Chapter 3
Recording of Transactions
Recording of Transactions
Short Answer
What is the purpose of posting J.F numbers that are entered in the journal at the time entries are posted to the accounts?
What entry (debit or credit) would you make to:
(a) increase revenue
(b) decrease in expense,
(c) record drawings
(d) record the fresh capital introduced by the owner.
(a) increase revenue
(b) decrease in expense,
(c) record drawings
(d) record the fresh capital introduced by the owner.
If a transaction has the effect of decreasing an asset, is the decrease recorded as a debit or as a credit? If the transaction has the effect of decreasing a liability, is the decrease recorded as a debit or as a credit?
Long Answer
Describe the events recorded in accounting systems and the importance of source documents in those systems?
Accounting equation remains intact under all circumstances. Justify the statement with the help of an example
Long Answer
Prepare accounting equation on the basis of the following:
(a) Harsha started business with cash ₹ 2,00,000
(b) Purchased goods from Naman for cash ₹ 40,000
(c) Sold goods to Bhanu costing ₹ 10,000/- ₹ 12,000
(d) Bought furniture on credit ₹ 7,000
(a) Harsha started business with cash ₹ 2,00,000
(b) Purchased goods from Naman for cash ₹ 40,000
(c) Sold goods to Bhanu costing ₹ 10,000/- ₹ 12,000
(d) Bought furniture on credit ₹ 7,000
Prepare accounting equation from the following:
Kunal started business with cash ₹ 2,50000
He purchased furniture for cash ₹ 35,000
He paid commission ₹ 2,000
He purchases goods on credit ₹ 40,000
He sold goods (Costing ₹ 20,000) for each ₹ 26,000
Kunal started business with cash ₹ 2,50000
He purchased furniture for cash ₹ 35,000
He paid commission ₹ 2,000
He purchases goods on credit ₹ 40,000
He sold goods (Costing ₹ 20,000) for each ₹ 26,000
Mohit has the following transactions, prepare accounting equation:
| (a) | Business started with cash | ₹ 1,75,000 |
| (b) | Purchased goods from Rohit | ₹ 50,000 |
| (c) | Sales goods on credit to Manish (Costing ₹ 17,500) | ₹ 20,000 |
| (d) | Purchased furniture for office use | ₹ 10,000 |
| (e) | Cash paid to Rohit in full settlement | ₹ 48,500 |
| (f) | Cash received from Manish | ₹ 20,000 |
| (g) | Rent paid | ₹ 1,000 |
| (h) | Cash withdrew for personal use | ₹ 3,000 |
Rohit has the following transactions:
Prepare the Accounting Equation to show the effect of the above transactions on the assets, liabilities and capital.
| (a) | Commenced business with cash | ₹ 1,50,000 |
| (b) | Purchased machinery on credit | ₹ 40,000 |
| (c) | Purchased goods for cash | ₹ 20,000 |
| (d) | Purchased car for personal use | ₹ 80,000 |
| (e) | Paid to creditors in full settlement | ₹ 38,000 |
| (f) | Sold goods for cash costing ₹ 5,000 | ₹ 4,500 |
| (g) | Paid rent | ₹ 1,000 |
| (h) | Commission received in advance | ₹ 2,000 |
Prepare the Accounting Equation to show the effect of the above transactions on the assets, liabilities and capital.
Use accounting equation to show the effect of the following transactions of M/s Royal Traders:
| (a) | Started business with cash | ₹ 1,20,000 |
| (b) | Purchased goods for cash | ₹ 10,000 |
| (c) | Rent received | ₹ 5,000 |
| (d) | Salary outstanding | ₹ 2,000 |
| (e) | Prepaid Insurance | ₹ 1,000 |
| (f) | Received interest | ₹ 700 |
| (g) | Sold goods for cash (Costing ₹ 5,000) | ₹ 7,000 |
| (h) | Goods destroyed by fire | ₹ 500 |
Show the accounting equation on the basis of the following transaction:
| (a) | Udit started business with: | |
| (i) Cash | ₹ 5,00,000 | |
| (ii) Goods | ₹ 1,00,000 | |
| (b) | Purchased building for cash | ₹ 2,00,000 |
| (c) | Purchased goods from Himani | ₹ 50,000 |
| (d) | Sold goods to Ashu (Cost ₹ 25,000) | ₹ 36,000 |
| (e) | Paid insurance premium | ₹ 3,000 |
| (f) | Rent outstanding | ₹ 5,000 |
| (g) | Depreciation on building | ₹ 8,000 |
| (h) | Cash withdrawn for personal use | ₹ 20,000 |
| (i) | Rent received in advance | ₹ 5,000 |
| (j) | Cash paid to himani on account | ₹ 20,000 |
| (k) | Cash received from Ashu | ₹ 30,000 |
Show the effect of the following transactions on Assets, Liabilities and Capital through accounting equation:
| (a) | Started business with cash | ₹ 1,20,000 |
| (b) | Rent received | ₹ 10,000 |
| (c) | Invested in shares | ₹ 50,000 |
| (d) | Received dividend | ₹ 5,000 |
| (e) | Purchase goods on credit from Ragani | ₹ 35,000 |
| (f) | Paid cash for household Expenses | ₹ 7,000 |
| (g) | Sold goods for cash (costing ₹ 10,000) | ₹ 14,000 |
| (h) | Cash paid to Ragani | ₹ 35,000 |
| (i) | Deposited into bank | ₹ 20,000 |
Show the effect of following transaction on the accounting equation:
| (a) | Manoj started business with | |
| (i) Cash | ₹ 2,30,000 | |
| (ii) Goods | ₹ 1,00,000 | |
| (iii) Building | ₹ 2,00,000 | |
| (b) | He purchased goods for cash | ₹ 50,000 |
| (c) | He sold goods (costing ₹ 20,000) | ₹ 35,000 |
| (d) | He purchased goods from Rahul | ₹ 55,000 |
| (e) | He sold goods to Varun (Costing ₹ 52,000) | ₹ 60,000 |
| (f) | He paid cash to Rahul in full settlement | ₹ 53,000 |
| (g) | Salary paid by him | ₹ 20,000 |
| (h) | Received cash from Varun in full settlement | ₹ 59,000 |
| (i) | Rent outstanding | ₹ 3,000 |
| (j) | Prepaid Insurance | ₹ 2,000 |
| (k) | Commission received by him | ₹ 13,000 |
| (l) | Amount withdrawn by him for personal use | ₹ 20,000 |
| (m) | Depreciation charge on building | ₹ 10,000 |
| (n) | Fresh capital invested | ₹ 50,000 |
| (o) | Purchased goods from Rakhi | ₹ 6,000 |
Transactions of M/s Vipin Traders are given below.
Show the effects on Assets, Liabilities and Capital with the help of accounting Equation:
Show the effects on Assets, Liabilities and Capital with the help of accounting Equation:
| (a) | Business started with cash | ₹ 1,25,000 |
| (b) | Purchased goods for cash | ₹ 50,000 |
| (c) | Purchase furniture from R.K. Furniture | ₹ 10,000 |
| (d) | Sold goods to Parul Traders (Costing ₹ 7,000 vide bill no. 567) | ₹ 9,000 |
| (e) | Paid cartage | ₹ 100 |
| (f) | Cash Paid to R.K. furniture in full settlement | ₹ 9,700 |
| (g) | Cash sales (costing ₹ 10,000) | ₹ 12,000 |
| (h) | Rent received | ₹ 4,000 |
| (i) | Cash withdrew for personal use | ₹ 3,000 |
Bobby opened a consulting firm and completed these transactions during November, 2017:
(a) Invested ₹ 4,00,000 cash and office equipment with ₹ 1,50,000 in a business called Bobbie Consulting.
(b) Purchased land and a small office building. The land was worth ₹ 1,50,000 and the building worth ₹ 3,50,000. The purchase price was paid with ₹ 2,00,000 cash and a long-term note payable for ₹ 3,00,000.
(c) Purchased office supplies on credit for ₹ 12,000
(d) Bobbie transferred title of motor car to the business. The motor car was worth ₹ 90,000.
(e) Purchased for ₹ 30,000 additional office equipment on credit.
(f) Paid ₹ 75,00 salary to the office manager
(g) Provided services to a client and collected ₹ 30,000
(h) Paid ₹ 4,000 for the month’s utilities.
(i) Paid supplier created in transaction c.
(j) Purchase new office equipment by paying ₹ 93,000 cash and trading in old equipment with a recorded cost of ₹ 7,000.
(k) Completed services of a client for ₹ 26,000. This amount is to be paid within 30 days
(l) Received ₹ 19,000 payment from the client created in transaction k
(m) Bobby withdrew ₹ 20,000 from the business.
Analyse the above stated transactions and open the following T-accounts: Cash, client, office supplies, motor car, building, land, long-term payables, capital, withdrawals, salary, expense and utilities expense.
(a) Invested ₹ 4,00,000 cash and office equipment with ₹ 1,50,000 in a business called Bobbie Consulting.
(b) Purchased land and a small office building. The land was worth ₹ 1,50,000 and the building worth ₹ 3,50,000. The purchase price was paid with ₹ 2,00,000 cash and a long-term note payable for ₹ 3,00,000.
(c) Purchased office supplies on credit for ₹ 12,000
(d) Bobbie transferred title of motor car to the business. The motor car was worth ₹ 90,000.
(e) Purchased for ₹ 30,000 additional office equipment on credit.
(f) Paid ₹ 75,00 salary to the office manager
(g) Provided services to a client and collected ₹ 30,000
(h) Paid ₹ 4,000 for the month’s utilities.
(i) Paid supplier created in transaction c.
(j) Purchase new office equipment by paying ₹ 93,000 cash and trading in old equipment with a recorded cost of ₹ 7,000.
(k) Completed services of a client for ₹ 26,000. This amount is to be paid within 30 days
(l) Received ₹ 19,000 payment from the client created in transaction k
(m) Bobby withdrew ₹ 20,000 from the business.
Analyse the above stated transactions and open the following T-accounts: Cash, client, office supplies, motor car, building, land, long-term payables, capital, withdrawals, salary, expense and utilities expense.
Journalising
Journalise the following transactions in the books of Himanshu:
| 2017 | ₹ | |
| Dec.01 | Business started with cash | 75,000 |
| Dec.07 | Purchased goods for cash | 10,000 |
| Dec.09 | Sold goods to Swati | 5,000 |
| Dec.12 | Purchased furniture | 3,000 |
| Dec.18 | Cash received from Swati In full settlement | 4,000 |
| Dec.25 | Paid rent | 1,000 |
| Dec.30 | Paid salary | 1,500 |
Enter the following Transactions in the Journal of Mudit:
| 2017 | ₹ | |
| Jan.01 | Commenced business with cash | 1,75,000 |
| Jan.01 | Building | 1,00,000 |
| Jan.02 | Goods purchased for cash | 75,000 |
| Jan.03 | Sold goods to Ramesh | 30,000 |
| Jan.04 | Paid wages | 500 |
| Jan.06 | Sold goods for cash | 10,000 |
| Jan.10 | Paid for trade expenses | 700 |
| Jan.12 | Cash received from Ramesh | 29,500 |
| Discount allowed | 500 | |
| Jan.14 | Goods purchased for Sudhir | 27,000 |
| Jan.18 | Cartage paid | 1,000 |
| Jan.20 | Drew cash for personal use | 5,000 |
| Jan.22 | Goods use for household | 2,000 |
| Jan.25 | Cash paid to Sudhir 26,700 | 26,700 |
| Discount allowed | 300 |
Journalise the following transactions:
| 2017 | ₹ | |
| Dec.01 | Hema started business with cash | 1,00,000 |
| Dec.02 | Open a bank account with SBI | 30,000 |
| Dec.04 | Purchased goods from Ashu | 20,000 |
| Dec.06 | Sold goods to Rahul for cash | 15,000 |
| Dec.10 | Bought goods from Tara for cash | 40,000 |
| Dec.13 | Sold goods to Suman | 20,000 |
| Dec.16 | Received cheque from Suman | 19,500 |
| Discount allowed | 500 | |
| Dec.20 | Cheque given to Ashu on account | 10,000 |
| Dec.22 | Rent paid by cheque | 2,000 |
| Dec.23 | Deposited into bank | 16,000 |
| Dec.25 | Machine purchased from Parigya | 10,000 |
| Dec.26 | Trade expenses | 2,000 |
| Dec.28 | Cheque issued to Parigya | 10,000 |
| Dec.29 | Paid telephone expenses by cheque | 1,200 |
| Dec.31 | Paid salary | 4,500 |
Jouranlise the following transactions in the books of Harpreet Bros:
(a) ₹ 1,000 due from Rohit are now bad debts.
(b) Goods worth ₹ 2,000 were used by the propriet
(c) Charge depreciation @ 10% p.a for two month on machine costing `30,000.
(d) Provide interest on capital of ₹ 1,50,000 at 6% p.a. for 9 months
(e) Rahul become insolvent, who owed is ₹ 2,000 a final dividend of 60 paise in a rupee is received from his estate.
(a) ₹ 1,000 due from Rohit are now bad debts.
(b) Goods worth ₹ 2,000 were used by the propriet
(c) Charge depreciation @ 10% p.a for two month on machine costing `30,000.
(d) Provide interest on capital of ₹ 1,50,000 at 6% p.a. for 9 months
(e) Rahul become insolvent, who owed is ₹ 2,000 a final dividend of 60 paise in a rupee is received from his estate.
Prepare Journal from the transactions given below:
| (a) | Cash paid for installation of machine | ₹ 500 |
| (b) | Goods given as charity | ₹ 2,000 |
| (c) | Interest charge on capital @7% p.a. when total capital were | ₹ 70,000 |
| (d) | Received ₹ 1,200 of a bad debts written-off last year | |
| (e) | Goods destroyed by fire | ₹ 2,000 |
| (f) | Rent outstanding | ₹ 1,000 |
| (g) | Interest on drawings | ₹ 900 |
| (h) | Sudhir Kumar who owed me ₹ 3,000 has failed to pay the amount. He pays me a compensation of 45 paise in a rupee. | |
| (i) | Commission received in advance | ₹ 7,000 |
Posting
Journalise the following transactions, post to the ledger:
| 2017 | ₹ | |
| Nov.01 | Business started with | |
| (i) Cash | 1,50,000 | |
| (ii) Goods | 50,000 | |
| Nov.03 | Purchased goods from Harish | 30,000 |
| Nov.05 | Sold goods for cash | 12,000 |
| Nov.08 | Purchase furniture for cash | 5,000 |
| Nov.10 | Cash paid to Harish on account | 15,000 |
| Nov.13 | Paid sundry expenses | 200 |
| Nov.15 | Cash sales | 15,000 |
| Nov.18 | Deposited into bank | 5,000 |
| Nov.20 | Drew cash for personal use | 1,000 |
| Nov.22 | Cash paid to Harish in full settlement of account | 14,700 |
| Nov.25 | Good sold to Nitesh | 7,000 |
| Nov.26 | Cartage paid | 200 |
| Nov.27 | Rent paid | 1,500 |
| Nov.29 | Received cash from Nitesh | 6,800 |
| Discount allowed | 200 | |
| Nov.30 | Salary paid | 3,000 |
Journalise the following transactions is the journal of M/s. Goel Brothers and post them to the ledger:
| 2017 | ₹ | |
| Jan.01 | Started business with cash | 1,65,000 |
| Jan.02 | Opened bank account in PNB | 80,000 |
| Jan.04 | Goods purchased from Tara | 22,000 |
| Jan.05 | Goods purchased for cash | 30,000 |
| Jan.18 | Goods sold to Naman | 12,000 |
| Jan.10 | Cash paid to Tara | 22,000 |
| Jan.15 | Cash received from Naman | 11,700 |
| Discount allowed | 300 | |
| Jan.16 | Paid wages | 200 |
| Jan.18 | Furniture purchased for office use | 5,000 |
| Jan.20 | Withdrawn from bank for personal use | 4,000 |
| Jan.22 | Issued cheque for rent | 3,000 |
| Jan.23 | Goods issued for household purpose | 2,000 |
| Jan.24 | Drawn cash from bank for office use | 6,000 |
| Jan.26 | Commission received | 1,000 |
| Jan.27 | Bank charges | 200 |
| Jan.28 | Cheque given for insurance premium | 3,000 |
| Jan.29 | Paid salary | 7,000 |
| Jan.30 | Cash sales | 10,000 |
Give journal entries of M/s Mohit traders, Post them to the Ledger from the following transactions:
| August 2017 | ₹ | |
| 1. | Commenced business with cash | 1,10,000 |
| 2. | Opened bank account with H.D.F.C. | 50,000 |
| 3. | Purchased furniture | 20,000 |
| 7. | Bought goods for cash from M/s Rupa Traders | 30,000 |
| 8. | Purchased good from M/s Hema Traders | 42,000 |
| 10. | Sold goods for cash | 30,000 |
| 14. | Sold goods on credit to M/s. 2020 Gupta Traders | 12,000 |
| 16. | Rent paid | 4,000 |
| 18. | Paid trade expenses | 1,000 |
| 20. | Received cash from Gupta Traders | 12,000 |
| 22. | Goods return to Hema Traders | 2,000 |
| 23. | Cash paid to Hema Traders | 40,000 |
| 25. | Bought postage stamps | 100 |
| 30. | Paid salary to Rishabh | 4,000 |
Journalise the following transaction in the Books of the M/s Bhanu Traders and Post them into the Ledger.
| December 2017 | ₹ | |
| 1. | Started business with cash | 92,000 |
| 2. | Deposited into bank | 60,000 |
| 3. | Bought goods on credit from Himani | 40,000 |
| 6. | Purchased goods from cash | 20,000 |
| 8. | Returned goods to Himani | 4,000 |
| 10. | Sold goods for cash | 20,000 |
| 14. | Cheque given to Himani | 36,000 |
| 17. | Goods sold to M/s Goyal Traders | 3,50,000 |
| 19. | Drew cash from bank for personal use | 2,000 |
| 21. | Goyal traders returned goods | 3,500 |
| 22. | Cash deposited into bank | 20,000 |
| 26. | Cheque received from Goyal Traders | 31,500 |
| 28. | Goods given as charity | 2,000 |
| 29. | Rent paid | 3,000 |
| 30. | Salary paid | 7,000 |
| 31. | Office machine purchased for cash | 3,000 |
Journalise the following transaction in the Book of M/s Beauti traders. Also post them in the ledger.
| Dec. 2017 | ₹ | |
| 1. | Started business with cash | 2,00,000 |
| 2. | Bought office furniture | 30,000 |
| 3. | Paid into bank to open an current account | 1,00,000 |
| 5. | Purchased a computer and paid by cheque | 2,50,000 |
| 6. | Bought goods on credit from Ritika | 60,000 |
| 8. | Cash sales | 30,000 |
| 9. | Sold goods to Karishna on credit | 25,000 |
| 12. | Cash paid to Mansi on account | 30,000 |
| 14. | Goods returned to Ritika | 2,000 |
| 15 | Stationery purchased for cash | 3,000 |
| 16. | Paid wages | 1,000 |
| 18. | Goods returned by Karishna | 2,000 |
| 20. | Cheque given to Ritika | 28,000 |
| 22. | Cash received from Karishna on account | 15,000 |
| 24. | Insurance premium paid by cheque | 4,000 |
| 26. | Cheque received from Karishna | 8,000 |
| 28. | Rent paid by cheque | 3,000 |
| 29. | Purchased goods on credit from Meena Traders | 20,000 |
| 30. | Cash sales | 14,000 |
Journalise the following transaction in the books of Sanjana and post them into the ledger:
| January 2017 | ₹ | |
| 1. | Cash in hand | 6,000 |
| Cash at bank | 55,000 | |
| Stock of goods | 40,000 | |
| Due to Rohan | 6,000 | |
| Due from Tarun | 10,000 | |
| 3. | Sold goods to Karuna | 15,000 |
| 4. | Cash sales | 10,000 |
| 6. | Goods sold to Heena | 5,000 |
| 8. | Purchased goods from Rupali | 30,000 |
| 10. | Goods returned from Karuna | 2,000 |
| 14. | Cash received from Karuna | 13,000 |
| 15. | Cheque given to Rohan | 6,000 |
| 16. | Cash received from Heena | 3,000 |
| 20. | Cheque received from Tarun | 10,000 |
| 22. | Cheque received from to Heena | 2,000 |
| 25. | Cash given to Rupali | 18,000 |
| 26. | Paid cartage | 1,000 |
| 27. | Paid salary | 8,000 |
| 28. | Cash sale | 7,000 |
| 29. | Cheque given to Rupali | 12,000 |
| 30. | Sanjana took goods for Personal use | 4,000 |
| 31. | Paid General expense | 500 |
Record journal entries for the following transactions in the books of Anudeep of Delhi:
(a) Bought goods ₹ 2,00,000 from Kanta of Delhi (CGST @ 9%, SGST @ 9%)
(b) Bought goods ₹ 1,00,000 for cash from Rajasthan (IGST @ 12%)
(c) Sold goods ₹ 1,50,000 to Sudhir of Punjab (IGST @ 18%)
(d) Paid for Railway Transport Rs. 10,000 (CGST @ 5%, SGST @ 5%)
(e) Sold goods ₹ 1,20,000 to Sidhu of Delhi (CGST @ 9%, SGST @ 9%)
(f) Bought Air-Condition for office use ₹ 60,000 (CGST @ 9%, SGST @ 9%)
(g) Sold goods ₹ 1,50,000 for cash to Sunil to Uttar Pradesh (IGST 18%)
(h) Bought Motor Cycle for business use ₹ 50,000 (CGST 14%, SGST @ 14%)
(i) Paid for Broadband services ₹ 4,000 (CGST @ 9%, SGST @ 0%)
(j) Bought goods ₹ 50,000 from Rajesh, Delhi (CGST @ 9%, SGST @ 9%)