UNIT III: Financial Accounting Process – Accounting Information System (Journal)

Journal
Source Document for writing Journal
Financial accounting contains certain genuine financial information. Thus, all business transactions should be evidenced by
documentary evidence. For instance, a cash memo showing cash sale, invoice or bill showing credit sales, receipt showing
cash received from customer; pay in slip, cheque, debit note, credit note, etc. This business document is called the ‘source
or supporting document or voucher’. This document also serves as legal evidence in case of any dispute in future.

Voucher System
A voucher is a document which provides evidence of some business transaction. When this documentary evidence is
collected, recorded, and maintained in a systematic manner, it is referred to as ‘Voucher System.’ The vouchers may be
categorized into source vouchers and accounting vouchers. The use of voucher systems is very popular in the banking
business.
(a) Source or supporting vouchers or source documents – these are the documents which come into existence when a
transaction takes place, i.e., cash memo, credit memo.
(b) Accounting vouchers – these are prepared after the analysis of the transaction, giving details of accounts to be debited
and credited. Accounting vouchers are of two types, such as cash vouchers and non-cash vouchers.

Introduction of Journal Book

The word ‘Journal’ has been derived from the French word “Jour’ which means day. Therefore, a journal means daily
record. It is called a book of original or prime entry because every business transaction is first recorded in this book. In the
case of small business, journal is the only book of original entry. But in the case of big business, where the number of
transactions is large, it is practically impossible to record the transactions through one journal. To overcome this
shortcoming, subsidiary books (special journal) are prepared for specific transactions of similar nature. This book
systematically records business transactions based on a source document in a chronological (day-to-day) order for the first
time. Therefore, it is also called the ‘book of prime or original entry’.

Definition of Journal
“A Journal is a chronological record of accounting transactions showing the names of the accounts that are to be debited
or credited, the amounts of debits and credits, and any useful supplementary information about the transactions. It is
analogous to a diary”. – Robert Anthony

Accounting to Carter, “The Journal as originally used, is a book of prime entry in which transactions are copied, in order
of date, from a memorandum or waste book”.

Eric. L. Kohler defies “The Journal is a book of original entries in which are recorded transactions not provided for in
specialized journals”.

Meaning of Journal
A Journal is a book of original or prime entry in which transactions are recorded in the order in which they occur i.e.,
chronological (sequential) order. It is a subsidiary book. The word subsidiary means ‘giving additional help to’. The
journal helps a businessman to take the various transactions to the right place i.e., to appropriate accounts. It is called a
book of ‘prime or original entry’ because all business transactions are entered first in this book. In other words, a journal is
the basic book of prime entry where transactions are first recorded with their dates, amounts and brief explanations.

Features of Journal
The following are the main characteristics of journal:
1. It is a book of original entry because transaction is recorded at first stage in this book.
2. It is also known as ‘daybook or diary’ because transactions are recorded in it on a day-to-day basis as and when they
take place.
3. The journal is only a subsidiary book, subordinate to the ledger which is the principal book of accounts.
4. It keeps a chronological record of all transactions i.e., arranged according to the order of occurrence.
5. The journal gives a complete picture of each business transaction and thus maintains the identity of the transaction.
6. The amount of transactions is recorded on both debit and credit side by side. It helps in maintaining arithmetical
accuracy of the books of accounts.
7. The journal reflects the relation that exists between two aspects (i.e., debit and credit) involved in a transaction.
8. Every entry in the journal flows with narration which briefly describes the true nature and context of the transaction.

Need for Journal

The transactions can be directly recorded in the proper ledger accounts, but such a procedure will be difficult and
confusing if the number of transactions is large. Thus, journal is needed in the following respects:
a) Convenient recording of the transactions
b) Maintaining and preserving the identity of the transactions
c) Ascertaining the true nature of transactions with the help of narrations and
d) Maintaining a permanent record of information.

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 UNIT III: Financial Accounting Process – Accounting Information System (Journal)
Advantages or Merits or Utilities of Journal
The following are the disadvantages of journal:
1. Chronological/record – all business monetary transactions are entered permanently in the journal in chronological
order i.e., order of occurrence or date wise. Thus, chances of omitting a transaction are reduced.
2. Explanation of Transaction – each journal entry carries narration which gives a brief explanation of the transaction so
that it would be possible to understand the entry properly in future.
3. Recording of both the aspect – both the aspects (i.e., debit and credit) of a transaction are recorded in the journal and it
reduces the possibility of error as both aspects of a business transaction are written side by side.
4. Understanding – it helps in understanding of the principles of double entry system as entries in journal are classified
into debit and credit.
5. Easier – it is easier to post this book into ledger without any difficulty as it can be ascertained from this book as to
which account is to be debited and which account is to be credited.
6. Reduces the possibility of error – the possibility of errors is reduced as the amounts to be debited and credited are
written side by side the two amounts cane be compared to see that they are equal.
7. Provides primary source date – journal is directly written based on vouchers. So, the information contained in the
journal is a primary source of financial statistics of the business.
8. Forwarding of balances – the closing balances of last year, related to assets and liabilities can be brought forward to
the next accounting year by passing opening journal entry.
9. Reliable evidence – as the transactions taking place and recordings are at the same time, and thus, chances of cooking
or manipulating the facts are minimised. Therefore, courts regard the evidential quality of journal much better as
compared to secondary records, say ledger.

Disadvantages or Demerits or Limitations of Journal

The following are the disadvantages of journal:
1. Bulky - The journal will become very bulky if all transactions are recorded there. (To overcome the shortcomings of the
use of journal, the journal is sub-divided in such a way that a separate book is used for each category of transactions [i.e., subsidiary
books] which are repetitive in nature and are sufficiently large in number).
2. Delay - This system does not provide the information on a prompt basis.
3. Daily cash balance not possible – it is not possible to ascertain daily cash balance from journal and thus separate book
is to be maintained for this purpose.
4. Difficult to locate a transaction – it is difficult and time consuming to locate transaction in the journal if date of
transaction is forgotten.
5. Time and cost consuming posting – the system of recording all the transactions in a journal requires as much time as
the transactions occur, and individual posing of each account involves the repetitive journalizing and posting ledger.
6. No Internal check - Such a system does not facilitate the installation of an internal check system since the journal can
be handed over by only one person.
7. Obviate – firms may like to ascertain the cash balance every day and hence they usually record cash transactions
directly into a separate book. This obviates the necessity of journalizing cash transactions in the journal.
Journal Entry
An entry made in the journal is known as a ‘Journal Entry’.
Journalizing
The process of recording a transaction in a journal is called ‘Journalizing’. In other words, recording of business
transactions in the journal book based on rules of the double entry system is called journalizing.

Types of Journal Entries

Entries in the journal may be divided into three groups as follows:
1. Opening Entry
A journal entry by means of which the balances of various assets, liabilities and capital appearing in the balance sheet of
previous accounting period are brought forward in the books of current account period is known as ‘Opening Entry’. In
simple terms, it is to record the opening balances of various accounts that are being transferred from the books of previous
books to new year books. It is made in the journal.

2. Simple Entry
When only two accounts are involved, the entry passed to record the transaction is called a ‘Simple Journal Entry’. A
simple entry is one in which only two accounts are affected i.e., one account to be debited and another to be credited with
an equal amount. In other words, a journal entry which contains only one debit, and one credit entry is called simple entry.

3. Compound or Combined Entry

If two or more transactions of the same nature occur on the same day and either the debit account or credit account is
common, such transactions can be conveniently entered in the journal in the form of a combined journal entry instead of
making a separate entry for each transaction. This type of entry is known as ‘Compound Entry’. In simple, if a journal
entry contains more than one debit or credit or both, the entry is called ‘Compound or Combined Journal Entry”.
Compound entries are passed only when the following conditions are satisfied:
(i) Transactions take place on the same day.
(ii) At least one aspect (either debit or credit) of these transactions is common and
(iii) The number of accounts involved is more than one.

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 UNIT III: Financial Accounting Process – Accounting Information System (Journal)
Sub-division of Journal or Types of Journal
Journal is divided into two types -(i) General Journal and (ii) Special Journal:
1. Cash Book – to record all cash transactions of receipts as well as payments.
2. Purchases Book – to record credit purchases.
3. Sales Book – to record credit sales.
4. Purchases Return Book or Return Outwards Book – to record the return of goods to the suppliers on credit.
5. Sales Return Book or Return Inwards Book – to record the return of goods by the customers on credit.
6. Bills Receivable Book – to record the details of all the bills receivable.
7. Bills Payable Book – to record the details of all the bills payable.
8. Journal Proper – to record all residual transactions which do not find place in any of the books of original entry. It is
also used for rectifying errors.
Note: All the above journals are to be discussed in detail in sequent chapters.

Types or Classification of Accounts

An account is a summary of relevant transactions at one place relating to a particular head. It records not only amount of
transactions but also their effect and direction. Accounts can be divided into the following two categories:
a) Personal Accounts
Accounts recording transactions relating to individuals, firms or companies are known as ‘Personal Account’. The
proprietor being an individual, his Capital Account and his Drawing Account are also known as personal accounts. It
may be further classified into the following:
a) Natural Personal Accounts – These accounts relate to human beings. The term ‘natural person’ means persons who
are creation of God i.e., name of the individuals either customer or suppliers (e.g.) Mohan’s A/c, Farooq’s A/c,
Advance to X A/c, Advance from Y A/c.
b) Artificial Personal Accounts – These accounts include accounts of corporate bodies or institutions which are
recognized as people in business dealings. For example: the accounts of association of persons, partnership firms,
limited accompany, government bodies, colleges, schools, banking companies, insurance company, etc. (like Lavanya &
Bros A/c, or Lalitha & Sons A/c, Farooq & Co. A/c, Bank A/c, Loan A/c, etc).
c) Representative Personal Accounts – Wherever a nominal account represents the amount payable to or receivable from
certain persons, it is called Representative Personal Account. Ex. Outstanding Rent A/c, Outstanding Salary A/c,
Prepaid Insurance A/c, Accrued Interest A/c, Unearned Incomes A/c, etc.

b) Impersonal Accounts
Impersonal accounts are those accounts which are not personal accounts such as machinery accounts, cash account, rent
account, salary account, wage account, etc. These can be further sub divided into two categories:
1) Real or Property Account – Accounts in which the business records the real things owned by the business i.e., the
assets of the business are known as ‘Real Account’. It deals with accounts relating to the properties and assets of the
business concern. It can be divided into the following:
a) Tangible Real Account – The accounts recording transactions relating to those assets which can be touched, seen,
felt, measured, purchased, and sold, etc., are called tangible real account such as Machinery A/c, Cash A/c, Building
A/c, Furniture A/c, Stock A/c (i.e., Purchases A/c, Sales A/c,), capital work in progress, etc. It should be noted that bank A/c is
a personal account since it represents the account of the banking company as an artificial person.
b) Intangible Real Account – Intangible real accounts are those assets which cannot be seen or touched but can be felt
and they can be measured in terms of money and purchased and sold out like tangible fixed assets. For example,
goodwill, patents rights, copy rights, mining rights, trade marks, brands, computer software, recipes, formulae,
models, designs and prototypes, licenses, and franchise, etc.

2) Nominal Account – Nominal accounts are those accounts which record all business expenses, losses, gains, and
incomes of the business. These accounts relate to the items which exist in name only such as Rent A/c, Wages A/c,
Salary A/c, Dividend A/c, Commission A/c, Interest A/c, Bad Debts A/c, Bad Debt Recovered A/c, Depreciation A/c,
Postage A/c, Advertising A/c, Interest on Loan A/c, Interest on Capital A/c, Interest on Drawings A/c, etc.

THE ACCOUNITNG PROCESS - Rules for Debit and Credit

There are two approaches for deciding when to write on the debit side of an account and when to write on the credit side of
an account:
A. American Approach/ Modern Approach
B. British Approach/ Traditional Approach/Double Entry System

I.Golden Rules (UK / British Approach - Traditional Approach)

The following are the golden rules for making entries under Double Entry System of accounting.
1. Personal Accounts – Debit – the Receiver and
Credit – the Giver.
2. Real Accounts – Debit – what comes in and
Credit – what goes out.
3. Nominal Accounts – Debit – all expenses and losses and
Credit – all incomes, gains and profits.

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 UNIT III: Financial Accounting Process – Accounting Information System (Journal)
II. Diamond Rules (US / American Approach – Modern Approach)
To understand the rules of debit and credit according to this approach transactions are divided into the following five
categories:
1. Regarding Capital (Owner) ------------------------------------- Increases in capital are Credits and
Decreases in capital are Debits.
2. Regarding Liabilities (e.g., suppliers of goods) ----------------- Increases in liabilities are Credits and
Decreases in liabilities are Debits.
3. Regarding Revenue (i.e., Incomes or Profits – e.g., rent received) --- Increases in incomes or profits are Credits &
Decreases in incomes or profits Debits.
4. Regarding Expenses or losses (e.g., rent, salary, commission) ----- Increases in expenses are Debits and
Decreases in expenses are Credits.
5. Regarding Assets (e.g., land & buildings, cash, stock) ------- Increases in assets are Debits and
Decreases in assets are Credits.
Note: It may be noted that the application of rules of debit and credit under both the approaches will give the same results.

The rules of debit and credit in relation to these accounts are stated as under:
(i) For Capital Account (ii) For any Liability Account (iii) For any Revenue Account
Debit means decrease Debit means decrease Debit means decrease
Credit means increase Credit means increase Credit means increase

(iv) For any Asset Account (v) For any Expense Account
Debit means increase Debit means increase
Credit means decrease Credit means decrease

A careful perusal of the above rules will reveal that the meaning of debit is the same for the first three types of accounts on
the one side and last two types of accounts on the other. It also reveals that in the first three cases ‘debit’ stands for
decrease, and for increase in the last two cases. Similarly, ‘credit’ stands for increase in the first three cases and for
decrease in the last two cases. The meaning of debit and credit has been diagrammatically illustrated as under:

Rules for Debit and Credit

Rules
Sl.# Type of Account
Debit Credit
1 Personal Account The Receiver The Giver
2 Real or Property Account What comes in What goes out
3 Nominal Account All expenses and losses. All incomes and gains.

Procedure
Debited /
Sl.# Name of the Account Rule
Credited
Personal Accounts
1 Capital Account The giver Credited
2 Drawings Account The receiver Debited
3 Individual, firm, company, society, bank, and loan accounts The receiver Debited
The giver Credited
4 Incomes Accrued or Outstanding Incomes or incomes earned but not received The receiver Debited
5 Prepaid Expenses or unexpired expenses or expenses paid in advance The receiver Debited
6 Outstanding Expenses or expenses due but not paid or creditors for expenses The giver Credited
7 Incomes received in advance or Prepaid Incomes or incomes received but not The giver Credited
earned
Real or Property Account
1 Purchases Account (goods) What comes in Debited
2 Purchases Returns or Returns outwards A/C What goes out credited
3 Sales Account (goods) What goes out Credited
4 Sales Returns or Returns inwards Account What comes in Debited
5 Cash Account (received) What comes in Debited
6 Cash Account (paid) What goes out Credited
7 Asset Account – Purchased (plant & machinery (P/M), land & buildings (L/B), What comes in Debited
furniture & fixtures or fittings (F/F), goodwill, patents rights, copy rights, trade
marks, etc.)
8 Assets Account – Sold (P/M, L/B, F/F, G.W, patents, copy rights, trademarks, What goes out Credited
computer software, etc.)
Nominal or Fictitious Account
1 Expenses or Losses – salary, rent paid, advertisement, interest paid, discount All expenses Debited
allowed, paid commission, paid insurance premium, electricity charges, bank or losses
Dr. Ramakrishnan P, Associate Professor, RBS, REVA University Page 4 of 23
 UNIT III: Financial Accounting Process – Accounting Information System (Journal)
charges, wages, carriage, stationery, repairs, postages, office expenses, travelling
expenses, etc.)
2 Incomes or gains – rent received, commission received, discount earned, interest All incomes Credited
earned, dividend received, etc.) and gains

Capital and Drawings

The amount with which a trader starts the business is called ‘capital’. The proprietor may withdraw certain amounts from
the business to meet personal expenses or goods for personal use, is known as ‘drawings.’ The drawings may be of three
types namely:
a) Drew cash from business for personal use
Particulars Debit Credit
Drawings Account Dr. xxxxxx
To Cash Account xxxxxx
(Being withdrawn cash for personal use)
b) Drew cheque from bank for non-official use
Particulars Debit Credit
Drawings Account Dr. xxxxxx
To Bank Account xxxxxx
(Being amount withdrawn from bank for private use)

c) Drew goods from business for domestic purpose

Particulars Debit Credit
Drawings Account Dr. xxxxxx
To Purchases Account xxxxxx
(Being goods withdrawn from business for own use)

Illustration 1. (Transactions related to purchases, sales, and drawings)

Journalize the following transactions of Mr. Sharath.
2015 January 1, Sharath started business with cash Rs.40,000.
3 Goods Purchased for cash Rs.6,000
4 Purchased goods Rs.3,000
5 Cash Purchases Rs.2,000
6 Purchased goods from Shradha for cash Rs.5,000
7 Purchased goods worth Rs.1,500 from Shradha and cheque issued for the same.
8 Bought goods worth Rs.4,000 from Sowjanya on credit.
10 Goods bought from Tenkayala Rs.1,000
12 Credit Purchases Rs.2,500
13 Machinery purchased on credit Rs.10,000 from Vishnu
14 Credit Sales Rs.1,000
15 Sold goods to Vishnura Rs.2,000
16 Goods sold to Yashaswi Rs.5,000 on credit
18 Sold goods to Rakesh for cash Rs.1,500
19 Goods sold to Mohan for Rs.7,000 and cheque received.
20 Sold goods to Harshath for Rs.2,000, cheque received and deposited into bank.
21 Cash sales Rs.3,000
22 Old furniture sold for Rs.4,000.
23 Cheque deposited into bank Rs.7,000.
24 Withdrawn from bank Rs.2,000
25 Withdrawn from bank for non-official use Rs.1,000
26 Withdrawn from office for domestic purpose Rs.1,500
27 Goods worth Rs.3,000 withdrawn for personal use.
28 Goods worth Rs.2,000 given as charity.
29 Goods worth Rs.1,000 spent on gifts and presents to employees.
30 Bank charges amounted to Rs.500.
Journal Entries in the books of Sonu
Date Particulars L.F Debit Credit
January 1, 2015 Cash A/c Dr. 40,000
To Sharath’s Capital A/c 40,000
(Being Sonu commenced his business with cash)
January 3, 2015 Purchases A/c Dr. 6,000

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 UNIT III: Financial Accounting Process – Accounting Information System (Journal)
To Cash A/c 6,000
(Being goods purchased for cash)
January 4, 2015 Purchases A/c Dr. 3,000
To Cash A/c 3,000
(Being purchased goods)
January 5, 2015 Purchases A/c Dr. 2,000
To Cash A/c 2,000
(Being cash purchases made)
January 6, 2015 Purchases A/c Dr. 5,000
To Cash A/c 5,000
(Being purchased goods from Azman for cash)
January 7, 2015 Purchases A/c Dr. 1,500
To Bank A/c 1,500
(Being purchased goods from Azman and cheque issued)
January 8, 2015 Purchases A/c Dr. 4,000
To Sowjanya’s A/c 4,000
(Being purchased goods from Sowjanya on credit)
January 10, 2015 Purchases A/c Dr. 1,000
To Tenkayala’s A/c 1,000
(Being goods from Tenkayala on credit)
January 12, 2015 Purchases A/c Dr. 2,500
To Creditor’s A/c 2,500
(Being goods purchased from on credit)
January 13, 2015 Machinery A/c Dr. 10,000
To Vishnu’s A/c 10,000
(Being machinery purchased from Vishnu)
January 14, 2015 Debtor’s A/c Dr. 1,000
To Sales A/c 1,000
(Being goods sold on credit)
January 15, 2015 Vishnura’s A/c Dr. 2,000
To Sales A/c 2,000
(Being goods sold on credit to Vishnura)
January 16, 2015 Yashaswi’s A/c Dr. 5,000
To Sales A/c 5,000
(Being goods sold to Yashaswi on credit)
January 18, 2015 Cash A/c Dr. 1,500
To Sales A/c 1,500
(Being goods sold to Rakesh for cash)
January 19, 2015 Cash A/c Dr. 7,000
To Sales A/c 7,000
(Being goods sold to Mohan and cheque received)
January 20, 2015 Bank A/c Dr. 2,000
To Sales A/c 2,000
(Being goods sold to Harshath, cheque received and deposited
into the bank on the same day)
January 21, 2015 Cash A/c Dr. 3,000
To Sales A/c 3,000
(Being goods sold for cash)
January 22, 2015 Cash A/c Dr. 4,000
To Furniture A/c 4,000
(Being old furniture sold)
January 23, 2015 Bank A/c Dr. 7,000
To Cash A/c 7,000
(Being cheque deposited into bank)
January 24, 2015 Cash A/c Dr. 2,000
To Bank A/c 2,000
(Being cash withdrawn from bank for official purpose)
January 25, 2015 Drawings A/c Dr. 1,000
To Bank A/c 1,000
(Being cash withdrawn from bank for unofficial purpose)
January 26, 2015 Drawings A/c Dr. 1,500
To Cash A/c 1,500
(Being cash withdrawn from office for domestic purpose)
January 27, 2015 Drawings A/c Dr. 3,000
To Purchases A/c 3,000
(Being goods withdrawn from office for personal use)
January 28, 2015 Charity A/c Dr. 2,000
To Purchases A/c 2,000
(Being goods worth Rs.2,000 given as charity)
January 29, 2015 Advertisement A/c Dr. 1,000
To Purchases A/c 1,000
(Being goods worth Rs.1,000 spent on gifts and presents to
Dr. Ramakrishnan P, Associate Professor, RBS, REVA University Page 6 of 23
 UNIT III: Financial Accounting Process – Accounting Information System (Journal)
employees)
January 30, 2015 Bank Chagres A/c Dr. 500
To Bank A/c 500
(Being bank charges paid)

Practical Questions
1. Transactions of Bharath for April are given below. Journalise them. Rs.
2021 May 1 Bharath started business with cash -------------- 10,000
2 Paid into bank -------------------------------------------------- 7,000
3 Bought goods for cash ----------------------------------------- 500
4 Drew cash from bank for office ------------------------------ 100
13 Sold to Cyril Goods on credit ------------------------------ 150
20 Bought from Chaithra goods on credit -------------------------- 225
24 Received from Cyril ------------------------------------------ 150
28 Paid to Chaithra ----------------------------------------------- 215
28 Discount allowed ---------------------------------------------- 10
30 Cash sales for the month -------------------------------------- 800
30 Paid rent ---------------------------------------------------------- 50
30 Paid salary to Mr. Rahul ----------------------------------------- 100

2. Journalise the following transactions. Rs.

2022 Jan.1 Nathaniel started business with a capital of ---------- 10,000
2 Bought goods from Neeraj --------------------- 7,500
7 Cash Purchases ------------------------------ 3,000
10 Cash sales ------------------------------ 4,000
13 Bought goods from Neeraj by cheque --------------- 2,000
16 Sold goods to Mohammed --------------------- 7,000
17 Received by cheque from Mohammed ------------------- 1,500
18 Paid cash to Neeraj in full settlement of Rs.3,000 2,850
19 Sold goods to Mohammed --------------------- 500
20 Paid to Neeraj on account --------------------- 2,400
22 Mohammed’s cheque deposited into bank
24 Received cheque from Mohammed --------------------- 1,000
26 Mohammed’s cheque returned dishonoured
27 Mohammed’s cheque of Rs.1,000 endorsed to Neeraj
28 Paid salaries --------------------- 1,250
30 Received cash from Mohammed --------------------- 200
31 Cheque endorsed to Neeraj returned dishonoured

3. Journalise the following transactions. Rs.

2023 April.1 Pavan started business with a capital of ------- 15,000
5 Bought goods for cash from Rajkumar --------------------- 1,700
7 Sold goods to Prasanta ------------------------------ 3,000
8 Opened current account with the Indian bank -------- 10,000
9 Returned damaged goods to Rajkumar -------------------- 700
11 Paid wages --------------------- 200
15 Received commission --------------------- 5,000
18 Sold goods to Rohith for cash --------------------- 2,000
20 Cash sales --------------------- 500
21 Paid Rohith on account --------------------- 2,400
23 Received five chairs from Godrej Co. at Rs. 100 per chair
24 Paid Godrej Co. cash for five chairs
25 Paid rent --------------------- 200
25 Paid salaries by cheque --------------- 5,000
27 Withdrew from bank for personal use 200
30 Withdrew from office for non-business 300
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 UNIT III: Financial Accounting Process – Accounting Information System (Journal)
Illustration 2.
Journalese the following transactions: [RUB, B.Com – Sept. 2009]
(i) Goods worth Rs.5,000 is used by the proprietor for personal use and Rs.3,000 is distributed as
sample.
(ii) Goods worth Rs.10,000 got destroyed due to fire, insurance company accepted the claim for
Rs.7,500.
(iii)Bills receivable Rs.5,000 were discounted for Rs.4,900 but dishonoured when presented for
payment.
(iv) Goods worth Rs.3,200 were returned from the customer but wrongly entered the sales book.
(v) Machinery worth Rs.5,000 was purchased during the year but included in purchases.
(vi) Create provision for doubtful debts @ 15% on debtors and provision for discount against
creditors @3% (Debtors Rs.50,000 and Creditors Rs.25,000)
Journal Entries in the books of …
Date Particulars L.F Debit Credit
(i) Drawings A/c Dr. 5,000
Sample A/c Or Advertisement A/c Dr. 3,000
To Purchases A/c 8,000
(Being goods worth Rs.5,000 used by proprietor and Rs.3,000
distributed as sample)
(ii) Insurance Company A/c Or Insurance Claim A/c Dr. 7,500
Loss of Goods by Fire A/c Or P/L A/c (Balancing figure) Dr. 2,500
To Purchases A/c Or Trading A/c 10,000
(Being goods worth Rs.10,000 destroyed by fire and insurance claim
accepted and balance transferred to P/L A/c)
(iii) Customer’s A/c or Suspense A/c Dr. 5,000
To Bank A/c 5,000
(Being the discounted bills dishonored)
(iv) Sales Return or Return Inwards A/c Dr. 3,200
Sales A/c Dr. 3,200
To Customer A/c Or Suspense A/c 6,400
(Being goods returned by customer wrongly entered in sales book)
(v) Machinery A/c Dr. 5,000
To Purchases A/c 5,000
(Being machinery purchased wrongly entered in purchase book)
(vi) Provision for Doubtful Debts A/c (15% of 50,000) Dr. 7,500
Creditors A/c (3% of 25,000) Dr. 750
To Debtors A/c 7,500
To Provision for Discount on Creditors A/c 750
(Being 15% doubtful debts created on debtors and 3% provision for
discount on creditors created)

Practical Questions
4.Journalize the following transactions: [GCBS, CF Sept. 2015]
a) Bills receivable Rs.5,000 were discounted for Rs.4,900 but dishonoured when presented for
payment.
b) Bought goods from Lalitha Rs.30,000 at a trade discount of 20% and cash discount of 10%. Paid
60% of the amount immediately.

5. Give journal entries for the following transactions in the books of Mr. Santosh.
March 2022, 1 Santosh started business with cash Rs.1,00,000 [RUB, CF – Feb.2015]
2 Cash purchases Rs.48,000
3 Sold goods to Mr. Ashish Rs.10,000
6 Returned defective goods by Mr. Ashish Rs.1,000
8 Received cash from Mr. Ashish Rs.8,800 & discount allowed Rs.200
9 Mr. Deepak sold goods to us Rs.20,000
10 Ms. Durga purchased goods from us Rs.12,000
10 Paid insurance premium Rs.500
12 Paid life insurance premiums of Saurab Rs.2,000
15 Paid cash to Mr. Deepak Rs.13,780 and discount allowed by him Rs.220.
18 Lent to Ms. Lalana Rs.5,000
18 Bought goods from Ms. Naila, list price Rs.15,000 less 20% trade discount.
22 Paid to Ms. Naila Rs.8,000
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 UNIT III: Financial Accounting Process – Accounting Information System (Journal)
26 Received cash from Ms. Durga Rs.6,000
31 Paid wages Rs.400, advertisement expenses Rs.250 & salaries Rs.1,500.
31 Received interest Rs.100 and received commission Rs.600

6. Journalize the following transactions in the books of Ms. Vismaya:

2023 May 1 Ms. Vismaya started business with cash Rs.1,00,000.
3 Deposited into bank Rs.50,000.
5 Furniture purchased for Rs.10,000.
8 Drew from bank Rs.6,000.
10 Purchased goods for cash Rs.15,000.
12 Sold goods to Ms. Vaishnavi Rs.10,000.
15 Goods purchased from Ms. Varsha Rs.20,000.
18 Paid for wages Rs.3,000 and rent Rs.7,000.
22 Received from Ms. Vaishnavi by cheque Rs.9,900 in full settlement of her claim.
25 The above cheque was deposited in the bank.
28 Rent received from tenant Rs.5,000.
30 Paid to Ms. Varsha Rs.15,000.

7. Journalise the following transactions in the books of Mr. Ajay.

2023 February 1 Mr. Ajay commenced business with cash Rs.50,000.
2 Purchased goods for cash Rs.10,000.
5 Bought goods from Mr. Vinith on credit Rs.6,000.
7 Paid into bank Rs.5,000.
10 Purchased furniture Rs.2,000.
15 Sold goods to Mr. Vijay on credit Rs.5,000.
17 Cash sales Rs.3,500.
20 Paid to Mr. Vinith on account Rs.3,000.
25 Paid salaries and rent Rs.2,800 and Rs.500 respectively.
28 Received from Mr. Vijay Rs.4,900 in full settlement.

8. Journalize the following transactions in the books of Ms. Joshna.

2023 March 1 Ms. Joshna commenced business with cash Rs.80,000.
4 Purchased goods from Mr. Vittal Rs.10,000 in cash.
6 Bought goods from Mr. Vivek on credit Rs.15,000.
7 Paid into bank Rs.25,000.
10 Purchased Machinery for Rs.10,000.
14 Sold goods to Mr. Vignesh Rs.15,000 (Mr. Vitttal stock sold).
18 Goods returned by Mr. Vignesh Rs.1,000 (Cost of goods sold Rs.800).
23 Paid to Mr. Vivek Rs.10,000, half in cash and half in cheque.
25 Paid Salaries and Rent by cheque Rs.4,500 and Rs.500 respectively.
31 Received a cheque from Mr. Vignesh Rs.13,900 in full settlement.

9. Journalise the following transactions in the books of Ms. Priya.

2023 January 1 Paid into bank as Capital Rs.2,00,000
2 Withdrawn from bank for office use Rs.1,50,000
6 Bought goods by cheque Rs.6,000
7 Sold goods to Ms. Pooja Rs.5,000 (cost of goods sold Rs.3,000)
10 Purchased furniture from Ms. Gopika Rs.10,000
15 Received from Ms. Pooja Rs.4,000
17 Cash sales Rs.3,500. (cost of goods sold Rs.3,000)
20 Paid to Ms. Gopika on account Rs.10,000
25 Paid salaries and rent Rs.2,800 and Rs.500 respectively.
28 Sold furniture Rs.10,000

10. Enter the following transactions in the journal of Ms. Yogita. Rs.
Apr l Ms. Yogita started business with cash 70,000
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 UNIT III: Financial Accounting Process – Accounting Information System (Journal)
Apr 2 Purchased furniture for cash 9,000
Apr 3 Purchased goods for cash 30,000
Apr 8 Sold goods to Ms. Krutika (cost of goods sold Rs.7,000) 15,000
Apr 11 Bought computer 20,000
Apr 14 Sold goods for cash (cost of goods sold Rs.15,000) 25,000
Apr 20 Received cash from Ms. Krutika 10,000
Apr 25 Received commission 500
Apr 28 Withdrew cash from office for personal use 2,000
Apr 30 Received cash from Ms. Krutika, in full settlement of his account 4,800

Illustration 3.
Journaleze the following transactions of M/s Devika & Co. Ltd., for the month of March 2023:
[RUB, BBA – Sept. 2010]
Balance as on March 1, 2023:- Cash Rs.7,000; Bank Rs.20,000, Stock Rs.15,000; Furniture Rs.5,000,
Building Rs.40,000, Debtors – Geetha Rs.3,000, Kavya Rs.5,000, Bank Loan Rs.7,000, Creditors –
Biju Rs.7,000 & Viju Rs.8,000.
Transactions during the month of March, 2023 were as follows:
March 2. Received Rs.2,800 cash from Ms. Geetha in full and final settlement of his account.
March 6. Purchased goods of the list price Rs.10,000 at 10% discount on credit from Mr. Reddy.
March 8. Sold goods to Devi on credit Rs.8,000.
March 11. Devi pays Rs.7,200 after getting 10% discount for prompt payment.
March 15. Salaries paid in cash Rs.2,000.
March 18. Interest on bank loan Rs.700 debited to the current account of the business enterprise.
March 20. Goods costing Rs.1,000 distributed as free sample.
March 25. Cash withdrawn by Mr. Devika for person use Rs.2,000.
March 30. Paid Rs.6,900 to Biju in full and final settlement of his account.
March 31. Cash sales at list price Rs.5,000. Trade discount allowed Rs.500.
Journal Entries in the books of Devika & Co. Ltd.,
Date Particulars L.F Debit Credit
March 1, 2009 Cash A/c Dr. 7,000
Bank A/c Dr. 20,000
Stock A/c Dr. 15,000
Furniture A/c Dr. 5,000
Buildings A/c Dr. 40,000
Debtors – Geetha’s A/c Dr. 3,000
Kavya’s A/c Dr. 5,000
To Bank Loan A/c 7,000
To Creditors – Biju’s A/c 7,000
Viju’s A/c 8,000
To Roshini & Co. Ltd. Capital A/c(B/f) 73,000
(Being Devika & Co. Ltd., started business with various assets and
liabilities and excess of assets over liabilities taken as capital)
March 2, 2009 Cash A/c Dr. 2,800
Discount Allowed A/c (Balancing figure) Dr. 200
To Geetha’s A/c 3,000
(Being cash received as full settlement from Geetha and discount
allowed)
March 6, 2009 Purchases A/c Dr. 9,000
To Mr. Reddy’s A/c (10,000 x 90%) 9,000
(Being the goods purchased after trade discount of 10%)
March 8, 2009 Devi’s A/c Dr. 8,000
To Sales A/c 8,000
(Being goods sold to C on credit)
March 11, 2009 Cash A/c Dr. 7,200
Discount Allowed A/c (8,000 x 10%) Dr 800
To Devi’s A/c 8,000
(Being cash received from Mr. Devi and 10% cash discount allowed
for prompt payment)
March 15, 2009 Salaries A/c Dr. 2,000
To Cash A/c 2,000
(Being salaries paid)
March 18, 2009 Interest on Bank Loan A/c Dr. 700
To Bank A/c 700
(Being Interest on bank loan charged by bank)

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 UNIT III: Financial Accounting Process – Accounting Information System (Journal)
March 20, 2009 Sample A/c/Advertisement A/c/Sales Promotion A/c Dr. 1,000
To Purchases A/c 1,000
(Being goods distributed as free sample)
March 25, 2009 Drawings A/c Dr. 2,000
To Cash A/c 2,000
(Being cash withdrawn by Mr. Devika from office for personal use)
March 30, 2009 Biju’s A/c Dr. 7,000
To Cash A/c 6,900
To Discount Received A/c (Balancing figure) 100
(Being cash paid to X as full settlement and discount received)
March 31, 2009 Cash A/c Dr. 4,500
To Sales A/c (5,000 – 500) 4,500
(Being goods sold for cash and trade discount allowed Rs.500)

Practical Questions
11. Consider the following account balances in the books of Ram Ltd., on 1st November 2022.
Cash Rs.7,000; Bank Rs.20,000; Stock Rs.15,000; Furniture Rs.5,000; Building Rs.40,000;
Debtors – Cyril Rs.3,000; Bikash Rs.5,000; Bank Loan Rs.7,000; Creditors – Lakshmi Rs.7,000;
Priya Rs.8,000. Many transactions followed thereafter for the month.
You are an accountant and have been asked to journalize these transactions with proper
narration. How would you do this job? [RUB, CF – Dec. 2014]

12. Consider the following account balances in the books of Tandin Ltd., on 1st November 2014:
Cash Rs.5,000; Bank Rs.7,000; Bikram Rs.5,000 (Dr.), Dinesh Rs.6,000 (Dr.), Likhitha Rs.4,000
(Cr.), Muskan Rs.5,500 (Cr.), Nikhitha Rs.6,500 (Cr.), Shradha Rs.8,400 (Cr.), Stock of goods
Rs.4,000; Furniture Rs.2,000; Prepaid rent Rs.1,000, Bank Loan Rs.8,000; Salary outstanding
Rs.9,000; and Wages payable Rs.500. Many transactions followed thereafter for the month.
You are an accountant and have been asked to journalize these transactions with proper
narration. How would you do this job? [RUB, CF – Feb. 2015]

13. Pass the Journal Entries for the following transaction: [RUB, CF – Sept. 2010]
Received from ‘Ranjana’ Rs.1,000 and allowed him a discount of Rs.20.
Rent due but not paid Rs.2,000; Goods given as sample Rs.500
Loss of cash by theft Rs.600; Closing stock on hand Rs.1,000.
14. Journalize the following transactions in the books of Ms. Priti.
1. Received Rs.2,000 from Ms.Rachana, which were written off as bad debts in the previous year.
2. Salaries due to clerks Rs.5,000.
3. Out of the rent paid this year Rs.1,000 is related to the next year.
4. Provide 10% depreciation on furniture costing Rs.5,000.
5. Provide 12% interest on capital amounting to Rs.1,00,000.
6. Charge interest on drawings Rs.800.
7. Cash deposited into bank Rs.20,000.
15. Journalize the following transactions in the books of Sayyed.
1. Bought goods from Shoheb for cash Rs.5,000. Also paid Rs. 100 for their carriage.
2. Paid to Shahed Rs.965 in full settlement of his dues Rs.1,000.
3. Purchased machinery for Cash Rs.30,000 & paid Rs.2,500 in cash as wages on its installation.
Goods for Rs. 1,000 were also used from business on its installation.
4. Bricks for Rs.1,50,000 & timber for Rs.1,00,000 purchased for the construction of building.
The repayment was made by cheque.
5. Purchased machinery for Rs.10,000 & spent Rs.500 on its carriage and Rs.2,000 on its
immediate repairs.
6. Paid Rs.250 to repair the office furniture.
Illustration 4.
Journalise the following transactions:
2009 Jan.1. Lalitha started business with Cash Rs.500, Bank Rs.8,000, Building Rs.30,000, Furniture
Rs.2,000, Stock Rs.1,000, Loan to Saran Rs.3,000; Loan from Lavanya Rs.10,000 and Bills
Payable Rs.4,000.
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 UNIT III: Financial Accounting Process – Accounting Information System (Journal)
2 Bought goods from Nanthaniel Rs.3,000 on which he allowed 10% trade discount.
3 Purchased goods worth Rs.5,000 less 20% trade discount and 5% cash discount.
5 Bought goods from Pelmo Rs.25,000 out of which Rs.20,000 was on credit
7 Bought from Ram goods worth Rs.30,000 at 15% trade discount and 10% cash discount
terms and paid him half the amount in cash
10 Goods sold to Gyeltshen Rs.5,000 on credit
11 Credit sales to Sonam Rs.16,000
11 Old furniture sold Rs.2,500 to Ugyen & Co.
12 Goods returned to Pelmo Rs.1,000
13 Lalitha draw Rs.4,000 for personal use
13 Lalitha drew a cheque for Rs.3,000 for domestic purpose.
13 Withdrawn goods worth Rs.3,000 for own use.
14 Charge depreciation @ 10% on Building.
15 Lalitha withdrawn Rs.2000 from bank for official use
17 Purchased pencils and office covers Rs.600
18 Gyeltshen returned goods to us Rs.1,500
19 Received cash from Sonam 15,900 and allowed discount Rs.100
20 Cheque received from Gyeltshen Rs.3,490 in full settlement.
21 Dechen who owed us Rs.2,000 has failed. She pays us a cheque for composition of 75
chhertum in the Ngultrum.
22 Dechen’s cheque is deposited into the bank.
23 Issued a cheque to Pelmo for Rs.18,900 as full settlement.
23 Received cash Rs.500 of a bad debt written off last year.
24 Rs.400 due from Norbu is a bad debt.
24 Two chairs bought at Rs.300 per chair.
25 Interest charged on drawings @ 5% when total drawings were Rs.10,000
25 Interest allowed on capital @ 10 % of Rs.30,500
26 Provide interest on loan from creditors (Rs.10,000) @ 5% for six months.
26 Received interest on loan from the debtors Rs.200.
26 Charged 1% interest on loan from debtors for 2 months.
26 Bought neon sign costing Rs.400
27 Bank notified that Dechen’s cheque dishonoured.
28 One chair stolen and goods uninsured worth Rs.5,000 were destroyed by fire.
29 Received commission Rs.750
30 Paid commission Rs.400
30 Salary paid Rs.2,000
30 Interest received Rs.600
31 Interest accrued Rs.700
31 Salary due but not yet paid Rs.1,500
31 Prepaid insurance Rs.3,000
31 Commission received in advance Rs.900
31 Gyeltshen’s cheque endorsed to Lavanya.
Journal of Lalitha
Date Particulars L.F Debit Credit
2009 Jan. 1 Cash A/c Dr. 500
Bank A/c Dr. 8,000
Building A/c Dr. 30,000
Furniture A/c Dr. 2,000
Stock A/c Dr. 1,000
Saran’s Loan A/c 3,000
Dr. 10,000
To Lavanya’s Loan A/c 4,000
To Bills Payable A/c 30,500
To Capital A/c (Being balancing figure)
(Being the various assets and liabilities brought into the
business by Lalitha)
2 Purchases A/c (3,000x90%) Dr. 2,700
To Mohan’s A/c 2,700
(Being goods bought from Nanthaniel Rs.3,000. He allowed
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 UNIT III: Financial Accounting Process – Accounting Information System (Journal)
10% trade discount)
3 Purchases A/c (5,000x20%) Dr. 4,000
To Cash A/c (4,000x95%) 3,800
To Discount Received A/c (4,000x5%) 200
(Being goods worth Rs.5,000 bought for cash less 20% trade
discount and 5% cash discount. Trade discount is not show in
the books but cash discount is shown in the books)
5 Purchases A/c Dr. 25,000
To Pelmo’s A/c 20,000
To Cash A/c (B/F) 5,000
(Being goods purchased from Pelmo for cash and credit)
7 Purchases A/c (30,000x85%) Dr. 25,500
To Ram’s A/c (25,500x50%) 12,750
To Discount A/c (12,750x10%) 1,275
To Cash A/c (b/f) 11,475
(Being goods worth 30,000 purchased from Ram less 15% trade
discount and half of the amount received with 10% cash
discount)
10 Gyeltshen’s A/c Dr. 5,000
To Sales A/c 5,000
(Being goods sold to Gyeltshen)
11 Sonam’s A/c Dr. 16,000
To Sales A/c 16,000
(Being goods sold to Sonam on credit)
11 Ugyen & Co.’s A/c Dr. 2,500
To Furniture A/c 2,500
(Being old furniture sold to Ugyen & Co. on credit)
12 Pelmo’s A/c Dr. 1,000
To Purchases Return (Return Outwards) A/c 1,000
(Being brought goods retuned to Pelmo)
13 Drawings A/c Dr. 10,000
To Cash A/c 4,000
To Bank A/c 3,000
To Purchases A/c 3,000
(Being withdrawn by proprietor Lalitha for his personal use)
14 Depreciation A/c (30,000 x10%) Dr. 3,000
To Buildings A/c 3,000
(Being charged 10 % depreciation on building)
15 Cash A/c Dr. 2,000
To Bank A/c 2,000
(Being cash withdrawn for official use)
17 Stationery A/c Dr. 600
To Cash A/c 600
(Being pencils and office covers purchased)
18 Sales Return (Return Inwards) A/c Dr. 1,500
To Gyeltshen’s A/c 1,500
(Being sold goods returned by Gyeltshen to us)
19 Cash A/c Dr. 15,900
Discount Allowed A/c (b/f) Dr. 100
To Sonam’s A/c 16,000
(Being cash received and discount allowed to Sonam)
20 Cash A/c Dr. 3,490
Discount Allowed A/c (b/f) Dr. 10
To Gyeltshen’s A/c (5000 -1500) 3,500
(Being cheque received and discount allowed to Gyeltshen)
21 Cash A/c (2,000 x 0.75) Dr. 1,500
Bad Debt A/c (2000 – 1,500) Dr. 500
To Dechen’s A/c 2,000
(Being a cheque received for composition of 75 paisa from
Dechen out of a debt Rs.2,000)
22 Bank A/c Dr. 1,500
To Cash A/c 1,500
(Being Dechen’s cheque deposited in the bank)
23 Pelmo’s A/c (20,000 – 1,000) Dr. 19,000
To Bank A/c 18,900
To Discount Received A/c (b/f) 100
(Being cheque issued to Pelmo and discount received)
23 Cash A/c Dr. 500
To Bad Debts Recovered A/c 500
(Being bad debts written off last year, now recovered)
24 Bad Debt A/c Dr. 400
To Norbu’s A/c 400

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 UNIT III: Financial Accounting Process – Accounting Information System (Journal)
(Being bad debt Rs.400 from Norbu)
24 Furniture A/c (300 x 2 = 600) Dr. 600
To Cash A/c 600
(Being two chairs purchased)
25 Drawings A/c or Capital A/c (10,000 x 5%) Dr. 500
To Interest on Drawings A/c 500
(Being interest on drawings charged)
25 Interest on Capital A/c (30,500 x 10%) Dr. 3,050
To Capital A/c 3,050
(Being 10% interest allowed on capital)
26 Interest on Loan A/c (10,000 x 5% 6/12) Dr. 250
To Loan A/c 250
(Being 5% interest paid on loan to creditors)
26 Cash A/c Dr. 200
To Interest on loan A/c 200
(Being interest on loan received)
26 Loan to Saran’s A/c (3,000 x 1% x 2/12) Dr. 30
To Interest on Loan A/c 30
(Being 1% interest charged on loan from debtors)
26 Fixtures A/c Dr. 400
To Cash A/c 400
(Being neon sign brought for cash)
27 Dechen’s A/c Dr. 1,500
To Bank A/c 1,500
(Being Dechen’s cheque dishonored)
28 Loss by Theft A/c Dr. 300
To Furniture A/c 300
(Being loss of one chair by stolen)
28 Loss by Fire A/c Dr. 5,000
To Purchases A/c
(Being goods destroyed by fire) 5,000
29 Cash A/c Dr. 750
To Commission A/c 750
(Being Commission received)
30 Commission A/c Dr. 400
Salaries A/c Dr. 2,000
To Cash A/c 2,400
(Being commission and salary paid)
30 Cash A/c Dr. 600
To Interest Received A/c 600
(Being interest received)
31 Interest Accrued A/c Dr. 700
To Interest A/c 700
(Being the interest accrued but not yet received)
31 Salaries A/c Dr. 1,500
To Salaries Outstanding A/c 1,500
(Being salary due but not paid to clerk)
31 Prepaid Insurance A/c Dr. 3,000
To Cash or Insurance A/c 3,000
(Being insurance paid in advance)
31 Commission Or Cash A/c Dr. 900
To Unearned Commission A/c 900
(Being commission received in advance)
31 Lavanya’s A/c Dr. 3,490
To Cash A/c 3,490
(Being Gyeltshen’s cheque endorsed to Lavanya)

Practical Questions
16. Pass journal entries in the books of Mr. Harsha.
2011June 1 Mr. Harsha started business with cash Rs. 80,000; Goods Rs. 40,000 & Furniture
Rs.20,000
2 Sold goods to Ms. Shruthi of the list price of Rs. 20,000 at a trade discount of 10%.
4 Ms. Shruthi returned the goods of the list price of Rs.4,000.
8 Received from Ms. Shruthi Rs. 14,150 in full settlement of his account.
10 Purchases goods from Mr. Mohan of the list price of Rs.10,000 at a 15% trade discount.
13 Returned goods to Mr. Mohan of the list price Rs.1,000.
16 Settled the account of Mr. Mohan by paying cash, under a discount of 4%.
18 Purchased goods from Mr. Arun Rs.5,000, Mr. Vivek Rs.10,000
Dr. Ramakrishnan P, Associate Professor, RBS, REVA University Page 14 of 23
 UNIT III: Financial Accounting Process – Accounting Information System (Journal)
19 Paid cash to Mr. Arun Rs.1,900 and discount received Rs.100.
20 Paid Rs.9,800 to Mr. Vivek in full settlement of his account.
20 Bought a table-fan for Rs. 1,200 for the domestic use of Mr. Manoj.
25 Sold goods for cash of the list price Rs. 8,000 at a 10% trade discount and 3% cash
discount.
30 Paid rent Rs.800; Trade expenses Rs.700 & Travelling Expenses Rs.380.

17. Enter the following transactions in the Journal of Mr. Charan.

2015, June1 Charan commenced business with cash Rs.25,000 and goods Rs.75,000.
5 Bought goods for Rs.10,000.
7 Purchased goods from Hiremath, for Rs.30,000 against a current dated cheque.
8 Goods bought from Keerthi for Rs.20,000.
10 Bought goods from Poorna of list price of Rs.30,000 at a trade discount of 10%.
12 Purchased goods with a list price of Rs.1,25,000 from Shoheb, less a 20% trade
discount and a 2% cash discount. Paid 40% of the total amount by cheque.
15 Rejected and returned 10% of goods supplied by Keerthi.
20 Rejected and returned 10% of goods supplied by Poorna.
22 Goods used in making of furniture (sale price Rs.2,000, cost price Rs.1,500)
25 Goods stolen in transit (sale price Rs.1,000, cost price Rs.800)
30 Goods stolen by an employee (sale price Rs.1,000, cost price Rs.600)

18. Give journal entries for the following transactions in the books of Pavan:
2023, March 1 Started business with bank Rs.1,00,000 and goods Rs.25,000.
2 Purchased goods from Chandran Rs.20,000 and Nathaniel Rs.10,000.
3 Sold goods to Mariya Rs.31,800
5 Returned defective goods by Mariya Rs.1,800
7 Received cash from Mariya Rs.29,000 and discount allowed.
10 Nandan purchased old furniture from us Rs.5,000
12 Dinesh sold goods to us Rs.10,000.
15 Paid to Dinesh by cheque Rs.6,900 and discount allowed by him Rs.100.
17 Bought table fan for domestic use Rs.1,500.
20 Lent to Priya Rs.3,000.
25 Paid remuneration to manager Rs.400.
28 Bought goods from Neeraj, list price Rs.20,000 less 20% trade discount.
30 Rent received Rs.400.
30 Interest received Rs.500
31 Paid salary Rs.2,000 and trade expenses Rs.300.

19. From the following transactions of M/s Wise and Active write up the Journal entries.
1st January 2023 Cash in hand Rs.2,000; Stock of goods Rs.10,800; Machinery Rs.1,00,000;
Debtors Rs.4,000;
Creditors Rs.6,800.
2 Deposited into bank Rs.10,000.
4 Bought goods from Vishnuraj for cash Rs.20,000: for credit Nu:50,000.
5 Sold goods to Tejaswini Rs.20,000 for cash: Out of these Rs.5,000 deposited in Bank.
8 Received Cheque from debtors and the Cheque deposited in bank Rs.4,000.
10 Bank intimates that Cheque of debtor has been dishonoured.
12 Sold goods for cash to Ruthresh Rs.4,000 and to Rohith on credit Rs.10,000.
15 Purchased Printing and Stationery for Rs.1,700 by cheque.
17 Received from Rohith in full settlement of amount due on January 5th Rs.9,500.
19 Old Furniture sold for cash Rs.1,000.
20 Salary due to clerk Rs.6,000.
21 Sold goods to Rakesh Rs.4,000.
25 Rs.19,000 received from Prasanta in full settlement of Rs.20,000.
31 Rakesh, becomes insolvent, a dividend of Rs.75 paise in the rupee is received.
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 UNIT III: Financial Accounting Process – Accounting Information System (Journal)
20. Journalize the following transactions of Sonu.
2024 January 1, Sonu Started business with cash Rs.40,000.
3 Goods Purchased for cash Rs.6,000
4 Purchased goods Rs.3,000
5 Cash Purchases Rs.2,000
6 Purchased goods from Azman for cash Rs.5,000
7 Purchased goods worth Rs.1,500 from Azman and cheque issued for the same.
8 Bought goods worth Rs.4,000 from Farooq on credit.
10 Goods bought from Mounish Rs.1,000
12 Credit Purchases Rs.2,500
13 Machinery purchased on credit Rs.10,000 from Nanthaniel
14 Credit Sales Rs.1,000
15 Sold goods to Saran Rs.2,000
16 Goods sold to Lalitha Rs.5,000 on credit.
18 Sold goods to Meghana for cash Rs.1,500
19 Goods sold to Prem for Rs.7,000 and cheque received.
20 Sold goods to Muskan for Rs.2,000, cheque received and deposited into bank.
21 Cash sales Rs.3,000
22 Old furniture sold for Rs.4,000.
23 Cheque deposited into bank Rs.7,000.
24 Withdrawn from bank Rs.2,000
25 Withdrawn from bank for non-official use Rs.1,000
26 Withdrawn from office for domestic purpose Rs.1,500
27 Goods worth Rs.3,000 withdrawn for personal use.
28 Goods worth Rs.2,000 given as charity.
29 Goods worth Rs.1,000 spent on gifts and presents to employees.
30 Bank charges amounted to Rs.500.

21. Enter the following transactions in the journal of Mr. Kaushik.

2024, June1 Kaushik started business with cash Rs.50,000.
2 Purchase goods for cash Rs.20,000
4 Purchase goods from Geetha Rs.12,000
5 Purchase furniture for cash Rs.6,000
7 Sold goods for cash Rs.13,000
9 Sold goods to Reeta Rs.15,000
10 Paid cash to Geetha Rs.8,000
12 Received cash from Reeta Rs.10,000
16 Purchased goods from Rama for cash Rs.7,500
17 Purchased goods from Rama Rs.5,000
18 Sold goods to Seetha for cash Rs.12,600
19 Sold goods to Seetha Rs.7,000
20 Bought machinery for cash Rs.8,000
24 Withdraw cash from office for personal use Rs.2,500
27 Paid rent Rs.400
29 Paid wages Rs.450
30 Paid salary to Vishnu Rs.1,200
30 Paid for repairing the office furniture Rs.800
30 Received commission Rs.500

22. Enter the following transactions in the books of XYZ Limited for the income year ending
31/12/2023
Date Transactions Amount
1/7/2023 Started business with cash as an investment 9,000
2/7/2023 Deposited in Bank of Baroda 7,000
4/7/2023 Acquired a building by issuing a cheque 5,000
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10/7/2023 Paid the bill of the furniture by a cheque 1,000
15/7/2023 Purchased merchandise by cheque 800
18/7/2023 Withdrew from Bank of Baroda 100
20/7/2023 Sold merchandise to Mohan 1,200
22/7/2023 Deposited into Bank of Baroda 2,000
25/7/2023 Bought merchandise from Murali 1,000
26/7/2023 Sold merchandise by cheque 1,500
27/7/2023 Paid premium by cheque for insuring building against fire 100
28/7/2023 Paid freight 50
30/7/2023 Withdrew from bank for personal use 500
31/7/2023 Cleared electricity bill 90
31/7/2023 Paid Murali as full and final payment 800
31/7/2023 Received from Mohan as full and final payment 1,100

23. The following transactions appears in the books of Rahul for the year ending 31st Dec. 2024
Date/Year Business Transactions
1/1/2024 Rahul started business with cash Rs.7,00,000; Goods Rs.1,50,000, Buildings
Rs.13,00,000 and Furniture Rs.1,50,000
5/2/2024 Cash deposited into BOB Rs.2,50,000
20/2/2024 Purchased goods from Kumar of list price Rs.30,000 at 10% trade discount
25/2/2024 Returned defective goods to Kumar of the list price Rs.5,000
16/3/2024 Settle the A/c of Kumar by paying cash with a 3% cash discount
28/3/2024 Cash purchased of goods from Devi Rs.2,20,000
15/4/2024 Sold goods to Monu, list price Rs.50,000 at trade discount of 15%
20/4/2024 Monu returned some of the defective goods of the list price Rs.4,000
12/5/2024 Received sale proceeds from Monu Rs.39,000 in full settlement of her A/c.
20/5/2024 Cash sale of goods Rs.3,60,000
28/6/2024 Sold goods to Priya Rs.90,000 with an understanding that she would pay the full sale
proceeds after one month from the purchase date.
29/7/2024 The cheque received from Priya Rs.90,000. This cheque was immediately deposited
in the BOB.
5/8/2024 The cheque was received from Priya dishonoured.
6/9/2024 Paid wages Rs.6,000, office expenses Rs.4,000 and conveyance Rs.6,500
7/10/2024 Withdrawn Rs.6,000 from the office by Rahul to buy a gift for his wife.
8/12/2024 Withdrawn from bank for office use Rs.15,000
From the above furnished information, you are required to pass the required journal entries in the
books of Rahul.

24. Mr. Chandan acquired the business of Ms. Lalitha on 1st January 2025. The following transactions
are in the Journal of Mr. Chandan. Accounting Period:
Jan 1st Debit Balances on the date of acquisition:
Cash in hand Rs.8,000, Cash at Bank Rs.25,000, Stock of goods Rs.20,000, Equipment
Rs.2,000, Buildings Rs.10,000. Sundry Debtors – Uzma Rs.2,000, Laharika Rs.1,000 &
Yogita Rs.2,000.
Credit Balances on the date of acquisition:
Sundry Creditors – Vishnu Rs.5,000, Loan from Vijayanda Rs.10,000.
4th Sold household Furniture for Rs.2,000 and paid the money into business cash
5th Cash received from Uzma Rs.1,980 in full settlement of her account.
6th Paid Landlord Rs.1,200 for rent. One-third of the premises are occupied by the
proprietor for his own residence.
7th Goods sold to Laharika for Rs.3,000 and to Yogita for Rs.5,000.
8th Sold some office equipment for Rs.1,300 (Proceeds being received as Rs.700 by cheque
and balance in cash)
11th Interest received from Harika Rs.200
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 UNIT III: Financial Accounting Process – Accounting Information System (Journal)
12th Paid to Vijayanda towards interest Rs.500
13th Sold goods for cash Rs.5,000
14th Cash paid to Vishnu Rs.2,000
17th Withdrew goods from business for personal use Rs.2,000
20th The cheque was received for sale of Equipment endorsed to Vishnu.

25. Pass the journal entries in the books of R for the year 2024
2020, Jan 1 R started business with Rs.80,000, Goods Rs.40,000 and Furniture Rs.20,000
2 Sold goods to Mr. N list price Rs.20,000 at trade discount 10%
4 Mr. N returned the goods of the list price of Rs.4,000
8 Received from Mr. N Rs.14,150 in the full settlement of his account
10 Purchase goods from Mohan of list price Rs.10,000 at 15% trade discount
15 Returned goods to Mohan of list price Rs.1,000
16 Settle the account of Mr. Mohan by paying cash with 4% discount
18 Purchase goods from Anil Rs.5,000, Sunil Rs.10,000
19 Paid cash to Anil Rs.1,900 and discount received Rs.100
20 Paid Rs.9,800 to Sunil in full settlement of his account
20 Brought table fan for Rs.1,200 for domestic use of Mr. R
25 Sold goods for cash of list price Rs.8,000 at 10% trade discount
30 Paid rent Rs.800, trade expense Rs.700 and travelling expenses Rs.380

26. From the following transactions in the Journal of Mr. Piyush.

Date 2023 Particulars
1-July Piyush started Business with Cash Rs.160,000, Goods Rs.80,000 and Furniture
Rs.40,000
2-July Sold goods to Mr. Manish list price Rs.40,000 @ trade discount 10%
4- July Mr. Manish returned goods of the list price of Rs. 8,000
8-July Received from Mr. Manish Rs.28,300 in the full settlement of his account
10-July Purchase goods from Mandira of list price Rs.20,000 @ 15% trade discount
15-July Returned goods to Mandira of list price Rs.2,000
16-July Settled the account of Mandira by paying cash with 4% discount
18-July Purchase goods from Mansi Rs.10,000, Latha Rs.20,000
19-July Paid cash to MansiRs.3,800 and discount received Rs.100
20-July Paid Rs.19,600 to Latha in full settlement of her account.
21-July Bought Fan for Rs.2400 for domestic use of owner.
25-July Sold goods for cash of list price Rs.16,000 @ 10% discount
30-July Paid rent Rs.1,600, trade expenses Rs.1400 and travelling expenses Rs.760.

27. Give the journal Entries from the following transaction in the books of Puneeth for the year 2024.
Date Particulars Amt. (Rs.)
1-Mar Started business with cash 100,000
2-Mar Cash purchases 48,000
3-Mar Sold goods to Mr. X 10,000
Goods worth Rs.500 were damaged in transit; a claim was made on the
5-Mar General Insurance Corporation (GIC) of India for the same.
6-Mar Returned defective goods by Mr. X 1,000
8-Mar Received cash from Mr. X Rs.8,800 and discount allowed Rs.200
9-Mar Mr. C sold goods to us 20,000
10-Mar Mr. Y purchased goods from us 12,000
Received from travelling salesman Rs.3,000 for good sold by him after
10-Mar deducting his travelling expenses Rs.150
11-Mar Received cash from GIC in full settlement of claim for damaged in transit 250

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 UNIT III: Financial Accounting Process – Accounting Information System (Journal)
12-Mar Paid life insurance premium of Puneeth 2,000
15-Mar Paid cash to Mr. C Rs.13,780 and discount allowed by him Rs.220
18-Mar Lent to Mr. M 5,000
18-Mar Brought goods from Pawn list price Rs.15,000 less 20% trade discount
22-Mar Paid to Pawn 8,000
26-Mar Received cash from Y 6,000
31-Mar Paid wages Rs.400, advertisement expenses Rs.250 and salaries Rs.1,500
31-Mar Received interest 100
31-Mar Received commission 600

28. The following balance appeared in the book of ABC stores on 1st January 2024.
Liabilities Amounts Assets Amounts
Bank Loan 20,000 Cash in hand 30,000
Sundry Creditors Cash at Bank 10,000
A 10,000 Stock 80,000
B 15,000 Furniture 7,200
25,000 Sundry Debtors: X 12,000
Y 16,000
Z 20,000 48,000
The following transaction took place during January 2024
Date Particulars
Brought goods from K Rs.40,000 at a trade discount 5% and cash discount of 2%
2-Jan and paid 70% amount immediately.
4-Jan Sold goods to Mr. X Rs.18,000
5-Jan Received Rs.29,800 from Mr. X in full settlement of his account
6-Jan Cash deposited into bank Rs.15,000
Cheque received from Y Rs.15,900 in full settlement of his account. This cheque
8-Jan was immediately deposited into bank
10-Jan Received cheque from Z Rs.15,000
12-Jan Cheque received from Z and deposited into bank
15-Jan Cheque received from Y dishonored returned
16-Jan Cash sale Rs.30,000 out of which half deposited into bank
16-Jan Amount due to A paid by cheque
18-Jan Old newspaper sold Rs.200, old furniture sold Rs.1,500
20-Jan Z become insolvent and 60 paise in a rupee could be received from his estate.
22-Jan Purchased goods from Mr. G and paid by cheque Rs.16,000
24-Jan Sold half of the above goods to Mr. C at a profit Rs.2,000
25-Jan Proprietor withdrew for private use Rs.4,000 from office and Rs.1,000 from Bank
28-Jan Paid the amount due to B.
Received the amount due from Y as full settlement of Rs.15,950.
Received dividend on shares of Rs.1.5 per share of 1,000 shares.
Received interest on investments Rs.5,000.
29-Jan Sales Rs.30,000 and additional capital introduced Rs.40,000.
Goods costing Rs.3,000 distributed as free sample.
Goods worth Rs.2,000 given as charity.
30-Jan Purchased machinery by cheque Rs.40,000.
Paid freight and carriage on machinery Rs.4,000 and installation charges Rs.6,000
by cash.
31-Jan Paid salaries to Mr. M Rs.5,000
Paid rent by cheque Rs.10,000
Paid trade expense by cheque Rs.1,500
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 UNIT III: Financial Accounting Process – Accounting Information System (Journal)
29. The following balances are expressed in the books of Harshath General Shop on 1st January 2023.
Assets – Cash Rs.15,000; Bank Balances Rs.5,000; Stock Rs.40,000; Furniture Rs.3,600; …………..
(Srishti - Rs.6,000; Shradha- Rs.8,000; Sowjanya – Rs.10,000)
Liabilities – Bank Loan Rs.10,000; ……………..
(Sharath -Rs. 5,000; Shanjeev - Rs.7,500)
The following transactions took place during January 2023:
2 Bought goods from Rajkumar Rs. 20,000 at a trade discount of 10% and a cash discount of 2%.
Paid 60% of the amount immediately.
4 Sold goods to Srishti Rs.9,000
5 Received Rs.14,800 from Srishti in full settlement of her account.
6 Cash deposited into bank Rs.10,000
8 Cheque received from Shradha Rs.7,850 in full settlement of her account. This cheque was
immediately deposited it into the bank.
10 Received cheque from Sowjanya Rs.2,000
12 Cheque received from Sowjanya deposited into bank.
15 Cheque received from Shradha dishonoured.
16 Cash sales Rs.15,000, out of this amount Rs.12,000 deposited into the bank.
16 Amount due to Sharath paid by cheque.
18 Old newspapers sold Rs.50; old furniture sold Rs.750
20 Sowjanya become insolvent and 40 paise in a rupee could be received from her estate.
22 Purchases goods from Raja and paid by cheque Rs.8,000
24 Sold halves of the above goods to Monu at a profit of Rs.1,200 (30% on cost)
25 Proprietor withdraws for private use Rs.2,000 from the office, Rs.3,000 from the bank and Rs.
1,000 worth of goods from previous purchases.
31 Salary paid to Kavya by cheque Rs.2,000
31 Rent paid by cheque Rs.1,500
31 Paid trade expenses Rs.500.
From the above transactions of M/s Harshath General Shop write up the Journal entries.

30. Pass the journal entries for the following information:

(a) On 1st April 2023, the position of Guhan was as follows.: Cash Rs.3,000; Bank Rs.70,000;
Bills Payable Rs.10,000; Bills Receivable Rs.20,000; Biju (Dr.) Rs.6,000; Stock Rs.40,000;
and Viju (Cr.) Rs.9,000.
(b) Prasanth who owed me Rs.10,000 is declared insolvent and Rs.3,000 is received from Prasanth
on 15th May 2023.
(c) On 4th June 2023, Kinley contributed capital – Cash Rs.90,000 and Furniture Rs.20,000.
Aravinth contributed capital – Cash Rs.50,000 and Stock Rs.70,000.

31. Journalize the following transactions and post them into ledger. [RBS, May 2021]
January 2012
1. Mohan started the business with cash Rs.1,00,000.
2. He opened a bank account with Rs.50,000.
3. Bought office furniture for cash Rs.10,000.
4. Bought goods from Mr. Narayan for Rs.15,000.

32. Journalize the following transactions in the books of Krishna. [RBS, Nov. 2022]
1-5-2020 Krishna started business with Rs.65,000.
2-5-2020 Purchased goods for cash Rs.14,000.
3-5-2020 Deposited into bank Rs.2,400.
4-5-2020 Goods sold for cash Rs.18,000.
10-5-2020 Cash paid to Gopal Rs.1,000.
11-5-2020 Goods purchased for cash Rs.15,000.
12-5-2020 Goods sold to Narayan Rs.4,000.
14-5-2020 Purchased Furniture for cash Rs.2,000.
15-5-2020 Received cash from Narayan Rs.750.
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 UNIT III: Financial Accounting Process – Accounting Information System (Journal)
16-5-2020 Goods purchased from Sridhar Rs.2,000.
17-5-2020 Cash paid to Sridhar Rs.2,000.
18-5-2020 With draw from bank Rs.1,000.
19-5-2020 With draw from bank for personal use Rs.250.
20-5-2020 Rent paid Rs.600.

33. Journalize the following transactions in the books of Mr. Rajashekhar. [RBS, Nov. 2022]
January, 2024.
1. Started business with cash Rs.1,00,000.
2. Purchased furniture for cash Rs.10,000.
3. Purchased goods from Mr. Kamalesh on list price of Rs.15,000 at a trade discount of 10%.
4. Returned goods to Mr. Kamalesh valued at list price Rs.1,000.
5. Settled the account of Mr. Kamalesh by paying Rs.12,500.
6. Sold goods to Mr. RamlalRs.10,000.
7. Ramlal returned goods worth Rs.2,000.
8. Received from Ramlal Rs.7,900 in full settlement of his account.
9. Provide depreciation on furniture Rs.500.
10. Received commission Rs.1,000 for the professional services provided.

34. Journalize the following transactions in the books of Mr. Mohan. [RBS, April. 2023]
On April 1, 2024 Mr. Mohan started a business with cash Rs.1,00,000.
Date Particulars
April 1 Opened bank account and deposited cash Rs.10,000
3 Bought goods Rs.5,000
4 Sold goods to Gopal Rs.4,000
10 Bought goods from Ram Rs.8,000
15 Paid trade expenses Rs.2,000
20 Received cash Gopal in full settlement of his account Rs.3,950
25 Paid wages Rs.700
27 Paid to Ram in full settlement Rs.7,700
30 Paid rent Rs.1,500

35. Journalise the following transactions in the books of Sunil Kumar. [RBS, July 2023]
2024, January.
1. Sunil Kumar started business with cash Rs.80,000, Goods worth Rs.40,000, and Furniture with
Rs.10,000.
2. Purchased goods worth Rs.50,000 less 20% trade discount and 5% cash discount.
3. Bought 100 shares of Bharathi Ltd @ Rs. 15 per share, brokerage paid Rs. 25.
4. Purchased a motor car in exchange for goods Rs.20,000 and cash Rs.20,000.
5. Purchased goods from Briz on list price of Rs.10,000 at a trade discount of 15%.
6. Returned goods to Briz valued at list price Rs.1,000.
7. Settled the account of Briz by paying Rs.7,400.
8. Bought a table fan for Rs.1,200 for domestic use of Sunil Kumar.
9. Paid trade expenses and travelling expenses of Rs.200 and Rs.380 respectively.
10. Loan taken from SBI Rs.1,00,000.

36. Journalize the following transactions in the books of M/s Kothari & Sons, post them into Cash
ledger for April 20241: [RBS, July 2023]
Apr. 1: Commenced business with Rs.40,000.
Apr. 4: Bought goods for cash Rs.4,000
Apr. 7: Sold goods Rs.700
Apr. 10: Bought goods from M/s Bhandari Bros. Rs.3,000 at 10% trade discount.
Apr. 14: Purchased machinery of Rs.5,000 from M/s Kirloskar Bros.
Apr. 16: Paid for transportation of machinery Rs.500 & installation charges Rs.300 on it.
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Apr. 20: Paid quarterly interest on borrowed amount of Rs.5,000 at 12% p.a.
Apr. 24: Supplied goods to M/s Kunal & Sons Rs.3,500.
Apr. 27: Paid to M/s Bhandari Bros. Rs.2600 in full settlement of account.
Apr. 28: M/s Kunal & Sons returned goods worth Rs.300 & paid for Rs.1,200 on account.
Apr. 29: Received commission Rs.250.
Apr. 30: Paid conveyance to manager Rs.45

37. On 1st April 2024, Mohit started business with a capital of ₹50,000. He made the following
transactions: [RBS, Sept. 2023]
2024, April 03 Purchased goods from Rita on credit for ₹20,000
April 04 Cash paid to Rita ₹10,000
April 06 Goods sold to Rohit ₹25,000
April 08 Cash received from Rohit ₹20,000
April 12 Goods purchased from Rita ₹12,000
April 18 Cash paid Rita ₹20,000
April 25 Goods sold to Rohit ₹10,000
April30 Received cash from Rohit₹ 6,000.
You are required to journalise the above transactions and show the respective Ledger accounts.

38. Journalize the following transactions in the books of Suresh. [RBS, Jan. 2024]
Date Particulars
2024, July 1 Commenced business with cash borrowed from Vijaya Bank Rs.6,000
8 Bought goods worth Rs.4,000 from Pavithra Shety and paid cash Rs.2,500.
13 Received an account payee cheque from Devraj Rs.1,800.
16 Goods worth Rs.3,200 were sold to Rajani and received cash of Rs.2,000.
20 Paid to Mahesh Rs.1,400 and received a discount Rs.100.
27 Bank Charges charged by bank Rs.150.
30 Paid rent Rs.800 and salary Rs.1,500 by cheque.

39. The following balances appeared in the books of Ram & Shyam on January 2023. [RBS, May 2024]
Assets: Cash in hand ₹3,000; Stock ₹36,000; Lal Chand ₹7,600; Mukesh Khanna ₹16,200;
Furniture ₹8,000.
Liabilities: Ghanshyam ₹6,000; Vinod ₹8,000.
Jan. 2 Purchased Typewriter for ₹7,500.
Jan. 4 Sold goods for cash of the list price of ₹25,000 at 20% trade discount and 5% cash
discount.
Jan. 6 Sold goods to Gopal Seth for ₹10,000.
Jan. 8 Gopal Seth returned goods of ₹1,500.
Jan. 12 Purchased goods from Arun ₹12,000; and from Varun ₹15,000.
Jan. 13 Settled Arun’s account in full after deducting 5% for cash discount.
Jan. 14 Paid cash to Ghanshyam in full settlement of his account.
Jan. 16 Received ₹7,500 from Lal Chand in full settlement of his account.
Jan. 22 Received from Gopal Seth ₹4,850 and discount allowed ₹150.
Jan. 29 Paid for Life Insurance premium of the proprietor ₹1,600.

40. Journalise the following transactions in the books of M/s ABC Ltd. [RBS, July 2024]
Jan. 2025
1. Started business with cash Rs.1,00,000.
2. Purchased furniture for cash Rs.10,000.
3. Purchased furniture from Mr. Kamalesh on list price of Rs.15,000 at a trade discount of 10%.
4. Returned good to Mr. Kamalesh value at list price Rs.1,000.
5. Settled the account of Mr. Kamalesh by paying Rs.12,500.
6. Sold goods to Mr. Ramlal Rs.10,000.
7. Ramlal returned goods worth RS.2,000.

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 UNIT III: Financial Accounting Process – Accounting Information System (Journal)
8. Received from Ramlal Rs.7,900 in full settlement of his account.
9. Purchased a motorcar in exchange of goods at cost of Rs.20,000 and cash Rs.30,000.
10. Provide depreciation on furniture RS.500.

41. Mr. Sanjai of Hyderabad started a retail business at the beginning of this year. Being money
minded person, he wanted to know his business position within a month after. He requested you to
prepare his Cash Book, Ledger, Trial Balance, Trading and Profit and Loss account and Balance
sheet for the month.
Date Transactions
2/1/06 Mr. Sanjai of Hyderabad started a retail business with a sum of Rs.700,000 in the bank.
4/1/06 Bought a computer for business from Sahil for Rs.40,000 by using cheque no.123450
4/1/06 Paid for a computer table from bank account Rs.10,000 by using cheque no.123451
5/1/06 Withdrawn for office use from bank account Rs.70,000 by using cheque no.123452
6/1/06 Bought goods from Sandhya for Rs.20,000 by using cheque no. 123453
7/1/06 Bought goods for Rs.32,000 from Shama Company on credit
7/1/06 Paid Rs.5,000 in cash to Sanjana Transporter for transportation of goods from
Phuentsholing to the business godown
9/1/06 Paid to M/s Shalini for office supplies 5700 using cheque no.123454
11/1/06 Received Rs.50,000 in cash for sale of goods
12/1/06 Deposited Rs.35,000 in the business bank account
13/1/06 Paid Rs.3,500 to Roshini as advance salary
14/1/06 Bought goods worth Rs.40,000 from Rakshitha Company on credit
16/1/06 Bought goods worth Rs.20,000 from Pradeep on credit
17/1/06 Paid to Prajwal Transporters for carrying goods to Paro, Rs.7,500
19/1/06 Sold goods worth Rs.40,000 to Hotel Holiday Home on credit
20/1/06 Sold goods worth Rs.50,000 to M/s Le Meridien on credit
21/1/06 Returned goods worth Rs. 10,000 to Rakshitha Company
22/1/06 Returned goods worth Rs. 5,000 to Rakshitha Company
23/1/06 Received back goods worth Rs.15,000 from M/s Le Meridien.
23/1/06 Paid to Muskan, salary advance of Rs.2,000
24/1/06 Received back goods worth Rs.5,000 from Hotel Holiday Home.
25/1/06 The Proprietor used goods worth Rs.1,500 for his domestic purpose
26/1/06 Paid office rent of Rs.5,000
26/1/06 Received a cheque for Rs.25,000 from Hotel Holiday Home
27/1/06 Paid to Landlord Rs.7000 as house rent on behalf of the proprietor
28/1/06 Paid to Shama Company Rs.19,870.50 by using cheque no.123455
29/1/06 Received a cheque for Rs.15,000 from M/s Le Meridien.

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