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Question

Journalise the following transactions:
(i) Bought goods from Arun for ₹ 2,00,000 at a trade discount of 15% and cash discount of 2%. Paid 80% amount immediately.
(ii) Purchased foods for ₹ 20,000 from X and supplied it to Y for ₹ 26,000.
(iii) Cash withdrawn from bank ₹ 5,000 for personal use and ₹ 25,000 for office use.
(iv) Goods destroyed by fire : Cost Price ₹ 40,000.
(v) Provide 20% depreciation on machinery costing ₹ 50,000.
(vi) Out of insurance paid this year, ₹ 3,000 is related to next year.
(vii) Allow ₹ 5,000 as interest on capital and charge ₹ 1,000 as interest on drawings.
(viii) Sohan who owed us ₹ 25,000 was declared insolvent and a cheque of 40 paise in a ₹ is received from him in full settlement.
(ix) Paid Income Tax ₹ 10,000 by cheque.
(x) Salary paid ₹ 80,000 and Salary Outstanding ₹ 20,000.

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Solution

Journal
In the Books of …
Date Particulars L.F. Debit Amount (₹) Credit Amount (₹)
(i) Purchases A/c (WN) Dr. 1,70,000
To Arun’s A/c
34,000
To Cash A/c
1,33,280
To Discount Received A/c
2,720
(Goods purchased and 80% payment made in cash)
(ii) Purchases A/c Dr. 20,000
To X’s A/c
20,000
(Goods purchased on credit from X)
Y’s A/c Dr. 26,000
To Sales A/c
26,000
(Goods sold on credit to Y)
(iii) Cash A/c Dr. 25,000
Drawings A/c Dr. 5,000
To Bank A/c
30,000
(Cash withdrawn from bank for personal and office use)
(iv) Loss by Fire A/c Dr. 40,000
To Purchases A/c
40,000
(Goods destroyed by fire)
(v) Depreciation A/c Dr. 10,000
To Machinery A/c
10,000
(Depreciation charged on machinery)
(vi) Prepaid Insurance A/c Dr. 3,000
To Insurance A/c
3,000
(Insurance paid in advance)
(vii) Interest on Capital A/c Dr. 5,000
To Capital A/c
5,000
(Allowed interest on capital)
Drawings A/c Dr. 1,000
To Interest on Drawings A/c
1,000
(Charged interest on drawings)
(viii) Cash A/c Dr. 10,000
Bad Debts A/c Dr. 15,000
To Sohan’s A/c
25,000
(Cash received from Sohan and bad debts written-off)
(ix) Drawings A/c Dr. 10,000
To Bank A/c
10,000
(Income tax paid)
(x) Salaries A/c Dr. 1,00,000
To Cash A/c
80,000
To Outstanding Salaries A/c
20,000
(Salary paid and outstanding)
TOTAL 4,40,000 4,40,000

Working Notes: Calculation of payment made and outstanding amount to Arun


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