CHAPTER

8
Journal
MEANING OF KEY TERMS USED IN THE CHAPTER

1. Journal It is the primary book of account in which transactions are first recorded
in a chronological order, i.e., in the order they are entered into.
2. Book of Original It is the book in which a transaction is first recorded, i.e., Journal book.
Entry
3. Bad Debts It is the amount which is not recoverable and hence, written off.
4. Bad Debts It is the amount which was earlier written off as Bad Debt and is later
Recovered recovered, in full or in part.
5. Discount
• Trade Discount It is a discount allowed to the purchaser of goods when goods are
purchased in large quantity.
• Cash Discount It is a discount allowed on receipt of amount promptly, i.e., within the
agreed time.
• Rebate Rebate is the discount allowed for reasons other than those for which trade
discount and cash discount are allowed. For example, rebate allowed for
poor quality of goods, goods being not as per specification, etc.
6. Simple Journal It is a Journal entry in which one account is debited and another
Entry account is credited.
7. Compound Journal It is a Journal entry in which one or more accounts are debited and/or
Entry credited.
8. Opening Entry It is the first entry passed in the Journal book incorporating the closing
balances of previous year.
9. Goods and Services Goods and Services Tax (GST) is a comprehensive indirect tax charged
Tax (GST) each time the supply is made, i.e., each time the goods are sold and/
or services are rendered, except on the exempt goods and services.

CHAPTER SUMMARY

• Journal is the primary book of account in which transactions are first recorded in a
chronological (day-to-day) order.
• Journal is a book of original entry because a transaction is first entered in the Journal from
where it is posted to the Ledger.
• Journal entry may be (i) Simple Journal Entry; or (ii) Compound Journal Entry.
(i) Simple Journal Entry is a Journal entry in which one account is debited and another
account is credited.
(ii) Compound Journal Entry is a Journal entry, which involves more than two accounts.
It means it is an entry in which one or more than one accounts are debited
and/or credited.
8.2 Double Entry Book Keeping — CBSE XI

• Opening Entry: In case of an existing business, assets and liabilities existing in the previous
year’s Balance Sheet will have to be brought forward to the current year. These assets and
liabilities are brought in the books of account of new financial year by means of a Journal
entry termed as Opening Entry.

• Steps in Journalising
Step 1: Identify the accounts involved in the transaction.
Step 2: Determine the nature of accounts, i.e., Asset, Liability, Capital, Expense or Revenue.
Step 3: Apply the rules for ‘Debit’ and ‘Credit’.
Step 4: Draw ruling of a Journal and record the transaction.

• Advantages of a Journal
1. It reduces the possibility of errors.
2. It provides an explanation to an entry by way of narration.
3. It provides a chronological record of transactions.
4. It provides the base for posting of transactions in ledger accounts.
5. It helps in locating the errors.

• Disadvantages of Journal
1. Unsuitable for Large Volume of Transactions.
2. Not a simple system of recording.
3. Cash Balance is not revealed.
4. Not a substitute of ledger.

IMPORTANT JOURNAL ENTRIES

Transaction Journal Entry
1. Amount brought into the business as capital Cash or Bank A/c ...Dr.
To  Capital A/c

2. Cash and other assets brought into business Building A/c ...Dr.
Plant and Machinery A/c ...Dr.
Furniture A/c ...Dr.
Cash or Bank A/c ...Dr.
To  Capital A/c

3. Goods purchased on credit Purchases A/c ...Dr.

To  Supplier’s A/c

4. Sale of goods on credit Customer’s A/c ...Dr.

To Sales A/c

5. Goods purchased for cash Purchases A/c ...Dr.

To  Cash or Bank A/c
Journal 8.3

6. Cash sales Cash or Bank A/c ...Dr.

To 
Sales A/c
7. Opening a Bank Account Bank A/c ...Dr.
To 
Cash A/c
To  Capital A/c (If opened with personal cash/cheque)

8. Withdrawal of cash from bank Cash A/c (Office Cash) ...Dr.

Drawings A/c (Personal use) ...Dr.
To 
Bank A/c

9. Collection of cash/cheque from customers Cash or Bank A/c (Net amount) ...Dr.
(and discount allowed, if any) Discount Allowed A/c (Discount) ...Dr.
To 
Customers’ A/c

10. For payment of cash/cheque to suppliers Suppliers’ A/c ...Dr.

(and discount received, if any) To  Cash or Bank A/c (Net Amount)
To  Discount Received A/c (Discount)

11. Bad Debts Bad Debts A/c ...Dr.

To 
Debtor’s A/c

12. Recovery of Bad Debts Cash or Bank A/c ...Dr.

To  Bad Debts Recovered A/c

13. Purchase of machinery for cash Machinery A/c ...Dr.

To  Cash or Bank A/c

14. Purchase of Machinery on Credit Machinery A/c ...Dr.

To Supplier’s A/c

15. Depreciation charged on assets Depreciation A/c ...Dr.

To  Asset A/c

16. Sale or disposal of any old asset at a loss Cash or Bank A/c ...Dr.
Loss on Sale of Asset A/c (Profit and Loss A/c) ...Dr.
To  Asset A/c

17. Sale or disposal of any old asset at a profit Cash or Bank A/c ...Dr.
To Asset A/c
To Gain (Profit) on Sale of Asset A/c (Profit and Loss A/c)

18. Goods returned by the customer Returns Inward A/c ...Dr.

To Debtor’s A/c

19. Goods returned to the supplier Creditor’s A/c ...Dr.

To Returns Outward A/c

20. Distribution of goods as samples Advertisement/Samples/Sales Promotion Expenses A/c ...Dr.

To  Purchases A/c (Trader)
8.4 Double Entry Book Keeping — CBSE XI

21. For abnormal loss of goods (Fire/Stolen) Bank A/c (Insurance claim received) ...Dr.
Or
Insurance Claim A/c (Insurance claim admitted) ...Dr.
Abnormal Loss A/c (Insurance claim not admitted) ...Dr.
To Purchases A/c

22. Drawing a Bill of Exchange on debtor Bills Receivable A/c ...Dr.

To  Debtor’s A/c

23. Acceptance of a Bill of Exchange Creditor ’s A/c ...Dr.

To  Bills Payable A/c

Solved Questions
1 Journalise the following transactions in the books of Gupta Bros.:
Date Particulars ` 
2020
March 1 Started business with cash ` 30,000; goods ` 15,000 and furniture ` 20,000
March 2 Paid into bank 20,000
March 3 Bought goods from Mohan Bros. on credit 7,000
March 4 Sold goods to Goyal Bros. on credit 6,000
March 5 Bought a vehicle for delivering goods to customers 10,000
March 7 Received from salesman for goods sold by him after deducting commission ` 150 3,000
March 9 Drawn a cheque for ` 800 for personal use
March 10 Goyal Bros. gave cheque; deposited in the bank 6,000
March 11 Paid to Mohan Bros. by cheque 6,700
Discount allowed by him 300
March 13 Paid for repairs of furniture 200
March 13 Received an order for goods from Mahesh 5,000
March 14 Sold old newspapers 80
March 15 Interest received from bank 400
March 16 Paid ` 300 for expenses on goods sold to Goyal Bros. This amount to be realised from Goyal Bros.
March 19 Bought goods from Sohan Lal & Sons 400
Paid cartage on these goods 50
March 20 Bank intimates that the cheque of Goyal Bros. has been returned dishonoured
March 21 The vehicle bought on March 5 met with an accident resulting in complete loss. Its salvage was sold for ` 500
March 22 Paid rent by cheque 600
March 23 Salaries for the month of February remain unpaid 300
March 25 Paid Municipal taxes in cash 800
March 31 Depreciation charged on furniture @ 10%
Received an order for goods ` 5,000 from Shyam and received ` 1,000 as advance
Journal 8.5

Solution: In the Books of Gupta Bros.

JOURNAL
Date Particulars L.F. Dr. (`) Cr. (`)

2020
March 1 Cash A/c ...Dr. 30,000
Stock A/c ...Dr. 15,000
Furniture A/c ...Dr. 20,000
To Capital A/c 65,000
(Being the business started with cash, goods and furniture)
March 2 Bank A/c ...Dr. 20,000
To Cash A/c 20,000
(Being the cash paid into bank)
March 3 Purchases A/c ...Dr. 7,000
To Mohan Bros. 7,000
(Being the goods purchased from Mohan Bros.)
March 4 Goyal Bros. ...Dr. 6,000
To Sales A/c 6,000
(Being the goods sold to Goyal Bros.)
March 5 Vehicle A/c ...Dr. 10,000
To Cash A/c 10,000
(Being a vehicle purchased for delivering goods to customers)
March 7 Cash A/c ...Dr. 3,000
Commission Paid A/c ...Dr. 150
To Sales A/c 3,150
(Being the cash received from salesman after deducting
commission)
March 9 Drawings A/c ...Dr. 800
To Bank A/c 800
(Being the cheque drawn out of bank for personal use)
March 10 Bank A/c ...Dr. 6,000
To Goyal Bros. 6,000
(Being the cheque received from Goyal Bros., deposited in bank)
March 11 Mohan Bros. ...Dr. 7,000
To Bank A/c 6,700
To Discount Received A/c 300
(Being the payment made by cheque and discount received)
March 13 Repairs A/c ...Dr. 200
To Cash A/c 200
(Being the amount paid for repairs of furniture)
                 Total c/f 1,25,150 1,25,150
8.6 Double Entry Book Keeping — CBSE XI

               Total b/f 1,25,150 1,25,150

March 13 In receipt of an order or on placing an order or tender, no entry will be passed,
because it is not a transaction.
March 14 Cash A/c ...Dr. 80
To Sundry Receipts A/c 80
(Being the cash received by sale of old newspapers)
March 15 Bank A/c ...Dr. 400
To Interest Received A/c 400
(Being the interest received from bank)
March 16 Goyal Bros. ...Dr. 300
To Cash A/c 300
(Being the expenses on goods sold to Goyal Bros.)
March 19 Purchases A/c ...Dr. 400
Cartage A/c ...Dr. 50
To Sohan Lal & Sons 400
To Cash A/c 50
(Being the goods purchased from Sohan Lal & Sons and paid cartage)
March 20 Goyal Bros. ...Dr. 6,000
To Bank A/c 6,000
(Being the cheque received from Goyal Bros. dishonoured)
March 21 Cash A/c ...Dr. 500
Loss by Accident A/c (Profit and Loss A/c) ...Dr. 9,500
To Vehicle A/c 10,000
(Being the cash received by sale of salvage of vehicle)
March 22 Rent A/c ...Dr. 600
To Bank A/c 600
(Being the rent paid by cheque)
March 23 Salaries A/c ...Dr. 300
To Outstanding Salaries A/c 300
(Being the salaries for the month of February unpaid)
March 25 Municipal Taxes A/c ...Dr. 800
To Cash A/c 800
(Being the amount paid for municipal taxes)

March 31 Depreciation A/c ...Dr. 2,000

To Furniture A/c 2,000
(Being the depreciation charged on furniture @ 10%)

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

To Advance from Shyam A/c 1,000
(Being the cash received from Shyam as advance)

  Total 1,47,080 1,47,080

Journal 8.7

2. Journalise the following transactions in the Journal of a firm:

(i) Car purchased for business use ` 10,000.
(ii) Cash received from a debtor ` 5,000 whose account was written off as bad
debts during the last month.
(iii) Goods costing ` 16,000 were sold at a profit of 20% on sale price to
Amrit and allowed 10% discount on immediate payment.
(iv) Cash embezzled by an employee ` 2,000.
(v) A machine which stood in the books for ` 85,000 on 1st April, 2019 was sold
for ` 51,000 in exchange for a new machine costing ` 1,76,000 supplied by
D.K. Suppliers on 1st June, 2019.
(vi) Cash of ` 24,000 invested in shares of SAIL and payment made
through bank.
(vii) Sold goods to Bhanu for ` 26,400 and freight ` 700 (to be charged from
customer).
(viii) Received an order for 100 Kgs of goods @ ` 450 per kg from Shiv Bros.
(ix) Bought from M/s. Kamath Bros. 200 cases of goods @ ` 350 per case less
Trade Discount of 10%. Purchase terms provide that 15% cash discount will
be allowed provided that payment is made within 15 days of purchase. 60%
of the invoice was paid immediately.
(x) Received interest from bank ` 2,500 on fixed deposits.
(xi) Income tax paid ` 5,000.
(xii) Goods (cost ` 3,000, sales price ` 4,000) taken away by the proprietor for his
personal use.
(xiii) Placed an order with Manoj for the supply of goods of the list price of
` 1,00,000. In this connection, issued a cheque of 10% of the list price as an
advance.
(xiv) Paid life insurance premium ` 3,500.
(xv) Paid rent of building ` 80,000 by cheque, half of the building is used by the
proprietor for residential use.
(xvi) Paid ` 9,000 to Mohan on his account for ` 10,000.
(xvii) Cheque of ` 20,000 received from Arun (Debtor) and endorsed to Ramesh
(Creditor) was dishonoured.
(xviii) Goods costing ` 10,000 destroyed in fire.
8.8 Double Entry Book Keeping — CBSE XI

Solution: JOURNAL
Date Particulars L.F. Dr. (`) Cr. (`)
(i ) Car A/c ...Dr. 10,000
To Cash A/c 10,000
(Being a car purchased for business use)
(ii ) Cash A/c ...Dr. 5,000
To Bad Debts Recovered A/c 5,000
(Being cash received against bad debts)
(iii ) (a) Amrit ...Dr. 20,000
To Sales A/c 20,000
(Being the goods sold at profit of 20% on sale price) (WN 1)
(b) Cash A/c ...Dr. 18,000
Discount Allowed A/c ...Dr. 2,000
To Amrit 20,000
(Being cash received and allowed 10% discount)
(iv) Loss by Embezzlement A/c ...Dr. 2,000
To Cash A/c 2,000
(Being cash embezzled by an employee)
(v) (a) D.K. Suppliers ...Dr. 51,000
Loss on Sale of Machine A/c ...Dr. 34,000
To Machinery A/c 85,000
(Being the loss on sale of machine recorded)
(b) Machinery A/c ...Dr. 1,76,000
To D.K. Suppliers 1,76,000
(Being an old machine of ` 85,000 sold at ` 51,000 in exchange
for a new machine costing ` 1,76,000)
Alternatively, combined entry of (a) and (b)
Machinery A/c (New Machine) ...Dr. 1,76,000
Loss on Sale of Machine A/c ...Dr. 34,000
To Machinery A/c (Old Machine) 85,000
To D.K. Suppliers (Net Invoice) 1,25,000
(Being an old machine of ` 85,000 sold at ` 51,000 in exchange
for a new machine costing ` 1,76,000)
(vi ) Investment A/c ...Dr. 24,000
To Bank A/c 24,000
(Being the investment made in shares of SAIL)
(vii ) Bhanu ...Dr. 27,100
To Sales A/c 26,400
To Cash A/c 700
(Being the goods sold on credit and freight to be charged from customer)
(viii ) No entry can be passed. This is not a transaction.
(ix) (a) Purchases A/c ...Dr. 63,000
To M/s. Kamath Bros. 63,000
(Being 200 cases of goods @ ` 350 per case purchased less trade
discount 10%) (WN 2)
(b) M/s. Kamath Bros. ...Dr. 37,800
To Cash A/c 32,130
To Discount Received A/c 5,670
(Being 60% of invoice price of ` 63,000 paid and received 15%
cash discount)
Journal 8.9

(x) Bank A/c ...Dr. 2,500

To Interest on Fixed Deposits A/c 2,500
(Being interest received from bank on Fixed Deposits A/c)
(xi ) Drawings A/c ...Dr. 5,000
To Bank A/c 5,000
(Being income tax paid) (WN 3)
(xii ) Drawings A/c ...Dr. 3,000
To Purchases A/c 3,000
(Being goods withdrawn for personal use)
(xiii ) Advance to Manoj A/c ...Dr. 10,000
To Bank A/c 10,000
(Being advance paid to Manoj)
(xiv) Drawings A/c ...Dr. 3,500
To Bank A/c 3,500
(Being life insurance premium paid)
(xv) (a) Rent A/c ...Dr. 80,000
To Bank A/c 80,000
(Being the rent paid for building)
(b) Drawings A/c ...Dr. 40,000
To Rent A/c 40,000
(Being the rent for half building charged to proprietor)
(xvi) Mohan ...Dr. 9,000
To Cash A/c 9,000
(Being the cash paid to Mohan on account)
(xvii ) Arun ...Dr. 20,000
To Ramesh 20,000
(Being the cheque of Arun endorsed to Ramesh dishonoured)
(xviii ) Loss of Goods by Fire A/c ...Dr. 10,000
To Purchases A/c 10,000
(Being the loss of goods)

Working Notes:
1. Calculation of selling price for transaction No. iii:
Goods were sold @ 20% profit on sale price. So, when selling price is ` 100, cost would be ` 80 (i.e., 100 – 20).
Hence, profit % on cost = ` 20/` 80 × 100 = 25% (or 1/4th on cost)
`
Cost of the Goods 16,000
Add: 25% Profit on Cost 4,000
Selling Price 20,000

2. Calculation of invoice price and cash discount received:

`
200 cases of goods @ ` 350 per case 70,000
Less: Trade discount 10% 7,000
Invoice Price 63,000
60% of Invoice Price (60/100 × 63,000) 37,800
Less: Cash discount (15% of ` 37,800) 5,670
Amount paid 32,130
3. It is assumed that income tax was paid for the proprietor as it is not a company. Thus, it is treated as drawings of the proprietor.
8.10 Double Entry Book Keeping — CBSE XI

3. Journalise the following transactions in the books of M/s. Consolidated Sales:

(i) Purchased goods of list price of ` 50,000 from Rahul at 20% trade discount.
(ii) Purchased goods of list price of ` 25,000 from Vikas at 20% trade discount
against cheque payment.
(iii) Purchased goods of list price of ` 25,000 from Nitin at 15% trade discount
against cash.
(iv) Purchased goods of list price of ` 40,000 for ` 35,000 for cash.
(v) Goods returned of list price ` 10,000 purchased from Rahul.
(vi) Sold goods to Amit at list price of ` 10,000 at 10% trade discount.
(vii) Sold goods to Raman at list price of ` 20,000 at 10% trade discount against
cheque payment.
(viii) Sold goods to Akash at list price of ` 15,000 at 10% trade discount against
cash.
(ix) Sold goods to Yogesh at list price of ` 15,000 for ` 14,000.
(x) Sold goods costing ` 10,000 at cost plus 20% profit less 10% trade discount
to Sujit.
(xi) Sold goods purchased at list price of ` 25,000 less 15% trade discount sold at
a profit of 20% less 10% trade discount against cheque.
(xii) Akash returned goods of list price ` 5,000 sold to him at 10% trade discount.
Solution: JOURNAL
Date Particulars L.F. Dr. (`) Cr. (`)
(i ) Purchases A/c ...Dr. 40,000
To Rahul 40,000
(Being the goods purchased of list price ` 50,000 less 20% trade discount)
(ii ) Purchases A/c ...Dr. 20,000
To Bank A/c 20,000
(Being the goods purchased of list price ` 25,000 at 20% trade discount
against cheque payment)
(iii ) Purchases A/c ...Dr. 21,250
To Cash A/c 21,250
(Being the goods purchased of list price ` 25,000 less 15% trade
discount against cash payment)
(iv) Purchases A/c ...Dr. 35,000
To Cash A/c 35,000
(Being the goods purchased of list price of ` 40,000 for ` 35,000
against cash payment)
Note: Purchase of goods for ` 35,000 against list price of ` 40,000
means ` 5,000 is trade discount.
(v) Rahul ...Dr. 8,000
To Purchases Return A/c 8,000
(Being the goods of list price ` 10,000 less 20% trade discount returned)
Journal 8.11

(vi ) Amit ...Dr. 9,000

To Sales A/c 9,000
(Being the goods of list price ` 10,000 sold at 10% trade discount)
(vii ) Bank A/c ...Dr. 18,000
To Sales A/c 18,000
(Being the goods of list price ` 20,000 sold at 10% trade discount
against cheque)
(viii ) Cash A/c ...Dr. 13,500
To Sales A/c 13,500
(Being the goods of list price ` 15,000 sold at 10% trade discount
to Akash against cash payment)
(ix) Yogesh ...Dr. 14,000
To Sales A/c 14,000
(Being the goods of list price ` 15,000 sold for ` 14,000)
Note: Sale of goods for ` 15,000 for ` 14,000 means trade discount
of ` 1,000 has been allowed.
(x) Sujit A/c ...Dr. 10,800
To Sales A/c 10,800
(Being the goods sold at cost + 20% profit – 10% trade discount, i.e.,
`
Cost 10,000
Add: Profit of 20% 2,000
12,000
Less: Trade Discount 10% 1,200
10,800 )
(xi) Bank A/c ...Dr. 22,950
To Sales A/c 22,950
(Being the goods sold against cheque `
List price 25,000
Less: Trade Discount (15%) Received 3,750
21,250
Add: Profit (20%) 4,250
25,500
Less: Trade Discount (10%) Allowed 2,550
22,950 )
(xii ) Sales Return A/c ...Dr. 4,500
To Akash 4,500
(Being the goods returned by Akash of list price ` 5,000
less 10% trade discount)

4. Journalise the following transactions in the books of Bhushan Agencies:

(i) Received from Sahil ` 10,000 in cash allowed him discount of ` 200.
(ii) Received from Mukesh ` 25,000 by cheque allowed him discount of ` 500.
(iii) Received from Abhay ` 26,500 in settlement of his dues of ` 27,500 in cash.
(iv) Received from Satish ` 40,000 by cheque on account against dues of
` 60,000.
8.12 Double Entry Book Keeping — CBSE XI

(v) Paid cash ` 20,000 to Kamal availed discount of 2%.

(vi) Paid by cheque of ` 15,000 to Manoj and settled his dues of ` 16,000.
(vii) Paid to ` 25,000 Sushil by cheque on account.
(viii) Purchased goods costing ` 25,000 against cheque and availed discount of 2%.
(ix) Purchased goods costing ` 50,000 from Rakesh & Co. paid 50% immediately
for availing 2% discount.
(x) Sold goods of ` 20,000 against cheque allowing 2% discount.
(xi) Sold goods of ` 60,000 to Vishal, received 50% of due amount allowing 2%
discount.
Solution: JOURNAL
Date Particulars L.F. Dr. (`) Cr. (`)
(i ) Cash A/c ...Dr. 10,000
Discount Allowed A/c ...Dr. 200
To Sahil 10,200
(Being the cash received from Sahil and allowed discount)
(ii ) Bank A/c ...Dr. 25,000
Discount Allowed A/c ...Dr. 500
To Mukesh 25,500
(Being the cheque received from Mukesh and allowed discount)
(iii ) Cash A/c ...Dr. 26,500
Discount Allowed A/c ...Dr. 1,000
To Abhay 27,500
(Being the amount received from Abhay and allowed discount)
(iv) Bank A/c ...Dr. 40,000
To Satish 40,000
(Being the amount received on account)
(v) Kamal ...Dr. 20,400
To Cash A/c 20,000
To Discount Received A/c 400
(Being the amount paid and cash discount received)
(vi ) Manoj ...Dr. 16,000
To Bank A/c 15,000
To Discount Received A/c 1,000
(Being the amount paid and discount received)
(vii ) Sushil ...Dr. 25,000
To Bank A/c 25,000
(Being the amount paid on account)
(viii ) Purchases A/c ...Dr. 25,000
To Bank A/c 24,500
To Discount Received A/c 500
(Being the goods purchased against cheque and discount availed)
Note: Cash discount received is accounted as income
Journal 8.13

(ix) Purchases A/c ...Dr. 50,000

To Cash A/c 24,500
To Rakesh & Co. 25,000
To Discount Received A/c 500
(Being the goods purchased paying 50% availing 2% discount)
Note: Cash discount will be received on amount paid, i.e., 2% of ` 25,000.
(x) Bank A/c ...Dr. 19,600
Discount Allowed A/c ...Dr. 400
To Sales A/c 20,000
(Being the goods sold against cheque allowing 2% discount)
(xi ) Cash A/c ...Dr. 29,400
Vishal ...Dr. 30,000
Discount Allowed A/c ...Dr. 600
To Sales A/c 60,000
(Being the goods sold receiving 50% of sales, allowing 2% discount)
Note: Cash discount will be allowed on amount received, i.e., 2% of ` 30,000.

5. Pass the correct Journal entries on the basis of the narrations:

JOURNAL
Date Particulars L.F. Dr. (`) Cr. (`)
(i) Purchase A/c ...Dr. 2,000
To Cash A/c 2,000
(Being the goods returned by Y costing ` 2,000)
(ii) Income Tax A/c ...Dr. 1,000
To Cash A/c 1,000
(Being the income tax paid)
(iii) Bank A/c ...Dr. 5,000
To Y 5,000
(Being the cheque received from Y dishonoured)
(iv) Cash A/c ...Dr. 1,000
To Commission A/c 1,000
(Being the commission 1/5th received in advance out of ` 1,000)
(v) Charity A/c ...Dr. 2,000
To Purchases A/c 2,000
(Being the goods distributed as samples)
(vi) Interest A/c ...Dr. 4,000
To Accrued Interest A/c 4,000
(Being the interest accrued)
(vii) Outstanding Salary A/c ...Dr. 12,000
To Salary A/c 12,000
(Being the salary outstanding was paid by giving a cheque of ` 12,000)
(viii) Cash A/c ...Dr. 25,000
To Lata’s Loan A/c 25,000
(Being Lata’s loan of ` 25,000 was repaid by giving a machine of
` 20,000 in full settlement)
(ix) Electricity A/c ...Dr. 3,000
To Cash A/c 3,000
(Being the electricity bill remain unpaid)
(x) Purchases Return A/c ...Dr. 2,000
To Kailash 2,000
(Being the goods of ` 2,000 returned to Kailash)
8.14 Double Entry Book Keeping — CBSE XI

Solution: CORRECT JOURNAL

Date Particulars L.F. Dr. (`) Cr. (`)

(i) Sales Return A/c ...Dr. 2,000

Y 2,000
To
(Being the goods returned by Y costing ` 2,000)

(ii) Drawings A/c ...Dr. 1,000

To Cash A/c 1,000
(Being the income tax paid)

(iii) Y ...Dr. 5,000

To Bank A/c 5,000
(Being the cheque received from Y dishonoured)

(iv) Cash A/c ...Dr. 1,000

To Commission A/c 800
To Commission Received in Advance A/c 200
(Being the commission received out of which 1/5th is received in advance)

(v) Samples A/c or Advertisement A/c ...Dr. 2,000

To Purchases A/c 2,000
(Being the goods distributed as samples)

(vi ) Accrued Interest A/c ...Dr. 4,000

To Interest A/c 4,000
(Being the interest accrued)

(vii ) Outstanding Salary A/c ...Dr. 12,000

To Bank A/c 12,000
(Being the salary outstanding was paid by giving a cheque of ` 12,000)

(viii) Lata’s Loan A/c ...Dr. 25,000

To Machinery A/c 20,000
To Profit and Loss A/c 5,000
(Being Lata’s loan of ` 25,000 was repaid by giving a machine of
` 20,000 in full settlement, gain on disposal transferred to Profit and Loss A/c)

(ix) Electricity Expenses A/c ...Dr. 3,000

To Outstanding Electricity Expenses A/c 3,000
(Being the electricity bill remain unpaid)

(x) Kailash ...Dr. 2,000

To Purchases Return A/c 2,000
(Being the goods of ` 2,000 returned to Kailash)
Journal 8.15

6. Journalise the following transactions in the books of Gupta Bros., Lucknow (UP):
2020 ` 
March 1 Started business with cash ` 30,000; goods worth ` 15,000 and furniture worth ` 20,000
March 2 Paid into bank 20,000
March 3 Bought goods from Mohan Bros., Lucknow 7,000
March 4 Sold goods to Goyal Bros., Kanpur 6,000
March 5 Bought a computer against cheque 20,000
March 7 Received from salesman for goods sold by him after deducting conveyance expenses ` 150 2,850
March 10 Goyal Bros. gave cheque; deposited in the bank 6,000
March 11 Paid to Mohan Bros. by cheque 6,700
Discount allowed by him 300
March 13 Received an order for goods along with advance of ` 1,000 in cash from Mahesh 5,000
March 15 Interest received from bank 400
March 20 Bank intimates that the cheque of Goyal Bros. is returned dishonoured
March 22 Paid rent by cheque 6,000
March 23 Salaries for the month of February remains unpaid 30,000

Solution: JOURNAL OF GUPTA BROS.

Date Particulars L.F. Dr. (`) Cr. (`)
2020
March 1 Cash A/c ...Dr. 30,000
Stock A/c ...Dr. 15,000
Furniture A/c ...Dr. 20,000
To Capital A/c 65,000
(Being the business started with cash, goods and furniture)

March 2 Bank A/c ...Dr. 20,000

To Cash A/c 20,000
(Being the cash paid into bank)

March 3 Purchases A/c ...Dr. 7,000

To Mohan Bros. 7,000
(Being the goods purchased from Mohan Bros., Lucknow)

March 4 Goyal Bros. ...Dr. 6,000

To Sales A/c 6,000
(Being the goods sold to Goyal Bros., Kanpur)

March 5 Computer A/c ...Dr. 20,000

To Bank A/c 20,000
(Being the computer purchased against cheque)

March 7 Cash A/c ...Dr. 2,850

Conveyance Expenses A/c ...Dr. 150
To Sales A/c 3,000
(Being the cash received from salesman after deducting conveyance expenses)

March 10 Bank A/c ...Dr. 6,000

To Goyal Bros. 6,000
(Being the cheque received from Goyal Bros. deposited in bank)
8.16 Double Entry Book Keeping — CBSE XI

March 11 Mohan Bros. ...Dr. 7,000

To Bank A/c 6,700
To Discount Received A/c 300
(Being the payment made by cheque and discount received)
March 13 Cash A/c ...Dr. 1,000
To Advance from Mahesh A/c 1,000
(Being the cash received from Mahesh as advance)
March 15 Bank A/c ...Dr. 400
To Interest A/c 400
(Being the interest received from bank)
March 20 Goyal Bros. ...Dr. 6,000
To Bank A/c 6,000
(Being the cheque received from Goyal Bros. dishonoured)
March 22 Rent A/c ...Dr. 6,000
To Bank A/c 6,000
(Being the rent paid by cheque)
March 23 Salaries A/c ...Dr. 30,000
To Outstanding Salaries A/c 30,000
(Being the salaries for the month of February unpaid)
Note: No entry will be passed for receipt of an order of goods from Mahesh on 13th March, 2020, because
it is not a transaction. Only advance received will be recorded.

7. Journalise the following transactions in the books of Gaurav, Delhi:

Balances as on 1st April, 2020
Debit Balances: Cash in Hand—` 18,000; Cash at Bank—` 25,600; Stock of Goods—
` 50,000; Furniture—` 10,000; Building—` 4,51,400.
Debtors: Vijay—` 2,700; Anil—` 1,500; Ashwani—` 2,000; Anupam—` 1,800; and
Madhu—` 5,000.
Credit Balances: Creditors: Anand—` 5,400; Arya & Co.—` 77,000; Balwant—
` 52,000; and Anita’s Loan—` 1,00,000.
2020
April 1 Purchased from Rahul Traders, Faridabad goods of ` 50,000 less 20% trade discount and 5% cash discount.
April 3 ` 2,646 received from Vijay and allowed him discount ` 54.
April 8 Goods costing ` 5,000 purchased from Kolkata were damaged in transit; a claim was made on the transporter.
April 10 Cash ` 5,292 paid to Anand and discount allowed by him ` 108.
April 13 Received by cheque in full settlement of claim for damages in transit.
April 15 Anupam is declared insolvent and a dividend of 50 paise in the rupee is received from him in full settlement.
April 22 Paid for: Donation ` 501
Postage ` 200
April 30 One month’s interest on Anita’s Loan @ 12% p.a. became due but was not paid.
April 30 Received amount from salesman for goods sold by him for ` 5,000 after deducting his travelling expenses ` 150.
April 30 Sold goods for ` 12,000 less 10% trade discount.
April 30 New furniture was purchased for ` 50,000 from M/s. Rohan Furnitures. The existing furniture was given in exchange
valued at ` 5,000 (Book Value Nil).
Journal 8.17

Solution: JOURNAL
Date Particulars L.F. Dr. (`) Cr. (`)
2020
April 1 Cash A/c ...Dr. 18,000
Bank A/c ...Dr. 25,600
Stock A/c ...Dr. 50,000
Furniture A/c ...Dr. 10,000
Building A/c ...Dr. 4,51,400
Vijay ...Dr. 2,700
Anil ...Dr. 1,500
Ashwani ...Dr. 2,000
Anupam ...Dr. 1,800
Madhu ...Dr. 5,000
To Anand 5,400
To Arya & Co. 77,000
To Balwant Rai 52,000
To Mrs. Anita’s Loan A/c 1,00,000
To Capital A/c (Balancing Figure) 3,33,600
(Being the balances brought in from previous year)
April 1 Purchases A/c ...Dr. 40,000
To Bank A/c 38,000
To Discount Received A/c 2,000
(Being the goods of ` 50,000 bought for cash less 20% trade
discount and 5% cash discount)
April 3 Cash A/c ...Dr. 2,646
Discount Allowed A/c ...Dr. 54
To Vijay 2,700
(Being the cash received from Vijay and allowed him discount)
April 8 Claim for Damages A/c ...Dr. 5,000
To Purchases A/c 5,000
(Being the claim sent to transporter for goods damaged in transit)
April 10 Anand ...Dr. 5,400
To Cash A/c 5,292
To Discount Received A/c 108
(Being the cash paid to Anand and discount allowed by him)
April 13 Bank A/c ...Dr. 5,000
To Claim for Damages A/c 5,000
(Being the cheque received of claim for damages)
April 15 Cash A/c ...Dr. 900
Bad Debts A/c ...Dr. 900
To Anupam 1,800
(Being the half of the amount due received from Anupam and balance
written off as bad debts)
April 22 Donation A/c ...Dr. 501
Postage A/c ...Dr. 200
To Cash A/c 701
(Being the cash paid for charity, postage and stationery)
8.18 Double Entry Book Keeping — CBSE XI

April 30 Interest A/c ...Dr. 1,000

To Anita’s Loan A/c 1,000
(Being the interest payable on Anita’s Loan ` 1,00,000
@ 12% p.a. for one month)
April 30 Cash A/c ...Dr. 4,850
Travelling Expenses A/c ...Dr. 150
To Sales A/c 5,000
(Being ` 5,450 cash received for sales from salesman after
deducting his travelling expenses ` 150)
April 30 Cash A/c ...Dr. 10,800
To Sales A/c 10,800
(Being the sales of goods worth ` 12,000 less 10% trade discount)
April 30 Furniture A/c (New) ...Dr. 50,000
To M/s. Rohan Furnitures 50,000
(Being the new furniture purchased for ` 50,000)
April 30 M/s. Rohan Furnitures ...Dr. 5,000
To Miscellaneous Sales A/c* 5,000
(Being the old furniture having nil book value given in exchange)

*Sale of old Furniture having Book Value Nil.