DEBIT ALL PAYMENTS AND CREDIT

ALL RECEIPTS
PAYMENTS ARE OF TWO TYPES:
1. REVENUE PAYMENTS- BENEFITS UTILISED IN THE PERIOD AND ARE
RECURRING IN NATURE.
2. CAPITAL PAYMENTS- BENEFITS ARE NOT UTILISED IN THE PERIOD, BUT
BENEFITS UTILISED IN COMING PERIODS AND ARE NON-RECURRING IN
NATURE.
RECEIPTS ARE OF TWO TYPES:
1. REVENUE RECEIPT.
2. CAPITAL RECEIPT.
RULES:

• INCREASE IN EXPENSE\LOSS\ASSET TO BE
DEBITED.

• INCREASE IN INCOME\PROFIT\LIABILITY TO BE
CREDITED.

• DECREASE IN EXPENSE\LOSS\ASSET TO BE
CREDITED.
REVENUE EXPENSES ARE EXPENSES, CAPITAL EXPENSES ARE ASSETS.
REVENUE RECEIPTS ARE RECEIPTS, CAPITAL INCOMES ARE LIABILITY.
DOUBLE ENTRY BOOKING KEEPING SYSTEM
RECORDING OF TWO ASPECTS OF AN ENTRY.
• DECREASE IN INCOME\PROFIT\LIABILITY TO BE

PROBLEMS:

1. MR.A INVESTED RS 80000 OF HIS FUNDS IN BUSINESS ENTITLED

ALFHA CO LTD.
CASH A\C DR 80000
 TO A’S CAPITAL A\C 80000

2. ALFHA CO PURCHASES THE FOLLOWING ASSETS FOR CASH :

SUPPLIES-9000, OFFICE EQUIPMENTS-7000, TOOLS-60000

SUPPLIES A\C DR 9000

OFFICE EQUIPMENTS A\C 7000
TOOLS A\C 60000
TO CASH A\C 76000

3. ALFHA CO ACQUIRES LAND FOR 75000. PAYING RS 15000 IN CASH

AND ISSUING BILLS PAYABLE FOR THE DIFFERENCE AMOUNT
LAND A\C DR 75000
TO CASH A\C 15000
TO BILLS PAYABLE A\C 60000

4. ALFHA CO PAID RS 12000 FOR 3 MONTH’S RENT IN ADVANCE.

PREPAID RENT A\C DR 12000
TO CASH A\C 12000

5. ALFHA CO RECEIVED RS 9500 AS PAYMENT FOR CONSULTANCY

SERVICE RENDERED BY THE FIRM TO CUSTOMERS
CASH A\C DR 9500
TO CONSULTANCY SERVICES A\C 9500

6. ALFHA CO RENDERED CONSULTANCY SERVICE FOR 13500 ON CREDIT

TO ITS CUSTOMERS
ACCOUNTS RECEIVABLES A\C DR 13500
TO CONSULTANCY SERVICES A\C 13500

7. ALFHA CO PAID 12000 FOR LAND EARLIER PURCHASED ON CREDIT

FOR RS 60000
ACCOUNTS PAYABLE A\C DR 12000
TO CASH A\C 12000

8. ADDITIONAL TOOLS PURCHASED ON CREDIT FOR RS 1500

TOOLS A\C DR 1500
TO ACCOUNTS PAYABLE A\C 1500

9. ALFHA CO PAID UTILITIES EXPENSE OF RS 1000

UTILITIES EXPENSE A\C DR 1000
 TO CASH A\C 1000

10.ALFHA CO RECEIVED 7500 IN CASH FROM CUSTOMER FOR WHOM

CONSULTANCY SERVICE WAS RENDERED EARLIER
CASH A\C DR 7500
TO ACCOUNTS RECEIVABLES A\C 7500

11.DEPRECIATION OF 7500 IS RECORDED ON OFFICE EQUIPMENT

DEPRECIATION A\C DR 7500
TO OFFICE EQUIPMENTS A\C 7500

12.A WITHDREW RS 2000FROM FIRM FOR PERSONAL USE

DRAWING’S A\C DR 2000
TO CASH 2000

13.4000 OF RENT (12000) HAS EXPIRED AS MENTIONED IN 4

RENT A\C DR 4000
TO CASH 4000

14.BAD DEBTS:
BAD DEBTS A\C DR XXXX
TO DEBTOR’S A\C XXXX

15.OUTSTANDING AMOUNT:
EXPENSE A\C DR XXXX
TO EXPENSE OUTSTANDING A\C XXX
16.RECEIVABLES:
RENT RECEIVABLE A\C DR XXXX
TO RENT A\C XXXX

FORMAT OF JOURNAL
DATE PARTICULARS L\F DEBI CREDI
T T
A FURNITURE DEALING COMPANY.PREPARE A JOURNAL, LEDGER AND TRIAL
BALANCE

QUESTION:

DATE PARTICULARS AMOUN

(mar T
ch-
2010
)

01 Commenced business with: Cash 200000

.00
Bank
800000
Furniture(go .00
ods)
500000
.00

03 Bought furniture from Ratan Brother’s 200000

.00

04 Bought furniture for Office use 100000

.00

06 Sold furniture to J.Mitra 200000

.00

08 Bought furniture 180000

.00

10 Returned Furniture to Ratan Brother’s 5000.0

0

12 J.Mitra Returned Goods 20000.

00

14 Paid Taxi Fare 1000.0

0

15 Sold Goods to J.Kabiraj Less Trade 50000.

Discount 00
17 Commission Received 1500.0
0

18 Paid Ratan Brothers by Cheque 100000

.00

19 Send to Bank 20000.

00

20 Received Cheque From J.Kabiraj (Full 42500.

Settlement) 00

22 Received Cheque From J.Mitra and 50000.

Deposited the same into Bank 00

23 Loan to Naren 15000.

00

24 J.Mitra’s Cheque dishonored

25 Withdrew Cash For Personal Use 40000.

00

26 Interest Received 1000.0

0

27 Dividend Received 2500.0

0

29 Paid Postage 500.00

30 Paid Rent 10000.

00

31 Cash Withdrawn from Bank 200000

.00

31 Salary Being Paid 30000.

00

31 Taxes Being Paid 15000.

00

DATE PARTICULARS L\F DEBI CREDI

(Mar T T
ch-
2010
 )

Cash A\c 2000

01 Bank A\c 00
Stock A\c 8000
To Capital A\c 00 15000
5000 00
00

02 Purchase 2000
To Ratan 00 20000
Brother’s 0

Trial Balance As On 31st March 2010

SL.
NO PARTICULARS DEBIT CREDIT

333500.0
1 CASH 0
262500.0
2 BANK 0
500000.0
3 STOCK 0
1500000.
4 CAPITAL 00
340000.0
5 PURCHASE 0
6 RATAN BROTHERS 95000.00
100000.0
7 FURNITURE 0
180000.0
8 J.MITRA 0
245000.0
9 SALES 0
PURCHASE
10 RETURNS 5000.00
11 SALES RETURNS 20000.00
12 TRAVELLING 1000.00
13 COMMISSIOM 1500.00
14 DISCOUNT 2500.00
15 NAREN 15000.00
16 DRAWINGS 40000.00
17 INTEREST 1000.00
18 DIVIDEND 2500.00
19 POSTAGE 500.00
20 RENT 10000.00
21 SALARY 30000.00
22 TAXES 15000.00

1850000. 1850000.
TOTAL 00 00