Journal Entry Comprehensive Question and Solution | Basic Journal Entries
Arjun EP
Basic journal entries:
Journal entry for business started (capital)
Journal entry for business goods (inventory, merchandise) purchases
Journal entry for business goods (inventory, merchandise) sold
Journal entry for assets purchase
Journal entry for assets sold (at loss or at profit)
Journal entry for full settlement (discount allowed and discount received)
Journal entry for loan taken, loan given and investment
Journal entry for operating expenses
Journal entry for outstanding expenses (expenses payable)
Journal entry for prepaid expenses (advance expenses)
Journal entry for drawings and withdrawals
Journal entry for purchase returns (return outward, return to creditors and suppliers)
Journal entry for sales returns (return inward, return from debtors and customers)
Journal entry for sundry income (commission, discount, interest, rent)
Journal entry for depreciation on fixed assets (tangible assets)
Journal entry for amortisation on fictitious assets (intangible assets)
Journal entry for appreciation on fixed assets (tangible assets)
Journal entry for bad debts, provision for bad debts and discount to debtors
Journal entry for bad debts recovered
Journal entry for goods (inventory, merchandise) lost and insurance claim
Journal entry for free samples
Comprehensive Question of Journal Entries
PROBLEM: 21
KL Traders has following information:
Jan 1: Business started with cash $200,000.
Jan 2: Goods purchased in cash $100,000.
Jan 4: Goods sold for cash $80,000.
Jan 6: Machinery purchased worth $50,000.
Jan 8: Furniture purchase from KN Furniture House $15,000.
Jan 10: Loan taken from NB Bank $50,000.
Jan 12: Cash deposited into bank $80,000.
Jan 14: Commission paid $10,000.
Jan 16: Goods sold to M/s Sharma Bros for $50,000.
Jan 20: Payment made to KN Furniture House by cheque.
Jan 22: Cash received from M/s Sharma Bros $30,000.
Jan 25: Old furniture sold for $4,000.
Jan 26: Loan given to Mahesh $20,000.
Jan 27: Goods costing $5,000 sold for $7,000.
Jan 28: Goods costing $4,000 sold for $3,500.
Jan 31: Rent paid $10,000.
Required: Journal entries and effect on accounts
SOLUTION:
Journal Entries and Effect on Accounts
|
Journal Entries |
Effect on accounts |
||||||||
|
Date |
Particulars |
|
LF |
Amount Debit |
Amount Credit |
Involved Accounts |
Nature of account |
Dr or Cr |
|
|
Jan, 1 |
Cash account To KL Trader’s capital account (Being- business started with cash) |
Dr
|
|
300,000 |
300,000 |
Cash Capital |
Real Personal |
Comes in Giver |
Dr Cr
|
|
Jan, 2 |
Purchase account To Cash account (Being- goods purchase in cash) |
Dr
|
|
100,000 |
100,000 |
Purchase Cash |
Real Real |
Comes in Goes out |
Dr Cr |
|
Jan, 4 |
Cash account To Sales account (Being- goods sold in cash) |
Dr
|
|
80,000 |
80,000 |
Cash Sales |
Real Real |
Comes in Goes out |
Dr Cr |
|
Jan, 6 |
Equipment account To Cash account (Being- machinery purchased in cash) |
Dr
|
|
50,000 |
50,000 |
Equipment Cash |
Real Real |
Comes in Goes out |
Dr Cr |
|
Jan, 8 |
Furniture account To KN Furniture account (Being- machinery purchased in cash) |
Dr
|
|
15,000 |
15,000 |
Furniture KN Furniture |
Real Personal |
Comes in Giver |
Dr Cr
|
|
Jan, 10 |
Cash account To Loan from Raj account (Being- loan taken from Raj) |
Dr
|
|
50,000 |
50,000 |
Cash Loan from Raj |
Real Personal |
Comes in Giver |
Dr Cr |
|
Jan, 12 |
NB Bank account To Cash account (Being- cash deposited into bank) |
Dr
|
|
30,000 |
30,000 |
NB Bank Cash |
Personal Real |
Receiver Goes out |
Dr Cr |
|
Jan, 14 |
Commission paid account To Cash account (Being- commission paid in cash) |
Dr
|
|
10,000 |
10,000 |
Commission Cash |
Nominal Cash |
Expenses Goes out |
Dr Cr |
|
Jan, 16 |
M/s Sharma Bros account To Sales account (Being- goods sold on credit to Sharma Bros) |
Dr
|
|
50,000 |
50,000 |
Sharma Bros Sales |
Personal Real |
Receiver Goes out |
Dr Cr |
|
Jan, 20 |
KN Furniture account To NB Bank account (Being- payment made to KN Furniture) |
Dr
|
|
10,000 |
10,000 |
KN Furniture NB Bank |
Personal Personal |
Receiver Giver |
Dr Cr
|
|
Jan, 22 |
Cash account To Sharma Bros account (Being- cash received from Sharma Bros) |
Dr
|
|
30,000 |
30,000 |
Cash Sharma Bros |
Real Personal |
Comes in Giver |
Dr Cr
|
|
Jan, 25 |
Cash account To Furniture account (Being- old furniture sold in cash) |
Dr
|
|
4,000 |
4,000 |
Cash Furniture |
Real Real |
Comes in Goes out |
Dr Cr |
|
Jan, 27 |
Cash account To Sales (stock) account To P&L (gross profit) (Being- goods sold at profit) |
Dr
|
|
7,000 |
5,000 2,000 |
Cash Stock Profit
|
Real Real Nominal |
Comes in Goes out income |
Dr Cr Cr
|
|
Jan, 27 |
Cash account P&L (gross loss) To Sales (stock) account (Being- goods sold at loss) |
Dr Dr
|
|
3,500 500 |
4,000 |
Cash Loss Profit
|
Real Nominal Real |
Comes in loss goes out |
Dr Dr |
|
Jan, 31 |
Rent account To Cash account (Being- rent paid in cash) |
Dr
|
|
10,000 |
10,000 |
Rent Cash |
Nominal Real |
Expenses Goes out |
Dr Cr |
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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
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FINAL ACCOUNT: CLASS 11 http://tiny.cc/y89jkz
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CAPITAL AND REVENUE http://tiny.cc/peakkz
SINGLE ENTRY SYSTEM http://tiny.cc/n19jkz
NON-PROFIT ORGANIZATION (NON-TRADING CONCERN http://tiny.cc/j09jkz
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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 year. |
|
But in manufacturing account, profit or loss is adjusted at the time of goods transferred to next process. |
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