Office Practice and Accounting -9

"Cost accounting is the application of accounting and costing principles,
methods & techniques in the ascertainment of costs and the analysis of saving
and or exercises as completed with precious experience or with standard." -
I.C.M.A., London


To conclude, cost accounting is a discipline concerning cost identification, allocation,
analysis and presentation of cost information about different process, product or
activities for managerial decision making & control.

Basic accounting concept and principles

Accounting principles are the basic rules that are applied in reading transactions and
preparing financial statements. They are also known as accounting concept. These
rules are necessary to ensure that accounting records provide reliable information.
All businesses should apply the rules in their financial statements.

Business Entity Concept
Every business is regarded as having an existence separate from that of its owner.
This has already been recognized when an owner’s capital has been debited in the
business bank/cash account and credited to the owner’s capital account. The credit in
the capital account shows that the owner is a creditor of business, which owes him the
money. This can only be the case if the business is regarded as being separate from the
owner as no one can owe himself money. When the owner withdraws money from
the business, the amount is debited to his drawing account. The business account
does not show if he spends the money on personal expenses like clothes, foods, etc.
because these are not business expenses.
Money Measurement Concept

According to this concept, only transactions that can be expressed in monetary terms
are recorded in books of accounts. Goods, fixed assets, debtors, creditors, etc. may be
recorded in books of accounts because they have resulted from transactions that can
be expressed in monetary form. That’s why it is also termed as measurability concept.
Things which cannot be expressed in monetary terms are not recorded in accounts.
It is the reason that some of the people think it would be good if non-monetary items
such as skill of workers or dedications of employees, could be included in financial
statement.
Matching Concept

According to this concept, net profit/loss is different from revenue and expenses. If
the final accounts of a business are to give reliable information, the revenue and other
income should be matched with the expense in the period covered by the financial
statement. Trading and profit and loss account should be prepared on the accruals,


Office Practice and Accounting 9 97

or matching basis so that expenses are matched to the revenue earned. This implies,
expenses should be shown in the profit and loss account as they have been incurred
rather than as they have been paid.

Cost Concept

According to this concept, fixed assets are recorded in books of account at their actual
cost price rather than their market price or book price. If machinery was purchased
at Rs. 1,00,000 before five years, and today it costs Rs. 1,70,000 in the market, the
depreciations and other accounting record should be maintained on the basis of Rs.
1,00,000. This actual cost is systematically reduced over its life by depreciation. Cost
cannot be disputed as invoices or other documentary evidences may be produced to
support it. This treatment is said to be objective because it is based on fact and not on
opinion. Some of the scholars have criticized the historical cost principle, even though
it is still the most widely used method.

Revenue Realization Concept

According to this principle, revenue is recognized only when a specific critical event
has occurred and the amount of revenue is measurable. This concept of revenue is
known as the realization principle. When the order is received but goods are not
supplied and customer pays for goods in advance these are not revenue. Therefore,
revenue is supposed to be earned only when the seller sells the goods to the buyer.

Going Concern Concept

A business is a going corncern if there is no intention to discontinue. It is the foreseeable
future. If it is short of working, capital and the owner is unable to put more money
into it, or to find somebody who will be prepared to lend it money, it may be unable
to pay its creditors and forced to close.

Unless stated to the contrary, it is assumed that the accounts of a business are prepared
on going concern basis. If a business is not going concern, the assets should be valued
in the balance sheet at the amounts they could be expected to fetch in an enforced
sale, which could be much less than their real worth. Balance sheet should always
show a realistic situation, bearing in mind the weakness of the business.
Accounting Period Concept

According to this concept, to know the result of business transactions, the life of
business is divided into appropriate periodical intervals which is known as accounting
periods. Every organization follows this concept because the life of business is
assumed to be indefinite and under this circumstances, business can not wait for
such a long period for the determination of profit and loss and financial position of
the business. Normally accounting period of one year is determined in which the
financial statements are prepared.





98 Office Practice and Accounting 9

Duality (Dual Aspect) Concept

The concept of duality recognizes that there are two aspects for each transaction-
represented by debit and credit entries in accounts. The concept is the basis of the
accounting equations:
Assets = Capital + Liabilities.

The equation is also expressed in its other form:
Assets - Liabilities=Capital. Balance sheets are prepared in this form. The accounting
equation is a very useful tool for solving some accounting problems.
Accounting system

There are two systems of accounting:
1. Single Entry System 2. Double Entry System

Single Entry System

The single entry system is not really a system because in some cases record may be one
sided; and in some other cases no record is maintained at all. It is more appropriate to
call it an incomplete system of recording transactions.
In single entry system, scientific principles and uniform system of recording of
transactions is not followed. It is such type of book keeping which has no fixed set
of rules and principles. Thus, this system is incomplete, inaccurate, unscientific and
unsystematic style of account keeping. It does not follow the principles of double
entry system. It is a system of book keeping in which as a rule, the records of only cash
and personal accounts are maintained. It is a method of record keeping which ignores
two fold effects, and fails to provide the necessary information relating to financial
position. In this system, only one aspect of every transaction is usually recorded. So,
it is called single entry system. In this system, personal account of the debtors and
creditors are maintained. Real and nominal accounts are not maintained under it.


According to R.N. Carter– "Single entry is a method employed for recording
transactions, which ignores the two fold aspects and consequently, fails to
provide the businessman with the information necessary for him to be able to
ascertain the position."




According to J.R. Batliboi– "Single entry system is not any particular system
of book-keeping, but rather than double entry system in an incomplete and
disjoined firm."







Office Practice and Accounting 9 99

Now it becomes clear that single entry is traditional, incomplete, unscientific process
of recording financial transactions which keeps the record only of personal and cash
accounts without following the rule of dual aspects of any transactions.

Features of single entry system
Features of single entry system are listed as below:
i. It is incomplete record because it ignores the nominal and real account except
cash.
ii. It is not guided by certain rule of recording of financial transaction.
iii. Trial balance can't be prepared from this system.
iv. Since it is not guided by rule, it lacks uniformity in recording of financial
transaction.
v. Though it gives details of income and expenditure, yet actual profit or loss
cannot be ascertained.
Advantages of single entry system

i. Single entry system is simple method to use and understand.
ii. It is suitable for small scale business.
iii. It is an economical method because person without specific knowledge of
account can maintain it.
iv. Profit and loss of business can be easily ascertained.
v. It is time saving method because there is no use of various types of books of
accounts.
vi. In this system, secrecy can be maintained.

Disadvantages
i. It is unscientific, unsystematic and incomplete system of book-keeping.
ii. Tax authority does not accept this system.
iii. There is no clear-cut record of purchases, sales and sales return.
iv. In absence of real account, balance sheet cannot be prepared. So, true financial
position of the organization cannot be shown.
v. True profit and loss of business cannot be determined in absence of nominal
account.
vi. Since proper records are not kept, control on assets is very poor.
vii. It records only one aspect of each transaction. So, trial balance cannot be
prepared and arithmetical accuracy of accounts cannot be checked.

Double Entry System

It is the method of accounting based on what is known as double entry principle. It
refers to that system of book-keeping where each transaction is recorded in both of
its aspects that is – receiving of the benefit of the transactions and giving away of the


100 Office Practice and Accounting 9

benefit of the transactions. For a complete record of transaction, it should be presented
in both the accounts. Business transaction affects two aspects of the account in the
opposite direction. If one account receives a benefit there must be another account to
give the benefit. Thus every transaction involves two accounts- one which gives the
benefit of the transaction and another which receives the same. The system, under
which both the receiving and giving aspects are recorded (as Debit and Credit), is
known as the principle of Double Entry System of book keeping. Therefore we can
say that every debit must have a corresponding credit and obviously every credit
must have corresponding debit. It follows that any number of transactions can be
recorded in the above manner; the total debit must be equal to total credits and this
helps drawing of a trial balance to prove the arithmetical accuracy of the account
books.

J.R. Batliboi– "Every business transaction has two fold effects and that affects
two accounts in opposite directions and if the complete record was to be made
of each such transaction, it would be necessary to debit one account and credit
another account. It is the recording of two fold effects of every transaction that
has given rise to the term double entry system."




Munro and Palmer– "Every transaction involving money or money’s worth
has twofold aspects the receiving of value on the one hand and the giving of
the same value on the other. This twofold nature end in all transactions must
be recorded in the books, and this has given rise to the term double entry
system of book keeping."


So we can conclude that, double entry book keeping is a system of recording
transactions that recognizes that there are two sides (aspects) to every transaction.
For example - Machinery is sold for Rs 20,000. This involves giving of machinery
(one aspect) and receiving of Rs. 20,000 (the other aspect). Every transaction involves
giving and receiving. It is important to recognize and record both aspects of every
transaction in book-keeping.

Double entry book keeping system was propounded by Italian business man Luca
De Pacioli in 1494 AD publishing the book- Summa De Aritmetica, Geometrica,
Propertionalita.

Objectives
The objectives of double entry system are listed below:
i. To record the financial transactions in scientific and systematic order.



Office Practice and Accounting 9 101

ii. To classify the accounts according to its nature.
iii. To check the arithmetical accuracy of transactions by preparing the trial balance.
iv. To detect and rectify accounting errors.
v. To find out the true profit or loss of business during an accounting period.
vi. To reflect the total financial position of a firm by preparing balance sheet.
vii. To provide information and data to management for planning and decision
making process.
viii. To provide records for amendments and to take corrective actions.

Features

The features of double entry system are as follows:
1. Dual Aspects: This implies that there are two aspects for each transaction-
represented by debit and credit entries in accounts. Every debit must have a
corresponding credit and, of course, every credit must have corresponding
debit.

2. Equal Effect: There are two accounts involved in every transaction – debit and
credit. The total debit must be equal to total credit.
3. Classification of Account: Account is classified into three types on the basis of
nature of transactions. They are:
i. Personal Accounts ii. Real Accounts iii. Nominal Accounts
4. Auditing: All the transactions are recorded showing dual effects under this
system which facilitates auditing because dual recording system helps to detect
frauds and errors.
5. Worldwide Acceptance: Accounting maintained under this system is globally
accepted as it is based on certain assumptions, rules and principles.
6. Transfer of Ownership: Transfer of ownership refers to the system of giving
and receiving of financial transaction. For example, sale of goods on cash
transfers the ownership of goods and cash to each other.
Importance and advantages

The advantages of double entry book keeping system are as follows:

1. It presents a complete record of transactions. Because it records both the aspects
of every transaction, which relates to personal and impersonal.

2. Profit and loss account can easily be prepared. The exact reasons for profit
and loss can be ascertained. The information enables the firm to take action to
increase the profit and reduce the loss.

3. It gives the exact information regarding the amount due to the firm at any time,
because the system gives ready references.


102 Office Practice and Accounting 9

4. Arithmetical accuracy can be tested by preparing a list of balances (Trial Balance)
from all ledgers concerned.
5. Trading account and profit and loss account is prepared with the help of trial
balance to know the exact profit or loss earned by a business during a particular
period.
6. This system provides full particulars of various assets and liabilities of the
business, so financial position can be known by preparing Balance Sheet.
7. It provides facility for internal and external comparison that helps the
organization for its growth.
8. Accounts maintained under this system is accepted by court of law and income
tax as authentic financial document.

9. It provides information and data to internal and external users to make right
decisions.

Differences between Single Entry and Double Entry System

1. Single entry system is unscientific and unsystematic style of account keeping.
It is more appropriate to call it an incomplete system of recording transactions.
Whereas the double entry system of book-keeping is a scientific, modern, complete
and the best system of recording the financial transactions of a business.

2. Under single entry system, transactions are recorded without using duality
principle but transactions are recorded following duality principle under double
entry system.
3. Only personal accounts and cash summaries are prepared in single entry system.
That means nominal accounts and real accounts (other than cash) are ignored. But
all accounts: personal, real and nominal are prepared under double entry system.

4. Single entry system is comparatively cheaper and more economical as single book
is enough for maintenance of records but double entry system is comparatively
expensive as it requires separate books, vouchers and person with specific
knowledge to maintain financial records.

5. Preparation of trial balance is not possible in single entry system but trial balance
can be prepared and arithmetical errors may be detected in double entry system.
6. Under single entry system balance sheet cannot show the actual financial position
of business. Balance sheet is prepared under double entry system as it shows
actual financial position of the business.

7. Single entry system is suitable to small scale business organizations whereas
double entry system is suitable for every kind of business organization.

Office Practice and Accounting 9 103

8. Accounts maintained under single entry system is not accepted by court of law
and income tax but accounts maintained under double entry system is accepted
by court of law and income tax as authentic financial document.
Basic Accounting Terminologies


Capital: Capital is the sum of all assets with which a trader starts the business. It is the
amount actually invested in the business at any given time.

Assets: All the properties, things, stock of materials having monetary value in business
are known as assets. Assets can be classified as follows:

i. Fixed assets: Those assets which have life of more than one accounting year are
known as fixed assets. Machinery, furniture, land and building, vehicles are the
examples of fixed assets.

ii. Tangible assets: Those assets which have their physical form and can be seen and
felt. Land and buildings, furniture, plant and machinery, etc. are tangible assets.

iii. Intangible assets: Those assets which do not have any physical existence but give
benefit to the firm are called intangible assets. Patents, copyrights, goodwill, etc.
are intangible assets.

iv. Fictitious assets: Fictitious assets are assets that do not exist. These are the assets,
such as pre-payments, that do not have a resale value or cannot be converted into
cash but are entered as assets on a company's balance sheet. Fictitious assets are
written off against the earning of firm. Non-physical assets such as preliminary
expenses, underwriting commission, loss on issue of shares or debentures, etc. are
the examples of fictitious assets.

v. Current assets: Cash and those assets which can be converted into cash within one
accounting year are current assets. They are cash, bank balance, prepaid expenses,
stocks, etc.

Liabilities: Capital and the debts which are due by the firm to other parties are
collectively known as liabilities. Bank loan, debentures, bills payable, advance income,
creditors, outstanding expenses, profit are the examples of liabilities.

Revenue: Revenue is the total earning collected by the business through the supply
of goods or services. It is also called income of business. Income from sales of goods,
income from investments, commission received, dividend received, etc. are revenue.

Cash: Cash is asset in business. In addition to coins and currency, cash also includes
bank balance, cheque, money orders, etc.


104 Office Practice and Accounting 9

Expense: An expense is amount paid by the business. It is the cost of running business
or cost incurred for generating income. Expenses can be cash and non-cash. Salary,
rent, wages, electricity charge, stationery, etc. are cash expenses where as depreciation,
and goodwill written off, etc. are non-cash expenses.

Write‐off: It is the total reduction in the value of an asset, recognizing that it no longer
has any value. Write-downs and write-offs are non-cash expenses that affect profits.


Profit and Loss: Profit is the excess of income over expenses and loss is excess of
expenses over income. Profit increases the capital and loss decreases the capital.

Debit: It is an accounting entry where there is either an increase in assets or a decrease
in liabilities on a company's balance sheet. Debit is the entry made on the left side of
an account. It denotes receiving aspect.

Credit: An accounting entry that may either decrease assets or increase liabilities and
equity on the company's balance sheet, depending on the transaction. When using
the double-entry accounting method there will be two recorded entries for every
transaction: a credit and a debit. A credit is the entry made on the right side of an
account. It denotes giving aspect.


Audit: Audit is a careful review of financial records to verify their accuracy. It is the
act of reviewing and verifying the accuracy of financial records as well as validating
methods used to calculate financial records.

Goods: Commodities bought for the purpose of resale are termed as goods. That is
the thing or service which a businessman sells.

Drawings: Drawings are the withdrawals of money or assets by the proprietor from
the business for personal use.

Goodwill: Goodwill is an intangible asset representing such things as reputation,
customer loyalty, location, and other items that give a business a competitive
advantage. Goodwill is usually recognized only when a business is sold, and is the
difference between the amount paid for a business and its net worth. So, goodwill is
an overpayment.

Debtor: The parties and the persons to whom goods are sold and services are rendered
on credit and amount to be received. Debtor is treated as asset.

Creditor: The parties and the persons from whom goods are purchased and services
received on credit and amount to be paid. Creditor is treated as liabilities.

Stock: The goods remaining in the business firm at a particular time is known as stock.

Office Practice and Accounting 9 105

It is the property held for sale in the ordinary course of business or for consumption
in the production of goods or services for sale. Stock is of two types- opening stock
and closing stock. There may be opening and closing stock of raw materials, semi-
finished goods and finished goods.

Sales: Sales is the amount received or due for goods or services sold to customers.
Gross sales are total sales before any returns or adjustments. Net sales are after
accounting for returns and adjustments.

Fiscal/ financial year: A fiscal year is a period of twelve continuous months chosen
by an entity for its accounting period. In the Nepali context, it begins from 1st of
Shrawan and ends at the end of Asar.

Depreciation: Depreciation is the permanent and gradual decrease in the value of fixed
assets from any cause. These causes of depreciation may be accident, obsolescence,
wear and tear, technology, fall in market price, etc. So it is charged on the value of
fixed assets recorded on debit side of profit and loss account.
Bad debt: Bad debt is the definite loss arising from credit sales. It is the amount not
paid by the debtors due to their dishonesty and insolvency. It is loss and debited to
the profit and loss account.

Discount: Discount is a kind of rebate or facility offered by a seller to the buyer on
goods sold or offered by the creditor to the debtors while making payment. Discount
is of two types:

i. Cash discount: Cash discount is given by a trader to another trader on payment
being made within certain period. It is recorded in the books of account and the
entry is passed. It is not deducted while preparing the invoice.

ii. Trade discount: Trade discount is allowance made by one trader to another trader
or customer. It is generally allowed by a wholesaler to retailer at a fixed percentage
on the catalogue price. It is not recorded in general journal book, and the entry is
made with the net amount. It is deducted in the invoice.

Dividend: It is a portion of the after-tax profits paid out to the owners of a business
as a return on their investment.













106 Office Practice and Accounting 9

EXERCISE

Give short answer to the following questions.

1. What is meant by financial accounting?
2. What is accounting? Describe any three concepts of accounting.
3. What is money measurement principle of accounting?
4. Explain the following terms.
a. Capital b. Assets c. Goods

d. Audit e. Fictitious assets f. Revenue
g. Expenses h. Bad debt i. Stock
j. Current asset k. Cash discount l. Trade discount

5. Define single entry system of accounting and explain its advantages and
disadvantages.

6. Write about revenue concept and realization concept.
7. What is double entry system of accounting? Explain its features.
8. Write the differences between single and double entry system of accounting.
9. State the objectives of accounting.







































Office Practice and Accounting 9 107

UNIT
9 Journal



























Learning objectives:

After the completion of this unit, students will be able
to understand:
• meaning and definition of journal book.
• rules of debit and credit.
• objectives of journal.

• format of a journal and its preparation.





























108 Office Practice and Accounting 9

9 Journal


















The journal is the day to day book of business where both the aspects of all business
transactions are recorded in chronological order i.e. date wise. Thus journal is a book
of prime entry and also known as book of original entry because transactions are
recorded at the first occurrence in this book.
Recording of transactions in a journal is termed as journalizing. Journalizing is an act
of recording the debit and credit aspect of a business transaction in journal together
with an explanation of the transaction, known as narration. The record of any
particular transaction in journal is called journal entry. These entries are then posted
from journal into the ledger. Each journal entry shows the account to be debited and
the account to be credited.

According to R.N. Carter– "The Journal or daily record as originally used was a
book of primary entry in which transactions were copied, in order of date, from a
memorandum or waste book. The entries as they were copied, were classified into
debits and credits so as to facilitate this being correctly posted afterwards in the
ledgers."
Thus, journal is the book of prime entry in which financial transactions are recorded
on the basis of rule of double entry book keeping, in a chronological order.

Advantages/Objectives of journal

The main advantages and objectives of journal are as follows:
i. It helps to provide the date wise record of financial transactions.
ii. It ensures that every transaction occurred in business is recorded.
iii. Every entry is supported by narration, that explains the transaction of business.
iv. Journal is not only base, for ledger account but also for other financial records
and documents.
v. Corresponding debit and credit recording of every transaction helps to reduce
the chances of error.
vi. It can be presented as evidence for legal proof.


Office Practice and Accounting 9 109

Jounal book of................ for the month of..............

Date Particulars LF Debit (Rs.) Credit (Rs.)








Journal contains five columns which are explained below:

1. Date: It is the first column of journal. In this column, the date on which financial
transaction takes place is recorded. For e.g. 2072-01-10
2. Particulars: The second column is for recording the account to be debited and
credited. After recording the accounts to be credited and debited, narration is
given to explain the transaction recorded.
3. Ledger folio number (LF No. ): This column is for recording the page number
of the ledger, where the entries are posted. Its main objective is to build link
between journal and ledger.
4. Debit: The fourth column is to record the amount to be debited.
5. Credit: This column is to record the amount to be credited.

Rule for debit and credit

On the basis of Account classification, it is also known as traditional rule. Under this
method, accounts are classified as personal, real and nominal account and rule of
debit and credit is applied as follows:
Personal Account: All the natural and artificial persons come under personal account.

For example, Ram's A/c, Sita's A/c, Hari A/c, XYZ Co A/c, Pashupati Trader’s A/c, etc.
The rule is:
Debit the receiver | Credit the giver

Real Account: All property or assets having monetary value of the business come
under real account. For example, Cash A/c, Machinery A/c, Land and Building A/c,
Goodwill A/c, etc.
The rule is:

What comes in Debit | What goes out Credit
Nominal Account: Accounts relating to expenses, losses, income, and gains come
under nominal accounts. For example, rent A/c, salaries A/c, wages A/c, interest A/c,
discount A/c etc.

The rule is:
All expenses and losses are –Debit | All incomes and gains are - Credit



110 Office Practice and Accounting 9

On the basis of nature of transactions: This method is known as modern rule. Increase
or decrease in the value of transactions, record is maintained under this method.
Increase in Assets, Losses and Expenses – Debit

Decrease in Assets, Losses and Expenses – Credit
Increase in Capital, Income and Liabilities – Credit
Decrease in Capital, Income and Liabilities – Debit

Journal preparation and explanation of frequently occurring financial
transactions

Investment of Capital
Commenced a business with cash Rs. 80000 and computer of Rs. 20,000


Date Particulars LF Dr (Rs.) Cr (Rs.)
Cash A/c..................... Dr. 80,000
Machinery A/c Dr. 20000
To Capital A/c 100000
(Being Business started with
cash and computer )

While investing different assets in business, all assets are debited and the sum of all
assets are credited as capital.
As per the rule of real account, debit what comes in, Cash and Machinery are debited
because these assets are coming in business. And the capital account is credited
because capital being proprietor’s personal account, it is credited as per the rule of
personal account.

Interest on Capital
Provide interest on capital Rs. 3000


Date Particulars LF Dr (Rs.) Cr (Rs.)
Interest on capital A/c............Dr. 3,000
To capital A/c 3,000
(Being interest provided on
capital)


Here interest is expenses for the business firm. So, interest on capital account is
debited and interest increases the amount of capital and capital is credited.







Office Practice and Accounting 9 111

Drawing
Drawn cash by proprietor Rs. 9000 for personal expenses.


Date Particulars LF Dr (Rs.) Cr (Rs.)
Drawing A/c..................... Dr. 9,000
To Cash A/c 9000
(Being cash drawn for personal
purpose )

Drawing is withdrawal of capital. When the proprietors take the cash or kinds (goods,
assets) from business for personal use, it is drawing.

Here, drawing account is debited because it reduces the capital. Decrease in capital is
debited and cash is going out, so it is credited.
Goods of Rs 3000 taken for domestic use.


Date Particulars LF Dr (Rs.) Cr (Rs.)
Drawing A/c..................... Dr. 3,000
To purchase A/c 3000
(Being goods drawn for
personal purpose )



In this transaction drawing account is debited and purchase is credited because there
is decrease in purchased goods in business.


Interest on Drawing

Interest on drawing charged Rs 600.

Date Particulars LF Dr (Rs.) Cr (Rs.)
Drawing A/c..................... Dr. 600
To interest on drawing A/c 600
(Being interest charged on
drawing)

Here interest on drawing is income so it is credited and interest is charged on drawing
(personal account) so drawing is debited.









112 Office Practice and Accounting 9

Depositing into bank
Cash deposited in to the bank Rs 10,000.


Date Particulars LF Dr (Rs.) Cr (Rs.)
Bank A/c..................... Dr. 10,000
To Cash A/c 10000
(Being cash deposited into the bank)


Here bank being personal A/c it is debited as per the rule of personal account. On the
other hand, cash goes out and therefore, it should be credited as per real account.
Purchase and Sale of goods
Purchased goods for cash Rs 5,000.

Date Particulars LF Dr (Rs.) Cr (Rs.)
Purchase A/c..................... Dr. 5,000
To Cash A/c 5000
(Being goods purchased on cash)



Purchase means purchase of goods. So goods and cash both are related to real account
being assets. As per the rules of real A/c, 'what comes in' is to be debited and 'what
goes out' is to be credited, goods are received so debited and cash is paid so it is
credited. There is practice of writing purchase or sale instead of goods.
Sold goods for Rs 4000.

Date Particulars LF Dr (Rs.) Cr (Rs.)
Cash A/c..................... Dr. 4,000
To Sales A/c 4,000
(Being goods sold on cash)

As per the rules of real account, 'what comes in' is to be debited and 'what goes out'
is to be credited, cash is received so debited and goods are sold, so it is credited. Sales
is written instead of goods.

Purchase Return
Goods of Rs. 5000 returned to Bigyan.

Date Particulars LF Dr (Rs.) Cr (Rs.)
Bigyan A/c..................... Dr. 5,000
To purchase return A/c 5,000
(Being goods returned to Bigyan)

Office Practice and Accounting 9 113

Here Bigyan is receiver so his account is debited as per the rule of personal account
and purchase return is credited because as goods is real account, which is going
outside.

Sales Return
Goods of Rs. 5000 returned from Sanju.


Date Particulars LF Dr (Rs.) Cr (Rs.)
Sales Return A/c...........Dr. 5,000
To Sanju A/c 5,000
(Being goods returned to Sanju)

Here sales return is debited because goods is real account and it is coming inside.
Whereas Sanju is the giver so her account is credited as per the rule of personal
account.

Discount

There are two types of discount:
1. Cash discount: Cash discount is a rebate offered by seller to buyer to encourage
early payment. Cash discount is treated as income (credited) if it is received and
as expenses (debited) if allowed.
i. Received Rs. 9800 from debtor Prativa in full settlement of her account of
Rs 10,000.

Date Particulars LF Dr (Rs.) Cr (Rs.)
Cash A/c ................... Dr. 9800
Discount A/c................... Dr. 200
To Prativa A/c 10,000
(Being cash received from
Prativa in full settlement)

Here cash is debited because it is incoming, discount is debited as it is expenses and
Prativa is credited because she is the giver.

ii. Paid to Kiran Rs. 4750 on his account of Rs 5000 in full settlement.

Date Particulars LF Dr (Rs.) Cr (Rs.)
Kiran A/c................ Dr. 5000
To Cash A/c 4750
To Discount 250
(Being cash paid to Kiran in full
settlement of his account




114 Office Practice and Accounting 9

Here Kiran is receiver so his account is debited. Cash is credited because it is going
outside. Similarly discount is credited as it is income. Actually Rs. 5000 is to be paid
but only Rs. 4750 is paid so Rs. 250 discount is like income for the company.
2. Trade discount: Simply trade discount is reduction in invoice (bill) price to
encourage customers to buy bulk amount of goods. It is the net amount in
which the transactions are recorded so it is not shown in books of account.
Goods of Rs. 8000 purchased on cash from Pashupati Cheese Store at 10% trade
discount.

Date Particulars LF Dr (Rs.) Cr (Rs.)
Purchase A/c................. Dr. 7200
To Cash A/c 7200
(Being goods purchased
on cash and trade discount
received)

Here trade discount is given by seller while purchasing the goods. Though price of the
goods is Rs. 8000 the actual amount paid is Rs 7200 (i.e. 8000-8000x10%). The amount
of discount Rs. 800 is deducted from bill, so it is not shown in books of accounts.

Purchase and sale of fixed assets
Purchased furniture Rs. 12,000

Date Particulars LF Dr (Rs.) Cr (Rs.)
Furniture A/c.........................Dr. 12,000
To Cash A/c
(Being Furniture purchased for 12,000
cash )


Furniture and cash both are concerned with assets and assets are related to real A/c.
Furniture is coming in, so it is debited and cash is going out and so it is credited.

Machinery of Rs. 22000 sold.

Date Particulars LF Dr (Rs.) Cr (Rs.)
Cash A/c................................ Dr. 22,000
To Machinery A/c 22,000
(Being machinery sold for cash )

Here, machinery and cash both are assets and real account. Cash is received so it is
debited and machinery is sold and going out, so it is credited.






Office Practice and Accounting 9 115

Depreciation on fixed assets
Depreciation charged on machinery Rs. 8,000.


Date Particulars LF Dr (Rs.) Cr (Rs.)
Depreciation A/c...................Dr. 8,000
To Machinery A/c 8,000
(Being depreciation charged on
machinery)

Here depreciation is loss for organization, so it is debited and it reduces the value of
machinery (i.e. fixed assets) so machinery is credited.

Payment of expenses
Salaries for the month Rs. 15,000 paid.

Date Particulars LF Dr (Rs.) Cr (Rs.)
Salary A/c...............................Dr. 15,000
To Cash A/c 15,000
(Being salary paid )

Here salary is expense and related to nominal A/c. In nominal account, expenses are
to be debited so, salary A/c is debited and cash goes out, so cash A/c is credited being
real A/c.

Outstanding Expenses

Rent outstanding Rs. 7000.

Date Particulars LF Dr (Rs.) Cr (Rs.)
Rent A/c.............................Dr. 7000
To Outstanding Rent A/c
(Being rent outstanding) 7000

Here, rent is still to be paid and it should be added to rent expenses, so rent is debited.
Outstanding rent means increase in liabilities and it is credited.

Prepaid expenses

Salary prepaid Rs. 2,500

Date Particulars LF Dr (Rs.) Cr (Rs.)
Prepaid Salary A/c.................Dr. 2500
To Cash A/c
(Being Salary paid in advance) 2500






116 Office Practice and Accounting 9

Here, salary is paid in advance. Expenses advance is assets, so it is debited. On the
other hand, cash is going outside, so it is credited.
Income receipts

1. Commission received Rs. 600.

Date Particulars LF Dr (Rs.) Cr (Rs.)
Cash A/c................................ Dr. 600
To Commission A/c 600
(Being commission received )

Here, cash is received so, as per the rule of real account, it is debited. Similarly, as per
the rule of nominal account, commission is credited because it is income.
Bad Debt written off

Rs. 200 to be received from Kamal is written off as bad debt.

Date Particulars LF Dr (Rs.) Cr (Rs.)
Bad debt A/c...........................Dr. 200
To Kamal's A/c 200
(Being amount receivable from
Kamal written off as bad debt)

Here bad debt is debited on the basis of rule of nominal account because it is loss for
the firm. Kamal is credited to settle his account.

Goods lost in accident
Goods of Rs. 500 lost in an accident in godown.


Date Particulars LF Dr (Rs.) Cr (Rs.)
Goods lost A/c......................Dr. 500
To Purchase A/c 500
(Being goods lost in an accident)

Here according to the rule of nominal account, losses are debited and purchase
account is to be credited to reduce the value of goods.

Goods distributed as free sample
Goods of Rs. 700 distributed as free sample for market promotion.


Date Particulars LF Dr (Rs.) Cr (Rs.)
Advertisement A/c................Dr. 700
To Purchase A/c 700
(Being goods distributed as
free sample for advertisement)



Office Practice and Accounting 9 117

Here goods given as free sample refers to the expenses of business firm and should be
debited to advertisement account and purchase is credited because there is decrease
in purchased goods.

Illustrations:
1. Journalize the following transactions.
2071 Mangsir 1 Commenced a business with capital of Rs. 120000 in
cash and computer of Rs. 30,000.
2071 Mangsir 3 Sold goods to Anish Rs. 2,000.
2071 Mangsir 4 Arun, who owned Rs. 1,000 became insolvent and his
acoount written off as bad debt
2071 Mangsir 5 Received from Anish Rs. 1,800 in full settlement
2071 Mangsir 7 Goods distributed as free sample Rs. 1,000
2071 Mangsir 8 Old furniture sold for cash Rs. 1,500
2071 Mangsir 9 Purchased goods for Rs. 10,000 from Suresh and made
partial payment of Rs. 6,000 only
2071 Mangsir 10 Received Rs. 1,000 from Ram which was earlier written
off as bad debt
Solution:

Date Particulars LF Debit (Rs.) Credit (Rs.)
Mangsir 1 Cash A/c................................................Dr. 1,50,000
To Capital A/c 120000
To Machinery A/c 30,000
(Being business started with cash & computer)
Mangsir 3 Anish A/c................................................Dr. 2,000
To Sales A/c 2,000
(Being goods sold to Anish)
Mangsir 4 Cash A/c ................................................ Dr. 500
Bad debts A/c..........................................Dr. 500
To Arun A/c 1,000
(Being 50 paisa in a rupee realized from Arun and
balance written off as bad debt)
Mangsir 5 Cash A/c................................................Dr. 1,800
Discount A/c.........................................Dr. 200
To Anish A/c 2,000
(Being cash received from Anish in full settlement)
Mangsir 7 Advertisement A/c................................................Dr. 1,000
To Goods A/c 1,000
(Being goods distributed for free sample)






118 Office Practice and Accounting 9

Mangsir 8 Cash A/c................................................Dr. 1,500
To Furniture A/c 1,500
(Being old furniture sold)
Mangsir 9 Purchase A/c................................................Dr. 10,000
To Cash A/c 6,000
To Suresh A/c 4,000
(Being goods purchased from Suresh and made
partial payment)
Mangsir Cash A/c................................................Dr. 1,000
10
To Bad debt recovered A/c 1,000
(Being bad debt recovered)

2. You are given the following transactions:

i. Started business with cash Rs. 80,000
ii. Goods of Rs. 14,000 purchased
iii. Cash Rs. 25,000 deposited into bank

iv. Furniture purchased from Hari for Rs. 10,000
v. Rent paid Rs. 1800

Required: Journal entries

Date Particular LF Debit (Rs) Credit (Rs.)
i. Cash A/c …………………………Dr. 80,000
To Capital A/c 80,000
(Being business started with cash)
ii. Purchase A/c ………………………….. Dr. 14,000
To Cash A/c 14,000
(Being goods purchased on Cash)
iii. Bank A/c …………………………………Dr. 25,000

To Cash A/c 25,000
(Being cash deposited into bank)
iv. Furniture A/c ………………………………Dr. 10,000
To Hari A/c 10,000

(Being furniture purchased on credit)
v. Rent A/c ………………………………..Dr. 1800
To Cash A/c 1800
(Being rent paid)





Office Practice and Accounting 9 119

3. Following transaction are given to you:
a. Sold goods to Rojal for Rs. 75,000

b. Furniture costing Rs. 7,000 were sold for Rs. 4,000
c. Received cash Rs. 14,000 from Rojal in full settlement of his account

d. Received loan of Rs. 8,000 from the bank
Required: Journal entries.


Journal Entries

In the book of.............
Date Particular LF Debit (Rs) Credit (Rs.)
a. Rojal A/c..................................................Dr. 75,000
To Sales A/c 75,000
(Being goods sold to Rojal on credit)
b. Cash A/c .......................................................Dr. 4,000
Profit & Loss A/c (Loss on Sale)................Dr. 3000
To Furniture A/c 7,000
(Being furniture sold at loss)
c. Cash A/c .................................................Dr. 14,000
Discount A/c..........................................Dr. 1,000
To Rojal A/c 15,000
(Being receipt of cash from Rojal after adjusting
discount)
d. Cash A/c ...........................................................Dr. 8,000
To Bank’s Loan 8,000
(Being receipt of loan from bank)


4. The following transactions are given:
1 Jan. 2015 Goods purchased of Rs. 70,000

2 Jan. 2015 Goods purchased on credit from Ram of Rs. 30,000
5 Jan. 2015 Goods sold for Rs. 80,000
6 Jan. 2015 Goods withdrawn by proprietor for personal use Rs. 3,000

7 Jan. 2015 Goods destroyed by fire of Rs. 5,000 and claim admitted by
insurance company for Rs. 3,000

8 Jan. 2015, Paid to Ram Rs. 29,000 in full settlement of his A/c
Required: Journal Entries.


120 Office Practice and Accounting 9

Journal Book of

.....................................
Date Particular LF Debit (Rs) Credit (Rs.)
1/1/ 2015 Purchase A/c........................................ Dr. 70,000
To Cash A/c 70,000
(Being goods purchased for cash)
2/1/ 2015 Purchase A/c........................................ Dr. 30,000
To Ram’s A/c 30,000
(Being goods purchased from Ram on credit)
5/1/ 2015 Cash A/c ........................................ Dr. 80,000
To Sales A/c 80,000
(Being goods sold for cash)
6/1/ 2015 Drawings A/c........................................Dr. 3,000
To Purchased A/c 3,000
(Being goods withdrawn by proprietor for
personal use)
7/1/ 2015 Insurance Company’s A/c.......................... Dr. 3,000
Loss on accident A/c....................................Dr. 2,000
To Purchase A/c 5,000
(Being goods destroyed by fire and partial
claim admitted by insurance company)
8/1/2015 Ram’s A/c........................................Dr. 30,000
To Discount A/c 1,000
To Cash A/c 29,000
(Being cash paid to Ram for full settlement
of his A/c)
Total 2,18,000 2,18,000

5. Journalize the following transactions in the books of XYZ Ltd.

Asoj 1 : Panday started business with cash Rs 2,50,000
Asoj 3 : He deposited cash in to the bank Rs 10,000
Asoj 5 : Purchased goods for cash Rs 5,000
Asoj 8 : Sold goods for cash Rs 4000
Asoj 10 : Furniture purchased for Rs. 5,000 and paid through cheque

Asoj 12 : Sold goods to Bhuwan Rs 2000
Asoj 14 : Purchased goods from Dhruba Rs 1,000
Asoj 15 : Goods returned to Dhruba Rs 500

Office Practice and Accounting 9 121

Asoj 16 : Received from Bhuwan Rs 1,800 in full settlement
Asoj 18 : Withdrew goods for personal use Rs 1,000
Asoj 20 : Drawn cash from business for personal use Rs 2,000
Asoj 22 : Paid telephone charges Rs 500
Asoj 23 : Cash paid to Dhruba Rs 400 in full settlement

Asoj 25 : Paid for stationery Rs 7200, rent Rs 500 and salaries to staff Rs 1,000

Journal Book of XYZ Ltd.

Date Particulars LF Dr (Rs) Cr (Rs)
Asoj 1 Cash A/c ..............................................................Dr. 2,50,000
To Capital A/c 2,50,000
(Being business started with cash)
Asoj 3 Bank A/c..............................................................Dr.
To Cash A/c 10,000
(Being cash deposited to the bank) 10,000
Asoj 5 Purchase A/c..............................................................Dr.
To Cash A/c 5,000
(Being Purchased goods for cash) 5,000
Asoj 8 Cash A/c..............................................................Dr.
To sales A/c 4,000
(Being goods sold for cash) 4,000
Asoj 10 Furniture A/c..............................................................Dr.
To Bank A/c 5,000
(Being furniture purchased and paid by cheque) 5,000
Asoj 12 Bhuwan A/c..............................................................Dr.
To sales A/c 2,000
(Being goods sold to Bhuwan) 2,000
Asoj 14 Purchase A/c..............................................................Dr.
To Dhruba A/c 1,000
(Being Purchased goods from Dhruba) 1,000
Asoj 15 Dhruba A/c..............................................................Dr.
To Purchase return A/c 500
(Being goods returned to Dhruba) 500
Asoj 16 Cash A/c..............................................................Dr.
Discount A/c..............................................................Dr. 1,800
To Bhuwan A/c 200
(Being cash received from Bhuwan in full settlement and
allowed him Rs 200 Discount)
2,000






122 Office Practice and Accounting 9

Asoj 18 Drawing A/c..............................................................Dr.
To purchase A/c 1,000
(Being goods withdrew from Business for personal use) 1,000
Asoj 20 Drawing A/c..............................................................Dr.
To Cash A/c 2,000
(Being cash withdraw from Business for personal use) 2,000
Asoj 22 Telephone charges A/c..........................................................Dr. 500
To Cash A/c 500
(Being Telephone charge paid)
Asoj 23 Dhruba A/c..............................................................Dr. 500
To Cash A/c 400
To discount A/c 100
(Paid to Dhruba in full settlement)
Asoj 25 Stationary A/c..............................................................Dr. 7200
Rent A/c..............................................................Dr. 500
Salaries A/c..............................................................Dr. 1,000 8,700
To cash A/c
(Being expenses paid)




6. Journalize the following transactions:
Jan–1 : Started business with cash Rs. 30,000 and bank balance of Rs. 70,000
Jan–5 : Goods of Rs. 14,000 purchased through cheque

Jan–7 : Furniture purchased for Rs. 7,000
Jan–9 : Cash drawn for office use Rs. 15,000
Jan–14 : Goods costing Rs. 5,000 purchased from Manju
Jan–20 : Electricity bill paid Rs. 500
Jan–25 : A cheque of Rs. 4,900 issued to Manju in full settlement
Jan–30 : Rent paid for the month Rs. 800 through cheque

Date Particular LF Debit (Rs.) Credit (Rs.)
Jan–1 Cash A/c.......................................................Dr. 30,000
Bank A/c.......................................................Dr. 70,000
To Capital A/c 10,00,000
(Being business started with cash and bank)
Jan–5 Purchase A/c.......................................................Dr. 14,000
To Bank A/c 14,000
(Being goods purchased through cheque)



Office Practice and Accounting 9 123

Jan–7 Furniture A/c.......................................................Dr. 7,000
To Cash A/c 7,000
(Being furniture purchased on cash)
Jan–9 Cash A/c.......................................................Dr. 15,000
To Bank A/c 15,000
(Being cash drawn for office use)
Jan–14 Purchase A/c.......................................................Dr. 5,000
To Manju A/c 5,000
(Being goods purchased from Manju on credit)
Jan–20 Electricity bill A/c.....................................................Dr. 5,00
To Cash A/c 5,00
(Being electricity bill paid)
Jan–25 Manju A/c.......................................................Dr. 5,000
To Bank A/c 4,900
To Discount A/c 100
(Being cheque paid to Manju in full settlement)
Jan–30 Rent A/c ....................................................... Dr. 800
To Bank A/c 800
(Being rent paid through cheque)



7. The following transactions are given:
1 Ashadh 2072 : Goods purchased of Rs. 70,000
2 Ashadh 2072 : Goods purchased on credit from Ram of Rs. 30,000
5 Ashadh 2072 : Goods sold for Rs. 80,000
6 Ashadh 2072 : Goods withdrawn by proprietor for personal use Rs. 3,000
7 Ashadh 2072 : Goods destroyed by fire of Rs. 5,000 and claim admitted by
insurance company for Rs. 3,000
Required: Journal entries

Journal entries
Date Particular LF Debit (Rs) Credit (Rs.)
1–3–2072 Purchase A/c....................................Dr. 70,000
To Cash A/c 70,000
(Being goods purchased)
2–3–2072 Purchase A/c.................................... Dr. 30,000
To Ram A/c 30,000
(Being goods purchased from Ram)
5–3–2072 Cash A/c.................................... Dr. 80,000
To Sales A/c 80,000
(Being goods sold on cash)
6–3–2072 Drawing A/c.................................... Dr. 3,000
To Purchase A/c 3,000
(Being goods drawn for personal use)
7–-3–2072 Goods lost A/c.................................... Dr. 2,000
Insurance Co. A/c............................... Dr. 3,000
To Purchase A/c 5,000
(Being goods lost and insurance claimed)


124 Office Practice and Accounting 9

8. You are given following transactions.
Baishakh – 1 Started business with cash Rs. 90,000 and goods of Rs. 10,000
Baishakh – 2 Cash Rs. 60,000 deposited into bank
Baishakh – 4 Goods of Rs. 4,000 purchased from Rama

Baishakh – 5 Furniture sold to Uma for Rs. 2,000
Baishakh – 10 Cash drawn for domestic use Rs. 10,000
Baishakh – 12 Goods of Rs. 2500 sold to Sujan receiving cash Rs. 1,000 partial
receipt
Baishakh – 15 A cheque of Rs. 3,900 issued to Rama in full settlement
Baishakh – 16 Rs. 1,000 was paid for proprietor's life insurance premium

Baishakh – 20 Cash received from Uma
Baishakh – 25 Ganga who owns Rs. 10,000 declared insolvent and her account
is choosed
Baishakh – 28 Goods of Rs. 5,000 lost by accident out of which Rs. 3,000 claim
is admitted by insurance company
Baishakh – 30 Salary Rs. 200 due for the month
Required: Journal entries


Date Particular LF Debit (Rs) Credit (Rs.)
1–1 Cash A/c..........................................Dr. 90,000
Goods A/c..........................................Dr. 10,000
To Capital A/c 1,00,000
(Being business started with cash and goods)
1–2 Bank A/c..........................................Dr. 60,000
To Cash A/c 60,000
(Being cash deposited into Bank)
1–4 Purchase A/c..........................................Dr. 4,000
To Rama A/c 4,000
(Being goods purchased from Rama)
1–5 Uma A/c..........................................Dr. 2,000
To Furniture A/c 2,000
(Being furniture sold to Uma on credit)
1–10 Drawing A/c..........................................Dr. 10,000
To Cash A/c 10,000
(Being cash drawn for domestic use)
1–12 Sujan A/c..........................................Dr. 1,500
Cash A/c..........................................Dr. 1,000
To Sales A/c 2,500
(Being goods sold & partial payment received)



Office Practice and Accounting 9 125

1–15 Rama A/c..........................................Dr. 4,000
To Bank A/c 3,900
To Discount A/c 100
(Being cheque paid to Rama in full settlement)
1–16 Drawing A/c..........................................Dr. 1,000
To Cash A/c 1,000
(Being proprietor's life insurance paid)
1–20 Cash A/c..........................................Dr. 2,000
To Uma A/c 2,000
(Being cash received from Uma)
1–25 Bad debt A/c..........................................Dr. 10,000
To Ganga A/c 10,000
(Being account of Ganga written off)
1–28 Goods lost A/c.................................... Dr. 2,000
Insurance Co. A/c............................... Dr. 3,000
To Purchase A/c 5,000
(Being goods lost and insurance claimed)
1–30 Salary A/c..........................................Dr. 200
To Salary outstanding A/c 200
(Being salary due)

9. You are provided following information to prepare the journal entries.
Jan–1 Goods of Rs. 2,000 returned to Binita
Jan–5 Furniture costing Rs. 500 sold to Ram
Jan–7 Goods costing Rs. 1,200 returned by Hari
Jan–9 Machinery costing Rs. 20,000 purchased from Dinesh paying cash Rs.
9,000, issuing cheque of Rs. 1,000 and balance on credit
Jan–10 Purchased goods of Rs. 6,000 for cash and received 10% trade discount
Jan–15 A debt of Rs. 500 previously by written off as bad debt recovered now
Jan–20 Provide depreciation 10% on machinery
Jan–21 Provide 10% interest on capital of Rs. 75,000
Jan–25 Interest on drawing Rs. 1,000
Jan–30 Salary due Rs. 2,000

Journal entries

Date Particular LF Debit (Rs) Credit (Rs.)
Jan–1 Binita A/c...............................Dr. 2,000
To Return outward A/c 2,000
(Being goods returned to Binita)
Jan–5 Ram A/c...............................Dr. 500
To Furniture A/c 500
(Being furniture sold to Ram on credit)
Jan–7 Returned inward A/c.....................Dr. 1,200
To Hari A/c 1,200
(Being goods returned by Hari)



126 Office Practice and Accounting 9

Jan–9 Machinery A/c...............................Dr. 20,000
To Cash A/c 9,000
To Bank A/c 1,000
To Dinesh A/c 10,000
(Being machinery purchased from Dinesh making
partial payment.)
Jan–10 Purchase A/c...............................Dr. 5,400*
To Cash A/c 5,400
(Being goods purchased at 10% trade discount
Jan–15 Cash A/c...............................Dr. 500
To Bad Debt A/c 500
(Being bad debt recovered.)
Jan–20 Depreciation A/c..........................Dr. 2,000
To Machinery A/c 2,000
(Being depreciation on machinery charged)
Jan–21 Interest on capital A/c....................Dr. 7,500
To Capital A/c 7,500
(Being interest on capital charged)
Jan–25 Drawing A/c...............................Dr. 1,000
To Interest on Drawing A/c 1,000
(Being interest on Drawing A/c)
Jan–30 Salary A/c...............................Dr. 2000
To Salary outstanding A/c 2000
(Being salary outstanding)


* Rs. 6000 – [6000 × 10/100] = 5400. Trade discount Rs. 600 is not shown in books of account.
EXERCISE


1. Prepare journal entries from the following transactions.

i. Commenced business with cash Rs 1,00,000 and goods Rs. 10,000
ii. Purchased goods for cash Rs. 10,000 and credit Rs. 5,000

iii. Sold goods for cash Rs. 3,000 and credit Rs. 5,000
iv. Paid salaries Rs. 1000 to Dilip
v. Wages outstanding Rs. 500

vi. Goods taken by the owner for personal use Rs. 1,000
vii. Paid to creditors Rs. 3,000
viii. Machinery costing Rs. 20,000 purchased from Kamal




Office Practice and Accounting 9 127

2. You are required to prepare journal entries on the basis of the following
transactions:
a. Started business with cash Rs. 50,000
b. Purchased goods from Dhruba Rs. 10,000

c. Bought refrigerator for personal use Rs 4,000
d. Purchased securities for cash Rs. 4,000

e. Dividend received on securities Rs. 1,000
f. Loan received from Citizens Bank Rs. 10,000
g. Partial repayment of Citizens Bank's loans Rs. 6,000

h. Interest paid on loan Rs 1,000
3. Journalize the following transactions.

Ashadh 1 Business commenced with cash Rs. 1,50,000 and computer Rs. 20,000
Ashadh 2 Opened a bank account with Rs. 90,000

Ashadh 5 Purchased Furniture for cash Rs. 10,000 and on credit Rs. 3,000
Ashadh 6 Furniture costing Rs. 1,000 sold for Rs. 1,500.
Ashadh 10 Cash withdrawn from bank for personal use Rs. 800 for office use
Rs. 3500
Ashadh 15 Paid to Sushil Rs. 7900 by cheque in full settlement of his account of
Rs. 8,000

4. Journalize the following transactions for the month of December.
Dec. 2 Commenced business with cash Rs. 85,000 and furniture Rs. 18000
Dec. 5 Bought goods on credit from Suman Rs. 11000

Dec. 6 Sold goods for cash to Dhiraj Rs. 500
Dec. 8 Purchased furniture for Rs. 1500

Dec. 11 Cash paid to Suman Rs. 10500 and discount allowed by him Rs. 500
Dec. 11 Paid insurance premium of proprietor Rs. 1000
Dec. 12 Commission paid Rs. 2000

Dec. 17 Rent due to landlord Rs 500
Dec. 19 Purchased goods from SK Traders Rs 17000 at 15% trade discount
Dec. 20 Cash deposited into Everest Bank Rs. 3000

Dec. 22 Paid interest by cheque Rs. 670
Dec. 25 Loan taken from Sita Ram Rs. 7000


128 Office Practice and Accounting 9

Dec. 27 Debts Rs. 400 to be received from Sagun written as bad debt
Dec. 30 Goods worth of Rs. 1500 donated

5. Journalize the following transactions:

Jestha 1 Business commenced with cash Rs. 5,00,000 and stock Rs. 70,000
Jestha 5 Purchased goods worth Rs. 10,000 from Sonu
Jestha 7 Goods sold to Kabita for Rs. 10,000

Jestha 9 Paid to Sonu Rs. 9800 in full settlement of her account
Jestha 11 Received Rs. 9900 from Kabita in full settlement
Jestha 15 Paid wages Rs. 500 and salaries Rs. 1000

Jestha 16 Goods worth Rs.1,700 damaged in an accident. Insurance company
admitted claim for Rs.1, 700 only

Jestha 19 Sold goods for cash Rs. 3,000 and credit Rs. 5,000
Jestha 20 Paid interest on loan Rs. 700
Jestha 23 Samjhana who owns Rs. 10,000 declared insolvent and her account
is closed

6. Enter the following transactions in the Journal Book for the month of
Falgun, 2072.
Falgun 1 Business started with bank balance Rs 60,000
Falgun 2 Purchased goods worth Rs 4000 for cash less 10% trade discount

Falgun 4 Goods withdrawn by proprietor for personal use Rs. 3,000
Falgun 7 Rent paid Rs. 4,000 including advance of Rs. 1,000
Falgun 9 Furniture bought from Prativa for Rs 8,000 and paid Rs 1500 for
carriage
Falgun11 Interest on investment received Rs 1200

Falgun18 Abhisek debtor of Rs 1000 became insolvent and account has been
closed

Falgun27 Rs. 1000 paid as owner's life insurance premium
Falgun 28 A debt of Rs. 500 previously by written off as bad debt recovered
now
Falgun 29 Provide 10% interest on capital of Rs. 20,000








Office Practice and Accounting 9 129

7. Give the journal entries for the following transactions of ABC Company
Limited for the month of January:
Jan 1 Started business with capital of Rs. 1,00,000
Jan 2 Cash deposited into bank Rs. 75,000

Jan 5 Furniture purchased on cash Rs. 15,000
Jan 8 Rent paid Rs. 4,000 including advance of Rs. 1,000

Jan 9 Cash drawn for domestic use Rs. 5,000
Jan 11 Cash drawn for office use Rs. 6,000
Jan 15 Goods of Rs 1,000 sold to Ram for Rs. 800

Jan 19 Interest received Rs. 2,000
Jan 24 Machinery of Rs. 15000 purchased from Dipak
Jan 25 Purchased goods from Pashupati Tradings for Rs 12000 at 5%
trade discount
Jan 26 Cheque issued to Dipak Rs. 14800 in full settlement

Jan 27 Paid commission by cheque Rs. 1200
Jan 28 Paid to Pashupati Traders at 10% discount
8. The following transactions are relating to a business office.

Baishakh – 1 Business started with cash Rs. 5,50,000 and bank balance of Rs.
50,000
Baishakh – 5 Deposited Rs 45000 into bank
Baishakh – 8 Goods of Rs. 12000 purchased from Nima
Baishakh – 11 Paid Rs. 22000 to creditor through cheque
Baishakh – 16 Goods withdrawn by proprietor for personal use Rs. 8,500
Baishakh – 17 Goods of Rs. 9000 sold to Kiran receiving cash Rs. 1,000 as
partial receipt
Baishakh – 21 Cash drawn for office use Rs. 5,000
Baishakh – 23 Goods purchased for Rs. 3,000 and paid through cheque
Baishakh – 24 Paid to Nima Rs. 11000 in full settlement
Baishakh – 26 Furniture purchased from Sanju for Rs. 3,500
Baishakh – 27 Goods costing Rs. 1,500 sold at profit of Rs. 500

Baishakh – 29 Telephone bill paid through cheque Rs. 700
Baishakh – 31 Received Rs. 7900 from Kiran in full settlement of his account
Required: Journal entries





130 Office Practice and Accounting 9

9. Journalize the following transactions in the books of Aryan & Co. for
the month of Ashwin, 2072.
Ashwin 6 Business started with capital of Rs. 85,000

Ashwin 7 Out of Rs. 2,000 only Rs. 1,500 paid for salary
Ashwin 12 Rent paid Rs. 1,300 (Rs. 1,000 for current month)
Ashwin 14 Opened bank account with Rs. 25,000

Ashwin 15 Cheque of Rs. 1,000 issued for electricity bill
Ashwin 18 Goods of Rs. 500 distributed free for example

10. The following transactions are given to you:
1, Ashadh 2072 Goods purchased of Rs. 70,000

7, Ashadh 2072 Goods purchased on credit from Ram of Rs. 30,000
11, Ashadh 2072 Goods sold for Rs. 80,000
16, Ashadh 2072 Goods withdrawn by proprietor for personal use Rs. 3,000

22, Ashadh 2072 Goods destroyed by fire of Rs. 5,000 and claim admitted by
insurance company for Rs. 3,000

28, Ashadh 2072 Paid to Ram Rs. 29,000 in full settlement of his A/c
Required: Journal Entries

11. Journalize the following transactions for the month of January.
Jan–1 Started business with cash Rs. 30,000 and bank balance of Rs.
70,000
Jan–5 Goods of Rs. 14,000 purchased through cheque

Jan–7 Furniture purchased for Rs. 7,000
Jan–9 Cash drawn for office use Rs. 15,000
Jan–14 Goods costing Rs. 5,000 purchased from Bimala

Jan–20 Electricity bill paid Rs. 500
Jan–25 A cheque of Rs. 4,900 issued to Bimala in full settlement
Jan–30 Rent paid for the month Rs. 800 through cheque

12. The following transactions belong to a trading house:

a. Started business with Rs. 1,75,000
b. Purchased furniture for Rs. 1,500
c. Purchased goods from Parajuli Concerns for Rs. 12,000



Office Practice and Accounting 9 131

d. Purchased goods for Rs. 7,000
e. Sold goods for Rs. 4,000

f. Sold goods to Kirtee Enterprises for Rs. 3,000
g. Paid rent Rs. 3,000

Required: Journal Entries
13. You are given following transactions.

Shrawan – 1 Started business with cash Rs. 4,50,000 and goods of Rs.
80,000
Shrawan – 2 Cash Rs. 1,20,000 deposited into bank

Shrawan – 4 Goods of Rs. 25,000 purchased from Rama
Shrawan – 5 Furniture sold to Uma for Rs. 23,000
Shrawan – 10 Cash drawn for domestic use Rs. 10,000
Shrawan – 12 Goods of Rs. 25000 sold to Sujan receiving cash Rs. 13,000
partial receipt
Shrawan – 15 A cheque of Rs. 23,900 issued to Rama in full settlement
Shrawan – 16 Rs. 2500 was paid for proprietor’s life insurance premium

Shrawan – 20 Cash received from Uma
Shrawan – 25 Ganga who owns Rs. 15,000 declared insolvent and her
account is closed

Shrawan – 28 Goods of Rs. 3,000 lost by accident out of which Rs. 2,000
claim is admitted by insurance company
Shrawan – 30 Salary Rs. 200 due for the month

Required: Journal entries
14. Journalize the following transactions in the books of Barbote Cheese
Factory for the month of January, 2014.

Jan–1 Business commenced with cash Rs. 1,20,000, furniture of Rs.
30,000 and machinery of Rs.22,500

Jan–5 Opened a bank account with Rs. 75,000
Jan–7 Sold Cheese to Fikkal Dairy for Rs.20,000
Jan–9 Machinery costing Rs. 25,000 purchased from Pampha, paying
cash Rs. 7,000, issuing cheque of Rs. 8,000 and balance on credit
Jan 10 Purchased goods of Rs. 25000 from XYZ Traders

Jan–12 Purchased goods of Rs. 6,000 for cash and received 10% trade
discount



132 Office Practice and Accounting 9

Jan–15 A debt of Rs. 500 previously written off as bad debt recoverd now
Jan–20 Provide 5% interest on capital

Jan–20 Received a cheque of Rs. 19800 from Fikkal Dairy in full settlement
Jan–20 Paid cash to Pampha Rs.10000

Jan–20 Salary due Rs. 2,000
Jan–20 Paid to XYZ Traders

15. Journalize the following transactions in the books of XYZ and ltd.
Jan. 1 Commenced business with

Cash Rs. 2,00,000
Goods Rs. 50,000
Machinery Rs. 75000

Jan. 2 Goods purchased for Rs. 10,000 from Ram
Jan. 5 Machinery of Rs. 9000 purchased
Jan. 8 Goods of Rs. 2000 sold to Dilip

Jan. 10 Paid commission Rs. 700
Jan. 12 Paid to Ram Rs. 9500 in full settlement
Jan. 15 Deposited into bank Rs. 1,50,000

Jan. 18 Drawn cash:
for domestic purpose Rs. 7000
for office use Rs. 12000

Jan. 20 Cash purchased Rs. 15000
Jan. 22 Cash sales Rs. 16000
Jan. 25 Rent paid Rs. 12000 through cheque

Jan. 27 Interest received Rs. 800
Jan. 28 Salary paid for the month Rs. 15000

Jan. 30 Received a cheque of Rs. 1850 from Dilip for full settlement
16. Record the following transactions in the books of Kavre Juice factory
for the month of Baishakh.

Baishakh 1 Business started with cash Rs. 7,50,000, bank balance Rs. 15,00,000
Baishakh 2 Deposited into bank Rs. 5,00,000
Baishakh 5 Goods for Rs. 35,000 purchased


Office Practice and Accounting 9 133

Baishakh 6 Machinery purchased through cheque no. 00259 for Rs. 4,50,000
Baishakh 7 Paid to creditors Rs. 35,000

Baishakh 12 Received sales commission Rs. 1500
Baishakh 14 Goods of Rs. 13000 sold to Pemba

Baishakh 15 Paid salary to Binita Rs. 2000
Baishakh 18 Goods of Rs. 1000 returned by Pemba
Baishakh 23 Cash sales Rs. 10,000 at 10% trade discount

Baishakh 25 Received from debtors Rs. 5,000
Baishakh 28 A cheque of Rs. 11,700 received from Pemba and settled the
account
Baishakh 29 Geeta a creditor of Rs. 15,000, allowed discount Rs. 200 while
paying the amount
Baishakh 30 Rent paid Rs. 7000 to landlord Pushpa

17. Following are the transaction of Barbote Furniture Factory.
a. Started business with Rs. 40,000

b. Sold goods of Rs. 2000
c. Purchased goods of Rs. 3000
d. Insurance premium of proprietor Rs. 800

e. Paid to ABC Rs. 2000 on behalf of Sanju
f. Goods of Rs. 5000 sold at 10% trade discount
g. Interest on capital Rs. 1000 provided

Required: Journal entries

18. Pashupati Cheese Factory, Chitwan has the following transactions for
the month of Jestha.

Jeshta 1 Invested Rs. 5,00,000 cash to start the business
Jeshta 2 Loan taken from Suryodaya Shahakari Rs. 2,00,000
Jeshta 4 Deposited into Fikkal development bank Rs. 3,00,000
Jeshta 6 Furniture of Rs. 12,000 purchased from Barbote Furniture
Jeshta 7 Goods of Rs. 9000 sold to Parajuli Traders
Jeshta 10 Purchased on cash Rs. 20,000
Jeshta 15 Cash drawn from bank
for personal use Rs. 3000
for office use Rs. 9000



134 Office Practice and Accounting 9

Jeshta 18 Issued cheque of Rs. 11,800 to settle the account of Barbote Furniture
Jeshta 20 Received cash Rs. 8500 after discount, from Parajuli Traders
Jeshta 25 Paid the following expenses:
Rent Rs. 7000
Interest Rs. 1000
Commission Rs. 500

Telephone Rs. 700
Jeshta 28 Goods worth of Rs. 3500 destroyed and insurance company admitted
the claim of Rs. 3200
Jeshta 29 Goods of Rs. 500 distributed for business promotion
Jeshta 30 Salary for the month paid in cash Rs. 4000 and through cheque Rs.
4500

19. You are given the following transactions:
072 Ashoj 1 Started business with Rs. 75000
072 Ashoj 2 Opened a bank account with Rs. 40,000
072 Ashoj 4 Stationery bought Rs. 2000
072 Ashoj 5 Machinery purchased for Rs. 7000

072 Ashoj 6 Goods of Rs. 8000 purchased from ABC Company
072 Ashoj 8 Cash purchased for Rs. 4000
072 Ashoj 9 Sold goods for 5000 and allowed discount 10%
072 Ashoj 15 Paid salary Rs. 12000
072 Ashoj 17 Fire insurance paid Rs. 3000
072 Ashoj 19 Personal expenses of proprietor paid Rs. 1500
072 Ashoj 25 Paid to ABC Company Rs. 8200 in full settlement
072 Ashoj 28 Rent Rs. 4000 paid
072 Ashoj 30 Cash sales Rs. 2500

Required: Journal entries

20. Journalize the following transaction in the books of Sanju and Brothers
for the month of January, 2015.

Jan. 1 Initiated business with Rs. 1,75,000, computer of Rs. 25000 and bank
balance of Rs. 1,00,000
Jan. 2 Goods of Rs. 50,000 purchased from Geeta Traders
Jan. 5 Purchased furniture from Bigyan furniture for Rs. 8000

Jan. 7 Cash sales Rs.11.000; credited sales to Sanat Enterprises for Rs. 9,000
Jan. 8 Rent paid Rs. 4000 including advance of Rs. 1500

Office Practice and Accounting 9 135

Jan. 10 Goods of Rs. 3500 sold at Rs. 4,000
Jan. 12 Paid to Geeta Traders in cash Rs. 40,000 and with cheque of Rs. 9,900
Jan. 15 Interest on loan Rs. 2000 is paid
Jan. 18 Interest on investment Rs. 2500 deposited into bank
Jan. 20 Issued a cheque of Rs. 7,800 in favourer of Bigyan Furniture
Jan. 25 Received cash from Sanat Enterprises

Jan. 28 Salary paid to Kiran Rs. 5,000 out of total salary of Rs. 6000
Jan. 30 Cash drawn for office use Rs. 25,000
21. Mr. Ramesh started business on 1st January 2015 and made the
following transactions in the first month.
Jan. 1 Invested Rs. 80,000 in business
Jan. 2 Bought goods from Pemba for Rs. 16,000
Jan. 6 Purchased goods from Raju for Rs. 8,000
Jan. 8 Sold goods to Manish Rs. 4,000
Jan. 10 Sold goods for Rs. 9,600
Jan. 12 Machinery purchased from Green Trading for Rs. 15,000
Jan. 15 Drawn for personal use Rs. 1000
Jan. 18 Paid to Raju Rs. 7,900 in full settlement
Jan. 20 Received cheque from Manish
Required: Journal entries for above transactions

22. The following transactions occured to Sujan during the first month of
the operation of business.
Ahoj 1 Commenced with cash Rs. 1,50,000

Ashoj 2 Purchased an asset of Rs. 60,000
Ashoj 3 Purchased machinery of Rs. 25,000

Ashoj 4 Purchased goods on credit Rs. 1,00,000
Ashoj 5 Sale of goods for cash Rs. 80,000
Ashoj 6 Paid salary Rs. 20,000

Ashoj 14 Received Rs. 40,000 from customers
Ashoj 20 Borrowed loan from Nabil Bank Rs. 30,000
Ashoj 25 Drawn Rs. 2000 for domestic and Rs. 5000 for office use

Ashoj 30 Paid for newspaper Rs. 700
Ashoj 30 Paid Rs. 5000 for rent by cheque






136 Office Practice and Accounting 9

UNIT
10 Ledger





























Learning objectives:


After the completion of this unit, students will be able
to understand:
• meaning and the features of ledger.
• objectives and importance of ledger.
• format and preparation of ledger.




























Office Practice and Accounting 9 137

10 Ledger















The book in which accounts are maintained is called ledger. All transactions relating
to that account are recorded chronologically. It is the second step of Double Entry
Book-Keeping System in which transactions are recorded accounting head wise in
chronological order from journal. It is also called secondary entry. From journal each
transaction is posted to at least two concerned accounts - debit side of one account
and credit side of another account. In ledger, separate account is opened for each and
every accounting transaction as Cash A/c, Ram A/c, Rent A/c, etc.

A general ledger is a company's main accounting record. It is a complete record
of financial transactions over the life of a company. The ledger holds an account
information that is needed to prepare financial statements, and includes accounts for
assets, liabilities, owners' equity, revenues and expenses.
A general ledger is typically used by business that employs the double-entry
bookkeeping method - where each financial transaction is posted twice, as both a
debit and a credit, and where each account has two columns. Because a debit in one
account is offset by a credit in a different account, the sum of all debits will be equal
to the sum of all credits.

According to L.C. Croper– "The book which contains a classified and
permanent record of all the transactions of a business is called ledger."


So a ledger is a book of account: in which all types of accounts relating to assets,
liabilities, capital, expenses and revenues are maintained. It is a complete set of
accounts of a business enterprise.

Format of ledger

Ledger account which contains eight columns is divided into two equal parts. The first
four columns of left hand side represent the debit side and the other four columns of
right hand side represent the credit side. The format of ledger account is presented
below:






138 Office Practice and Accounting 9

Dr Name of Account Cr

Date Particulars JF Amount Date Particulars JF Amount





Explanation of the above columns is given below:
i. Date: Respective date of transactions is recorded in this column.
ii. Particular: In debit side, a detail of debit transactions is recorded whereas in
credit side details of credit transaction is recorded.
iii. J. F. (Journal folio): In this column, the page number of journal or subsidiary
book from where transaction is taken is to be written.
iv. Amount: The amount of respective transaction is recorded in this column.

Features of ledger
i. Ledger is an account book that contains various accounts to which various
business transactions of a business enterprise are posted.
ii. It is a book of final entry because the transactions that are first entered in the
journal or special purpose books, are finally posted in the ledger. It is also called
the Principal Book of Accounts.
iii. In the ledger all types of accounts relating to assets, liabilities, capital, revenue
and expenses are maintained.
iv. It is a permanent record of business transactions classified into relevant
accounts.
v. It is the reference book of accounting system which is used to classify and
summarize transactions to facilitate the preparation of financial statements.
Importance of ledger

Ledger is an important book of Account. It contains all the accounts in which
all the business transactions of a business enterprise are classified. At the end of
the accounting period, each account will contain the entire information of all the
transactions relating to it. Following are the advantages of ledger.
l. Knowledge of business results: Ledger provides detailed information about
revenues and expenses at one place. While finding out business results the
revenue and expenses are matched with each other.
2. Knowledge of book value of assets: Ledger records every asset separately.
Hence, the information about the Book value of any asset can be obtained
whenever needed.
3. Useful for management: The information given in different ledger accounts
will help the management in preparing budgets. It also helps the management
in keeping to check on the performance of business it is managing.


Office Practice and Accounting 9 139

4. Knowledge of financial position: Ledger provides information about assets
and liabilities of the business. From this we can judge the financial position and
health of the business.
5. Instant information: The business always needs to know what it owes to others
and what the others owe to it. The ledger accounts provide this information at
a glance through the account receivables and payables.




Illustrations:

1. Pass the journal entries of the following transactions for the month of
Ashadh and post them into necessary ledgers.

Ashadh 1 Started business with cash Rs. 30,000
Ashadh 3 Cash purchased Rs. 2,000
Ashadh 5 Cash sales Rs. 1,000
Ashadh 7 Purchased furniture Rs 2,000
Ashadh 9 Paid rent Rs. 2,000
Ashadh 11 Cash deposited in to the bank Rs. 6800
Ashadh 12 Goods withdrawn from business for personal use Rs. 1,000
Ashadh 15 Withdrawn from bank Rs. 500 for personal use
Ashadh 16 Purchased goods from Dev Rs. 1,000
Ashadh 18 Goods sold to Amir Rs. 500
Ashadh 21 Rent paid by cheque Rs. 2,000

Solution:

Date Particulars LF Dr (Rs) Cr (Rs)
Ashadh 1 Cash A/c.......................................................................Dr 30,000
To Capital A/c 30,000
(Being business started with cash)
Ashadh Purchase A/c.......................................................................Dr 2,000
3
To Cash A/c 2,000
(Being Purchased goods for cash)
Ashadh Cash A/c.......................................................................Dr 1,000
5
To sales A/c
(Being goods sold for cash) 1,000








140 Office Practice and Accounting 9

Ashadh 7 Furniture A/c................................................................Dr 2,000
To Cash A/c
(Being Purchased furniture ) 2,000
Ashadh 9 Rent A/c ....................................................................... Dr 2,000
To cash A/c
(Being paid rent ) 2,000
Ashadh 11 Bank A/c.......................................................................Dr 6800
To Cash A/c
(Being Cash deposited in to the Bank ) 6800
Ashadh 12 Drawing A/c Dr 1,000
To Purchase A/c
(Being goods withdrawal for private use ) 1,000
Ashadh 15 Drawing A/c...................................................................Dr 500
To Bank A/c 500
(Being withdrew from bank for personal use)
Ashadh 16 Purchase A/c...................................................................Dr 1,000
To Dev A/c 1,000
(Being goods purchased from Dev)
Ashadh 18 Amir A/c.......................................................................Dr 500

To Sales A/c 500
(Being goods sold to Amir )
Ashadh 21 Rent A/c.......................................................................Dr 2000
To Bank A/c 2000

(Being Rent paid by Cheque )

Dr Cash A/c Cr

Date Particulars JF Amount Date Particulars JF Amount
Ashadh 1 To Capital A/c 30,000 Ashadh 3 By Purchase A/c 2000
Ashadh 5 To Sales A/c 1000 Ashadh 7 By Furniture A/c 2000
Ashadh 9 By Rent A/c 2000
Ashadh 11 By Bank A/c 6,800
Ashadh 31 By Balance c/d 18,200
31,000 31,000
Shrawan To Balance b/d 18,200
1





Office Practice and Accounting 9 141

Dr Capital A/c Cr
Date Particulars JF Amount Date Particulars JF Amount
Ash.31 To Balance c/d 30,000 Ash.1 By Cash A/c 30,000
30,000 30,000
Shrawan 1 By Balance b/d 30,000


Dr Purchase A/c Cr

Date Particulars JF Amount Date Particulars JF Amount
Ash.3 To Cash A/c 2,000 Ash.12 By Drawing A/c 1,000
Ash.16 To Dev A/c 1,000 Ash.31 By Balance c/d 2,000
3,000 3,000

Shrawan. 1 To Balance b/d 2,000


Dr Sales A/c Cr
Date Particulars JF Amount Date Particulars JF Amount
Ash. 31 To Balance c/d 1,500 Ash.5 By Cash A/c 1,000
Ash.18 By Amir A/c 500
1,500 1,500
Shrawan 1 By Balance b/d 1,500



Dr Furniture A/c Cr
Date Particulars JF Amount Date Particulars JF Amount
Ash.,7 To Cash A/c 2,000 Ash.. 31 By Balance c/d 2,000
2,000 2,000
Shrawan. 1 To Balance b/d 2,000



Dr Bank A/c Cr

Date Particulars JF Amount Date Particulars JF Amount
Ash. 11 To Cash A/c 6,800 Ash. 15 By Drawing A/c 500
Ash. 21 By Rent A/c 2,000
Ash. 31 By Balance c/d 4,300
6,800 6,800
Shrawan.1 To Balance b/d 4,300





142 Office Practice and Accounting 9

Dr Rent A/c Cr
Date Particulars JF Amount Date Particulars JF Amount
Ash. 9 To Cash A/c 2,000 Ash.. 31 By Balance c/d 2,000


2,000 2,000
Shrawan 1 To Balance b/d 2,000



Dr Drawing A/c Cr

Date Particulars JF Amount Date Particulars JF Amount
Ash 12 To Purchases A/c 1,000 Ash.. 31 By Balance c/d 1,500

Ash. 15 To Bank A/c 500
1,500 1,500
Shrawan 1 To Balance b/d 1,500


Dr Dev A/c Cr

Date Particulars JF Amount Date Particulars JF Amount
Ash. 31 To Balance c/d 1,000 Ash.. 16 By Purchase A/c 1,000
1,000 1,000
Shrawan 1 By balance b/d. 1,000



Dr Amir A/c Cr
Date Particulars JF Amount Date Particulars JF Amount
Ash. 18 To sales A/c 500 Ash.. 31 By Balance C/d 500
500 500
Shrawan 1 To Balance b/d 500


Dr Rent A/c Cr
Date Particulars JF Amount Date Particulars JF Amount
Ash. 9 To Bank A/c 2,000 Ash.. 31 By Balance C/d 2,000
2,000 2,000
Shrawan To Balance b/d 2,000
1








Office Practice and Accounting 9 143

2. Post the following transactions into:
a. Capital Account
b. Rent Account
c. Furniture Account and
d. Sarad Trading Concern Account
i. Started business with Rs. 25,000
ii. Purchased furniture for Rs. 1,300.
iii. Purchased goods from Sharda for Rs. 5,000
iv. Purchased goods for Rs. 7,000
v. Sold goods for Rs. 4,000
vi. Sold goods to Sarad Trade Concern for Rs. 6,500
vii. Paid rent Rs. 1300
Solution:

Dr Capital Account Cr

Date Particular JF Amount Date Particular JF Amount
To Balance c/d 25,000 i. By Cash A/c 25,000
25,000 25,000
By Balance b/d 25,000
Dr Rent Account Cr

Date Particular JF Amount Date Particular JF Amount
To Cash A/c 1,300 By Balance c/d 1,300
ii. 1,300 1,300
To Balance b/d 1,300
Dr Cash Account Cr

Date Particular JF Amount Date Particular JF Amount
i. To Capital A/c 25,000 ii. By Furniture A/c 1300
v. To Sales 4,000 iv. By Purchase A/c 7,000
vii. By Rent A/c 1300

By Balance c/d 19,400
29,000 29,000
To Balance b/d 19,400
Dr Sarad Trading Concern’s Account Cr

Date Particular JF Amount Date Particular JF Amount
vi. To Sales A/c 6,500 By Balance c/d 6,500
6,500 6,500
To Balance b/d 6,500




144 Office Practice and Accounting 9

3. You are given the following transactions:
a. B.B. Shrestha commenced a business with capital Rs. 10,000

b. Received cash from Kumar Rs. 500
c. Rent due to the owner Rs. 150

Required: Ledger accounts of above transactions
Solution:

Dr Cash Account Cr

Date Particular JF Amount Date Particular JF Amount
a. To Capital A/c 10,000 By Balance c/d 10,500
b. To Kumar A/c 500
10,500 10,500
To Balance b/d 10,500
Dr Rent Account Cr

Date Particular JF Amount Date Particular JF Amount
c. To Rent due A/c 150 By Balance c/d 150
150 150
To Balance b/d 150
Dr Capital Account Cr

Date Particular JF Amount Date Particular JF Amount
To Balance c/d 10,000 c. By Cash A/c 10,000


To Balance b/d 10,000
Dr Outstanding Rent Account Cr

Date Particular JF Amount Date Particular JF Amount
To Balance c/d 150 c. By Rent A/c 150

By Balance b/d 150
Dr Kumar’s Account Cr

Date Particular JF Amount Date Particular JF Amount
To Balance c/d 500 b. By Cash A/c 500


By Balance b/d 500





Office Practice and Accounting 9 145

Problems


1. You are given the following transactions:
i. Started business with cash Rs. 50,000
ii. Goods of Rs. 4,000 purchased

iii. Cash Rs. 25,000 deposited into bank
iv. Furniture purchased from Hari for Rs. 10,000

v. Rent paid Rs. 2,000
Required: i) Journal entries ii) Cash Account

2 Journalize the following transactions and also post them into Bank
and purchase ledger.

Jan–1 : Started business with cash Rs. 30,000 and bank balance of Rs.
70,000
Jan–5 : Goods of Rs. 14,000 purchased through cheque
Jan–7 : Furniture purchased for Rs. 7,000

Jan–9 : Cash drawn for office use Rs. 15,000
Jan–14 : Goods costing Rs. 5,000 purchased from Manju
Jan–20 : Electricity bill paid Rs. 500

Jan–25 : A cheque of Rs. 4,900 issued to Manju in full settlement
Jan–30 : Rent paid for the month Rs. 800 through cheque

3. The following transactions are provided
1. Lama started business with Rs. 25,000 as Lama Trade Concern
2. Purchased furniture for Rs. 1,300

3. Purchased goods from Renu for Rs. 5,000
4. Purchased goods for Rs. 7,000
5. Sold goods for Rs. 4,000
6. Sold goods to Khanal Trade House for Rs. 6,500
7. Paid rent Rs. 2,000
Required : i. Capital Account
ii. Rent Account
iii. Furniture Account

iv. Khanal Trading House Account




146 Office Practice and Accounting 9