NCERT solutions for Class 11 chapter 3 - Recording of Transactions

Chapter 3
Recording of Transactions  

Short Answer

   State the three fundamental steps in the accounting process.

   Why is the evidence provided by source documents important to accounting?

   Should a transaction be first recorded in a journal or ledger? Why?

   Are debits or credits listed first in journal entries? Are debits or credits indented?

   Why are some accounting systems called double accounting systems?

   Give a specimen of an account.

   Why are the rules of debit and credit same for both liability and capital?

   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.

   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?

   Describe how debits and credits are used to analyse transactions

   Describe how accounts are used to record information about the effects of transactions?

   What is a journal? Give a specimen of journal showing at least five entries.

   Differentiate between source documents and vouchers

   Accounting equation remains intact under all circumstances. Justify the statement with the help of an example

   Explain the double entry mechanism with an illustrative 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

   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

   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:

(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:

(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.

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.

   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%)