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Page No 91:

Question 1.A.1:

Answer in once sentence only.

What is a Journal?

Answer:

A Journal is the book of original entry or prime entry in which transactions are recorded in the books of accounts from the source documents. The transactions are recorded in a chronological order, i.e. as and when they take place. The transactions are recorded following the double-entry system of accounting.

Page No 91:

Question 1.A2:

Answer in once sentence only.

State the meaning of Narration.

Answer:

A brief explanation of the transaction, together with necessary details, is provided with the Journal entry. This explanation is called a narration. It provides the details of the Journal entry and helps understand the account debited or credited.

Page No 91:

Question 1.A3:

Answer in once sentence only.

What do you mean by Journalising?

Answer:

The process of recording transactions in the book of original entry is known as Journalising. The transactions are recorded in the form of a Journal entry. Recording is made following the double-entry system of accounting. Thus, it records the two-fold effect of every transaction. In the process of Journalising, the transaction is first analysed in order to decide the account to be debited and credited by ascertaining the rule of debit and credit. After this, entries are recorded in the books of accounts.

Page No 91:

Question 1.A4:

Answer in once sentence only.

Which column in a journal is not filled in at the time of journalising?

Answer:

The ledger folio (L.F.) is the column that is not filled at the time of Journalising. This column indicates the page number of the Ledger book on which the relevant account appears. All the entries from Journal are posted to the Ledger Accounts. Therefore, the ledger folio is recorded after the entries are posted to the Ledger Accounts and not at the time of Journalising.

Page No 91:

Question 1.A5:

Answer in once sentence only.

State the meaning of Simple Entry.

Answer:

When only two accounts are affected while recording a transaction in the book of original entry, i.e. one account is debited and one account is credited, it is known as a Simple Journal Entry. For example, if Rs 500 were paid to Hari, the entry will be:
 

Hari Dr. 500  
  To Cash A/c     500
(Payment is made to Hari)      

 

Page No 91:

Question 1.A6:

Answer in once sentence only.

Which account is credited, when salary is paid by cheque?

Answer:

When salary is paid by cheque, the Bank A/c is credited because payment is made through a cheque. According to the modern classification of accounts, an increase in any asset should be debited, whereas a decrease in any asset should be credited. The Bank A/c is an asset of a business and, thus, it is credited.

Page No 91:

Question 1.A7:

Answer in once sentence only.

Why is journal called the Book of Prime Entry?

Answer:

A Journal is called the book of prime entry because all the transactions of a business are first recorded in a Journal, i.e. book of original entry. The transactions are recorded in chronological order and on the basis of the source documents. After recording, these transactions are posted to the ledger accounts, i.e. secondary books. Hence, a Journal is called the book of prime entry.

Page No 91:

Question 1.A8:

Answer in once sentence only.

In which order the transactions are recorded in a journal?

Answer:

A Journal records the transactions in a chronological order, i.e. as and when they occur. Transactions of a business are recorded in the book of original entry on the basis of their occurrence from the source document.

Page No 91:

Question 1.A9:

Answer in once sentence only.

Which discount is not recorded in the books of account?

Answer:

A trade discount is not recorded in the books of accounts. This discount is allowed at the time of sale or purchase of goods at an affixed percentage on the printed list price of the goods. The purchases and sale transactions are recorded in the books at net value (i.e. List Price minus Trade Discount). Thus, the books of accounts do not reflect the amount of trade discount so allowed or received.

Page No 91:

Question 1.A10:

Answer in once sentence only.

Which account is debited, when goods are destroyed by fire?

Answer:

When goods are destroyed by fire, then ‘Loss by Fire A/c’ is debited and ‘Purchases A/c’ is credited. The goods destroyed by fire are considered to be a loss for a business entity and is classified as a nominal account. Therefore, according to the rule of nominal account, all the expenses and losses are to be debited. Hence, ‘Loss by Fire A/c’ is debited when goods are destroyed by fire.

Page No 91:

Question 1.B:

Give one word / term or phrase for each of the following statements.

(1) A book of original entry.
(2) The process of recording transactions in the journal.
(3) Brief explanation of an entry.
(4) The French word from which the word journal is derived.
(5) Entry in which more than one account are to be debited or credited.
(6) Anything taken by proprietor from business for his personal use.
(7) Amount of money payable to broker while buying and selling the shares and securities.
(8) Entry in which one account is debited and another account is credited
(9) The column in journal, which is not filled at the time of Journalising.
(10) An account that is debited when rent is paid to landlord.

Answer:


(1) A book of original entry- Journal

Explanation:
All the transactions of a business are recorded for the first time in the book of original entry. A Journal is one of the main book of original entry. It is called the book of original entry as all the transactions are recorded in the Journal in a chronological order.

(2) The process of recording transactions in the journal- Journalising
Explanation:
Journalising is the process of recording transactions in the book of original entry, i.e. a Journal. The transactions are recorded in a chronological order, i.e. occurrence-wise. These transactions are recorded according to the rules of debit and credit and after ascertaining the accounts that are affected.

(3) Brief explanation of an entry- Narration
Explanation:
The narration is a brief explanation of the transaction together with the necessary details that are provided with the Journal entry. It is necessary to write the narration, as it provides the details of the Journal entry and helps understand the account that is debited or credited. For example, a narration for the transaction of payment of Rs 2,000 as salary will be:
Salary of Rs 2000 is paid in cash.

(4) The French word from which the word journal is derived- Jour
Explanation:
Journal is derived from the French word ‘Jour’ which means daily records. Therefore, Journal means a book, wherein the day-to-day transactions are recorded date–wise, i.e. in a chronological order.

(5) Entry in which more than one account are to be debited or credited- Compound/ Combined entry
Explanation:
The Journal entries in which more than one account is to be debited or credited are known as compound or combined journal entries. Sometimes, two or more transactions, relating to one particular account, may take place on the same date.  Hence, instead of passing separate entries for all such transactions, only one entry is passed.
For example: - On 30th June, Rs 5,000 for salaries and Rs 2,000 for rent are paid in cash. The entry will be:-
 
Salary A/c
Dr.
5,000
 
Rent A/c    
Dr.
2,000
 
To Cash A/c        
 
 
7,000
(Salaries and Rent are paid in cash)
 
 
 

(6) Anything taken by proprietor from business for his personal use- Drawings
Explanation:
The amount/ value of goods taken by a proprietor from a business for his personal use are termed as drawings.

(7) Amount of money payable to broker while buying and selling the shares and securities- Brokerage
Explanation:
Any fee or commission paid to a broker, who is engaged in buying and selling of shares and securities, is termed as brokerage.

(8) Entry in which one account is debited and another account is credited- Simple entry
Explanation:
An entry in which one account is debited and another account is credited, is termed as simple entry. It involves only two accounts, i.e. one is debited and other is credited. For example: Goods worth Rs 4,000 are purchased for cash. It involves two accounts: ‘Purchases A/c’, which will be debited and ‘Cash A/c’, which will be credited.

(9) The column in journal, which is not filled at the time of Journalising- Ledger Folio
Explanation:
The Ledger Folio is the column that is not filled at the time of Journalising. This column records the page number or folio number of the ledger accounts on which the relevant account appears. Thus, the page number of the ledger accounts can only be recorded once the entries are posted to the ledger. Hence, this column is not filled at the time of Journalising.

(10) An account that is debited when rent is paid to landlord- Rent A/c
Explanation:
The payment of rent is an expense for a business and all the expenses are classified as a nominal account. As per the rule of nominal account, all expenses and losses should be debited and all incomes and gains should be credited. Hence, Rent A/c will be debited.

Page No 91:

Question 1.C1:

Select the most appropriate alternative from the alternatives given below and rewrite the statement.

The ______ column of the journal is not entered at the time of Journalising.
a) Date
b) Particulars
c) Ledger Folio
d) Amount

Answer:

The Ledger Folio column of the journal is not entered at the time of Journalising.

Explanation:
The Ledger Folio column shows the page number or folio number on which the relevant account appears. A Journal is the book of original entry from where the entries are posted to their respective ledger accounts. Thus, the Ledger Folio column is entered after the entries are posted to the ledger accounts and not at the time of Journalising.

Page No 91:

Question 1.C2:

Select the most appropriate alternative from the alternatives given below and rewrite the statement.

Recording of transaction in the journal is called _____ .
a) Posting
b) Casting
c) Tallying
d) Journalising

Answer:

Recording of transaction in the journal is called Journalising.

Explanation:
The process of recording transactions in the book of original entry, i.e. a Journal, is known as Journalising.
The process of posting entries from the Journal to the Ledger is known as posting. All the entries from the Journal are posted in their respective Ledger Accounts.
The totaling of Sales and Purchases Books is known as casting.
Tallying means matching the debit and credit totals of the columns.

Page No 91:

Question 1.C3:

Select the most appropriate alternative from the alternatives given below and rewrite the statement.

Goods or Amount taken by proprietor for his personal use should be debited to ______.
a) Sales A/c
b) Drawing A/c
c) Purchases A/c
d) Cash A/c

Answer:

Goods or Amount taken by proprietor for his personal use should be debited to Drawings A/c.

Explanation:
Drawings represent the amount withdrawn by the proprietor from his/her business. It can be either in cash or kind (goods withdrawn for personal use). Such withdrawals reduce the amount of capital and are debited to a separate account known as Drawings Account.

Rationale behind why drawings are not debited to Purchases A/c, Sales A/c or Cash A/c?
Purchases A/c is debited when some goods are purchased for resale.
Sales A/c is credited when goods are sold for cash or on credit.
Finally, Cash A/c is debited when cash sales are made.

Hence, Drawings A/c is debited when the proprietor withdraws goods or cash from the business for his/her personal use.

Page No 91:

Question 1.C4:

Select the most appropriate alternative from the alternatives given below and rewrite the statement.

Cash purchases of goods should be credited to ______.
a) Purchase A/c
b) Sales A/c
c) Cash A/c
d) Goods A/c

Answer:

Cash purchases of goods should be credited to Cash A/c.

Explanation:
A cash account is classified as a real account. The rule for recording transactions of a real account is to debit what comes in and to credit what goes out. Cash purchases of goods will lead to an outflow of cash, i.e. cash is going out. Hence, the cash account is credited and the purchases account is debited. The sales account is credited only when goods are sold.

Page No 91:

Question 1.C5:

Select the most appropriate alternative from the alternatives given below and rewrite the statement.

Wages paid for installation of machinery should be debited to ______.
a) Wages A/c
b) Machinery A/c
c) Cash A/c
d) Installation A/c

Answer:

Wages paid for installation of machinery should be debited to Machinery A/c.

Explanation:
Any expenditure incurred on the carriage and installation of machinery such as freight, transit expenses, installation expenses, wages etc should be treated as capital expenditure and should be debited to the Machinery A/c. This expenditure is non-recurring in nature and, thus, added to the value of the machinery. Thus, it should be debited to the Machinery A/c and not to the Wages A/c.

Page No 91:

Question 1.C6:

Select the most appropriate alternative from the alternatives given below and rewrite the statement.

The rent paid to the land lord should be debited to ______.
a) Drawing A/c
b) Cash A/c
c) Landlord A/c
d) Rent A/c

Answer:

The rent paid to the land lord should be debited to Rent A/c.

Explanation:
The rent paid to the landlord is an expense. Thus, in adherence to the rule of nominal accounts, all such expenses and losses are to be debited; therefore, in this case, Rent A/c will be debited.

Page No 91:

Question 1.C7:

Select the most appropriate alternative from the alternatives given below and rewrite the statement.

The amount brought in by the proprietor in the business should be credited to
a) Salary A/c
b) Mandar’s A/c
c) Cash A/c
d) Capital A/c

Answer:

The amount brought in by the proprietor in the business should be credited to Capital A/c.

Explanation:
Any amount/value of goods withdrawn from a business is known as drawings and is deducted from the capital account of the proprietor. Likewise, any additional amount brought in by the proprietor is treated as capital and will be added to the existing capital of the business.

Page No 91:

Question 1.C8:

Select the most appropriate alternative from the alternatives given below and rewrite the statement.

A payment of Rs. 100 to Kokate Carriage Co. for bringing a machine to the business place should be debited to ______.
a) Machine A/c
b) Cash A/c
c) Kokate carnage Co. A/c
d) Carriage A/c

Answer:

A payment of Rs. 100 to Kokate Carriage Co. for bringing a machine to the business place should be debited to the Machine A/c.

Explanation:
The expenses incurred to bring in assets in a workable condition before they are  put to use are capitalised and added to the asset account. Therefore, the expenses incurred for bringing a machine to a business place should be debited to the machine account. This expenditure is non-recurring in nature and any expenses incurred before the asset is put to use are debited to the asset account.

Page No 91:

Question 1.C9:

Select the most appropriate alternative from the alternatives given below and rewrite the statement.

A purchase of horse in cash should be debited to ______
a) Livestock A/c
b) Goods A/c
c) Cash A/c
d) Bank A/c

Answer:

A purchase of horse in cash should be debited to Livestock A/c.

Explanation:
Domestic animals used in a business to help in doing business more effectively are treated as assets of the business and included under the head of the Livestock A/c. Hence, the purchase of a horse will be debited to the Livestock A/c.
It is not the goods of the business, as it is not purchased for resale in business.



Page No 92:

Question 1.D:

State whether the following statements are true or false:

(1) A journal voucher is must for all transactions recorded in the journal.
(2) Journal is a book of secondary entry.
(3) Narration is not necessary for each and every journal entry.
(4) Every transaction is recorded first in the journal.
(5) Live Stock A/c is a Nominal A/c.
(6) Bank of Maharashtra A/c is a Nominal A/c.
(7) Brokerage paid on sale of goods is debited to brokerage A/c.
(8) If the goods are sold the entry should be recorded in the journal.
(9) Goods withdrawn by the proprietor from business is debited to the Drawing A/c.
(10) Cash discount does not appear in the books of accounts.
(11) If rent is paid to the landlord, landlord’s A/c should be debited.
(12) Book keeping records monetary transactions only.
(13) Drawings made by the proprietor increases his capital.
(14) Premium paid on the life policy of the proprietor should be debited to insurance premium account.

Answer:

(1) True

Explanation:
The above statement is true, since vouchers act as the base for the recording of all the transactions. Vouchers are regarded as the source documents, based on which the transactions are recorded in the Journal book in form of Journal entries. Thus, for all the transactions that are recorded in the Journal book, corresponding voucher is a necessary condition.

(2) False
Explanation:
A Journal is a book of original or prime entry and not a book of secondary entry. All the business transactions are first recorded in the Journal, and then postings are made in the respective Ledger Accounts, i.e. secondary books. Thus, a Journal is a book of original entry.

(3) False
Explanation:
This statement is false because narration is a brief explanation of a transaction, together with necessary details that are provided with the Journal entry, which helps to understand the account which is to be debited or credited. Thus, a narration is necessary for each and every Journal entry, as it provides the details of the Journal entry and helps understand the entry.

(4) True
Explanation:
Every business transaction is first of all recorded in a Journal or Subsidiary Books known as books of original or prime entry and then postings are made in the relevant ledger accounts from which the final accounts are prepared. Thus, every transaction is recorded first in the Journal.

(5) False
Explanation:
Livestock A/c records the monetary value of the domestic animals used in a business such as dog, horse, cow etc. Thus, it is  a fixed asset of a business and all the assets of the business whose value can be measured in terms of money are classified  under the real account, whereas , the nominal account includes the accounts related to expenses, losses, incomes and gains. Therefore, the Live Stock A/c is a real account and not a nominal account.

(6) False
Explanation:
All the accounts of persons, companies or institutions are classified as personal accounts. The Bank of Maharashtra A/c is related to the banking firm, which is an artificial person, and all the accounts related to people, whether artificial or natural, are termed as personal accounts.

(7) True
Explanation:
Brokerage is a fee or commission paid to  a broker who is engaged in buying and selling shares and securities. Hence, it is an indirect expense for a business that is to be accounted under Brokerage A/c. Being an expense for the business, it should be debited to the Profit and Loss A/c, according to the rule of nominal account.

(8) True
Explanation:
When goods are sold, the transactions should be recorded in the book of original entry, i.e. Journal. All the business transactions of a business are recorded in the Journal and, thus, it is called the book of original entry. Hence, the entries for the goods sold should be recorded in the Journal.

(9) True
Explanation:
Drawings A/c shows all the withdrawals made by a proprietor from the business for his/her personal use. The withdrawals may be in the form of cash or goods. Thus, goods withdrawn by the proprietor are debited to Drawings A/c.

(10) False
Explanation:
A cash discount is the discount given to the customers for early payments. It is provided at the time of receiving the payment. Thus, it should be recorded in the books of accounts. Thus, the cash discount appears in the books of accounts, whereas, the trade discount does not appear in the books of accounts.

(11) False
Explanation:
If rent is paid to a landlord, Rent A/c should be debited and not the Landlord’s A/c. It is an expense for the business and should be accounted under Rent A/c. Rent is an expense for the business and falls under the category of nominal accounts. Hence, Rent A/c should be debited.

(12) True
Explanation:
Book keeping records only those transactions whose value can be measured in terms of money.
Note:
As we all know that all those transactions which can be measured in monetary terms are recorded in the books of accounts. Thus, the above statement is true and the solution provided in the book is incorrect.

(13) False
Explanation:
This statement is false because drawings made by a proprietor decrease his capital. Drawings are the cash or goods that are withdrawn by a proprietor from business for his/her personal use. Thus, it will reduce or decrease the capital of the proprietor in the business.

(14) False
Explanation:
Premium paid on the life policy of a proprietor is regarded as the personal expense of the proprietor and, thus, should be treated as drawings. Hence, it should be debited to Drawings A/c instead of Insurance Premium A/c.

Page No 92:

Question 1:

Journalise the following transactions in the books of Mr. Akshay.
 

2010 April
1
Mr. Akshay started business with Cash Rs 80,000.
 
4
Purchased goods form Mona Rs 28,000.
7
Deposited cash into Dena Bank Rs 39,000.
10
Sold goods to Dinesh Rs 41,000.
13
Purchased Laptop of Rs 30,000 in cash.
17
Paid Mona by cheque Rs 30,000.
20
Paid wages Rs 500.

Answer:

In the Books of Mr. Akshay
Journal
 
Date
Particulars
L.F.
Debit
Amount
(Rs)
Credit
Amount
(Rs)
April 2010
 
 
 
 
 
1
Cash A/c
Dr.
 
80,000
 
 
To Capital A/c
 
 
 
80,000
 
(Commenced business with cash)
 
 
 
 
 
 
 
 
 
 
4
Purchases A/c
Dr.
 
28,000
 
 
To Mona
 
 
 
28,000
 
(Goods purchased from Mona)
 
 
 
 
 
 
 
 
 
 
7
Bank A/c
Dr.
 
39,000
 
 
To Cash A/c
 
 
 
39,000
 
(Cash deposited into Dena Bank)
 
 
 
 
 
 
 
 
 
 
10
Dinesh
Dr.
 
41,000
 
 
To Sales A/c
 
 
 
41,000
 
(Goods sold to Dinesh on credit)
 
 
 
 
 
 
 
 
 
 
13
Laptop A/c
Dr.
 
30,000
 
 
To Cash A/c
 
 
 
30,000
 
(Laptop purchased in cash)
 
 
 
 
 
 
 
 
 
 
17
Mona
Dr.
 
30,000
 
 
To Bank A/c
 
 
 
30,000
 
( Issue of cheque to Mona)
 
 
 
 
 
 
 
 
 
 
20
Wages A/c
Dr.
 
500
 
 
To Cash A/c
 
 
 
500
 
( Wages paid)
 
 
 
 
 
 
 
 
 

Page No 92:

Question 2:

Journalise the following transactions in the books of Miss. Nivedita.

2010 May
1
Commenced business with Cash Rs 2,10,000.
 
4
Purchased goods for cash Rs 60,000.
5
Sold good for cash Rs 70,000.
9
Deposited into Bank of India Rs 1,00,000.
13
Paid for stationery Rs 10,000.
17
Purchased Computer with printer Rs 40,000.
21
Purchased goods from Ravi for Rs 50,000 on credit.
25
Paid for Office Rent Rs 2,000.
26
Received Commission Rs 1,000.
30
Withdrew from bank for office use Rs 50,000.
31
Paid for salaries Rs 4,500.

 

Answer:

In the Books of Miss. Nivedita
Journal
 
Date
Particulars
L.F.
Debit
Amount
(Rs)
Credit
Amount
(Rs)
May 2010
 
 
 
 
 
1
Cash A/c
Dr.
 
2,10,000
 
 
To Capital A/c
 
 
 
2,10,000
 
(Commenced business with cash)
 
 
 
 
 
 
 
 
 
 
4
Purchases A/c
Dr.
 
60,000
 
 
To Cash A/c
 
 
 
60,000
 
(Goods purchased for cash)
 
 
 
 
 
 
 
 
 
 
5
Cash A/c
Dr.
 
70,000
 
 
To Sales A/c
 
 
 
70,000
 
(Goods sold for cash)
 
 
 
 
 
 
 
 
 
 
9
Bank A/c
Dr.
 
1,00,000
 
 
To Cash A/c
 
 
 
1,00,000
 
(Cash deposited into Bank of India)
 
 
 
 
 
 
 
 
 
 
13
Stationery A/c
Dr.
 
10,000
 
 
To Cash A/c
 
 
 
10,000
 
( Stationery purchased)
 
 
 
 
 
 
 
 
 
 
17
Computer A/c
Dr.
 
40,000
 
 
To Cash A/c
 
 
 
40,000
 
( Computer purchased)
 
 
 
 
 
 
 
 
 
 
21
Purchases A/c
Dr.
 
50,000
 
 
To Ravi
 
 
 
50,000
 
(Goods purchased from Ravi on credit)
 
 
 
 
 
 
 
 
 
 
25
Rent A/c
Dr.
 
2,000
 
 
To Cash A/c
 
 
 
2,000
 
(Office Rent paid)
 
 
 
 
 
 
 
 
 
 
26
Cash A/c
Dr.
 
1,000
 
 
To Commission A/c
 
 
 
1,000
 
( Commission received)
 
 
 
 
 
 
 
 
 
 
30
Cash A/c
Dr.
 
50,000
 
 
To Bank A/c
 
 
 
50,000
 
(Withdrew from bank for office use)
 
 
 
 
 
 
 
 
 
 
31
Salaries A/c
Dr.
 
4,500
 
 
To Cash A/c
 
 
 
4,500
 
(Salaries paid)
 
 
 
 
 
 
 
 
 

 

Page No 92:

Question 3:

Journalise the following transactions in the books of Mantri.

2011 June
1
Commenced business with Cash Rs 1,20,000, Goods Rs. 60,000 and Furniture Rs 65,000.
 
3
Opened a current account in Bank of Baroda by depositing Rs 75,000.
5
Cash purchases Rs 35,000.
9
Cash Sales Rs 55,000.
10
Purchased goods worth Rs 20,000 from Amit & Co. subject trade discount of 2%
14
Credit sales to Kalpana Rs 15,000.
16
Paid cash to Amit & Co. Rs 9,500 who allowed us discount Rs 100.
19
Goods distributed as free samples of Rs 1,500.
21
Received Cash from Kalpana Rs 4,800 on account and allowed her cash discount Rs 200.
24
Returned goods of Rs 750 to Amit & Co.
26
Purchased shares of Rs 15,000 of HDFC Bank.
29
Received goods returned by Kalpana Rs 200.
30
Rent paid by cheque Rs 7,000.

 

Answer:

In the Books of Mantri

Journal

 
Date
Particulars
L.F.
Debit
Amount
(Rs)
Credit
Amount
(Rs)
June 2011
 
 
 
 
 
1
Cash A/c
Dr.
 
1,20,000
 
 
Stock A/c
Dr.
 
60,000
 
 
Furniture A/c
Dr.
 
65,000
 
 
To Capital A/c
 
 
 
2,45,000
 
(Commenced with cash, goods and furniture)
 
 
 
 
 
 
 
 
 
 
3
Bank A/c
Dr.
 
75,000
 
 
To Cash A/c
 
 
 
75,000
 
(Cash deposited in Bank of Baroda)
 
 
 
 
 
 
 
 
 
 
5
Purchases A/c
Dr.
 
35,000
 
 
To Cash A/c
 
 
 
35,000
 
(Cash purchases made)
 
 
 
 
 
 
 
 
 
 
9
Cash A/c
Dr.
 
55,000
 
 
To Sales A/c
 
 
 
55,000
 
(Goods sold for cash )
 
 
 
 
 
 
 
 
 
 
10
Purchases A/c  [20,000 – 400]
Dr.
 
19,600
 
 
To Amit & Co.
 
 
 
19,600
 
(Goods purchased worth Rs 20,000 at a trade discount of 2%)
 
 
 
 
 
 
 
 
 
 
14
Kalpana
Dr.
 
15,000
 
 
To Sales A/c
 
 
 
15,000
 
(Credit sales to Kalpana)
 
 
 
 
 
 
 
 
 
 
16
Amit& Co.
Dr.
 
9,600
 
 
To Cash A/c
 
 
 
9,500
 
To Discount Received A/c
 
 
 
100
 
(Cash paid to Amit & Co. and discount received)
 
 
 
 
 
 
 
 
 
 
19
Advertisement A/c
Dr.
 
1,500
 
 
To Purchases A/c
 
 
 
1,500
 
(Goods distributed as Free Samples)
 
 
 
 
 
 
 
 
 
 
21
Cash A/c
Dr.
 
4,800
 
 
Discount Allowed A/c
Dr.
 
200
 
 
To Kalpana
 
 
 
5,000
 
(Cash received and Discount Allowed)
 
 
 
 
 
 
 
 
 
 
24
Amit & Co.
Dr.
 
735*
 
 
To Purchases Return A/c
 
 
 
735*
 
(Goods returned to Amit & Co.)
 
 
 
 
 
 
 
 
 
 
26
Investment in Shares A/c
Dr.
 
15,000
 
 
To Cash A/c
 
 
 
15,000
 
(Purchase of shares of HDFC Bank)
 
 
 
 
 
 
 
 
 
 
29
Sales Return A/c
Dr.
 
200
 
 
To Kalpana
 
 
 
200
 
(Goods returned by Kalpana)
 
 
 
 
 
 
 
 
 
 
30
Rent A/c
Dr.
 
7,000
 
 
To Bank A/c
 
 
 
7,000
 
(Rent paid through cheque)
 
 
 
 
 
 
 
 
 

*Goods returned to Amit of value Rs 750 will be recorded at a discount of 2% which was allowed as trade discount i.e. at Rs735 [750- 15(2% of 750)].



Page No 93:

Question 4:

Journalise the following transactions in the books of Mr. Bipin.
 

2011 July
1
Started business with Cash Rs 3,25,000 Goods worth Rs 50,000 and Laptop Rs 45, 000.
 
3
Deposited in Dena Bank Rs 1,50,000.
7
Bought goods on credit from Manish Rs 10,000 at 10% Trade discount.
11
Sold goods to Nitin of Rs 12,000 at 5% Trade Discount.
13
Goods worth Rs 900 burnt by fire.
17
Received cash of Rs 11,200 from Nitin in full settlement of his account.
20
Drew from bank Rs 4,000 for his personal purpose.
23
Paid cash Rs 9,300 to Manish in full settlement of his account.
25
Paid house rent Rs 2,500.
28
Sold goods worth Rs 12,000 to Dinesh who paid us Rs 8,000 on account.
31
Wages paid Rs 6,000.

Answer:

In the Books of Mr. Bipin
Journal
 
Date
Particulars
L.F.
Debit
Amount
(Rs)
Credit
Amount
(Rs)
July 2011
 
 
 
 
 
1
Cash A/c
Dr.
 
3,25,000
 
 
Stock A/c
Dr.
 
50,000
 
 
Laptop A/c
Dr.
 
45,000
 
 
To Capital A/c
 
 
 
4,20,000
 
(Commenced with cash, goods and furniture)
 
 
 
 
 
 
 
 
 
 
3
Bank A/c
Dr.
 
1,50,000
 
 
To Cash A/c
 
 
 
1,50,000
 
(Cash deposited into Dena Bank)
 
 
 
 
 
 
 
 
 
 
7
Purchases A/c (10,000-1,000)
Dr.
 
9,000
 
 
To Manish
 
 
 
9,000
 
(Goods purchased worth Rs 10,000 at a trade discount of 10%)
 
 
 
 
 
 
 
 
 
 
11
Nitin (12,000 – 600)
Dr.
 
11,400
 
 
To Sales A/c
 
 
 
11,400
 
(Goods sold to Nitin worth Rs 12,000 at a trade discount of 5%)
 
 
 
 
 
 
 
 
 
 
13
Loss by Fire A/c
Dr.
 
900
 
 
To Purchases A/c
 
 
 
900
 
(Goods burnt by fire)
 
 
 
 
 
 
 
 
 
 
17
Cash A/c
Dr.
 
11,200
 
 
Discount Allowed A/c
Dr.
 
200
 
 
To Nitin
 
 
 
11,400
 
(Cash received and Discount Allowed)
 
 
 
 
 
 
 
 
 
 
20
Drawings A/c
Dr.
 
4,000
 
 
To Bank A/c
 
 
 
4,000
 
(Amount withdrawn from bank for personal use)
 
 
 
 
 
 
 
 
 
 
23
Manish A/c
Dr.
 
9,000*
 
 
      To Cash A/c
 
 
 
8,700
 
To Discount Received A/c
 
 
 
300
 
(Cash paid to Manish in full settlement of his account)
 
 
 
 
 
 
 
 
 
 
25
Drawings A/c
Dr.
 
2,500
 
 
To Cash A/c
 
 
 
2,500
 
(House rent paid)
 
 
 
 
 
 
 
 
 
 
28
Bank A/c
Dr.
 
8,000
 
 
Dinesh
Dr.
 
4,000
 
 
To Sales A/c
 
 
 
12,000
 
(Goods sold to Dinesh and received Rs 8,000 on account)
 
 
 
 
 
 
 
 
 
 
31
Wages A/c
Dr.
 
6,000
 
 
To Cash A/c
 
 
 
6,000
 
(Wages paid)
 
 
 
 
 
 
 
 
 

*As per the book this entry is incorrect, Rs 9,300 cannot be paid to be Manish because he is the creditor of the business with Rs 9,000. Therefore, as per our concern Rs 8,700 should be paid to Manish in full settlement of his account. Hence, the entry has been passed according to it.

Page No 93:

Question 5:

Journalise the following transactions.

2011 Aug.
1
Shri Akshay started his business with Cash Rs 90,000, Building Rs 1,50,000 borrowed from friend Jayesh Rs 40,000.
 
3
Paid cash into Bank of Maharashtra Rs 80,000.
6
Purchased furniture from Mohan and issued him a cheque Rs 10,000.
9
Credit purchase from Sohan Rs 20,000 less 5% Trade Discount.
10
Returned goods to Sohan Rs 200.
13
Credit sales to Amit Rs 6,000 less 2% Trade Discount.
15
Amit returned goods of Rs 588.
17
Goods taken by Akshay for his personal use Rs 500.
18
Paid postage Rs 200 and Electricity bill Rs 900.
20
Sent a Telegram of Rs 30 to Sohan to supply goods of Rs 9,000 immediately.
21
Purchased Laptop & Printer of Rs 41,000 from Keshav & Co. and paid him cash Rs 21,000
27
Paid insurance premium on life of Akshay of Rs 4,000.
29
Paid Telephone Deposit for new telephone connection by cheque Rs 4,000.
31
Audit fees paid by cheque Rs 4,500.

Answer:

Journal
 
Date
Particulars
L.F.
Debit
Amount
(Rs)
Credit
Amount
(Rs)
Aug 2011
 
 
 
 
 
1
Cash A/c
Dr.
 
90,000
 
 
Building A/c
Dr.
 
1,50,000
 
 
To Jayesh
 
 
 
40,000
 
To Capital A/c
 
 
 
2,00,000
 
(Business commenced with cash, building and loan from Jayesh)
 
 
 
 
 
 
 
 
 
 
3
Bank A/c
Dr.
 
80,000
 
 
To Cash A/c
 
 
 
80,000
 
(Cash deposited into Bank of Maharashtra)
 
 
 
 
 
 
 
 
 
 
6
Furniture A/c
Dr.
 
10,000
 
 
To Bank A/c
 
 
 
10,000
 
(Furniture purchased through issue of cheque)
 
 
 
 
 
 
 
 
 
 
9
Purchases A/c  [20,000 – 1,000]
Dr.
 
19,000
 
 
To Sohan
 
 
 
19,000
 
(Purchases made on credit at a trade discount of 5%)
 
 
 
 
 
 
 
 
 
 
10
Sohan A/c  [200 – 10]
Dr.
 
190*
 
 
To Purchases Returns A/c
 
 
 
190*
 
(Goods returned)
 
 
 
 
 
 
 
 
 
 
13
Amit [6,000 – 120]
Dr.
 
5,880
 
 
To Sales A/c
 
 
 
5,880
 
(Sold goods to Amit on credit, at trade discount of 2%)
 
 
 
 
 
 
 
 
 
 
15
Sales Returns A/c
Dr.
 
588
 
 
To Amit
 
 
 
588
 
(Goods returned by Amit)
 
 
 
 
 
 
 
 
 
 
17
Drawings A/c
Dr.
 
500
 
 
To Purchases A/c
 
 
 
500
 
(Goods withdrawn for personal use)
 
 
 
 
 
 
 
 
 
 
18
Postage A/c
Dr.
 
200
 
 
Electricity A/c
Dr.
 
900
 
 
To Cash A/c
 
 
 
1,100
 
(Payment of postage and electricity bill)
 
 
 
 
 
 
 
 
 
 
20
Telegram Expenses A/c
Dr.
 
30
 
 
To Cash A/c
 
 
 
30
 
(Telegram expenses incurred)
 
 
 
 
 
 
 
 
 
 
20
Purchases A/c
Dr.
 
9,000
 
 
To Sohan
 
 
 
9,000
 
(Goods purchased from Sohan)
 
 
 
 
 
 
 
 
 
 
21
Laptop & Printer A/c
Dr.
 
41,000
 
 
To Cash A/c
 
 
 
21,000
 
To Keshav & co.
 
 
 
20,000
 
(Laptop & printer purchased from Keshav & Co. and Rs 21,000 paid in cash)
 
 
 
 
 
 
 
 
 
 
27
Drawings A/c
Dr.
 
4,000
 
 
To Cash A/c
 
 
 
4,000
 
(Insurance Premium on life of proprietor paid)
 
 
 
 
 
 
 
 
 
 
29
Telephone Deposit A/c
Dr.
 
4,000
 
 
To Bank A/c
 
 
 
4,000
 
(Deposits made for new telephone connection)
 
 
 
 
 
 
 
 
 
 
31
Audit Fees A/c
Dr.
 
4,500
 
 
To Bank A/c
 
 
 
4,500
 
(Paid audit fees)
 
 
 
 
 
 
 
 
 

*Goods returned to Sohan of value Rs 200 will be recorded at a discount of 2% which was allowed as trade discount i.e. at Rs 190 [200-10(5% of 200)]

Page No 93:

Question 6:

Journalise the following transactions in the books of Mr. Arun.

2010 Sept.
1
Commenced business with Cash 75,000 and Goods Rs 20,000 and Furniture Rs 30,000.
 
2
Opened a current account in Bank of India by depositing Rs 50,000.
5
Purchased stationery of Rs 200.
6
Goods purchased from Nisha Rs 15,000.
9
Gave a cheque for Rs 15,000 to Nisha.
11
Sold goods to Minakshi of Rs 20,000.
14
Received a cheque for Rs 19,500 from our debtor. Minakshi in full settlement of her account.
16
Gave loan to Sanjay by cheque Rs 10,000 at 12% interest p.a.
19
Bought Laptop of Rs 36,000 in exchange of goods from Pande & Co. Goods of Rs 40,000 were given at 10% Trade Discount.
22
Purchased Printer of Rs 10,000, paying half the amount in cash from H.P.Ltd.
28
Uninsured goods worth Rs 700 destroyed by fire.
29
Paid office Rent Rs 2,000 to landlord.
30
Paid for Travelling expenses Rs 5,000.

Answer:

In the Books of Mr. Arun
Journal
 
Date
Particulars
L.F.
Debit
Amount
(Rs)
Credit
Amount
(Rs)
Sep. 2010
 
 
 
 
 
1
Cash A/c
Dr.
 
75,000
 
 
Stock A/c
Dr.
 
20,000
 
 
Furniture A/c
Dr.
 
30,000
 
 
To Capital A/c
 
 
 
1,25,000
 
(Commenced business with cash, goods and furniture)
 
 
 
 
 
 
 
 
 
 
2
Bank A/c
Dr.
 
50,000
 
 
To Cash A/c
 
 
 
50,000
 
(Cash deposited into Bank of India)
 
 
 
 
 
 
 
 
 
 
5
Stationery A/c
Dr.
 
200
 
 
To Cash A/c
 
 
 
200
 
(Stationery purchased)
 
 
 
 
 
 
 
 
 
 
6
Purchases A/c
Dr.
 
15,000
 
 
To Nisha
 
 
 
15,000
 
(Purchases from Nisha on credit)
 
 
 
 
 
 
 
 
 
 
9
Nisha
Dr.
 
15,000
 
 
To Bank A/c
 
 
 
15,000
 
(Cheque issued to Nisha)
 
 
 
 
 
 
 
 
 
 
11
Minakshi
Dr.
 
20,000
 
 
To Sales A/c
 
 
 
20,000
 
(Goods sold to Minakshi on credit)
 
 
 
 
 
 
 
 
 
 
14
Bank A/c
Dr.
 
19,500
 
 
Discount Allowed A/c
 
 
500
 
 
To Minakshi
 
 
 
20,000
 
(Cheque received from Minakshi in full settlement of her account)
 
 
 
 
 
 
 
 
 
 
16
Sanjay’s Loan A/c
Dr.
 
10,000
 
 
To Bank A/c
 
 
 
10,000
 
( Loan given to Sanjay @12% per annum by issue of cheque)
 
 
 
 
 
 
 
 
 
 
19
Laptop A/c
Dr.
 
36,000
 
 
To Purchases Return A/c
 
 
 
36,000
 
(Laptop purchased worth Rs 36,000 in exchange of  goods worth Rs 40,000 at a trade discount of 10%)
 
 
 
 
 
 
 
 
 
 
22
Printer A/c
Dr.
 
10,000
 
 
To Cash A/c
 
 
 
5,000
 
To H.P. Ltd.
 
 
 
5,000
 
(Printer purchased from H.P. Ltd. and half of the amount paid in cash)
 
 
 
 
 
 
 
 
 
 
28
Loss by fire A/c
Dr.
 
700
 
 
To Purchase A/c
 
 
 
700
 
(Goods lost by fire)
 
 
 
 
 
 
 
 
 
 
29
Rent A/c
Dr.
 
2,000
 
 
To Cash A/c
 
 
 
2,000
 
(Rent paid)
 
 
 
 
 
 
 
 
 
 
30
Travelling Expenses A/c
Dr.
 
5,000
 
 
To Cash A/c
 
 
 
5,000
 
(Travelling Expenses paid)
 
 
 
  
 
 
 
 
 



Page No 94:

Question 7:

Journalise the following transactions in the books of Mr. Sancheti.

2011 Oct.
1
Mr. Sancheti received Rs 50,000 from his uncle as a gift and deposited the same into the account of business Bank of India A/c.
 
3
Purchased goods of Rs 15,000 from Mahesh.
5
Sold goods on credit to Suman for Rs 18,000.
7
Goods of Rs 600 being defective returned by Suman.
11
Remitted cash to Mahesh Rs 14,800 and received discount Rs 200.
15
Bought machinery from KK & Co. Rs 30,000 and half the amount paid immediately.
17
Paid for repairs to Machinery Rs 400.
20
Purchased a horse for Rs 4,800 and carriage charges Rs 200 paid.
25
Withdrawn from bank Rs 5,000 for personal use.
27
Amount due from Girish Rs 900 is proved to be irrecoverable and has to be written off as bad.
29
Paid for sales vouchers Rs 1,100.
31
Paid Insurance Premium Rs 6,000.

Answer:

In the Books of Mr. Sancheti
Journal
 
Date
Particulars
L.F.
Debit
Amount
(Rs)
Credit
Amount
(Rs)
Oct
 2011
 
 
 
 
 
1
Bank A/c
Dr.
 
50,000
 
 
To Capital A/c
 
 
 
50,000
 
(Amount  in business)
 
 
 
 
 
 
 
 
 
 
3
Purchases A/c
Dr.
 
15,000
 
 
To Mahesh
 
 
 
15,000
 
(Goods purchased from Mahesh on credit)
 
 
 
 
 
 
 
 
 
 
5
Suman
Dr.
 
18,000
 
 
To Sales A/c
 
 
 
18,000
 
(Goods sold on credit to Suman)
 
 
 
 
 
 
 
 
 
 
7
Sales Return A/c
Dr.
 
600
 
 
To Suman A/
 
 
 
600
 
(Goods returned by Suman)
 
 
 
 
 
 
 
 
 
 
11
Mahesh
Dr.
 
15,000
 
 
To Cash A/c
 
 
 
14,800
 
To Discount Received A/c
 
 
 
200
 
(Cash remitted to Mahesh and discount received)
 
 
 
 
 
 
 
 
 
 
15
Machinery A/c
Dr.
 
30,000
 
 
To Cash A/c
 
 
 
15,000
 
To KK & Co.
 
 
 
15,000
 
(Machinery purchased from KK & Co. and half of the amount paid in cash)
 
 
 
 
 
 
 
 
 
 
17
Repairs to Machinery A/c
Dr.
 
400
 
 
To Cash A/c
 
 
 
400
 
(Repairs made to Machinery)
 
 
 
 
 
 
 
 
 
 
20
Horse A/c
Dr.
 
4,800
 
 
Carriage A/c
Dr.
 
200
 
 
To Cash A/c
 
 
 
5,000
 
(Horse purchased and carriage paid)
 
 
 
 
 
 
 
 
 
 
25
Drawings A/c
Dr.