Question 6.
Journalise the following entries:
(i) Goods worth ₹ 500 given as charity.
(ii) Sold goods to Mayank of ₹ 1,00,000, payable 25% by cheque at the time of sale and balance after 30 days of sale.
(iii) Received ₹ 975 from Harikrishna in full settlement of his account for 1,000.
(iv) Received a first and final dividend of 60 paise in a rupee from the Official Receiver of Rajan, who owed us ₹ 1,000.
(v) Charged depreciation on plant ₹ 1,000.
(vi) Charge interest on Drawings ₹ 1,500.
(vii) Sold goods costing ₹ 40,000 to Anil for cash at a profit of 25% on cost less 20% trade discount and charged 8% Value Added Tax and paid cartage ₹ 100, which is not to be charged from customer.
Answers
All the journal entries are explained here. Hope you will understand it.
Explanation:
(i) Charity A/c Dr 500
To purchase A/c 500
When we distribute goods from our own stock we have to credit the purchase account. Charity is the expense for the company so we debited the charity account.
(ii) Bank A/c Dr. 25000
Mayank A/c Dr. 75000
To Sales A/c 100000
We debited the bank account with 25000 as we only received the 25% of the money through cheque rest we debited to the Mayank account as he becomes our debtor. Sales is credited with the total amount.
(iii) Cash A/c Dr. 975
Discount Allowed Dr. 25
To Harikrishna A/c 1000
Cash account is debited with the amount of money actually received. Discount is given, so it is debited as it is our expense. And Harikrishna account is to be credited as we receive the amount from him.
(iv) Cash A/c Dr. 600
Bad debts A/c Dr. 400
To Rajan A/c 1000
Cash account is debited with the amount received from him and rest amount is to be transferred to the bad debts account. Bad debts is the loss to the company so it is debited. Rajan account is credited as he the giver.
(v) Depreciation A/c Dr. 1000
To Plant A/c 1000
Depreciation is a non cash expense of the company which is to be debited and the corresponding asset i.e. plant is to be credited .
(vi) Drawings A/c Dr. 1500
To interest on drawing A/c 1500
Interest on drawing is the income of the company so it is credited and drawing account is debited as the amount is to be transferred to the drawing account.
(vii) Trade discount is not shown in the books so we just need to calculate the amount and deduct it from the sales account.
One thing i want to clear i ignored the VAT entry as after GST it is not applicable.
Cash A/c Dr. 40000
To Sales A/c 40000
Total Sales is 40000 when we add 25% profit it comes to 50000. Then we deduct 20% as trade discount which comes to 40000.
Entry for cartage will be
Cartage A/c Dr. 100
To cash A/c 100
Answer:
charity A/C Dr = 500
to purchase = 500