Accounting and Finance Unit 2

Accounting and Finance
Course Code: 21VMB0C103
Unit 2: Accounting Cycle
Prof. Vasudha Srivatsa

Accounting Process
Identify the
transaction
Recording
Closing the Journal Entries
of the
Books
transaction
Income
Statement and
Balance Sheet
Preparation
Posting in
of Financial Ledge
the Ledger
Statements Accounting Accounts
Process/Cycle
Adjusted Unadjusted
Trial Trial
Balance Balance
Adjusting
Journal
Entries
Books of Accounts
• A group of similar
• A record maintained • A detailed accounts whose • A cash book in
for a financial transaction combined balances accounting records
transaction book information for one equal the balance in a all cash transactions
place account specific general in detail
ledger account
Journal Ledger Subsidiary Books Cash Book
Journal
The Journal records all daily transactions of a business into the order in which they occur. A
journal may, therefore, be defined as a book containing a chronological record of transactions.
It is the book in which the transactions are recorded first of all under the double entry system.
Thus, Journal is the book of the original record .
Journal entries in the books of………

Date Particulars LF Debit (₹) Credit (₹)
Journal
Rules of Debit and Credit

The transaction in the Journal is recorded on the basis of the rules of debit and credit. For
this purpose business transactions have been classified into three categories:
1. Transactions relating to persons.
2. Transactions relating to properties and assets.
3. Transactions relating to income and expenses.
On this basis, it becomes necessary for the business to keep an account of:
4. Each person with whom it deals.
5. Each property or asset which the business owns.
6. Each item of income or expense.
 The accounting falling under the first heading is called “Personal Accounts”.
 The account falling under the second heading are termed “Real Accounts”.
 The accounts falling under the third heading are termed “Nominal Accounts”.
Journal
ACCOUNTS
PERSONAL REAL NOMINAL
Natural Person Tangible Expenses & Losses
Artificial Person Intangible Incomes and Gains
Representative Person
Rule: Rule: Rule:

Debit the Receiver Debit What Comes In Debit All Expenses and Losses
Credit the Giver Credit What Goes Out Credit All Incomes and Gains
Journal
Note: Both Real Accounts and Nominal Accounts come in the category of Impersonal
Accounts. When a prefix or suffix is added to a Nominal Account, it becomes a Personal
Account.
Nominal Account Personal Account

1. Rent Account Rent prepaid account, O/S rent account
2. Interest Account O/S interest account, Interest received in advance account,

Prepaid interest account
3. Salary Account O/S Salaries account, Prepaid salaries account
4. Insurance Account O/S insurance account, Prepaid insurance account
5. Commission Account O/S commission account, Prepaid commission account
Journal
classify the following into personal, real and nominal accounts

1. Investments 1. Asset - Real Account
2. Freehold Premises 2. Asset - Real Account
3. Accrued Interest 3. Accrued Income – Personal Account
4. Punjab Agro Industries Corporation 4. Artificial Person – Personal Account
5. Janata Allied Mechanical Works 5. Artificial Person – Personal Account
6. Salary Accounts 6. Expenses – Nominal Account
7. Loose Tools Accounts 7. Asset – Real Account
8. Purchases Account 8. Asset – Real Account
9. Indian Bank Ltd. 9. Artificial Person – Personal Account
10.Capital Account 10.Owner’s money – Personal Account
11. Brokerage Account 11. Income – Nominal Account
12.Toll Tax Account 12. Income – Nominal Account
13.Dividend Received Account 13. Income – Nominal Account
14.Royalty Account 14. Income/Expenses – Nominal Account
15.Sales Account 15. Asset – Real Account
Journal
From the following transactions find out the nature of the account and also state which account should be
debited and which account should be credited.
1. Rent paid
2. Salaries paid
3. Interest received
4. Dividends received
5. Furniture purchased for cash
6. Machinery sold
7. Outstanding salaries.
8. Paid to Suresh
9. Received from Mohan (the proprietor)
10.Lighting expenses
Journal
Transaction Accounts Involved Nature of Account Debit/Credit

Rent A/c Nominal A/c Debit
1 Rent paid
Cash A/c Real A/c Credit
Salaries A/c Nominal A/c Debit
2 Salaries paid
Cash A/c Real A/c Debit
3 Interest received
Interest A/c Nominal A/c Credit
4 Dividends received
Dividend A/c Nominal A/c Credit
Furniture A/c Real A/c Debit
Furniture Purchased for
5
cash
Credit
6 Machinery sold
Machinery A/c Real A/c Credit
Salaries A/c Nominal A/c Debit
7 Outstanding for salaries
O/S Salaries A/c Personal A/c Credit
Suresh A/c Personal A/c Debit
8 Paid to Suresh
Received from Mohan
9
(the Proprietor)
Capital A/c
Lighting A/c Personal A/c
Nominal Credit
Debit
10 Lighting expenses
Journal
The Journalise the following transactions.

1. Ram Starts a business with a capital of Rs.2,00,000 on January 1, 2022
2. He purchased furniture for cash of Rs.50,000 on January 5, 2022
3. He paid rent for business premises Rs.20,000 on January 10, 2022
4. He purchased goods on the credit of Rs.20,000 from Suresh on January 20, 2022
1. Ram Starts a business with a capital of Rs.2,00,000 on January 1, 2022

Date Particulars L.F Debit (Rs.) Credit (Rs.)
Cash A/c Dr. 2,00,000
Jan 1, 2011
To Capital A/c 2,00,000
(Being commencement of Business)
2. He purchased furniture for cash of Rs.50,000 on January 5, 2022
Furniture A/c
Dr. 50,000
Jan 5, 2011 To CashA/c 50,000
(Being purchase of furniture for cash)
3. He paid rent for business premises Rs.20,000 on January 10, 2022
Rent A/c Dr. 20,000
Jan 10,
To Cash A/c 20,000
2011
(Being Rent Paid)
4. He purchased goods on the credit of Rs.20,000 from Suresh on January 20, 2022
Purchases A/c
Jan 20, Dr. 20,000
2011 To Suresh A/c 20,000
(Being Purchase of goods on Credit)
Journal
The Journalise the following transactions.

1. Payment made to Ram Rs.9,500. He allowed a cash discount of Rs.500
2. Cash received from Suresh Rs.4750 and allowed him Rs.250 as discount
3. A running business was purchased by Mohan with the following assets and Liabilities: Cash
Rs.20,000, Land Rs.40,000, Furniture Rs.10,000, Stock Rs.20,000, Creditors Rs.10,000, Bank
Overdraft Rs.20,000.
Journal entries in the books of…..

Ram A/c Dr. 10,000
1 To Cash A/c 9,500
“ Discount A/c 500
(Being Paid to Ram by receiving discount)
Cash A/c
Dr. 4,750
2 Discount A/c Dr. 250
To Suresh A/c 5,000
(Being amount received from Suresh and
allowed discount)
Journal
Cash A/c
Dr. 20,000
Land A/c
Dr.
Furniture A/c
Dr. 40,000
3 Stock A/c 10,000
Dr. 20,000
To Creditors A/c 10,000
“ Overdraft A/c 20,000
“ Capital A/c [Bal] 60,000
(Being commencement of business by Mohan
by taking over a running business)
Journal
Journalise the following transactions in the books of Komal

1st January 2022 Komal started his business with the following:
Cash in hand Rs.1,50,000
Cash at bank Rs.50,000
Goods in hand Rs.30,000
Furniture Rs.20,000
Building Rs.1,00,000
Bank overdraft rs.5,000
3rd January 2022 Loan taken from the bank Rs.50,000
5th January 2022 Purchased a motor car in exchange for goods Rs.20,000 and cheque Rs.30,000
8th January 2022 Paid proprietor’s life insurance premium Rs.1,000
10th January 2022 Bought goods from Lakshman on account Rs.5,000
12th January 2022 Furniture costing Rs.5,000 was destroyed by fire and recovered Rs.3,000
15th January 2022 Purchased goods worth Rs.50,000 less 20% trade discount and 5% cash discount
16th January 2022 Bought 100 shares of GMR Infra Ltd., at Rs.50 per share and paid a brokerage of Rs.25.
19th January 2022 Bought goods of Rs.50,000 by issuing a cheque.
20th January 2022 Sold goods to Mr.Y for Rs.60,000 on credit.
21st January 2022 Sold goods and received cheque for Rs.40,000.
21st January 2022 Goods distributed as free samples Rs.1,000
22nd January 2022 Mr. Y became insolvent and only fifty paise in the rupee was received from his estate.
23rd January 2022 Cash Rs.5,000 is withdrawn by the Komal for personal use.
Journal
Journal entries in the books of Komal

Cash A/c
01.01.2014 Dr 1,50,000
Bank A/c
Dr 50,000
Stock A/c
Dr 30,000
Furniture A/c
Dr 20,000
Buildings
Dr 1,00,000
To Bank Overdraft A/c 5,000
To Capital A/c 3,45,000
(Being Commencement of Business)
Charity A/c
02.01.2014 Dr. 1,000
To Cash A/c 1,000
(Being Charity paid by cash)
03.01.2014 Cash A/c Dr. 50,000
To Bank loan A/c 50,000
Journal

Furniture Rs.20,000
Journal
08.01.2014 Drawings A/c Dr. 1,000

To Cash A/c 1,000
(Being proprietor's life insurance paid)
Purchases A/c
10.01.2014 Dr. 5,000
To Lakshman's A/c 5,000
(Being Purchase of goods on credit)
12.01.2014 Loss on furniture destroyed by fire A/c Dr. 2,000
To Furniture A/c 2,000
(Being loss on furniture destroyed by fire)
15.01.2014 Purchases A/c Dr. 50,000
To Discount A/c 2,500
To Cash A/c 47,500
(Being goods purchased with 5% discount)
Investment A/c
16.01.2014 Dr. 5,025
To Cash A/c 5,025
19.01.2014 Purchases A/c in GMR Shares at Rs.50 per shareDr.
(Being invested 50,000
andTo Bank
paid A/c
a commission of Rs.25) 50,000
(Being purchase of goods by issuing a cheque)
Journal

Furniture Rs.20,000
Journal
Y's A/c
20.01.2014 Dr. 60,000
To Sales A/c 60,000
(Being goods sold on credit)
21.01.2014 Cash A/c Dr. 40,000
To Sales A/c 40,000
(Being goods sold and received cheque)
Advertisement A/c
21.01.2014 Dr. 1,000
To Stock A/c 1,000
(Being goods distributed as free samples)
22.01.2014 Cash A/c Dr. 30,000
Bad Debts A/c Dr. 30,000
To Y'sA/c 60,000
(Being amount received from Y, balance treated as
Bad debt)
Bank A/c
22.01.2014 Dr. 40,000
To Cash A/c 40,000
(Being cheque deposited into bank)
Drawings A/c
Journal

Furniture Rs.20,000
Journal
25.01.2014 Bank A/c Dr. 10,000

To Rent A/c 10,000
(Being cheque dishonoured because of signature
mismatch)
27.01.2014 Travelling Expenses A/c Dr. 1,500
Cash A/c Dr. 30,000
To Sales A/c 31,500
(Being Cash received after deducting travelling
expenses)
Total 8,34,525 8,34,525
Ledger
Dr. Name of the Ledger Account Cr.

Amount Amount
Date Particulars JF Date Particulars JF
(₹) (₹)
Ledger
Journalise the following transactions for the month of Dec 2014.

Dec 1: Ajit started business with cash Rs.40,000
Dec 3: He paid into the Bank Rs.2,000
Dec 5: He purchased goods for cash Rs.15,000
Dec 8: He sold goods for cash Rs.6,000
Dec 10: He purchased furniture and paid by cheque Rs.5,000
Dec 12: He sold goods to Arvind Rs.4,000
Dec 14: He purchased goods from Amrit Rs.10,000
Dec 15: He returned goods to Amrit Rs.5,000
Dec 16: He received from Arvind Rs.3,960 in full settlement
Dec 18: He withdrew goods for personal use Rs.1,000
Dec 20: He withdrew cash from business for personal use Rs.2,000
Dec 24: He paid telephone charges Rs,1,000
Dec 26: Cash paid to Amrit in full settlement Rs.4,900
Dec 31: Paid for stationary Rs.200, Rent Rs.500 and salaries to staff Rs.2,000
Dec 31: Goods distributed by way of free samples Rs.1,000
Ledger
Journal entries in the books of Ajit

Date Particulars L.F Debit Credit
1-Dec Cash A/c Dr. 40,000
To Capital A/c 40,000
3-Dec Bank A/c Dr. 2,000
To Cash A/c 2,000
(Being Cash deposited in to Bank)
5-Dec Purchases A/c Dr. 15,000
To Cash A/c 15,000
(Being purchase of goods for cash)
To Sales A/c 6,000
(Being goods sold for cash)
10-Dec Furniture A/c Dr. 5,000
To Bank A/c 5,000
(Being purchased furniture and paid by cheque)
Ledger

Ledger
Arvind A/c
12-Dec 4,000
Dr.
To Sales A/c 4,000
(Being sale of goods)
To Amrit A/c 10,000
(Being purchased goods from Amrit)
15-Dec Amrit A/c Dr. 5,000
To Purchase returns A/c 5,000
(Being goods returned to Amrit)
Discount A/c Dr. 40
To Arvind A/c 4,000
(Being cash received from Arvind in full settlement and
allowd him a discount of Rs.40)
18-Dec Drawings A/c Dr. 1,000
To Purchases A/c 1,000
(Being withdrawal of goods for personal use)
Ledger

Ledger

To Cash A/c 2,000
(Being withdrawal of cash for personal use)
24-Dec Telephone Charges A/c Dr. 1,000
To Cash A/c 1,000
(Being Telephone expenses paid)
To Cash A/c 4,900
To Discount A/c 100
(Being cash paid to Amrit, he allowed a discount of Rs.100)
31-Dec Stationery A/c Dr. 200
Rent A/c Dr. 500
Salaries A/c Dr. 2,000
To Cash A/c 2,700
(Being expenses paid)
31-Dec Advertisement Expenses A/c Dr. 1,000
To Purchases A/c 1000
(Being distribution of goods by way of free samples)
Total 1,03,700 1,03,700
Ledger
Posting to Ledger Accounts

Ledger
Dr. Name of the Ledger Account Cr.

Amount Amount
(₹) (₹)
Ledger

To Cash A/c 2,000
To Cash A/c 15,000
To Sales A/c 6,000
To Bank A/c 5,000
Ledger
Dr. Cash A/c Cr.

Amount Amount
(₹) (₹)
1-Dec To Capital A/c 40,000
Ledger
Dr. Capital A/c Cr.

Amount Amount
(₹) (₹)
1-Dec By Cash A/c 40,000
Ledger

To Cash A/c 2,000
To Cash A/c 15,000
To Sales A/c 6,000
To Bank A/c 5,000
Ledger
Dr. Bank A/c Cr.

Amount Amount
(₹) (₹)
3-Dec To Cash A/c 2,000
Dr. Cash A/c Cr.

Amount Amount
(₹) (₹)
1-Dec To Capital A/c 40,000 3-Dec By Bank A/c 2,000
Ledger

To Cash A/c 2,000
To Cash A/c 15,000
To Sales A/c 6,000
To Bank A/c 5,000
Ledger
Dr. Purchases A/c Cr.

Amount Amount
(₹) (₹)
Dr. Cash A/c Cr.

Amount Amount
(₹) (₹)
5-Dec “ Purchases A/c 15,000
Ledger

To Cash A/c 2,000
To Cash A/c 15,000
To Sales A/c 6,000
To Bank A/c 5,000
Ledger
Dr. Cash A/c Cr.

Amount Amount
(₹) (₹)
8-Dec “ Sales A/c 6,000 5-Dec “ Purchases A/c 15,000
Dr. Sales A/c Cr.

Amount Amount
(₹) (₹)
Ledger

To Cash A/c 2,000
To Cash A/c 15,000
To Sales A/c 6,000
To Bank A/c 5,000
Ledger
Dr. Furniture A/c Cr.

Amount Amount
(₹) (₹)
10-Dec To Bank A/c 5,000
Dr. Bank A/c Cr.

Amount Amount
(₹) (₹)
3-Dec To Cash A/c 2,00010-Dec By Furniture A/c 5,000
Ledger
Arvind A/c
12-Dec 4,000
Dr.
To Sales A/c 4,000
To Amrit A/c 10,000
Discount A/c Dr. 40
To Arvind A/c 4,000
Ledger
Dr. Arvind A/c Cr.

Amount Amount
(₹) (₹)
12-Dec To Sales A/c 4,000
Dr. Sales A/c Cr.

Amount Amount
(₹) (₹)
12-Dec “ Arvind A/c 4,000
Ledger
Arvind A/c
12-Dec 4,000
Dr.
To Sales A/c 4,000
To Amrit A/c 10,000
Discount A/c Dr. 40
To Arvind A/c 4,000
Ledger

Amount Amount
(₹) (₹)
14-Dec “ Amit A/c 10,000
Dr. Amrit A/c Cr.

Amount Amount
(₹) (₹)
14-Dec By Purchases A/c 10,000
Ledger
Arvind A/c
12-Dec 4,000
Dr.
To Sales A/c 4,000
To Amrit A/c 10,000
Discount A/c Dr. 40
To Arvind A/c 4,000
Ledger
Dr. Amrit A/c Cr.

Amount Amount
(₹) (₹)
15-Dec To Purchase Returns A/c 5,00014-Dec By Purchases A/c 10,000
Dr. Purchase Returns A/c Cr.

Amount Amount
(₹) (₹)
15-Dec By Amrit A/c 5,000
Ledger
Arvind A/c
12-Dec 4,000
Dr.
To Sales A/c 4,000
To Amrit A/c 10,000
Discount A/c Dr. 40
To Arvind A/c 4,000
allowed him a discount of Rs.40)
Ledger
Dr. Cash A/c Cr.

Amount Amount
(₹) (₹)
Ledger
Dr. Discount A/c Cr.

Amount Amount
(₹) (₹)
18-Dec To Arvind A/c 40
Dr. Arvind A/c Cr.

Amount Amount
(₹) (₹)
12-Dec To Sales A/c 4,00018-Dec By Cash A/c 3,960
-“- “ Discount A/c 40
Ledger
Arvind A/c
12-Dec 4,000
Dr.
To Sales A/c 4,000
To Amrit A/c 10,000
Discount A/c Dr. 40
To Arvind A/c 4,000
allowed him a discount of Rs.40)
Ledger
Dr. Drawings A/c Cr.

Amount Amount
(₹) (₹)
18-Dec To Purchases A/c 1,000

Amount Amount
(₹) (₹)
5-Dec To Cash A/c 15,00018-Dec By Drawings A/c 1,000
14-Dec “ Amit A/c 10,000
Ledger

To Cash A/c 2,000
To Cash A/c 1,000
To Cash A/c 4,900
To Discount A/c 100
Rent A/c Dr. 500
To Cash A/c 2,700
Total 1,03,700 1,03,700
Ledger

Amount Amount
(₹) (₹)
20-Dec “ Cash A/c 2,000
Dr. Cash A/c Cr.

Amount Amount
(₹) (₹)
18-Dec “ Arvind A/c 3,96020-Dec “ Drawings A/c 2,000
Ledger

To Cash A/c 2,000
To Cash A/c 1,000
To Cash A/c 4,900
To Discount A/c 100
Rent A/c Dr. 500
To Cash A/c 2,700
Total 1,03,700 1,03,700
Ledger
Dr. Telephone Charges A/c Cr.

Amount Amount
(₹) (₹)
Dr. Cash A/c Cr.

Amount Amount
(₹) (₹)
24-Dec “ Telephone Charges A/c 1,000
Ledger

To Cash A/c 2,000
To Cash A/c 1,000
To Cash A/c 4,900
To Discount A/c 100
Rent A/c Dr. 500
To Cash A/c 2,700
Total 1,03,700 1,03,700
Ledger
Dr. Amrit A/c Cr.

Amount Amount
(₹) (₹)
26-Dec “ Discount A/c 100
-“- “ Cash A/c 4,900

Amount Amount
(₹) (₹)
18-Dec To Arvind A/c 4026-Dec By Amrit A/c 100
Ledger
Dr. Cash A/c Cr.

Amount Amount
(₹) (₹)
26-Dec “ Amrit A/c 4,900
Ledger

To Cash A/c 2,000
To Cash A/c 1,000
To Cash A/c 4,900
To Discount A/c 100
Rent A/c Dr. 500
To Cash A/c 2,700
Total 1,03,700 1,03,700
Ledger
Dr. Stationery A/c Cr.

Amount Amount
(₹) (₹)
31-Dec To Cash A/c 200
Dr. Rent A/c Cr.

Amount Amount
(₹) (₹)
Ledger
Dr. Salary A/c Cr.

Amount Amount
(₹) (₹)
Ledger
Dr. Cash A/c Cr.

Amount Amount
(₹) (₹)
31-Dec “ Stationery A/c 200
-“- “ Rent A/c 500
-“- “ Salary A/c 2,000
Ledger

To Cash A/c 2,000
To Cash A/c 1,000
To Cash A/c 4,900
To Discount A/c 100
Rent A/c Dr. 500
To Cash A/c 2,700
Total 1,03,700 1,03,700
Ledger
Dr. Advertisement Expenses A/c Cr.

Amount Amount
(₹) (₹)

Amount Amount
(₹) (₹)
14-Dec “ Amit A/c 10,00031-Dec “ Advertisement Expenses A/c 1,000
Ledger
Balancing of Ledger Accounts

Ledger
Dr. Cash A/c Cr.

Amount Amount
(₹) (₹)
-“- “ Rent A/c 500
-“- “ Salary A/c 2,000
- “ - By Balance C/d 22,360
49,960 49,960
1-Jan To Balance B/d 22,360
Note: The total on the debit side is more than the total on the Credit side, so it is called a Debit Balance
Ledger
Dr. Capital A/c Cr.

Amount Amount
(₹) (₹)
31-Dec To Balance C/d 40,000
40,000 40,000
1-Jan By Balance B/d 40,000
Dr. Bank A/c Cr.

Amount Amount
(₹) (₹)
5,000 5,000
Ledger

Amount Amount
(₹) (₹)
25,000 25,000
Dr. Sales A/c Cr.

Amount Amount
(₹) (₹)
10,000 10,000
Ledger

Amount Amount
(₹) (₹)
31-Dec By Balance C/d 5,000
5,000 5,000
Dr. Arvind A/c Cr.

Amount Amount
(₹) (₹)
4,000 4,000
Note: If ledger a/c doesn’t have balance, then It will not be taken into Trial Balance
Ledger
Dr. Amrit A/c Cr.

Amount Amount
(₹) (₹)
-“- “ Cash A/c 4,900
10,000 10,000
Amount Amount
(₹) (₹)
15-Dec By Amit A/c 5,000
5,000 5,000
Ledger

Amount Amount
(₹) (₹)
31-Dec To Balance C/d 60
100 100
1-Jan By Balance B/d 60

Amount Amount
(₹) (₹)
20-Dec “ Cash A/c 2,000
3,000 3,000
Ledger

Amount Amount
(₹) (₹)
1,000 1,000

Amount Amount
(₹) (₹)
31-Dec By Balance C/d 200
200 200
1-Jan To Balance B/d 200
Ledger
Dr. Rent A/c Cr.

Amount Amount
(₹) (₹)
31-DecBy Balance C/d 500
500 500
Dr. Salary A/c Cr.

Amount Amount
(₹) (₹)
31-DecBy Balance C/d 2,000
2,000 2,000
Ledger

Amount Amount
(₹) (₹)
2,000 1,000
Trial Balance
Trial Balance of……………... as on ………..

Particulars Debit Credit
Total
Ledger
Dr. Cash A/c Cr.

Amount Amount
(₹) (₹)
-“- “ Rent A/c 500
-“- “ Salary A/c 2,000
49,960 49,960
Note: The total on the debit side is more than the total on the Credit side, so it is called a Debit Balance
Trial Balance
Trial Balance of Ajit as on 31st December
Cash A/c 22,360
Capital A/c 40,000
Bank A/c (OD) 3,000
Purchases A/c 23,000
Sales A/c 10,000
Furniture A/c 5,000
Purchase Returns A/c 5,000
Discount A/c 60
Drawings A/c 3,000
Telephone Charges A/c 1,000
Stationery A/c 200
Rent A/c 500
Salary A/c 2,000
Advertisement Expenses A/c 1,000
Total 58,060 58,060
Ledger
Dr. Capital A/c Cr.

Amount Amount
(₹) (₹)
40,000 40,000
Dr. Bank A/c Cr.

Amount Amount
(₹) (₹)
5,000 5,000
Trial Balance
Cash A/c 22,360
Capital A/c 40,000
Bank A/c (OD) 3,000
Sales A/c 10,000
Furniture A/c 5,000
Discount A/c 60
Drawings A/c 3,000
Stationery A/c 200
Rent A/c 500
Salary A/c 2,000
Total 58,060 58,060
Ledger

Amount Amount
(₹) (₹)
25,000 25,000
Dr. Sales A/c Cr.

Amount Amount
(₹) (₹)
10,000 10,000
Trial Balance
Cash A/c 22,360
Capital A/c 40,000
Bank A/c (OD) 3,000
Sales A/c 10,000
Furniture A/c 5,000
Discount A/c 60
Drawings A/c 3,000
Stationery A/c 200
Rent A/c 500
Salary A/c 2,000
Total 58,060 58,060
Ledger

Amount Amount
(₹) (₹)
5,000 5,000
Dr. Arvind A/c Cr.

Amount Amount
(₹) (₹)
4,000 4,000
Trial Balance
Cash A/c 22,360
Capital A/c 40,000
Bank A/c (OD) 3,000
Sales A/c 10,000
Furniture A/c 5,000
Discount A/c 60
Drawings A/c 3,000
Stationery A/c 200
Rent A/c 500
Salary A/c 2,000
Total 58,060 58,060
Ledger
Dr. Amrit A/c Cr.

Amount Amount
(₹) (₹)
-“- “ Cash A/c 4,900
10,000 10,000
Amount Amount
(₹) (₹)
15-Dec By Amit A/c 5,000
5,000 5,000
Trial Balance
Cash A/c 22,360
Capital A/c 40,000
Bank A/c (OD) 3,000
Sales A/c 10,000
Furniture A/c 5,000
Discount A/c 60
Drawings A/c 3,000
Stationery A/c 200
Rent A/c 500
Salary A/c 2,000
Total 58,060 58,060
Ledger

Amount Amount
(₹) (₹)
31-Dec To Balance C/d 60
100 100
1-Jan By Balance B/d 60

Amount Amount
(₹) (₹)
20-Dec “ Cash A/c 2,000
3,000 3,000
Trial Balance
Cash A/c 22,360
Capital A/c 40,000
Bank A/c (OD) 3,000
Sales A/c 10,000
Furniture A/c 5,000
Discount A/c 60
Drawings A/c 3,000
Stationery A/c 200
Rent A/c 500
Salary A/c 2,000
Total 58,060 58,060
Ledger

Amount Amount
(₹) (₹)
1,000 1,000

Amount Amount
(₹) (₹)
31-Dec By Balance C/d 200
200 200
Trial Balance
Cash A/c 22,360
Capital A/c 40,000
Bank A/c (OD) 3,000
Sales A/c 10,000
Furniture A/c 5,000
Discount A/c 60
Drawings A/c 3,000
Stationery A/c 200
Rent A/c 500
Salary A/c 2,000
Total 58,060 58,060
Ledger
Dr. Rent A/c Cr.

Amount Amount
(₹) (₹)
31-DecBy Balance C/d 500
500 500
Dr. Salary A/c Cr.

Amount Amount
(₹) (₹)
2,000 2,000
Trial Balance
Cash A/c 22,360
Capital A/c 40,000
Bank A/c (OD) 3,000
Sales A/c 10,000
Furniture A/c 5,000
Discount A/c 60
Drawings A/c 3,000
Stationery A/c 200
Rent A/c 500
Salary A/c 2,000
Total 58,060 58,060
Ledger

Amount Amount
(₹) (₹)
2,000 1,000
Trial Balance
Cash A/c 22,360
Capital A/c 40,000
Bank A/c (OD) 3,000
Sales A/c 10,000
Furniture A/c 5,000
Discount A/c 60
Drawings A/c 3,000
Stationery A/c 200
Rent A/c 500
Salary A/c 2,000
Total 58,060 58,060
Cash Book
Dr. Cash Book (Single Column) Cr.

Amount Amount
(₹) (₹)
Note: Regular Ledger Account

Cash Book
Prepare a triple-column cash book from the following transactions:

May 1 Cash in hand 85,000
May 1 Cash at Bank 52,000
May 5 Paid salaries by cash 22,000
May 6 Paid Raman and Co. by cheque 26,000
May 6 Received discount from Raman and Co., 500
May 6 Received from Ramesh on account cheque 40,000
May 7 Bought goods for cash 12,500
May 8 Cash sent to Bank 10,000
May 9 Paid to Hari and Co., by cheque 6,400
May 9 Received discount from Hari and Co., 300
May 10 Received from Madan 15,000
May 12 Received from Ramlal cheque (discount allowed Rs.800) 16,000
May 13 Drawn from Bank 20,000
May 15 Paid wages 27,000
May 18 Cheque from Ramlal return dishonoured and bank debits account in respect of charges 200
May 25 Interest provided by bank 3,000
May 25 Goods sold to Mr. Venky for cash 8,000
May 26 Bought goods from Lakshmi on Credit 2,700
Cash Book
Dr. Cash Book (Double Column) Cr.

Date Particulars Cash Bank Date Particulars Cash Bank
Cash Book

Cash Book
Dr. Cash Book Cr.

May 1 To Balance B/d 85,000 52,000
Cash Book

Cash Book
Dr. Cash Book Cr.

Cash Book
Dr. Cash Book Cr.

May 1 To Balance B/d 85,000 52,000May 5 By Salary A/c 22,000
Cash Book

Cash Book
Dr. Cash Book Cr.

Cash Book
Dr. Cash Book Cr.

May 6 -”- Ram and Co., A/c 26,000
Cash Book

May 6 Received cheque from Ramesh on account 40,000
Cash Book
Dr. Cash Book Cr.

May 6 -”- Ram and Co., A/c 26,000
Cash Book
Dr. Cash Book Cr.

May 6 -”- Ramesh A/c 40,000 May 6 -”- Ram and Co., A/c 26,000
Cash Book

Cash Book
Dr. Cash Book Cr.

Cash Book
Dr. Cash Book Cr.

May 7 -”- Purchases A/c 12,500
Cash Book

Cash Book
Dr. Cash Book Cr.

May 8 -”- Cash A/c C 10,000May 7 -”- Purchases A/c 12,500
May 8 -”- Bank A/c C 10,000
Cash Book

Cash Book
Dr. Cash Book Cr.

May 8 -”- Bank A/c C 10,000
Cash Book
Dr. Cash Book Cr.

May 8 -”- Bank A/c C 10,000
May 9 -”- Hari & Co., A/c 6,400
Cash Book

Cash Book
Dr. Cash Book Cr.

May 8 -”- Bank A/c C 10,000
May 9 -”- Hari & Co., A/c 6,400
Cash Book
Dr. Cash Book Cr.

May 10 -”- Madhan’s A/c 15,000 May 8 -”- Bank A/c C 10,000
May 9 -”- Hari & Co., A/c 6,400
Cash Book

Cash Book
Dr. Cash Book Cr.

May 9 -”- Hari & Co., A/c 6,400
Cash Book
Dr. Cash Book Cr.

May 12 -”- Ramlal’s A/c 16,000 May 9 -”- Hari & Co., A/c 6,400
Cash Book

Cash Book
Dr. Cash Book Cr.

Cash Book
Dr. Cash Book Cr.

May
May 13 -”- Bank A/c C 20,000 -”- Cash A/c C 20,000
13
Cash Book

Cash Book
Dr. Cash Book Cr.

May
13
Cash Book
Dr. Cash Book Cr.

May
13
May
-”- Wages A/c 27,000
15
Cash Book

May 18 Cheque from Ramlal dishonoured and bank debits account in respect of charges 200
Cash Book
Dr. Cash Book Cr.

May
13
May
-”- Wages A/c 27,000
15
Cash Book
Dr. Cash Book Cr.

May
13
May
-”- Wages A/c 27,000
15
May
-”- Bank Charges A/c 200
18
Cash Book

Cash Book
Dr. Cash Book Cr.

May
13
May
-”- Wages A/c 27,000
15
May
18
Cash Book
Dr. Cash Book Cr.

May
13
May
May 25 -”- Interest A/c 3,000 -”- Wages A/c 27,000
15
May
18
Cash Book

Cash Book
Dr. Cash Book Cr.

May
13
May
15
May
18
Cash Book
Dr. Cash Book Cr.

May
13
May
15
May
May 25 -”- Sales A/c 8,000 -”- Bank Charges A/c 200
18
Cash Book

Cash Book
Dr. Cash Book Cr.

May
13
May
15
May
18
Note: There is no Cash A/c or Bank A/c is involved in this transaction, so it is not recorded in Cash Book
Cash Book
Dr. Cash Book Cr.

May
13
May
15
May
18
1,84,000 65,000 1,84,000 65,000

Cash Book
Dr. Cash Book Cr.

May
13
May
15
May
18
May
By Balance C/d 1,12,500 12,400
31
1,84,000 65,000 1,84,000 65,000
Jun 1 To Balance B/d 1,12,500 12,400
Cash Book
Dr. Cash Book (Triple Column) Cr.

Date Particulars Discount Cash Bank Date Particulars Discount Cash Bank
Cash Book

May 12 Cheque Received from Ramlal (discount allowed Rs.800) 16,000
Cash Book

Cash Book

Cash Book

Cash Book

Cash Book

May 1 To Balance B/d 85,000 52,000 May 5 By Salary A/c 22,000
Cash Book

Cash Book

Cash Book

May 6 -”- Ram and Co., A/c 500 26,000
Cash Book

Cash Book

May 6 -”- Ram and Co., A/c 500 26,000
Cash Book

May 6 -”- Ramesh A/c 40,000 May 6 -”- Ram and Co., A/c 500 26,000
Cash Book

Cash Book

Cash Book

Cash Book

Cash Book

Cash Book

-”- Cash A/c
May 8 C 10,000 May 7 -”- Purchases A/c 12,500
-”- Bank A/c
May 8 C 10,000
Cash Book

Cash Book

-”- Cash A/c
-”- Bank A/c
May 8 C 10,000
Cash Book

-”- Cash A/c
-”- Bank A/c
May 8 C 10,000
May 9 -”- Hari & Co., A/c 300 6,400
Cash Book

Cash Book

-”- Cash A/c
-”- Bank A/c
May 8 C 10,000
May 9 -”- Hari & Co., A/c 300 6,400
Cash Book

-”- Cash A/c
-”- Bank A/c
May 10 -”- Madhan’s A/c 15,000 May 8 C 10,000
May 9 -”- Hari & Co., A/c 300 6,400
Cash Book

May 12 Cheque received from Ramlal (discount allowed Rs.800) 16,000
Cash Book

-”- Cash A/c
-”- Bank A/c
May 9 -”- Hari & Co., A/c 300 6,400
Cash Book

-”- Cash A/c
-”- Bank A/c
May 12 -”- Ramlal’s A/c 800 16,000 May 9 -”- Hari & Co., A/c 300 6,400
Cash Book

Cash Book

-”- Cash A/c
-”- Bank A/c
Cash Book

-”- Cash A/c
-”- Bank A/c
-”- Bank A/c
May 13 C 20,000 May 13 -”- Cash A/c C 20,000
Cash Book

Cash Book

-”- Cash A/c
-”- Bank A/c
-”- Bank A/c
May 13 C 20,000 May 13 -”- Cash A/c C 20,000
Cash Book

-”- Cash A/c
-”- Bank A/c
-”- Bank A/c
May 13 C 20,000 May 13 -”- Cash A/c C 20,000
May 15 -”- Wages A/c 27,000
Cash Book

Cash Book

-”- Cash A/c
-”- Bank A/c
-”- Bank A/c
May 13 C 20,000 May 13 -”- Cash A/c C 20,000
May 15 -”- Wages A/c 27,000
Cash Book

-”- Cash A/c
-”- Bank A/c
-”- Bank A/c
May 13 C 20,000 May 13 -”- Cash A/c C 20,000
May 15 -”- Wages A/c 27,000
May 18 -”- Bank Charges A/c 200
Cash Book

Cash Book

-”- Cash A/c
-”- Bank A/c
-”- Bank A/c
May 13 C 20,000 May 13 -”- Cash A/c C 20,000
May 15 -”- Wages A/c 27,000
Cash Book

-”- Cash A/c
-”- Bank A/c
-”- Bank A/c
May 13 C 20,000 May 13 -”- Cash A/c C 20,000
May 25 -”- Interest A/c 3,000May 15 -”- Wages A/c 27,000
Cash Book

Cash Book

-”- Cash A/c
-”- Bank A/c
-”- Bank A/c
May 13 C 20,000 May 13 -”- Cash A/c C 20,000
Cash Book

-”- Cash A/c
-”- Bank A/c
-”- Bank A/c
May 13 C 20,000 May 13 -”- Cash A/c C 20,000
May 25 -”- Sales A/c 8,000 May 18 -”- Bank Charges A/c 200
Cash Book

Cash Book

-”- Cash A/c
-”- Bank A/c
-”- Bank A/c
May 13 C 20,000 May 13 -”- Cash A/c C 20,000
Cash Book

-”- Cash A/c
-”- Bank A/c
-”- Bank A/c
May 13 C 20,000 May 13 -”- Cash A/c C 20,000
May 31 By Balance C/d 1,12,500 12,400

800 1,84,000 65,000 800 1,84,000 65,000
Jun 1 To Balance B/d 1,12,500 12,400

Accounting and Finance Unit 2

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Accounting and Finance Unit 2

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Accounting and Finance

Course Code: 21VMB0C103

Unit 2: Accounting Cycle

Prof. Vasudha Srivatsa

Journal entries in the books of………

Rules of Debit and Credit

PERSONAL REAL NOMINAL

Natural Person Tangible Expenses & Losses

Artificial Person Intangible Incomes and Gains

Rule: Rule: Rule:

Nominal Account Personal Account

2. Interest Account O/S interest account, Interest received in advance account,

classify the following into personal, real and nominal accounts

Transaction Accounts Involved Nature of Account Debit/Credit

The Journalise the following transactions.

1. Ram Starts a business with a capital of Rs.2,00,000 on January 1, 2022

The Journalise the following transactions.

Journal entries in the books of…..

Journalise the following transactions in the books of Komal

Journal entries in the books of Komal

Journalise the following transactions in the books of Komal

08.01.2014 Drawings A/c Dr. 1,000

Journalise the following transactions in the books of Komal

Journalise the following transactions in the books of Komal

25.01.2014 Bank A/c Dr. 10,000

Dr. Name of the Ledger Account Cr.

Journalise the following transactions for the month of Dec 2014.

Journal entries in the books of Ajit

Journalise the following transactions for the month of Dec 2014.

Journalise the following transactions for the month of Dec 2014.

20-Dec Drawings A/c Dr. 2,000

Posting to Ledger Accounts

Dr. Name of the Ledger Account Cr.

Journal entries in the books of Ajit

Dr. Cash A/c Cr.

Dr. Capital A/c Cr.

Journal entries in the books of Ajit

Dr. Bank A/c Cr.

Dr. Cash A/c Cr.

Journal entries in the books of Ajit

Dr. Purchases A/c Cr.

Dr. Cash A/c Cr.

Journal entries in the books of Ajit

Dr. Cash A/c Cr.

Dr. Sales A/c Cr.

Journal entries in the books of Ajit

Dr. Furniture A/c Cr.

Dr. Bank A/c Cr.

Dr. Arvind A/c Cr.

Dr. Sales A/c Cr.

Dr. Purchases A/c Cr.

Dr. Amrit A/c Cr.

Dr. Amrit A/c Cr.

Dr. Purchase Returns A/c Cr.

Dr. Cash A/c Cr.

Dr. Discount A/c Cr.

Dr. Arvind A/c Cr.

Dr. Drawings A/c Cr.

Dr. Purchases A/c Cr.

20-Dec Drawings A/c Dr. 2,000

Dr. Drawings A/c Cr.

Dr. Cash A/c Cr.

20-Dec Drawings A/c Dr. 2,000

Dr. Telephone Charges A/c Cr.