Question

Journalise the following transactions:
1) Started business with Rs. 70000
2) Credit purchase of goods Rs. 18000
3) Payment made to creditors in full settlement Rs. 17500
4) Purchase of machinery for cash Rs. 20000
5) Depreciation on machinery Rs. 2000

Answer 1

Answer :

Golden Rules of Journal

Personal account rule

Debit- The receiver.

Credit- The giver.

Real account rule

Debit- What comes in.

Credit- What goes out.

Nominal account rule.

Debit- All expenses and losses.

Credit- All incomes and gains.

Now

The journal entries will be  

1. Cash A/C     DR.    ₹ 70,000

      To Capital A/C               ₹ 70,000

( Being started business with cash )

2. Purchase A/C    DR    ₹  18,000

         To Creditors A/C                ₹ 18,000

( Being credit purchase).

3. Creditors A/C      DR   ₹ 17500

          To Cash A/C                 ₹  17500

 

( Being cash paid to creditors )

4.  Machinery A/C    DR   ₹ 20,000

             To Cash a/c                     ₹ 20,000

(Being cash paid on purchasing of machinery)

5. Depreciation A/C    DR    ₹ 2,000

            To Machinery A/C            ₹ 2,000

( Being depreciation machinery )

Answer 2

commenced business with cash rs70000