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: 19
KL Traders has following information:
Jan 1: Business started with cash Rs 200,000.
Jan 2: Goods purchased in cash Rs 100,000.
Jan 3: Insurance paid in advance for one year Rs 6,240.
Jan 4: Goods sold for cash Rs 80,000 with the help of sales agent.
Jan 6: Machinery purchased worth Rs 50,000.
Jan 8: Furniture purchase from KN Furniture House Rs 15,000.
Jan 10: Borrow from Raj Rs 50,000.
Jan 12: Bank account opened at City Bank by depositing cash of Rs 80,000.
Jan 14: Commission paid to agent Rs 10,000.
Jan 16: Goods sold to M/s Sharma Bros for Rs 50,000 on account.
Jan 20: Payment made to KN Furniture House by cheque.
Jan 22: Cash received from M/s Sharma Bros Rs 30,000.
Jan 25: Excess furniture sold for Rs 4,000.
Jan 26: Loan given to Mahesh Rs 20,000.
Jan 27: Goods costing Rs 5,000 sold for Rs 7,000.
Jan 28: Damaged goods costing 4,000 sold for Rs 3,500.
Jan 30: Rent paid of Rs 10,200.
Jan 31: Salary payable Rs 22,300.
Required: Journal entries and effect on accounts
SOLUTION:
Journal Entries and Effect on Accounts
Journal Entries |
Effect on accounts |
||||||||
Date |
Particulars |
|
LF |
Amount |
Amount |
Involved |
Nature of |
Dr or Cr |
|
|
|
|
|
Debit |
Credit |
Accounts |
account |
|
|
Jan, 1 |
Cash account |
Dr |
|
300,000 |
|
Cash |
Real |
Comes in |
Dr |
|
To KL Trader’s capital account |
|
|
|
300,000 |
Capital |
Personal |
Giver |
Cr |
|
(Being- business started with cash) |
|
|
|
|
|
|
|
|
Jan, 2 |
Purchase account |
Dr |
|
100,000 |
|
Purchase |
Real |
Comes in |
Dr |
|
To Cash account |
|
|
|
100,000 |
Cash |
Real |
Goes out |
Cr |
|
(Being- goods purchase in cash) |
|
|
|
|
|
|
|
|
Jan, 3 |
Advance insurance account |
Dr |
|
6,240 |
|
Prepaid |
Real |
Assets |
Dr |
|
To Cash account |
|
|
|
6,240 |
Cash |
Real |
Goes out |
Cr |
|
(Being: insurance paid in advance) |
|
|
|
|
|
|
|
|
Jan, 4 |
Cash account |
Dr |
|
80,000 |
|
Cash |
Real |
Comes in |
Dr |
|
To Sales account |
|
|
|
80,000 |
Sales |
Real |
Goes out |
Cr |
|
(Being- goods sold in cash) |
|
|
|
|
|
|
|
|
Jan, 6 |
Equipment account |
Dr |
|
50,000 |
|
Equipment |
Real |
Comes in |
Dr |
|
To Cash account |
|
|
|
50,000 |
Cash |
Real |
Goes out |
Cr |
|
(Being- machinery purchased in cash) |
|
|
|
|
|
|
|
|
Jan, 8 |
Furniture account |
Dr |
|
15,000 |
|
Furniture |
Real |
Comes in |
Dr |
|
To KN Furniture account |
|
|
|
15,000 |
KN Furniture |
Personal |
Giver |
Cr |
|
(Being- machinery purchased in cash) |
|
|
|
|
|
|
|
|
Jan, 10 |
Cash account |
Dr |
|
50,000 |
|
Cash |
Real |
Comes in |
Dr |
|
To Loan from Raj account |
|
|
|
50,000 |
Loan from Raj |
Personal |
Giver |
Cr |
|
(Being- loan taken from Raj) |
|
|
|
|
|
|
|
|
Jan, 12 |
City Bank account |
Dr |
|
30,000 |
|
NB Bank |
Personal |
Receiver |
Dr |
|
To Cash account |
|
|
|
30,000 |
Cash |
Real |
Goes out |
Cr |
|
(Being- bank account opened) |
|
|
|
|
|
|
|
|
Jan, 14 |
Commission paid account |
Dr |
|
10,000 |
|
Commission |
Nominal |
Expenses |
Dr Cr |
|
To Cash account |
|
|
|
10,000 |
Cash |
Cash |
Goes out |
|
|
(Being- commission paid in cash) |
|
|
|
|
|
|
|
|
Jan, 16 |
M/s Sharma Bros account |
Dr |
|
50,000 |
|
Sharma Bros |
Personal |
Receiver |
Dr |
|
To Sales account |
|
|
|
50,000 |
Sales |
Real |
Goes out |
Cr |
|
(Being- goods sold on credit to Sharma Bros) |
|
|
|
|
|
|
|
|
Jan, 20 |
KN Furniture account |
Dr |
|
10,000 |
|
KN Furniture |
Personal |
Receiver |
Dr |
|
To City Bank account |
|
|
|
10,000 |
NB Bank |
Personal |
Giver |
Cr |
|
(Being- payment made to KN Furniture) |
|
|
|
|
|
|
|
|
Jan, 22 |
Cash account |
Dr |
|
30,000 |
|
Cash |
Real |
Comes in |
Dr |
|
To Sharma Bros account |
|
|
|
30,000 |
Sharma Bros |
Personal |
Giver |
Cr |
|
(Being- cash received from Sharma Bros) |
|
|
|
|
|
|
|
|
Jan, 25 |
Cash account |
Dr |
|
4,000 |
|
Cash |
Real |
Comes in |
Dr |
|
To Furniture account |
|
|
|
4,000 |
Furniture |
Real |
Goes out |
Cr |
|
(Being- old furniture sold in cash) |
|
|
|
|
|
|
|
|
Jan, 26 |
Loan to Mahesh |
Dr |
|
20,000 |
|
Loan |
Real |
Asset |
Dr |
|
To Cash account |
|
|
|
20,000 |
Cash |
Real |
Goes out |
Cr |
|
(Being: loan given to Mahesh) |
|
|
|
|
|
|
|
|
Jan, 27 |
Cash account |
Dr |
|
7,000 |
|
Cash |
Real |
Comes in |
Dr |
|
To Sales (stock) account |
|
|
|
5,000 |
Stock |
Real |
Goes out |
Cr |
|
To P&L (gross profit) |
|
|
|
2,000 |
Profit |
Nominal |
income |
Cr |
|
(Being- goods sold at profit) |
|
|
|
|
|
|
|
|
Jan, 28 |
Cash account |
Dr |
|
3,500 |
|
Cash |
Real |
Comes in |
Dr |
|
P&L (gross loss) |
Dr |
|
500 |
|
Loss |
Nominal |
loss |
Dr |
|
To Sales (stock) account |
|
|
|
4,000 |
Profit |
Real |
goes out |
Cr |
|
(Being- goods sold at loss) |
|
|
|
|
|
|
|
|
Jan, 30 |
Rent account |
Dr |
|
10,200 |
|
Rent |
Nominal |
Expenses |
Dr |
|
To Cash account |
|
|
|
10,200 |
Cash |
Real |
Goes out |
Cr |
|
(Being- rent paid in cash) |
|
|
|
|
|
|
|
|
Jan, 31 |
Salary account |
Dr |
|
22,300 |
|
Salary |
Nominal |
Expenses |
Dr |
|
To Salary payable account |
|
|
|
22,300 |
Payable |
Real |
Liability |
Cr |
|
(Being- salary payable for the month) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
#######
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 |
#####
Keep in mind
Goods costing Rs 5,000 sold for Rs 7,000 means stock sold at profit. |
You go to ABC Shoes House to purchase a pair of shoes. |
The shopkeeper has purchased shoes for Rs 5,000 and sold to customer for Rs 7,000. |
Here, Rs 2,000 is profit (7,000 sold price ‒ 5,000 cost price) |
The shopkeeper does not record profit or loss day to day. |
Profit or loss is determined at the end of accounting period. |
But in manufacturing account, profit or loss is adjusted at the time of goods transferred to next process. |
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