Illustrations Example 1: January 1, 2004 – Saravanan started business with Rs. 1,00,000.

Illustrations

Example 1:

January 1, 2004 – Saravanan started business with Rs. 1,00,000.

Analysis of Transaction

Step 1	Determine the two accounts involved in the transaction.	Cash Account	Capital Account
Step 2	Classify the accounts under personal, real or nominal.	Real Account	Personal Account
Step 3	Find out the rules of debit and credit.	2(a) Debit what comes in.	¹(b) Credit the giver
Step 4	Identify which account is to be debited and credited.	Cash A/c is to be debited	Capital A/c is to be credited

Solution : Journal

Date	Particulars	L.F	Debit Rs. P.		Credit Rs. P.
2004	Cash A/c Dr.	12	1,00,000	—
Jan 1	To Capital A/c	45			1,00,000	—
	(The amount invested in the business)

The Ledger Folio column indicates 12 against Cash Account which means that Cash Account is found in page 12 in the ledger and this debit of Rs.1,00,000 to Cash A/c can be seen on that page. Similarly 45 against Capital A/c indicates the page number in which Capital account is found and the credit of Rs.1,00,000 indicated there in.

Example 2:

Jan. 3, 2004 : Received cash from Balan Rs. 25,000

Analysis of Transaction

Step 1	Determine the two accounts involved in the transaction.	Cash Account	Balan Account
Step 2	Classify the accounts under personal, real or nominal.	Real Account	Personal Account
Step 3	Find out the rules of debit and credit.	2(a) Debit what comes in.	¹(b) Credit the giver
Step 4	Identify which account is to be debited and credited.	Cash A/c is to be debited	Balan A/c is to be credited

Solution : Journal

			Debit		Credit
Date	Particulars	L.F	Rs. P.		Rs. P.
2004	Cash A/c Dr.	12	25,000	—
Jan 3	To Balan’s A/c	81			25,000	—
	(Cash received from Balan)

The Ledger Folio column indicates 12 against Cash Account which means that Cash Account is found in page 12 in the ledger and this debit of Rs.25,000 to Cash A/c can be seen on that page. Similarly 81 against Balan A/c indicates the page number in which Balan Account is found and the credit of Rs.25,000 indicated there in.

Example 3: July 7, 2004 – Paid cash to Perumal Rs.37,000.

Analysis of Transaction

Step 1	Determine the two accounts involved in the transaction.	Perumal Account	Cash Account
Step 2	Classify the accounts under personal, real or nominal.	Personal Account	Real Account
Step 3	Find out the rules of debit and credit.	1(a) Debit the receiver	2(b) Credit what goes out
Step 4	Identify which account is to be debited and credited.	Perumal A/c is to be debited	Cash A/c is to be credited

Solution :

Journal

Date	Particulars	L.F	Debit		Credit

			Rs. P.		Rs. p.
2004	Perumal A/c Dr.	95	37,000	—
July 7	To Cash A/c	12			37,000	—
	(Cash paid to Perumal)

Example 4: Feb. 7, 2004 — Bought goods for cash Rs. 80,000.

Analysis of Transaction

Step 1	Determine the two accounts involved in the transaction.	Purchases Account	Cash Account
Step 2	Classify the accounts under personal, real or nominal.	Real Account	Real Account
Step 3	Find out the rules of debit and credit.	2(a) Debit what comes in	2(b) Credit what goes out
Step 4	Identify which account is to be debited and credited.	Purchases A/c is to be debited	Cash A/c is to be credited

Solution :

Journal

Date

Particulars

L.F

Debit
Rs. P.

Credit
Rs. P.

2004 Feb 7

Purchases A/c Dr.

To Cash A/c

(Cash purchase of goods)

48
12

80,000

—

80,000

Example 5: March 10, 2004 — Cash sales Rs.90,000.

Analysis of Transaction

Step 1	Determine the two accounts involved in the transaction.	Cash Account	Sales Account
Step 2	Classify the accounts under personal, real or nominal.	Real Account	Real Account
Step 3	Find out the rules of debit and credit.	2(a) Debit what comes in	2(b) Credit what goes out
Step 4	Identify which account is to be debited and credited.	Cash A/c is to be debited	Sales A/c is to be credited

Solution :

Journal

Date

Particulars

L.F

Debit
Rs. P.

Credit
Rs . P.

2004 Mar 10

Cash A/c Dr.

To Sales A/c

(Cash Sales)

90,000

—

90,000

—

Example 6: March 15, 2004 — Sold goods to Jaleel on credit Rs.1,00,000.

Analysis of Transaction

Step 1	Determine the two accounts involved in the transaction.	Jaleel Account	Sales Account
Step 2	Classify the accounts under personal, real or nominal.	Personal Account	Real Account
Step 3	Find out the rules of debit and credit.	1(a) Debit the receiver	2(b) Credit what goes out
Step 4	Identify which account is to be debited and credited.	Jaleel A/c is to be debited	Sales A/c is to be credited

Solution :

Journal

Date

Particulars

L.F

Debit
Rs. P.

Credit
Rs. P.

2004 March 15

Jaleel A/c Dr.

T o Sales A/c

(Credit sales)

1,00,000

—

1,00,000

—

Example 7: March 18, 2004 — Purchased goods from James on credit Rs.1,50,000.

Analysis of Transaction

Step 1	Determine the two accounts involved in the transaction.	Purchases Account	James Account
Step 2	Classify the accounts under personal, real or nominal.	Real Account	Personal Account
Step 3	Find out the rules of debit and credit.	2(a) Debit what comes in	1(b) Credit the giver
Step 4	Identify which account is to be debited and credited.	Purchases A/c is to be debited	James A/c is to be credited

Solution : Journal

Date

Particulars

L.F

Debit
Rs. P.

Credit
Rs. P.

2004 March 18

Purchases A/c Dr.

To James A/c

(Credit purchases)

1,50,000

—

1,50,000

Example 8: March 20, 2004 — Returned goods from Jaleel Rs.5,000.

Analysis of Transaction

Step 1	Determine the two accounts involved in the transaction.	Sales Return Account	Jaleel Account
Step 2	Classify the accounts under personal, real or nominal.	Real Account	Personal Account
Step 3	Find out the rules of debit and credit.	2(a) Debit what comes in	¹(b) Credit the giver
Step 4	Identify which account is to be debited and credited.	Sales return A/c is to be debited	Jaleel A/c is to be credited

Date	Particulars	L.F	Debit Rs. P		Credit rs. P.
2004 March 20	Sales return A/c Dr.		5,000	___
	To Jaleel A/c				5,000	___
	(Returned goods)

Example 9: March 25, 2004 — Goods returned to James Rs.7,000.

Analysis of Transaction

Step 1	Determine the two accounts involved in the transaction.	James Account	Purchases return Account
Step 2	Classify the accounts under personal, real or nominal.	Personal Account	Real Account
Step 3	Find out the rules of debit and credit.	1(a) Debit the receiver	2(b) Credit what goes out
Step 4	Identify which account is to be debited and credited.	James A/c is to be debited	Purchases return A/c is to be credited

Solution : Journal

Date	Particulars	L.F	Debit Rs. P		Credit Rs P.
2004 March 25	James A/c Dr.		7,000	____
	To Purchases return A/c				7 ,000	__
	(Goods returned)

Example 10: March 25, 2004 — Paid salaries in cash Rs.6,000

Analysis of Transaction

Step 1	Determine the two accounts involved in the transaction.	Salaries Account	Cash Account
Step 2	Classify the accounts under personal, real or nominal.	Nominal Account	Real Account
Step 3	Find out the rules of debit and credit.	3(a) Debit all expenses & losses	2(b) Credit what goes out
Step 4	Identify which account is to be debited and credited.	Salaries A/c is to be debited	Cash A/c is to be credited

Solution: Journal

Date

Particulars

L.F

Debit
Rs. P.

Credit
Rs. P.

2004 March 25

Salaries A/c Dr.

To Cash A/c

(Salaries paid)

6,000

—

6,000

—

Example 11: April 14, 2004 — Commission received Rs.5,000.

Analysis of Transaction

Step 1	Determine the two accounts involved in the transaction.	Cash Account	Commission Account
Step 2	Classify the accounts under personal, real or nominal.	Real Account	Nominal Account
Step 3	Find out the rules of debit and credit.	2(a) Debit what comes in	³(b) Credit all incomes & gains
Step 4	Identify which account is to be debited and credited.	Cash A/c is to be debited	Commission A/c is to be credited

Solution:

Journal

Date	Particulars	L.F	Debit		Credit
			Rs. P.		Rs. P.
2004	Cash A/c Dr.		5,000	—
April 14	To Commission A/c				5,000	—
	(Commission received)

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