Question

paid office expenses journal

Answer 1

The Journal Entry For the above mentioned transactions is :-

1. Cash A/c. Dr. (Amount)
To Capital A/c. (Amount)

(Being Business Started)

2. Purchases A/c. Dr. (Amount)
To Cash A/c. (Amount)

(Being Goods purchased for Cash)

3. Cash A/c. Dr. (Amount)
To Sales A/c. (Amount)

(Being Goods sold for cash)

4. Purchases A/c. Dr. (Amount)
To Rano A/c. (Amount)

(Being Goods purchased from Rano on credit)

5. Guddu A/c. Dr. (Amount)
To Sales A/c. (Amount)

(Being Goods Sold to Guddu on credit)

Explanation of the above mentioned enteries :-

1. Raju started business with cash.

A business unit is always considered to be separate and distinct from the proprietor. All the transactions are recorded in the books of Business from the point of view of the business. Cash coming into the business will be debited according to the rule of Real account, i.e., “debit what comes in”. Owner is the giver of cash to the business, therefore, his capital account will be credited according to the rule of personal account, i.e., “credit the giver”.

2. Bought Goods from Bobby for cash.

The Two A/c's affected in this transactions are purchases A/c and Cash A/c. Purchases A/c is a nominal account and will be debited because of the rule of “Debit all expenses”. Cash A/c is a real account and will be credited because of the rule of “Credit what goes out”.

3. Sold Goods to Gudiya for cash.

The Two Accounts affected are Cash A/c and Sales A/c. Cash is coming into the business and hence it will be debited as per rule of Real account i.e., “Debit what comes in”. Sales A/c is a nominal account and will be credited as per the rule of “Credit all incomes”.

4. Bought Goods from Rano.

When the name of the seller is given and it is not mentioned that the goods have been purchased for Cash, it will be assumed that the goods have been purchased on credit. Purchases A/c will be debited according to the rule of nominal account i.e., “Debit all expenses”. Rano is the giver of goods, as such, his personal account will be credited according to the rule of “Credit the giver”.

5. Sold Goods to Guddu.

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

Answer 2

Answer: cash A/C debit

To Capital A/C

Explanation: