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    ACCOUNTING EQUATION, JOURNAL LEDGER - Solution

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    Ritika Das
    The document contains two accounting illustrations. The first provides transactions for Arjun's business and establishes the accounting equation. The second lists 14 transactions conducted by Raj & Co., providing the journal entries for each and the resulting ledger account for Raj's cash account. It establishes assets and capital at the start and records purchases, sales, expenses, withdrawals, and payments to arrive at the ending cash balance.

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    ACCOUNTING EQUATION, JOURNAL LEDGER - Solution

    Uploaded by

    Ritika Das
    304 views4 pages
    The document contains two accounting illustrations. The first provides transactions for Arjun's business and establishes the accounting equation. The second lists 14 transactions conducted by Raj & Co., providing the journal entries for each and the resulting ledger account for Raj's cash account. It establishes assets and capital at the start and records purchases, sales, expenses, withdrawals, and payments to arrive at the ending cash balance.

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    ACCOUNTING EQUATION, JOURNAL LEDGER_Solution (1)

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    The document contains two accounting illustrations. The first provides transactions for Arjun's business and establishes the accounting equation. The second lists 14 transactions conducted by Raj & Co., providing the journal entries for each and the resulting ledger account for Raj's cash account. It establishes assets and capital at the start and records purchases, sales, expenses, withdrawals, and payments to arrive at the ending cash balance.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    304 views4 pages

    ACCOUNTING EQUATION, JOURNAL LEDGER - Solution

    Uploaded by

    Ritika Das
    The document contains two accounting illustrations. The first provides transactions for Arjun's business and establishes the accounting equation. The second lists 14 transactions conducted by Raj & Co., providing the journal entries for each and the resulting ledger account for Raj's cash account. It establishes assets and capital at the start and records purchases, sales, expenses, withdrawals, and payments to arrive at the ending cash balance.

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    ACCOUNTING EQUATION

    Illustration– 1:

    Give the accounting equation for the following transactions-

    1) Arjun started business with Cash ₹90,000.

    2) Purchased Motor Car on credit from Honda Co. for ₹30,000.

    3) Purchased goods from Karan worth ₹10,000 on credit.

    4) Goods destroyed by fire ₹1,000.

    5) Depreciation on Motor Car for 1 year is ₹1,000.

    6) Goods sold for cash ₹5,000.

    JOURNAL & LEDGER

    Illustration– 1:

    1. Raj started business by introducing the following assets:

    Cash ₹ 10,000

    Furniture ₹ 20,000

    Plant ₹ 30,000

    Goods ₹ 20,000

    2. He purchased goods of the invoice value of ₹10,000 at 10% trade discount from Suresh.

    3. He supplied goods costing ₹1,000 to Ramesh at an invoice price of 10% above cost at a
    trade discount of 5%.

    4. He installed further machinery of ₹20,000 and paid wages for installation ₹2,000. The
    machinery was supplied by M/s Surya Brothers.

    5. He purchased stationery for business purposes ₹500.

    6. He sold goods to Sidharth for ₹5,000.

    7. He withdrew goods for personal use costing ₹5,000 (sale value ₹6,000).

    8. He distributed goods costing ₹2,000 (sale value ₹2,500 as free samples).

    9. Sidharth became insolvent and the whole money due from him was considered as a bad
    debt.

    10. He sold goods for cash ₹20,000.


    11. Salaries paid ₹10,000 after deduction ₹1,000 as income tax, ₹1,500 as employee’s share
    of provident fund but before employer’s share of provident fund ₹1,500.

    12. Amount due from Sidharth earlier written off bad debts recovered in full.

    13. Amount paid to Suresh ₹8,500 in full satisfaction.

    14. Income tax liability of Raj ₹ l,000 paid in cash.

    You are required to pass the necessary journal entries for the above transactions and prepare
    necessary ledger accounts.

    Solution:

    In the books of Raj & Co.

    Journal Enties

    Date Particulars L/F Debit (₹) Credit (₹)

    ? Cash A/c ………………………..Dr. 10000

    Furniture A/c ……………………Dr. 20000

    Plant A/c ………………………..Dr. 30000

    Purchases A/c ………………….. Dr. 20000

    To Capital A/c 80000

    (Being cash, furniture, plant and goods introduced

    In the business as capital)

    ? Purchases A/c………………………Dr. 9000

    To Suresh A/c 9000

    (Being goods purchased from Suresh on credit

    @ 10% TD)

    Cost = Rs. 1000

    Selling Price = Rs. 1000 + 10% of 1000 = 1100

    Current SP = 1100 – 5% of 1100 = 1045

    ? Ramesh A/c …………………………Dr. 1045

    To Sales A/c 1045

    ? Machinery A/c………………………..Dr. 22000


    To Cash A/c 2000

    To M/s Surya Bros. A/c 20000

    ? Stationery A/c……………………….Dr. 500

    To Cash A/c 500

    ? Sidharth A/c ……………………..Dr. 5000

    To Sales A/c 5000

    ? Drawings A/c………………………Dr. 5000

    To Purchases A/c 5000

    ? Advertisement A/c………………..Dr. 2000

    To Purchases A/c 2000

    ? Bad Debt A/c…………………..Dr. 5000

    To Sidharth A/c 5000

    ? Cash A/c……………………Dr. 20000

    To Sales A/c 20000

    ? Salary A/c……………………..Dr. 14000

    To Cash A/c 10000

    To Tax deducted at source A/c 1000

    To Employees’ Provident Fund A/c 3000

    ? Cash A/c ……………………………Dr. 5000

    To Bad Debt Recovery A/c 5000

    ? Suresh A/c ……………………….Dr. 9000

    To Cash A/c 8500

    To Discount A/c 500

    ? Drawings A/c…………………..Dr. 1000

    To Cash A/c 1000


    In the books……………………….
    Dr. Cash Account Cr.
    Date Particulars J/F Rs. Date Particulars J/F Rs.
    To Capital A/c 10000 By Machinery A/c 2000
    To Sales A/c 20000 By Stationery A/c 500
    To B/D Recovery A/c 5000 By Salary A/c 10000
    By Suresh A/c 8500
    By Drawings A/c 1000
    st
    31 Mar By Balance c/d 13000

    35000 35000

    1st To Balance b/d 13000


    Apr

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