Question

Journalise the following transactions :-
[Given in the picture below] ;

Answer 1

The journal entries for the following transactions are as follows :-

1.) Loss of Goods by Fire :

It may sometimes so happen that Goods are damaged by some Accidental causes or reasons, such as Fire. This is a loss to the business. The Following journal entry is passed for such loss :-

Loss by Fire A/c ... Dr. 50,000
To purchases A/c. 50,000

(Being Goods lost or destroyed by Fire).

2.) Distribution of Goods as Free Samples.

Sometimes, the Businessman distributes the goods as free samples to familiarise his goods in the market. In this Case, the stock of goods descreases, So purchase account is credited. On the other hand, Free Samples or Advertisement account is debited because it is an expense for the bussiness. The journal entry is as follows :-

Free Samples OR Advertisement A/c ... Dr. 18,000
To purchases A/c. 18,000

(Being Goods distributed as free samples)

Charity A/c ... Dr. 20,000
To Cash A/c. 20,000

(Being Cash given away as charity)

3.) Goods or Cash drawn for personal use.

Sometimes, the Businessman withdraws goods or Cash from the business for his personal use, When cash or goods drawn from business for personal use, is called "Drawings". When Cash or/and goods is withdrawn from the business, the following journal entry is passed :-

Drawings A/c ... Dr. 65,000
To Cash A/c. 40,000
To Purchases A/c. (For goods) 25,000

(Being Goods & Cash withdrawn for personal use).

4.) Goods Given away as charity.

Sometimes, the Businessman gives away the goods and cash in the business as Charity. In such case, charity account is debited as it is an expense for the business and purchases and cash account is credited , as goods and cash is going out of the business. The journal entry for this transaction is given as under :-

Charity A/c ... Dr. 25,000
To Cash A/c. 5,000
To Purchases A/c. 20,000

(Being Goods & cash given away as charity).

5.) Goods or Cash Stolen by an employee.

If Goods or Cash is stolen or misappropriated by an dishonest employee, Since, theft of Cash or goods is a loss to the business. In Such a case, Following entry is passed :-

Loss by Theft A/c ... Dr. 1,00,000
To Cash A/c. 1,00,000

(Being Cash stolen).

TOTAL : Dr. Side ₹ 2,78,000 & Cr. Side ₹ 2,78,000
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