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Financial and Management Accounting Unit 4

Unit 4 Primary Books

Structure:
4.1 Introduction
4.2 Introduction to Primary books
4.3 Journal
4.4 Ground rules of journal entry
4.5 Types of journal
4.6 Purchases Book /Purchases Day book
4.7 Sales Book or Sales Day book
4.8 Purchase Returns Book
4.9 Sales Returns Book
4.10 Bills receivable book
4.11 Bills payable book
4.12 Cash book

4.1 Introduction
The accounting process actually begins with recording the transactions in an
accounting book. This book of original recording is called primary book and
of course all transactions are recorded basing on certain documents like
invoices, vouchers or receipts etc., All transactions should invariably be
entered through the primary accounting books. Other wise, the final results
of the business concern project a distorted position or end up in preparing
unreliable statements. So making entries in the primary books is the basis
for further accounting treatment such as posting to ledger, preparation of
trial balance etc.,

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Financial and Management Accounting Unit 4

Learning Objectives:
After studying this unit, you should be able to understand the following:
1. To know the various primary books, containing original entries.
2. To record transactions in General Journal adopting debit and credit
principles.
3. To know in brief about subsidiary books
4. To open purchases day book and Purchase Returns Book.
5. To open Sales day book and Sales Returns Book.
6. To know about Bill Transactions.
7. To prepare Bills Receivable Book and Bills Payable Book.
8. To open Cash Book with Cash column only.
9. To understand the preparation of Cash Book with Cash and Bank
Columns.
10. To understand the preparation of Cash Book with cash, bank and
discount columns.
11. To know the preparation of Petty Cash Book.
12. To know how to prepare ledger accounts from individual subsidiary
books.

4.2 Introduction to Primary Books
Journal is a book of original entry. In French, ‘jour’ means ‘a day’. Therefore
journal is basically a day book in which transactions are first entered in a
systematic manner adopting the principles of debit and credit. If a business
organization is very small and the number of transactions taking place each
day are limited, then all the transactions can easily be recorded in the
journal. But it is not so, in case of organizations of large scale, where
hundreds of transactions take place. To facilitate convenient way of entering
transactions, journal is subdivided into several books of original entry,
namely purchases, sales, cash, bills receivable, bills payable, returns
inwards, returns outwards books. They are also regarded as primary books

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4. Self Assessment Questions 1: 1.Financial and Management Accounting Unit 4 or subsidiary books. For instance. then the ledger folio is 120. Transactions are first recorded in the journal and later posted to ____________________. However. the cash account is separately mentioned in page number 120 of the ledger book. Each page of the journal is numbered and it is called journal folio (JF). to help in cross checking. posting is made to ledger. JOURNAL Ledger Debit Credit Date Particulars Folio Rs.3 Journal It is a book containing systematic recording of transactions. The entry made is known as journal entry and the process of writing the journal entry is called journalizing.: 64 . Entries are made date wise and they reflect what account is debited and what account is credited. Book of original entry is called ______________________________. It is also possible that entries are made directly to ledger accounts without bringing them to journal at all. Similarly the folio number is Page No. 2. Do you regard subsidiary books as primary books of original entry? 3. Rs. The form of a journal is given below. 2-4-2005 Cash A/c Dr 100000 To Capital A/c 100000 (Being capital brought in cash) 3-4-2005 Furniture A/c Dr To cash A/c 20000 20000 (Being furniture purchased for cash) The ledger folio mentioned in the third column indicates the number of page in the ledger book where the respective account summary is stated. both journal and ledger accounts are prepared. When once the transactions are recorded in the journal or other subsidiary books.

Self Assessment Questions 2: 1.5000 for cash 4.Financial and Management Accounting Unit 4 given to other accounts. For each class of accounts. To draw journal entries. What does a Ledger folio indicate ? 4.30000 3.300 Page No. a transaction affects at least two accounts and the accounts may be personal or real or nominal. 12-5-2004 Bought goods worth Rs.12000 on credit 5. 14-5-2004 Sold goods to Ram Charan for Rs. Usually the entry is read as ‘cash account debtor to capital account’ and so on. Illustration 1 Enter the following transactions in the books of Gopichand 1.4 Ground rules of journal entry As discussed earlier. 15-5-2004 Sold goods to Kanthilal Rs. 20-5-2004 Paid wages to daily workers Rs. What is journal? 2. the rules of debit and credit are also discussed. ‘debit what comes in and credit what goes out’ is the rule for real accounts and ‘debit all expenses and losses and credit all incomes and gains’ is the rule for nominal accounts. ‘Debit the receiver and credit the giver’ is the principle for personal accounts. real or nominal c) Apply the relevant rule for debit and credit to determine what account to debit and what account to credit d) Write the journal entry as described above. For every journal entry. narration is given to briefly describe the transaction. 10-5-2004 Started business with capital of Rs. e) Give the narration for the transaction. the following steps be followed: a) Identify the accounts affected in the given transaction b) Classify the accounts as personal.50000 2.: 65 .

3. Kanthilal is debited and the goods account is credited because goods are going out and it is real account 2. the total of debits should be equal to total of credits. It is thus debited and since cash account is real account and it is going out and therefore it is credited. The fourth transaction is a credit transaction and so the name of the debtor.: 66 . The fifth transaction involves an expense and wages account is a nominal account. Page No. Self Assessment Questions 3: 1.) (Rs.) 10-5-04 Cash A/c Dr 50000 To Capital A/c 50000 (Being capital brought in cash) 12-5-04 Goods A/c Dr 30000 To Cash A/c 30000 (Being Goods purchased for cash) 14-5-04 Cash A/c Dr 5000 To Goods A/c 5000 (Being goods sold on cash to Ram Charan) 15-5-04 Kanthilal A/c Dr 12000 To Goods a/c 12000 (Being goods sold on credit to Kanthilal) 20-5-04 Wages A/c Dr 300 To Cash A/c 300 (Being wages paid to daily workers) 97300 97300 Note: 1.Financial and Management Accounting Unit 4 Answer Journal Entries in the books of Gopichand Date Particulars LF Debit Credit (Rs. All assets should be debited and all liabilities should be ___________________. At the end of accounting period.

However. 40000 iii) Amount drawn from Bank of Baroda for miscellaneous expenses Rs. When creditors are paid out. 500000 received from Damodar & Bros for the supply of goods. The types of journal include purchases book. the overdraft account is ________ and cash account is _____. 5. 5000. The entries are made in these books straight without recording in usual journal. If bank overdraft is raised.Financial and Management Accounting Unit 4 2.. posting is made to ledger.. then subsidiary books which are known as books of original entry are prepared. If wages are paid for construction of business premises. cash book and journal proper. i) Advance of Rs. 7. Why? 6. sales returns book. the company account is not credited. purchase returns book. journalizing can be done. When interest is received in cash. Page No.5 Types of Journal Journal is a book of original entry and only one journal is maintained if the business is very small in size and the transactions are limited. From the respective books. In fact. if the transactions are multifarious. bills receivable book. Cash account is debited and _____ account is credited 3. ___________ A/c is debited and _____________ A/c is credited. If furniture is bought for cash from X Co Ltd. 4. bills payable book. ii) Sales tax paid Rs. from the entries made in the subsidiary books. ______is debited and _____________ account is credited.: 67 . 4. Write the journal entries for the following transactions in the books of Y Co Ltd. sales book. A detailed note is given in the following paragraphs on each of the subsidiary books.

2006 August 5 Rao Bros. Every invoice received is numbered and this number is stated in the purchases book for reference. 87 45. Purchases Book of Johnson and Johnson Co Inward Amount Date Name of Supplier Ledger Folio Invoice No Rs.10. (True/False) 2.000 Inward invoice is the document sent by the supplier while selling the goods. All such transaction which cannot be included under different subsidiary books are entered in journal proper. goods account is debited because it is real account Page No.000 8 Snow white Co. Cash purchases are recorded in cash book and credit purchases are recorded in purchases book.000 16 Best & Company 146 29. ‘Goods’ mean items or commodities procured for resale. All subsidiary books are also journal because they are books of original entry. The form of a purchases book is given below. From the above entries made in the purchases book. purchases are made.000 Total 1. (T/F) 4. Can we post the transactions to ledger accounts from the entries made in subsidiary books ? (T/F) 4. Only credit purchases of goods are recorded in this journal. (T/F) 3. The purpose of subsidiary books is to classify enumerable transactions into various functional activities. Bangalore 567 36.: 68 . Whenever.Financial and Management Accounting Unit 4 Self Assessment Questions 4: State True or False 1.6 Purchases Book/purchases day book Purchases book is also called purchases journal. it is possible to record journal entries.

All purchases cash or credit are entered into purchases day book. (T/F) 3. the supplier’s account is credited and goods account is debited.000 Observe that in every case of credit purchase.000 Rao Bros A/c 36.000 Snow White Co A/c 45.000 (Being Goods purchased on Credit) 16-8-06 Goods A/c Dr 29.10.000 1. price and other details of goods purchased.: 69 .000 To Best & Co A/c 29.. Ganesh an credit Rs 6000. (T/F) 2. Debit Credit Date Particulars LF Rs.10. (T/F) 4. 5-8-06 Goods A/c Dr 36. Purchases made from Mr. Purchases of goods and other assets can also be recorded in purchase book. Inwards Invoice is a document to verify the quantity.000 Total 1.000 (Being goods purchased on credit) 8-8-06 Goods A/c Dr 45. entered in the purchases book. The journal entries for the above transactions appear as under: Journal entries in the books Johnson and Johnson Co. the total of purchases is transferred to one ledger account known as Purchases account in the ledger. At the end of the day or week or month. Self Assessment Questions 5: State True or False 1. What is the journal entry ? (T/F) Page No.Financial and Management Accounting Unit 4 and the supplier’s account is credited because the supplier is the giver and it is personal account. Rs.

Sales book of Raghu Medicals Ledger Outward Amount Date Name of customer/debtor Folio Invoice No.000 Total 1.8 Purchase Returns Book When the businessman purchases the goods and finds that the goods are not as per the specifications or the goods are damaged or for any other valid Page No. A pro forma of sales book is as given under.200 28-3-05 Shaw Medical and General Stores 478 85. 1.000 will be transferred to sales account in the ledger. Sale of any other asset other than goods is also recorded in sales day book. Sales day book contains only credit sales of goods made. All debtors are classified as personal accounts and for each party. (T/F) 3. Self Assessment Questions 6: 1.Financial and Management Accounting Unit 4 4. 4.11. Sales account shows credit balance and debtor’s account shows debit balance. Persons to whom sales are made on credit are called ________. (T/F) 2. The parties to whom credit sales are made are known as trade debtors. ledger account is prepared in the ledger. (T/F) 4.7 Sales book or Sales Day book Sales book or sales day book contains the details of credit sales of goods made during a particular period. Similarly the respective ledger accounts of the customers will be prepared in the ledger. 4-3-05 French Medicals 476 6. The total of Rs.000 Outward Invoice number is the number of the invoice issued by the businessman to the customer. when the goods are sold on credit.11. The total of the sales book is transferred to ledger to an account called sales account. Rs.800 18-3-05 Mandara stores 477 19. Outward invoice is a document issued to customer.: 70 .

(T/F) 2. (T/F) 3.000 The total of the book is transferred to ledger to an account called purchase returns account. which shows credit balance. Self Assessment Questions 7: 1. Then a credit note is prepared to show that the Page No. All such purchase returns are recorded in a journal called purchase returns book. Debit note is a document to slow the supplies account being debited. are returned. 4.: 71 . When goods. then a debit note will be sent and the number of debit note is recorded in the purchase returns book. The respective personal accounts of the suppliers/creditors are debited in their respective ledger accounts. bought. Purchase returns take place when the goods bought are not as for the specification. Normally the supplier’s account is credited when the purchases are made. he may decide to return the goods to the supplier from whom the goods were purchased. Purchase Returns Book of Johnson and Johnson Co. Rs. suppliers account is _________ and purchase return account is _____________. 2006 August.9 Sales Returns Book Just as goods which do not conform with specifications are sent back to suppliers. Purchase returns are also called returns outwards. our customers may also send the goods sold to them back to us owing to similar reasons. (T/F) 4. 12 Snow White Co 25 5000 24 Best & Co 26 7000 Total 12..Financial and Management Accounting Unit 4 reason. If the goods are returned. Ledger Debit note Amount Date Name of supplier folio No.

Such a bill of exchange can be discounted with a banker for commission. Sales Returns Book of Raghu Medicals Credit Amount Date Name of customer/debtor LF Note No. promising to pay a certain sum of money or money’s worth to the drawer at a certain date for value received. he does not receive cash immediately. The respective personal accounts of the customers are credited with the value of the goods returned by them.000 Total 6. (T/F) 2. Goods are received from the customers and a credit note is sent to them. But the businessman requires cash for which he draws a bill of exchange against the customer and the customer accepts it. Credit noted is sent by _____________ to __________. Rs. So bill of exchange is a document in writing.000 As usual the total of the book is transferred to an account called sales returns account in the ledger and this account shows debit balance. The businessman maintains a journal/ subsidiary book containing the details of the bills receivable. The businessman who draws the bill is called drawer and the customer on whom it is drawn is drawee or acceptor. Sales return are also called returns inwards.Financial and Management Accounting Unit 4 customer’s/debtor’s account is credited to the extent of the value of the goods returned by them to us. (T/F) 3. Credit not is a document to indicate that the goods are recived as returned by customers. 10-3-05 French Medicals 56 2. Stores 57 4.000 30-3-05 Shaw Medicals and Gen.10 Bills Receivable Book When a businessman sells goods on credit. 4. The Page No. Self Assessment Questions 8: 1.: 72 .

11 Bills Payable Book What is bills receivable for a drawer. of Date of Date of Accep Where Term of Whom Due Date LF Remarks the bill Receipt the bill tor payable the bill Rs. A Agra 3 mths 12-12-04 12. Page No. (T/F) 2. Y Noida 4 mths 4-12-04 9. Who is a drawer of a bill of exchange in a business ? 3.000 3 9-9-04 09-9-04 Mr. Bills Receivable Book of Sham Sundar & Co. A Mr. The sum of the value of bills payable for a period ending will be transferred to the ledger. From Amount No.000 2 1-8-04 01-8-04 Mr. The total of the bill receivable is transferred to bills receivable account in the ledger.X Mr.Financial and Management Accounting Unit 4 bills receivable account shows debit balance and the amount receivable against them is an asset. In a business concern. A bill is an instrument in writing similar to that of a promissory note.balance. received 1 04-7-04 04-7-04 Mr. Self Assessment Questions 9: 1. is bills payable to the drawee. Bills Receivable account shows _____________. B Delhi 4 mnth 13-1-05 10.000 4 10-9-04 10-9-04 Mr. 5.000 For every bill the due date is calculated after adding three days of grace. Who is the acceptor of a bill of exchange in a business ? 4.: 73 .000 38. The form of bills payable book is given here under. proprietor draws bills on debtors and accepts bills drawn by trade creditors. Can bills receivable be discounted ? 4. The person from whom the bill is received and the person who accepted the bill could be the same person or different persons. All such bills accepted by the proprietor are recorded in a separate book called bills payable book.. Usually bills payable account shows credit balance and hence is a liability. X Delhi 3 mths 7-10-04 7. Y Mr. B Mr.

In this connection. affecting both cash and bank accounts. 5. Bills accepted by the proprietor of the business and drawn by supplies are called _________. payments are recorded. Every bill has ________ number of grace days .000 Self Assessment Questions 10: 1. Cash book may also contain cash column and bank column. Just as a ledger account. Cash column represents cash in the business and bank column represents cash kept in the bank. The receipts are on debit side and the payments are on credit side.000 12 aram 15 3 June KV & Co KV & Co KV & Chennai 5 months Nov 50.12 Cash Book Cash book is an important subsidiary book and a book of original entry. A simple cash book has two sides. cash Page No. Bill payable represent ________. For example.78. No.: 74 . it is important to note that in a few transactions. Bank column of cash book is a reflection of bank pass book.000 June Co & Co. contra entries are drawn. when bills payable account is credited ________ account is debited. Bill payable account shows _________ balance. 4. 4. Date of of To whom Where Term of Due Amount Date Re- Drawer Payee LF the the given payable the bill date Rs paid marks bill bill 1 2000 Ram & Co Ram & Ram Agra 3 months 2000 56. 3. Sept 07 10 2 June Sundaram Sundaram Sund Delhi 4 months Oct 72.Financial and Management Accounting Unit 4 Bills Payable Book of Sun Shine Co. 2.000 20 Co 23 Total 1. receipts side and payment side. On the right hand side. receipts are recorded and on the left hand side.. the words ‘To’ and ‘By’ are used. It is a record of cash receipts and cash payments made during a particular period.

2003 2003 July 1 To Balance b/d 4.350 15 By Yenki Ltd 10. Rs.550 33. Single column Cash Book of Rekha & Bros Date Receipts Cash Date Payments Cash Rs.000 8 By repairs 11 To Beta Co 2.000 31 By Narasimhan 9.000 30 To Balagopalan 5. debiting cash account and crediting bank account. on the receipt side.) (Rs..000 April 2 By Wages 6 To Sales 900 5 By Electricity 50 400 7 To Ashok Co 2.000 20 To Commission 4.000 14 By Purchases 7.800 17. bank and discount allowed columns are stated. cash.350 2. On the credit side.800 400 20 To Sales 500 30 By Balance 6. In cash account.500 July 1 By Rent of shop 500 4 To Sales 8.150 c/d 2. bank and discount received columns are mentioned. Similarly when cash is withdrawn from bank for office purpose. Cash Bank Cash Bank Date Receipts Date Payments (Rs. Cash book containing cash and bank columns is known as two column cash book.350 Page No. In the case of three column cash book.Financial and Management Accounting Unit 4 is deposited in the bank is a transaction in which cash goes out and bank is the receiver.000 28 By wages 2.500 13.000 20 By Stationery 800 28 To Sale of goods 10. cash.000 By balance c/d 13. it is recorded as payment and in bank account it is treated as a receipt.800 33. contra entry is drawn.: 75 .350 2.800 17.550 Two-Column Cash Book of Sampson Co.050 3 By Postage 50 10 To Interest on FD 2.) (Rs) (Rs) 2003 2003 Apr 5 To Balance b/d 1.

Balancing is not done for these columns for a simple reason to find out separately the discount allowed and received.400 3 By Agarwal 50 950 To Patel 10 6.000 22 By drawings 2.600 7. ‘C’ is mentioned against the entry.000 100 9. Page No.000 To Bank C 30 1.500 Note the following points from the above illustration: a) Discount column on the debit side represents discount allowed and on the credit side.000 15 By Cash C 3. it represents discount received.700 4. e) Dividend from X Co is received by cheque and the company should have remitted the dividend directly to the bank account of the businessman.000 To Neelima 15 3. d) Drawings represent the amount withdrawn from bank for business purposes. c) To indicate contra entry. 3.000 30 By Bank C 1. On 15th the transaction is cash withdrawn from bank Rs. f) The balance c/d is the closing balance for the month of January 2002 and this becomes opening balance for February.Financial and Management Accounting Unit 4 Three-Column Cash Book of Janardhan Works Discount Cash Bank Discount Cash Bank Date Receipts Date Payments Rs Rs Rs Rs Rs Rs 2002 2002 Jan 2 3. It is a receipt to the bank account and payment from cash account.000 31 By bal c/d 5. It is a payment from bank and it is receipt to business cash.500 To Dividend from X Co 2.000 To Cash C 31 31 By rent 1.550 To balance b/d 5 100 2. 2002. Similarly on 30th Cash is deposited to bank Rs.: 76 .100 13.1000.100 13.000.500 Jan 6 By wages 1. b) There are two contra entries each on 15th and 30th.500 50 9.

a separate book. Cash book and cash account are one and the same.: 77 . cartage.Financial and Management Accounting Unit 4 Self Assessment Questions 11: State True or False 1. All these expenses are more in number and very insignificant in value. a separate petty cashier is appointed. 2004. (T/F) 3. Bank columns of cash book indicates Bank transations made by business man. For instance. namely imprest system which is adopted in maintaining such petty cash book. known as petty cash book is maintained. at the beginning of a month. in the beginning of January. who obtains a definite sum of money at the beginning of a month and gives a statement of account at the end of the period to the chief cashier. (T/F) 6.12 (a) Petty Cash Book In large organizations. postage. To look after payment of such expenses. Trade discount allowed to customers or received from suppliers are not recorded in cash book. At the commencement of the next period. There is a distinct method. Cash book may be single column. Under this system. petty expenses like stationery.10000 is given to Page No. carriage. a definite sum of money is given by chief cashier to petty cashier for petty expenses. a sum of Rs. the petty cashier receives money equal to what is spent during the earlier period. 4. (T/F) 4. (T/F) 2. cash discount allowed to customers appears an ____ side of cash book. discount columns are independently totaled and not balanced. stamps. (T/F) 7. Cash discount received appears are ____ side of cash book. contra entry is an entry where both cash account and bank account are affected. 5. refreshments. daily wages etc are incurred day in and day out. two column or three column are. To record such payments.

1000 2nd . 20 Page No. Received a cheque for petty cash Rs. Purchased envelopes Rs.50 20th . 4.9000. Paid for stationery Rs90 15th . Then the chief cashier will reimburse Rs.9000 so that the opening balance for the month of February will be Rs. it may be found that the actual expenses are only Rs.50 30th . Petty cash book is maintained in case of petty organization. This is also called analytical petty cash book. 3. Wages paid Rs 100 . 25th . Paid for carriage Rs. The closing balance in case of imprest system of petty cash book always remains the same . Paid auto fare Rs. 2005 November 1st . By the end of January.10000. Paid bus fare to messengers Rs50 4th .: 78 . 2.70 10th . Imprest system of cash book is a system where the expenses paid are reimbursed.60 16th . Telephone calls paid Rs.10000. Postal stamps purchased Rs. Self Assessment Questions 12: State True or False 1.80 12th . Tips given to driver Rs. Illustration: Enter the following transactions in an analytical petty cash book.Financial and Management Accounting Unit 4 petty cashier assuming that such miscellaneous expenses may be to the order of Rs. Imprest system of cash book is also called analytical cash book.

Carr indicates Carriage expenses 5. Credit sales are entered in ____________________________ book. 4. Tra stands for Travelling expenses 4. Cash purchases are recorded on-_____________ side of cash book. 3.000 Note: 1. If drawings are made from bank for office purpose. 5.No.: 79 . what is the entry? Page No. 2. V. 3. P & S stands for printing and stationery Terminal Question 1. stands for Voucher No. Record a journal entry for drawings made for personal purposes of the businessman.Financial and Management Accounting Unit 4 Total Amt V Payment Ledger Recd CBF Date Particulars Analysis of payments LF No s A/cs Rs Rs Tra Post Carr P&S Wages Sundry Exps Rs Rs Rs Rs Rs Rs 1.000 Nov To Bank 1st By bus fare 50 50 2nd ByAutofare 70 70 4th By postal 80 80 10th By Stationery 90 90 12th By Carriage 60 60 15th By Envelopes 50 50 16th By Wages 100 100 20th By tips 50 50 25th By Telegram 20 ___ ___ 20 ____ _____ 30th 120 _80 80 By Balance C/d 570 140 100 50 Nov 30th 430 Dec 1st 1. CBF stands for cash book folio 2. Purchases book records___________________ purchases.

it is because of earnings made during the year. Complete the following matrix by entering either debit or credit in each cell. 50. Listed below a number of transactions. Identify which account to be debited and which account to be credited.Financial and Management Accounting Unit 4 6. as shown for the first transaction. increased from Rs. During the year. Is this statement necessarily true? 7. if the total owner’s equity of Beta Co. Item Increases Decreases Assets Liabilities Owner’s equity Income Expenses 8.: 80 . Transaction Debit Credit Paid to Gopal. a creditor Gopal account Cash account Paid rent in advance for the next year Purchased stationery Paid rent for the proprietor’s house Purchases machinery on part payment Charged customers for services provided Collected cash for the services provided Received a cheque from customer on account Paid dividend Paid wages for construction of business premises Paid interest charges on loan Electricity bill paid Salaries paid Page No.000 to Rs. 60000.

500 10.000 th 7 Sold goods for cash 44.000 th 30 Paid wages 5.Financial and Management Accounting Unit 4 9.000 th 11 Received cash from Ramanath 10. 2000.000 14 Sold goods to Ram 45. Record the following transactions in the subsidiary books of Ramachandra and Sons of Chennai and show the totals of each book for the month of January.000 th 25 Purchased computers on credit from Shivshankar 28.000 8 Received goods returned by Sen Gupta 5. Date Transaction Amount (Rs.) Jan 1 Bought goods from Das Gupta 20.500 9 Purchased goods from Shyam Sundar 16.000 7 Sold goods to Anand 13.000 11 Roy returned goods to us 3.500 3 Sold goods to Ramesh 30. Rs.000 10 Roy bought goods from us 25.000 29th Paid salaries 7.000 th 10 Paid cash Kamalnath 15.000 16 Bought goods from Naresh 20.000 Page No. Journalise the following transactions in the books of Harinam Singh for the month of April.000 22 Purchased furniture from Vibhu 10.000 20 Returned goods to Naresh 4.000 th 5 Bought goods from Karmesh 25.000 30 Sold goods on cash to Khadju 9.000 5 Bought goods from Suresh 15.: 81 .000 th 9 Sold goods to Ramesh 30.000 th 4 Purchased goods for cash 25.000 th 30 Withdrew cash for personal use from the office 10.000 nd 2 Purchased furniture for cash 10.000 2 Sold to Sen Gupta 12.000 30 Paid cash to Suresh 10. 2005. st 1 Harinam Singh started business with cash 60.000 th 18 Purchased goods from Sohan Kumar 12.

Enter the following transactions in the single column cash book of Gopichand. and paid it into bank 4. Goods purchased from Ravi Kumar 10000 10th .500 (Bank) 7. Sold goods for cash 4000 4th .Commenced business with cash 20000 nd 2 Bought goods for cash 5000 rd 3 .200 th 12 . Repairs paid 1.: 82 . cash paid to Rahim Bros to settle his account 10. July.Find out the closing balances.500 th 09 . for the month of July. Paid rent 600 th 30 .000 20th .000 th 18 .Paid to Ravi Kumar 7000 th 14 . Purchased furniture for office 4000 22nd . Opening balance b/d(Cash) 14. Paid salary 900 12. Dividend received from X Co. Withdrew for personal purpose 1000 31st . Cash sales 15.700 th 05 .000 th 04 . 2004 Rs.000 nd 22 . March. Rent for June month paid by cheque 2.000 Page No. Cash sales 8000 th 18 . Cash purchases 6.Financial and Management Accounting Unit 4 11.350 15th .000 rd 23 . st 01 .. Cash deposited into bank 5. Commission paid by cheque 2. 2003 1st . Paid wages 500 th 25 . Record the following transactions in two column cash book(Cash and Bank)in the books of Soft Silk Co. Received Commission 4000 30th . Deepak remitted to our bank account 20. 2004. Customer.

25.Financial and Management Accounting Unit 4 25th . Purchased goods for cash Rs. Page No. Drawings made from business cash for personal purposes 2.000 30th . cash and bank columns May 1st . Cash sales Rs.300.000 28th . 10000 out of which Rs.15.: 83 .400 13.000 th 27 . 7.000 11th . Dividend received by cheque Rs. deposited in the bank on 19th April. Drew from the bank for salary of the office staff Rs.5000 4th Invested further capital Rs. Enter the following transactions in the cash book with discount.40. Commission received by cheque Rs. deposited in the bank on 28th April 29th .650 13th . Cash withdrawn for personel use from bank 1. Rent paid Rs. electricity charges paid Rs.000. 30000 6th Collected from debtors of last year Rs. 2000. Office furniture purchased for cash Rs. Drew from the bank for office use Rs. 14000. 55. Deposited cash in the bank Rs.500 24th .000 14th .000 30th . Commission paid to our agent Rs. 2. Discount allowed to them Rs.5.10. Purchased stationery by cash 3. 1. Balance of cash in hand Rs. 400.500. Cash withdrawn from bank for office use 5.000 17th .000 18th .1. Sold goods for cash Rs.2. Drew cheque for personal use Rs.000.000 22nd . our creditor Rs. 5. 80000. 6th . 19th .300 14th . Collection from Atal Bihari Rs. Paid Ram Vilas. discount allowed by him Rs. bank overdraft at bank Rs.000 14th . Drew cheque for petty expenses Rs. 25th . 25. 10th .000.6000 was deposited in the bank. deposited in the bank on the same day.

00. cash 5. Creditor’s account. Credited. Yes 3.000 to Damodar & Bros.expenses) Self Assessment Questions 4: 1. False 3. Yes 4.000 (sales Tax paid ) iii. Self Assessment Questions 3: 1. Cash A/c the 5000 To BOB A/c 5000 (cash drawn for mis. False 2. Sales Tax A/c 40. debited 4. Journal 2. To Cash A/c 40. 6. cash 7.00.: 84 . 5. True 2. is insignificant.000 (Being advance received) ii. Because it is cash transaction and X Co. True 3. 5. Cash A/c Dr. i.Financial and Management Accounting Unit 4 Answer for Self Assessment Questions Self Assessment Questions 1: 1.000. True Page No. It is a book containing the entry of transactions 2. Business premises. Credited 2. It indicates the pages number in which the summary of respective account is found in ledger. Interest 3. True Self Assessment Questions 5: 1. Ledger Self Assessment Questions 2: 1.

Owner of the business who is the seller 3. Three 3. Debited. Debit 5. Credit 4. True 2. Customer. Liability 5. False 3. Business. Yes Self Assessment Questions 10: 1. True 2. Supplier’s account / Creditors account Page No. To Ganesh account (Being purchases made) Self Assessment Questions 6: 1.Financial and Management Accounting Unit 4 4. Credited 4. True Self Assessment Questions 7: 1.: 85 . True Self Assessment Questions 8: 1. Self Assessment Questions 9: 1. Purchases A/c Dr. Bills payable 2. Debtors 4. True 2. True 3. True 2. Customer / debtor 4. True 3.

: 86 . 6. Owner’s equity increases if profits are added or additional capital is brought in. Debit. True 3. Credit 3. Debit Credit Credit Debit Credit Debit Credit Debit Debit Credit Page No. True 4. To bank account. False 4. True. Credit 5. To Cash a/c 5. Drawing are A/c . The statement is true if additional capital is not brought in during the year. Sales Day 4. True 7. Self Assessment Questions 12: 1. True 2. 7. True Answer for Terminal Questions: Answer 1. Cash account Dr. True 3. True 6. Dr. Credit 2. False 2.Financial and Management Accounting Unit 4 Self Assessment Questions 11: 1.

16.000 Suresh Rs. 20. 55.000 Shyan sunda Rs.000 Page No. st 1 1 Cash a/c Debited Capital a/c Credited nd 2 2 Furniture a/c Debited Cash a/c Credited th 3 4 Goods a/c Debited Cash a/c Credited th 4 5 Purchases a/c Debited Kamalesh a/c Credited th 5 7 Cash a/c Debited Goods a/c Credited th 6 9 Ramesh a/c Debited Sales a/c Credited th 7 10 Kamel nath a/c Debited Cash a/c Credited th 8 11 Cash a/c Debited Kamanath a/c Credited th 9 18 Purchases a/c Debited Sohan Kuma Credited th 10 25 Computers a/c Debited Shiva Shankar Credited th 11 29 Salaries a/c Debited Cash a/c Credited th 12 30 Drawings a/c Debited Cash a/c Credited 13 30th Wages a/c Debited Cash a/c Credited 10. Total of Purchases Day book: Das Gupta Rs. Prepaid Expenses Cash Stationery Cash Drawings Cash Machinery Supplier Customers Services Cash Customers Cash Customers Dividend Cash Business Premises Cash Interest on loan Cash Electricity Cash Salaries Cash 9.000 Naresh Rs. 4.: 87 . 15.Financial and Management Accounting Unit 4 8.000 Rs.

Cash Book To Capital 20.000 Anand Rs. 8. 4.000 36.25.500 11.: 88 .000 By Goods 5000 To Sales 4.000 By wages 500 By rent 600 By drawings 1000 By salary 900 By bal c/d 17.500 Total sales Day book Sen Gupts Rs.500 Roy Rs.Financial and Management Accounting Unit 4 Purchase Returns Book Naresh Rs.500 Ramesh Rs.000 Rs.000 Ray Rs. 3000 Rs. 25.000 36. 30. 5. Page No.000 By Ravi Kumar 7000 To Sales 8.000 By office furniture 4000 To Commission 4. 12.000 Sales Returns Book Sen Gupta Rs. 1.000 Hint: Goods Purchased from Ravi Kumar is a credit purchase. 45. 13.000 Ram Rs.

200 By Rent 2500 To Cash (c) 5000 By dividend 4350 To Deepak 20.000 By bank ( c) 10.Financial and Management Accounting Unit 4 12. Cash Bank Cash Bank To Opening bal b/d 14.000 By bank ( c) 2.000 To Commission 2300 By cash ( c) 5.000 By electricity 1000 To Bank 5.000 By drawings 7000 To Dividend 500 By banks ( c) 40.300 To Sales 25.300 By salary 15.000 By bank (c) 5000 To Bank ( c ) 5000 By Rahim & 10.000 34700 32.500 To Cash ( c) 10.500 7000 By Purchases 6700 To Sales 15.: 89 .000 To Bal b/d 7.000 By rent 400 To Cash ( c) 40.000 By office furniture 2000 To Atal Bihari 40.000 By balance b/d 5000 To Capital 4000 6000 By purchase 55.000 By commission 5.000 Page No.000 To Debtors 2000 80.000 To Cash ( c) 2300 By petty expenses 1.000 To Sales 30.750 13.000 Bus By repairs 1000 By commission 2000 paid By cash ( c ) 5000 By drawings 2000 By stationery 3000 By drawings 1400 By bal c/o 7000 16750 34700 32.000 By Ram vilas 650 25.000 16. Cash Book Discount Cash Bank Discount Cash Bank Rs Rs Rs Rs Rs Rs To bal b/d 14.

300 Total 2000 2.: 90 .00.00.300 25.300 58800 Total 650 2.Financial and Management Accounting Unit 4 By balance c/d 59.800 Page No.300 58.