FUNDAMENTALS OF

ACCOUNTING
LECTURE NO.5
SECTION C & D
5-NOV-2020
Rules for determining Cash or Credit Transaction
■ Cash purchases, Cash sales and all transactions where the word
“paid” is mentioned are to be treated as cash transactions.
– Salary Paid, Goods sold on Cash
■ When a personal name or the name of a firm or the word “on
account” or “on credit” is mentioned in the transaction, it will be
treated as credit transaction.
– Goods sold to Mr. Farhan for Rs. 50,000
■ When both Cash and personal name are mentioned in the
transaction, it will be treated as a cash transaction.
– For example: Goods sold to Mr. Amir for Cash Rs. 10,000
Q1. Journalize the following transaction of Mr. Kashan for the month of April 2015:
April 01, Mr. Kashan Started business with cash Rs.250,000
02 Mr. Kashan Purchased goods on cash from Alam & Co., a supplier, for the Rs.85,000
purpose of resale
05 Sold goods to the Rehman Sons, a customer, for cash Rs.90,000
06 Mr. Kashan returned defected goods to Alam & Co. for cash Rs.5,000
06 Rehman Sons returned defected goods to Mr. Kashan for cash Rs.2,000
09 Purchased office furniture for cash Rs.4,000
10 Purchased Equipment for office Rs.35,000
13 Cash Paid for office Rent Rs.500
13 Mr. Kashan purchased stationery for office use Rs.500
16 Mr. Kashan purchased goods on cash for the purpose of resale Rs.8,000
18 Mr. Kashan paid cartage expense Rs.350
20 Mr. Kashan paid salary to his staff Rs.95,000
22 Mr. Kashan paid cash for telephone bill Rs.1,500
23 Bad debts expense for the year Rs.400
24 Depreciation expense for equipment Rs.1000