Q.

1 Pass journal entries for the following:

2019

Purchased goods from Henry for ₹ 50,000 on 10% trade

Jan. 6
discount and 4% cash discount and paid 60% amount by cheque.

Bought goods from Amit for ₹ 2,00,000 at terms 5% cash

Jan.
discount and 20% trade discount. Paid 3/4th of the amount in
15
cash at the time of purchase.

Sold goods to Sherpa at the list price of ₹ 50,000 less 20% trade
Jan.
discount and 4% cash discount if the payment is made within 7
18
days. 75% payment is received by cheque on Jan. 23rd.

Sold goods to Garima for ₹ 1,00,000, allowed her 20% trade

discount and 5% cash discount if the payment is made within 15
Jan. days. She paid 1/4th of the amount by cheque on Feb. 5th and
25 60% of the remainder on Feb.15th in cash

Q.2 Rajan purchased a machine on 1st October, 2017 for ₹ 5,00,000 plus CGST and SGST @
6% each. He paid ₹ 20,000 for loading/unloading and carriage expenses to the bring the machine
to factory. He further incurred ₹ 25,000 for installing the machine. Determine:
 How much amount did Rajan pay to vendor of machine?
 How much amount will be debited to Machinery Account?
Pass the Journal Entries giving effect to the transaction.

Q.3 How will you deal with the following items in accounting equation (answer any
three):
(i) Interest due but not received
(ii) Rent received in advance
(iii) Insurance premium paid in advance
(iv) Salaries due but not paid.

Q.4 State the rules of debit and credit on the basis of nature of accounts.
ANSWER:1
Journal
In the Books of …
Date Particulars L.F. Debit Amount (₹) Credit Amount (₹)
2019
Jan. Purchases A/c Dr. 45,000
06
To Bank A/c (WN1) 25,920
To Discount Received A/c 1,080
To Henry’s A/c 18,000
(Goods purchased and discount
received on cash payment)

Jan. Purchases A/c Dr. 1,60,000

15
To Bank A/c 1,14,000
To Discount Received A/c 6,000
To Amit’s A/c 40,000
(Goods purchased and discount
received on cash payment)

Jan. Sherpa’s A/c Dr. 40,000

18
To Sales A/c 40,000
(Goods sold to Sherpa on
credit)

Jan. Bank A/c Dr. 28,800

23
Discount Allowed A/c Dr. 1,200
To Sherpa’s A/c 30,000
(75% payment received by
Sherpa and allowed cash
discount)

Jan. Garima’s A/c Dr. 80,000

25
To Sales A/c 80,000
(Goods sold to Garima on
credit)

Feb. Bank A/c Dr. 19,000

05
Discount Allowed A/c Dr. 1,000
 To Garima’s A/c 20,000
(Cheque received from Garima
and allowed cash discount)

Feb. Cash A/c* Dr. 60,000

15
To Garima’s A/c 60,000
(Cash received from
Garima)
TOTAL 4,35,000 4,35,000

Working Notes:

WN1: Calculation of Payment made to Henry

WN2: Calculation of Payment made to Amit

*Note: Cash discount can be availed only if the payment is made within 15
days. Since payment is made on Feb. 15, thus, no discount is to be allowed to
her.

ANS.-2
ANS-4 On the basis of the nature of accounts the rules of debit and credit are explained below:

 Asset, Expense and loss account:

Debit the increase, Credit the decrease.
 Liability accounts, Income and gain account: Debit the decrease, Credit the increase.
 Capital accounts: Debit the decrease, Credit the increase.