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State with reason which account should be debited and which
account should be credited in each of the following
transactions:
1. Raj commenced business with cash Rs. 5000
2. Bought goods from Kiran for cash Rs. 1000
3. Sold furniture to Ravi on credit Rs. 500
4. Sold goods for cash Rs. 800
5. cash purchases Rs. 600
6. Bought Stamps Rs. 10
7. Withdrew cash from the business for personal use Rs. 1000
8. Paid salary to manager Rs. 500
9. Paid rent to landlord Rs. 200
10. Received commission from Mani Rs. 50
11. Paid for repairing machinery Rs. 30
12. Received cash form Ravi on account Rs. 400
13. Gave loan to Babu Rs. 500
14. Purchased goods from Sachin Rs. 400
15. Opened a bank account with Rs. 1000
16. Charged Mohan Rs. 50 commission for service rendered to him
17. Santosh paid the interest on loan advanced to him
18. Received loan from Manju Rs.10000
19. Office furniture stolen Rs. 500
20. Paid income tax Rs. 5000
21. Paid life insurance premium Rs. 300
22. Allowed discount to Babu Rs. 90
23. Discount received from Santosh Rs. 150
24. Amount charged by bank as bank charges Rs. 30
25. Railway fright paid on machinery purchased Rs. 100
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Answer Posted / aditya poddar
Last 4 entries for the transactions in above answer needs
some corrections. Though they are very minor ones.
They are as under:
22.)
Discount Allowed A/c Dr. Rs. 90
To Babu A/c Rs. 90
(Discount is not given in cash)
(Even if it is cash discount or trade discount it is
deducted from the bill amount or payment amount and not
paid/received in cash.)
23. Similar to the above reply discount will not be
received in cash.
Santosh A/c Dr. Rs. 150
To Discount Recieved A/c Rs. 150
24.
Bank Charges A/c Dr. Rs.30
To Bank A/c Rs. 30
(Since bank charges would be debited from your bank account
and not paid in cash.)
25.
Machinery A/c Dr. Rs. 100
To Railway Freight A/c Rs. 100
(Since the cost incurred on fixed asset to bring it to
ready to use condition is supposed to be capitalised. And
machinery is a Capital Asset, thus the freight charges will
be added to cost of machinery.)
Railway Freight A/c Dr. Rs. 100
To Cash A/c Rs. 100
| Is This Answer Correct ? | 2 Yes | 1 No |
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