Complex Compound Journal Entries :: Problems & Solutions

Problem : 1

Journalise the following transactions.
Jun 5th : Acquired the running business of Max, for cash 50, 000 by taking over the following assets and liabilities at values stated against them:

Stock of Goods 15,000; Cash 25,000; Furniture 10,000; Debtors 7,000; Machinery 8,000 & Creditors 15,000.

6th : Opened a bank account with 5,000
7th : Bought goods worth 6, 000 from Usha & Co. & paid half the amount in cash.
8th : Sold to Bee & Co. goods worth 5,000 and a cheque received for the due
14th : Sold private car for 4,000 and bought a new one for business with the proceeds plus 5,000 from office cash.
16th : Bought furniture worth 4,000 of which, those worth 1,000 are for office use and the balance for stock.
18th : Sold goods to Arial & Co. 8,000 and to Wheel & Co. 7,000
19th : Payment made to Creditors 4,500
20th : Cash received from Debtors 5,800
25th : Paid Rent by cheque 2,500
30th : Commission received 3,000

Solution

  • Jun 5th
    Assets taken over:
    Stock of Goods
    Cash
    Furniture
    Debtors
    Machinery
    - Liabilities taken over:
    Creditors
    Net Assets (capital)

    15,000
    25,000
    10,000
    7,000
    8,000

    15,000
    50,000
  • Jun 7th
    Total value of goods bought
    - paid in cash
    Bought on credit
    6,000
    3,000
    3,000
  • Jun 14th
    Realisation from sale of private car
    + Office cash used for purchase
    value of car bought
    4,000
    5,000
    9,000
  • Jun 16th
    Value of Furniture bought
    - Furniture for office
    value of Furniture bought for goods
    4,000
    1,000
    3,000
Journal in the books of M/s ___ for the period from June 5th, 20_5 to June 30th, 20_5
Date V/R
No.
Particulars L/F Amount
(Dr)
Amount
(Cr)
June 5th Goods/Stock a/c
Furniture a/c
Debtors a/c
Machinery a/c
Cash a/c
To Creditors a/c
To Capital a/c
Dr
Dr
Dr
Dr
Dr






15,000
10,000
7,000
8,000
25,000





15,000
50,000
[Being the amount of assets and liabilities acquired from Mr. Max]
6th Bank a/c
To Cash a/c
Dr
5,000
5,000
[Being the amount of cash deposited into bank on:__ ]
7th Goods/Stock a/c
To Cash a/c
To Usha & Co. a/c
Dr

6,000
3,000
3,000
[Being the value of stock purchased from M/s. Usha & Co on credit and paid half the amount in cash vide bill no:___, voucher no:___ dated:__ ]
8th Bank a/c
To Goods/Stock a/c
Dr
5,000
5,000
[Being the value of stock sold to M/s. Bee & Co. and received amount due by cheque no:___ dated:__]
14th Car a/c
To Capital a/c
To Cash a/c
Dr

9,000
4,000
5,000
[Being the amount paid for car purchase for office from private cash and business cash vide voucher no:___ dated:__ ]
16th Goods/Stock a/c
Furniture a/c
To Cash a/c
Dr
Dr


3,000
1,000


4,000
[Being the value of furniture purchased for office decoration and for stock vide bill no:___ dated:__ ]
18th Arial & Co. a/c
Wheel & Co. a/c
To Goods/Stock a/c
Dr
Dr


8,000
7,000


15,000
[Being the value of stock sold to M/s Arial & Co. and M/s Wheel & Co. on credit vide invoice nos:___ dated:__ ]
19th Creditors a/c
To Cash a/c
Dr
4,500
4,500
[Being the amount paid to creditors vide voucher no:___ dated:__ ]
20th Cash a/c
To Debtors a/c
Dr
5,800
5,800
[Being the amount of cash received from debtors vide cash receipt no:___ dated:__ ]
25th Rent Paid a/c
To Bank a/c
Dr
2,500
2,500
[Being the amount paid for rent vide cheque no:___ dated:__ ]
30th Cash a/c
To Commission Received a/c
Dr
3,000
3,000
[Being the amount of cash received for commission vide cash receipt no:___ dated:__ ]

General Ledger
[Books of M/s ____ ]

Goods/Stock a/c
Dr Cr
Date Particulars J/F Amount Date Particulars J/F Amount
05/06/_5

07/06/_5
07/06/_5
08/06/_5
16/06/_5
To Sundry Liabilities
(Capital a/c)
To Cash a/c
To Usha & Co. a/c
To Bank a/c
To Cash a/c





15,000

3,000
3,000
5,000
3,000
18/06/_5
18/06/_5
30/06/_5
By Arial & Co. a/c
By Wheel & Co. a/c
By Balance c/d


8,000
7,000
14,000
      29,000       29,000
01/07/_5 To Balance b/d 14,000        
Furniture a/c
Dr Cr
Date Particulars J/F Amount Date Particulars J/F Amount
05/06/_5

16/06/_5
To Sundry Liabilities
(Capital a/c)
To Cash a/c


10,000

1,000
30/06/_5 By Balance c/d 11,000
      11,000       11,000
01/07/_5 To Balance b/d 11,000        
Debtors a/c
Dr Cr
Date Particulars J/F Amount Date Particulars J/F Amount
05/06/_5 To Sundry Liabilities
(Capital a/c)
7,000 20/06/_5
30/06/_5
By Cash a/c
By Balance c/d

5,800
1,200
      7,000       7,000
01/07/_5 To Balance b/d 1,200        
Machinery a/c
Dr Cr
Date Particulars J/F Amount Date Particulars J/F Amount
05/06/_5 To Sundry Liabilities
(Capital a/c)
8,000 30/06/_5 By Balance c/d 8,000
      8,000       8,000
01/07/_5 To Balance b/d 8,000        
Cash a/c
Dr Cr
Date Particulars J/F Amount Date Particulars J/F Amount
05/06/_5

20/06/_5
30/06/_5
To Sundry Liabilities
(Capital a/c)
To Debtors a/c
To Commission
Received a/c




25,000

5,800

3,000
06/06/_5
07/06/_5
14/06/_5
16/06/_5
16/06/_5
19/06/_5
30/06/_5
By Bank a/c
By Goods/Stock a/c
By Car a/c
By Goods/Stock a/c
By Furniture a/c
By Creditors a/c
By Balance c/d






5,000
3,000
5,000
3,000
1,000
4,500
12,300
      33,800       33,800
01/07/_5 To Balance b/d 12,300        
Creditors a/c
Dr Cr
Date Particulars J/F Amount Date Particulars J/F Amount
19/06/_5
30/06/_5
To Cash a/c
To Balance c/d

4,500
10,500
05/06/_5 By Sundry Assets
(Capital a/c)
15,000
      15,000       15,000
        01/07/_5 By Balance b/d 10,500
Capital a/c
Dr Cr
Date Particulars J/F Amount Date Particulars J/F Amount
30/06/_5 To Balance c/d 54,000 05/06/_5

14/06/_5
By Sundry Assets
and Liabilities
By Car a/c



50,000
4,000
      54,000       54,000
        01/07/_5 By Balance b/d 54,000
Bank a/c
Dr Cr
Date Particulars J/F Amount Date Particulars J/F Amount
06/06/_5
30/06/_5
To Cash a/c
To Balance c/d

5,000
2,500
08/06/_5
25/06/_5
By Goods/Stock c/d
By Rent Paid a/c

5,000
2,500
      7,500       7,500
        01/07/_5 By Balance b/d 2,500
Usha & Co. a/c
Dr Cr
Date Particulars J/F Amount Date Particulars J/F Amount
30/06/_5 To Balance c/d 3,000 07/06/_5 By Goods/stock a/c 3,000
      3,000       3,000
        01/07/_5 By Balance b/d 3,000
Car a/c
Dr Cr
Date Particulars J/F Amount Date Particulars J/F Amount
14/06/_5
14/06/_5
To Capital a/c
To Cash a/c

4,000
5,000
30/06/_5 By Balance c/d 9,000
      9,000       9,000
01/07/_5 To Balance b/d 9,000        
Arial & Co. a/c
Dr Cr
Date Particulars J/F Amount Date Particulars J/F Amount
18/06/_5 To Goods/Stock a/c 8,000 30/06/_5 By Balance c/d 8,000
      8,000       8,000
01/07/_5 To Balance b/d 8,000        
Wheel & Co. a/c
Dr Cr
Date Particulars J/F Amount Date Particulars J/F Amount
18/06/_5 To Goods/Stock a/c 7,000 30/06/_5 By Balance c/d 7,000
      7,000       7,000
01/07/_5 To Balance b/d 7,000        
Rent Paid a/c
Dr Cr
Date Particulars J/F Amount Date Particulars J/F Amount
25/06/_5 To Bank a/c 2,500 30/06/_5 By Balance c/d 2,500
      2,500       2,500
01/07/_5 To Balance b/d 2,500        
Commission Received a/c
Dr Cr
Date Particulars J/F Amount Date Particulars J/F Amount
30/06/_5 To Balance c/d 3,000 30/06/_5 By Cash a/c 3,000
      3,000       3,000
        01/07/_5 By Balance b/d 3,000

Trial Balance
[Modern Method]

Trial Balance of M/s.____ as on 30/06/_5
Particulars L/F Amount
(Dr)
Amount
(Cr)
Goods/Stock a/c
Furniture a/c
Debtors a/c
Machinery a/c
Cash a/c
Creditors a/c
Capital a/c
Bank a/c
Usha & Co. a/c
Car a/c
Arial & Co. a/c
Wheel & Co. a/c
Rent Paid a/c
Commission Received a/c













14,000
11,000
1,200
8,000
12,300




9,000
8,000
7,000
2,500





10,500
54,000
2,500
3,000




3,000
Total   73,000 73,000

Simple Compound entries to replace Complex Compound entry

The transactions involved in the complex compound entry relating to purchase of assets and liabilities of Mr. Max can be interpreted to form two or more simple compound entries to provide clear information as follows :

Acquired the running business of Max, for cash 50, 000 by taking over the following

  • Assets - Stock of Goods 15,000; Cash 25,000; Furniture 10,000; Debtors 7,000; Machinery 8,000 .
  • Liabilities - Creditors 15,000
Journal in the books of M/s __ for the period from ____ to _____
Particulars Amount
(Dr)
Amount
(Cr)
Goods/Stock a/c
Furniture a/c
Debtors a/c
Machinery a/c
Cash a/c
To Capital a/c
Dr
Dr
Dr
15,000
10,000
7,000
8,000
25,000





65,000
[Being the value of assets of Mr. Max taken over by the business.]
Capital a/c
To Creditors a/c
Dr
15,000

15,000
[Being the value of liabilities of Mr. Max taken over by the business.]

Using additional Ledger Accounts

The transactions involved in the complex compound entry can be recorded using additional ledger accounts to give a clear picture of the happenings. 'Business Purchase' a/c is used here.
Journal in the books of M/s __ for the period from ____ to _____
Particulars Amount
(Dr)
Amount
(Cr)
Goods/Stock a/c
Furniture a/c
Debtors a/c
Machinery a/c
Cash a/c
To Business Purchase a/c
Dr
Dr
Dr
15,000
10,000
7,000
8,000
25,000





65,000
[Being the value of assets of Mr. Max taken over by the business.]
Business Purchase a/c
To Creditors a/c
Dr
15,000

15,000
[Being the value of liabilities of Mr. Max taken over by the business.]
Business Purchase a/c
To Capital a/c
Dr
50,000

50,000
[Being the value of liabilities of Mr. Max taken over by the business.]

This will only affect the way the postings appear in the ledger accounts and nothing else changes.

Goods/Stock a/c
Dr Cr
Date Particulars J/F Amount Date Particulars J/F Amount
05/06/_5
07/06/_5
07/06/_5
08/06/_5
16/06/_5
To Business Purchase a/c
To Cash a/c
To Usha & Co. a/c
To Bank a/c
To Cash a/c




15,000
3,000
3,000
5,000
3,000
18/06/_5
18/06/_5
30/06/_5
By Arial & Co. a/c
By Wheel & Co. a/c
By Balance c/d


8,000
7,000
14,000
      29,000       29,000
01/07/_5 To Balance b/d 14,000        
Furniture a/c
Dr Cr
Date Particulars J/F Amount Date Particulars J/F Amount
05/06/_5
16/06/_5
To Business Purchase a/c
To Cash a/c

10,000
1,000
30/06/_5 By Balance c/d 11,000
      11,000       11,000
01/07/_5 To Balance b/d 11,000        
Debtors a/c
Dr Cr
Date Particulars J/F Amount Date Particulars J/F Amount
05/06/_5 To Business Purchase a/c 7,000 20/06/_5
30/06/_5
By Cash a/c
By Balance c/d

5,800
1,200
      7,000       7,000
01/07/_5 To Balance b/d 1,200        
Machinery a/c
Dr Cr
Date Particulars J/F Amount Date Particulars J/F Amount
05/06/_5 To Business Purchase a/c 8,000 30/06/_5 By Balance c/d 8,000
      8,000       8,000
01/07/_5 To Balance b/d 8,000        
Cash a/c
Dr Cr
Date Particulars J/F Amount Date Particulars J/F Amount
05/06/_5
20/06/_5
30/06/_5
To Business Purchase a/c
To Debtors a/c
To Commission
Received a/c



25,000
5,800

3,000
06/06/_5
07/06/_5
14/06/_5
16/06/_5
16/06/_5
19/06/_5
30/06/_5
By Bank a/c
By Goods/Stock a/c
By Car a/c
By Goods/Stock a/c
By Furniture a/c
By Creditors a/c
By Balance c/d






5,000
3,000
5,000
3,000
1,000
4,500
12,300
      33,800       33,800
01/07/_5 To Balance b/d 12,300        
Creditors a/c
Dr Cr
Date Particulars J/F Amount Date Particulars J/F Amount
19/06/_5
30/06/_5
To Cash a/c
To Balance c/d

4,500
10,500
05/06/_5 By Business Purchase a/c
15,000
      15,000       15,000
        01/07/_5 By Balance b/d 10,500
Capital a/c
Dr Cr
Date Particulars J/F Amount Date Particulars J/F Amount
30/06/_5 To Balance c/d 54,000 05/06/_5
14/06/_5
By Business Purchase a/c
By Car a/c

50,000
4,000
      54,000       54,000
        01/07/_5 By Balance b/d 54,000

Problem : 2

Mr. Madhav acquired the business of Mr. Gowrav on 1st April, 20_5. Record the following transactions in the journal and post them into the ledger of Mr. Madhav. Also prepare a trial balance as on that date.
Apr 1st : Debit Balances on the date of acquisition:

Cash in hand 8,000, Cash at Bank 25,000, Stock of goods 20,000, Furniture 2,000, Buildings 10,000. Sundry Debtors – Vijay 2,000, Anil 1,000 & Madhu 2,000.

Credit Balances on the date of acquisition:

Sundry creditors – Anand 5,000, Loan from Bablu 10,000

Following were further transactions in the month of April, 20_5;

4th : Sold household furniture for 2,000 and paid the money into business cash.
5th : Cash received from Vijay 1,980 in full settlement of his account.
6th : Paid landlord 1,200 for rent. One – third of the premises is occupied by the proprietor for his own residence.
7th : Goods sold to Anil for 3,000 and to Madhu for 5,000
8th : Sold some furniture for 1,300 (proceeds being received as 700 by cheque and balance in cash)
11th : Interest received from Madhu 200.
12th : Paid to Bablu towards interest 500
13th : Sold goods for cash 5,000.
14th : Cash paid to Anand 2,000
15th : Withdrew goods from business for personal use 2,000.

Solution

  • Apr 1st
    Assets taken over:
    Cash
    Bank
    Goods/Stock
    Furniture
    Buildings
    Vijay
    Anil
    Madhu
    - Liabilities taken over:
    Anand
    Loan from Bablu
    Net Assets (capital)

    8,000
    25,000
    20,000
    2,000
    10,000
    2,000
    1,000
    2,000

    5,000
    10,000
    55,000
  • Apr 5th
    Total due
    - cash received
    Discount
    2,000
    1,980
    20
  • Apr 6th
    Rent
    + one-third for proprietors residence
    attributable to business
    1,200
    400
    800
  • Apr 8th
    Sale proceeds of office equipment
    - received by cheque
    received in cash
    1,300
    700
    600
Journal in the books of M/s ___ for the period from April 1st, 20_5 to April 15th, 20_5
Date V/R
No.
Particulars L/F Amount
(Dr)
Amount
(Cr)
April 1st Cash a/c
Bank a/c
Goods/Stock a/c
Furniture a/c
Buildings a/c
Vijay a/c
Anil a/c
Madhu a/c
To Anand a/c
To Loan from Bablu a/c
To Capital a/c
Dr
Dr
Dr
Dr
Dr
Dr
Dr
Dr










8,000
25,000
20,000
2,000
10,000
2,000
1,000
2,000








5,000
10,000
55,000
[Being the amount of assets and liabilities of Mr. Gowrav's business acquired]
4th Cash a/c
To Capital a/c
Dr
2,000
2,000
[Being the amount of cash received from selling personal furniture brought into business vide receipt no:___ dated:__ ]
5th Cash a/c
Discount allowed a/c
To Vijay a/c
Dr
Dr


1,980
20


2,000
[Being the amount of cash received from Mr. Vijay in full settlement of his due on account vide receipt no:___ dated:__ ]
6th Rent a/c
Drawings a/c
To Cash a/c
Dr
Dr


800
400


1,200
[Being the amount of cash paid for rent of office and personal premises of the proprietor vide voucher no:___ dated:__ ]
7th Anil a/c
Madhu a/c
To Goods/Stock a/c
Dr
Dr


3,000
5,000


8,000
[Being the value of goods sold on credit to Anil vide invoice No: __ dated:___ and to Madhu vide invoice No:___ dated:____]
8th Cash a/c
Bank a/c
To Furniture a/c
Dr
Dr


600
700


1,300
[Being the amount of equipment sold and part payment was deposited into personal bank a/c vide bill no:___ dated:__ ]
11th Cash a/c
To Interest Received a/c
Dr
200
200
[Being the amount of cash received as interest from Mr. Madha vide cash receipt no:___ dated:__ ]
12th Interest Paid a/c
To Cash a/c
Dr
500
500
[Being the amount of cash paid to Mr. Bablu as interest vide voucher no:___ dated:__ ]
13th Cash a/c
To Goods/Stock a/c
Dr
5,000
5,000
[Being the value of stock sold for cash vide cash receipt no:___ dated:__]
14th Anand a/c
To Cash a/c
Dr
2,000
2,000
[Being the amount paid to Anand vide voucher no:___ dated:__ ]
15th Drawings a/c
To Goods/Stock a/c
Dr
2,000
2,000
[Being the value of goods taken by the proprietor for personal use vide on:__ ]

General Ledger
[Books of Mr. Madhav]

Cash a/c
Dr Cr
Date Particulars J/F Amount Date Particulars J/F Amount
01/04/_5
04/04/_5
05/04/_5
08/04/_5
11/04/_5
13/04/_5
To Sundry Liabilities
To Capital a/c
To Vijay a/c
To Furniture a/c
To Interest Received a/c
To Goods/Stock a/c





8,000
2,000
1,980
600
200
5,000
06/04/_5
06/04/_5
12/04/_5
14/04/_5
15/04/_5
By Rent a/c
By Drawings a/c
By Interest Paid a/c
By Anand a/c
By Balance c/d




800
400
500
2,000
14,080
      17,780       17,780
16/04/_5 To Balance b/d 14,080        
Bank a/c
Dr Cr
Date Particulars J/F Amount Date Particulars J/F Amount
01/04/_5

08/04/_5
To Sundry Liabilities
(Capital a/c)
To Furniture a/c
25,000

700
15/04/_5 By Balance c/d 25,700
      25,700       25,700
16/04/_5 To Balance b/d 25,700        
Goods/Stock a/c
Dr Cr
Date Particulars J/F Amount Date Particulars J/F Amount
01/04/_5 To Sundry Liabilities
(Capital a/c)
20,000 07/04/_5
07/04/_5
13/04/_5
15/04/_5
15/04/_5
By Anil a/c
By Madhu a/c
By Cash a/c
By Drawings a/c
By Balance c/d




3,000
5,000
5,000
2,000
5,000
      20,000       20,000
16/04/_5 To Balance b/d 5,000        
Furniture a/c
Dr Cr
Date Particulars J/F Amount Date Particulars J/F Amount
01/04/_5 To Sundry Liabilities
(Capital a/c)
2,000 08/04/_5
08/04/_5
15/04/_5
By Cash a/c
By Bank a/c
By Balance c/d


600
700
700
      2,000       2,000
16/04/_5 To Balance b/d 700        
Buildings a/c
Dr Cr
Date Particulars J/F Amount Date Particulars J/F Amount
01/04/_5 To Sundry Liabilities
(Capital a/c)
10,000 15/04/_5 By Balance c/d 10,000
      10,000       10,000
16/04/_5 To Balance b/d 10,000        
Vijay a/c
Dr Cr
Date Particulars J/F Amount Date Particulars J/F Amount
01/04/_5 To Sundry Liabilities
(Capital a/c)
2,000 05/04/_5
05/04/_5
By Cash a/c
By Discount Allowed a/c

1,980
20
      2,000       2,000
Anil a/c
Dr Cr
Date Particulars J/F Amount Date Particulars J/F Amount
01/04/_5

07/04/_5
To Sundry Liabilities
(Capital a/c)
To Goods/Stock a/c


1,000

3,000
15/04/_5 By Balance c/d 4,000
      4,000       4,000
16/04/_5 To Balance b/d 4,000        
Madhu a/c
Dr Cr
Date Particulars J/F Amount Date Particulars J/F Amount
01/04/_5

07/04/_5
To Sundry Liabilities
(Capital a/c)
To Goods/Stock a/c


2,000

5,000
15/04/_5 By Balance c/d 7,000
      7,000       7,000
16/04/_5 To Balance b/d 7,000        
Anand a/c
Dr Cr
Date Particulars J/F Amount Date Particulars J/F Amount
14/04/_5
15/04/_5
To Cash a/c
To Balance c/d

2,000
3,000
01/04/_5 By Sundry Assets
(Capital a/c)
5,000
      5,000       5,000
        16/04/_5 By Balance b/d 3,000
Loan from Bablu a/c
Dr Cr
Date Particulars J/F Amount Date Particulars J/F Amount
15/04/_5 To Balance c/d 10,000 01/04/_5 By Sundry Assets
(Capital a/c)
10,000
      10,000       10,000
        16/04/_5 By Balance b/d 10,000
Capital a/c
Dr Cr
Date Particulars J/F Amount Date Particulars J/F Amount
15/04/_5 To Balance c/d 57,000 01/04/_5

04/04/_5
By Sundry Assets
and Liabilities
By Cash a/c



55,000
2,000
      57,000       57,000
        16/04/_5 By Balance b/d 57,000
Rent Paid a/c
Dr Cr
Date Particulars J/F Amount Date Particulars J/F Amount
06/04/_5 To Cash a/c 800 15/04/_5 By Balance c/d 800
      800       800
16/04/_5 To Balance b/d 800        
Drawings a/c
Dr Cr
Date Particulars J/F Amount Date Particulars J/F Amount
06/04/_5
15/04/_5
To Cash a/c
To Goods/Stock a/c

400
2,000
15/04/_5 By Balance c/d 2,400
      2,400       2,400
16/04/_5 To Balance b/d 2,400        
Interest Received a/c
Dr Cr
Date Particulars J/F Amount Date Particulars J/F Amount
15/04/_5 To Balance c/d 200 11/04/_5
By Cash a/c
200
      200       200
16/04/_5 By Balance b/d 300
Interest Paid a/c
Dr Cr
Date Particulars J/F Amount Date Particulars J/F Amount
12/04/_5 To Cash a/c 500 15/04/_5 By Balance c/d 500
      500       500
16/04/_5 To Balance b/d 500        
Discount Allowed a/c
Dr Cr
Date Particulars J/F Amount Date Particulars J/F Amount
06/04/_5 To Vijay a/c 20 15/04/_5 By Balance c/d 20
      20       20
16/04/_5 To Balance b/d 20        

Trial Balance
[Modern Method]

Trial Balance of Mr. Madhav as on 15/04/_5
Particulars L/F Amount
(Dr)
Amount
(Cr)
Cash a/c
Bank a/c
Goods/Stock a/c
Furniture a/c
Buildings a/c
Vijay a/c
Anil a/c
Madhu a/c
Anand a/c
Loan from Bablu a/c
Capital a/c
Rent Paid a/c
Drawings a/c
Interest Received a/c
Interest Paid a/c
Discount Allowed a/c














14,080
25,700
5,000
700
10,000

4,000
7,000



800
2,400

500
20








3,000
10,000
57,000


200

Total   70,200 70,200

Simple Compound entries to replace Complex Compound entry

The transactions involved in the complex compound entry relating to purchase of assets and liabilities of Mr. Gouraw can be interpreted to form two or more simple compound entries to provide clear information as follows :

Acquired the running business of Gouraw, for cash 55,000 by taking over the following

  • Assets : Cash in hand 8,000, Cash at Bank 25,000, Stock of goods 20,000, Furniture 2,000, Buildings 10,000. Sundry Debtors - Vijay 2,000, Anil 1,000 & Madhu 2,000.
  • Liabilities : Sundry creditors - Anand 5,000, Loan from Bablu 10,000
Journal in the books of M/s __ for the period from ____ to _____
Particulars Amount
(Dr)
Amount
(Cr)
Cash a/c
Bank a/c
Goods/Stock a/c
Furniture a/c
Buildings a/c
Vijay a/c
Anil a/c
Madhu a/c
To Capital a/c
Dr
Dr
Dr
8,000
25,000
20,000
2,000
10,000
2,000
1,000
2,000








70,000
[Being the value of assets of Mr. Gouraw taken over by the business.]
Capital a/c
To Anand a/c
To Loan from Bablu a/c
Dr
15,000

5,000
10,000
[Being the value of liabilities of Mr. Gouraw taken over by the business.]

Using additional Ledger Accounts

The transactions involved in the complex compound entry can be recorded using additional ledger accounts to give a clear picture of the happenings. 'Business Purchase' a/c is used here.
Journal in the books of M/s __ for the period from ____ to _____
Particulars Amount
(Dr)
Amount
(Cr)
Cash a/c
Bank a/c
Goods/Stock a/c
Furniture a/c
Buildings a/c
Vijay a/c
Anil a/c
Madhu a/c
To Business Purchase a/c
Dr
Dr
Dr
8,000
25,000
20,000
2,000
10,000
2,000
1,000
2,000








70,000
[Being the value of assets of Mr. Gouraw taken over by the business.]
Business Purchase a/c
To Anand a/c
To Loan from Bablu a/c
Dr
15,000

5,000
10,000
[Being the value of liabilities of Mr. Gouraw taken over by the business.]
Business Purchase a/c
To Capital a/c
Dr
55,000

55,000
[Being the value of liabilities of Mr. Max taken over by the business.]

This will only affect the way the postings appear in the ledger accounts and nothing else changes.

Cash a/c
Dr Cr
Date Particulars J/F Amount Date Particulars J/F Amount
01/04/_5
04/04/_5
05/04/_5
08/04/_5
11/04/_5
13/04/_5
To Business Purchase a/c
To Capital a/c
To Vijay a/c
To Furniture a/c
To Interest Received a/c
To Goods/Stock a/c





8,000
2,000
1,980
600
200
5,000
06/04/_5
06/04/_5
12/04/_5
14/04/_5
15/04/_5
By Rent a/c
By Drawings a/c
By Interest Paid a/c
By Anand a/c
By Balance c/d




800
400
500
2,000
14,080
      17,780       17,780
16/04/_5 To Balance b/d 14,080        
Bank a/c
Dr Cr
Date Particulars J/F Amount Date Particulars J/F Amount
01/04/_5
08/04/_5
To Business Purchase a/c
To Furniture a/c
25,000
700
15/04/_5 By Balance c/d 25,700
      25,700       25,700
16/04/_5 To Balance b/d 25,700        
Goods/Stock a/c
Dr Cr
Date Particulars J/F Amount Date Particulars J/F Amount
01/04/_5 To Business Purchase a/c 20,000 07/04/_5
07/04/_5
13/04/_5
15/04/_5
15/04/_5
By Anil a/c
By Madhu a/c
By Cash a/c
By Drawings a/c
By Balance c/d




3,000
5,000
5,000
2,000
5,000
      20,000       20,000
16/04/_5 To Balance b/d 5,000        
Furniture a/c
Dr Cr
Date Particulars J/F Amount Date Particulars J/F Amount
01/04/_5 To Business Purchase a/c 2,000 08/04/_5
08/04/_5
15/04/_5
By Cash a/c
By Bank a/c
By Balance c/d


600
700
700
      2,000       2,000
16/04/_5 To Balance b/d 700        
Buildings a/c
Dr Cr
Date Particulars J/F Amount Date Particulars J/F Amount
01/04/_5 To Business Purchase a/c 10,000 15/04/_5 By Balance c/d 10,000
      10,000       10,000
16/04/_5 To Balance b/d 10,000        
Vijay a/c
Dr Cr
Date Particulars J/F Amount Date Particulars J/F Amount
01/04/_5 To Business Purchase a/c 2,000 05/04/_5
05/04/_5
By Cash a/c
By Discount Allowed a/c

1,980
20
      2,000       2,000
Anil a/c
Dr Cr
Date Particulars J/F Amount Date Particulars J/F Amount
01/04/_5
07/04/_5
To Business Purchase a/c
To Goods/Stock a/c

1,000
3,000
15/04/_5 By Balance c/d 4,000
      4,000       4,000
16/04/_5 To Balance b/d 4,000        
Madhu a/c
Dr Cr
Date Particulars J/F Amount Date Particulars J/F Amount
01/04/_5
07/04/_5
To Business Purchase a/c
To Goods/Stock a/c

2,000
5,000
15/04/_5 By Balance c/d 7,000
      7,000       7,000
16/04/_5 To Balance b/d 7,000        
Anand a/c
Dr Cr
Date Particulars J/F Amount Date Particulars J/F Amount
14/04/_5
15/04/_5
To Cash a/c
To Balance c/d

2,000
3,000
01/04/_5 By Business Purchase a/c 5,000
      5,000       5,000
        16/04/_5 By Balance b/d 3,000
Loan from Bablu a/c
Dr Cr
Date Particulars J/F Amount Date Particulars J/F Amount
15/04/_5 To Balance c/d 10,000 01/04/_5 By Business Purchase a/c 10,000
      10,000       10,000
        16/04/_5 By Balance b/d 10,000
Capital a/c
Dr Cr
Date Particulars J/F Amount Date Particulars J/F Amount
15/04/_5 To Balance c/d 57,000 01/04/_5
04/04/_5
By Business Purchase a/c
By Cash a/c

55,000
2,000
      57,000       57,000
        16/04/_5 By Balance b/d 57,000