Question

journal entries of ramesh settled his account by issuing a cheque of rs 12080 including interestof rs 60
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Answer 1

Solution :-

Bank A/c Dr. → 12020

Interest A/c Dr. → 60

• To Ramesh A/c → 12080

Reason for debit → Increase in asset

Reason for credit → Ramesh is a giver

More to know :-

There are two types of entries : -

• Simple Journal Entry
• Compound Journal Entry

Simple Journal Entry

Journal entry in which one account is debited and another account is credited with equal amount is known as simple journal entry

Compound Journal Entry

journal entry in which one or more account and debited and or one or more account at credit is known as compound journal entry.

• Above transaction is compound journal entry

According to traditional approach

• Personal Account → Debit the receiver and credit the giver
• Real Account → Debit what comes in and credit what goes out
• Nominal Account → Debit all expenses or loss and credit all gains or losses

Answer 2

Answer:

The journal entry is as follows:

Bank a/c dr (amt due less discount)

Discount allowed a/c dr (discount amt)

To Ram’s a/c (full amt)

Explanation:

Bank is receiver so debited

Discount is allowed and is expense of business so debited

Ram’s a/c was shown as debtor in the previous transactions and as his account is settled , he is no more debtor so credited. (Moreover he is also the giver so credited.)