BUSINESS ACCOUNTING

DRAFTING EXERCISE 1905

Submitted by:

Name of the Student: Ms Vaishnavi gangula

PRN: 24010244021
Division: A
Batch: 2024-2029
Programme: BBA. LLB
Academic Year: 2024-2025

Under the Supervision of

Dr. Meenakshi Kaul

Associate Professor
[Course-In-Charge: Business Accounting]
TABLE OF CONTENTS
Contents
Introduction_______________________________________________________________________________________________1
Rules of Debit & Credit____________________________________________________________________________________1
Source Document 1________________________________________________________________________________________1
Transaction 1______________________________________________________________________________________________1
Journal 1___________________________________________________________________________________________________1
Ledger 1____________________________________________________________________________________________________1
Source Document 2________________________________________________________________________________________1
Transaction 2______________________________________________________________________________________________1
Journal 2___________________________________________________________________________________________________1
Ledger 2____________________________________________________________________________________________________1
Source Document 3________________________________________________________________________________________1
Transaction 3______________________________________________________________________________________________1
Journal 3___________________________________________________________________________________________________1
Ledger 3____________________________________________________________________________________________________1
Source Document 4________________________________________________________________________________________1
Transaction 4______________________________________________________________________________________________1
Journal 4___________________________________________________________________________________________________1
Ledger 4____________________________________________________________________________________________________1
Source Document 5________________________________________________________________________________________1
Transaction 5______________________________________________________________________________________________1
Journal 5___________________________________________________________________________________________________1
Ledger 5____________________________________________________________________________________________________1
Conclusion_________________________________________________________________________________________________1
DRAFTING EXERCISE
Introduction
The drafting exercise in accounting bridges the gap between theory and practice, focusing on
critical thinking, problem-solving, and double-entry bookkeeping. By engaging with real-
world scenarios, we gain valuable insights into financial transactions and reporting.

Through this hands-on approach, we develop a comprehensive understanding of how

transactions impact accounts and statements, reinforcing our theoretical knowledge and
enhancing our practical skills. The exercise guides us through the entire accounting cycle—
from reviewing source documents to preparing journal entries and posting to ledgers—
ensuring accuracy and balance in financial records.

In the drafting exercise, we will follow these steps for each of the five source documents. After
completing these steps for Source Document 1, we will repeat the same process for Source
Documents 2, 3, and so on:

1. Step 1: Identify Source Documents for Creating a Transaction.

2. Step 2: Create a Transaction based on the source documents.

3. Step 3: Record the Transaction in a Journal.

4. Step 4: Post the Journal entries to a Ledger.

Rules of Debit and Credit

Modern Classification of Accounting

Asset Liability Capital Revenue Expense

RULE

DESCRIPTION DEBIT CREDIT RULE

Assets INCREASE DECREASE Debit the increase & credit the decrease
Liabilities DECREASE INCREASE Debit the decrease & credit the increase
Capital DECREASE INCREASE Debit the decrease & credit the increase
Revenue DECREASE INCREASE Debit the decrease & credit the increase
Expense INCREASE DECREASE Debit the increase & credit the decrease

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SOURCE DOCUMENT 1

The Cash Receipt serves as an essential source document for recording the initial capital
introduced into the business. This document provides evidence of the cash transaction where
the owner introduces capital into the business.

Source Document 1
CASH RECEIPT
Receipt No: 540001
Date: August 6, 2024

Received from: Owner’s Name [Atul]

Amount: Rs 1,00,000
Description: Capital introduced into the business.
Payment Method: Cash

Authorized Signatory:
J. Mohan
Senior Accountant | Atul Traders

TRANSACTION 1

To create a transaction from the Source Document 1, we have carefully reviewed the details
provided in the document, i.e. the initial capital investment of ₹1,00,000 into the business.
This receipt provided all necessary information, confirming that the cash was introduced as
capital by the owner. We then used this information to record the transaction and it ensures
that the initial funding is properly documented. The transaction so created will be:

DATE TRANSACTION 1 [FROM SOURCE DOCUMENT 1]

August 6, 2024 Atul started business with cash Rs. 1,00,000

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JOURNAL 1:

The transaction 1 involves the introduction of capital by the owner, Atul, into the business
Atul Traders for Rs. 1,00,000.

JOURNAL OF ATUL TRADERS

Date Particulars L.F. Dr. [Rs.] Cr. [Rs.]

2024 Cash A/c Dr. 1,00,000

August 6 To Capital A/c 1,00,000
(Being Capital introduced in Business)

LEDGER 1 [CASH ACCOUNT & CAPITAL ACCOUNT]

The ledger is a book where all the transactions recorded in the journal are posted to
individual accounts. From the above Journal, two Ledger Accounts need to be created:

LEDGER of ATUL TRADERS

Dr. CASH ACCOUNT Cr.
Amount Amount
Date Particulars L.F. (Rs.) Date Particulars L.F. (Rs.)
2024 2024
Aug 6 Capital A/c 1,00,000
Aug 31 Balance c/d 1,00,000
1,00,000 1,00,000

Sep 1 Balance b/d 1,00,000

LEDGER of ATUL TRADERS

Dr. CAPITAL ACCOUNT Cr.
Amount Amount
Date Particulars L.F. (Rs.) Date Particulars L.F. (Rs.)
2024 2024
Aug 6 Cash 1,00,000
Aug 31 Balance c/d 1,00,000
1,00,000 1,00,000

Sep 1 Balance b/d 1,00,000

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SOURCE DOCUMENT 2

The Bank receipt stands as an essential document for the cash being deposited into the bank.
This document provides evidence of bank transaction where the owner deposits cash into
bank.

Source Document 2
BANK RECEIPT
Bank name: Union bank of India
Branch address: Sector 23, NOIDA

Receipt No: 540002

Date: August 11, 2024

Account Holder’s Name: Atul

Account Number: 876876548
Transaction Type: bank
Amount: Rs 20000
Description: Cash deposited into bank

Authorized Signatory:
J. Mohan
Senior Accountant | Atul Traders

TRANSACTION 2

To create a transaction from the Source Document 2, we have carefully reviewed the details
provided in the document, i.e. the cash of Rs 20,000 being deposited into bank. This receipt

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provided all necessary information, confirming that the cash was being deposited into bank
by the owner. We then used this information to record the transaction and it ensures that the
cash was deposited. The transaction so created will be:

DATE TRANSACTION 2 [FROM SOURCE DOCUMENT 2]

August 11, 2024 Cash was deposited into bank Rs 20,000

JOURNAL 2:

The transaction 2 involves the cash being deposited into bank by the owner, Atul for Rs
20000.

JOURNAL OF ATUL TRADERS

Date Particulars L.F. Dr. [Rs.] Cr. [Rs.]

2024 Bank A/c Dr. 20,000

August 11 To Cash A/c 20,000
(Being deposited cash into bank)

LEDGER 2 [CASH ACCOUNT & BANK ACCOUNT]

LEDGER of ATUL TRADERS

Dr. BANK ACCOUNT Cr.
Amount Amount
Date Particulars L.F. (Rs.) Date Particulars L.F. (Rs.)
2024 2024
Aug 11 To cash A/c 20,000
Aug 31 Balance c/d 20,000
20,000 20,000

Sep 1 Balance b/d 20,000

LEDGER of ATUL TRADERS

Dr. CASH ACCOUNT Cr.
Date Particulars L.F. Amount Date Particulars L.F. Amount

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(Rs.) (Rs.)
2024 2024
Aug 11 By bank A/c 20,000
Aug 31 Balance c/d 20,000
20,000 20,000

Sep 1 Balance b/d 20,000

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DRAFTING EXERCISE
SOURCE DOCUMENT 3

The Sales receipt stands as an essential document for selling goods to Hari. This document
provides evidence of cash transaction where the owner sold goods to Hari.

Source Document 3
SALES ORDER RECEIPT

Order no: 30056

Date: August 13, 2024

Customer Information:
Name: Hari
Address: sector 35, NOIDA
Contact: 9866715557

Order Details:

Item Description Quantity Unit Price Total Price

Widget A 2 ₹500 ₹1000

Widget B 1 ₹4000 ₹4000

Subtotal: Rs 5000
Tax (10%): Rs 500
Total Amount: Rs 5500

Payment Information:
Paid via Credit Card
Transaction ID: TXN59384748

TRANSACTION 3

To create a transaction from the Source Document 3, we have carefully reviewed the details
provided in the document, i.e the goods are sold to Hari. This receipt provided all necessary
information, confirming that the goods are sold to Hari by the owner. We then used this

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DRAFTING EXERCISE
information to record the transaction, and it ensures that the goods were sold. The
transaction so created will be:

DATE TRANSACTION 3 [FROM SOURCE DOCUMENT 3]

August 13, 2024 Sold goods to Hari Rs 5500

JOURNAL 3:

The transaction 3 involves the goods sold to Hari by the owner, Atul for Rs 5500.

JOURNAL OF ATUL TRADERS

Date Particulars L.F. Dr. [Rs.] Cr. [Rs.]

2024 Hari A/c Dr. 5500

August 13 To sales A/c 5500
(Being sold goods to Hari)

LEDGER 3 [HARI ACCOUNT & SALES ACCOUNT]

LEDGER of ATUL TRADERS

Dr. HARI ACCOUNT Cr.
Amount Amount
Date Particulars L.F. (Rs.) Date Particulars L.F. (Rs.)
2024 2024
Aug 13 To Sales A/c 5500
Aug 31 Balance c/d 5500
5500 5500

Sep 1 Balance b/d 5500

LEDGER of ATUL TRADERS

Dr. SALES ACCOUNT Cr.
Amount Amount
Date Particulars L.F. (Rs.) Date Particulars L.F. (Rs.)
2024 2024
Aug 11 By Hari A/c 5500
Aug 31 Balance c/d 5500
5500 5500

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Sep 1 Balance b/d 5500

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DRAFTING EXERCISE
SOURCE DOCUMENT 4

The Purchase receipt stands as an essential document for purchasing goods from Agasthya.
This document provides evidence of cash transaction where the owner purchased goods from
Agasthya.

Source Document 4
PURCHASE RECEIPT
Date: August 15,2024
Receipt No: 463276

Supplier:
Agasthya Supplies [Link].
Sector 61, NOIDA
Phone:9398306448
Email: contact@[Link]

Buyer:
Atul traders
678 Industrial Area, NOIDA
Phone:7659234576
Email: info@[Link]
Description of Goods:

Item Quantit Unit Price Total Price

No. Description y (INR) (INR)

001 Office Chairs 5 2,500 12,500

002 Desks 5 2,500 12,500

Subtotal: INR 25000

GST (10%): INR 2500
Total Amount: INR 27500

Payment Method: Cash

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DRAFTING EXERCISE

Authorized Signatory:
J. Mohan

TRANSACTION 4

To create a transaction from the Source Document 4, we have carefully reviewed the details
provided in the document, i.e the goods are purchased from Agasthya. This receipt provided
all necessary information, confirming that the goods are purchased from Agasthya by the
owner. We then used this information to record the transaction and it ensures that the goods
were purchased . The transaction so created will be:

DATE TRANSACTION 4 [FROM SOURCE DOCUMENT 4]

August 15, 2024 Purchased goods from Agasthya Rs 27,500

JOURNAL 4:

The transaction 4 involves the goods purchased from Agasthya supplies pvt ltd by the owner,
Atul for Rs 27,500.

JOURNAL OF ATUL TRADERS

Date Particulars L.F. Dr. [Rs.] Cr. [Rs.]

2024 Purchase A/c Dr. 27,500

August 15 To Agasthya A/c 27,500
(Being purchased goods from Agasthya)

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DRAFTING EXERCISE
LEDGER 4 [PURCHASE ACCOUNT & AGASTHYA ACCOUNT]

LEDGER of ATUL TRADERS

Dr. PURCHASE ACCOUNT Cr.
Amount Amount
Date Particulars L.F. (Rs.) Date Particulars L.F. (Rs.)
2024 2024
Aug 15 To Agasthya A/c 27,500
Aug 31 Balance c/d 27,500
27,500 27,500

Sep 1 Balance b/d 27,500

LEDGER of ATUL TRADERS

Dr. AGASTHYA ACCOUNT Cr.
Amount Amount
Date Particulars L.F. (Rs.) Date Particulars L.F. (Rs.)
2024 2024
By purchase
Aug 11 A/c 27,500
Aug 31 Balance c/d 27,500
27,500 27,500

Sep 1 Balance b/d 27,500

SOURCE DOCUMENT 5:

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DRAFTING EXERCISE
The Cheque serves as an essential source document for recording the goods were bought
using cheque. This document provides evidence of the bank transaction where the owner
buys goods through cheque.

Source Document 5
CHEQUE RECEIPT
Atul traders
Date: August 18, 2024
Pay to the Order of: Ekta Supplies
Amount: Rs 10,000

Cheque Number: 93764

TRANSACTION 5:

To create a transaction from the Source Document 5, we have carefully reviewed the details
provided in the document, i.e the goods were brought through cheque. This receipt provided
all necessary information, confirming that the goods are purchased through cheque by the
owner. We then used this information to record the transaction, and it ensures that the goods
were purchased. The transaction so created will be:

DATE TRANSACTION 4 [FROM SOURCE DOCUMENT 4]

August 18, 2024 Brought goods worth Rs 10,000 through cheque.

JOURNAL 3:

The transaction 5 involves the goods brought by the owner through cheque Rs 10,000.

JOURNAL OF ATUL TRADERS

Date Particulars L.F. Dr. [Rs.] Cr. [Rs.]

2024 Purchase A/c Dr. 10,000

August 18 To Bank A/c 10,000

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(Being goods purchased and payment made
through cheque)

LEDGER 5 [PURCHASE ACCOUNT & BANK ACCOUNT]

LEDGER of ATUL TRADERS

Dr. BANK ACCOUNT Cr.
Amount Amount
Date Particulars L.F. (Rs.) Date Particulars L.F. (Rs.)
2024 2024
Aug 15 To Purchase A/c 10,000
Aug 31 Balance c/d 10,000
10,000 10,000

Sep 1 Balance b/d 10,000

LEDGER of ATUL TRADERS

Dr. PURCHASE ACCOUNT Cr.
Amount Amount
Date Particulars L.F. (Rs.) Date Particulars L.F. (Rs.)
2024 2024
Aug 11 By Bank A/c 10,000
Aug 31 Balance c/d 10,000
10,000 10,000

Sep 1 Balance b/d 10,000

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DRAFTING EXERCISE
Conclusion

The drafting exercise in accounting has transformed our theoretical knowledge into practical
expertise. By guiding us through each step—from identifying source documents to posting
journal entries to ledgers—we have developed a solid foundation in financial transactions
and reporting.

Engaging with real-world scenarios has sharpened our critical thinking, problem-solving, and
double-entry bookkeeping skills. This hands-on approach has prepared us for the demands of
the accounting profession, ensuring we are ready to excel in our careers with confidence and
competence.

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