Pamanand & Co. started business with cash
2. Purchased goods on credit
3. Sold goods on credit costing 6.000 for
4. Withdrew cash for personal use
5 Withdrew goods for daughter's marriage costing
6. Purchased goods on cash
7. Paid for office expenses
8. Sold goods for cash (cost price 10,000)
9. Received cash from debtors
10. Paid cash to creditors
11. Purchased fumiture
Answers
Answer:
When goods are withdrawn by the proprietor, goods are going out of the business i.e., purchases account has to credited. The journal entry for this is -
Drawings A/c Dr 10000
To Purchases A/c 10000
Instead of this entry, the incorrect entry passed was -
Drawings A/c Dr 10000
To Sales A/c 10000
Here, instead of purchase account sales account has been credited whereas drawings account has been rightly debited , so to cancel this entry and rectify it, sales account which was credited is to be debited to cancel the entry, and purchases account will be credited fro the original entry. Since drawings account is rightly debited, no change will be made regarding drawings account. The rectified journal entry thus becomes -
Sales A/c Dr 10000
To Purchases A/c 10000