Question

HELP
WHAT WILL BE THE JOURNAL ENTRY FOR THESE TWO?


1.Sold goods to John rs 1000
2.Recieved rs 800 from John full settlement of account

Answer 1

The Journal entry for the above mentioned transactions are as follows :-

1. Sold Goods to John ₹ 1,000

John A/c. Dr ... 1,000
To Sales A/c. 1,000

(Being Goods sold to John on credit).

2. Recieved ₹ 800 from John full settlement of account

Cash A/c. Dr ... (Amount)
Discount Allowed A/c. Dr... 800
To John A/c. (Amount)

(Being Amount received from Mohan in full-settlement of his a/c).

Explanation of the above mentioned entries:-

1. In this transaction the name of the purchaser is mentioned, and it is not given that the goods have been sold for cash, it will be assumed that the goods have been sold on credit.

John is the receiver of goods, as such his personal account has been debited according to the rule of personal account, i.e., ‘Debit the receiver’. Sales A/c will be credited according to the rule of nominal account i.e.,‘Credit all incomes’.

2. The Accounts involved are, Cash A/c, Discount Allowed A/c and John A/c. Cash Account is a Real account,Cash is Coming in, So, Cash A/c will be debited, according to the rule of Real account ‘Debit what comes in’.

Discount Allowed A/c is always debited as it is an expense. As it is given to customer or debtor who makes prompt payment.

John is the giver of cash, therefore, the account of John has been credited. According to the rule of personal account ‘Credit the Giver’.