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Journal Entries and Ledger Accounts: Long Question and Solution

Arjun EP

Published on: October 8, 2020

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: 9

EP Online Study LLC has the following transaction: (all transaction through bank)

(a) Invested cash Rs 100,000 into business and converted into common stock of 1,000 shares @ Rs 100 each.

(b) Promissory note issued to take loan Rs 40,000.

(d) Purchase insurance policy in advance for Rs 8,000.

(e) Service provided of Rs 100,000.

(f) Service provided on account Rs 50,000.

(g) Service revenue received in advance Rs 20,000.

(h) Office expenses paid Rs 10,000.

(i) Office supplies purchased worth Rs 5,000.

(j) Office supplies purchased on account (credit) Rs 15,000

(k) Dividend distributed Rs 10,000.

(l) Invested in mutual fund Rs 75,500

Required: (a) Journal entries; (b) Ledger accounts in T from; (c) Ledger account in continuous balance form

SOLUTION

(a) Journal entries

Journal Entries

EP Online Study LLC

Date			LF	Dr Amount	Cr Amount
a	Bank account	Dr		100,000
	To Common stock account				100,000
	(Being- business commenced with equity shares)

b	Bank account	Dr		40,000
	To Promissory note				40,000
	(Being- note taken)

c	Equipment account	Dr		20,000
	To Bank account				20,000
	(Being- equipment purchased by cheque)

d	Advance insurance account	Dr		8,000
	To Bank account				8,000
	(Being: insurance policy purchased in advance)

e	Bank account	Dr		100,000
	To Service revenue account				100,000
	(Being: service provided in cash)

f	Account receivable account	Dr		50,000
	To Service revenue				50,000
	(Being: service provided on credit)

g	Bank account	Dr		20,000
	To Advance service revenue				20,000
	(Being: cheque received and discount allowed)

h	Office expenses account	Dr		10,000
	To Bank account				10,000
	(Being: office expenses paid)

i	Office supplies account	Dr		5,000
	To Bank account				5,000
	(Being: office supplies purchased)

j	Office supplies account	Dr		15,000
	To Account payable account				15,000
	(Being: office supplies purchased on account)

k	Dividend paid account	Dr		10,000
	To Bank account				10,000
	(Being: dividend paid)

l	Investment account	Dr		75.500
	To Bank account				75.500
	(Being: invested in mutual fund)

#######

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 accounts in T form

Bank Account

Date	Particulars	LF	Amount Dr	Date	Particulars	LF	Amount Cr
a	To Common stock		100,000	c	By Equipment		20,000
b	To Promissory note		40,000	d	By Advance insurance		8,000
e	To Service revenue		100,000	h	By Office expenses		10,000
g	To Advance serv. revenue		20,000	i	By office supplies		5,000
				k	By Dividend paid		10,000
				l	By Investment		75,500
					By Balance c/d		131,500
			260,000				260,000
	To Balance b/d		131,500

Common Stock Account

Date	Particulars	LF	Amount Dr	Date	Particulars	LF	Amount Cr
Jan 1	To Balance c/d		100,000	a	By Bank		100,000

			100,000				100,000
					By Balance b/d		100,000

Promissory Note Account

Date	Particulars	LF	Amount Dr	Date	Particulars	LF	Amount Cr
	To Balance c/d		40,000	b	By Bank		40,000

			40,000				40,000
					By Balance b/d		40,000

Equipment Account

Date	Particulars	LF	Amount Dr	Date	Particulars	LF	Amount Cr
c	To Bank		20,000		By Balance c/d		20,000

			20,000				20,000
	To Balance b/d		20,000

Advance Insurance Account

Date	Particulars	LF	Amount Dr	Date	Particulars	LF	Amount Cr
d	To Bank		8,000		By balance c/d		8,000

			8,000				8,000
	To Balance b/d		8,000

Service Revenue Account

Date	Particulars	LF	Amount Dr	Date	Particulars	LF	Amount Cr
	To Balance c/d		150,000	e	By Bank		100,000
				f	By Account receivable		50,000
			150,000				150,000
					By Balance b/d		150,000

Account Receivable Account

Date	Particulars	LF	Amount Dr	Date	Particulars	LF	Amount Cr
f	To Service revenue		50,000		By Balance c/d		50,000

			50,000				50,000
	To Balance b/d		50,000

Advance Service Revenue Account

Date	Particulars	LF	Amount Dr	Date	Particulars	LF	Amount Cr
	To Balance c/d		20,000	g	By Bank		20,000

			20,000				20,000
					By Balance b/d		20,000

Office Expenses Account

Date	Particulars	LF	Amount Dr	Date	Particulars	LF	Amount Cr
h	To Bank		10,000		By Balance c/d		10,000

			10,000				10,000
	To Balance b/d		10,000

Office Supplies Account

Date	Particulars	LF	Amount Dr	Date	Particulars	LF	Amount Cr
i	To Bank		5,000		By Balance c/d		20,000
j	To Account payable		15,000
			20,000				20,000
	To Balance b/d		20,000

Account payable Account

Date	Particulars	LF	Amount Dr	Date	Particulars	LF	Amount Cr
	To Balance c/d		15,000	g	By Office supplies		15,000

			15,000				15,000
					By Balance b/d		15,000

Dividend Paid Account

Date	Particulars	LF	Amount Dr	Date	Particulars	LF	Amount Cr
k	To Bank		10,000		By Balance c/d		10,000

			10,000				10,000
	To Balance b/d		10,000

Investment Account

Date	Particulars	LF	Amount Dr	Date	Particulars	LF	Amount Cr
l	To Bank		75,500		By Balance c/d		75,500

			75,500				75,500
	To Balance b/d		75,500

(c) Ledger account in continuous balance form

Bank Account

Date	Particulars	LF	Debit	Credit	Balance	Dr/Cr
a	Common stock		100,000		100,000	Dr
b	Promissory note		40,000		140,000	Dr
c	Equipment			20,000	120,000	Dr
d	Advance insurance			8,000	112,000	Dr
e	Service revenue		100,000		212,000	Dr
g	Advance service revenue		20,000		232,000	Dr
h	Office expenses			10,000	222,000	Dr
i	Office supplies			5,000	217,000	Dr
k	Dividend paid			10,000	207,000	Dr
l	Investment			75,500	131,500	Dr

Common Stock Account

Date	Particulars	LF	Debit	Credit	Balance	Dr/Cr
a	Bank			100,000	100,000	Cr

Promissory Note Account

Date	Particulars	LF	Debit	Credit	Balance	Dr/Cr
b	Bank			40,000	40,000	Cr

Equipment Account

Date	Particulars	LF	Debit	Credit	Balance	Dr/Cr
c	Bank		20,000		20,000	Dr

Advance Insurance Account

Date	Particulars	LF	Debit	Credit	Balance	Dr/Cr
d	Bank		8,000		8,000	Dr

Service Revenue Account

Date	Particulars	LF	Debit	Credit	Balance	Dr/Cr
e	Bank			100,000	100,000	Cr
f	Account receivable			50,000	150,000	Cr

Account Receivable Account

Date	Particulars	LF	Debit	Credit	Balance	Dr/Cr
f	Account receivable		50,000		50,000	Dr

Advance Service Revenue Account

Date	Particulars	LF	Debit	Credit	Balance	Dr/Cr
g	Bank			20,000	20,000	Cr

Office Expenses Account

Date	Particulars	LF	Debit	Credit	Balance	Dr/Cr
h	Bank		10,000		10,000	Dr

Office Supplies Account

Date	Particulars	LF	Debit	Credit	Balance	Dr/Cr
i	Bank		5,000		5,000	Dr
j	Account receivable		15,000		20,000	Dr

Account Payable Account

Date	Particulars	LF	Debit	Credit	Balance	Dr/Cr
g	Bank			15,000	15,000	Cr

Dividend Paid Account

Date	Particulars	LF	Debit	Credit	Balance	Dr/Cr
k	Bank		10,000		10,000	Dr

Investment Account

Date	Particulars	LF	Debit	Credit	Balance	Dr/Cr
k	Bank		75,500		75,000	Dr

#######

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