Journals, Ledgers and Trial Balance

1. Present journal in the books of K. K. Co. from the following transactions:

2008 Rs
Dec 1 Started business with a capital of 50,000
Dec 6 Paid into bank 20,000
Dec 8 Purchased goods for cash 4,000
Dec 9 Paid to Ram 1,980
Dec 9 Discount allowed by him 20
Dec 10 Cash Sales 3,000
Dec 12 Sold to Hari for cash 2,000
Dec 15 Purchased goods from Ram 4,000
Dec 18 Paid wages to workers 300
Dec 20 Received from Pankaj allowed him discount
Rs 50 1,000
Dec 22 Withdrawn from bank 3,000
Dec 25 Paid Ram by cheque 500
Dec 31 Withdrawn for personal use 200
2. On 1 January, 2019 the following were the balances of Rajan & Co.:
st

Cash in hand - ₹ 900; Cash at bank - ₹ 21,000; Soni (Cr.) - ₹ 3,000; Zahir (Dr.) - ₹ 2,400; Stock - ₹ 12,000;
Prasad (Cr.) - ₹ 6,000; Sharma (Dr.) - ₹ 4,500; Lal - ₹ 2,700.
Transactions during the month were –

2019 Details ₹
Jan 2 Bought goods from Prasad @ 12.5% VAT 2,700
Jan 3 Sold to Sharma @12.5% VAT 3,000
Jan 5 Sold to Lal goods for cash @ 12.5% VAT 3,600
Jan 7 Took goods for personal use 200
Jan Received from Zahir in full settlement 2,350
13
Jan Paid to Soni in full settlement 2,920
17
Jan Paid cash for stationery 50
22
Jan Paid to Prasad by cheque 2,987.50
29
Discount allowed 50
Jan Provide interest on capital 100
30
Rent due to landlord 200
Journalize the above transactions and post them into ledgers and prepare the Trial Balance.
3. Record the following transactions in the journal of Delhi Furniture Mart:

2019 Details
Jan 1 Started business with cash ₹ 10,000
Jan 2 Deposited into bank ₹ 9,000
Jan 3 Purchased machinery for ₹ 5,000 from Jawahar and gave him a cheque for the
amount
Jan Paid installation charges of machinery ₹ 100
15
Jan Purchased timber from Naveen of the list price of ₹ 2,000. He allowed 10% trade
20 discount.
 Jan Furniture costing ₹ 500 was used in furnishing the office.
23
Jan Sold furniture to Naresh of the list price of ₹ 1,000 and allowed him 5% trade
25 discount.
Jan Received a cheque from Naresh for ₹ 930 in full settlement and sent the cheque to
28 bank
Jan Sent to Naveen in full settlement a cheque for ₹ 1,750.
29
Jan Paid wages ₹ 350 and rent ₹ 200.
31
Also post the above transactions into ledgers and prepare the Trial Balance.
4. The clerk of a businessman wrongly prepared the following Trial Balance. You are required to draw-up a Trial
Balance correctly stating reasons in brief:

Sl. Head of Accounts L.F. Debit Credit

No.

1 Capital 60,000

2 Stock at Commencement 5,000

3 Discount Allowed 500

4 Commission Received 700

5 Fixed Assets 60,000

6 Sales 85,000

7 Purchases 45,000

8 Return Outward 1,000

9 Return Inward 2,000

10 Carriage Inward 600

11 Carriage Outward 700

12 Wages & Salary 25,000

13 Bills Receivable 7,000

14 Debtors 9,000

15 Bills Payable 7,000

16 Rent 3,000

17 Interest Paid 2,000

18 Cash 800

19 Creditors 6,900

20 Stock at the end 33,800

 TOTAL 1,77,500 1,77,500

5. The total of the debit side of the Trial Balance of a large boot and shoe repairing company as at 31 st December,
2018 is ₹ 1,66,590 and that of the credit side is ₹ 42,470.
After several checking and re-checking’s, the following mistakes are discovered:

Name of the Accounts Correct Figure (as it should Figure as it appears in the
be) Trial Balance
Opening Stock 14,900 14,800
Repairs 61,780 61,780 (appear on debit side)
Rent and Rates 2,160 2,400
Sundry Creditors 6,070 5,900
Sundry Debtors 8,060 8,310
Ascertain the correct total of the Trial Balance.

Types of Accounts

Accounts

Personal Accounts Impersonal Accounts Valuation Accounts

(Individual, Company, (Provision for Bad

Bank, etc) Debts, Provision for

Real Accounts Nominal Accounts Depreciation)

(Tangible and Intangible Assets) (Expenses and Incomes,

Losses and Gains)

Rule of Debit and Credit

Golden Rule of Accounting (Traditional Rule)

1. Personal Account – Dr. The Receiver

Cr. The Giver
2. Real Account - Dr. What comes in
Cr. What goes out
3. Nominal Account – Dr. Expenses and Losses
Cr. Incomes and Gains
4. Valuation Account – Dr. When account is decreased
Cr. When account is increased
Modern Concept (American Concept of Accounting)

1. Increase in Asset ---------- Dr. 2. Increase in Liabilities -------------- Cr.

Decrease in Asset --------- Cr. Decrease in Liabilities ------------- Dr.

3. Increase in Stock ---------- Dr. 4. Increase in Capital ----------------- Cr.

Decrease in Stock --------- Cr. Decrease in Capital ---------------- Dr.

5. Increase in Expenses ----- Dr. 6. Increase in Incomes --------------- Cr.

Decrease in Expenses ---- Cr. Decrease in Incomes -------------- Dr.

Steps in Preparing a Journal Entry

1. First of all, identify the transaction. Whether it is a financial transaction or not.
2. Each transaction should be viewed from the point of business.
3. There should be two items in a transaction. You have to identify them.
4. Then you have to see that to what type of account that item belongs.
5. Then apply the golden rule or the modern concept and see whether it is debit or credit.

Illustration:

1. Goods sold for cash ₹ 1,000

Cash A/c ---- Dr.

Sales A/c ---- Cr.
2. Goods purchased for cash ₹ 1,500

Purchases A/c ------ Dr.

Cash A/c ------ Cr.

Solutions:
1. Journal Entries

Date Particulars L.F. Debit Credit

₹ ₹
2008 Cash A/c …. Dr. 50,000
Dec 1 To Capital A/c 50,000
(Being cash brought in business or capital invested in
business)
Dec 6 Bank A/c …. Dr. 20,000
To Cash A/c 20,000
(Being cash paid deposited in bank)
Dec 8 Purchases A/c …. Dr. 4,000
To Cash A/c 4,000
(Being goods purchased in cash)
Dec 9 Ram A/c …. Dr 2,000
To Cash A/c 1,980
To Discount Received 20
(Being cash paid to Ram and discount received)
Dec 10 Cash A/c ….. Dr. 3,000
To Sales A/c 3,000
(Being goods sold for cash)
Dec 12 Cash A/c ….. Dr 2,000
To Sales A/c 2,000
(Being goods sold to Hari for cash)
Dec 15 Purchases A/c ….. Dr. 4,000
To Ram A/c 4,000
(Being goods purchased from Ram)
Dec 18 Wages A/c ----- Dr. 300
To Cash A/c 300
(Being wages paid to workers)
Dec 20 Cash A/c ----- Dr. 1,000
Discount Allowed A/c ---- Dr. 50
To Pankaj A/c 1,050
(Being cash received from Pankaj, allowed him
discount of ₹ 50)
Dec 22 Cash A/c ----- Dr. 3,000
To Bank A/c 3,000
(Being cash withdrawn from bank)
Dec 25 Ram A/c ------- Dr. 500
To Bank A/c 500
(Being paid to Ram by cheque)
Dec 31 Drawings A/c ----- Dr. 200
To Cash A/c 200
(Being cash withdrawn for personal use)

Dr. Cash A/c Cr.

Date Particulars ₹ Date Particulars ₹

2008 To Capital A/c 50,000 2008 By Bank A/c 20,000
Dec 1 Dec 6
Dec 10 To Sales A/c 3,000 Dec 8 By Purchases A/c 4,000
Dec 12 To Sales A/c 2,000 Dec 9 By Ram A/c 1,980
Dec 20 To Pankaj A/c 1,000 Dec 18 By Wages A/c 300
Dec 22 To Bank A/c 3,000 Dec 31 By Drawings A/c 200
Dec 31 By Balance c/d 32,520

59,000 59,000
2009 To Balance b/d 32,520
Jan 1

Dr. Capital A/c Cr.

Date Particulars ₹ Date Particulars ₹

2008 To Balance c/d 50,000 2008 By Cash A/c 50,000
Dec 31 Dec 1

50,000 50,000
2009 By Balance b/d 50,000
Jan 1
Dr. Bank A/c Cr.

Date Particulars ₹ Date Particulars ₹

2008 To Cash A/c 20,000 2008 By Cash A/c 3,000
Dec 6 Dec 22
Dec 25 By Ram A/c 500
Dec 31 By Balance c/d 16,500
20,000 20,000
2009 To Balance b/d 16,500
Jan 1
Dr. Purchases A/c Cr.

Date Particulars ₹ Date Particulars ₹

2008 To Cash A/c 4,000 2008 By Balance c/d 8,000
Dec 8 Dec 31
Dec 15 To Ram A/c 4,000

8,000 8,000
2009 To Balance b/d 8,000
Jan 1
Dr. Sales A/c Cr.

Date Particulars ₹ Date Particulars ₹

2008 To Balance c/d 5,000 2008 By Cash A/c 3,000
Dec 31 Dec 10
Dec 12 By Cash A/c 2,000

5,000 5,000
2009 By Balance b/d 5,000
Jan 1
Dr. Ram A/c Cr.

Date Particulars ₹ Date Particulars ₹

2008 To Cash A/c 1,980 Dec 15 By Purchases 4,000
Dec 9
Dec 9 To Discount Received A/c 20
Dec 25 To Bank A/c 500
Dec 31 To Balance c/d 1,500

4,000 4,000
2009 By Balance b/d 1,500
Jan 1
Dr. Discount Received A/c Cr.

Date Particulars ₹ Date Particulars ₹

2008 To Balance c/d 20 2008 By Ram A/c 20
Dec 31 Dec 9

20 20
2009 By Balance b/d 20
Jan 1
Dr. Wages A/c Cr.

Date Particulars ₹ Date Particulars ₹

2008 To Cash A/c 300 2008 By Balance c/d 300
Dec 18 Dec 31

300 300
2009 By Balance b/d 300
Jan 1

Dr. Pankaj A/c Cr.

Date Particulars ₹ Date Particulars ₹

2008 To Balance c/d 1,050 2008 By Cash A/c 1,000
Dec 31 Dec 20
Dec 20 By Discount Allowed A/c 50

1,050 1,050
2009 By Balance b/d 1,050
Jan 1
Dr. Discount Allowed A/c Cr.

Date Particulars ₹ Date Particulars ₹

2008 To Pankaj A/c 50 2008 By Balance c/d 50
Dec 20 Dec 31

50 50
2009 To Balance b/d 50
Jan 1
Dr. Drawings A/c Cr.

Date Particulars ₹ Date Particulars ₹

2008 To Cash A/c 200 2008 By Balance c/d 200
Dec 31 Dec 31

200 200
2009 To Balance b/d 200
Jan 1
Trial Balance

As on …………

Particulars Dr. Cr.

₹ ₹
Cash A/c 32,520
Capital A/c 50,000
Bank A/c 16,500
Purchases A/c 8,000
Sales A/c 5,000
Ram A/c 1,500
Discount Received A/c 20
Wages A/c 300
Pankaj A/c 1,050
Discount Allowed A/c 50
Drawings A/c 200
Total 57,570 57,570

All Assets, Expenses & Losses ---------------- Dr.

All Liabilities, Incomes & Gains --------------- Cr.