Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු =
Binesh Thapa commenced BT Consulting Firm providing consultancies; He had following transactions during May:
May 2: Invested Rs 250,000 from his personal savings into BT Consulting Firm.
May 2: Office rent paid in cash for two months in advance @ Rs 6,000 per month.
May 3: Office equipment purchased for Rs 25,000, paying Rs 8,000 cash and accepted bill for 2 months.
May 4: Stationery purchased for cash Rs 500.
May 8: Consultancy collected Rs 5,000 in cash.
May 15: Consultancy services receivable from a client Rs 15,000.
May 20: Received Rs 10,000 from client for the work completed on May 15.
May 30: Advance rent had expired and become an expense.
May 31: Salary paid to office secretary Rs 10,000.
Required: Show the effects of the above transactions in the firm and apply the rules of debit and credit.
Solution
Analytical Accounting equation
Date |
Transaction |
Accounts Involved |
Nature of Accounts |
Effect |
Rule of Dr and Cr |
||
2 May |
Invested by owner |
Cash |
Asset |
Increase |
Increase in asset |
Dr |
250,000 |
Capital |
Owner’s equity |
Increase |
Increase in OE |
Cr |
250,000 |
||
2 May |
Rent paid in advance |
Advance rent |
Asset |
Increase |
Increase in asset |
Dr |
12,000 |
Cash |
Asset |
Decrease |
Decrease in asset |
Cr |
12,000 |
||
3 May |
Office equipment purchased |
Equipment |
Asset |
Increase |
Increase in asset |
Dr |
25,000 |
Cash |
Asset |
Decrease |
Decrease in asset |
Cr |
8,000 |
||
Account payable |
Liability |
Increase |
Increase in liability |
Cr |
17,000 |
||
4 May |
Stationery purchased |
Office materials |
Expenses |
Increase |
Increase in expenses |
Dr |
500 |
Cash |
Asset |
Decrease |
Decrease in asset |
Cr |
500 |
||
8 May |
Collected consultancy fees |
Cash |
Asset |
Increase |
Increase in asset |
Dr |
5,000 |
Consultancy fees |
Revenue |
Increase |
Increase in revenue |
Cr |
5,000 |
||
15 May |
Earned consultancy fees |
Account receivable |
Asset |
Increase |
Increase in asset |
Dr |
15,000 |
Consultancy fees |
Revenue |
Increase |
Increase in revenue |
Cr |
15,000 |
||
20 May |
Partial A/R received |
Cash |
Asset |
Increase |
Increase in asset |
Dr |
10,000 |
Account receivable |
Asset |
Decrease |
Decrease in asset |
Cr |
10,000 |
||
30 May |
Prepaid rent expired |
Rent |
Expenses |
Increase |
Increase in expense |
Dr |
6,000 |
Advance rent |
Asset |
Decrease |
Decrease in asset |
Cr |
6,000 |
||
31 May |
Salary paid |
Salary |
Expenses |
Increase |
Increase in expense |
Dr |
10,000 |
Cash |
Asset |
Decrease |
Decrease in asset |
Cr |
10,000 |
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Click on link for YouTube videos CHAPTERS OF CLASS 11
ACCOUNTING EQUATION http://tiny.cc/c89jkz
BASIC JOURNAL ENTRIES IN NEPALI http://tiny.cc/uaakkz
BASIC JOURNAL ENTRIES http://tiny.cc/8aakkz
JOURNAL ENTRY AND LEDGER http://tiny.cc/caakkz
LEDGER http://tiny.cc/haakkz
SUBSIDIARY BOOK http://tiny.cc/399jkz
CASH BOOK http://tiny.cc/889jkz
TRIAL BALANCE & ADJUSTED TRIAL BALANCE http://tiny.cc/c59jkz
BANK RECONCILIATION STATEMENT (BRS) http://tiny.cc/q59jkz
DEPRECIATION http://tiny.cc/ugakkz
FINAL ACCOUNT: CLASS 11 http://tiny.cc/y89jkz
ADJUSTMENT IN FINAL ACCOUNT http://tiny.cc/keakkz
CAPITAL AND REVENUE http://tiny.cc/peakkz
SINGLE ENTRY SYSTEM http://tiny.cc/n19jkz
NON-PROFIT ORGANIZATION (NON-TRADING CONCERN http://tiny.cc/j09jkz
GOVERNMENT ACCOUNTING http://tiny.cc/hcakkz
GOSWARA VOUCHER (JOURNAL VOUCHER) http://tiny.cc/hcakkz
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