ation 6 1 Mr. Peter commences business as a computer merchant, trading under the name of ‘Computer Point with a capital of Rs 4,00,000 brought in cash. 3 He buys.on credit from Hindusthan Computers Ltd. 13 He receives an invoice from Janata Transport Corpor of computers from Bangalore. 10 computers @ Rs 30,000 each. ‘ation for Rs 5,000.in respect of carriage20 25 29 31 31 He opens a bank account by depositing Rs 3,50,000. He sells 6 computers on credit to ABC Computers @ Rs 35,000 each. He pays by cheque the amount for caniage. He receives cash Rs 2,00,000 from ABC Computers. He issues a cheque to Hindusthan Computers Ltd. for Rs 3.00,000. u are required to pass necessary Journal entries in the books of Computer Point. planation: In this illustration, there are eight distinct transactions to be 1 The commencement of business : At the very beginning, it must be «tration 7 ecessary journal entries and post them in the appropriate Ledger Accounts of P. Basak for Started business with Rs 2,00,000 in the bank and Rs 40,000 cash; Bought shop fittings Rs 40,000 and a van Rs 60,000 both paid by cheque;Paid rent by cheque Rs 5,000; Bought goods for resale on credit from Zakir & Co Rs 50,000; Cash sales Rs 5,000; ** Paid wages of assistant in cash Rs 1,000; 10 _ Paid insurance by cheque Rs 500; 12 Cash sales Rs 8,000; 15 Paid wages of assistant in cash Rs 1,000; Goods returned to Zakir & Co Rs 6,00 17 Paid Zakir & Co Rs 30,000 by cheque; 19 Bought goods for resale on credit from Rao & Co Rs 25,000; 19 Cash sales Rs 7,000; 22 Paid wages of assistant in cash Rs 1,000; 24 ~~ Bought stationery, paid in cash Rs 500; 25 Cash sales Rs 15,000; 27 ~~ Paid Rao & Co Rs 14,000 by cheque; 29 Paid wages of assistant in cash Rs 1,000; 31, Paid Rs 20,000 into the bank. DUwWN”. “Qe+ ae THEORETICAL QUESTIONS ‘What do you understand by an account? Explain the nature of different kinds of accounts. Explain the rules for debit and credit. Give a suitable example for each type of account. Define the term Journal and explain its present day use. Define ledger. Give its ruling and explain its utility in accountancy. Distinguish between Journal and Ledger. “Ledger is the principal book of accounts in a business’. Do you agree with this statement ? Give reasons. How are Ledger Accounts balanced ? Explain clearly. PRACTICAL QUESTIONS Write up the following transactions in the ledger of Mr J Reddy for the month of July, 1997. |. Started business with Rs 80,000 in bank and Rs 30,000 in cash. 1 2. Paid rent by cheque Rs 3,000; Bought goods on credit from : Barnali Sengupta & Co Rs 15,000; 3. Sold goods for cash Rs 3,000 and on credit to P Sengupta & Co Rs 5,000; 4, Paid insurance by cheque Rs 250 and bought stationery for Rs 100 in cash; 5. Paid wages in cash Rs 500; sold goods for cash Rs 700; 8. Paid cash into bank Rs 1,000 and returned goods to Barnali Sengupta & Co Rs 3,000; 9. Paid by cheque to Barnali Sengupta & Co. Rs 10,000; 11. Sold goods on eredit to G Basu Rs 8,000; 12. Paid wages in cash Rs 500 and sold goods for cash Rs 2,000; 15. Cash paid into bank Rs 1,500; goods returned by P Sengupta & Co Rs 1,000; bought shop furniture, paid t cheque Rs 500; 17. Cheque received from P Sengupta & Co Rs 4,000; 19. Paid wages. in cash Rs 500 and cash sales Rs 2,000; 21. Bought goods on credit from Barnali Sengupta & Co Rs 6,000; 22. Goods soid for cash Rs 5,000 and on credit to P Sengupta & Co Rs 10,000; 26. Cash paid into bank Rs 4,000 and bought postage stamps for Rs 50; 27. Paid telephone bill Rs 500 and electricity Rs 400 by cheque; 30. Paid wages in cash Rs 500.