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Sales Tax

in of Journal...

Question

Journalise the following transactions in the books of Kanishk Traders:

(i) Sold goods costing ₹ 1,20,000 to Charu at a profit of $33 \frac{1}{3}$ % on cost less 15% Trade Discount.

(ii) Sold goods costing ₹ 80,000 to Arun against cheque at a profit of 25% on cost less 15% Trade Discount.

(iii) Paid by cheque ₹ 8,400 as insurance premium for a period of 12 months starting 1st August 2016. Financial year closes on 31st March every year.

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Solution

Journal
In the Books of Kanishk

Date Particulars L.F. Debit Amount (₹) Credit Amount (₹)

i) Charu’s A/c (WN1) Dr. 1,36,000

To Sales A/c
1,36,000

(Goods sold to Charu)

ii) Bank A/c (WN2) Dr. 85,000

To Sales A/c
85,000

(Goods sold to Arun)

iii) Insurance A/c Dr. 8,400

To Bank A/c
8,400

(Insurance premium paid through cheque)

Prepaid Insurance A/c Dr. 2,800

To Insurance A/c
2,800

(Insurance premium paid in advance for four months)

TOTAL 2,32,200 2,32,200

Working Notes:

WN1: Calculation of amount of goods sold to Charu
$C o s t = 1, 20, 000 A d d : P r o f i t @ 33 \frac{1}{3} % o n 1, 20, 000 = \frac{40, 000}{1, 60, 000} L e s s : T r a d e D i s c o u n t @ 15 % o n 1, 60, 000 = \frac{24, 000}{1, 36, 000}$

WN2: Calculation of amount of goods sold to Arun
$C o s t = 80, 000 A d d : P r o f i t @ 25 % o n 80, 000 = \frac{20, 000}{1, 00, 000} L e s s : T r a d e D i s c o u n t @ 15 % = \frac{15, 000}{85, 000}$

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