Journal Entries and Ledger Accounts: Long Question and Solution-10

 

How to make journal entries and ledger accounts?

Step 1, Prepare journal entries of entire question as well as additional information,

Step 2, Transfer entire journal entries into related ledger accounts,  

Step 3, Close ledger accounts; some may have debit balance, some credit balance and some may be equal.

 

Long answer question of journal entries and ledger accounts is the exam based problems and solution

Journal entries and ledger accounts long question and answer.

It is exam based comprehensive question and solution.

It covers large topic of the chapter.

 

PROBLEM: 10

Manoj Sharma started AutoCAD consulting firm called MS AutoCAD Services; he has following transactions:

1: Cash contributed Rs 3,00,000 as capital.

2: Office equipment purchased on credit Rs 160,000.

3: Motor bike bought for Rs 1,90,000; paying Rs 90,000 in cash and signing a 14% loan agreement for the rest.

4: Paid Rs 6,000 for insurance of office assets.

5: Office supplies purchased on credit Rs 7,000.

6: Completed an AutoCAD assignment and received Rs 14,000 cash.

7: Received advance from a customer for assignment to be completed in August Rs 4,000

8: Invoiced a client for services completed Rs 12,000.

9: Cash paid of office equipment Rs 60,000. 

10: Utility bills paid Rs 3,250.

Required: (a) Journalise the above transactions by using accounting code and ledger folio number;

(b) Ledger account in continuous balance form 

 

Account codes:

Accounts payable	200	Cash	100	Capital	300
Account receivable	130	Insurance	110	Office equipment	180
Advance income	220	Loan payable	210	Service revenue	400
Office materials	120	Vehicle	160	Utility	500

*Invoiced = account receivable

SOLUTION

(A) Journal Entries

Journal Entries

In MS AutoCAD Services

Date	Particulars		A/c	LF	Debit	Credit
			Code	No.	Amount	Amount
	Cash account	Dr	100	2	300,000
July   1	To    Capital account		300	1		300,000
	(Being- business started with cash)
2	Equipment	Dr	180	3	160,000
	To Accounts payable		200	4		160,000
	(Being- office equipment purchased on credit)
3	Motor Bike account	Dr	160	5	190,000
	To Cash account		100	2		90,000
	To 14% Loan account		210	6		100,000
	(Being- bike purchase and partial payment paid)
4	Insurance  account	Dr	110	7	6,000
	To Cash		100	2		6,000
	(Being- insurance policy bought)
5	Office supplies account	Dr	120	8	7,000
	To Accounts payable		200	4		7,000
	(Being- office materials purchased on credit)
6	Cash account	Dr	100	2	14,000
	To Service revenue		400	9		14,000
	(Being- revenue received)
7	Cash account	Dr	100	2	4,000
	To Advance service revenue		220	10		4,000
	(Being- advance revenue received)
8	Accounts receivable account	Dr	130	11	12,000
	To  Service revenue		400	9		12,000
	(Being- billing for services rendered)
9	Account payable account	Dr	200	4	60,000
	To Cash account		100	2		60,000
	(Being: partial payment made for equipment)
10	Utility bills account	Dr	500	12	3,250
	To Cash account		100	2		3,250
	(Being: utility bills paid)

 

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Click on link for YouTube videos topic wise :
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 Account	http://tiny.cc/haakkz
Subsidiary Book	http://tiny.cc/399jkz
Cash Book	http://tiny.cc/889jkz
Trial Balance and Adjusted Trial Balance	http://tiny.cc/c59jkz
Bank Reconciliation Statement (BRS)	http://tiny.cc/q59jkz
Depreciation	http://tiny.cc/ugakkz
Click on link for YouTube videos chapter wise:
Financial Accounting and Analysis (All videos)	http://tiny.cc/jlersz
Accounting Process	http://tiny.cc/mlersz
Accounting for Long Lived Assets	http://tiny.cc/plersz
Analysis of Financial Statement	http://tiny.cc/slersz

 

(b) Ledger account in continuous balance form 

Cash Account (2)

Date	Particulars	LF	Debit	Credit	Balance	Dr/Cr
July 1	Capital	1	300,000		300,000	Dr
July 3	Moto bike	5		90,000	210,000	Dr
July 4	Insurance	7		6,000	204,000	Dr
July 6	Service revenue	9	14,000		218,000	Dr
July 7	Advance service revenue	10	4,000		222,000	Dr
July 9	Account payable	4		60,000	162,000	Dr
July 10	Utility bills	12		3,250	158,750	Dr

 

Capital Account (1)

Date	Particulars	LF	Debit	Credit	Balance	Dr/Cr
July 1	Cash	2		300,000	300,000	Cr

 

Equipment Account (3)

Date	Particulars	LF	Debit	Credit	Balance	Dr/Cr
July 2	Account payable	4	160,000		160,000	Dr

 

Account Payable Account (4)

Date	Particulars	LF	Debit	Credit	Balance	Dr/Cr
July 2	Equipment	3		160,000	160,000	Cr
July 5	Office supplies	8		7,000	167,000	Cr
July 9	Cash	2	60,000		107,000	Cr

 

Moto Bike Account (5)

Date	Particulars	LF	Debit	Credit	Balance	Dr/Cr
July 3	Cash	2	90,000		90,000	Dr
July 3	14% Loan	6	100,000		190,000

 

14% Loan Account (6)

Date	Particulars	LF	Debit	Credit	Balance	Dr/Cr
July 3	Motor bike	5		100,000	100,000	Cr

 

Insurance Account (7)

Date	Particulars	LF	Debit	Credit	Balance	Dr/Cr
July 4	Cash	2	6,000		6,000	Dr

 

Office Supplies Account (8)

Date	Particulars	LF	Debit	Credit	Balance	Dr/Cr
July 5	Account payable	4	7,000		7,000	Dr

 

Service Revenue Account (9)

Date	Particulars	LF	Debit	Credit	Balance	Dr/Cr
July 6	Cash	2	0	14,000	14,000	Cr
July 8		11		12,000	26,000	Cr

 

Advance Service Revenue Account (10)

Date	Particulars	LF	Debit	Credit	Balance	Dr/Cr
July 7	Cash	2		4,000	4,000	Cr

 

Account Receivable Account (11)

Date	Particulars	LF	Debit	Credit	Balance	Dr/Cr
July 8	Service revenue	9	12,000		12,000	Dr

 

Utility Bills Account (12)

Date	Particulars	LF	Debit	Credit	Balance	Dr/Cr
July 10	Cash	2	3,250		3,250	Dr

 

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