Double Entry System

Tutorial 06

1. State the fundamental double entry rules and explain each element with an example

2. What are Journals/ Prime Entry Books? Briefly explain the different types of prime entry books
by identifying the types of transactions recorded in each category.

3. The monthly transactions of ‘Sha Bakery’ which commenced its operations in July 2021 are
presented below:

a) Mr. Sha invested Rs. 500,000 in cash as initial capital for his business

b) Purchase of bakery equipment worth Rs. 80,000 and delivery vehicle worth Rs. 140,000

on cash

c) Inventory purchases on credit worth Rs. 40,000 from Mr. Sampath

d) Obtained a bank loan worth Rs.200,000

e) Sold goods worth Rs. 30,000 to Naduni on credit basis

f) Cash receipt from Naduni for Rs.10,000

g) Rent payment of Rs. 25,000

h) Mr. Sha withdrew Rs.20,000 of cash for his personal use from the business

You are required to:

1. Write the journal entries to record the above transactions/events in the General
Ledger
2. Post the transactions to the ledger accounts
4. The transactions of ‘Gayan Apparels’ for the month of June 2021 are given in chronological
order:
01st June 2021 – Mr. Gayan started his business by investing a land worth Rs.800,000, aA
motor vehicle worth Rs.300,000 and Rs. 400,000 in cash as his initial
investment
03rd June 2021 – Purchased Furniture and Fittings worth Rs. 60,000 on cash basis
06th June 2021 – Purchased goods worth Rs. 150,000 on credit basis from Tharushi
08th June 2021 – Mr. Gayan opened a bank account for the business by depositing Rs.
200,000 cash held in hand in the bank account
09th June 2021 – Sold goods worth Rs. 25,000 on credit basis to Isuri
11th June 2021 – Isuri returned goods worth Rs. 10,000
14th June 2021 – Purchased goods worth Rs. 40,000 on credit basis from Tharushi
16th June 2021 – Issued a cheque for goods purchased worth Rs. 25,000 to Tharushi
17th June 2021 – The business returned goods worth Rs.10,000 to Tharushi
19th June 2021 – Purchased Office Equipment worth Rs.10,000 on credit from Serendib
PLC
21st June 2021 – Sold goods worth Rs. 10,000 to Isuri to which the payment was received
in full through a cheque
23rd June 2021 – Paid a building rent of Rs. 30,000 by cash
25th June 2021 – Paid monthly salaries to employees of Rs. 50,000 by a cheque
26th June 2021 – Obtained a bank loan worth Rs. 200,000 and deposited the entire
amount in the bank account
28th June 2021 – Gayan withdrew Rs. 10,000 cash from the business
29th June 2021 – Gayan withdrew goods worth Rs. 5,000 for his personal use
30th June 2021 – Sold goods worth Rs.10,000 to Shaja on cash basis

You are required to:

1. Write the journal entries to record the above transactions/events
2. Post the transactions to the ledger accounts
5. On January 01, 2021, Jayani started a business by investing cash Rs. 1,000,000 and other
transactions for the month are as follows:

2nd January – Purchased Furniture for Cash Rs. 70,000.

3rd January – Purchased equipment worth Rs.50,000 from VPN Electronics on cash
5th January – Purchased stationary worth Rs.5,000 for cash from Sarasavi Stationaries
7th January – Obtained a bank loan of Rs.1,000,000 from HK Bank.
8th January – Purchased Goods for Cash Rs. 12,000 and for Credit Rs. 10,000 from Nithya Retail
Store.
10th January – Purchased Rs.200,000 worth goods from Nimaya Retailers on credit basis.
14th January – Sold Goods to Jaliya Brothers Rs. 12,000 on credit basis.
18th January – Owner withdrew cash worth Rs. 2,000 for personal use.
22nd January – Paid Nithya Retail Store Rs. 5000 by cash
25th January – The business returned goods worth Rs. 20,000 to Nimaya Retailers due to
damage.
26th January – Received Rs. 10,000 cash from Jaliya Brothers
27th January – Paid Salaries Expense Rs. 20,000 by cash
30th January – Balance amount of the Jaliya Brothers written off as bad debt.

You are required to:

1. Write the journal entries to record the above transactions/events.
2. Post the transactions to the ledger accounts