Question

Pass journal entries for the following transactions:
i. Provide 10% interest on capital amounting to Rs.80,000.
ii. Sold goods to Kamal costing Rs. 10,000 at 30% above cost less 10% trade discount and 2%
cash discount. Kamal was not willing to avail cash discount.
iii. Bought a horse for delivering goods to customers Rs. 12,000
iv. An old machine of book value Rs. 50,000 is exchanged for a new machine costing Rs.1,20,000. The old machine is valued for Rs. 40,000 by HMT Ltd.
v. Salary due to clerk Rs. 2,000
vi. Goods destroyed by fire cost Rs. 5,500 but Insurance Co. admitted the claim of Rs. 4,000
only.

Answer 1

1. interest on capital account Dr 8000
......to capital account 8000

2. kamal's account Dr 9700
to sales account 9700

3. Horse account Dr 12000
........to cash account 12000

4. machinery Account (new) Dr 120000 loss on exchanged of old machine 10000
........to machinery (old) 50000
........to Hmt Ltd account 80000

5. salary account Dr 2000
.........to out standing salary a/c 2000

6. lost by fire account Dr 5500
........to purchase account 5500

and...

insurance company account Dr 4000
.....to lost by fire account 4000