2.

35 Financial Account
the Misoellaneous transactions' find place in the journai proper. The folierwig

the mportant transactions which are usually recorded in journalproper

are (They
purchase of assets and credit sale of assets,
() Credit or sales book or cash
book)
shown in purchases hook
(2) urchase of business.
columns of petty cash book:
shown by analytical
(3) Expenses
(4) Transfer entrics:
entries by means of which all nominal accounts. acco
purchse
(5) Closing account and profit and loss
sales, etc are taken to trading
(6) Adjustment entries which are necessary
to record closing sa
expenses, etc.
depreciation, outstanding and prepaid
general journal orjournal proper acts as ombudsmar
We can say that the transactiÜns
book system by taking care of all miscellaneous
subsidiary »specialised books' opened for partic
items which can not be recorded in the
gToups of transactions.
ILLUSTRATIONS

Journal :
Illustration 1
Journalise the following transactions:
1. Purchased goods for cash Rs. 10,000
2. Purchased stationery for cash Rs. 500
3. Purchased furniture for cash Rs. 3,000
4. Sold goods for cash Rs.,000.
5. Sold goods to Jane for cash Rs. 3,000
6.Sold goods to James Rs. 2,000
7.Paid Rent to Krishnan, the landlord Rs. 800
8. Paid salary of Rs. 8,000
9. Paid Lokesh, the manager his salary of Rs.3,000
10. Paid freight on goods purchased Rs. 300
11. Paid freight on machine purchased Rs. 400
12.Paid wages Rs. 500
13. Paid wages to erect a machine Rs. 1,000
The Accounting Cycle - Books and Records 2.36

14. Received Rs.800 from Kamal

15. Received Rs.600 from Kamal as interest
16. Received Rs. 7,000 from Kamal as loan at 5% interest
Solution
Journal Entries
Particulars LE Debit Credir
Date
Rs. Rs.
Purchases Alc Dr 10,000
To Cash Alc 10,000

[Being cash purchase of goods]

Stationary Alc Dr 500

To Cash Alc 500

[Being purchase of stationary]

3 Furniture Alc Dr 3,000
To Cash Alc 3,000

[Being cash purchase of furniture]

Cash Alc Dr 8,000
4
To Sales A/c 8,000
(Being cash sales made])
Dr 3,000
5. Cash A/c
To Sales Alc
3.000

[Being cash sales to Jane]

Dr 2,000
James AVc
2,000
To Sales A/c
[Being good sold on credit]
Dr 800
7. Rent Alc
800
ToCash A/c
[Being rent paid to Krishnan, the landlord] 8,000
Dr
8. Salary A/c 8,000
To Cash Ale

| Being salary paid in cash) 3,000

Dr
9 Salary A/c 3,000
To Cash Ale
[Being Manager's Salary paid in cash)
Dr 300
10. Freight A/c 300
To Cash Ale
[Being freight paid for goods]
2.37
Financial Rs.Accountin
L.E
11. Dr 400 R&
Machinery Alc
To Cash Alc
[Being payment of Freight on machinery]l 400
12. Wages Alc Dr S00
To Cash Alc
[Being payment of wages]
13. Dr 1,000
Machinery Alc
To Cash A/c
1,094%
|Being wages paid to erect machine]
14. Cash A/e Dr 800
To Kamal's A/c
[Being amount received from Kamal
on account]
1s. Cash A/c Dr 600
To Interest A/c 604
[Being interest received from Kamal]
16. Cash A/c Dr 7,000
To 5% Loan A/c 7,00
[Being loan from Kamal for interest]
Notes :

(A) 1-2-3: Purchases account is to be debited for purchase of goods. But

purchase of stationary, furniture etc., purchases account should not be debite
Respective items should be debited.
(B) 5: For cash sale the buyers' name is to be ignored in the entry. It may be shost
in narration.

(C) 6: When sale ismade to a specific person, it should be

unless otherwise given. assumed as credit sa
(D) 7:When rent, an expenditure is paid, landlord's name is to be
shown in narration. ignored. It mayt
(E) 9: When salary is paid, the name of the
in narration only. employee is immaterial. It can be sho
(F) 11-13: Freight, Wages and any other expenses incurred for machinery tillit
installed should be debited to machinery
(G) 15-16: Amountsreceived as
account itself.
interest and loan should not be credited t0 peis
account of the person who gives. They should be credited to interest A
Loan A/c.
 The Accounting Cycle Books and Records 2.38
Nustration 2
Journalise the following transactions of M/s. Radha & Sons.
M/s. Radha & Sons
20121 Rs.
Jan 1 Business started with Rs. 2,50,000 and cash
deposited with Bank 1,50,000
3 Purchased machihery on credit from Rangan 50,000
6Bought furniture from Ramesh for cash 25,000
12 Goods sold to Yesodha 22,500
13 Goods Returned by Yesodha 2,500
15 Goods sold for cash 50,000
17 Bought goods for cash 25,000
20 Cash received from Yesodha 10,000
21 Cash paid to Ramola 20,000
25 Cash withdrawn from bank 50,000
29 Paid advertisement expenses 12,500
30 Bought office stationery for cash 5,000
31 Cash withdrawn from bank for personal use of the proprietor 6,250
31 Paid salaries 15,000
31 Paid rent 2,500
Solution:
Books of M/s. Radha & Sons
Journdl

Particulars L. F Debit Credit

Date
Rs. Rs.

2021
Jan 1 Cash A/c Dr 2,50,000
|2,50,000
To Capital Alc
[Being cash brought in as capital ]
Dr 1,50,000
Bank A/c
1,50,000
To Cash A/c
[Being cash deposited into bank] S0,000
3 Dr
Machinery Alc 50,000
ToRangan's A/c
(Being machinery bought on
eredit from Rangan]
2.39

Finarcial Aon
Furmiture Ale Dr
To Cash Ale 25 5M9
|Being furniture purchased fot 23 56
caslh from Ramesh]
12 Yesodha 'sAle
To Sales Ae Dr
22.50)
I3
|Being goods sold to Yesodha on credit)
Sales Retums A/e
To Yesodha's Alc Dr
2,309
15
[Being goods returncd by Yesodha) 299
Cash A/c
Dr
To Sales A/c 50,99
(Being goods sold for cash)
17
Purchases A/c
Dr 25,000
ToCash Alc
[Being goods purchased for cash] 239%
20 Cash A/c
Dr 10,000
To Yesodha's A/c
[Being cash received from Yesodha) 19.0
21 Ramola A/c Dr 20,000
To Cash A/c
20.09%
[Being cash paid to Ramola]
25 Cash A/c Dr 50,000
To Bank Alc
S0.00
[Being cash withdrawn from bank]
29
Advertisement Expenses Alc Dr 12,500
To Cash Alc
[Being advertisement expenses paid]
30 Office stationery Alc Dr 5,000
To Cash Alc
[Being stationery purchased for cash]
31
Drawings Ale Dr 6,250
To Bank Alc
[Being cash withdrawn from
bank for personal use)
31 Salaries A/c is,000
Dr
Rent Alc Dr 2,500
ToCash Alc
[Being salaries and rent paid]
 tlhe Acounting C'ye Boks asd tecns
Nate

lyuay 1 tamny n Machinery purchased and furniture purchaned are tn

t dehited to the respeive asset Aeots Purchases Aceont shosld not he
debited at it i meant fot ereditpurchase of goeds onty
) Janury 12 Sales with nane of buyer given should he ssumed ss
oredit sales, unless specifealty metioned scash sates
( Jmmry 29 491 Cash withdrawn from Bank is asumedto he for bsiness e
nty untesn stated to he for personal use In the later case, it is drawings
(4) kamurn 0 Goda hongh alone are debited to purchases Stationary hratt is to
te debited to stationary A/e
llustration 3

Pass the necessary journal entries in the books of Sakthivel of Chenna for
the following transactions from the following report of transactions written by
him for April 2021.
2021
April 2 Purchased business for Rs. 2,00,000.
4 Purchased machinery from Kandan Bros, Trichy for Rs 30,000
on which they paid Rs, 300 freight on my behalf.
4 The ercction chargesof machinery amounted to Rs. 900 which
were
in casa
6 Acashier haa stlen Rs. 1,500 and he is absconding.
8 Goods costing Rs. 12,000 were insured for Rs. 10,000 and premium at
8% p.awas paid on them.
paid
i0 On claim being made for theft of cash, insurance company
Rs. I,500.
worth Rs. 4,000
12 Received an order from Dayalan lor supply of goods
of Rs 200 was
13 Goods were suppled as per order of Dayalan arnd freight
paidon it
trec of charge.
3 Go0ds wortth Rs, 10) were disubuled as sanples
(G0ots the list pce of wchs k, 4),00), are sold to Sugumar at 1o
3)
rade disoUnt
2.41 raelat Auiny
25 Goods worth Rs. 300 were spoilt In tranait and a elaim
the Railway Co., in this respect.
30 Rs. 300 was received in cash fiom Railwny 0, n tb wynen ofesin
Solution:
Books of Sakthlvel

Journal Entrles
Date Particulars
2021
April Business purchase Ale Dr |2,00,(%>
To Cash Alc
[Being purchase of business)
4 Machinery Ale Dr 30,3(0)
To Kandan Bros A/c 30,340
(Being purchase of machineryincluding freighi)
4 Machinery Alc Dr 900
ToCash
[Being payment of erection charges of machinery]
6 Loss by theft (or Abnormal loss A/c) Dr 1,500
To Cash 1,509
[Being cash stolen by cashier who is not traceable]
8 Insurance premium A/c Dr 800
To Cash Alc
[Being payment of premium@8% on Rs. 10,0001
10 Insurance Co., Alc Dr 1,500
To Loss by theft Alc 1,500
[Being claim payable by Insurance Co.,]
10 Cash A/c Dr 1,500
1,500
To Insurance Co., Alc
[Being receipt of cash from insurance company
on claim for stolen cash]
"No entry because receipt of an order is not
a transaction'
13 Dayalan A/c Dr 4,200
200
To Cash A/c
4.000
To Sales Alc
[Being supply of goods to Dayalan and payment
of freight thereon]
15 Dr I00
Advertising A/c 100
To Purchases A/e
[Being goods distributed as free samples)
 T'he Avvounting Cycle Books and Records 2.42
0 Sugumar At Dr 36,000
To Sales A/e 36,000
|Being sale ofgoods to sugunar (a) 10%
trade discount]
Railway clainm Ale Dr 300
To Trading A/c 300
|Being claim nade for goods spoilt)
Note: lt is assumed that part of' goods
purchased are spoilt in transit.
30 Cash A/e Dr 300
To Railway Claim A/c 300
|Being receipt of cash for claim]
Note :
(1) April 2: When details of assets and liabilities of thebusiness purchased are
given, assets should be debited individually, liabilities should be credited
one by one and the difference should be credited to business purchase account.
(2) April4: Freight on machinery purchased and erection charges of machinery
are to be added to the machinery cost because all expenses incurred for an
asset till itcomes to an usable condition are to be debited to the asset account
itself.
(3) April 8: Cost of the goods insured and value of policy taken will not form
part of the journal entry. Only premium paid is debited as expenditure.
(4) April 13: Freight is assumed to be recovered from Dayalan and not already
included in sales price.
(5)April 15 : Goods purchased but usedas samples instead ofbeing sold should
be credited to purchases, after debiting Advertising Ac.
(6) April 20: Trade discount does not form part of accounts. Sale entry is made
for the net value of goods sold, after deducting Trade discount from the
original price of goods.
(7) April 25: Goods purchased are shown on debit side of TradingA/c. So, ifany
ofthose goods are destroyed or spoilt etc., Trading account should be credited
with such abnorma] loss.
llustration 4
On Ist March 2020, the books of accounts of Mr. Raja Rajan disclosed the
ollowing position: Cash in hand Rs. 20,000; Cash at bank Rs.66,000; Stock of
goods Rs. 42,000;Machinery Rs. 1,00,000; Furniture Rs. 15,000; Debtors : Mahesh
Bros.: Rs. 15,000; Balu Bros. : Rs. 25,000; Sundry creditors: Johnny Bros:
Bs. 20,000; Loan Rs. 50,000.
Transactions during the month:
243
Date
2020
Particulars
Financia R
March 3 Purchased goods on credit from
Sishva &Co.,
Sold goods for cash
Sold goods to Mahesh Bros.
6 Received from Mahesh Bros. in
of amount due on March 1.
fullsettlement 10,000
Payment made to Jonny Bros. by cheque 14.5009
They allowed discount 9800
10 Sold old furniture for cash 200
12 Purchased goods for cash S00
13 Balu Bros. paid by 1200
cheque; cheque
deposited in bank
Paid repairs to machinery 25,000
1S|Purchased goods of Johnny Bros. 400
15 Freight paid on the goods 10.000
18 Received cheque from
from Jonny Bros. I00
Mahesh Bros.
Cheque deposited in bank 9,60
Discount allowed to them
400
19 Paid by cheque to Johnny
20 Bank intimated that
Bros. 10,00
chegue of Mahesh Bros.
has been returned unpaid.
21 Cash sales
6.000
2 Cash deposited in bank
7,000
23 Paid municipal taxes in
cash 1,000
24 Old
newspapers sold
25 Drew cash from bank for
office use L000
25 Purchased furniture 2000
25 Purchased adding
machine &typewriter 8200
(Payment all cases made by cheque)
in
26 Received interest from
Bank
(Amount credited in bank account)
27 Paid for advertisement S,000
31 paid rent by cheque S00
Paid salaries for the month 3.000
Drew out of bank for private use 2.000
 Mohad Tfan A
The Accounting Cycle Books and Records
Mahesh Bros becomes insolvent,
adividend of 60paise in the rupee is received.
An old debt, written off as bad debt
in 2019, is recovered 200
Enter the above transactions in the journalof Raja Rajan.
Solution :
Books of Raja Rajan
Journal Entries
Particulars LE Debit Credit
Date
Rs. Rs.

2020
March 1
Cash A/c Dr 20,000
Bank A/c Dr 66,000
Stock A/c Dr 42,000
Machinery Dr 1,00,000
Furniture Alc Dr 15,000
Mahesh Bros. A/c Dr 15,000
Balu Bros. Alc Dr 25,000
To Jonny Bros A/c 20,000
To Loan Alc 50,000
To Capital Alc (Bal.fig) 2,13,000
[Being various assets and liabilities
on 1.3.2020, balance being capital)
3 Purchases A/c Dr 10,000
To Sishya & Co., A/c 10,000
Being goods purchased on credit]
Cash A/c Dr 5,000
To Sales Alc 5,000
[Being goods sold for cash)
Mahesh Bros. A/c Dr 10,000
10,000
To Sales A/c
[Being goods sold on credit)
Cash A/c Dr 14,500
Discount allowed Alc Dr S00
To Mahesh Bros I5,000
(Being cash received from Mahesh Bros. &
discount allowed to them)
2.47
31 Cash Ale Dr
financial Accolntiny
6,000
Bad debts A/e Dr 4,000
To Mahesh Bros.
|Bcing 60% ofthe dues received from
Mahesh Bros on thecir becoming insolvent
and balance written off as bad debts]
Dr 200
3|Cash Alc
To Bad debts Recovered A/c 20
[Being the sum previously written off
now recovered]
Notes:
() March 1: When opening assets and liabilities of abusiness are given .
difference between them is to be deemed as the capital.
(2) March 5: Sales to specific buyers are to be taken as credit sales unless otheri
mentioned.
(3) March 6: Discount allowed = Rs. 15,000 (due on Ist March) - Rs. 14.50%
received.
(4) March 10: When goods are sold, sales account is to be credited. For sale of
furmiture, machinery, etc., the respective assets should be credited.
(5) March l13: When cheque is received and immediately deposited in bank.
bank a/c is to be debited. However, when cheque is received and nothing is
mentioned about depositing in bank, 'cash Alc' should be debited. The cheque
may be sent to bank for collection later on or it can be endorsed tothird
parties because cheque is a negotiable instrument.
(6) March 15: Purchases are assumed to be on credit basis if not specifically
mentioned as cash purchases.
(7)March 20: When cheque given by a customer is dishonoured, he must
be debited for the cheque amount and also for any discount allowed to him.
So,discount allowed should be credited to cancel it.
(8)March 24: For sale of old newspapers, neither sales account nor newspapen
alc shouldbe credited because it is not a credit sale of goods and newspapen
is not a fixed asset (real A/c) sold. So, sundry income account should
credited for such miscellaneous incomes.
(9) March 25: Adding machine, typewriter, etc., can be grouped under thehead
ofhce equipment' because it is not preferable to open a separate accountfor
each item of assets purchased.
(10) March 3/: When a customer becomes insolvent, the uncoBlectible portiono
his debt is to be treated as 'Bad debts'.
(11) March 3!: When old debts written off are collcted, the amount shouldnot
be credited to the personal account of the customer or 1othe bad debts
is to be credited to 'Bad debts
recovered alc'.
 2.48
The Accounting Cycle Books and Records
llustration S
Journalise the following transactions
(a) Purchasedgoods on crdit from Anbu Rs. S,000
(b) Goods returned by Babu Rs S00
(c) Sale oftypewriter fer Rs. I.000
(d) Withdrew for domestic use Rs 250
(c) Paid Radha Rs. I,980 in full settlement ofa deht of Rs. 2,000
() Cheque for Rs. 2,500 received from Charles in settlement of a debt of
Rs. 2.750, returned dishonoured.
(g) Murugan who owes Rs. 3,000 pays Rs. 2,850 in full settlement.
(h) Goods worth Rs. 400 given as charity.
() Received a first and final dividend of 75 paise in the rupee from the
official receiver of M. Raju who owed us Rs. 3500.
() Sold to Shanthigoods worth Rs.40,000 less 2% discount and received
Rs.39,200 net by cheque.
(k) Purchased from Madan goods worth Rs.50,000 at $% trade discount
and 2% Cash discount terms and paid them half the amount in cash.
) Goods uninsured worth Rs. 1,500 were destroyed by fire.
(m) Rs. 200owing by Panneerselvam written off as bad debt.
(n) Goods worth Rs. 4, S00 were used by the proprietor for his personal use.
(o) Ahorse, bought for Rs. 3,000 during the year, died; its body was sold
for Rs. 1S0.
(p) Received from travelling salesman Rs.12,000 for goods sold by him.
after deducting his travelling expenses Rs. 500.
(q) Bought computer for personal use for Rs. 25,000 and the payment was
made out of business money.
(r) Issued acheque for Rs. 750 in favour of the landlord for rent.
(s) Received cash for dividend on shares Rs.400
() Bank paid Rs.600 directly for insurance premium of proprietor.
(u) Purchased machinery for Rs. 15,000 in exchange for Rs. 5,000
cash down payment and Rs.10,000 promissory note.
(v) Goods were distributed from stock as free samples to the value of
Rs. 250 as part of an advertisement campaign.
(w) Sold goods to Rita agencies for Rs. 12,000,received their acceptance
for Rs. 4,000 and balance in cash.
() Returned goods to Sujatha Rs. I,000
(y) Bank collected inerest on our investments Rs. 900
(2) Bank charges debited by bank Rs. 50.
 2.49
Solution: Financial Account
Journal Entries

Date Particulars LE Debit

Rs. Credit
Rs.
(a) Purchases Alc Dr S,000
To Anbu A/c
S,000
[Being goods purchased on credit]
(b) Sales Returns Alc Dr 500
To Babu A/c
S00
[Being goods returned by Babu]
(c) Cash A/c Dr 1,000
To Typewriter A/c 1,000
[Being sale of typewriter]
(d) Drawings Ale Dr 250
To Cash Alc 250
[Being amount drawn for domestic use]
(e) Radha AC Dr 2,000
To Cash Alc 1,980
To Discount received Alc 20
[Being Radha paid off &discount
received]
() Charles Alc Dr 2,750
To Bank A/c 2,500
To Discount allowed A/c 250
[Being Cheque received from
Charles in settlement of a debt
of Rs. 2,750 dishonoured and
discount allowed thereon cancelled]
(g) Cash A/c Dr 2,850
Discount allowed A/c Dr 150
To Murugan A/c 3,000
[Being amount received and discount
allowed in full settlement.]
(h) Charity Alc Dr 400
To Purchases Alc 400
(Being goods given as charity)
i) Cash A/c (3500x 75%) Dr 2,625
Bad debts Alc Dr 875
To Raju A/e 3,000
(Being cash received and balance
treated as bad debt due to insolvency
of customer]
 2.50
The Accounting Cycle - Books and Records 39,200
Cash A/c Dr
) 39.200
To Sales A/c
[Being goods sold and cheque
received after allowing 2% Trade
discount]
() Purchases A/e Dr 47,500
(K) 47,500
To Madan A/c
[Being goods purchased on credit
after Trade iscount of 5%]
(ii) Madan A/c Dr 23,750
To Cash Alc
23,275
475
To Discount received A/c
[Being cash paid & discount
received at 2%]
Goods destroyed by fire A/c Dr 1,500
() 1.500
To Trading A/c
[Being goods destroyed by fire]
Dr 200
(m) Bad debts Alc
200
To Panneerselvam Alc

[Being amount owed by Panerselvam

written offl
Dr 4,500
(n) Drawings Alc 4,500
To Purchases A/c
[Being goods withdrawn for
personal use] Dr 150
(0) Cash Alc
Profit & Loss A/c Dr 2,850
3,000
To Live stock A/c
[Being dead body of horse sold for
written off
cash and rest of the balance
asloss)
Dr 12,000
(p) Cash A/c
Dr 500
Travelling Expenses Alc 12,500
To Sales Alc
[Being cash received from salesman
for goods sold by him after deducting
his travelling expenses]
Dr 25,000
(q) Drawings A/c 25.000
ToCash Alc
|[BeingComputer bought for
personal use]
 2.51
(r) Rent A/c Dr
Financial Aceoumi
750
To Bank A/c
[Being rent paid to landlord by cheque]
(s) Cash A/c Dr 400
To Dividend Ae
[Being dividendon shares received] 400
() Drawing's A/c Dt 600
To Bank Alc
(Being insurance premium of
proprietor paid by Bark directly]
(u) Machinery Alc Dr 15,000
To Cash Ac
To Promissory Note Ale 5,000
[Being Machinery bought on Part 10,000
payment of cash and issue of
promissory note for the balance]
(v) Advertisement A/c Dr 250
To purchases A/c
[Being sanples distributed for 250

(w)
advertising
campaign]
Bills Receivable A/c Dr 4,000
Cash A/c Dr
To Sales A/c
8,000
12,000
[Being goods sold on part
payment of cash and the
balance by Bills receivable]
(x) Sujatha A/c Dr 1,0r^)
To Purchase returns Alc
(Being goods returned to Sujatha) 1,000
(y) Bank A/c Dr 900
To interest on investment A/c 900
(Being Interest collected by bank)
(z) Bank charges A/c Dr 50
To Bank Ale
(Beingbank charges debited by bank]
Notes :
() When cheque given by a
cheque amount and also forcustomer is dishonoured, for ihe
debitedallowed
any discount allowedto hehim.mustSo, bediscount
should be credited to cancel it.
(h) If goods are given
away as charity, they must be reduced from purchases by
crediting purchases Alc and charity is to be debited as an
expendiure.
 The Accounting Cycle - Books and Records 2.52
(i) When a customer becomes insolvent, the uncollected portion of the debt is to be
treated as bad debt.
(i) Trade discount does not form part of accounts. Net sale price is recovered as
sales. Since cheque received is like cash received, cash Alc should be debited
unless the cheque is deposited in bank on the sane day.
(k) Trade discount is reduced and entry is passed for net purchase price. Then cash
discount of 2% isconiputed on net purchase price of half the goods i.e.,
47,500 x 2=27,350.
(n) Goods used by proprietor are to be reduced from purchases by crediting
purchases account and drawings a/c is to be debited.
(o) Death of ahorse (property) causes a loss. Loss of Rs. 2,850(3000 150) is to be
debited to profit and loss a/c.
(p) Sales by a travelling salesman includes amount sent by him and expenses
incurred by him.
(q) Anything purchased for personal use of owner with business cash is to be
treated as drawings.
(r) Landlord Alc should not be debited. Though cheque is given to him, it is not given
in personalcapacity but as rent which is an expenditure. Thus, amounts paid to
any persons for expenses should be debited to the concerned expenses Alc and
not the individuals.
(t) Any payment made for proprietor's personal benefit is to be treated as
drawings.
(w) 'Acceptance' refers to bill receivable
(z) When bank charges are debited, bank balance redüces, so Bank Alc is to be
credited.

lustration 6
Atthe end of an accounting year, a trader finds that no entry has been
passed in the books of accounts in respect of the following transactions:
) Stock- in-hand at the end of the year Rs. 35,000
(i) Outstanding salary at the end of the year Rs. 4,000
(üi) Charge interest on capital (Rs. 1,00,000) at 10% p.a. for nine months.
(iv) Interest to be charged on drawings @6% when total drawings
were Rs. 30,000.
(v) An unsold machinery appearing in the books at Rs. 10,000isexchanged
for new machinery of Rs. 10,000. The old machinery has been valued
at Rs. 1,600 for exchange purpose.
(vi) Prepaid Insurance Premium Rs. 450.
Vi) Charge depreciation on furniture @8% for six months
(Furniture Rs. 16,000).
253
Solution: Pinancial
Journal Entrles
Date Particulars
Debit
Rs (redin
i) Closing Stock A/c Dr
To Trading Alc
35,000
[Being stock at the end brought
into books]
() Salary A/c Dr 4,000
To Outstanding salary Alc
4,00)
|[Being Salary outstanding brought
into books]
(m) Interest on Capital Alc Dr 7,500
To Capital Alc 7,500
[Being Interest on Capital @10%
p.a on Rs. 1,00,000 for nine months]

(iv) Drawings Alc Dr 1,800

To Interest on Drawings 1,800
[Being Interest on Drawings
a 6% on Rs. 30,000]
(v) Machinery Alc (New) Alc Dr 10,000
P& LA/C (loss on exchange) Dr 8,400
10,000
ToMachinery Alc (old)
ToSupplier's Alc 8,400
[Being exchange of oldmachine
with new machine and loss thereon]
Dr 450
(vi) Prepaid Insurance Alc 450
To Insurance Alc
[Being Insurance Premium Paid in
advance) 640
(vi) Depreciation Alc Dr
640
ToFurmiture Alc
(Being depreciation charged
a% p.a on Rs. 16,000 for six months)