
tl 2,000 tl 2,000
16/04/_5 By Balance b/d – 2,000
Trial Balance
[Modern Method]
Trial Balance of Mr. Madhav as on 15/04/_5
Amount Amount
Particulars L/F
(Dr) (Cr)
Cash a/c – 14,080 –

Bank a/c – 25,700 –
Goods/Stock a/c – 20,000 –
Furniture a/c – 700 –
Buildings a/c – 10,000 –
Vijay a/c – – –
Anil a/c – 4,000 –
Madhu a/c – 7,000 –
Anand a/c – – 3,000
Loan from Bablu a/c – – 10,000
Rent a/c – 800 –
Sales a/c – – 13,000
Interest Received a/c – – 200
Trial Balance of Mr. Madhav as on 15/04/_5
Amount Amount
Particulars L/F
(Dr) (Cr)
Interest paid a/c – 500 –

Purchases a/c – – 2,000
Total 85,200 85,200
Deriving greater information

The following two methods will help in deriving greater information in case of recording complex compound
journal entries. In both the cases, the postings in the ledger accounts involved in the complex compound entry
vary. However, there will not be any change in the ledger account balance.
 Replacing the complex compound entry with Simple Compound entries

The transactions involved in the complex compound entry relating to purchase of assets and liabilities of
Mr. Gouraw can be interpreted to form two or more simple compound entries to provide clear information
as follows :
Acquired the running business of Gouraw, by taking over the following
 Assets :
Cash in hand 8,000,

Cash at Bank 25,000,
Stock of goods 20,000,
Furniture 2,000,
Buildings 10,000,
Sundry Debtors -
Vijay 2,000,
Anil 1,000 and
Madhu 2,000
 Liabilities :
Sundry creditors -
Anand 5,000,
Loan from Bablu 10,000
Amount Amount
Particulars L/F
(Dr) (Cr)

Bank a/c Dr – 25,000
– 70,000
To Capital a/c
[Being the value of assets of Mr. Gouraw taken over by the business.]
Capital a/c Dr – 15,000

– 5,000
To Anand a/c
– 10,000
To Loan from Bablu a/c
[Being the value of liabilities of Mr. Gouraw taken over by the business.]
This will result in detailed posting in the Capital account. The single posting by name Sundry Accounts
would be replaced by postings indicating all the assets and liabilities taken over.
Capital a/c
DrCr
J/ J/
F F
01/04/_5 To Anand a/c – 5,000 01/04/_5 By Sundry Accounts – 55000

01/04/_5 To Loan from Bablu a/c – 10,000 01/04/_5 By Cash a/c – 8,000
15/04/_5 To Balance c/d – 57,000 01/04/_5 By Bank a/c – 25,000
01/04/_5 By Goods/Stock a/c – 20,000
Capital a/c
DrCr
J/ J/
F F
01/04/_5 By Furniture a/c – 2,000

01/04/_5 By Buildings a/c – 10,000
01/04/_5 By Vijay a/c – 2,000
01/04/_5 By Anil a/c – 1,000
01/04/_5 By Madhu a/c – 2,000
04/04/_5 By Cash a/c – 2,000
tl 72,000 tl 72,000
16/04/_5 By Balance b/d – 57,000
Capital a/c takes the place of Sundry Accounts in all other accounts reperesenting the assets and liabilities
taken over.
Anand a/c
DrCr
14/04/_5 To Cash a/c – 2,000 01/04/_5 By Sundry Accounts

15/04/_5 To Balance – 3,000 – 5,000
Capital a/c
c/d
tl 5,000 tl 5,000
16/04/_5 By Balance b/d – 3,000
 Using additional Ledger Accounts

The more the information we need the more the accounting heads we need to maintain.
The transactions involved in the complex compound entry can be recorded using additional ledger
accounts to give a clear picture of the happenings.
Business Purchase a/c is used here.
Amount Amount
Particulars L/F
(Dr) (Cr)

Bank a/c Dr – 25,000
– 70,000
To Business Purchase a/c
[Being the value of assets of Mr. Gouraw taken over by the business.]

– 5,000
To Anand a/c
– 10,000
To Loan from Bablu a/c
[Being the value of liabilities of Mr. Gouraw taken over by the business.]

– 55,000
To Capital a/c
Business Purchase a/c appears in place of Sundry Accounts in the earlier postings.

Bank a/c
DrCr
J/ Amoun J/
F t F
01/04/_5 To Sundry Accounts 15/04/_5 By Balance c/d – 25,700

– 25,000
08/04/_5 – 700
To Furniture a/c
tl 25,700 tl 25,700
16/04/_5 To Balance b/d – 25,700
Anand a/c
DrCr
J/ J/
F F
14/04/_5 To Cash a/c – 2,000 01/04/_5 By Sundry Accounts 5,000

15/04/_5 To Balance c/d – 3,000 –
tl 5,000 tl 5,000
16/04/_5 By Balance b/d – 3,000
Capital a/c
DrCr
J/ J/
F F
15/04/_5 To Balance c/d – 57,000 01/04/_5 By Sundry Accounts

– 55,000
04/04/_5 – 2,000
Capital a/c
DrCr
J/ J/
F F
By Cash a/c
tl 57,000 tl 57,000
16/04/_5 By Balance b/d – 57,000
This will give a clear idea of the postings in the ledger accounts. The following conclusions can be drawn.
 Assets and liabilities changed on account of assets and liabilities relating to another business taken over.
 The net value of business purchase has been paid up by allocating capital.
An additional account appears in the books of accounts.
DrCr
J/ J/
F F
01/04/_5 To Anand a/c – 5,000 01/04/_5 By Cash a/c – 8,000

01/04/_5 To Loan from Bablu a/c – 10,000 01/04/_5 By Bank a/c – 25,000
01/04/_5 To Capital a/c – 55,000 01/04/_5 By Goods/Stock – 20,000
01/04/_5 a/c – 2,000
01/04/_5 By Furniture a/c – 10,000
01/04/_5 By Buildings a/c – 2,000
01/04/_5 By Vijay a/c – 1,000
01/04/_5 By Anil a/c – 2,000
By Madhu a/c
tl 70,000 tl 70,000
Accounting Cycle - Problems and Solutions
Problem - 1
Journalise the following transactions, post them into ledger and balance the accounts.Also
prepare a trial balance.
Oct. 1 Manohar commenced business 1,00,000

2 Purchased goods from Ravi 10,000
4 Sold goods to Gopi 20,000
5 Cash purchases 20,000
6 Cash paid into bank 10,000
7 Paid for salaries 5,000
8 Sold for cash 20,000
9 Bought furniture paid by cheque 2,000
10 Goods returned to Ravi 2,000
12 Bought goods from Sobhan 10,000
14 Cash paid to Ravi 7,800
Discount received 200
16 Goods returned from Gopi 3,000
17 Deposited cash into bank 10,000
18 Sold goods to Bhuwan 12,000
19 Paid advertisement by cheque 1,000
20 Paid cash to Sobhan 5,000
22 Cash received from Gopi 6,900
Discount allowed to him 100
25 Received interest through cheque 2,000
28 Goods taken by Manohar for own use 1,000
31 Paid for rent 2,000
Solution hide
Journal in the books of Mr. Manohar
for the period from Oct. 1st, _5 to Oct. 31th, _5
V/ Amoun
Amount
(Cr)
No. (Dr)
Oct. – Cash a/c Dr – 1,00,000

1st – 1,00,000
To Capital a/c
[Being the amount of cash received from Mr. Manohar, the proprietor as his
V/ Amoun
Amount
(Cr)
No. (Dr)
capital contribution vide receipt no:__ dated:__]
2nd – Purchases a/c Dr – 10,000

– 10,000
To Ravi a/c
[Being the value stock of goods purchased from Mr. Ravi on credit vide bill no:__
dated:__]
4th – Gopi a/c Dr – 20,000

– 20,000
To Sales a/c
[Being the value of stock sold to MR. Gopi on credit vide bill no:___ dated:__]

– 20,000
To Cash a/c
6th – Bank a/c Dr – 10,000

– 10,000
To Cash a/c
[Being the amount of cash deposited into bank vide bill no:___ dated:__]

– 5,000
To Cash a/c
[Being the amount of cash paid for salaries vide voucher no:___ dated:__]
8th – Cash a/c Dr – 20,000

V/ Amoun
Amount
(Cr)
No. (Dr)
To Sales a/c – 20,000
[Being the value of stock sold for cash vide bill no:___ dated:__]
9th – Furniture a/c Dr – 2,000

– 2,000
To Bank a/c
[Being the value of furniture purchased vide cheque no:___ dated:__]
10th – Ravi a/c Dr – 2,000

– 2,000
To Purchase Returns a/c
[Being the value of stock returned to MR. Ravi vide Debit note no:___ dated:__]

– 10,000
To Shoban a/c
[Being the value stock of goods purchased from Mr. Shoban vide bill no:___
dated:__]
14th – Ravi a/c Dr – 8,000

– 7,800
To Cash a/c
– 200
[Being the amount of cash paid to Mr. Ravi after receiving a discount of 200 vide
Vocher no:___ dated:__]

– 3,000
To Gopi a/c
V/ Amoun
Amount
(Cr)
No. (Dr)
[Being the value of stock returned by Mr. Gopi vide credit note no:___ dated:__]
17th – Bank a/c Dr – 10,000

– 10,000
To Cash a/c
[Being the amount of cash deposited into bank vide voucher no:___ dated:__]
18th – Bhuwan a/c Dr – 12,000

– 12,000
To Sales a/c
[Being the value of stock sold to MR. Bhuwan on credit vide bill no:___ dated:__]
19th – Advertisement a/c Dr – 1,000

– 1,000
To Bank a/c
[Being the amount paid for advertisement vide cheque no:___ dated:__]
20th – Shoban a/c Dr – 5,000

– 5,000
To Cash a/c
[Being the amount paid to shoban vide voucher no:___ dated:__]
22nd – Cash a/c Dr – 6,900

– 7,000
To Gopi a/c
[Being the amount of cash received from Mr. Gopi after allowing a discount of
100 vide receipt no:___ dated:__]
V/ Amoun
Amount
(Cr)
No. (Dr)
25th – Bank a/c Dr – 2,000

– 2,000
To Interest a/c
[Being the amount of cheque no:___ dated:__ received as interest]

– 1,000
To Purchases a/c
[Being the value of stock taken form the business for domestic use vide bill
no:___ dated:__]
31st – Rent a/c Dr – 2,000

– 2,000
To Cash a/c
[Being the amount of cash paid for rent vide voucher no:___ dated:__]
General Ledger
[Books of Mr.Manohar]
Cash a/c
DrCr
J/ J/
F F
01/10/_5 To Capital a/c – 1,00,000 05/10/_5 By Purchases a/c – 20,000

22/10/_5 To Gopi a/c – 6,900 07/10/_5 By Salaries a/c – 5,000
14/10/_5 By Ravi a/c – 7,800
Cash a/c
DrCr
J/ J/
F F
17/10/_5 By Bank a/c – 10,000

20/10/_5 By Shoban a/c – 5,000
31/10/_5 By Rent a/c – 2,000
31/10/_5 By Balance c/d – 67,100
tl 1,26,900 tl 1,26,900
01/11/_5 To Balance b/d – 67,100
Capital a/c
DrCr
Amoun
t
31/10/_5 To Balance c/d – 1,00,000 01/10/_5 By Cash a/c – 1,00,000
tl 1,00,000 tl 1,00,000
01/11/_5 By Balance – 1,00,000

b/d
Purchases a/c
DrCr
J/ J/
F F
02/10/_5 To Ravi a/c – 10,000 28/10/_5 By Drawings a/c – 1,000

12/10/_5 To Shoban a/c – 10,000
Purchases a/c
DrCr
J/ J/
F F
tl 40,000 tl 40,000
01/11/_5 To Balance b/d – 39,000
Ravi a/c
DrCr
10/10/_5 To Purchase Returns a/c – 2,000 02/10/_5 By Purchases a/c – 10,000

14/10/_5 To Cash a/c – 7,800
a/c
tl 10,000 tl 10,000
Gopi a/c
DrCr
Amoun
t

22/10/_5 By Cash a/c – 6,900
22/10/_5 By Discount Allowed – 100
31/10/_5 a/c – 10,000
By Balance c/d
tl 20,000 tl 20,000
01/11/_5 To Balance – 10,000

Gopi a/c
DrCr
Amoun
t
b/d
Sales a/c
DrCr
Amoun
t
31/10/_5 To Balance c/d – 52,000 04/10/_5 By Gopi a/c – 20,000

08/10/_5 By Cash a/c – 20,000
18/10/_5 By Bhuwan a/c – 12,000
tl 52,000 tl 52,000
01/11/_5 By Balance – 52,000

b/d
Bank a/c
DrCr
Amoun
t
06/10/_5 To Cash a/c – 10,000 09/10/_5 By Furniture a/c – 2,000

17/10/_5 To Cash a/c – 10,000 19/10/_5 By Advertisement a/c – 1,000
25/10/_5 To Interest a/c – 2,000 31/10/_5 By Balance c/d – 19,000
tl 22,000 tl 22,000
01/11/_5 To Balance – 19,000

b/d
Salaries a/c
DrCr
J/
F
tl 5,000 tl 5,000
01/11/_5 To Balance b/d – 5,000
Furniture a/c
DrCr
J/
F
tl 2,000 tl 2,000
01/11/_5 To Balance b/d – 2,000
Purchase Returns a/c
DrCr
Amoun
t
31/10/_5 To Balance c/d – 2,000 10/10/_5 By Ravi a/c – 2,000
tl 2,000 tl 2,000
01/11/_5 By Balance – 2,000

b/d
Shoban a/c
DrCr
J/
F

31/10/_5 To Balance c/d – 5,000
tl 10,000 tl 10,000
01/11/_5 By Balance b/d – 5,000
DrCr
Amoun
t
31/10/_5 To Balance c/d – 200 14/10/_5 By Ravi a/c – 200
tl 200 tl 200
01/11/_5 By Balance – 200

b/d
Sales Returns a/c
DrCr
J/
F
16/10/_5 To Gopi a/c – 3,000 31/10/_5 By Balance c/d – 3,000
tl 3,000 tl 3,000
01/11/_5 To Balance b/d – 3,000

Bhuwan a/c
DrCr
J/
F
tl 12,000 tl 12,000
01/11/_5 To Balance b/d – 12,000
Advertisement a/c
DrCr
J/
F
tl 1,000 tl 1,000
01/11/_5 To Balance b/d – 1,000
DrCr
J/
F
22/10/_5 To Gopi a/c – 100 31/10/_5 By Balance c/d – 100
tl 100 tl 100
01/11/_5 To Balance b/d – 100

Interest a/c
DrCr
Amoun
t
31/10/_5 To Balance c/d – 2,000 25/10/_5 By Bank a/c – 2,000
tl 2,000 tl 2,000
01/11/_5 By Balance – 2,000

b/d
Drawings a/c
DrCr
J/
F
28/10/_5 To Purchases a/c – 1,000 31/10/_5 By Balance – 1,000

c/d
tl 1,000 tl 1,000
01/11/_5 To Balance b/d – 1,000
Rent a/c
DrCr
J/
F
tl 2,000 tl 2,000
01/11/_5 To Balance b/d – 2,000

Trial Balance
[Modern Method]
Trial Balance of Mr. Manohar as on 31/10/_5
Amount Amount
Particulars L/F
(Dr) (Cr)
Cash a/c – 67,100 –

Capital a/c – – 1,00,000
Ravi a/c – – –
Gopi a/c – 10,000 –
Sales a/c – – 52,000
Bank a/c – 19,000 –
Purchase Returns a/c – – 2,000
Shoban a/c – – 5,000
Discount Received – – 200
a/c – 3,000 –
Bhuwan a/c – 1,000 –
Advertisement a/c – 100 –
Discount Allowed a/c – – 2,000
Interest a/c – 1,000 –
Rent a/c
Total 1,61,200 1,61,200
Problem - 2
Jounalise the following transactions and post them into the ledger. Also prepare a trial balance.
Nov 1 Venkat & Co. commenced business

with furniture 25,000,
Cash 75,000 and
goods 20,000
2 Sales 10,000
3 Purchases 8,000
5 Sold goods to Mahesh 12,000
6 Bought goods from Ramesh 7,000
9 Sold goods to Kesav for cash 6,000
10 Mahesh returned goods 6,000
11 Commission received 1,000
12 Returned goods to Ramesh 1,500
15 Cash deposited into bank 15,000
16 Bought goods from Suresh 12,000
17 Paid to Ramesh by cheque 4,000
Discount received 200
19 Withdrew from bank for domestic use 3,000
21 Sold goods to Madhav 9,000
22 Cash received from Mahesh 4,000
Discount allowed 100
23 Stationery expenses 500
25 Cash paid to Suresh 3,000
26 Cash received from Madhav 5,000
30 Paid salaries by cheque 3,000
Solution hide
Journal in the books of M/s. Venkat & Co.
for the period from Nov. 1st, _5 to Nov. 31th, _5
Amoun
V/R Amount
No. (Cr)
(Dr)
Oct. – Furniture a/c Dr – 25,000

1st Cash a/c Dr – 75,000
Purchases a/c Dr – 20,000
– 1,20,000
To Capital a/c
[Being the amount of assets brought in by M/s Venkat & Co. as their capital
contribution vide receipt no:___ dated:__]
2nd – Cash a/c Dr – 10,000

Amoun
V/R Amount
No. (Cr)
(Dr)
To Sales a/c – 10,000
[Being the value of stock sold for cash vide bill no:___ dated:__]
3rd – Purchases a/c Dr – 8,000

– 8,000
To Cash a/c
5th – Mahesh a/c Dr – 12,000

– 12,000
To Sales a/c
[Being the value of stock sold to Mahesh vide bill no:___ dated:___]

– 7,000
To Ramesh a/c
[Being the value of stock purchased to Mr. Ramesh on credit vide bill no:___
dated:__]

– 6,000
To Sales a/c
[Being the value of stock sold for cash to Kesav vide voucher no:___ dated:__]

– 6,000
To Mahesh a/c
[Being the value of stock returned by Mahesh vide credit note no:__ dated:__]
Amoun
V/R Amount
No. (Cr)
(Dr)
11th – Cash a/c Dr – 1,000

– 1,000
To Commission a/c
[Being the amount of cash received as commission vide receipt no:____

dated:____]
12th – Ramesh a/c Dr – 1,500

– 1,500
To Purchase Returns a/c
[Being the value of stock returned to Mr. Ramesh vide credit note no:__
dated:__]
15th – Bank a/c Dr – 1,500

– 1,500
To Cash a/c
[Being the amount of cash deposited into bank vide bill no:___ dated:____]

– 12,000
To Suresh a/c
[Being the value of stock Purchased from Mr. Suresh vide bill no:___ dated:__]
17th – Ramesh a/c Dr – 4,200

– 4,000
To Bank a/c
– 200
[Being the amount paid to Ramesh after receiving a discount of 200vide cheque
no:___ dated:__]
Amoun
V/R Amount
No. (Cr)
(Dr)

– 3,000
To Bank a/c
[Being the amount of cash withdrawn from bank for domestic use vide cheque
no:___ dated:__]
21th – Madhav a/c Dr – 9,000

– 9,000
To Sales a/c
[Being the value of stock sold to Madhav on credit vide bill no:___ dated:__]
22nd – Cash a/c Dr – 4,000

– 4,100
To Mahesh a/c
[Being the amount of cash received from Mahesh after allowing a discount of 100
23rd – Stationery a/c Dr – 500

– 500
To Cash a/c
[Being the amount of cash paid for stationery expenses vide bill no:___ dated:__]
25th – Suresh a/c Dr – 3,000

– 3,000
To Cash a/c
[Being the amount of cash paid to Mr. Suresh vide bill no:___ dated:__]
26th – Cash a/c Dr – 5,000

Amoun
V/R Amount
No. (Cr)
(Dr)
To Madhav a/c – 5,000
[Being the amount of cash received from Mr. Madhav vide bill no:___ dated:__]
28th – Bank a/c Dr – 10,000

– 10,000
To Cash a/c
[Being the amount of cash deposited into bank vide bill no:___ dated:____]

– 3,000
To Bank a/c
[Being the amount of cash paid for salaries vide cheque no:___ dated:____]
General Ledger
[Books of M/s. Venkat & Co.]
Furniture a/c
DrCr
J/
F
tl 25,000 tl 25,000
01/12/_5 To Balance b/d – 25,000

Cash a/c
DrCr
J/ J/
F F
01/11/_5 To Capital a/c – 75,000 03/11/_5 By Purchases a/c – 8,000

09/11/_5 To Sales a/c – 6,000 23/11/_5 By Stationery a/c – 500
11/11/_5 To Commission a/c – 1,000 25/11/_5 By Suresh a/c – 3,000
22/11/_5 To Mahesh a/c – 4,000 28/11/_5 By Bank a/c – 10,000
26/11/_5 To Madhav a/c – 5,000 30/11/_5 By Balance c/d – 78,000
tl 1,01,000 tl 1,01,000
01/12/_5 To Balance b/d – 78,000
Purchases a/c
DrCr
J/
F

03/11/_5 To Cash a/c – 8,000
06/11/_5 To Ramesh a/c – 7,000
16/11/_5 To Suresh a/c – 12,000
tl 47,000 tl 47,000
01/12/_5 To Balance b/d – 47,000

Capital a/c
DrCr
J/
F
30/11/_5 To Balance c/d – 1,20,000 01/11/_5 By Furniture a/c – 25,000

01/11/_5 By Cash a/c – 75,000
01/11/_5 By Purchases a/c – 20,000
tl 1,20,000 tl 1,20,000
01/12/_5 By Balance b/d – 1,20,000
Sales a/c
DrCr
Amoun
t

05/11/_5 By Mahesh a/c – 12,000
09/11/_5 By Cash a/c – 6,000
21/11/_5 By Madhav a/c – 9,000
tl 37,000 tl 37,000
01/12/_5 By Balance – 37,000

b/d
Mahesh a/c
DrCr
Amoun
t

22/11/_5 By Cash a/c – 4,000
Mahesh a/c
DrCr
Amoun
t
22/11/_5 By Discount Allowed – 100

30/11/_5 a/c – 1,900
By Balance c/d
tl 12,000 tl 12,000
01/12/_5 To Balance – 1,900

b/d
Ramesh a/c
DrCr
12/11/_5 To Purchase Returns a/c – 1,500 06/11/_5 By Purchases a/c – 7,000

17/11/_5 To Bank a/c – 4,000
30/11/_5 a/c – 1,300
To Balance c/d
tl 7,000 tl 7,000
01/12/_5 By Balance b/d – 1,300
Sales Returns a/c
DrCr
J/
F
10/11/_5 To Mahesh a/c – 6,000 30/11/_5 By Balance c/d – 6,000

Sales Returns a/c
DrCr
J/
F
tl 6,000 tl 6,000
01/12/_5 To Balance b/d – 6,000
Commission a/c
DrCr
Amoun
t
tl 1,000 tl 1,000
01/12/_5 By Balance – 1,000

b/d
Purchase Returns a/c
DrCr
Amoun
t
30/11/_5 To Balance c/d – 1,500 12/11/_5 By Ramesh a/c – 1,500
tl 1,500 tl 1,500
01/12/_5 By Balance – 1,500

b/d
Bank a/c
DrCr
J/ J/
F F
15/11/_5 To Cash a/c – 1,500 17/11/_5 By Ramesh a/c – 4,000

28/11/_5 To Cash a/c – 10,000 19/11/_5 By Drawings a/c – 3,000
30/11/_5 By Salaries a/c – 3,000
30/11/_5 By Balance c/d – 1,500
tl 11,500 tl 11,500
01/12/_5 To Balance b/d – 1,500
Suresh a/c
DrCr
J/
F

30/11/_5 To Balance c/d – 9,000
tl 12,000 tl 12,000
01/12/_5 By Balance b/d – 9,000
DrCr
Amoun
t
30/11/_5 To Balance c/d – 200 17/11/_5 By Ramesh a/c – 200
tl 200 tl 200
DrCr
Amoun
t
01/12/_5 By Balance – 200

b/d
Drawings a/c
DrCr
J/
F
tl 3,000 tl 3,000
01/12/_5 To Balance b/d – 3,000
Madhav a/c
DrCr
J/
F
21/11/_5 To Sales a/c – 9,000 26/11/_5 By Cash a/c – 5,000

30/11/_5 By Balance c/d – 4,000
tl 9,000 tl 9,000
01/12/_5 To Balance b/d – 4,000

DrCr
J/
F
22/11/_5 To Mahesh a/c – 100 30/11/_5 By Balance c/d – 100
tl 100 tl 100
01/12/_5 To Balance b/d – 100
Stationery a/c
DrCr
J/
F
tl 500 tl 500
01/12/_5 To Balance b/d – 500
Salaries a/c
DrCr
J/
F
tl 3,000 tl 3,000
01/12/_5 To Balance b/d – 3,000
Trial Balance
[Modern Method]
Trial Balance of M/s. Venkat & Co. as on 30/11/_5
Amount Amount
Particulars L/F
(Dr) (Cr)

Cash a/c – 78,000 –
Capital a/c – – 1,20,000
Sales a/c – – 37,000
Mahesh a/c – 1,900 –
Ramesh a/c – – 1,300
Commission a/c – – 1,000
Purchase Returns a/c – – 1,500
Bank a/c – 1,500 –
Suresh a/c – – 9,000
Discount Received a/c – – 200
Madhav a/c – 4,000 –
Stationery a/c – 500 –
Total 1,70,000 1,70,000
Illustration 8
Jeyaseeli is a sole proprietor having a provisions store. Following are the transactions during the
month of January, 2018. Journalise them.
Jan. Rs.
1 Commenced business with cash 80,000
2 Deposited cash with bank 40,000
3 Purchased goods by paying cash 5,000

4 Purchased goods from Lipton & Co. on credit 10,000
5 Sold goods to Joy and received cash 11,000
6 Paid salaries by cash 5,000
7 Paid Lipton & Co. by cheque for the purchases made on 4th Jan.
8 Bought furniture by cash 4,000
9 Paid electricity charges by cash 1,000
10 Bank paid insurance premium on furniture as per standing

instructions 300
Solution
Illustration 9
Ananth is a trader dealing in textiles. For the following transactions, pass journal entries for the
month of January, 2018.
Jan. Rs.
2 Purchased goods from X and Co. on credit 30,000
4 Bought a building from L and Co. on credit 95,000

5 Cash withdrawn from bank for office use 5,000
6 Cash withdrawn from bank for personal use of Ananthu 4,000
7 Towels given as charities 3,000
8 Shirts taken over by Ananth for personal use 12,000
9 Sarees distributed as free samples 3,000
10 Goods (table clothes) used for office use 200

Solution
Illustration 10
Arun is a trader dealing in automobiles. For the following transactions, pass journal entries for
the month of January, 2018
Jan. Rs.
2 Purchased goods from X and Co. on credit 40,000
3 Accepted bill drawn by X and Co. 20,000
4 Sold goods to D and Co. on credit 10,000
5 Paid by cash the bill drawn by X and Co.
6 Received cheque from D and Co. in full settlement and deposited the same in bank 9,000
7 Commission received in cash 5,000
8 Goods costing Rs. 40,000 was sold and cash received 50,000
9 Salaries paid in cash 4,000
10 Building purchased from Kumar and Co. for Rs. 1,00,000 and an advance of Rs. 20,000 is given
in cash
Solution
Illustration 11
Bragathish is a trader dealing in electronic goods who commenced his business in 2015. For the
following transactions took place in the month of March 2018, pass journal entries.
March Rs.
1. Purchased goods from Y and Co. on credit 60,000
2. Sold goods to D and Co. on credit 30,000
3. Paid Y and Co. through bank in full settlement 58,000

4. D and Co. accepted a bill drawn by Bragathish 30,000
5. Sold goods to L on credit 20,000
6. Sold goods to M on credit 40,000
7 Received a cheque from M in full settlement and deposited the same to the bank 39,000
8. Goods returned to Y and Co. 4,000
9. L became insolvent and only 90 paise per rupee is received by cash in final settlement
10. Goods returned by M 3,000

Solution
Illustration 12
Valluvar is a sole trader dealing in textiles. From the following transactions, pass journal entries
for the month of March, 2018.
March Rs.
with goods 60,000
2 Purchased 20 readymade shirts from X and Co. on credit 10,000
3 Cash deposited into bank through Cash Deposit Machine 30,000
4 Purchased 10 readymade sarees from Y and Co. by cash 6,000
5 Paid X and Co. through NEFT
6 Sold 5 sarees to A and Co. on credit 4,000
7 A and Co. deposited the amount due in Cash Deposit Machine
8 Purchased 20 sarees from Z & Co. and paid through debit card 12,000
9 Stationery purchased for and paid through net banking 6,000
10 Bank charges levied 200

Solution
Illustration 13
Deri is a sole trader dealing in automobiles. From the following transactions, pass journal entries
for the month of January, 2018.
Jan. Rs.
1 Commenced business with cash 1,00,000
with goods 2,00,000
with buildings 5,00,000
2 Purchased goods from A and Co. on credit 3,00,000

4 Purchased goods from B and Co. and payment made through credit card 5,000
5 Paid A and Co. through RTGS
6 Sold goods to C and Co. and cheque received 50,000
7 Deposited the cheque received from C and Co. with the bank
8 Purchased goods from Z & Co. and paid through debit card 12,000
9 Stationery purchased for and paid through net banking 6,000
10 Income tax of Deri is paid by cheque 10,000

Solution
Illustration 14
Chandran is a sole trader dealing in sports items. From the following transactions, pass journal
entries for the month of March, 2018.
March Rs.
2 Cash deposited into bank 3,00,000
3 Purchased goods from Ravi and payment made through net banking 90,000
4 Sales made to Kumar, who deposited the money through CDM 10,000
5 Sales made to Vivek, who made the payment by debit card 60,000
6 Sold goods to Keerthana, who made the payment through credit card 50,000
7 Dividend directly received by bank 2,000
8 Money withdrawn from ATM 3,000
9 Salaries paid through ECS 6,000
10 Cricket bats donated to a trust 10,000

Solution
Illustration 15
Deepak is a dealer in stationery items. From the following transactions, pass journal entries for
the month of January and February, 2018.
Jan. Rs.
2 Opened a bank account by depositing cash 1,00,000
3 ‘A 4 papers’ sold on credit to Padmini and Co. 60,000
4 Bills received from Padmini and Co. for the amount due
5 Bills received from Padmini and Co. discounted with the bank 58,000 Feb.
15 Bills of Padmini and Co. dishonoured
Solution

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 a sales journal to record ALL CREDIT SALES

July 5 Sold to Robby Red on credit. Sales Journal

July 6 Paid shipping cost. Cash Disbursements Jo

July 10 Sold inventory for cash. Cash Receipts Journal

July 12 Purchased inventory on credit. Purchases Journal

July 15 Received payment from Robby Red. Cash Receipts Journal

July 16 Returned damaged merchandise to supplier . General Journal

July 20 Paid utility bill. Cash Disbursements Jo

July 25 Paid for July 15 purchase. Cash Disbursements Jo

July 30 Sold to Bobby Blue on credit. Sales Journal

Mr. Nirmal has the following transactions in the month of April.

Write Journal Entries for the transactions.

10th April : Commenced business with a capital of 1,00,000

April 10th – Cash a/c Dr – 1,00,000

[Being the amount received from Mr. Nirmal in cash, the

11th – Goods/Stock a/c Dr – 20,000

[Being the value of stock purchased from Mr. Veeru on credit

13th – Goods/Stock a/c Dr – 15,000

14th – Goods/Stock a/c Dr – 9,000

16th – Goods/Stock a/c Dr – 12,000

17th – Tarun a/c Dr – 15,000

[Being the value of stock sold on credit to Mr. Tarun vide

19th – Cash a/c Dr – 20,000

20th – Cash a/c Dr – 6,000

21st – Pranav a/c Dr – 17,000

22nd – Veeru a/c Dr – 3,000

[Being the value of goods returned to Mr. Veeru vide returns

23rd – Goods/Stock a/c Dr – 1,000

25rd – Drawings a/c Dr – 1,000

[Being the value of stock taken by the proprietor vide bill

[Being the amount paid for land purchased on:__]

27th – Machinery a/c Dr – 45,000

28th – Computers a/c Dr – 25,000

[Being the value of a computer purchased from M/S Intel

29th – Cash a/c Dr – 15,000

29th – Goods/Stock a/c Dr – 22,000

30th – Drawings a/c Dr – 10,000

[Being the amount of cash paid for furniture purchased for

3rd May : Cash deposited into bank 60,000

4th May : Loan given to Bhuvan 20,000

5th May : Paid to Veeru by cheque 15,000

5th May : Cash received from Tarun 12,000

5th May : Took loan from Anush 15,000

6th May : Cheque received from Pranav 15,000

6th May : Paid to Intel Computers by cheque 17,000

6th May : Withdrew from bank 5,000

7th May : Withdrew from bank for office use 8,000

7th May : Cash received from Bhuvan on loan account 10,000

8th May : Withdrew from bank for personal use 1,000

8th May : Cash taken by proprietor for personal use 3,000

9th May : Bought furniture and paid by cheque 15,000

9th May : Paid to Anush by cheque on loan account 5,000

9th May : Brought additional capital of 25,000

May – Bank a/c Dr – 60,000

4th – Loan to Bhuvan a/c Dr – 20,000

To Cash a/c – 20,000

4th – Veeru a/c Dr – 20,000

5th – Veeru a/c Dr – 15,000

5th – Cash a/c Dr – 12,000

5th – Cash a/c Dr – 15,000

[Being the amount of loan taken from Anush on:__]

6th – Bank a/c Dr – 15,000