Illustration » Working Notes

Wherever a student needs to build certain notes which would help in the process of deriving the ultimate solution, they can be included as a part of the solution by marking the workings separately 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"). 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. Journal is everything of accounting Remember » No Journal : No Accounting. Commenced Business with a Capital of Rs. 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] Bought Furniture for cash Rs. 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] Paid Rent to the shop owner Mr. Murugan Rs. 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] Paid cash into bank Rs. 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] Bought Goods for cash Rs. 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] Bought Goods on credit from M/s Ramdas & Bros. for Rs. 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] Sold goods for cash Rs. 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] Bought Machinery from M/s Boolani Machinery and paid by cheque Rs. 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] Sold goods on credit to Mr. Natekar for Rs. 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] Paid weekly wages to workers Rs. 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] Paid M/s Ramdas and Brothers by cheque Rs. 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] Received from Mr. Natekar Rs. 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] Received commission from M/s Orion Traders for giving a trade lead Rs. 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 Debit Amount (in Rs) Credit Amount (in Rs) June 15th – Cash a/c       To Capital a/c [Being the amount received from Mr. Ibrahim, the proprietor as his capital contribution ] Dr – – 2,00,000 2,00,000 17th – Furniture a/c       To Cash a/c [Being the amount paid towards Furniture purchased ] Dr – – 20,000 20,000 17th – Rent Paid a/c       To Cash a/c [For the amount paid towards rent for the shop for the month of May ] Dr – – 5,000 5,000 18th – Bank a/c       To Cash a/c [For the amount of cash paid into bank ] Dr – – 1,50,000 1,50,000 18th – Goods/Stock a/c       To Cash a/c [Being the value of stock purchased for cash ] Dr – – 10,000 10,000 18th – Goods/Stock a/c       To M/s Ramdas & Bros a/c [Being the value of stock purchased from M/s Ramdas & Bros., on credit ] Dr – – 10,000 10,000 19th – Cash a/c       To Goods/Stock a/c [Being the value of stock sold for cash ] Dr – – 12,000 12,000 20th – Machinery a/c       To Bank a/c [Being the amount paid by cheque towards purchase of machinery ] Dr – – 25,000 25,000 21th – Mr. Natekar a/c       To Goods/Stock a/c [Being the value of stock sold on credit to Mr. Natekar ] Dr – – 8,000 8,000 21th – Wages paid a/c       To Cash a/c [For the amount paid towards weekly wages for the workers ] Dr – – 5,000 5,000 24th – M/s Ramdas & Bros a/c       To Bank a/c [For the amount paid by cheque to M/s Ramdas & Bros., on account] Dr – – 5,000 5,000 24th – Cash a/c       To Mr. Natekar a/c [For the amount received in cash from Mr. Natekar on account] Dr – – 2,000 2,000 24th – Cash a/c       To commission Received a/c [For the amount received in cash from Mr. Natekar on account] Dr – – 500 500 "accountancy,basic,financial,accounting,process" » 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.

Author Credit : The Edifier

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