QUESTION:

Finalize the following transaction in the books of Mr. Sagar.

2008 August 01 Mr. Sagar introduce Rs. 1, 00, 000 cash in business and received
Rs. 40,000 from his uncle as a gift and deposited the same in to the
State Bank of India account of business.

August 02 Purchased goods of Rs. 11,000 from Mohan.

August 04 Sold goods on credit to Sohan for Rs. 15,000.

August 08 Goods of Rs. 400 being defective returned by Sohan.

August 10 Remitted cash to Mohan Rs. 10,600 and received discount Rs. 400.

August 14 Bought Machinery from Kiran Scientific Company Rs. 20,000 and
Half the amount paid immediately.

August 18 Paid for repairs of above Machinery Rs. 200.

August 21 Purchased a horse for Rs. 4,000 and paid carriage charges Rs. 200.

August 24 Withdrawn from bank Rs. 4,000 for private use.

August 26 Amount due from Paresh Rs. 750 is proved to be irrecoverable and has
to be written off as bad.

August 28 Paid for sales literature Rs.1000.

August 31 Paid salary to staff by cheque Rs. 5,000.

SOLUTION:

In the books of Mr. Sagar

Journal entries
Date Particulars L Debit Credit
/ Amount Amount
F (Rs) (Rs)
2008 State bank of India A/c Dr 40,000
August 1 Cash A/c Dr 1,00,000
To Sagar’s Capital A/c 1,40,000
( Being amount invested in
business)

August 2 Purchases A/c Dr 11,000

To Mohan’s A/c 11,000
( Being goods purchased on
credit)
August 4 Sohan’s A/c Dr 15,000
To Sales A/c 15000
( Being goods sold on credit)
August 8 Sales Return A/c Dr 400
To Sohan’s A/c 400
( Being goods returned)
August 10 Mohan’s A/c Dr 11,000
To Cash A/c 10,600
To Discount Received A/c 400
( Being cash remitted and
discount received) In the books
August 14 Machinery A/c Dr 20,000 of Mr. Sagar
To Cash A/c 10,000
To Kiran Scientific Co. A/c 10,000 Ledger
(Being Machinery purchased entries
and half amount paid)
August 18 Repairs to Machinery A/c Dr 200
To Cash A/c 200 Mr. Sagar’s
(Being paid for repairs to Capital A/c
machinery) Dr
August 21 Livestock A/c Dr 4,200 Cr
Date To Cash A/c J Amount
Particulars Date 4,200
Particulars J Amount(
(Being horse purchased
/ and
(Rs) / Rs)
carriage Rs. 200 paid)
F F
August
2008 24 Drawings A/c Dr 4,000
2008
To State Bank of India A/c 4,000
Aug 1 By SBI A/c 40,000
(Being withdrawn for private Aug 1 By cash A/c 1,00,000
Aug 31 Touse)
Balance c/d 1,40,000
Total 1,40,000 Total 1,40,000
August 26 Bad Debts A/c Dr 7501
Sept By Balance b/d 1,40,000
To Paresh A/c 750
(Being amount irrecoverable
from Paresh written off as bad
debts) State Bank
August 28 Advertisement A/c Dr 1000 of India A/c
To Cash A/c 1000 (SBI A/c)
(Being paid foe sales
literature)
August 31 Salaries A/c Dr 5,000
To State Bank of India A/c 5,000
(Being Staff salary paid by
cheque)
Total 2,12,550 2,12,550
Dr Cr
Date Particulars J Amount Date Particulars J Amount
/ (Rs) / (Rs)
F F
2008 2008
Aug 1 To Sagar’s Capital 40,000 Aug 24 By Drawing A/c 4,000
A/c
Aug 31 By Salary A/c 5,000
Aug 31 By Balance c/d 31,000
Total 40,000 Total 40,000
Sept 1 To Balance b/d 31000

Purchase A/c
Dr Cr
Date Particulars J Amount Date Particulars J Amount
/ (Rs) / (Rs)
F F
2008 2008
Aug 2 To Mohan’s A/c 11,000

Aug 31 By Balance c/d 11,000

Total 11,000 Total 11,000
Sept 1 To Balance b/d 11,000

Mohan’s A/c
Dr Cr
Date Particulars J Amount Date Particulars J Amount
/ (Rs) / (Rs)
F F
2008 2008
Aug 10 To cash A/c 10,600 Aug 2 By Purchase 11,000
Aug 10 To Discount 400
Received

Total 11,000 Total 11,000

Sohan’s A/c
Dr Cr
Date Particulars J Amount Date Particulars J Amount
/ (Rs) / (Rs)
 F F
2008 2008
Aug 4 To sales 15,000 Aug 8 By Purchases

Aug 31 By Balance b/d 14,600

Total 15,000 Total 15,000
Sept 1 To Balance b/d 14,600

Sales A/c
Dr Cr
Date Particulars J Amount Date Particulars J Amount
/ (Rs) / (Rs)
F F
2008 2008
Aug 4 By Sohan’s A/c 15,000

Aug 31 By Balance c/d 15,000

Total 15,000 Total 15,000
Sept 1 To Balance b/d 15,000

Sales Return A/c

Dr Cr
Date Particulars J Amount Date Particulars J Amount
/ (Rs) / (Rs)
F F
2008 2008
Aug 8 To sales A/c 400

Aug 31 By Balance c/d 400

Total 400 Total 400
Sept 1 To Balance b/d 400

Cash A/c
Dr Cr
Date Particulars J Amount Date Particulars J Amount(
/ (Rs) / Rs)
F F
2008 2008
Aug 1 By Sagar’s Capital 1,00,000 Aug 10 By Mohan’s A/c 10,600
A/c
Aug 14 By Machinery A/c 10,000
Aug 18 By Repairs 200
Machinery A/c
Aug 21 By Livestock A/c 4,200
Aug 28 By Advertisement 1,000
A/C
Aug 31 To Balance c/d 74,000
Total 1,00,000 Total 1,00,000
Sept 1 By Balance b/d 74,000
Discount Received A/c
Dr Cr
Date Particulars J Amount Date Particulars J Amount
/ (Rs) / (Rs)
F F
2008 2008
Aug 10 By Mohan’s A/c 400

Aug 31 To Balance c/d 400

Total 400 Total 400
Sept1 By Balance b/d 400

Kiran’s Scientific Company Co.

Dr Cr
Date Particulars J Amount Date Particulars J Amount
/ (Rs) / (Rs)
F F
2008 2008
Aug 14 By Mohan’s A/c 10,000

Aug 31 To Balance c/d 10,000

Total 10,000 Total 10,000
Sept 1 By Balance b/d 10,000

Machinery A/c
Dr Cr
Date Particulars J Amount Date Particulars J Amount
 / (Rs) / (Rs)
F F
2008 2008
Aug 14 To cash A/c 10,000
Aug 14 To Kiran’s 10,000
Scientific Co.
Aug 31 By Balance c/d 20,000
Total 20,000 Total 20,000
Sept 1 To Balance b/d 20,000

Repairs to Machinery A/c

Dr Cr
Date Particulars J Amount Date Particulars J Amount
/ (Rs) / (Rs)
F F
2008 2008
Aug 18 To cash A/c 200

Aug 31 By Balanced A/c 200

Total 200 Total 200
Sept 1 To Balanced A/c 200

Livestock A/c
Dr Cr
Date Particulars J Amount Date Particulars J Amount
/ (Rs) / (Rs)
F F
2008 2008
Aug 21 To cash A/c 4,200

Aug 31 By Balanced c/d 4,200

Total 4,200 Total 4,200
Sept 1 To Balanced b/d 4,200

Drawings A/c
Dr Cr
 Date Particulars J Amount Date Particulars J Amount
/ (Rs) / (Rs)
F F
2008 2008
Aug 24 To SBI A/c 4,000

Aug 31 By Balanced A/c 4,000

Total 4,000 Total 4,000
Sept 1 To Balanced A/c 4,000

Bad Debts A/c

Dr Cr
Date Particulars J Amount Date Particulars J Amount
/ (Rs) / (Rs)
F F
2008 2008
Aug 26 To Paresh’s A/c 750

Aug 31 By Balanced c/d 750

Total 750 Total 750
Sept 1 To Balanced b/d 750

Paresh’s A/c
Dr Cr
Date Particulars J Amount Date Particulars J Amount
/ (Rs) / (Rs)
F F
2008 2008
Aug 26 By Bad Debts A/c 750

Aug 31 To Balanced c/d 750

Total 750 Total 750
Sept 1 By Balanced b/d 750

Advertisement A/c
Dr Cr
Date Particulars J Amount Date Particulars J Amount
/ (Rs) / (Rs)
F F
 2008 2008
Aug 28 To cash A/c 1,000

Aug 31 By Balanced c/d 1,000

Total 1,000 Total 1,000
Sept 1 To Balanced b/d 1,000

Salary A/c
Dr Cr
Date Particulars J Amount Date Particulars J Amount
/ (Rs) / (Rs)
F F
2008 2008
Aug 31 To SBI A/c 5,000

Aug 31 By Balanced c/d 5,000

Total 5,000 Total 5,000
Sept 1 To Balanced b/d 5,000

Trial Balance as on 31st August, 2008

Particulars Debit (Rs) Credit (Rs)

Capital A/c 1,40,000
State Bank of India A/c 31,000
Purchase A/c 11,000
Sohan’s A/c 14,600
Sales A/c 15,000
Sales Return A/c 400
Cash A/c 74,000
Discount Received A/c 400
Kiran Scientific Company A/c 10,000
Machinery A/c 20,000
Repairs to Machinery A/c 200
Livestock A/c 4,200
Drawings A/c 4,000
Bad Debts A/c 750
Paresh A/c 750
Advertisement A/c 1,000
Salary A/c 5,000

Total 1,66,150 1,66,150

In the books of Mr. Sagar

Trading A/c
For the year ended 31st August, 2008

Dr. Cr.
Particulars Amount Amount Particulars Amount Amount
Rs. Rs. Rs. Rs.
To Purchases 11,000 By Sales 15,000
Less: By Sales Return (400)
14,600

To Gross Profit c/d 3,600

Total 14,600 Total 14,600

In the books of Mr. Sagar

Profit & Loss A/c and Appropriation A/c
For the year ended 31st August, 2008

Dr. Cr.
Particulars Amount Amount Particulars Amount Amount
Rs. Rs. Rs. Rs.
To Repairs to 200 By Gross Profit b/d 3,600
Machinery A/c
To Bad Debts A/c 750 By Discount Received 400
A/c
To Advertisement 1,000
A/c
To Salary A/c 5,000

By Net Loss c/d 2,950

Total 6,950 Total 6,950
 Appropriation A/c
Dr. Cr.
Particulars Amount Amount Particulars Amount Amount
Rs. Rs. Rs. Rs.
To Net Loss b/d 2,950
To Drawings A/c 4,000
By Net loss carried 6,950
over to Balance sheet
Total 6,950 Total 6,950

Balance sheet
As on 31st August, 2008

Liabilities Amount Amount Assets Amount Amount

Rs. Rs. Rs. Rs.
Capital A/c 1,40,00 Machinery A/c 20,000
0
Less: Net Loss 6,950 Livestock A/c 4,200
1,33,050 State Bank of India 31,000
A/c
Sohan A/c 14,600
Cash A/c 74,000
Kiran Scientific Co. 10,000
A/c
Paresh A/c 750

Total 1,43,800 Total 1,43,800

 Anjuman-I-Islam’s
Allana institute of management
studies

FIRST YEAR IN MMS

(2010-2011)

Semester-1
Subject – Financial Accounting.

Submitted By: -Bhanpurawala Yusuf

Abdulla.
Roll no: 10
 Div: A

Submitted To: Prof M.B Thakoor