Q1. Journalise the following transactions:
(i) Paid rent of building Rs. 12,000, Half of the building is used by the proprietor for residential use.
(ii) Paid fire insurance of the above building in advance Rs. 1,000.
(iii) Paid life Insurance premium Rs. 2,000.
(iv) Paid income tax Rs. 3,000
(v) Salary due to clerk Rs. 500.
(vi) Charge depreciation on furniture @ 10% p.a. for one month (Furniture Rs. 12,000)
(vii) Provide interest on capital (Rs. 60,000) at 15% p.a. for six months.
(viii) Charge interest on drawing (Rs. 10,000) at 18% p.a. for two months.
Answers
Answer:
Journal entries:
1) Drawings A/c Dr. 6000
Rent A/c Dr. 6000
To Cash A/c 12000
(Being rent paid of building whose half premises are used by owner)
2)Insurance Premium A/c DR. 1000
To Cash A/c 1000
(Being cash paid for advance Insurance of Building)
3)Drawings A/c DR. 2000
To Cash A/c 2000
(Being cash paid for life insurance premium)
4) Income Tax A/c Dr. 3000
To Cash A/c 3000
(Being income tax paid in cash)
5) Salary A/c 500
To Clerk A/c 500
(Being Salary due to clerk)
6) Depreciation A./c Dr. 100
To Furniture A/c 100
(Being Depreciation charged on furniture for one month @10p.a)
7)Interest A/c Dr. 4500
To Cash A/c 4500
(Being Interest received in cash)
8)Cash A/c Dr. 300
To Interest A/c 300
(Being interest PAid by XYZ for 2 months)
Working Notes:
1) half is used by owner
thus half of the rent would be drawings as it is used for personal use.
thus Drawings = 1/2*12000=6000
3) Life insurance is done for humans and not buisness
thus the life insurance is for owner
and so it becomes Drawings
6) rate is given as 10 % p.a
thus depreciation for full year =1200
so depreciation for one month (1/12 year)= 100
7] rate is given as 15% p.a
thus interest for one year=9000
so interest for 6 months(1/2 year)=4500
8] rate is given as 18 % p.a
thus interest for 1 year=1800
so interest for two months (1/6 year)=300
Hope so it helps you
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