Get summaries, questions, answers, solutions, notes, extras, theories, practicles, PDF, and guide of Chapter 4 Rules of Debit And Credit-Journal, NBSE Class 9 Book Keeping (BK) textbook, which is part of the syllabus of students studying under Nagaland Board. These solutions, however, should only be treated as references and can be modified/changed.
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Summary
In business, many types of transactions take place, such as buying and selling goods, paying and receiving money. Every transaction must be recorded properly with supporting documents like cash memos, invoices, and cheques. These documents are called source documents. Transactions are first recorded in the journal, following the rules of debit and credit, before being transferred to the ledger.
The words “debit” and “credit” come from Latin. Debit means “what is due to that account,” and credit means “what is due from that account.” In simple terms, debit is used when something is received, while credit is used when something is given. In accounting, every account has two sides: the left side is called the debit side, and the right side is the credit side. If money is paid to a creditor, the creditor’s account is debited. If money is received from a debtor, the debtor’s account is credited.
An account is a record of all transactions related to a particular item or person. It shows the amount, the direction of money flow, and the effect of each transaction. Accounts are usually drawn in a “T” format, with separate sides for debit and credit.
There are two ways to classify accounts: the traditional approach and the modern approach.
Under the traditional approach, accounts are divided into personal and impersonal accounts. Personal accounts are related to individuals or organisations. They are further divided into natural personal accounts (for human beings), artificial personal accounts (for companies, banks, and institutions), and representative personal accounts (which represent people, such as outstanding rent). The rule for personal accounts is: “Debit the receiver, credit the giver.”
Impersonal accounts are divided into real accounts and nominal accounts. Real accounts deal with assets, which can be tangible (land, buildings, cash) or intangible (goodwill, trademarks). The rule for real accounts is: “Debit what comes in, credit what goes out.” Nominal accounts deal with business expenses, losses, incomes, and gains, such as salaries, rent, and sales. The rule for nominal accounts is: “Debit all expenses and losses, credit all incomes and gains.”
In the modern approach, accounts are divided into five categories: assets, liabilities, capital, revenue, and expenses. In asset accounts, an increase is debited, and a decrease is credited. In liability accounts, an increase is credited, and a decrease is debited. Capital follows the same rule as liabilities. Revenue accounts are credited when income increases and debited when it decreases. Expense accounts are debited when costs rise and credited when they fall.
A journal is a book where transactions are first recorded in order of occurrence. It is called the book of original entry. Each entry is written in a specific format, showing the date, the accounts involved, the amounts, and a short description called a narration.
There are different types of journal entries. A simple journal entry affects only two accounts, while a compound journal entry affects more than two. An opening entry is made at the beginning of a new accounting year to carry forward the closing balances from the previous year.
Discounts are of two types: trade discount and cash discount. A trade discount is given to encourage bulk purchases and is not recorded in the books. A cash discount is given to encourage quick payments and is recorded separately.
Recording transactions in the journal ensures that no entry is missed, helps in tracking money flow, and makes it easier to post entries into the ledger. However, journals have limitations, such as being time-consuming for large businesses.
Understanding the rules of debit and credit is necessary for accurate financial records. By following these rules, businesses can keep track of their transactions and prepare financial statements correctly.
Video tutorial
Textbook solutions
Multiple Choice Questions (MCQs)
1. Out of the following the Artificial Personal Account is:
(a) Account of Insurance Company
(b) Ram’s Account
(c) Outstanding Salary Account
(d) Drawings Account
Answer : (a) Account of Insurance Company
2. Out of the following Representative Personal Account is:
(a) Shyam’s Account
(b) Bank Account
(c) Prepaid Insurance Account
(d) Cash Account
Answer : (c) Prepaid Insurance Account
3. The Rule of Real Account is:
(a) Debit all expenses and credit all incomes
(b) Debit what comes in and credit what goes out
(c) Debit the Receiver and Credit the Giver
(d) Debit the Giver and Credit the Receiver
Answer : (b) Debit what comes in and credit what goes out
4. The Rule of Nominal Account is:
(a) Debit what comes in and credit what goes out
(b) Debit what goes out and credit what comes in
(c) Debit all expenses and losses and credit all incomes and gains
(d) Debit all incomes and gains and credit all expenses and losses
Answer : (c) Debit all expenses and losses and credit all incomes and gains
5. Cash discount is given:
(a) On cash payment
(b) On sale of goods
(c) On purchase of goods on credit
(d) On receipt of cash before time
Answer : (d) On receipt of cash before time
6. Real accounts are related to
(a) Assets
(b) Expenses, losses and incomes
(c) Debtors, Creditors etc.
(d) None of these
Answer : (a) Assets
7. Out of the following which is a feature of Journal:
(a) Journal is a book in which all the transactions are recorded, as and when they take place.
(b) A Journal has record of daily transactions, as and when they take place.
(c) In Journal, all the transactions are recorded in chronological order.
(d) All of the above.
Answer : (d) All of the above.
8. Goods worth 7,000 given away as charity would be credited to:
(a) Sales A/c
(b) Purchases A/c
(c) Charity A/c
(d) Trustee A/c
Answer : (b) Purchases A/c
9. In case of Personal Accounts, the rule of Journalising are:
(a) Debit the receiver and credit the giver
(b) Debit what comes in and credit what goes out
(c) Debit the expenses and losses and credit the incomes and gains
(d) Debit increase and Credit decrease.
Answer : (a) Debit the receiver and credit the giver
10. What shall be the amount of Capital if Cash is 5,000; Furniture ₹ 12,000; Stock ₹ 30,000 and Creditors ₹ 6,000?
(a) 53,000
(b) 47,000
(c) 41,000
(d) 52,000
Answer : (c) 41,000
11. Which account in the following will be credited on giving of goods in donation?
(a) Purchases Account
(b) Sales Account
(c) Donation Account
(d) Cash Account
Answer : (a) Purchases Account
12. The Types of Accounts are:
(a) One
(b) Two
(c) Three
(d) Four
Answer : (c) Three
13. Goods taken for personal use are called
(a) As Asset
(b) Liability
(c) Capital
(d) Drawings
Answer : (d) Drawings
14. Total assets in a business are ₹ 8,00,000 and total liabilities are ₹ 5,00,000. The difference is called:
(a) Income
(b) Expenses
(c) Capital
(d) Goodwill
Answer : (c) Capital
True/False
1. Journal is the book of secondary entry.
Answer: False
2. Opening entry is the first entry of everyday.
Answer: False
3. Debit means on increase in liability and decrease in Asset.
Answer: False
4. Withdrawal of cash from business by Proprietor should be debited to drawings account.
Answer: True
Assertion Reason Based Questions
Choose the correct option:
A. Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of the Assertion (A).
B. Both Assertion, (A) and Reason (R) are correct but Reason (R) is not the correct explanation ofAssertion (A).
C. Only Assertion (A) is correct.
D. Only Reason (R) is correct.
1. Assertion: Compound entry is also known as combined entry.
Reason: Compound entry is an entry in which more than two accounts are affected
Answer: (A)
2. Assertion: The books in which a transaction is recorded for the first time from source document are called ‘Books of Original Entry.’
Reason: Journal means a book which records all monetary transactions on yearly basis.
Answer: (C)
Statement Based Questions
Choose the correct option from the options given below :
A. Statement I is true and II is false.
B. Statement II is true and I is false.
C. Both the statements are false.
D. Both the statements are true.
1. Statement I: The form in which a transaction is recorded in the Journal is called a Journal Entry.
Statement II: The transfer of Journal entry to a Ledger Account is called Posting.
Answer: (D)
2. Statement I: Every business opens new books of accounts on the first day of the new year. It is called opening entry.
Statement II: Closing Balances of last year have to be carried forward to the next year it is the first entry in each year’s Journal.
Answer: (D)
Short Answer Type-l Questions
1. What is an account?
Answer : An account is a summarised record of all business transactions at one place relating to a particular head. It records not only the amount of transactions but also their effect and direction.
2. Write the type of accounts according to traditional approach.
Answer : The types of accounts according to the traditional approach are:
(i) Personal Accounts
(ii) Impersonal Accounts, which include:
(a) Real Accounts
(b) Nominal Accounts
3. What is a Real Account?
Answer : A Real Account is an account that relates to assets which can be tangible (such as Land, Plant, Building, Cash, Stock, Furniture) or intangible (such as Goodwill, Trademarks, Patent rights).
4. Write the examples of Artificial Account.
Answer : Examples of Artificial Accounts include accounts of firms, clubs, companies, schools, colleges, universities, hospitals, government offices, municipal corporations, improvement trusts, and banks. These are recognized as artificial persons in the eyes of the law.
5. Under Modern Approach, write the types of accounts.
Answer : Under the Modern Approach, the types of accounts are:
- Assets Accounts
- Liabilities Accounts
- Capital Accounts
- Revenue Accounts
- Expenses Accounts
6. Write the rules of debit and credit under Modern approach.
Answer : The rules of debit and credit under the Modern approach are:
- Assets Account: Increase in assets is debited, and decrease in assets is credited.
- Liabilities Account: Increase in liabilities is credited, and decrease in liabilities is debited.
- Capital Account: Increase in capital is credited, and decrease in capital is debited.
- Revenue or Income Account: Increase in income is credited, and decrease in income is debited.
- Expenses or Losses Account: Increase in expenses or losses is debited, and decrease in expenses or losses is credited.
7. Define Journal.
Answer : A Journal is a book in which transactions are recorded in the order in which they occur, i.e., in chronological order. It is called the book of original entry because all business transactions are entered first in this book.
8. Mention any two features of Journal.
Answer : Two features of Journal are: (i) It is a book of original entry because transactions are recorded first of all in Journal, as and when they take place. (ii) In Journal, all the transactions are recorded in a chronological order, i.e., date-wise.
9. What do you mean by Opening Entry?
Answer : An opening entry is the first entry made in the Journal at the beginning of each accounting year to record the closing balances of assets and liabilities from the previous year. It involves debiting all asset accounts and crediting all liability and capital accounts to carry forward the balances to the new accounting period.
10. What is cash discount?
Answer : Cash discount is a concession allowed to the debtor for payment of the amount due from him before the due date or within a stipulated period. It induces the debtor to settle his accounts at the earliest. Cash discount, received or allowed, is recorded separately in the books.
Short Answer Type-II Questions
1. Explain the terms debit and credit.
Answer : The term debit is derived from the Latin word ‘debitur’, which means due for that, and it represents the benefit-receiving aspect of a transaction. The term credit is derived from the Latin word ‘creder’, which means due to that, and it represents the benefit-giving aspect of a transaction. By convention, the left-hand side of any account is called the debit side, and the right-hand side is called the credit side. An item recorded on the debit side signifies that value has flowed to the named account, while an item recorded on the credit side signifies that value has flown from the source indicated by the name of the account. Debit and credit are essentially additions to or subtractions from an account.
2. What do you mean by an account? Draw the format of an account.
Answer : An account is a summarised record of all business transactions at one place relating to a particular head. It records not only the amount of transactions but also their effect and direction.
3. What are the different types of the Accounts? Give examples.
Answer : The different types of accounts are classified as follows:
(i) Personal Accounts: These represent the accounts related to individuals, firms, societies, clubs, hospitals, etc. Examples include Preeti’s Account, Anil’s Account, Richard’s Account (Natural Personal Accounts); M/s Carter Brothers A/c, Om Mill’s A/c, Bank A/c (Artificial Personal Accounts); and Outstanding Rent A/c, Prepaid Insurance A/c (Representative Personal Accounts).
(ii) Real Accounts: These are tangible or intangible assets that can be touched and seen or measured in terms of money. Examples include Land Account, Plant Account, Building Account, Cash Account, Stock Account, Furniture Account (Tangible Real Accounts); Goodwill A/c, Trademarks A/c, Patent Rights A/c (Intangible Real Accounts).
(iii) Nominal Accounts: These relate to business expenses, losses, gains, and revenues. Examples include Salaries Account, Wages Account, Loss of Goods by Fire Account, Interest Received Account, Sales Account, Repairs Account, Commission Received Account.
4. Explain the types of Personal Accounts.
Answer : Personal Accounts can be classified into three categories:
(i) Natural personal accounts: These accounts relate to human beings. For example: Preeti’s Account, Anil’s Account, Richard’s Account, etc.
(ii) Artificial personal accounts: These relate to corporate bodies or institutions which are recognised as artificial persons in the eyes of law, such as accounts of firms, clubs, companies, schools, colleges, universities, hospitals, government offices, municipal corporations, improvement trust, banks, etc.
(iii) Representative personal accounts: These are accounts which represent a certain person or a group of persons. For example, if rent is due to the landlord, an Outstanding Rent Account will be opened in the books. The Outstanding Rent Account represents the amount of rent payable to the landlord.
5. Write the Rules of Personal Account, Real Account and Nominal Account.
Answer : The rules for Personal Account, Real Account, and Nominal Account are as follows:
(i) Personal Account :
- Debit the Receiver
- Credit the Giver
(ii) Real Account :
- Debit what comes in
- Credit what goes out
(iii) Nominal Account :
- Debit all Expenses and Losses
- Credit all Incomes and Gains
6. Explain the Accounts under Modern Approach with examples.
Answer : Under the Modern Approach, accounts are classified into five categories:
- Assets Accounts : These accounts record increases in assets on the debit side and decreases in assets on the credit side. For example, an increase in the amount of cash is recorded on the debit side of the Cash Account.
- Liabilities Accounts : These accounts record increases in liabilities on the credit side and decreases in liabilities on the debit side. For example, if a business takes a loan, the Loan Account is credited.
- Capital Accounts : These accounts record increases in capital on the credit side and decreases in capital on the debit side. For instance, if the proprietor introduces additional capital, the Capital Account is credited.
- Revenue or Income Accounts : These accounts record increases in income on the credit side and reductions in income on the debit side. For example, interest received is credited to the Interest Received Account.
- Expenses or Losses Accounts : These accounts record increases in expenses on the debit side and reductions in expenses on the credit side. For example, salaries paid are debited to the Salaries Account.
7. What is a Journal? Why is it called a book of original entry?
Answer : A Journal is a book in which transactions are recorded in the order in which they occur, i.e., in chronological order. It is called a book of original entry because every transaction is first recorded in the Journal and subsequently transferred to the ledger, which is the principal book of accounts. The word ‘Journal’ has been derived from the French word ‘jour,’ which means ‘a day.’ Trader records his total daily transactions in it. The process of recording the transactions into the Journal is called Journalising.
8. What is a Compound Entry? Give example.
Answer : A Compound Entry is an entry in which more than two accounts are affected. A compound entry may require that two or more accounts be debited or two or more accounts be credited. For example, a debt of ₹6,000 due from Kevi (Debtor) has been discharged by receipt of ₹5,820 cash and ₹180 allowed as a discount. The transaction affects three accounts as follows: Cash A/c (Asset A/c) increased, Discount Allowed A/c (Expense A/c) debited because it is an expense or loss for the business, and Kevi (Debtor) (Asset A/c) credited because it is an asset.
9. What are the types of discounts? Explain them.
Answer : The types of discounts are: (i) Trade Discount: It is a concession given by a supplier from the list price of goods or services on business considerations other than for prompt payment. Trade discount is not recorded while recording the business transactions. Entry for the purchase or sale of goods at trade discount is recorded with the net amount (i.e., list price – trade discount). It may be allowed on cash or credit transactions.
(ii) Cash Discount: It is a concession allowed to the debtor for payment of the amount due from him before the due date or within a stipulated period. It induces the debtor to settle his accounts at the earliest. Cash discount, whether received or allowed, is recorded separately in the books. Cash discount allowed is debited to the Discount Allowed Account, and cash discount received is credited to the Discount Received Account.
10. What figures is an opening entry? Explain with the help of an example using imaginary figures.
Answer : An opening entry is the first entry in each year’s Journal, made to record the previous year’s closing balances of all the assets and liabilities. In this entry, the accounts of all assets are debited because assets always show debit balances, and the accounts of liabilities and capital are credited because they always show credit balances. If the balance of the capital account is not given in the question, it can be calculated as follows: Total debits – Total credits = Capital.
Long Answer Type Questions
1. Explain the classification of Accounts under traditional and modern approach
Answer :Under the Traditional Approach, accounts are classified into Personal, Impersonal (which includes Real and Nominal accounts).
Personal Accounts relate to individuals, firms, societies, clubs, hospitals, etc. These can be further classified into three categories:
- Natural Personal Accounts: These accounts relate to human beings, for example, Preeti’s Account, Anil’s Account, Richard’s Account, etc.
- Artificial Personal Accounts: These relate to corporate bodies or institutions which are recognized as artificial persons in the eyes of law, such as accounts of firms, clubs, companies, schools, colleges, universities, hospitals, government offices, municipal corporations, improvement trust, banks, etc.
- Representative Personal Accounts: These represent a certain person or a group of persons. For example, if rent is due to the landlord, an Outstanding Rent Account will be opened in the books.
Impersonal Accounts include all accounts that are not personal accounts, such as assets, losses, expenses, incomes, etc. It contains two types of accounts:
- Real Accounts: These may be classified into Tangible Real Accounts (relating to assets that can be touched and seen, e.g., Land Account, Plant Account, Building Account, Cash Account, Stock Account, Furniture Account) and Intangible Real Accounts (relating to assets that cannot be touched physically but can be measured in terms of money, e.g., Goodwill Account, Trademarks Account, Patent Rights Account).
- Nominal Accounts: These relate to business expenses, losses, gains, and revenues, e.g., Salaries Account, Wages Account, Loss of Goods by Fire Account, Interest Received Account, Sales Account, Repairs Account, Commission at Sales Received Account, etc.
Under the Modern Approach, accounts are classified into five categories:
- Assets Accounts
- Liabilities Accounts
- Capital Accounts
- Revenue Accounts
- Expenses Accounts
The rules of debit and credit under both approaches give the same trading results, and the balance sheet reflects the same state of affairs of the business.
2. Define Journal. Explain its needs and advantages.
Answer : A Journal is a book in which transactions are recorded in the order in which they occur, i.e., in chronological order. The word ‘Journal’ has been derived from the French word ‘jour,’ which means ‘a day.’ It is called the book of original entry because all business transactions are entered first in this book.
The needs for a Journal include:
- Providing a permanent record of transactions.
- Ascertaining the true nature of transactions with the help of narration.
- Maintaining the identity of each transaction.
- Facilitating convenient recording of transactions.
The advantages of a Journal are:
- Minimal omission: Each transaction is recorded as soon as it takes place, so there is rarely any possibility of transactions being omitted from the books of account.
- Aversion of errors: For each transaction, the concerned accounts to be debited and credited are clearly stated in the journal, minimizing mistakes in posting transactions into the ledger.
- Provides an explanation of the transaction: From the journal, an adequate explanation of each entry may be obtained as every entry is supported by narration relating to that transaction.
- Provides a chronological record of all transactions: Since each transaction in the journal is recorded in chronological order, the order in which they occur is permanently recorded.
3. Write a note on:
(i) Compound Journal Entry
Answer : A Compound Journal Entry is an entry in which more than two accounts are affected. A compound entry may require that two or more accounts be debited or two or more accounts be credited. The compound entry is also termed as combined entry. For example, a debt of ₹6,000 due from Kevi (Debtor) has been discharged by receipt of ₹5,820 cash and ₹180 allowed as discount. This transaction affects three accounts as follows: Cash A/c (Asset A/c) has increased, Discount Allowed A/c (Expense A/c) is debited because it is an expense or loss for the business, and Kevi (Debtor) (Asset A/c) is credited because it is an asset.
(ii) Opening Journal Entry
Answer : Every business opens new books of accounts on the first day of the new year. Since the closing balances of the last year have to be carried forward to the next year, the first entry in each year’s Journal will be to record the previous year’s closing balances of all the assets and liabilities. This is called the opening entry. In this entry, the accounts of all assets are debited because assets always show debit balances, and the accounts of liabilities and capital are credited because they always show credit balances. If the balance of the capital account is not given in the question, it can be calculated as follows: Total debits – Total credits = Capital. The opening journal entry is written as: Assets A/c Dr. (Individually) To Liabilities A/c (Individually) To Capital A/c (Being the opening entry for balance brought forward). In case the capital is given in the question and the difference comes on the debit side, it is treated as goodwill. If the difference comes on the credit side, it is treated as capital reserve. Normally, this happens when a running business with assets and liabilities is purchased for a certain price. If the price paid is more than the net assets (assets less liabilities), it is a capital loss (non-recurring) and is treated as paid for goodwill. But if the price paid is less than the net assets, it is a capital profit (non-recurring) and is transferred to the capital reserve account.
(iii) Discounts
Answer : A reduction in amount, either to encourage more purchase or prompt payment, is called a Discount. A discount may be classified into: (i) Trade Discount (ii) Cash Discount
Trade Discount is a concession given by a supplier from the List Price of goods or services on business considerations (such as purchase of a specific quantity, trade practices, etc.) other than for prompt payment. Trade discount is not recorded while recording the business transactions. Entry for the purchase or sale of goods at trade discount is recorded with the net amount (i.e., list price – trade discount). It is to be remembered that trade discount may be allowed on cash or credit transactions.
Cash Discount is a concession allowed to the debtor for payment of the amount due from him before the due date or within a stipulated period. It induces the debtor to settle his accounts at the earliest. Cash Discount, received or allowed, is recorded separately in the books. Cash discount is allowed when payment is received and cash discount is received when a payment is made. Cash discount allowed is debited to Discount Allowed Account, and cash discount received is credited to the Discount Received Account. Sometimes, both the discounts are allowed to a customer, i.e., trade discount and cash discount. In such a case, first, trade discount is deducted from the price of the goods, and then, cash discount is calculated on the balance of the amount.
Practical Problems
Questions
1. Enter the following transactions in the Journal of Noah:
| Date | Particulars | ₹ |
| April 1 | Noah started business with cash | 40,000 |
| April 2 | Purchased goods for cash | 10,000 |
| April 4 | Purchased goods from Grayson | 8,000 |
| April 5 | Purchased Furniture for cash | 7,000 |
| April 7 | Sold goods for cash | 12,000 |
| April 9 | Sold goods to Owen | 25,000 |
| April 10 | Paid cash to Grayson | 5,000 |
| April 12 | Received cash from Owen | 20,000 |
| April 16 | Purchased goods from Ryan for cash | 7,000 |
| April 17 | Purchased goods from Ryan | 4,000 |
| April 19 | Sold goods to Henry | 8,000 |
| April 20 | Bought Machinery for cash | 50,000 |
| April 24 | Withdrew cash from office for personal use | 2,000 |
| April 27 | Paid rent | 300 |
| April 29 | Paid wages | 200 |
| April 30 | Paid salary to Jackson | 1,500 |
| April 30 | Received Commission | 100 |
Solution: Check below
2. Record the following transactions in the Journal of Matthew:
| Date | Particulars | ₹ |
| May 1 | Commenced business with cash | 7,00,000 |
| May 2 | Goods purchased from Avi for cash | 60,000 |
| May 3 | Goods purchased from Jackson | 1,00,000 |
| May 4 | Goods returned to Jackson | 4,000 |
| May 8 | Goods sold to Rahul | 45,000 |
| May 12 | Rahul returned 10% of goods |
Solution: Check below
3. Record the following transactions in the Journal of Kevi:
| Date | Particulars | ₹ |
| 2022 | ||
| June 1 | Paid cash to Maron | 9,800 |
| and discount received from him | 200 | |
| June 4 | Received cash from Adi | 4,600 |
| and discount allowed to him | 400 | |
| June 10 | Goods sold to James | 40,000 |
| June 12 | James returned goods | 1,000 |
| June 14 | Received cash from James ₹ 38,500 in full settlement of his account | |
| June 20 | Sold goods to Eli at the list price of ₹ 50,000 at 10% trade discount | |
| June 23 | Purchased goods from Aiden at the list price of ₹ 10,000 at 15% trade discount |
Solution: Check below
4. Give Journal entries for the following transactions in the books of Addison:
| Date | Particulars | ₹ |
| 2021 | ||
| April 1 | Started business with Cash | 1,50,000 |
| April 2 | Cash purchases | 40,000 |
| April 3 | Sold goods to Luke | 20,000 |
| April 6 | Returned defective goods by Luke | 2,000 |
| April 8 | Received cash from Luke | 700 |
| and Discount allowed | 300 | |
| April 9 | Chander sold goods to us | 30,000 |
| April 10 | Puneet purchased goods from us | 18,000 |
| April 10 | Paid insurance premium | 400 |
| April 12 | Paid for Life Insurance Premium of Addison | 1,000 |
| April 15 | Paid Cash to Chander | 24,750 |
| and Discount allowed by him | 250 | |
| April 18 | Bought goods from Jacob, list price ₹ 10,000 less 20% trade discount | |
| April 22 | Paid to Jacob | 6,000 |
| April 26 | Received Cash from Puneet | 5,000 |
| April 30 | Paid wages ₹ 1,000, Advertisement Expenses ₹ 2,000 and Salaries paid ₹ 8,000 | |
| April 30 | Received Interest | 200 |
| April 30 | Received Commission | 1,000 |
Solution: Check below
5. Enter the following transactions in the Journal of Henry:
| Date | Particulars |
| 2021 | |
| April 1 | Purchased goods from Daniel at the list price of ₹ 50,000 at 10% trade discount |
| April 2 | Returned goods to Daniel at the list price of ₹ 2,000 |
| April 6 | Paid Cash to Daniel ₹ 42,000 in full settlement of his account |
Solution: Check below
6. Pass Journal Entries for the following transactions:
| Sl. No. | Transactions |
| (i) | Bought goods from Lily at the list price of ₹ 20,000 at 15% trade discount. |
| (ii) | Settled the account of Lily by paying cash, under a discount of 4%. |
| (iii) | Bought goods for cash at the list price of ₹ 60,000 at 20% trade discount and 5% cash discount. |
| (iv) | Sold goods for cash at the list price of ₹ 10,000 at 10% trade discount and 3% cash discount. |
Solution: Check below
7. Pass Journal entries in the books of Ryan from the following transactions:
| Date | Particulars | ₹ |
| 2022 | ||
| June 1 | Ryan started business with cash ₹ 90,000; Goods ₹ 50,000 and furniture ₹ 10,000. | |
| June 2 | Sold goods to Paul at the list price of ₹ 15,000 at trade discount of 10%. | |
| June 4 | Paul returned goods at the list price of ₹ 2,000. | |
| June 8 | Received from Paul ₹ 11,500 in full settlement of his account. | |
| June 10 | Purchased goods from Wyatt at the list price of ₹ 20,000 at 15% trade discount. | |
| June 13 | Returned goods to Wyatt at the list price of ₹ 2,000. | |
| June 16 | Settled the account of Wyatt by paying cash, under a discount of 4%. | |
| June 18 | Purchased goods from Adi ₹ 6,000; Jayden ₹ 14,000. | |
| June 19 | Paid cash to Adi ₹ 2,800 and discount received ₹ 200. | |
| June 20 | Paid ₹ 13,500 to Jayden in full settlement of his account. | |
| June 20 | Bought a ‘Table Fan’ for ₹ 1,000 for the domestic use of Ryan. | |
| June 25 | Sold goods for cash at the list price of ₹ 10,000 at 10% trade discount and 3% cash discount. | |
| June 30 | Paid Rent ₹ 500; Trade Expenses ₹ 600 and Travelling Expenses ₹ 200. |
Solution: Check below
8. Pass Journal Entries for the following:
| Date | Particulars | ₹ |
| 2022 | ||
| March 1 | Paid into bank for opening a Current Account | 20,000 |
| March 5 | Goods purchased and payment made by cheque | 12,000 |
| March 8 | Cash sales ₹ 50,000, out of this amount ₹ 35,000 deposited in bank. | |
| March 10 | Withdrawn for private use | 6,000 |
| March 12 | Withdrawn from bank for private use | 4,000 |
| March 15 | Withdrawn from bank | 10,000 |
| March 20 | Placed on fixed deposit account at bank by transferring from Current Account | 30,000 |
Solution: Check below
9. The following balances appeared in the books of Karan Stores on 1st April 2022:
Assets: Cash ₹ 10,000; Bank balance ₹ 6,000; Stock ₹ 45,000; Furniture ₹ 3,000; Debtors ₹ 22,000 (Harman ₹ 5,000; Kamal ₹ 5,000 and Abhi ₹ 12,000)
Liabilities: Bank Loan ₹ 15,000; Creditors ₹ 13,000 (Anil ₹ 6,000, Viny ₹ 7,000)
Following transactions took place during April 2022:
| Date | Particulars |
| April 2 | Bought goods from Mohan for ₹ 30,000 at a trade discount of 10% and cash discount of 2%. Paid 60% amount immediately. |
| April 4 | Sold goods to Harman for ₹ 10,000. |
| April 5 | Received ₹ 14,750 from Harman in full settlement of his account. |
| April 6 | Cash deposited into bank ₹ 15,000. |
| April 8 | Cheque received from Kamal for ₹ 4,800 in full settlement of his account. This cheque was immediately deposited into bank. |
| April 10 | Received a cheque from Abhi ₹ 3,000. |
| April 12 | Cheque received from Abhi deposited into bank. |
| April 15 | Cheque received from Kamal dishonoured. |
| April 16 | Cash sales ₹ 10,000; out of this amount ₹ 8,000 deposited into bank. |
| April 16 | Amount due to Anil paid by cheque. |
| April 18 | Old newspapers sold ₹ 60. |
| April 18 | Old furniture sold ₹ 600. |
| April 20 | Abhi became insolvent and 50 paise in a rupee could be received from his estate. |
| April 22 | Purchased goods from Rajiv and paid by cheque ₹ 5,000. |
| April 24 | Sold half of the above goods to Chetan at a profit of 30% on cost. |
| April 25 | Proprietor withdrew for private use ₹ 1,000 from office and ₹ 2,000 from bank. |
| April 28 | Paid salary to Kishor Lal by cheque ₹ 1,000. |
| April 30 | Paid rent by cheque ₹ 1,000. |
| April 30 | Paid trade expenses ₹ 400. |
Solution: Check below
10. Pass Journal Entries for the following:
| No. | Particulars |
| (1) | Received ₹ 10,000 from Subham, which were written off as bad debts in the previous year. |
| (2) | Salaries due to clerks ₹ 40,000. |
| (3) | Out of the rent paid this year, ₹ 20,000 is related to next year. |
| (4) | Provide 10% depreciation on furniture costing ₹ 60,000. |
| (5) | Provide 12% interest on capital amounting to ₹ 15,00,000. |
| (6) | Charge interest on drawings ₹ 10,000. |
Solution: Check below
11. Journalise the following items in the books of Ravi Krishan giving suitable narrations:
| No. | Particulars |
| (i) | Bought goods from Naresh for Cash ₹ 60,000. Also paid ₹ 1,000 for their carriage. |
| (ii) | Paid to Saloni ₹ 19,800 in full payment of her dues of ₹ 20,000. |
| (iii) | Purchased a machinery for Cash ₹ 4,00,000 and paid ₹ 20,000 in Cash as wages on its installation. |
| (iv) | Bricks for ₹ 10,00,000 and timber for ₹ 8,00,000 purchased for the construction of building. The payment was made by cheque. |
| (v) | Purchased an old machinery for ₹ 1,20,000 and spent ₹ 4,000 on its carriage and ₹ 21,000 on its immediate repairs. |
| (vi) | Paid ₹ 2,000 for repairing the office furniture. |
Solution: Check below
12. Pass Journal Entries for the following:
| No. | Particulars |
| (1) | Proprietor withdrew for his personal use cash ₹ 30,000 and goods worth ₹ 20,000. |
| (2) | Goods for ₹ 60,000 were given away as charity. (Sale price ₹ 70,000) |
| (3) | Goods worth ₹ 15,000 were distributed as free samples. |
| (4) | Goods worth ₹ 60,000 and cash ₹ 10,000 were stolen by an employee. |
| (5) | Goods worth ₹ 1,20,000 were destroyed by fire. Insurance Company admitted and paid claim for 60% amount. |
Solution: Check below
13. Journalise the following transactions in the books of Kamal Bros:
| No. | Particulars |
| (a) | ₹ 15,000 due from Ravi are now bad debts. |
| (b) | Goods worth ₹ 25,000 were used by the proprietor. |
| (c) | Charge depreciation @10% p.a. for two months on machine costing ₹ 3,60,000. |
| (d) | Provide interest on capital of ₹ 12,00,000 at 6% p.a. for 9 months. |
| (e) | Mohit who owed us ₹ 10,000 becomes insolvent and a final dividend of 60 paise in a rupee is received from his estate. |
| (f) | Goods costing ₹ 1,20,000 sold to Manish for ₹ 1,50,000. |
Solution: Check below
14. Prepare Journal from the transactions given below:
| No. | Particulars | ₹ |
| (a) | Cash paid for installation of machine | 3,000 |
| (b) | Goods given away as charity | 25,000 |
| (c) | Interest charged on capital @ 7% p.a. when total capital was | 8,00,000 |
| (d) | Received ₹ 10,000 of a bad debt written off last year | |
| (e) | Goods destroyed by fire | 25,000 |
| (f) | Rent outstanding | 12,000 |
| (g) | Interest on drawing | 8,000 |
| (h) | Sushil Kumar who owed me ₹ 60,000 has failed to pay the amount. He pays me a compensation of 45 p. in a rupee. |
Solution: Check below
15. Journalise the following transactions in the books of Sh. Gopi:
| Date | Particulars |
| 2022 | |
| March 5 | Purchased furniture worth ₹ 25,000 and tools worth ₹ 5,000. |
| March 10 | Opened bank account with IDBI Bank ₹ 6,000. |
| March 12 | Banked (Cash sent to Bank) ₹ 1,50,000. |
| March 16 | Withdrawn from bank by Gopi for personal use ₹ 12,000. |
| March 18 | Withdrawn from bank ₹ 45,000. |
| March 22 | Bought shares in ‘Colgate Ltd.’ for ₹ 60,000 and brokerage paid @ 2%. All the payment is made by cheque. |
| March 24 | Purchased postage ₹ 120. |
| March 25 | Paid to Anshu out of business funds for the repair of Gopi’s residential house ₹ 5,500. |
| March 28 | Paid electricity bill ₹ 1,000 and miscellaneous expenses ₹ 100. |
| March 31 | Salaries unpaid ₹ 10,000 and rent due to landlord ₹ 2,000. |
| March 31 | Provide interest on Capital (₹ 2,50,000) @ 8% p.a. from 1st April 2013 to 31st March 2014. |
Solution: Check below
Solutions
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Extras
Additional questions and answers
Q. Define debit.
Answer : Debit refers to the left side of an account, and it is used to record increases in assets or expenses or decreases in liabilities, equity, or revenues.
53 What are the terms associated with Journal entries? Explain each briefly.
Answer : The terms associated with Journal entries are:
(i) Book of Original Entry : Journal is called a Book of Original Entry (also called Book of Prime Entry) because every transaction is first recorded in the Journal and subsequently transferred to the ledger, which is the principal book of accounts.
(ii) Journal Entry : The form in which a transaction is recorded in the Journal is called a Journal Entry.
(iii) Journalising : Journalising is the act of recording or entering transactions in a Journal. It is a systematic process of entering the transactions in a Journal in chronological order, i.e., date-wise.
(iv) Posting : The transfer of a Journal entry to a Ledger Account is called Posting.
Additional MCQs
1. Which of the following is an example of a source document used in business transactions?
A. Invoice
B. Journal
C. Ledger
D. Account Statement
Answer: A. Invoice
43. The process of “journalising” refers to:
A. Recording transactions in the Journal
B. Posting entries to the Ledger
C. Balancing accounts
D. Preparing financial statements
Answer: A. Recording transactions in the Journal
Ron’e Dutta is a journalist, teacher, aspiring novelist, and blogger who manages Online Free Notes. An avid reader of Victorian literature, his favourite book is Wuthering Heights by Emily Brontë. He dreams of travelling the world. You can connect with him on social media. He does personal writing on ronism.
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