Give entries
i. Goods of Rs. 1200 returned by Raj which was sold a weak earlier.
ii. Payment made to a creditor (having dues of Rs. 50,000) @ 90% full settlement.
iii. Purchased stationery in cash Rs.50
Answers
Answer:
Additional capital introduced.
Cash: Rs. 10,000
Since cash, an asset is increasing, it will be debited.
Delivery Van: Rs. 50,000
Delivery van is an asset to the business and it's increase will also be debited.
In total, additional capital of Rs. 60,000 was introduced. Capital is the money invested by the owner in a business. It is a liability for the business because the business, at some point of time will have to return the capital to the owner in the form of profit.
So, capital is a liability for the business and, increase in liabilities is credited.
So, the capital account is credited by Rs. 50,000 + Rs. 10,000 = Rs. 60,0000.
April 26:
Cash paid to Anil. This means that cash, an asset will be reduced. Decrease in assets is credited. So, cash account will be credited by Rs. 975.
Also, a discount of Rs. 25 was received. Since discount received is an income, it will be credited because increase in income is credited.
Anil must be our creditor, a liability and now since we have paid him, he's no more a creditor. This means our liability is reduced.
So, Anil's account is debited by Rs. 1000 (total of the credit side) because decrease in liabilities is debited.
April 30:
Cash and bank payments made of Rs. 1,000 and Rs. 2,000 each. Since they both are assets and decrease in assets is credited, both of these two accounts are credited by Rs. 1,000 and Rs. 2,000 respectively.
Also, Raju, who must be our creditor, is no longer our creditor. This means that our liability has decreased. Decrease in liability is debited. So, Raju's account is debited by Rs. 3,000 (the total of the credit side).
April 30:
Mohan was a creditor and we had to pay him Rs. 5,000 in total.
But, we paid him Rs. 4,800 in total in full settlement. This means that we don't need to pay him any more amount.
So, the difference, Rs. 5,000 - Rs. 4,800 = Rs. 200 will be discount received, an income and increase in income is credited.
So, discount received account will be credited by Rs. 200 and Cash account by Rs. 4,800 because it is an asset and decrease in assets is credited.
Also, Mohan's account will be debited by Rs. 5,000 (the total of the credit and debit sides) because he is no longer our creditor and our liability is reduced and decrease in liabilities is debited.
Answer:
Answer in the attachment.
Introduction to Journals:
Journal is a book where all transactions of each day are recorded date-wise.
Rules of Accountancy:
Increase in Assets and Expenses/Losses is debited and decrease in Assets and Expenses is credited.
Increase in Income/Gains, Liabilities or Capital is credited and decrease in Income/Gains, Liabilities or Capital is debited.
Detailed Explanation of Each Entry:
April 5:
Salaries, Rent and Wages - they all are expense for the business. And increase in expenses is debited.
The payment was made through a cheque. Cash at bank is an asset and decrease in assets is credited.
April 7:
The list price of goods was Rs. 30,000. Trade discount of 10% was offered. We don't record trade discount in journals because transactions of only financial character are recorded and it is not a transaction of financial character.
Purchases increases the stock, an asset and increase in assets is debited. Since trade discount is not to be recorded, we'll subtract 10% of 30,000 from 30,000, the list price.
So, we debit the purchases account by Rs. (30,000 - 3,000) = Rs. 27,000.
Also, we received a cash discount of 2%. Cash discount allowed or received is a transaction of financial character. So, we'll record this.
2% of 27,000 is Rs. 540.
Since discount received is a gain for the business, discount received account is credited by Rs. 540 because increase in income/gains is credited.
The remaining amount, ie, Rs. 27,000 - Rs. 540 = Rs. 26,460 was paid in cash (because it was not mentioned that the payment was made through a cheque).
Cash is an asset and decrease in asset is credited. So the cash account is credited by Rs. 26,460.
April 15:
Amount paid to Raju.
Raju must be our creditor, ie a person who is to be paid by the business for consuming goods/services on credit.
In other words, Raju was a liability for the business and the business was no more liable to pay him once he was paid the required amount.
This means that our liability is reduced. Reduce in liabilities is debited.
So, we debit Raju's account by Rs. 12,000, out of which Rs. 5,000 was paid in cash and Rs. 7,000 through cheque.
Cash in hand and cash at bank are assets and decrease in assets is credited. So, cash account and bank account were credited for Rs. 5,000 and Rs. 7,000 respectively.
April 18:
This is a lengthy one to explain.
We sold goods to Roma, whose list price was Rs. 5,000.
We allowed trade discount of 20%.
So, the price after discount was
5000 - 20% of 5000
= 5000 - 1000
= Rs. 4,000
Now, after reading the complete question, we realize that half of the payment was made immediately. This means that the other half was not immediately paid or, it was sold on credit.
So, half of Rs. 4,000 is Rs.