Question

I) Started a business with cash of 500000 as capital ii)Purchased plant for Rs. 3,00,000 by paying Rs. 15,000 in cash and balance later. (iii) Deposited Rs. 6,00,000 into the bank. (iv) Purchased office furniture for Rs. 1,00,000 and made payment by cheque. (v) Purchased goods worth Rs. 80,000 for cash and for Rs. 35,000 in credit. (vi) Goods amounting to Rs. 45,000 was sold for Rs. 60,000 on cash basis. (vii) Goods costing to Rs. 80,000 was sold for Rs. 1,25,000 on credit. (viii) Cheque issued to the supplier of goods worth Rs. 35,000. (ix) Cheque received from customer amounting to Rs. 75,000. (x) Withdrawn by owner for personal use Rs. 25,000.

Answer 1

Question Completion:

Record the transactions in the journal.

Answer:

Journal Entries:

i) Debit Cash Account Rs. 500,000

Credit Owner's Capital Rs. 500,000

To record the capital.

ii) Debit Plant Rs. 300,000

Credit Cash Account Rs. 15,000

Credit Accounts Payable Rs. 285,000

To record the purchase of plant.

iii) Debit Bank Account Rs. 600,000

Credit Cash Account Rs. 600,000

To record the deposit put into the bank.

iv) Debit Office Furniture Rs. 100,000

Credit Bank Account Rs. 100,000

To record the purchase of office furniture by check.

v) Debit Inventory Rs. 115,000

Credit Cash Account Rs. 80,000

Credit Accounts Payable Rs. 35,000

To record the purchase of goods.

vi) Debit Cost of Goods Sold Rs 80,000

Credit Inventory Rs. 80,000

To record the cost of goods sold.

Debit Accounts Receivable Rs. 125,000

Credit Sales Revenue Rs. 125,000

To record the sale of goods on credit.

viii) Debit Accounts Payable Rs. 35,000

Credit Bank Account Rs. 35,000

To record the issue of check to a supplier.

ix) Debit Bank Account Rs. 75,000

Credit Accounts Receivable Rs. 75,000

To record the receipt of check on account.

x) Debit Drawings Rs. 25,000

Credit Cash Account Rs. 25,000

To record the amount withdrawn by the owner for personal use.

Step-by-step explanation:

The purpose of the above journal entries is to record the transactions systematically and correctly so that they are not posted to the wrong general ledger accounts.