Financial and

Management
Accounting By:
BITS Pilani Hema N C
hema.nc@wilp.bits-pilani.ac.in
Work Integrated Learning
Programmes Division
 BITS Pilani
Work Integrated Learning
Programmes Division

Journal – Practice Problems

 Journal Entries: Debit and Credit
Rule
Personal Accounts
Debit (Dr.) Credit (Cr.)
Receiver Giver

Real Accounts

Debit (Dr.) Credit (Cr.)

Comes in to the Business Goes out from the Business

Nominal Accounts
Debit (Dr.) Credit (Cr.)
Expenses or Loss of the Business Income or Profit of the Business

01/29/2023 BITS Pilani, WILPD

 Journal Entries: Debit and Credit
Rule
Assets Accounts
Debit Credit
Increase in asset Decrease in Assets
Liabilities Accounts

Debit Credit

Decrease in Liabilities Increase in Liabilities

Owner’s Equity Accounts

Debit Credit
Decrease in OE Increase in OE
Revenue and Expenses
Debit Credit
Expenses or Loss of the Business Revenue or Income or Profit of the
Business

01/29/2023 BITS Pilani, WILPD

 Journal Entries – Practice
Problems
Prepare the Journal Entries for the following transactions of W Company for the
month of July 2021

1. Cash sales for the month Rs.55,000/-

2. Credit sales during the month Rs.36000/-
3. Cash received from customers for the previous month sales Rs.15750/-
4. Cheque issued to suppliers for last month purchases Rs.24000/-
5. Credit purchases during the month Rs.29000/-
6. Rent paid for the month of June Rs.8000/-
7. Received advance from Customers for next month sales Rs.18000/-
8. Salaries paid for June Rs.16000/-
9. Interest earned on deposits with Bank Rs.15700/-
10. Loan raised from the Bank Rs.100000/-
11. Cash drawn for personal use Rs.10000/-

01/29/2023 BITS Pilani, WILPD

Journal Entries – Practice Problems
Since the data is given for the month as a whole, dates are not
mentioned in the JEs

July Cash Sales for the month Rs.55,000/-

Analysis Asset (Cash) increased. Revenue (Sales)increased
Rule Debit asset to record increase. Credit Revenue to record increase
Entry Cash A/C Dr………………………………………………55,000/-
To Sales A/C.…………………………………55,000/-
Accounts Cash Account, Sales Account

July Credit Sales for the month Rs.36,000/-

Analysis Asset (Trade Receivables) increased. Revenue (Sales) increased.
Rule Debit asset to record increase. Credit Revenue to record increase
Entry Trade Receivables A/C Dr…………………………………36,000/-
To Sales A/C …………………………………………. 36,000/-
Accounts Trade Receivables A/c, Sales A/c.

01/29/2023 BITS Pilani, WILPD

Practice Problem Solution
July Cash received from customers for the previous month sales Rs.15750/-
Analysis Asset (Cash) increased. Asset (Trade receivables) decreased
Rule Debit asset to record increase. Credit asset to record decrease
Entry Cash A/C Dr………………………………………………15,750/-
To Trade receivables A/c.……………………15,750/-
Accounts Cash Account, Trade receivables Account

July Cheque issued to suppliers for last month purchases Rs.24000/-

Analysis Asset (Bank) decreased, Liability (Trade payables) decreased
Rule Debit Liability to record the decrease, Credit Asset to record the decrease
Entry Trade Payables A/C Dr……………………24,000/-
To Bank A/C ………………………24,000/-
Accounts Bank A/c, Trade payables A/c

01/29/2023 BITS Pilani, WILPD

 Practice Problem Solution
July Credit purchases during the month Rs.29000/-
Analysis Expenses (Purchases) increased. Liability (Trade payables) increased
Rule Debit expense to record increase. Credit liability to record increase
Entry Purchases A/C Dr………………………………29,000/-
To Trade Payables A/C ……………..29,000/-
Accounts Cash Account, Trade Payables Account

July Rent paid for the month of June Rs.8000/-

Analysis Expense (Rent) increased, Asset (Cash) decreased
Rule Debit expense to record increase. Credit asset to record decrease
Entry Rent A/C Dr………………………8,000/-
To, Cash A/c…………………8,000/-
Accounts Rent Account, Cash Account

01/29/2023 BITS Pilani, WILPD

 Practice Problem Solution
July Received advance from Customers for next month sales Rs.18000/-
Analysis Asset (Cash) increased. Liability (Advance from Customers) increased
Rule Debit asset to record increase. Credit Liability to record increase
Entry Cash A/C Dr…………………………………….………………18,000/-
To Advance from Customers A/C ………………..18,000/-
Accounts Cash Account, Advances from Customers

July Salaries paid for June Rs.16000/-

Analysis Asset (Cash) decreased. Expense (Salaries) increased
Rule Debit Expense to record increase. Credit Asset to record decrease
Entry Salaries A/C Dr……………16,000/-
To Cash A/C …………16,000/-
Accounts Cash Account, Salaries Account

01/29/2023 BITS Pilani, WILPD

 Practice Problem Solution
July Interest earned on deposits with Bank Rs.15700/-
Analysis Asset (Bank) increased. Revenue (Interest on Deposits) increased
Rule Debit asset to record increase. Credit Revenue to record increase
Entry Bank A/C Dr………………………………………………15,700/-
To Interest on Deposits.…………………………………15,700/-
Accounts Bank Account, Interest on Deposits

July Loan raised from the Bank Rs.100000/-

Analysis Asset (Bank) increased. Liability (Loan from Bank) increased
Rule Debit asset to record increase. Credit Liability to record increase
Entry Bank A/C Dr………………………………………1,00,000/-
To Loan from Bank.………………………1,00,000/-
Accounts Bank Account, Loan from Bank Account

01/29/2023 BITS Pilani, WILPD

Exercise : Journal Entries
July Cash drawn from Bank for personal use Rs.10000/-
Analysis Asset (Bank) decreased. Drawings increased
Rule Credit asset to record decrease. Debit Drawings
Entry Drawings A/C Dr………………………10,000/-
To Bank A/C .…………………………………10,000/-
Accounts Bank Account, Drawings Account

01/29/2023 BITS Pilani, WILPD

Exercise : Journal Entries
Following are some of the financial transactions for the month of August 2021of
XYZ, a designer company
Date Transactions
August 1 Pavan invested Rs.5,00,000 cash in XYZ Company shares and received 5000
shares of Rs.100/- each in the share capital of the company
August 2 Bought Stationery for cash , Rs.2,000/-
August 3 Paid office rent for July, Rs.15,000/-
August 4 Bought equipment from S Company for Rs.90,000/- with a down payment of
Rs.30,000/- and agreed to pay the balance in six equal instalments on the
last day of the month beginning August.
August 5 Signed an agreement with Design wear for developing a special design. The
agreement provided for payment of a fee of Rs.35,000/- upon completion of
the work.
August 6 Paid for repairs to Equipment Rs.9,500/-
August 7 Received payment for designs supplied, Rs.20,000/-

01/29/2023 BITS Pilani, WILPD

Exercise:
XYZ, a business that supplies new designs for dresses. Following are some of the financial transactions for
the month of August 2021.
Date Transactions
August 8 Advance received from Kids world, a customer, for designs to be provided
later Rs.15000/-
August 9 Bought Computers on credit from Y, Rs.35000/-
August 10 Cash paid for office expenses Rs.15000/-
August 14 Paid Y on account , Rs.10,000/-
August 18 Received from Dinesh & Company, Rs. 4,000/- for designs supplied
August 21 Appointed an office manager on monthly salary of Rs.25,000/-
August 27 Paid telephone bill, Rs.1,200/-
August 28 Paid office assistant’s July salary, Rs.4,500/-
August 29 Electricity bill due Rs.1,200/-
August 30 Paid S Company, Rs.10,000/- towards instalment due for August

01/29/2023 BITS Pilani, WILPD

Exercise: Solution
August 1 Pavan invested Rs.5,00,000/- cash in XYZ and received 5000 shares of
Rs.100 each in the share capital of the company
Analysis Asset (Cash) increased. Equity (Share Capital) increased
Rule Debit asset to record increase. Credit equity to record increase
Entry August 1 Cash A/C Dr………………………………………………5,00,000/-
To Share Capital A/C Cr.…………………………………5,00,000/-
Accounts Cash Account, Share Capital Account

August 2 Bought Stationery for cash , Rs.2,000/-

Analysis Expense (Stationery) increased. Asset (Cash) decreased.
Rule Debit Expense to record increase. Credit asset to record decrease
Entry August 2 Stationery A/C Dr……………………2,000/-
To Cash A/C Cr.………………………………2,000/-
Accounts Stationery A/C, Cash A/C

01/29/2023 BITS Pilani, WILPD

Exercise: Solution
August 3 Paid office rent for July, Rs.15,000/-
Analysis Expenses (Rent) increased. Asset (Cash) decreased
Rule Debit expenses to record increase. Credit asset to record decrease
Entry August 3 Rent Expense A/C Dr……………………………15,000/-
To Cash A/C .…………………………………………..15,000/-
Accounts Rent Expense A/C, Cash A/C

August 4 Bought equipment from S Company for Rs.90,000/- with a down payment
of Rs.30,000/- and agreed to pay the balance in six equal instalments on
the last day of the month beginning August.
Analysis Asset (Equipment) increased. Asset (Cash) decreased. Liability (non-trade
payables) increased
Rule Debit asset to record increase. Credit asset to record decrease. Credit liability
to record increase
Entry August 4 Equipment A/C Dr…………………………………90,000/-
To Cash A/C Cr.………………………………………….30,000/-
To Non-trade Payables – S Company…………….60,000/-
Accounts Equipment A/C, Cash A/C, Non-trade Payable – S Company A/C

01/29/2023 BITS Pilani, WILPD

 Exercise: Solution
August 5 Signed an agreement with Design wear for developing a special design. The
agreement provided for payment of a fee of Rs.35,000/- upon completion
of the work. .
Analysis Signing an agreement with a customer is not an accounting transaction since
it does not create any asset or revenue. FCC will earn the revenue when it
completes the design. No entry is to be passed. This is an information about
the future assignment.

August 6 Paid for repairs to equipment, Rs.9,500/-

Analysis Expense (Repairs) increased. Asset (Cash) decreased.

Rule Debit Expense to record increase. Credit asset to record decrease.

Entry August 6 Repairs A/C Dr…………………………9,200/-

To Cash A/C Cr.………………………………………9,200/-

Accounts Repairs A/C, Cash A/C

01/29/2023 BITS Pilani, WILPD
Exercise: Solution
August 7 Received payment for designs supplied, Rs.20,000/-
Analysis Asset (Cash) increased. Revenue (Sales) increased.
Rule Debit asset to record increase. Credit revenue to record increase.
Entry June 7 Cash A/C Dr……………………………20,000/-
To Sales A/C …………………….………20,000/-
Accounts Cash A/C, Sales A/C

August 8 Advance received from Kids world, a customer, for designs to be provided
later Rs.15000/-

Analysis Asset (Cash) increased. Liability (Advance from Customers) increased

Rule Debit asset to record increase. Credit liability to record increase.

Entry August 8 Cash A/C Dr…………………………………15,000/-

To Advance from Customers A/c……………………15,000/-

Accounts Cash A/C, Advance from Customers A/C

01/29/2023 BITS Pilani, WILPD
Exercise: Solution
August 9 Bought computers on credit from Y, Rs.35000/-
Analysis Asset (Computers) increased. Liability (Non Trade Payables - Y) increased.
Rule Debit asset to record increase. Credit liability to record increase.
Entry August 9 Computers A/C Dr…………………………………35000/-
To Non Trade Payable- Y A/C Cr ……………………………..35000/-
Accounts Computers A/C, Non Trade Payable (Y) A/C

August 10 Cash paid for office expenses Rs.15000/-

Analysis Expense (Office expenses) increased. Asset (cash) decreased

Rule Debit expense to record increase. Credit asset to record decrease.
Entry August 10 Office expenses A/C Dr……………………15,000/-
To Cash A/c…………………………….…15,000/-
Accounts Office expense A/c, Cash A/c

01/29/2023 BITS Pilani, WILPD

Exercise: Solution
August 14 Paid Y on account , Rs.10,000/-
Analysis Liability (Non Trade Payables - Y) decreased. Assets (Cash) decreased.
Rule Debit liability to record decrease. Credit assets to record decrease.
Entry August 14 Non Trade Payable-Y A/C Dr…………………………………10,000/-
To Cash A/C …………………………………………….10,000/-
Accounts Non Trade Payables – Y A/C, Cash A/C

August 18 Received from Dinesh & Company, Rs. 4,000/- for designs supplied

Analysis Asset (Cash) increased. Revenue (Sales) increased

Rule Debit asset to record increase. Credit Revenue to record increase.
Entry August 18 Cash A/C Dr……………………………4,000/-
To Sales…………4,000/-
Accounts Sales A/C, Cash A/C

01/29/2023 BITS Pilani, WILPD

Exercise: Solution
August 21 Appointed an office manager on monthly salary of Rs.25,000/-
Analysis Appointing an employee is not an accounting transaction since it does not
result in any outflow of cash or liability. FCC will record an expense after the
office manager has provided services and the salary is paid or is payable.

August 27 Paid telephone bill, Rs.1,200/-

Analysis Expenses (Telephone exps) increased. Asset (Cash) decreased

Rule Debit expenses to record increase. Credit asset to record decrease.
Entry August 27 Telephone exps A/C Dr…………………………1,200/-
To Cash A/C Cr……………..……………………1,200/-
Accounts Telephone exps A/C, Cash A/C

01/29/2023 BITS Pilani, WILPD

Exercise: Solution

August 28 Paid office assistant’s July salary, Rs.4,500/-

Analysis Expenses (Salaries) increased. Asset (Cash) decreased

Rule Debit expenses to record increase. Credit asset to record decrease.
Entry August 28 Salaries A/C Dr…………………………4,500/-
To Cash A/C Cr……………..……………………………4,500/-
Accounts Salaries A/C, Cash A/C

August 29 Electricity bill due Rs.1,200/-

Analysis Expenses (Electricity Bill) increased. Liability (Ele. bill payable) increased
Rule Debit expenses to record increase. Credit liability to record increase.
Entry August 29 Electricity Bill A/C Dr………………………1,200/-
To Electricity bill payable A/C ……………..……1,200/-
Accounts Electricity Bill A/C, Electricity bill payable A/C

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Exercise: Solution

June 30 Paid S Company, Rs.10,000/- towards instalment due for August

Analysis Liability (Non-Trade Payable) decreased. Asset (Cash) decreased

Rule Debit liability to record decrease. Credit asset to record decrease.
Entry June 30 Non-Trade Payable S Company A/C Dr…………………………10,000/-
To Cash A/C ……………………………………10,000/-
Accounts Non-trade Payable – S Company A/C, Cash A/C

01/29/2023 BITS Pilani, WILPD

 HW – Journalise the following
transactions

1. Received an order for supply of goods from Gopal & Sons for Rs.1,50,000/-
2. Received and order for supply of goods from Ramesh & Co for Rs.3,00,000/-
along with an advance of Rs.1,00,000/- by cheque
3. Placed an order for supply of goods with S Kumar & Sons for Rs.4,50,000/-
and paid an advance of Rs.1,50,000/-
4. Sold goods to Y on credit Rs.2,25,000/-
5. Received Rs.1500/- from sale of old newspapers and magazines
6. Paid Rs.2,75,000/- to S Kumar & Sons in full and final settlement of the
account
7. Supplied goods to Ramesh & Co.
8. Allowed a discount of Rs.10,000/- to Ramesh & Co.
9. Purchased goods for Rs.60000/- and incurred Rs.2500/- towards cartage on
this
10. Received the balance amount from Ramesh & Co.

01/29/2023 BITS Pilani, WILPD