Journal Entries for Practice

JOURNAL ENTRY: - Each transaction is first recorded in the journal and then the appropriate entries are made to the accounts in the G/L. Because the journal is the first place a transaction is recorded it is called the book of original entry. The advantage of the journal is that it shows all the accounts that are affected by a transaction, and the amounts the appropriate accounts are debited and credited, all in one place.

SOME IMPORTANT NOTES FOR STUDENTS

Purchase	Always debited
	Example: - purchase goods cost price 1000 RS.  From Mohan in cash.                                    Purchase a/c dr.                         1000                 To cash                                                                1000
	Example: - purchased good cost price 1000rs from Mohan.                                 Purchase A/C DR.                                           1000                                                 To Mohan                                                                           1000
Purchase	It can be credited in only one condition and that is any type of loss {loss by fire, loss by theft, charity}
	Example: - Goods loss by fire value 1000                                 Loss by fire A/C DR.                                      1000                                                 To purchase                                                      1000
Purchase return	Always credited
	Example: - Good returned due to some technical fault value 1000 Mohan.                              Mohan A/C DR.                                  1000                                 To purchase return                                                        1000
Sale	Always credited
	Example: - sold good cost price 1000rs to x.                                 X A/C DR.                                            1000                                                 To sale A/C                                                        1000
Sales return	Always debited
	Example: - x returned goods to us due to fault value 1000                                 Sale Return A/C DR.                                      1000                                                 To X A/C                                                                             1000
If in any dealing it is defined that the payment is made by cheche or cash it may be commission, discount, rent, salary ETC then the expense name is debited and cash/bank is credited.
Example: - paid salary 2000rs to Mohan.                                                 Salary a/c dr.                                    2000                                                                 To Cash.                                                              2000
Example 2: - salary allowed/payable to Mohan 2000.                                                 Salary a/c dr.                               2000                                                                 To Mohan                                                           2000
If in any condition whether it is defined that cash receipt from any source to may be commission, discount, rent etc..
Example:           received commission from Mohan RS 2000                                                 Cash a/c dr.                                                       2000                                                                 To commission                                                      2000
Example2: commission receivable from Suresh RS. 2000                                                 Suresh a/c     dr.                                                               2000                                                                 To commission                                                                                2000

Some important some's to do

1. Started business with cash 1,50,000 Rs. And bank balance 25,000 Rs.
2. Started business with cash 15,000 Rs. Bank balance 25,000 Rs. And land and building 15,00,000 Rs.
3. Started business with furniture 2,50,000 Rs., land and building 25,000 Rs..
4. Started business with cash 12,500 Rs., land and building 250000 Rs. and Mohan creditor 25000   rs.
5. Started business with cash 15000 rs and bank balance 25000 rs. Furniture 25000 Rs and sita creditor 25000 Rs..
6. Started business with cash 25000 Rs., Mohan cr. 30000 Rs.
7. Started business with bank balance 5000 Rs., ram dr. 15000 Rs. and sham creditor 35000 Rs..  
8. Started business with cash 25150rs. Bank balance 50000rs. Site cr. 100000rs.
9. Started business with Mohan dry 50000 and Sohna creditor 60000 rs.
10. Started business with land and building 50000, bank 15000, furniture 15000 computer 25000.
11. Purchase goods from Ram cost price 15000 Rs.
12. Purchase goods from Ram cost price 15000 Rs. In cash.
13. Purchase goods cost 15000 Rs.
14. Purchase goods from Ram cost price 15000 Rs. Paid half amount same time by cheque.
15. Purchase goods from Ram cost price 15000 Rs. @ 10% trade discount Paid half amount same time by cheque.
16. Purchase goods from Ram cost price 15,000 @ 10% trade discount and 5% cash discount paid half amount same time and balance on credit.
17.  Purchased goods from Ram cost price 15000 @ 10% trade discount and 10% cash discount paid 40% amount same time by cheque and balance on credit.
18. Purchase goods cost price 12,500 @ 10% trade discount and payment made from business bank account.
19. Purchase goods from Ram Kapoor cost 2, 50,000 @ 10% trade discount and 10% cash discount paid 40% amount same time and balance on credit
20. Purchased goods from Ram Kumar cost price 20000 Rs.  @ 10% trade discount and 5% cash discount paid half amount same time by cheque 25% by draft and balance on credit.
21. Purchase some items from raj Malhotra cost prices 150000 Rs. @ 10% trade discount and 5% cash discount and paid half amount same time by cheque and balance on 3 days credit period.
22. Purchased 50 bottles of wine for office welfare and amount paid by cheque. Value 50000 Rs.
23. Purchased a dog for security purpose its cost 10000 Rs. And buy it on 10% trade discount.
24. Sold old computer cost 15,000 Rs. On credit to Mr. Mohan
25. Sold furniture to a Kumar which was in owner’s house from last 3 years. Its value 25,000 Rs. But sold it in loss amount 15,000.
26. Sold goods cost price 15,000.
27. Sold goods to Mona cost price 15,000 @ 15% loss due to some technical problem and received all amount by cheque.
28. Sold some office furniture cost 4100 Rs. And amount used for the personal purpose.
29. Sold furniture cost 150000 Rs. In 10% loss and received all amount same time by cheque.
30. Sold a bottle of wine which was in owner’s house from last 5 years. Its cost 1500 Rs. Sold it in 12000 Rs. And amount received by cheque.
31. Sold furniture cost 75000 Rs. To Hari Prasad @ 5% cash discount and received 70% amount same time by cheque.
32. Sold computer cost 15000 @ 15% profit in cash.
33. Sold goods cost price 125000 to Karan @ 5% trade discount.
34. Sold furniture cost 15,000 Rs. To Mr. Karan Kapoor on 10% trade discount and 5% cash discount and received all amount same time by cheque and cheque deposited into bank same day.
35. Sold goods to Mona cost price 15,000 @ 15% loss due to some technical problem and received all amount by cheque.
36. Paid wages to Mohan 15000.
37. Commission allowed to Ramesh 25000Rs.
38. Discount allowed to Harish 15000
39. Rent received in advance 15,000Rs.
40. Paid salary to Harish 25,000 by cheque.
41. Withdraw cash from bank for personal purpose Rs. 15,000.
42. Return goods cost price 10,000 to Mr. Rajesh Khanna.
43. Received from Karan Kapoor 10,000 Rs.
44. Purchased goods from hair cost 10000Rs. In cash
45. Return goods to Radha cost 2500Rs.
46. Purchased furniture cost 20000 for personal purpose and amount paid from the business account.
47. Commission allowed to Karan 22,000.
48. Good returned to Shankar cost price 8,000.
49. Sold goods cost price 15,000 to Radha.
50. Payment received from Radha.
51. Sold furniture to Mohan cost price 15000 Rs. @ 15% trade discount and 5% cash discount received half amount by a draft and balance on credit.
52. Returned goods cost 20000 to Ramesh due to some technical fault
53. Commission allowed to Mohan 150000.
54. Salary paid to Ramesh 15000.
55. Commission paid to Hari 15000.
56. Salary received from Ramesh 12500
57. Rent received from Harish 25000
58. Discount allowed to Karan 15000
59. Paid cash to Krishna 22000.
60. Cash received from Dinesh 22500.
61. Goods loss by fire amount 150000.
62. Above goods was insured so make insurance claim
63. Insurance company admit the claim and paid all amount by cheque.
64. Purchased a dog for security purpose value 50000.
65. Dog died
66. Paid wages to Ram who worked in owner house (15000).
67. Returned goods cost price 15000 to Ramesh due to some technical fault
68. Commission allowed to Mohan 150000.
69. Goods loss by fire amount 150000.
70. Above goods was insured so make insurance claim
71. Insurance company admit the claim and paid all amount by cheque.
72. Purchase goods from Ram Kumar cost 25000 Rs. @10% trade discount and 10% cash discount paid 40% amount same time by cheque and 20% in cash balance on credit.

Question: -1

1. Mohan Started business with cash RS. 2,00,000
2. Purchased goods cash from Rajesh @ RS. 5,000.
3. Purchased goods from Ram @ RS. 12,500
4. Sold good to A ltd. @ RS. 13,500
5. Sold goods to B ltd @ RS. 13,520 cash
6. Paid rent RS. 2,000 Mona
7. Paid commission to y RS. 200
8. Received cash form A ltd. RS. 12,000
9. Paid to RAM RS. 12,500 in full settlement.
10. Deposit into the Bank RS. 5,000

Question: -2

1. Purchase goods from Mohan cost pries 15000 @ 10% trade discount paid 40% amount same time and get 3% cash discount.
2. Paid rent to  Mohan 4000.
3. Withdraw Cash for personal use 5000.
4. Sold goods to Sita Ram cost price 16000 @5% trade discount he paid us a cheque for 50% amount and balance on credit. Cheque deposited into the Bank.
5. Withdraw cash from bank 15000 and use 50% for his personal use.
6. Received cash from Sita Ram for the balance amount.
7. Wages paid 12000.
8. Salary paid 15000.
9. Commission allowed to Mohan 12500.

 Question: -3

1. Purchase goods from Anil Cost Rs. 75000 @ 15% trade discount.
2. Returned goods Cost price Rs.15000 to Anil.
3. Paid to Anil balance amount.
4. Sold good to A Ltd. Cost Rs.10000 & 10% trade discount and get Rs. 5000 cash and a cheque for the balance amount.
5. A LTD. Retuned goods cost price Rs. 5000.
6. Paid LIC premium Rs. 2000  
7. Paid Fire insurance premium Rs. 1500
8. Cheque received from A Ltd. deposited into bank
9. Bank rejected that Cheque.
10. A Ltd. become Insolvent and paid only 30 paisa a rupee.

   Question: -4

1. Cash in hand rs. 10000: cash at bank rs. 20000; furniture Rs. 80000, Stock Rs. 50000, debtors- (Ram Rs. 8000; Shyam Rs. 12000;) Creditors – (X Rs. 5000, Y Rs. 10000)
2. Received a cheque from RAM in full settlement of his account after deducting 5% cash discount. Deposit the above cheque into the Bank.
3. Goods purchased for Rs. 20000 at 10% trade discount and 5% cash discount. Payment made by cheque.
4. Received a cheque from SHYAM for Rs 3860 and discount allowed to him Rs 140 cheque deposited into the bank on same day.
5. Cash paid to X after deducting 2% cash discount.
6. Old furniture sold for Rs 800
7. Sold to SHIV PRASHAD of the cost price of Rs 10000 at a 4% trade discount
8. SHIV PRASHAD retuned goods of the cost price Rs 1000
9. Paid furniture repairs to BHADUR SINGH 100 Rs.
10. Received a cheque from SHIV PRASHAD after deducting 4%Cash discount. Cheque was     deposited into bank.
11. Bank charged 50 for “BANK CHARGES”
12. Received commission Rs 200.

Some other important journal entries

1. X started business with cash Rs. 500,000/=
2. Open current A/c into SBI for Rs. 5000/=
3. Cash deposit into SBI Rs. 100,000/=
4. Commission Charged by SBI Rs. 50/=
5. Interest given by SBI Rs. 100/=
6. Goods purchased for cash Rs. 50,000/=
7. Drawing cash from SBI for office use Rs. 10,000/=
8. Goods sold to Krishna on credit Rs. 35,000/=
9. Goods return by Krishna worth Rs. 5000/=
10. Goods purchased from Sham Rs. 100,000 on credit.
11. Goods return to Sham Rs. 200.
12. Cash received from Krishna Rs. 28000/= with full settlement.
13. Cash paid to Sham Rs. 97000/= with full settlement.
14. Cash sales to Tripati & co. Rs. 1500/=
15. Paid Salary to Ram in cash 5500/=
16. Purchase goods from Rahim on Which he allows 10% Trade Discount on MRP of Rs. 12000.
17. Loan received form SBI Rs. 200,000/=
18. Interest paid on Loan Rs. 500/=
19. Goods sold to Sohna Rs. 1000 on credit.
20. Sohna declared insolvent and only 60% amount received
21. Bad debts amount recovered in cash Rs. 200/=
22. Cash withdraw by the owner Rs. 2500/=
23. Cash withdraw form SBI by owner Rs. 6500/=
24. Goods withdraw by owner Rs. 600/=
25. Open FD (Fixed Deposit) in SBI by transfer money form current A/c Rs. 10,000/=
26. Goods worth Rs. 500/= given as charity
27. Cash donate to trust Rs. 800/=
28. Goods distribute as free samples worth Rs. 3000/=  
29. Wages outstanding to Shaker Rs.2500/=
30. Outstanding wages paid to Shaker 
31. (a) Salary paid in advance to X for Rs. 5000/= and
32. (b) Adjust Rs. 1000/= every month from salary Rs. 7000/=
33. Depreciation on furniture charged Rs. 5000/=
34. Goods used in making furniture Rs. 1500/=
35. (a). One-year rent paid in advance to owner Mr. Y Rs. 60,000/=
36. (b). Rent adjust every month Rs. 5000/= per month
37. Electricity Bill paid to BSES in Cash 1312/=
38. Cartage paid in cash as purchasing time at goods Rs. 250/=
39. Cartage paid in cash at the selling time of goods Rs. 350/=
40. Scooter repair from Raju Mechanic payment outstanding Rs. 500/=
41. Outstanding bill paid of Raju
42. Rent of the business paid by owner Rs. 6000/=
43. Fire insurance premium paid by check Rs. 5000/=
44. Goods damaged in Railway Transport Rs. 4500/=
45. Typewriters purchased on credit from R & Co. Rs. 2400/=
46. Machine purchased by check Rs. 80,000/= from XYZ Pvt. Ltd.
47. The check was dishonored by bank
48. Newspaper bill paid Rs. 300/=
49. Old newspaper sold Rs. 50/=
50. Second Hand Car purchased Rs. 200,000/= and overhauling exp. Paid Rs. 10,000/=
51. Setup cost for new Machine paid Rs. 2500/=

Manual Vs Computerized Book Keeping

Manual book keeping: - in it we first create ledger, carry forward previous year’s closing balance as opening balance for the current year record cash transaction in cash book and non-cash transactions in journal, then amount from cash book and journal are posted into respective ledgers. Whenever we need to know balance of any ledger. We acquired to total amounts in both debit and credit columns of the ledger and compute the difference to derive the closing balance for the ledger as on the date to prepare final accounts (profit and loss & balance sheet) for any period, you have to compute closing balance of ledger for the period. And then prepare a trail balance from trail balance you post nominal account to profit & loss a/c real & personal ledger to balance sheet.  Next year when we create New Year book we have to repeat whole the process again.

 

Computerized accounting: - when we opt for computerized accounting first time we have to create all the ledgers and enter opening balance (in subsequent year we need to create the ledges again or carry forward previous year’s closing balance as opening balance since it would be carried forward on its own by the software) and classify at this stage. Thereafter you enter all transaction in vouches(different type of vouches to record diverse nature of transactions) that’s all you have to do and everything else (like posting to ledger preparation ) that’s all you have to do and everything else (like posting to ledger, preparation of trail balance, final account etc.)is done by the software In computerized accounting, while creating new ledger, you are required to classify it suitably under relevant accounts group to tell the software the nature of the ledger and where it will appear. This is necessary at this stage as all reports are prepared on line the moment you enter transactions (vouches). In case of manual book keeping this classification is done at late stage (after preparation of trail balance, nominal accounts are transferred to profit & loss accounts through journal entry, real and personal accounts are posted to balance sheet under propel heading i.e., groups).

 

YEAR END ENTRIES

 

In manual book keeping we required to pass journal entries to transfer closing balance of all nominal account to prepare profit and loss accounts, which we are not required to do in case of composited accounting. The software does this job on its own. In next year, only closing balance of teal and personal accounts are carried and nominal accounts balance is zeroed by the software (for which we pass journal entries in manual book keeping). The advantages are that our accounts are always open any modification is instantly reflected. 

Ledgers

 LEDGERS: - Ledgers are created to classify business dealings in subgroups.

To create ledger after creating company press (escape key) to go gateway of tally. Click on accounts info then create

Ledger

Here we can create ledger using two methods,

1. Single ledger

2. Multiple ledger

Single ledger: -We use single ledger system if we have to give extra information or enable any feature.

Multiple ledger: -We use multiple ledger system if we just want to create ledgers without any extra info.

 

Multiple ledger

Purchase Accounts	All type of Purchase Accounts & Purchase return
Sales Account	All types of Sales Accounts & Sale Return
Duties and Taxes	All types of Taxes like, Excise Duty Payable, Service Tax Payable, TDS, Output Vat Accounts, CENVAT Accounts, Sale tax Payables, Input Vat Accounts, Income Tax, VAT Payable & GST.
Direct Expenses	All expenses which appear in Trading Account like: - Labor, Power, Electricity Expense (Factory), Loading Unloading Expense, Carriage, Freight & Cartage, Warehousing Expenses, Custom Clearing Charges, Wages on Production, Import duty, Wages, Coal & Fuel, Coal, Gas & Water of Factory, Consumed Material, Export Duty, Delivery Charges (In Purchase Bill)
Indirect Expenses	All Indirect Expenses like: - Rounded Off, Salary, Advertisement Expense, Bad Debts, Maintenance Expense, Rent Expense, Postage & courier, Repair charge, Printing Expense, Stationary Expense, Audit Fees, Professional Charges, Legal Expenses/Charges, Depreciation , Interest paid, Penalty, Bank charges, Commission allowed, Discount allowed, Donation & charity, Free sample, Insurance premium, Interest on loan paid, Legal charge, Loss by fire, Taxi fare, Telephone charge, Travelling expenses, Outstanding expenses, Accrued expenses, Bad debt, Loss on theft, depreciation, Coffee Expenses, Coke Expenses, Manager’s Commission, Fuel Expenses A/c, Liability of Expenses, Preliminary Expenses A/c, Professional Fees
Indirect Income	Discount Received, Interest on Investment, commission received, rent received or any other income other than goods.
Deposit Account	All types of deposits like, Rent Deposit
Capital A/c	All types of Capital Account like, Share Capital, Partner Capital Account, Partner Current Account, Proprietor Account, Drawings, Life insurance, Equity Capital A/c, Partners’ Capital A/c
Current Assets	Prepaid Maintenance Expense, Prepaid Expense, Prepaid Rent, Prepaid Insurance Charges, Interest Receivables, Bill receivable, Accrued income, Mutual Fund
Current Liabilities	Bill drawn, Bill Payable
Sundry Creditor	Any Party from Whom Goods Purchased, Party from Whom any Bill of Expense Received,
Loans and Advances (Assets)	Any Party to whom we gave loan like: - Loan Given to Friends Relatives/Related Companies, Any Party to whom we gave Advance, like Advance to Supplier
Loans Liabilities	Any Party from whom we take loan., We can also put group Secured loan or Unsecured loan, Debenture A/c, Loans from Bank, Loans from Outside Party, Loans from Aravind(Friend)
Fixed Assets	All Fixed Assets on which Depreciation charged like Furniture, Machine, Plant and Machinery, Mobile, Computers, Furniture and Fittings, Car, Scooter, Laptops, Office lighting, Land & Building, Good will, Factory lighting, Air Conditioner etc.
Bank OCC	Cash Credit Limit (CC) taken from bank
Bank OD	Overdraft Limit (OD) taken from bank
Bank Accounts	Indian Bank A/c, SBI Bank A/c
Branch/Divisions	Any Branch whose Separate Accounting Done, (If branch account maintained by head office only, then this account not required), Delhi Branch, Branch in division
Cash in Hand	Cash in business & balance of Petty Cash
Investments	All types of Investments like, Investment in Shares, Investment in Bonds, Investment in Property/Plot etc., Long term investment, Debtor name, Short Term Investment
Stock-in-hand	Stock, Closing Stock, Consignment Stock, Opening Stock
Misc. Expense (ASSET)	Preliminary Expenses, NOT yet written off
Suspense A/c	Suspense Account, any payment or receipt from party whose name not known Suspense
Secured Loan	Loans for whom Security Given, like loan from bank/ Financial Institution
Unsecured Loan	Loans taken for whom no Security given, Like Short term loan from directors or loan from friends /relatives
Reserve & Surplus	Any type of reserve like, General Reserve, Capital Reserve, Capital Reserve A/c, Investment Allowance Reserve A/c, Share Premium A/c, Reverse and Surplus
Provisions	All Provisions except Provisions for bad debts, Provision for Tax, Provision for Expense, Provision for Sinking Fund, All types of Payables like Salary Payable, Audit fees Payable,
Sundry Debtors	Any Party to Whom Sales Made and Provision for Bad Debts

Vouchers

 VOUCHER: -A Document in Which the Transaction Details Are Noted. Like what, who, how much and to whom items sold or purchased.

 

CONTRA	All the transaction from bank entered in this voucher Like: - Withdrawal or deposit from bank. Cash deposit into bank Rs. 1000.                        Bank a/c     Dr.     1000                                 To cash                            1000 Cash withdrawal from bank Rs 1000.                       Cash a/c    Dr.        1000                                  To Bank.                           1000
PAYMENT	When we purchase any item, it may good or non-goods or any type of expenses paid in cash entered in this voucher. Paid wages Rs. 1000.                       Wages A/c Dr.     1000                                   To cash                          1000 Purchase furniture Rs. 1000 cash.                       Furniture A/c      Dr.    1000                                   To cash                                   1000
RECEIPT	All cash receipts entered in it. From any source. Commission received Rs. 1500.                       Cash A/c    Dr.                 1500                                   To commission                1500 Sold furniture Rs. 1500.                       Cash A/c    Dr.                 1500                                   To furniture                       1500
PURCHASE	All credit purchase will enter in it but only goods item. Purchase good from Mohan Rs. 3000                        Purchase A/c   Dr.             3000                                   To Mohan.                                 3000
SALE	All credit sale will have entered in it but only goods item. Sold goods to Raj Rs 3000                        Raj a/c             Dr.               3000                                    To sale                                     3000
CREDIT NOTE	Sale return Raj returned goods cost price Rs.1000.                        Sales return A/c      Dr.     1000                                    To Raj                                      1000
DEBIT NOTE	Purchase return Returned goods to Mohan Rs. 1000.                         Mohan A/c                 Dr.     1000                                   To purchase return               1000
JOURNAL	All credit purchase other than goods and balance entries will enter in it. Like: - Ram withdraw furniture for his personal use Rs 1500                       Drawings A/c           Dr.     1500                                   To furniture                           1500