Question

Rectify the following entries assuming that the narration in each case is correct:

Date	Particulars		L.F.	Amount Dr. (Rs)	Amount Cr. (Rs)
2017
May 04	Building A/c	Dr.		5,00,000
	Brokerage A/c	Dr.		10,000
	To Bank A/c				5,10,000
	(Purchase of building and payment of brokerage on its purchase)
May 10	Drawings A/c	Dr.		12,000
	To Sales A/c				12,000
	(Goods taken away by the proprietor for personal use)
May 16	Filing Cabinet A/c	Dr.		4,000
	Electric Fan A/c	Dr.		2,500
	To Cash A/c				6,500
	(Purchase of filing cabinet and an electric fan)
May 18	Cash A/c	Dr.		8,730
	To Sales A/c				8,730
	(Goods worth ₹ 10,000 sold at 10% trade discount and 3% cash discount)
May 20	Bank A/c	Dr.		10,000
	To Naresh				10,000
	(Receipt of 25 paise per rupee from the estate of Naresh who is declared insolvent)
May 31	Bank Charges A/c	Dr.		150
	To Cash A/c				150
	(Charges made by bank for its services)

Answer 1

Journal In the Books of …
Date	Particulars		L.F.	Debit Amount (Rs)	Credit Amount (Rs)
2017
May 04	Building A/c*	Dr.		5,10,000
	To Cash A/c				5,10,000
	(Purchase of building and payment of brokerage on its purchase)
May 10	Drawings A/c	Dr.		12,000
	To Purchases A/c				12,000
	(Goods taken away by the proprietor for personal use)
May 16	Office Equipment A/c	Dr.		6,500
	To Cash A/c				6,500
	(Purchase of filling cabinet and an electric fan)
May 18	Cash A/c (WN1)	Dr.		8,730
	Discount Allowed A/c			270
	To Sales A/c				9,000
	(Goods worth Rs 10,000 sold at 10% trade discount and 3% cash discount)
May 20	Cash A/c (WN2)	Dr.		10,000
	Bad Debts A/c			30,000
	To Naresh				40,000
	(Receipt of 25 paise per rupee from the estate of Naresh who is declared insolvent)
May 31	Bank Charges A/c	Dr.		150
	To Bank A/c				150
	(Charges made by bank for its services)
	TOTAL			5,77,650	5,77,650

* Payment of brokerage will be included in cost of the building as it is incurred at time of purchase of building.

Working Notes:

WN1: Calculation of amount of goods sold

WN2: Calculation of amount of bad debts