DEBIT ALL PAYMENTS AND CREDIT ALL RECEIPTS

PAYMENTS ARE OF TWO TYPES:

1. REVENUE PAYMENTS- BENEFITS UTILISED IN THE PERIOD AND ARE RECURRING IN NATURE.
2. CAPITAL PAYMENTS- BENEFITS ARE NOT UTILISED IN THE PERIOD, BUT BENEFITS UTILISED IN
COMING PERIODS AND ARE NON-RECURRING IN NATURE.
RECEIPTS ARE OF TWO TYPES:
1. REVENUE RECEIPT.
2. CAPITAL RECEIPT.
RULES:

 INCREASE IN EXPENSE\LOSS\ASSET TO BE DEBITED.

 INCREASE IN INCOME\PROFIT\LIABILITY TO BE CREDITED.

 DECREASE IN EXPENSE\LOSS\ASSET TO BE CREDITED.

 DECREASE
REVENUE IN EXPENSES,
EXPENSES ARE INCOME\PROFIT\LIABILITY TO
CAPITAL EXPENSES ARE ASSETS. BE DEBITED.
REVENUE RECEIPTS ARE RECEIPTS, CAPITAL INCOMES ARE LIABILITY.
DOUBLE ENTRY BOOKING KEEPING SYSTEM
RECORDING OF TWO ASPECTS OF AN ENTRY.

PROBLEMS:

1. MR.A INVESTED RS 80000 OF HIS FUNDS IN BUSINESS ENTITLED ALFHA CO LTD.

CASH A\C DR 80000
TO A’S CAPITAL A\C 80000
2. ALFHA CO PURCHASES THE FOLLOWING ASSETS FOR CASH :

SUPPLIES-9000, OFFICE EQUIPMENTS-7000, TOOLS-60000

SUPPLIES A\C DR 9000

OFFICE EQUIPMENTS A\C 7000
TOOLS A\C 60000
TO CASH A\C 76000

3. ALFHA CO ACQUIRES LAND FOR 75000. PAYING RS 15000 IN CASH AND ISSUING BILLS
PAYABLE FOR THE DIFFERENCE AMOUNT
LAND A\C DR 75000
TO CASH A\C 15000
TO BILLS PAYABLE A\C 60000

4. ALFHA CO PAID RS 12000 FOR 3 MONTH’S RENT IN ADVANCE.

PREPAID RENT A\C DR 12000
TO CASH A\C 12000

5. ALFHA CO RECEIVED RS 9500 AS PAYMENT FOR CONSULTANCY SERVICE RENDERED BY THE

FIRM TO CUSTOMERS
CASH A\C DR 9500
TO CONSULTANCY SERVICES A\C 9500

6. ALFHA CO RENDERED CONSULTANCY SERVICE FOR 13500 ON CREDIT TO ITS CUSTOMERS

ACCOUNTS RECEIVABLES A\C DR 13500
TO CONSULTANCY SERVICES A\C 13500

7. ALFHA CO PAID 12000 FOR LAND EARLIER PURCHASED ON CREDIT FOR RS 60000
ACCOUNTS PAYABLE A\C DR 12000
TO CASH A\C 12000

8. ADDITIONAL TOOLS PURCHASED ON CREDIT FOR RS 1500

TOOLS A\C DR 1500
TO ACCOUNTS PAYABLE A\C 1500

9. ALFHA CO PAID UTILITIES EXPENSE OF RS 1000

UTILITIES EXPENSE A\C DR 1000
TO CASH A\C 1000
 10. ALFHA CO RECEIVED 7500 IN CASH FROM CUSTOMER FOR WHOM CONSULTANCY SERVICE
WAS RENDERED EARLIER
CASH A\C DR 7500
TO ACCOUNTS RECEIVABLES A\C 7500

11. DEPRECIATION OF 7500 IS RECORDED ON OFFICE EQUIPMENT

DEPRECIATION A\C DR 7500
TO OFFICE EQUIPMENTS A\C 7500

12. A WITHDREW RS 2000FROM FIRM FOR PERSONAL USE

DRAWING’S A\C DR 2000
TO CASH 2000

13. 4000 OF RENT (12000) HAS EXPIRED AS MENTIONED IN 4

RENT A\C DR 4000
TO CASH 4000

14. BAD DEBTS:

BAD DEBTS A\C DR XXXX
TO DEBTOR’S A\C XXXX

15. OUTSTANDING AMOUNT:

EXPENSE A\C DR XXXX
TO EXPENSE OUTSTANDING A\C XXX
16. RECEIVABLES:
RENT RECEIVABLE A\C DR XXXX
TO RENT A\C XXXX

FORMAT OF JOURNAL
DATE PARTICULARS L\F DEBIT CREDIT
A FURNITURE DEALING COMPANY.PREPARE A JOURNAL, LEDGER AND TRIAL BALANCE

QUESTION:

DATE PARTICULARS AMOUNT

(march
-2010)
01 Commenced business with: Cash 200000.00
Bank 800000.00
Furniture(goods) 500000.00
03 Bought furniture from Ratan Brother’s 200000.00
04 Bought furniture for Office use 100000.00
06 Sold furniture to J.Mitra 200000.00
08 Bought furniture 180000.00
10 Returned Furniture to Ratan Brother’s 5000.00
12 J.Mitra Returned Goods 20000.00
14 Paid Taxi Fare 1000.00
15 Sold Goods to J.Kabiraj Less Trade Discount 50000.00
17 Commission Received 1500.00
18 Paid Ratan Brothers by Cheque 100000.00
19 Send to Bank 20000.00
20 Received Cheque From J.Kabiraj (Full Settlement) 42500.00
22 Received Cheque From J.Mitra and Deposited the same 50000.00
into Bank
23 Loan to Naren 15000.00
24 J.Mitra’s Cheque dishonored
25 Withdrew Cash For Personal Use 40000.00
26 Interest Received 1000.00
27 Dividend Received 2500.00
29 Paid Postage 500.00
30 Paid Rent 10000.00
31 Cash Withdrawn from Bank 200000.00
31 Salary Being Paid 30000.00
31 Taxes Being Paid 15000.00

DATE PARTICULARS L\F DEBIT CREDIT

(March
-2010)

Cash A\c 200000

01 Bank A\c 800000
Stock A\c 500000
To Capital A\c 1500000
 02 Purchase 200000
To Ratan Brother’s 200000

Trial Balance As On 31st March 2010

       
SL.N
O PARTICULARS DEBIT CREDIT
       
1 CASH 333500.00  
2 BANK 262500.00  
3 STOCK 500000.00  
4 CAPITAL   1500000.00
5 PURCHASE 340000.00  
6 RATAN BROTHERS   95000.00
7 FURNITURE 100000.00  
8 J.MITRA 180000.00  
9 SALES   245000.00
10 PURCHASE RETURNS   5000.00
11 SALES RETURNS 20000.00  
12 TRAVELLING 1000.00  
13 COMMISSIOM   1500.00
14 DISCOUNT 2500.00  
15 NAREN 15000.00  
16 DRAWINGS 40000.00  
17 INTEREST   1000.00
18 DIVIDEND   2500.00
19 POSTAGE 500.00  
20 RENT 10000.00  
21 SALARY 30000.00  
22 TAXES 15000.00  
       
  TOTAL 1850000.00 1850000.00