Journal entries long answer question is the comprehensive question and solution.
It is the summary of entire chapter of the journal entry.
It is designed for deep knowledge.
It is the base for ledger accounts and trial balance.
PROBLEM: 20
A sole proprietor commenced a new business named EP Traders. Firm does not show profit at the time of goods selling; it has following summarised financial information:
(A) Business commenced with capital Rs 635,000; out of this amount bank balance was Rs 485,000.
(B) Goods purchased from SG Suppliers of Rs 250,000 and paid 25% as partial payment.
(C) Office equipment purchased by cheque of Rs 120,000.
(D) Goods sold for cash Rs 115,000 and supplied goods on account to SK Traders for Rs 300,000.
(E) Purchase equity shares of City Bank Ltd of Rs 50,000.
(F) Cheque issued to SG Suppliers for Rs 142,500 after 5% discount.
(G) Cheque received from SK Traders of Rs 237,500 in full settlement of Rs 250,000.
(H) Cash withdrew from bank Rs 25,000 for office use and Rs 50,000 for personal use.
(I) Office expenses Rs 60,000 paid by cheque and rent Rs 80,000 paid in cash.
(J) Dividend received Rs 15,000 on investment.
Additional information:
1. Unpaid office expenses were Rs 25,000.
2. Office rent included Rs 8,000 as unexpired.
3. Charge depreciation on equipment @ 10%.
4. Unsold stock valued Rs 28,000.
Required: (a) Journal entries for the above financial transactions;
SOLUTION
Journal Entries
In the book of EP Traders
Date |
Particulars |
|
LF |
Dr Amount |
Cr Amount |
A |
Cash account |
Dr |
|
150,000 |
|
|
Bank account |
Dr |
|
485,000 |
|
|
To Capital account |
|
|
|
635,000 |
|
(Being- business commenced with cash and bank) |
|
|
|
|
|
|
|
|
|
|
B |
Purchase account |
Dr |
|
250,000 |
|
|
To Cash account |
|
|
|
62,500 |
|
To SG Suppliers account |
|
|
|
187,500 |
|
(Being- goods purchased in cash and on credit) |
|
|
|
|
|
|
|
|
|
|
C |
Equipment account |
Dr |
|
120,000 |
|
|
To Bank account |
|
|
|
120,000 |
|
(Being- equipment purchased by cheque) |
|
|
|
|
|
|
|
|
|
|
D |
Cash account |
Dr |
|
115,000 |
|
|
SK Traders |
Dr |
|
300,000 |
|
|
To Sales account |
|
|
|
415,000 |
|
(Being: goods sold in cash and on credit) |
|
|
|
|
|
|
|
|
|
|
E |
Investment in equity shares account |
Dr |
|
50,000 |
|
|
To Bank account |
|
|
|
50,000 |
|
(Being: equity shares purchased of City Bank Ltd) |
|
|
|
|
|
|
|
|
|
|
F |
SG Suppliers account |
Dr |
|
150,000 |
|
|
To Bank account |
|
|
|
142,500 |
|
To Discount received account |
|
|
|
7,500 |
|
(Being: cash paid and discount received; |
|
|
|
|
|
142,500 x 100/95) |
|
|
|
|
|
|
|
|
|
|
G |
Bank account |
Dr |
|
237,500 |
|
|
Discount allowed account |
Dr |
|
12,500 |
|
|
To SK Traders account |
|
|
|
250,000 |
|
(Being: |
|
|
|
|
|
|
|
|
|
|
H1 |
Cash account |
Dr |
|
25,000 |
|
|
To Bank account |
|
|
|
25,000 |
|
(Being: cash withdrew from bank for office use) |
|
|
|
|
|
|
|
|
|
|
H2 |
Drawings account |
Dr |
|
50,000 |
|
|
To Bank account |
|
|
|
50,000 |
|
(Being: cash withdrew from bank for personal use) |
|
|
|
|
|
|
|
|
|
|
I1 |
Office expenses account |
Dr |
|
85,000 |
|
|
To Bank account |
|
|
|
60,000 |
|
To Office expenses payable |
|
|
|
25,000 |
|
(Being: office expenses paid by cheque) |
|
|
|
|
|
|
|
|
|
|
I2 |
Rent account |
Dr |
|
72,000 |
|
|
Advance rent account |
Dr |
|
8,000 |
|
|
To Cash account |
|
|
|
80,000 |
|
(Being: rent paid and paid in advance) |
|
|
|
|
|
|
|
|
|
|
J |
Bank account |
Dr |
|
15,000 |
|
|
To Dividend received account |
|
|
|
15,000 |
|
(Being: dividend received on investment) |
|
|
|
|
|
|
|
|
|
|
Adj 3 |
Depreciation on equipment account |
Dr |
|
12,000 |
|
|
To Equipment account |
|
|
|
12,000 |
|
(Being: depreciation charged 120,000@10%) |
|
|
|
|
|
|
|
|
|
|
Adj 4 |
Closing stock account |
Dr |
|
28,000 |
|
|
To Income statement account |
|
|
|
28,000 |
|
(Being: unsold stock recorded) |
|
|
|
|
|
|
|
|
|
|
#######
Click on link for YouTube videos topic wise : |
|
Accounting Equation |
|
Basic Journal Entries in Nepali |
|
Basic Journal Entries |
|
Journal Entry and Ledger |
|
Ledger Account |
|
Subsidiary Book |
|
Cash Book |
|
Trial Balance and Adjusted Trial Balance |
|
Bank Reconciliation Statement (BRS) |
|
Depreciation |
|
Click on link for YouTube videos chapter wise: |
|
Financial Accounting and Analysis (All videos) |
|
Accounting Process |
|
Accounting for Long Lived Assets |
|
Analysis of Financial Statement |
#####
***** #EPOnlineStudy *****
Thank you for investing your time.
Please comment on article.
You can help me by sharing this article at your social media platform.
Jay Google, Jay YouTube, Jay Social Media
जय गूगल, जय युट्युब, जय सोशल मिडिया