Question

following transactions took place during the month of February 20-8: Sold goods, $300, on credit to Srivastava Srivastava returned faulty goods, $50 11 Purchased goods, $390, paying by cheque Paid $10 by cheque for carriage on goods purchased Cash sales, $610, of which $600 was paid into the bank uary 3 7 15 19 Chapter 4: Double entry book-keeping - Part B 21 23 Cr/B Srivastava paid the amount owing on 1 February by credit transfer, after deducting 3% cash discount Paid general expenses, $75, in cash Paid Ahmed by credit transfer the amount due, less a cash discount of 2-% 25 Sublet part of the premises and received $400 rent in cash 27 Paid $15 by cheque for repairs to fixtures 28 Paid all the cash into the bank except $100 ter these transactions in the books of Kalpana. lance the cash book and the personal accounts on 28 February. Transfer the totals the discount columns to the nominal (general) ledger on 28 February. aw up a trial balance at 28 February 20-8.​

Answer 1

To record the transactions in the books of Kalpana, we will use the double-entry bookkeeping method. We'll start by listing the transactions and then record the corresponding journal entries. After that, we'll balance the cash book and personal accounts, transfer the discount totals to the nominal ledger, and finally prepare a trial balance as of February 28, 20-8.

Transactions:

Sold goods on credit to Srivastava for $300.

Srivastava returned faulty goods worth $50.

Purchased goods for $390, paying by cheque.

Paid $10 by cheque for carriage on goods purchased.

Cash sales of $610, out of which $600 was deposited into the bank.

Srivastava paid the amount owing on 1 February by credit transfer, after deducting 3% cash discount.

Paid general expenses of $75 in cash.

Paid Ahmed by credit transfer the amount due, less a cash discount of 2.5%.

Sublet part of the premises and received $400 rent in cash.

Paid $15 by cheque for repairs to fixtures.

Paid all the cash into the bank except $100.

Journal Entries:

(Note: We will use the format - Debit account (Dr) / Credit account (Cr))

Accounts Receivable (Srivastava) Dr $300

Sales Cr $300

Sales Returns and Allowances Dr $50

Accounts Receivable (Srivastava) Cr $50

Purchases Dr $390

Bank Cr $390

Carriage Dr $10

Bank Cr $10

Bank Dr $600

Cash Sales Cr $610

Sales Cr $610

Bank Dr $291.00

Sales Discount Allowed Cr $9.00

Accounts Receivable (Srivastava) Cr $300.00

General Expenses Dr $75

Cash Cr $75

Accounts Payable (Ahmed) Dr $97.50

Sales Discount Received Dr $2.50

Bank Cr $100

Bank Dr $400

Rental Income Cr $400

Repairs and Maintenance Dr $15

Bank Cr $15

Cash Book Balance:

The closing balance in the cash book on February 28, 20-8, would be the remaining cash after all the transactions.

Cash Book Balance = Total Cash Received - Total Cash Paid = ($610 + $400) - ($10 + $75 + $100 + $15) = $810 - $200 = $610

Personal Accounts Balance:

Srivastava: $300 (Sales) - $50 (Sales Returns) - $300 (Payment) = $50 (Dr)

Ahmed: $100 (Payment) - $2.50 (Sales Discount Received) = $97.50 (Dr)

Discount Totals in the Nominal Ledger:

Sales Discount Allowed: $9 (Dr)

Sales Discount Received: $2.50 (Dr)

Trial Balance:

Now, we'll prepare a trial balance using the balances of the ledger accounts:

Account Debit ($) Credit ($)

Accounts Receivable 50

Sales Returns & Allowances 50

Purchases 390

Carriage 10

Bank 1410

Cash Sales 610

Sales 910

Sales Discount Allowed 9

Sales Discount Received 2.50

General Expenses 75

Rental Income 400

Repairs & Maintenance 15

Accounts Payable 97.50

Capital

Total 987.50 987.50

The trial balance should show that the total debits equal the total credits.