Recording a Transaction in the Journal : Journalising - Illustration

Illustration - Problem

Journalise the following transactions (Or) Record the following transactions in a Journal
1. 15th June : Ibrahim a sole proprietor Commenced business with a capital of 2,00,000.
2. 17th June : Bought Furniture for cash 20,000.
3. 17th June : Paid Rent to the shop owner Mr. Murugan 5,000.
4. 18th June : Paid cash into bank 1,50,000
5. 18th June : Bought Goods for cash 10,000 from M/s Shamir Jain & Co.,
6. 18th June : Bought Goods on credit from M/s Ramdas & Bros. for 10,000.
7. 19th June : Sold goods for cash 12,000 to Mr. Naryan Tiwari
8. 20th June : Bought Machinery from M/s Boolani Machinery and paid by cheque 25,000.
9. 21st June : Sold goods on credit to Mr. Natekar for 8,000
10. 21st June : Paid weekly wages to workers 5,000
11. 24th June : Paid M/s Ramdas and Brothers by cheque 5,000
12. 24th June : Received from Mr. Natekar 2,000
13. 24th June : Received commission from M/s Orion Traders for giving a trade lead 500.

Working Notes in problem solving

Wherever we need to build certain notes which would help in the process of deriving the ultimate solution, they should be appropriately included as a part of the solution by marking the workings distinctly as working notes.

This can be done even in examination conditions. Sometimes it would be needed of the student to include the working notes compulsorily in the solution (say when the question says "Working notes should form part of the solution/answer").

In this problem, transaction analysis would form part of working notes.

Solution » Transaction Analysis

In the initial stages of learning students are advised to work out some problems with analysis so that they would get accustomed to analysing the transaction for deriving the journal entry.
  1. Commenced business with a capital of 2,00,000.

    Capital a/c

    Person

    Personal a/c

    Giving benefit

    Credit
    [Credit the benefit giver]
    Cash a/c

    Tangible aspect/Asset

    Real a/c

    Coming in

    Debit
    [Debit what comes in]
  2. Bought Furniture for cash 20,000.

    Furniture a/c

    Tangible aspect/Asset

    Real a/c

    Coming in

    Debit
    [Debit what comes in]
    Cash a/c

    Tangible aspect/Asset

    Real a/c

    Going out

    Credit
    [Credit what goes out]
  3. Paid Rent to the shop owner Mr. Murugan 5,000.

    Rent Paid a/c

    Expenditure

    Nominal a/c

    Expenditure

    Debit
    [Debit all expenses and losses]
    Cash a/c

    Tangible aspect/Asset

    Real a/c

    Going out

    Credit
    [Credit what goes out]
  4. Paid cash into bank 1,50,000

    Cash a/c

    Tangible aspect/Asset

    Real a/c

    Going out

    Credit
    [Credit what goes out]
    Bank a/c

    Organisation

    Personal a/c

    Receiving

    Debit
    [Debit the benefit receiver]
  5. Bought Goods for cash 10,000 from M/s Shamir Jain & Co.,

    Cash a/c

    Tangible aspect/Asset

    Real a/c

    Going out

    Credit
    [Credit what goes out]
    Goods/Stock a/c

    Tangible aspect/Asset

    Real a/c

    Coming in

    Debit
    [Debit what comes in]
  1. Bought Goods on credit from M/s Ramdas & Bros. for 10,000.

    M/s Ramdas & Bros. a/c

    Organisation

    Personal a/c

    Giving benefit

    Credit
    [Credit the benefit giver]
    Goods/Stock a/c

    Tangible aspect/Asset

    Real a/c

    Coming in

    Debit
    [Debit what comes in]
  2. Sold goods for cash 12,000 to Mr. Naryan Tiwari.

    Cash a/c

    Tangible aspect/Asset

    Real a/c

    Coming in

    Debit
    [Debit what comes in]
    Goods/Stock a/c

    Tangible aspect/Asset

    Real a/c

    Going out

    Credit
    [Credit what goes out]
  3. Bought Machinery from M/s Boolani Machinery and paid by cheque 25,000.

    Bank a/c

    Organisation

    Personal a/c

    Giving benefit

    Credit
    [Credit the benefit giver]
    Machinery a/c

    Tangible aspect/Asset

    Real a/c

    Coming in

    Debit
    [Debit what comes in]
  4. Sold goods on credit to Mr. Natekar for 8,000.

    Goods/Stock a/c

    Tangible aspect/Asset

    Real a/c

    Going out

    Credit
    [Credit what goes out]
    Mr. Natekar a/c

    Person

    Personal a/c

    Taking benefit

    Debit
    [Debit the benefit receiver]
  5. Paid weekly wages to workers 5,000

    Cash a/c

    Tangible aspect/Asset

    Real a/c

    Going out

    Credit
    [Credit what goes out]
    Wages Paid a/c

    Expenditure

    Nominal a/c

    Expenditure

    Debit
    [Debit all expenses and losses]
  6. Paid M/s Ramdas and Brothers by cheque 5,000.

    M/s Ramdas & Bros. a/c

    Organisation

    Personal a/c

    Taking benefit

    Debit
    [Debit the benefit receiver]
    Bank a/c

    Organisation

    Personal a/c

    Giving benefit

    Credit
    [Credit the benefit giver]
  7. Received from Mr. Natekar 2,000

    Mr. Natekar a/c

    Person

    Personal a/c

    Giving benefit

    Credit
    [Credit the benefit giver]
    Cash a/c

    Tangible aspect/Asset

    Real a/c

    Coming in

    Debit
    [Debit what comes in]
  8. Received commission from M/s Orion Traders for giving a trade lead 500.

    Commission Received a/c

    Income

    Nominal a/c

    Income

    Credit
    [Credit all Incomes and Gains]
    Cash a/c

    Tangible aspect/Asset

    Real a/c

    Coming in

    Debit
    [Debit what comes in]

Illustration - Solution

Journal in the books of M/s __ for the period from ____ to _____
Date V/R
No.
Particulars L/F Amount
(Dr)
Amount
(Cr)
Jun 15th Cash a/c
To Capital a/c
Dr
2,00,000
2,00,000
[Being the amount received from Mr. Ibrahim, the proprietor as his capital contribution]
17th Furniture a/c
To Cash a/c
Dr
20,000
20,000
[Being the amount paid towards Furniture purchased ]
17th Rent Paid a/c
To Cash a/c
Dr
5,000
5,000
[For the amount paid towards rent for the shop for the month of May ]
18th Bank a/c
To Cash a/c
Dr
1,50,000
1,50,000
[For the amount of cash paid into bank ]
18th Goods/Stock a/c
To Cash a/c
Dr
10,000
10,000
[Being the value of stock purchased for cash ]
18th Goods/Stock a/c
To M/s Ramdas & Bros a/c
Dr
10,000
10,000
[Being the value of stock purchased from M/s Ramdas & Bros., on credit ]
19th Cash a/c
To Goods/Stock a/c
Dr
12,000
12,000
[Being the value of stock sold for cash ]
20th Machinery a/c
To Bank a/c
Dr
25,000
25,000
[Being the amount paid by cheque towards purchase of machinery ]
21st Mr. Natekar a/c
To Goods/Stock a/c
Dr
8,000
8,000
[Being the value of stock sold on credit to Mr. Natekar ]
21st Wages paid a/c
To Cash a/c
Dr
5,000
5,000
[For the amount paid towards weekly wages for the workers ]
24th M/s Ramdas & Bros a/c
To Bank a/c
Dr
5,000
5,000
[For the amount paid by cheque to M/s Ramdas & Bros., on account]
24th Cash a/c
To Mr. Natekar a/c
Dr
2,000
2,000
[For the amount received in cash from Mr. Natekar on account]
24th Cash a/c
To commission Received a/c
Dr
500
500
[For the amount received in cash from Mr. Natekar on account]

Note:

The narration written above is to give an idea of how it would appear in books in practice. The details relating to the invoice/bill no's and their dates can be eliminated in solving problems.

There is no set rule for writing the narration. Its purpose is to give an understanding on why the journal entry is being recorded. Any sentence that sounds meaningful and which serves the purpose would be acceptable.