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]

 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