CHAPTER- I

1.Classify the following accounts into Personal, Real and Nominal.

Sales A/c Carriage A/c Salary account Good will A/c
Bank A/c Royal A/c Rent prepaid Account Advertisement A/c
Drawing A/c Capital A/c Arvind’s capital a/c Bank loan A/c
Stock A/c purchase A/c Nanda’s drawing s A/c Postage A/c
Discount A/c Cash A/c Interest paid A/c Commission
Received a/c
Stationery A/c Purchase returns S.B.I A/c Goods A/c
a/c
Vijay’s A/c Wages Investment A/c Bank overdraft A/c
outstanding a/c
Sales returns Furniture A/c Electricity charges A/c Copyright A/c
A/c
Sales tax A/c Rani’s A/c Interest Payable A/c Plant and
machinery A/c
Livestock A/c Repairs to Bad debts A/c Depreciation on
computer A/c furniture A/c
Loss by theft Bangalore city Mumbai stock Rahul’s A/c
A/c corporation A/c exchange A/c
Premier Telephone Stationery A/c Building A/c
Companies A/c expense A/c
National trading Prepaid Cash A/c Repair to
company A/c Insurance A/c machinery A/c
Motor Van A/c Mumbai sports Bills receivable A/c Bank deposit A/c
club A/c
Commission Loose tools A/c Bad debts recovered Book debts A/c
received in A/c
advance A/c
Charity A/c Bills Payable Provision for discount Provision for
A/c on debtors A/c discount on
creditors A/c
Provision for Provision for
bad and depreciation
doubtful debts A/c
A/c

2.Identify TWO Accounts involved in the following transactions:

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a.Pavan Commenced business with cash Rs.50,000
b.Cash withdrawn from business for personal use
Rs.5,000
c.Purchased machinery from HMT Co., Rs.8,000
d.Purchased furniture from Fab Mart for cash Rs.2,000
e.Received commission Rs.4,000
f.Paid wages Rs.3,000
g.Sold goods for Rs.6,000
h.Received loan from Indian Bank Rs.40,000
i.Paid electricity charges Rs.1,000
j.Purchased paper, pens etc., for Rs.200

3.Identify TWO Accounts involved in the following transactions.

Opened a current account with Bank of India Rs.20,000

Cash Purchase Rs.10,000
Commission received from Ramya Rs.400
Received loan from Raghu Rs.10,000
Withdrawn from Bank of India for office use Rs.12,000
Paid rent for building in advance Rs.2,000
Sold furniture Rs.5,000

Rules of Double entry System of book keeping

1 Personal Account Debit : the receiver ( of benefits from business)
Credit: the giver ( of benefits to business)
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2 Real Account Debit : What comes in ( to the business)
Credit: What goes out ( of the business)
3 Nominal Account Debit : Expenses & Loss ( for the business)
Credit: Incomes & gains ( for the business)
Steps in application of Double entry system rules:
1. Find out two accounts involved in each business transaction.
2. Ascertain the type of accounts or class of account for the above two accounts.
3. Apply the rules for respective account
4.Identify which account should be Debited & Credited.

3.Find out debit and credit in each of the following transaction.

a. Vijay commenced business with cash of Rs.1,00,000.
b. Opened a current account with State Bank of Mysore Rs.20,000.
c. Purchased goods for Rs.10,000.
d. Sold goods for Rs.1,500.
e. Cash paid to Arun on account Rs.4,000.
f. Cash received from Varun on A/c Rs.5,000.
g. Purchased goods from Nitesh Rs.20,000.
h. Sold goods to Narayan Rs.30,000.
i. Salary paid Rs.10,000.
j. Rent paid to the Land Lord Rs.2,000.

4.Find out debit and credit on each of the following transaction

a. Mr. David started business with cash Rs.35,000.
b. Borrowed from Amar Rs10,000.
c. Purchased goods from Babu Rs.2,000.
d. Purchased furniture Rs.1,050
e. Sold goods are cash Rs.850
f. Purchased stationery from Vivek stores Rs.320
g. Received loan from Chandra Rs.8,000
h. Paid to Amar Rs.6,000
i. Paid salary Rs.300
j. Sold goods to Abhinandan Rs.2,000
k. Paid to Babu Rs.2,000
l. Bought postage stamps for Rs.50
m. Withdraw cash from business for personal use Rs.500
n. Received commission Rs.250
o. Paid municipal tax of Rs.150
p. Abhinandan returned goods worth Rs.450
q. Appointed a manager for a salary of Rs.2,000 per month
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 r. Placed on order for goods for Rs:6000 with Disha
s. Paid interest Rs.1,000
t. Paid commission Rs.250.
PROBLEMS BASED ON JOURNAL ENTRIES
1.Journalize the following transaction in the books of Ravi.
1-1-2016 Commenced business with cash Rs.25000 by selling his bike
2-1-2016 Purchased office furniture for cash Rs.2,000
3-1-2016 Paid for office Stationery Rs.100
4-1-2016 Bought goods from Raju on credit Rs.3,000
6-1-2016 Purchased goods for cash from Vijay Rs.1,000
7-1-2016 Sold goods to Sunder on credit Rs.1,500
9-1-2016 Sold goods to Manohar for cash Rs.500
10-1-2016 Paid cash to Raju on account Rs.1,200
11-1-2016 Received cash from Sunder on account Rs.800
15-1-2016 Return goods to Raju Rs:300
18-1-2016 Sunder returns goods to us Rs.200
19-1-2016: Cash sales Rs: 600
22-1-2016 Cash purchase Rs.900
23-1-2016 Paid for sundry expenses Rs.50
25-1-2016 Received commission from Mr.Singh Rs.350
27-1-2016 Paid office rent of Rs: 250 to Land lord
28-1-2016 Gave loan to Shankar Trading Co Rs.4,000
29-1-2016 Paid salary to Manager Rs.700
30-1-2016 Paid advertisement charges Rs.100
31-1-2016 Cash withdrawn for personal purpose Rs.100

2.Journalise following the transaction in the books of Mr.Bhaskar

1st June 2016 Started business by investing Rs: 80000 into Bank
2nd June 2016 Purchased goods ‘X’ company for Rs.40,000 and issued a Cheque
immediately.
3rd June 2016 Sold goods ‘Y’ Company for Rs .60,000
4th June 2016 Received a cheque from ‘Y’ company for Rs.35,000
5th June 2016 Received a cheque from Y company in full settlement.
6th June 2016 Cheque for Rs.35,000 received from Y Company was deposited into the
Bank for collection.
7th June 2016 A cheque for Rs.25,000 received from Y Company was endorsed to Mr.
Ajay to whom the business owes the same amount.
8th June 2016 Banker charged Rs.100 for services.
9th June 2016 Banker allowed Rs.300 as interest on deposits.
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10th June 2016 As per our instruction Banker paid electricity bill of Rs.300.
11th June 2016 Banker received Rs.1,000 by way of interest on investment from Tata
Chemical Ltd., on behalf of the business.
12th June 2016 Mr. Harish a customer deposited Rs.1,000 directly to our bank A/c.

3.Journalize the following transactions.

1st March 2016 Mr. Ajay started business with cash Rs.70,000.
5th March 2016 He introduced building worth Rs.2, 00,000.
11th March 2016 He introduced debtors worth Rs.10,000.
18th March 2016 Furniture has been introduced into the business worth Rs.1,000 as
capital.
21st March 2016 He introduced creditors worth Rs: 20,000 on to the Business.

Problems on Opening Entry or Compound Entry

1.Mr. X Commenced a business with Rs.1,00,000 Cash of his own and Rs.20,000
borrowed from his wife. Pass journal entry.

2. Mr. Y commenced business with cash Rs.2,00,000 of which Rs:40,000 borrowed

from a friend and Rs.60,000 from Canara bank. Pass journal entry.

3. Z commenced business with the following Assets and Liabilities.

Cash in hand Rs.20,000; Cash at Bank Rs.30,000; Stack in hand Rs.40,000; Machinery
Rs.1,00,000; Furniture Rs.60,000; Buildings Rs.2,00,000; Due by Ganesh Rs.20,000
Due to Arvind Rs.70,000. Pass opening journal entry.

4.Pass an opening entry

Murali commenced business on 1st January 2016.
Cash in hand Rs.20,000; Cash at Bank Rs.5,000; Sundry debtors Rs.40,000; Stock of
goods Rs.1,20,000; Furniture Rs.40,000; Building Rs. 2,00,000; Sundry creditors
Rs.20,000; Bills Payable Rs.10,000. Pass opening journal entry.

5.Journalize the following transaction in the books of Venkatesh.

1-2-2016 Started business with the following assets and liabilities:
Cash Rs.3,000; Goods in hands Rs.10,000; Furniture Rs.6,000; Buildings Rs.2,00,000;
Due by Narayan Rs.6,000; Due to Krishna Rs.8,000; Due to Damodar
Rs.17,000.
2-2-2016 Purchased goods from Anil subject to a trade discount of 5% Rs.10,000.
3-2-2016 Sold goods to Manoj subject to trade discount of 3%, Rs.5,000.
8-2-2016 Received from Narayan Rs.5,800 in full settlement of his A/c.
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12-2-2016 Received from Manoj Rs.4,500 in full settlement his A/c.
15-2-2016 Paid Anil Rs: 9,000 in full settlement.
25-2-2016 Sold goods for cash Rs.20,000.
28-2-2016 Paid Krishna Rs.8,000.

PROBLEMS ON LEDGER
6.Journalize the following, post them into ledger and prepare Trial balance.
2018 March.
1st Manoj started business with cash Rs. 50,000.
4th Purchased goods from Rs. 10,000
7th Sold goods for cash Rs. 5,000 and credit Rs. 10,000 to Sanjay.
8th Paid water bill Rs. 30
9th Received Rs. 600 as commission and 300 as interest.
11th Drawn goods for own use Rs. 500
22nd Drawn cash for own use Rs. 50
30th Purchased Vehicle for Rs. 4,000 from Jatti Motor Co. on cash.

7. Journalize the following, post them into ledger and prepare Trial balance.
January-2018
1st Ajay commenced the business with cash Rs.50,000.
2nd Deposited in to bank Rs.5,000.
8th Purchased goods from Mohit on credit Rs.5,000.
18th Sold furniture for cash Rs.10,000.
22nd Purchased goods from Rahul for cash Rs.5,000.
24th Paid rent Rs.500.
26th Returned goods to Rahul Rs.1,000.
28th Paid salary to Manager Rs.2,000.

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