Accounting for Depreciation – An expired cost of Accounting for Depreciation – An expired cost of

fixed asset except land fixed asset except land

Hospital purchased ECG machine worth Rs.2 lakhs on June 2019 and Hospital purchased ECG machine worth Rs.2 lakhs on June 2019 and depreciation is charged @20%.
depreciation is charged @20%. As per the Written Down Value Method (WDV) method of depreciation of 20%
As per the straight line method (SLM) of depreciation of 20%
Gross Block of ECG Machine on June 2019 = Rs.2,00,000
Gross Block of ECG Machine on June 2019 = Rs.2,00,000 Less: Depreciation: 20% for 10 months (June to March 20): Rs.33,334 (debited to P/L A/c)
Less: Depreciation: 20% for 10 months (June to March 20): Rs.33,334 (debited to P/L A/c) Net Block of ECG Machine as on 31st March 2020 (B/S): Rs.166,667
Net Block of ECG Machine as on 31st March 2020 (B/S): Rs.166,667
Net Block of ECG Machine as on 1st April 2020= Rs.1,66,667
Net Block of ECG Machine as on 1st April 2020= Rs.1,66,667 Less: Depreciation 20% for 12 months (2020-21)
Less: Depreciation 20% for 12 months (2020-21) on Net Block of fixed asset: Rs.33,334 (debited to P/L A/c)
on gross block of fixed asset: Rs.40,000 (debited to P/L A/c) Net Block of ECG Machine as on 31st March 2021 (B/S): Rs.1,33,333
Net Block of ECG Machine as on 31st March 2021 (B/S): Rs.1,26,667

Net Block of ECG Machine as on 1st April 2021 = Rs.1,26,667 Net Block of ECG Machine as on 1st April 2021 = Rs.1,33,334
Less: Depreciation: 20% for 12 months (2021-22): Rs.40,000 (debited to P/L A/c) Less: Depreciation: 20% for 12 months (2021-22): Rs.26,667 (debited to P/L A/c)
on gross block of fixed asset on gross block of fixed asset
Net Block of ECG Machine as on 31st March 2022 (B/S): Rs.86,667 Net Block of ECG Machine as on 31st March 2022 (B/S): Rs.1,06,667

Net Block of ECG Machine as on 1st April 2022 = Rs.86,667 Net Block of ECG Machine as on 1st April 2022 = Rs.1,06,667
Less: Depreciation: 20% for 12 months (2022-23): Rs.40,000 (debited to P/L A/c) Less: Depreciation: 20% for 12 months (2022-23): Rs.21,334 (debited to P/L A/c)
on gross block of fixed asset on gross block of fixed asset
Net Block of ECG Machine as on 31st March 2023 (B/S): Rs.46,667 Net Block of ECG Machine as on 31st March 2023 (B/S): Rs.85,333

Creating Provision for Doubtful Bad Debt against Transaction: Started Business with capital of
sundry debtors Rs. 2500000

Sold good on credit to XYZ Ltd. Worth Rs.50 lakhs

Sold service on credit to PQR worth Rs.6 lakhs
Type of Accounts Golden Rule
XYZ’s A/C Dr. Rs.50 lakhs
To Sales A/c Rs.50 lakhs
(Being goods sold on credit to XYZ Ltd.) Cash – Real A/c Debit what comes in
PQR’s A/c Dr. 6 lakhs Capital – Personal A/c Credit the giver
To Sales A/c Rs.6 lakhs
(Being service extended on credit to patient worth Rs.6 lakhs)

Total sundry debtors = Rs.56.00 lakhs

Create (provide) 10% provision for doubtful bad debt on sundry debtors Cash A/c Dr. Rs. 2500000
Bad Debt A/c Dr.5.6 lakhs (This is debited to P/L Account) To Capital A/c Rs. 2500000
Provision for Doubtful Debt Rs.5.6 lakhs ( will be deducted from sundry (Being business started with cash Rs. 25 lakhs)
debtors in B/s. Therefore, net
sundry debtors in B/S will be
= 50.40 lakhs (56 lakhs – 5.6 lakhs)
Transaction : Opened a bank account with SBI Transaction : Purchased goods from Tandon &
for Rs. 200000 Co. for cash Rs. 100000

Type of Accounts Golden Rule Type of Accounts Golden Rule

Bank – Personal A/c Debit the receiver Purchase – Nominal A/c Debit all expenses
Cash -- Real A/c Credit what goes out Cash -- Real A/c Credit what goes out

Bank A/c Dr. Rs.200000

Purchase A/c Dr. Rs. 100000
To Cash A/c Rs.200000
(Being cash Rs.2 lakhs deposited To Cash A/c Rs. 100000
in the bank) (Being goods worth Rs. 1 lakh purchased for cash)

Transaction : Purchased goods on credit from Transaction : Goods Return to Burman of Rs.
Burman’s Pvt Ltd. for Rs. 200000 50000

Type of Accounts Golden Rule

Type of Accounts Golden Rule

Purchase – Nominal A/c Debit all expense Burman’s - Personal A/c Debit the receiver
Mr. Burman –Personal A/c Credit the GIVER Purchase Return-Nominal Credit all gains
A/c
Purchase A/c Dr. Rs. 200000
To Burman A/c Rs. 200000
(Being for goods worth Rs. 2 lakhs Burman’s A/c Dr. Rs. 50000
purchased goods from Burman on To Purchase Return A/c Rs. 50000
credit)
Transaction : Paid Rs. 140000 in full Transaction : Paid Mr. Dharam, the landlord
settlement Rs. 50000 towards rent

Type of Accounts Golden Rule

Type of Accounts Golden Rule
Burman’s – Personal A/c Debit the receiver Rent - Nominal A/c Debit all expenses
Discount – Nominal A/c Credit all gains Cash - Real A/c Credit what goes out
Cash - Real A/c Credit what goes out

Burman A/c Dr. Rs.150000

Rent A/c Dr. Rs.50k
To Cash A/c 50k
To Discount A/c Rs.10000
(Being rent paid to landlord Mr. Dharam Rs.50k)
To cash A/c Rs.140000
(Being cash paid to Mr. Burman and
received discount worth Rs.10k)

Transaction: Sold goods to Mr. Karan for Cash

Transaction : Withdraw cash for household
Rs. 250000
expenses Rs.60000

Type of Accounts Golden Rule

Type of Accounts Golden Rule

Drawings - Personal A/c Debit the receiver Cash- Real A/c Debit what comes in
Cash - Real A/c Credit what goes out Sales - nominal A/c Credit all incomes & gains

Drawings A/c Dr. Rs.60000 Cash A/c Dr. Rs. 250000

To Cash A/c Rs.60000
(Being cash withdrawn for household To Sales A/c Rs.250000
expenses) (Being goods sold for cash)
 Transaction : Sold goods to Dev on credit for Transaction : Goods return by Mr. Dev for Rs.
Rs. 100000 25000

Type of Accounts Golden Rule

Type of Accounts Golden Rule

Dev – Personal A/c Debit the receiver

Sales - nominal A/c Credit all gains and income Sales Return – Nominal A/c Reverse transaction
Dev - Personal A/c Credit the giver

Dev A/c Dr. Rs.100000

To Sales A/c Rs. 100000
(Being goods sold for dev on Credit ) Sales Return A/c Dr. Rs.25000
To Dev A/c Rs.25000
(Being goods returned by Dev)

Transaction : Received cash from Mr. Dev Rs. Transaction: Purchased furniture for office
70000 in full settlement use for Rs. 100000

Type of Accounts Golden Rule Type of Accounts Golden Rule

Cash – Real A/c Debit what comes in Furniture – Real A/c Debit what comes in
Discount- Nominal A/c All expenses and losses Cash - Real A/c Credit what goes out
Dev – Personal A/c Credit the giver

Furniture A/c Dr. Rs.100000

Cash A/c Dr. Rs.70000
Discount A/c Dr. Rs. 5000
To Cash A/c Rs.100000
(Being Furniture purchased for office
To Mr. Dev A/c Rs.75000
use by cash)
(Being cash received from Dev and allowed
him discount)
 Transaction 1: Paid cartage on goods purchased Rs.
Transaction: Purchased furniture for 35000
re-sale Rs. 100000 Transaction 2: Paid Cartage on good sold Rs. 80000

Type of Accounts Golden Rule

Type of Accounts Golden Rule Cartage inwards- Nominal A/c Debit all expenses
Cash – Real A/c
Purchase - Nominal A/c Debit all expense
Credit what goes out
Cash – Real A/c Credit what goes out
Cartage outwards- Nominal A/c Debit all expenses
Cash - Real A/c
Credit what goes out

Purchase A/c Dr. Rs.100000 Cart. inwards A/c Dr. Rs.35000

To Cash A/c Rs. 35000

To Cash A/c Rs.100000
(Being furniture purchased for resale)
Cart. outwards A/c Dr. Rs.80000
To Cash Rs.80000

Transaction: Purchased goods on credit Transaction: Goods sold on credit to Flora

from Arora at the list price of Rs.8000. A at a list price of Rs.4000. A trade discount
trade discount of 10% was allowed. of 5% was allowed

Type of Accounts Golden Rule Type of Accounts Golden Rule

Purchase - Nominal A/c Debit all expense Flora - Personal A/c Debit the receiver
Arora – Personal A/c Credit the giver Sale – Nominal A/c Credit the income

Purchase A/c Dr. Rs.7200 Flora A/c Dr. Rs.3800

To Arora A/c Rs.7200 To Sales A/c Rs.3800

(Being goods purchased on credit from (Being goods sold on credit to Flora and
Arora with trade discount of 10%) allowed trade discount of 5%)
Transaction: Received cheque from Flora Transaction: Paid Arora Rs.7000 by cheque
for Rs.3600 in full settlement. in full settlement

Type of Accounts Golden Rule Type of Accounts Golden Rule

Bank - Personal A/c Debit the receiver Arora - Personal A/c Debit the receiver
Discount A/C – Nominal A/C Debit the losses Bank – Personal A/c Credit the giver
Flora – Personal A/c Credit the giver Discount – Nominal A/c Credit the income

Bank A/c Dr. Rs.3600 Arora A/c Dr. Rs.7200

Discount A/C Dr. Rs.200 To Bank A/c Rs.7000
To Flora A/c Rs.3800 To Discount A/C Rs.200
(Being cheque received from Flora in full (Being cheque Rs.7000 paid to Arora for full
settlement) settlement and avail discount of Rs. 200)
 Journal Entries - Answer
Journal Entries - Questions Date Particulars Debit Credit
2001 Rs Rs
Dt Particulars Rs Jan 1 Cash Account Dr 40,000
To capital account 40,000
1 Commenced business with cash 40,000 (being the cash brought into business
as capital)
2 Purchased goods on credit from shyam 30,000 Jan 2 Purchases Account Dr 30,000
To Shyam account 30,000
3 Purchased goods for cash 1,000 (being the goods purchased on credit)
Jan 3 Purchases Account Dr 1,000
4 Paid Gopalan an advance for goods 2,000 To cash account 1,000
ordered (being the goods purchased for cash)
Jan 4 Gopalan Account Dr 2,000
5 Received cash from Murthy as advance for 3,000 To cash account 2,000
goods ordered by him (being the amount paid to Gopalan)
Jan 5 Cash Account Dr 3,000
6 Purchased furniture for office use for cash 2,000 To Murthy account 3,000
(being the cash received from Murthy)
Jan 6 Furniture Account Dr 2,000
To cash account 2,000
(being the furniture purchased for
office use for cash)
 Journal Entries - Answer
Jan 7 Wages Account Dr 500
Journal Entries - Questions To cash account 500
(being the wages paid)
7 Paid wages 500 Jan 8 Cash Account Dr 500
8 Received commission (in cash) 600 To commission received account 500
(being the commission received)
Jan 9 Shyam Account Dr 200
9 Goods returned to shyam 200 To Purchase returns account 200
(being goods returned to shyam)
10 Goods sold to Kamal 10,000 Jan Kamal Account Dr 10,00
10 To sales account 0 10,000
(being goods sold to kamal on credit)
11 Paid for postage and telegrams 200 Jan Postages & Telegrams Account Dr 200
12 To cash account 200
(being amount paid for postages &
13 Goods returned by Kamal 500 telegrams)
15 Paid for Stationery 200 Jan Sales returns Account Dr 500
13 To Kamal account 500
(being goods returned by Kamal)
Jan Stationery Account Dr 200
15 To cash account 200
(being the amount paid for stationery)

Journal Entries - Answer

Journal Entries - Questions Jan
18
Bank Account
To cash account
Dr 500
500
(being the amount deposited into
Bank)
Jan cash Account Dr 750
18 Cash Deposited at bank 500 20 To sales account 750
20 Goods sold for cash 750 (being the goods sold for cash)
Jan Purchases Account Dr 1,000
22 Bought goods for cash 1,000 22 To cash account 1,000
25 Paid salaries 700 (being the goods purchased for cash)
28 Paid rent 500 Jan Salaries Account Dr 700
25 To cash account 700
31 Draw cash for personal use 1,000 (being the amount paid as salaries)
Jan Rent Account Dr 500
28 To cash account 500
(being the rent paid)
Jan Narayan’s Drawing Account Dr 1000
31 To cash account 1000
(being the cash drawn for personal
use)
 Journal Entries - Questions Journal Entries - Answer

32 Rent Outstanding 50,000

32 Rent A/C 50000
To Rent Outstanding A/C 50000
33 Insurance Premium Paid in Advance 10,000
33 Prepaid Insurance A/C Dr. 10000
(Prepaid) To Cash A/C 10000
34 Purchased Equipment 1 Lakhs 34 Equipment A/C Dr. 1 Lakhs
To Cash A/C 1 Lakhs
35 Depreciation Charged @ 20% 1 Lakh 35 Depreciation A/C Dr. 20k
To Equipment A/C (Net Block) 20k
36 Create Provision for Doubtful Bad Debt
36 Provision for Doubtful Bad Debt A/C Dr. XXX
To Sundry Debtor A/C XXX