Journal Entries

Question 1

Purchase of Goods for Cash

Answer 1

Purchase a/c
To Cash a/c

Question 2

Purchase of Goods on Credit

Answer 2

Purchase a/c Dr
To Creditors a/c

Question 3

Purchase return (Immediate return)

Answer 3

Cash a/c Dr
To Purchase return a/c

Question 4

Purchase return (Creditor return )

Answer 4

Creditors a/c Dr
To Purchase return

Question 5

Paid to creditors

Answer 5

Creditors a/c dr
To Cash a/c

Question 6

Discount received (earned)

Answer 6

Creditors a/c Dr
To Discount received a/c

Question 7

Sale of goods cash and credit

Answer 7

Cash a/c Dr
To Sales

Debtors a/c Dr
To Sales

Question 8

Sales return (credit and cash)

Answer 8

Sales return a/c Dr
To Cash a/c

Sales return a/c Dr
To Debtors

Question 9

Collection from Debtor and Discount allowed

Answer 9

Cash a/c Dr
To Debtors

Discount allowed a/c Dr
To Debtors

Question 10

Bad debts

bad debts received

Answer 10

Bad debts a/c Dr
To Debtors

Cash a/c Dr
To Bad debts received

Question 11

Expense incurred and Paid

Answer 11

Expense a/c Dr
To cash a/c

Question 12

Expense incurred but not paid

Answer 12

Expense a/c Dr
To O/S Expense

Question 13

Expenses not incurred but paid

Answer 13

Prepaid expense a/c Dr
To Cash a/c

Question 14

Income earned and received

Answer 14

Cash a/c Dr
To Income a/c

Question 15

Income earned but not received

Answer 15

Accrued Income a/c Dr
To Income a/c

Question 16

Income not earned but received

Answer 16

Cash a/c Dr
To Advance income a/c

Question 17

Capital Started with cash, asset , withdrawn for personal use

Answer 17

Cash a/c Dr
To Capital a/c

Asset a/c Dr
To Capital

Drawings a/c Dr
To Cash a/c

Question 18

Other Liabilities
Loan Taken:
Loan repaid:

Answer 18

Cash a/c Dr
To Loan a/c

Loan a/c Dr
To Cash a/c

Question 19

Asset Purchased Cash and Credit
Depreciation

Sale of Asset Cash and Credit

Answer 19

Asset a/c Dr
To Cash a/c
Asset a/c Dr
To Creditor for asset

Depreciation a/c Dr
To Asset

Cash a/c Dr
To Asset

Debtor for Asset a/c Dr
To Asset a/c

Question 20

SPT
A) Goods withdrawn for Personal use
B) Goods lost by theft
C) Goods given as free sample
D) Goods donated for charity

Answer 20

Drawings a/c
To Purchase a/c

Loss by theft a/c Dr
To Purchase

Sample a/c Dr
To Purchase

Charity a/c Dr
To Purchase a/c

Question 21

Special Transaction
Goods initially purchased for resale used
for demo Purpose:

Answer 21

Asset a/c Dr
To Purchase a/c
[Note: Whenever Goods are drawn [Used/Sent out] for purpose other than sales/P/R then Cr Purchase a/c

Question 22

Maturity of LIC policy of proprietor brought into
Business:

Answer 22

Cash a/c Dr
To Capital a/c

Question 23

Personal IT paid / Proprietor paid tuition fee:

Answer 23

Drawings a/c Dr
To Cash a/c

Question 24

Personal Money brought into business shall be treated as “Additional Capital”

Answer 24

Cash a/c Dr
To Capital a/c

Question 25

Personal Expense met from business shall be treated as "Drawings"

Answer 25

Drawings a/c Dr To Cash a/c

Question 26

Installation charges paid for asset

Answer 26

Machinery a/c Dr To Cash a/c Note: Expenses Incurred till asset is ready for use is capitalized. Expenses incurred after asset is ready for use shall be expensed.

Question 27

Repair charges paid for asset

Answer 27

Repair charges a/c Dr To Cash a/c Note: Expenses Incurred till asset is ready for use is capitalized. Expenses incurred after asset is ready for use shall be expensed.

Question 28

Interest on Capital Provided:

Answer 28

Interest on capital a/c Dr To Capital a/c

Question 29

Interest On Drawings Provided:

Answer 29

Drawings a/c Dr To Interest on drawings