Recording of Transactions - I

The correct answer is (iii): Every transaction must be recorded with equal debits equal total credits.

Justification: Double entry accounting is based on the principle that for every debit there must be an equal and corresponding credit. This ensures that the accounting equation (Assets = Liabilities + Capital) always remains balanced. Option (i) is not always true because a debit to an asset can also be offset by a credit to another asset. Option (ii) is not always true because a debit to a liability can be offset by a credit to another liability or capital.

Transactions that INCREASE Capital:
1. Fresh capital introduced by the owner (additional investment).
2. Net Profit earned during the period (revenues exceed expenses).
3. Interest on capital credited to the capital account.

Transactions that DECREASE Capital:
1. Drawings — when the owner withdraws cash or goods for personal use.
2. Net Loss suffered during the period (expenses exceed revenues).
3. Interest on drawings charged to the capital account.

In summary:
$$\text{Closing Capital} = \text{Opening Capital} + \text{Fresh Capital} + \text{Net Profit} - \text{Drawings} - \text{Net Loss}$$

No, debit does not always mean increase and credit does not always mean decrease. The meaning of debit and credit depends on the nature of the account:

| Account Type | Debit | Credit |
|---|---|---|
| Assets | Increase | Decrease |
| Liabilities | Decrease | Increase |
| Capital | Decrease | Increase |
| Revenue/Income | Decrease | Increase |
| Expenses | Increase | Decrease |

For example:
- Debiting an asset account means an increase in assets.
- Debiting a liability account means a decrease in liabilities.
- Crediting a capital account means an increase in capital.
- Crediting an expense account means a decrease in expenses.

Therefore, debit and credit represent either increase or decrease depending on the type of account involved.

The correct answer is (ii):

| Category | Account Numbers |
|---|---|
| Assets | 1 (Building), 6 (Prepaid Godown Rent) |
| Liabilities | 4 (Credit Purchases — Creditors), 5 (Outstanding Electricity Bills) |
| Capital | 8 (Fresh Capital Introduced) |
| Revenue | 7 (Sales), 3 (Credit Sales) |
| Expense | 2 (Wages), 9 (Drawings), 10 (Discount Paid) |

Explanation of each item:
1. Building — Asset (fixed/tangible asset).
2. Wages — Expense (revenue expenditure).
3. Credit Sales — Revenue (income earned, though collected later).
4. Credit Purchases — Liability (creates creditors).
5. Outstanding Electricity Bills — Liability (expense due but unpaid).
6. Prepaid Godown Rent — Asset (expense paid in advance, benefit yet to be received).
7. Sales — Revenue.
8. Fresh Capital Introduced — Capital (increases owner's equity).
9. Drawings — Reduces Capital (treated as expense in classification).
10. Discount Paid — Expense.

Hence option (ii) correctly classifies: Assets = 1, 6; Liabilities = 4, 5; Capital = 8; Revenue = 7, 3; Expense = 2, 9, 10.

Accounts Affected: Cash Account and Capital Account.

Type of Accounts:
- Cash Account → Asset Account
- Capital Account → Capital Account

Analysis: Cash (asset) comes into the business → Debit Cash Account (asset increases). Capital (owner's equity) increases → Credit Capital Account.

Journal Entry:
$$\text{Cash A/c} \quad Dr. \quad 1{,}00{,}000$$
$$\quad \text{To Capital A/c} \quad 1{,}00{,}000$$
*(Being business commenced with cash)*

Accounts Affected: Purchases Account and Ramesh's Account.

Type of Accounts:
- Purchases Account → Expense Account
- Ramesh's Account → Liability Account (Creditor)

Analysis: Goods (purchases) come in → Debit Purchases Account (expense increases). Ramesh becomes a creditor → Credit Ramesh's Account (liability increases).

Journal Entry:
$$\text{Purchases A/c} \quad Dr. \quad 40{,}000$$
$$\quad \text{To Ramesh's A/c} \quad 40{,}000$$
*(Being goods purchased on credit from Ramesh)*

Accounts Affected: Cash Account and Sales Account.

Type of Accounts:
- Cash Account → Asset Account
- Sales Account → Revenue Account

Analysis: Cash comes in → Debit Cash Account (asset increases). Sales revenue earned → Credit Sales Account (revenue increases).

Journal Entry:
$$\text{Cash A/c} \quad Dr. \quad 30{,}000$$
$$\quad \text{To Sales A/c} \quad 30{,}000$$
*(Being goods sold for cash)*

Accounts Affected: Salary Account and Cash Account.

Type of Accounts:
- Salary Account → Expense Account
- Cash Account → Asset Account

Analysis: Salary expense incurred → Debit Salary Account (expense increases). Cash goes out → Credit Cash Account (asset decreases).

Journal Entry:
$$\text{Salary A/c} \quad Dr. \quad 3{,}000$$
$$\quad \text{To Cash A/c} \quad 3{,}000$$
*(Being salaries paid)*

Accounts Affected: Furniture Account and Cash Account.

Type of Accounts:
- Furniture Account → Asset Account
- Cash Account → Asset Account

Analysis: Furniture (asset) comes in → Debit Furniture Account (asset increases). Cash goes out → Credit Cash Account (asset decreases).

Journal Entry:
$$\text{Furniture A/c} \quad Dr. \quad 10{,}000$$
$$\quad \text{To Cash A/c} \quad 10{,}000$$
*(Being furniture purchased for cash)*

Correct Answer: (d) Record the page number of the ledger account.

The Ledger Folio (L.F.) column in the Journal is used to record the page number of the ledger account to which the journal entry has been posted. This helps in cross-referencing between the Journal and the Ledger.

Correct Answer: (d) Debit to debtors and Credit to fees income.

When services are sold on credit, the customer (debtor) owes money to the business — so Debtors Account is debited (asset increases). The revenue earned is credited to Fees Income Account (revenue increases). Hence the entry is:
$$\text{Debtors A/c} \quad Dr.$$
$$\quad \text{To Fees Income A/c}$$

Correct Answer: (b) Debit equipment for ₹10,00,000 and Credit cash ₹2,00,000 and creditors ₹8,00,000.

The total cost of equipment = ₹2,00,000 + ₹8,00,000 = ₹10,00,000. Equipment Account is debited for the full value. Cash Account is credited for ₹2,00,000 (paid immediately) and Creditors Account is credited for ₹8,00,000 (balance due in 30 days).
$$\text{Equipment A/c} \quad Dr. \quad 10{,}00{,}000$$
$$\quad \text{To Cash A/c} \quad 2{,}00{,}000$$
$$\quad \text{To Creditors A/c} \quad 8{,}00{,}000$$

Correct Answer: (b) Accounts to be debited listed first.

In a journal entry, by convention, the account(s) to be debited are always written first (on the left side), and the account(s) to be credited are written below them, slightly indented to the right, preceded by the word 'To'.

Correct Answer: (d) Total amount debited will equal total amount credited.

The fundamental principle of double entry book-keeping states that for every transaction, the total amount debited must equal the total amount credited. A transaction may involve more than two accounts (compound entry), so option (a) is not always true. Option (c) is also not always true as both accounts can increase (e.g., asset increases and liability increases).

Correct Answer: (c) Debit monthly bill and Credit cash.

When a monthly bill (expense) is paid in cash, the expense account (monthly bill) is debited because expenses increase, and Cash Account is credited because cash (asset) decreases.
$$\text{Monthly Bill A/c} \quad Dr.$$
$$\quad \text{To Cash A/c}$$

Correct Answer: (a) Debit salaries Credit cash.

Salary is an expense. When salaries are paid in cash, Salary Account is debited (expense increases) and Cash Account is credited (asset decreases).
$$\text{Salary A/c} \quad Dr.$$
$$\quad \text{To Cash A/c}$$

The account to be debited is Rent Account.

Reason: Rent is an expense. When an expense increases, the concerned expense account is debited. Cash/Bank decreases (credit). Hence:
$$\text{Rent A/c} \quad Dr. \quad 8{,}000$$
$$\quad \text{To Bank A/c} \quad 8{,}000$$

The account to be credited is Debtors Account.

Reason: When cash is collected from debtors, the debtor's obligation is discharged — Debtors Account (asset) decreases, so it is credited. Cash Account (asset) increases, so it is debited.
$$\text{Cash A/c} \quad Dr. \quad 35{,}000$$
$$\quad \text{To Debtors A/c} \quad 35{,}000$$

The account to be credited is Cash Account.

Reason: Office stationery is purchased for cash. Cash (asset) goes out → Credit Cash Account. Stationery/Office Expenses Account is debited.
$$\text{Stationery A/c} \quad Dr. \quad 18{,}000$$
$$\quad \text{To Cash A/c} \quad 18{,}000$$

The account to be debited is Machine Account.

Reason: Machine is an asset. When an asset increases, the account is debited. Payment is made by cheque, so Bank Account is credited.
$$\text{Machine A/c} \quad Dr. \quad 1{,}70{,}000$$
$$\quad \text{To Bank A/c} \quad 1{,}70{,}000$$

The account to be debited is Creditors Account.

Reason: Paying off a creditor reduces the liability. Decrease in liability → Debit the Creditors Account. Bank Account (asset) decreases → Credit Bank Account.
$$\text{Creditors A/c} \quad Dr. \quad 70{,}000$$
$$\quad \text{To Bank A/c} \quad 70{,}000$$

The account to be credited is Office Stationery Account.

Reason: When damaged stationery is returned, the stationery (asset/expense) decreases → Credit Office Stationery Account. Cash received → Debit Cash Account.
$$\text{Cash A/c} \quad Dr. \quad 50{,}000$$
$$\quad \text{To Office Stationery A/c} \quad 50{,}000$$

The account to be debited is Debtors Account.

Reason: Services are provided on credit, so the client owes money — Debtors Account (asset) increases → Debit Debtors Account. Revenue (Fees/Service Income) increases → Credit Fees Income Account.
$$\text{Debtors A/c} \quad Dr. \quad 65{,}000$$
$$\quad \text{To Fees Income A/c} \quad 65{,}000$$

Correct Answer: (iv) All of the above.

A voucher is a documentary evidence prepared for all types of transactions — cash received, cash paid, credit sales, credit purchases, etc. It serves as the basis for recording entries in the books of account.

Correct Answer: (i) Documentary evidence.

A voucher is prepared on the basis of source documents (documentary evidence) such as invoices, receipts, bills, cash memos, etc. These documents provide proof of the transaction.

Correct Answer: (i) Two.

Every account has two sides — the left side called the Debit (Dr.) side and the right side called the Credit (Cr.) side. This is the basis of the double entry system.

Correct Answer: (ii) Machine account.

When a machine is purchased for cash, Machine Account (asset) increases → Debit Machine Account. Cash Account (asset) decreases → Credit Cash Account. Note: Purchases Account is used only for goods meant for resale, not for fixed assets.

Correct Answer: (iii) Capital = Assets − Liabilities.

The fundamental accounting equation is:
$$\text{Assets} = \text{Liabilities} + \text{Capital}$$
Rearranging:
$$\text{Capital} = \text{Assets} - \text{Liabilities}$$
This shows that capital is the residual interest of the owner after all liabilities are paid.

Correct Answer: (iv) Cash account.

When the proprietor withdraws cash for personal use, Cash Account (asset) decreases → Credit Cash Account. Drawings Account is debited (as drawings reduce capital). The journal entry is:
$$\text{Drawings A/c} \quad Dr.$$
$$\quad \text{To Cash A/c}$$

Correct Answer: (iv) Credit the increase in capital.

According to the rules of debit and credit:
- Capital increases → Credit (correct — option iv)
- Assets decrease → Credit (option i is correct in wording but option iv is the stated correct answer per the answer key)
- Expenses increase → Debit (not credit, so option ii is wrong)
- Revenue increases → Credit (not debit, so option iii is wrong)

The correct statement is (iv) Credit the increase in capital, as capital is a liability-type account and increases are recorded on the credit side.

Correct Answer: (iv) Ledger.

The Ledger is the principal book of accounts in which all accounts (personal, real, and nominal) are maintained. It is also called the 'Book of Final Entry' or 'Book of Secondary Entry'. Each account has a separate page (folio) in the ledger.

Correct Answer: (iii) Journalising.

The process of recording transactions in the Journal (book of original entry) in a chronological order is called Journalising. Posting refers to the process of transferring entries from the Journal to the Ledger. Casting refers to the totalling of columns.

The three fundamental steps in the accounting process are:

Step 1 — Recording (Journalising): Every business transaction is first identified from source documents and recorded in the Journal (book of original entry) in chronological order. This step is called journalising.

Step 2 — Classifying (Posting to Ledger): The recorded transactions are then transferred (posted) to the respective accounts in the Ledger. This groups all transactions of a similar nature together under one account head.

Step 3 — Summarising (Preparing Financial Statements): The ledger accounts are balanced and the balances are used to prepare the Trial Balance, Trading and Profit & Loss Account, and Balance Sheet. This step summarises the financial results and position of the business.

Source documents are important to accounting for the following reasons:

1. Basis of Recording: Source documents (invoices, receipts, cash memos, vouchers, etc.) provide the original evidence of a transaction and form the basis for recording entries in the books of account.

2. Legal Evidence: They serve as legal proof of a transaction in case of any dispute between parties.

3. Authenticity and Accuracy: They ensure that only genuine transactions are recorded, preventing fraud and errors.

4. Audit Trail: They help auditors verify the correctness of accounting records by tracing entries back to the original documents.

5. Chronological Record: They provide details such as date, amount, parties involved, and nature of transaction, which are essential for proper recording.

Examples of source documents: Cash Memo, Invoice, Debit Note, Credit Note, Pay-in-slip, Cheque, etc.

A transaction should be first recorded in the Journal and then posted to the Ledger.

Reasons:
1. The Journal is the book of original (first) entry where transactions are recorded in chronological order as they occur.
2. The Journal provides a complete picture of each transaction in one place — both the debit and credit aspects along with a narration.
3. Recording in the Journal first reduces the risk of errors and omissions because the complete double entry is made before posting.
4. The Journal serves as an audit trail — it is easier to trace and verify transactions.
5. The Ledger is the book of second (final) entry where information from the Journal is classified account-wise through the process of posting.

If entries were made directly in the Ledger, it would be difficult to maintain a chronological record and to detect errors.

Debits are listed first in journal entries.

By convention:
- The account(s) to be debited are written first on the left side, starting from the margin.
- The account(s) to be credited are written below the debited accounts and are indented (written slightly to the right), preceded by the word 'To'.

Example:
$$\text{Cash A/c} \quad Dr. \quad 1{,}00{,}000$$
$$\quad \text{To Capital A/c} \quad 1{,}00{,}000$$
*(Being business commenced with cash)*

So, credits are indented (not debits). This format makes it easy to distinguish between the debit and credit aspects of a transaction.

Some accounting systems are called double entry accounting systems (not 'double accounting systems') because they are based on the principle that every transaction has two aspects — a debit aspect and a credit aspect — and both aspects are recorded simultaneously.

Reasons for the name:
1. Every transaction affects at least two accounts — one is debited and another is credited.
2. The total of debits always equals the total of credits for every transaction.
3. This dual recording ensures that the accounting equation (Assets = Liabilities + Capital) always remains balanced.
4. It provides a complete and accurate record of all transactions.

For example, when goods are purchased for cash:
- Purchases Account is debited (one entry)
- Cash Account is credited (second entry)

This dual recording is why it is called the double entry system.

A specimen (T-format) of a Ledger Account is shown below:

Name of the Account

| Dr. | | | | Cr. | | | |
|---|---|---|---|---|---|---|---|
| Date | Particulars | J.F. | Amount (₹) | Date | Particulars | J.F. | Amount (₹) |
| 2017 | | | | 2017 | | | |
| Jan. 1 | To Capital A/c | 1 | 1,00,000 | Jan. 5 | By Purchases A/c | 2 | 40,000 |
| | | | | Jan. 31 | By Balance c/d | | 60,000 |
| | Total | | 1,00,000 | | Total | | 1,00,000 |

Explanation of columns:
- Date: Date of the transaction.
- Particulars: Name of the corresponding account.
- J.F. (Journal Folio): Page number of the Journal from which the entry is posted.
- Amount: The monetary value of the transaction.

The rules of debit and credit are the same for both Liability and Capital accounts because both represent claims against the assets of the business — they are sources of funds for the business.

Rules (same for both):
- Increase → Credit (right side)
- Decrease → Debit (left side)

Reason:
1. From the business entity's perspective, both liabilities (owed to outsiders) and capital (owed to the owner) are obligations of the business.
2. The accounting equation is: $\text{Assets} = \text{Liabilities} + \text{Capital}$. Both liabilities and capital appear on the right side (credit side) of this equation.
3. When either liability or capital increases, it means the business has received more funds — this is recorded as a credit.
4. When either decreases, funds are being returned — this is recorded as a debit.

Thus, both are treated identically in terms of debit and credit rules.

The Journal Folio (J.F.) number serves the following purposes:

1. Cross-referencing: It creates a link between the Journal entry and the corresponding Ledger account, making it easy to trace any entry from the Journal to the Ledger and vice versa.

2. Verification: It helps auditors and accountants verify whether all journal entries have been correctly posted to the ledger.

3. Avoiding Duplication: Once a J.F. number is entered in the ledger, it indicates that the entry has already been posted, preventing double posting of the same entry.

4. Error Detection: If a J.F. number is missing in the ledger, it signals that the posting has not been done, helping detect omissions.

5. Audit Trail: It maintains a complete audit trail, enabling easy tracking of transactions from source documents → Journal → Ledger.

(a) Increase Revenue → Credit
Revenue accounts have a credit balance. When revenue increases, the revenue account is credited.
$$\text{Example: Cash A/c Dr. | To Sales A/c (Cr.)}$$

(b) Decrease in Expense → Credit
Expense accounts have a debit balance. When an expense decreases (e.g., expense reversed or reduced), the expense account is credited.
$$\text{Example: Cash A/c Dr. | To Expense A/c (Cr.)}$$

(c) Record Drawings → Debit Drawings Account
Drawings reduce the owner's capital. Drawings Account is debited and Cash/Goods Account is credited.
$$\text{Drawings A/c Dr. | To Cash A/c (Cr.)}$$

(d) Record Fresh Capital Introduced → Credit Capital Account
When the owner introduces fresh capital, Capital Account (owner's equity) increases → Credit Capital Account. Cash/Asset Account increases → Debit.
$$\text{Cash A/c Dr. | To Capital A/c (Cr.)}$$

Decrease in an Asset:
A decrease in an asset is recorded as a Credit.

Reason: Assets normally have a debit balance. When an asset decreases, it is recorded on the credit (right) side of the asset account.

Example: When cash is paid out, Cash Account (asset) decreases → Credit Cash Account.
$$\text{Expense A/c Dr. | To Cash A/c (Cr.)} \quad \leftarrow \text{Cash decreases (Credit)}$$

Decrease in a Liability:
A decrease in a liability is recorded as a Debit.

Reason: Liabilities normally have a credit balance. When a liability decreases (e.g., a creditor is paid off), it is recorded on the debit (left) side of the liability account.

Example: When a creditor is paid, Creditors Account (liability) decreases → Debit Creditors Account.
$$\text{Creditors A/c (Dr.)} \quad | \quad \text{To Cash A/c (Cr.)} \quad \leftarrow \text{Liability decreases (Debit)}$$

Events Recorded in Accounting Systems:

Accounting records business transactions — events that have a monetary value and affect the financial position of the business. These include:
1. External Transactions: Transactions between the business and outside parties, e.g., purchase of goods, sale of goods, payment of expenses, receipt of income.
2. Internal Transactions: Events within the business that affect accounts, e.g., depreciation, outstanding expenses, prepaid expenses, goods used for personal purpose.
3. Financial Events: Events that change assets, liabilities, or capital, e.g., introduction of capital, drawings, loans taken or repaid.

Not all events are recorded — only those that can be measured in monetary terms and affect the financial position.

Importance of Source Documents:

Source documents are the original records (invoices, cash memos, receipts, vouchers, cheques, debit/credit notes) that provide evidence of a transaction. Their importance:

1. Basis of Recording: Every journal entry is made on the basis of a source document. Without it, no entry should be recorded.
2. Legal Evidence: Source documents serve as legal proof in case of disputes between buyer and seller.
3. Authenticity: They ensure that only genuine transactions are recorded, preventing fraud.
4. Audit Verification: Auditors use source documents to verify the accuracy and completeness of accounting records.
5. Chronological Reference: They provide date, amount, parties, and nature of transaction — all essential details for recording.
6. Internal Control: They help management control business operations by providing a paper trail of all transactions.

Examples of Source Documents:
- Cash Memo (for cash sales/purchases)
- Invoice/Bill (for credit transactions)
- Receipt (for cash received)
- Cheque (for bank payments)
- Debit Note (for goods returned by buyer)
- Credit Note (for goods returned to seller)
- Pay-in-slip (for bank deposits)

Debits and Credits — Meaning:
- The left side of an account is called the Debit (Dr.) side.
- The right side of an account is called the Credit (Cr.) side.

Rules of Debit and Credit:

| Type of Account | Debit (Dr.) | Credit (Cr.) |
|---|---|---|
| Asset | Increase (+) | Decrease (−) |
| Liability | Decrease (−) | Increase (+) |
| Capital | Decrease (−) | Increase (+) |
| Revenue/Income | Decrease (−) | Increase (+) |
| Expense | Increase (+) | Decrease (−) |

Steps to Analyse a Transaction Using Debits and Credits:

Step 1: Identify the accounts affected by the transaction.
Step 2: Determine the type of each account (asset, liability, capital, revenue, expense).
Step 3: Determine whether each account increases or decreases.
Step 4: Apply the rules — debit the account that increases (for assets/expenses) or decreases (for liabilities/capital/revenue); credit accordingly.

Illustration:

*Transaction:* Purchased goods for cash ₹20,000.
- Accounts affected: Purchases Account and Cash Account.
- Purchases → Expense → Increases → Debit Purchases A/c.
- Cash → Asset → Decreases → Credit Cash A/c.

$$\text{Purchases A/c} \quad Dr. \quad 20{,}000$$
$$\quad \text{To Cash A/c} \quad 20{,}000$$

*Transaction:* Sold goods on credit ₹15,000.
- Accounts: Debtors Account (Asset ↑ → Debit) and Sales Account (Revenue ↑ → Credit).

$$\text{Debtors A/c} \quad Dr. \quad 15{,}000$$
$$\quad \text{To Sales A/c} \quad 15{,}000$$

This systematic analysis ensures that the accounting equation always remains balanced.

Meaning of an Account:
An account is a summarised record of all transactions relating to a particular item (person, asset, liability, income, or expense). It is maintained in the Ledger.

Format of an Account (T-Format):

Every account has two sides:
- Left side = Debit (Dr.) side
- Right side = Credit (Cr.) side

| Dr. | Name of Account | Cr. |
|---|---|---|
| Date \| Particulars \| J.F. \| Amount | | Date \| Particulars \| J.F. \| Amount |

Types of Accounts:
1. Personal Accounts — Accounts of persons, firms, companies (e.g., Ramesh A/c, Bank A/c).
2. Real Accounts — Accounts of tangible and intangible assets (e.g., Cash A/c, Building A/c, Goodwill A/c).
3. Nominal Accounts — Accounts of expenses, losses, incomes, and gains (e.g., Salary A/c, Sales A/c).

How Accounts Record Transaction Effects:

1. When a transaction occurs, it is first journalised.
2. The journal entry identifies which accounts are debited and which are credited.
3. The amounts are then posted to the respective accounts in the ledger.
4. Each account accumulates all debits on the left and all credits on the right.
5. At the end of the period, the account is balanced — the difference between total debits and total credits gives the balance of the account.
6. These balances are used to prepare the Trial Balance and Financial Statements.

Example: Cash Account records all cash receipts (debit side) and all cash payments (credit side). The balance shows cash in hand.

Thus, accounts provide a classified, summarised record of the financial effects of all transactions on each item of the business.

Meaning of Journal:
A Journal is the book of original (first) entry in which all business transactions are recorded in chronological order (date-wise) as they occur. The process of recording transactions in the journal is called Journalising. Each entry in the journal is called a Journal Entry and consists of:
- Date of transaction
- Name of accounts debited and credited
- Journal Folio (L.F.) number
- Amount (Dr. and Cr.)
- Narration (brief explanation)

Specimen of Journal:

| Date | Particulars | L.F. | Dr. Amount (₹) | Cr. Amount (₹) |
|---|---|---|---|---|
| 2017 | | | | |
| Jan. 1 | Cash A/c   Dr. | | 1,00,000 | |
| |   To Capital A/c | | | 1,00,000 |
| | *(Being business commenced with cash)* | | | |
| Jan. 3 | Purchases A/c   Dr. | | 40,000 | |
| |   To Cash A/c | | | 40,000 |
| | *(Being goods purchased for cash)* | | | |
| Jan. 5 | Furniture A/c   Dr. | | 10,000 | |
| |   To Cash A/c | | | 10,000 |
| | *(Being furniture purchased for cash)* | | | |
| Jan. 8 | Ramesh A/c   Dr. | | 25,000 | |
| |   To Sales A/c | | | 25,000 |
| | *(Being goods sold to Ramesh on credit)* | | | |
| Jan. 10 | Salary A/c   Dr. | | 5,000 | |
| |   To Cash A/c | | | 5,000 |
| | *(Being salary paid to staff)* | | | |
| | Total | | 1,80,000 | 1,80,000 |

Distinction between Source Documents and Vouchers:

| Basis | Source Documents | Vouchers |
|---|---|---|
| Meaning | Original documents that provide evidence of a business transaction. | A document prepared internally by the business on the basis of source documents to authorise recording of a transaction. |
| Origin | Received from or given to outside parties (external). | Prepared internally within the business (internal). |
| Purpose | To provide proof/evidence of a transaction. | To authorise the recording of a transaction in the books of account. |
| Examples | Invoice, Cash Memo, Receipt, Cheque, Debit Note, Credit Note. | Debit Voucher, Credit Voucher, Transfer Voucher. |
| Preparation | Prepared by the party to the transaction (buyer/seller). | Prepared by the accountant/cashier of the business. |
| Basis | They are the primary evidence. | They are prepared on the basis of source documents. |
| Legal Status | Have higher legal value as they come from external parties. | Have lower legal value as they are internal documents. |

In summary: Source documents are the original external evidence of transactions, while vouchers are internally prepared documents that authorise the recording of those transactions in the accounting books.

Statement: The Accounting Equation $\text{Assets} = \text{Liabilities} + \text{Capital}$ always remains balanced, regardless of the nature of the transaction.

Justification:
Every business transaction affects at least two accounts, and the dual effect always keeps the equation balanced. The equation can be affected in the following ways:
1. Both sides increase equally.
2. Both sides decrease equally.
3. One side increases and decreases by the same amount (no net change).

Illustration:

Let us take the following transactions:

(a) Started business with cash ₹2,00,000:
- Cash (Asset) ↑ by ₹2,00,000; Capital ↑ by ₹2,00,000
$$\text{Assets} = 2{,}00{,}000 = \text{Capital} = 2{,}00{,}000 \quad \checkmark$$

(b) Purchased goods for cash ₹40,000:
- Goods (Asset) ↑ by ₹40,000; Cash (Asset) ↓ by ₹40,000
$$\text{Assets} = 1{,}60{,}000 + 40{,}000 = 2{,}00{,}000 = \text{Capital} = 2{,}00{,}000 \quad \checkmark$$

(c) Purchased furniture on credit ₹7,000:
- Furniture (Asset) ↑ by ₹7,000; Creditors (Liability) ↑ by ₹7,000
$$\text{Assets} = 2{,}07{,}000 = \text{Liabilities} (7{,}000) + \text{Capital} (2{,}00{,}000) = 2{,}07{,}000 \quad \checkmark$$

(d) Sold goods (cost ₹10,000) for ₹12,000:
- Cash (Asset) ↑ by ₹12,000; Goods (Asset) ↓ by ₹10,000; Capital ↑ by ₹2,000 (profit)
$$\text{Assets} = 2{,}09{,}000 = \text{Liabilities} (7{,}000) + \text{Capital} (2{,}02{,}000) = 2{,}09{,}000 \quad \checkmark$$

In every case, the equation remains balanced. Hence, the accounting equation remains intact under all circumstances.

Double Entry Mechanism:

The double entry system is based on the principle that every business transaction has two aspects — a debit aspect and a credit aspect — and both must be recorded simultaneously. For every debit, there is an equal and corresponding credit.

Basis: The accounting equation $\text{Assets} = \text{Liabilities} + \text{Capital}$ must always remain balanced.

Rules of Double Entry:

| Account Type | Debit | Credit |
|---|---|---|
| Asset | Increase | Decrease |
| Liability | Decrease | Increase |
| Capital | Decrease | Increase |
| Revenue | Decrease | Increase |
| Expense | Increase | Decrease |

Illustrative Example:

Suppose Ravi starts a business with the following transactions:

(1) Introduced cash ₹1,00,000 as capital:
- Cash (Asset) increases → Debit Cash A/c
- Capital increases → Credit Capital A/c
$$\text{Cash A/c} \quad Dr. \quad 1{,}00{,}000$$
$$\quad \text{To Capital A/c} \quad 1{,}00{,}000$$

(2) Purchased goods for cash ₹30,000:
- Purchases (Expense) increases → Debit Purchases A/c
- Cash (Asset) decreases → Credit Cash A/c
$$\text{Purchases A/c} \quad Dr. \quad 30{,}000$$
$$\quad \text{To Cash A/c} \quad 30{,}000$$

(3) Sold goods on credit to Mohan ₹20,000:
- Mohan/Debtors (Asset) increases → Debit Mohan's A/c
- Sales (Revenue) increases → Credit Sales A/c
$$\text{Mohan's A/c} \quad Dr. \quad 20{,}000$$
$$\quad \text{To Sales A/c} \quad 20{,}000$$

(4) Paid rent ₹2,000:
- Rent (Expense) increases → Debit Rent A/c
- Cash (Asset) decreases → Credit Cash A/c
$$\text{Rent A/c} \quad Dr. \quad 2{,}000$$
$$\quad \text{To Cash A/c} \quad 2{,}000$$

In each transaction, the total debit equals the total credit, maintaining the balance of the accounting equation. This is the essence of the double entry mechanism.

Accounting Equation: Assets = Liabilities + Capital

| Transaction | Cash (₹) | Goods (₹) | Debtors (₹) | Furniture (₹) | Total Assets (₹) | Creditors (₹) | Capital (₹) | Total L+C (₹) |
|---|---|---|---|---|---|---|---|---|
| (a) Started with cash | +2,00,000 | — | — | — | 2,00,000 | — | +2,00,000 | 2,00,000 |
| (b) Purchased goods for cash | −40,000 | +40,000 | — | — | 2,00,000 | — | — | 2,00,000 |
| (c) Sold goods (cost ₹10,000) for ₹12,000 | +12,000 | −10,000 | — | — | 2,02,000 | — | +2,000 (profit) | 2,02,000 |
| (d) Bought furniture on credit | — | — | — | +7,000 | 2,09,000 | +7,000 | — | 2,09,000 |
| Final Balance | 1,72,000 | 30,000 | — | 7,000 | 2,09,000 | 7,000 | 2,02,000 | 2,09,000 |

Note on (c): Bhanu is a debtor but cash is received → Cash increases by ₹12,000; Goods decrease by ₹10,000; Profit of ₹2,000 increases Capital.

Verification:
$$\text{Assets} = \text{Cash } (1{,}60{,}000) + \text{Goods } (30{,}000) + \text{Debtors } (12{,}000) + \text{Furniture } (7{,}000) = ₹2{,}09{,}000$$

*Wait — re-reading (c): goods sold to Bhanu (debtor) for ₹12,000. So Debtors = ₹12,000, Cash does not increase.*

Corrected Table:

| Transaction | Cash (₹) | Goods (₹) | Debtors (₹) | Furniture (₹) | Assets (₹) | Creditors (₹) | Capital (₹) | L+C (₹) |
|---|---|---|---|---|---|---|---|---|
| (a) | +2,00,000 | | | | 2,00,000 | | +2,00,000 | 2,00,000 |
| (b) | −40,000 | +40,000 | | | 2,00,000 | | | 2,00,000 |
| (c) | | −10,000 | +12,000 | | 2,02,000 | | +2,000 | 2,02,000 |
| (d) | | | | +7,000 | 2,09,000 | +7,000 | | 2,09,000 |
| Balance | 1,60,000 | 30,000 | 12,000 | 7,000 | 2,09,000 | 7,000 | 2,02,000 | 2,09,000 |

$$\boxed{\text{Assets} = ₹1{,}60{,}000 + ₹30{,}000 + ₹12{,}000 + ₹7{,}000 = ₹2{,}09{,}000}$$
$$\boxed{\text{Liabilities + Capital} = ₹7{,}000 + ₹2{,}02{,}000 = ₹2{,}09{,}000}$$

Accounting Equation: Assets = Liabilities + Capital

| Transaction | Cash (₹) | Furniture (₹) | Goods (₹) | Assets (₹) | Creditors (₹) | Capital (₹) | L+C (₹) |
|---|---|---|---|---|---|---|---|
| (a) Started with cash | +2,50,000 | | | 2,50,000 | | +2,50,000 | 2,50,000 |
| (b) Purchased furniture for cash | −35,000 | +35,000 | | 2,50,000 | | | 2,50,000 |
| (c) Paid commission | −2,000 | | | 2,48,000 | | −2,000 | 2,48,000 |
| (d) Purchased goods on credit | | | +40,000 | 2,88,000 | +40,000 | | 2,88,000 |
| (e) Sold goods (cost ₹20,000) for ₹26,000 | +26,000 | | −20,000 | 2,94,000 | | +6,000 | 2,94,000 |
| Balance | 2,39,000 | 35,000 | 20,000 | 2,94,000 | 40,000 | 2,54,000 | 2,94,000 |

Verification:
$$\text{Assets} = ₹2{,}39{,}000 + ₹35{,}000 + ₹20{,}000 = ₹2{,}94{,}000$$
$$\text{Liabilities + Capital} = ₹40{,}000 + ₹2{,}54{,}000 = ₹2{,}94{,}000 \quad \checkmark$$

Accounting Equation: Assets = Liabilities + Capital

| Transaction | Cash (₹) | Goods (₹) | Debtors (₹) | Furniture (₹) | Assets (₹) | Creditors (₹) | Capital (₹) | L+C (₹) |
|---|---|---|---|---|---|---|---|---|
| (a) Started with cash | +1,75,000 | | | | 1,75,000 | | +1,75,000 | 1,75,000 |
| (b) Purchased goods from Rohit (credit) | | +50,000 | | | 2,25,000 | +50,000 | | 2,25,000 |
| (c) Sold to Manish on credit (cost ₹17,500) for ₹20,000 | | −17,500 | +20,000 | | 2,27,500 | | +2,500 | 2,27,500 |
| (d) Purchased furniture for cash | −10,000 | | | +10,000 | 2,27,500 | | | 2,27,500 |
| (e) Paid Rohit ₹48,500 (discount ₹1,500) | −48,500 | | | | 1,79,000 | −50,000 | +1,500 | 1,79,000 |
| (f) Cash received from Manish | +20,000 | | −20,000 | | 1,79,000 | | | 1,79,000 |
| (g) Rent paid | −1,000 | | | | 1,78,000 | | −1,000 | 1,78,000 |
| (h) Cash withdrew for personal use | −3,000 | | | | 1,75,000 | | −3,000 | 1,75,000 |
| Balance | 1,32,500 | 32,500 | — | 10,000 | 1,75,000 | — | 1,75,000 | 1,75,000 |

Verification:
$$\text{Assets} = ₹1{,}32{,}500 + ₹32{,}500 + ₹10{,}000 = ₹1{,}75{,}000$$
$$\text{Capital} = ₹1{,}75{,}000 \quad \checkmark$$

*(Note: Discount received from Rohit = ₹50,000 − ₹48,500 = ₹1,500 increases capital.)*

Accounting Equation: Assets = Liabilities + Capital

| Transaction | Cash (₹) | Goods (₹) | Machine (₹) | Assets (₹) | Creditors (₹) | Commission Advance (₹) | Capital (₹) | L+C (₹) |
|---|---|---|---|---|---|---|---|---|
| (a) Commenced with cash | +1,50,000 | | | 1,50,000 | | | +1,50,000 | 1,50,000 |
| (b) Machinery on credit | | | +40,000 | 1,90,000 | +40,000 | | | 1,90,000 |
| (c) Goods for cash | −20,000 | +20,000 | | 1,90,000 | | | | 1,90,000 |
| (d) Car for personal use (drawings) | −80,000 | | | 1,10,000 | | | −80,000 | 1,10,000 |
| (e) Paid creditors ₹38,000 (discount ₹2,000) | −38,000 | | | 72,000 | −40,000 | | +2,000 | 72,000 |
| (f) Sold goods (cost ₹5,000) for ₹4,500 (loss ₹500) | +4,500 | −5,000 | | 71,500 | | | −500 | 71,500 |
| (g) Rent paid | −1,000 | | | 70,500 | | | −1,000 | 70,500 |
| (h) Commission received in advance | +2,000 | | | 72,500 | | +2,000 | | 72,500 |
| Balance | 17,500 | 15,000 | 40,000 | 72,500 | — | 2,000 | 70,500 | 72,500 |

Verification:
$$\text{Assets} = ₹17{,}500 + ₹15{,}000 + ₹40{,}000 = ₹72{,}500$$
$$\text{Liabilities + Capital} = ₹2{,}000 + ₹70{,}500 = ₹72{,}500 \quad \checkmark$$

Accounting Equation: Assets = Liabilities + Capital

| Transaction | Cash (₹) | Goods (₹) | Prepaid Insurance (₹) | Assets (₹) | Outstanding Salary (₹) | Capital (₹) | L+C (₹) |
|---|---|---|---|---|---|---|---|
| (a) Started with cash | +1,20,000 | | | 1,20,000 | | +1,20,000 | 1,20,000 |
| (b) Purchased goods for cash | −10,000 | +10,000 | | 1,20,000 | | | 1,20,000 |
| (c) Rent received | +5,000 | | | 1,25,000 | | +5,000 | 1,25,000 |
| (d) Salary outstanding | | | | 1,25,000 | +2,000 | −2,000 | 1,25,000 |
| (e) Prepaid Insurance (cash paid) | −1,000 | | +1,000 | 1,25,000 | | | 1,25,000 |
| (f) Interest received | +700 | | | 1,25,700 | | +700 | 1,25,700 |
| (g) Sold goods (cost ₹5,000) for ₹7,000 | +7,000 | −5,000 | | 1,27,700 | | +2,000 | 1,27,700 |
| (h) Goods destroyed by fire | | −500 | | 1,27,200 | | −500 | 1,27,200 |
| Balance | 1,21,700 | 4,500 | 1,000 | 1,27,200 | 2,000 | 1,25,200 | 1,27,200 |

Note: The answer given in the book shows Cash = ₹1,21,200. Let us recheck (e): Prepaid insurance — cash paid ₹1,000 reduces cash and creates prepaid insurance (asset). Cash = 1,20,000 − 10,000 + 5,000 − 1,000 + 700 + 7,000 = 1,21,700. The book answer shows ₹1,21,200 which may account for a slight variation. Our calculation gives ₹1,21,700.

Verification:
$$\text{Assets} = ₹1{,}21{,}700 + ₹4{,}500 + ₹1{,}000 = ₹1{,}27{,}200$$
$$\text{Liabilities + Capital} = ₹2{,}000 + ₹1{,}25{,}200 = ₹1{,}27{,}200 \quad \checkmark$$

Accounting Equation: Assets = Liabilities + Capital

| Transaction | Cash (₹) | Goods (₹) | Building (₹) | Debtors/Ashu (₹) | Assets (₹) | Creditors/Himani (₹) | Outstanding Rent (₹) | Advance Rent (₹) | Capital (₹) | L+C (₹) |
|---|---|---|---|---|---|---|---|---|---|---|
| (a) Started (cash+goods) | +5,00,000 | +1,00,000 | | | 6,00,000 | | | | +6,00,000 | 6,00,000 |
| (b) Building for cash | −2,00,000 | | +2,00,000 | | 6,00,000 | | | | | 6,00,000 |
| (c) Goods from Himani (credit) | | +50,000 | | | 6,50,000 | +50,000 | | | | 6,50,000 |
| (d) Sold to Ashu (cost ₹25,000) ₹36,000 | | −25,000 | | +36,000 | 6,61,000 | | | | +11,000 | 6,61,000 |
| (e) Insurance paid | −3,000 | | | | 6,58,000 | | | | −3,000 | 6,58,000 |
| (f) Rent outstanding | | | | | 6,58,000 | | +5,000 | | −5,000 | 6,58,000 |
| (g) Depreciation on building | | | −8,000 | | 6,50,000 | | | | −8,000 | 6,50,000 |
| (h) Cash withdrawn (drawings) | −20,000 | | | | 6,30,000 | | | | −20,000 | 6,30,000 |
| (i) Rent received in advance | +5,000 | | | | 6,35,000 | | | +5,000 | | 6,35,000 |
| (j) Cash paid to Himani ₹20,000 | −20,000 | | | | 6,15,000 | −20,000 | | | | 6,15,000 |
| (k) Cash received from Ashu ₹30,000 | +30,000 | | | −30,000 | 6,15,000 | | | | | 6,15,000 |
| Balance | 2,92,000 | 1,25,000 | 1,92,000 | 6,000 | 6,15,000 | 30,000 | 5,000 | 5,000 | 5,75,000 | 6,15,000 |

Verification:
$$\text{Assets} = ₹2{,}92{,}000 + ₹1{,}25{,}000 + ₹1{,}92{,}000 + ₹6{,}000 = ₹6{,}15{,}000$$
$$\text{Liabilities + Capital} = ₹30{,}000 + ₹5{,}000 + ₹5{,}000 + ₹5{,}75{,}000 = ₹6{,}15{,}000 \quad \checkmark$$

Accounting Equation: Assets = Liabilities + Capital

| Transaction | Cash (₹) | Shares (₹) | Goods (₹) | Bank (₹) | Assets (₹) | Creditors/Ragani (₹) | Capital (₹) | L+C (₹) |
|---|---|---|---|---|---|---|---|---|
| (a) Started with cash | +1,20,000 | | | | 1,20,000 | | +1,20,000 | 1,20,000 |
| (b) Rent received | +10,000 | | | | 1,30,000 | | +10,000 | 1,30,000 |
| (c) Invested in shares | −50,000 | +50,000 | | | 1,30,000 | | | 1,30,000 |
| (d) Dividend received | +5,000 | | | | 1,35,000 | | +5,000 | 1,35,000 |
| (e) Goods on credit from Ragani | | | +35,000 | | 1,70,000 | +35,000 | | 1,70,000 |
| (f) Household expenses (drawings) | −7,000 | | | | 1,63,000 | | −7,000 | 1,63,000 |
| (g) Sold goods (cost ₹10,000) for ₹14,000 | +14,000 | | −10,000 | | 1,67,000 | | +4,000 | 1,67,000 |
| (h) Cash paid to Ragani | −35,000 | | | | 1,32,000 | −35,000 | | 1,32,000 |
| (i) Deposited into bank | −20,000 | | | +20,000 | 1,32,000 | | | 1,32,000 |
| Balance | 37,000 | 50,000 | 25,000 | 20,000 | 1,32,000 | — | 1,32,000 | 1,32,000 |

Verification:
$$\text{Assets} = ₹37{,}000 + ₹50{,}000 + ₹25{,}000 + ₹20{,}000 = ₹1{,}32{,}000$$
$$\text{Capital} = ₹1{,}32{,}000 \quad \checkmark$$

Accounting Equation: Assets = Liabilities + Capital

Let us track each account systematically:

Starting Position (a):
- Cash = ₹2,30,000; Goods = ₹1,00,000; Building = ₹2,00,000
- Capital = ₹5,30,000

| Transaction | Cash | Goods | Building | Debtors/Varun | Prepaid Ins. | Assets | Creditors | O/S Rent | Capital | L+C |
|---|---|---|---|---|---|---|---|---|---|---|
| (a) Start | 2,30,000 | 1,00,000 | 2,00,000 | | | 5,30,000 | | | 5,30,000 | 5,30,000 |
| (b) Goods for cash | −50,000 | +50,000 | | | | 5,30,000 | | | | 5,30,000 |
| (c) Sold (cost ₹20,000) for ₹35,000 | +35,000 | −20,000 | | | | 5,45,000 | | | +15,000 | 5,45,000 |
| (d) Goods from Rahul (credit) | | +55,000 | | | | 6,00,000 | +55,000 | | | 6,00,000 |
| (e) Sold to Varun (cost ₹52,000) ₹60,000 | | −52,000 | | +60,000 | | 6,08,000 | | | +8,000 | 6,08,000 |
| (f) Paid Rahul ₹53,000 (discount ₹2,000) | −53,000 | | | | | 5,55,000 | −55,000 | | +2,000 | 5,55,000 |
| (g) Salary paid | −20,000 | | | | | 5,35,000 | | | −20,000 | 5,35,000 |
| (h) Received from Varun ₹59,000 (discount ₹1,000) | +59,000 | | | −60,000 | | 5,34,000 | | | −1,000 | 5,34,000 |
| (i) Rent outstanding | | | | | | 5,34,000 | | +3,000 | −3,000 | 5,34,000 |
| (j) Prepaid Insurance | −2,000 | | | | +2,000 | 5,34,000 | | | | 5,34,000 |
| (k) Commission received | +13,000 | | | | | 5,47,000 | | | +13,000 | 5,47,000 |
| (l) Drawings | −20,000 | | | | | 5,27,000 | | | −20,000 | 5,27,000 |
| (m) Depreciation on building | | | −10,000 | | | 5,17,000 | | | −10,000 | 5,17,000 |
| (n) Fresh capital | +50,000 | | | | | 5,67,000 | | | +50,000 | 5,67,000 |
| (o) Goods from Rakhi (credit) | | +10,000 | | | | 5,77,000 | +10,000 | | | 5,77,000 |
| Balance | 2,42,000 | 1,43,000 | 1,90,000 | — | 2,000 | 5,77,000 | 10,000 | 3,000 | 5,64,000 | 5,77,000 |

Verification:
$$\text{Assets} = ₹2{,}42{,}000 + ₹1{,}43{,}000 + ₹1{,}90{,}000 + ₹2{,}000 = ₹5{,}77{,}000$$
$$\text{Liabilities + Capital} = ₹10{,}000 + ₹3{,}000 + ₹5{,}64{,}000 = ₹5{,}77{,}000 \quad \checkmark$$

Accounting Equation: Assets = Liabilities + Capital

| Transaction | Cash (₹) | Goods (₹) | Furniture (₹) | Debtors/Parul (₹) | Assets (₹) | Creditors/R.K. (₹) | Capital (₹) | L+C (₹) |
|---|---|---|---|---|---|---|---|---|
| (a) Started with cash | +1,25,000 | | | | 1,25,000 | | +1,25,000 | 1,25,000 |
| (b) Goods for cash | −50,000 | +50,000 | | | 1,25,000 | | | 1,25,000 |
| (c) Furniture from R.K. (credit) | | | +10,000 | | 1,35,000 | +10,000 | | 1,35,000 |
| (d) Sold to Parul (cost ₹7,000) ₹9,000 | | −7,000 | | +9,000 | 1,37,000 | | +2,000 | 1,37,000 |
| (e) Cartage paid | −100 | | | | 1,36,900 | | −100 | 1,36,900 |
| (f) Paid R.K. ₹9,700 (discount ₹300) | −9,700 | | | | 1,27,200 | −10,000 | +300 | 1,27,200 |
| (g) Cash sales (cost ₹10,000) ₹12,000 | +12,000 | −10,000 | | | 1,29,200 | | +2,000 | 1,29,200 |
| (h) Rent received | +4,000 | | | | 1,33,200 | | +4,000 | 1,33,200 |
| (i) Cash withdrew (drawings) | −3,000 | | | | 1,30,200 | | −3,000 | 1,30,200 |
| Balance | 78,200 | 33,000 | 10,000 | 9,000 | 1,30,200 | — | 1,30,200 | 1,30,200 |

Verification:
$$\text{Assets} = ₹78{,}200 + ₹33{,}000 + ₹10{,}000 + ₹9{,}000 = ₹1{,}30{,}200$$
$$\text{Capital} = ₹1{,}30{,}200 \quad \checkmark$$

Step 1: Analysis of Transactions

(a) Cash ↑ ₹4,00,000; Office Equipment ↑ ₹1,50,000; Capital ↑ ₹5,50,000

(b) Land ↑ ₹1,50,000; Building ↑ ₹3,50,000; Cash ↓ ₹2,00,000; Long-term Note Payable ↑ ₹3,00,000

(c) Office Supplies ↑ ₹12,000; Creditors ↑ ₹12,000

(d) Motor Car ↑ ₹90,000; Capital ↑ ₹90,000

(e) Office Equipment ↑ ₹30,000; Creditors ↑ ₹30,000

(f) Salary Expense ↑ ₹7,500; Cash ↓ ₹7,500; Capital ↓ ₹7,500

(g) Cash ↑ ₹30,000; Capital ↑ ₹30,000 (revenue)

(h) Utilities Expense ↑ ₹4,000; Cash ↓ ₹4,000; Capital ↓ ₹4,000

(i) Creditors ↓ ₹12,000; Cash ↓ ₹12,000

(j) New Office Equipment ↑ ₹1,00,000; Old Office Equipment ↓ ₹7,000; Cash ↓ ₹93,000
*(Total new equipment = ₹93,000 cash + ₹7,000 trade-in = ₹1,00,000)*

(k) Client (Debtors) ↑ ₹26,000; Capital ↑ ₹26,000 (revenue)

(l) Cash ↑ ₹19,000; Client/Debtors ↓ ₹19,000

(m) Withdrawals ↑ ₹20,000; Cash ↓ ₹20,000; Capital ↓ ₹20,000

Step 2: T-Accounts

---
Cash Account

| Dr. | | Cr. | |
|---|---|---|---|
| (a) Capital | 4,00,000 | (b) Land & Building | 2,00,000 |
| (g) Service Revenue | 30,000 | (f) Salary | 7,500 |
| (l) Client | 19,000 | (h) Utilities | 4,000 |
| | | (i) Creditors | 12,000 |
| | | (j) Equipment | 93,000 |
| | | (m) Withdrawals | 20,000 |
| Balance c/d | 1,12,500 | | |

---
Client Account (Debtors)

| Dr. | | Cr. | |
|---|---|---|---|
| (k) Service Revenue | 26,000 | (l) Cash | 19,000 |
| | | Balance c/d | 7,000 |

---
Office Supplies Account

| Dr. | | Cr. | |
|---|---|---|---|
| (c) Creditors | 12,000 | Balance c/d | 12,000 |

---
Motor Car Account

| Dr. | | Cr. | |
|---|---|---|---|
| (d) Capital | 90,000 | Balance c/d | 90,000 |

---
Building Account

| Dr. | | Cr. | |
|---|---|---|---|
| (b) Cash/Note Payable | 3,50,000 | Balance c/d | 3,50,000 |

---
Land Account

| Dr. | | Cr. | |
|---|---|---|---|
| (b) Cash/Note Payable | 1,50,000 | Balance c/d | 1,50,000 |

---
Office Equipment Account

| Dr. | | Cr. | |
|---|---|---|---|
| (a) Capital | 1,50,000 | (j) Traded in | 7,000 |
| (e) Creditors | 30,000 | Balance c/d | 2,73,000 |
| (j) New Equipment | 1,00,000 | | |

---
Long-term Note Payable Account

| Dr. | | Cr. | |
|---|---|---|---|
| Balance c/d | 3,00,000 | (b) Land & Building | 3,00,000 |

---
Creditors Account

| Dr. | | Cr. | |
|---|---|---|---|
| (i) Cash | 12,000 | (c) Office Supplies | 12,000 |
| Balance c/d | 30,000 | (e) Office Equipment | 30,000 |

---
Capital Account

| Dr. | | Cr. | |
|---|---|---|---|
| (f) Salary Expense | 7,500 | (a) Cash + Equipment | 5,50,000 |
| (h) Utilities | 4,000 | (d) Motor Car | 90,000 |
| (m) Withdrawals | 20,000 | (g) Service Revenue | 30,000 |
| Balance c/d | 6,64,500 | (k) Service Revenue | 26,000 |

---
Withdrawals Account

| Dr. | | Cr. | |
|---|---|---|---|
| (m) Cash | 20,000 | Balance c/d | 20,000 |

---
Salary Expense Account

| Dr. | | Cr. | |
|---|---|---|---|
| (f) Cash | 7,500 | Balance c/d | 7,500 |

---
Utilities Expense Account

| Dr. | | Cr. | |
|---|---|---|---|
| (h) Cash | 4,000 | Balance c/d | 4,000 |

---
Accounting Equation Check:
$$\text{Assets} = \text{Cash } (1{,}12{,}500) + \text{Client } (7{,}000) + \text{Supplies } (12{,}000) + \text{Motor Car } (90{,}000) + \text{Building } (3{,}50{,}000) + \text{Land } (1{,}50{,}000) + \text{Equipment } (2{,}73{,}000) = ₹9{,}94{,}500$$
$$\text{Liabilities} = \text{Note Payable } (3{,}00{,}000) + \text{Creditors } (30{,}000) = ₹3{,}30{,}000$$
$$\text{Capital} = ₹6{,}64{,}500$$
$$\text{L + C} = ₹3{,}30{,}000 + ₹6{,}64{,}500 = ₹9{,}94{,}500 \quad \checkmark$$

Journal of Himanshu

| Date | Particulars | L.F. | Dr. (₹) | Cr. (₹) |
|---|---|---|---|---|
| 2017 | | | | |
| Dec. 01 | Cash A/c   Dr. | | 75,000 | |
| |   To Capital A/c | | | 75,000 |
| | *(Being business commenced with cash)* | | | |
| Dec. 07 | Purchases A/c   Dr. | | 10,000 | |
| |   To Cash A/c | | | 10,000 |
| | *(Being goods purchased for cash)* | | | |
| Dec. 09 | Swati A/c   Dr. | | 5,000 | |
| |   To Sales A/c | | | 5,000 |
| | *(Being goods sold to Swati on credit)* | | | |
| Dec. 12 | Furniture A/c   Dr. | | 3,000 | |
| |   To Cash A/c | | | 3,000 |
| | *(Being furniture purchased for cash)* | | | |
| Dec. 18 | Cash A/c   Dr. | | 4,000 | |
| | Discount Allowed A/c   Dr. | | 1,000 | |
| |   To Swati A/c | | | 5,000 |
| | *(Being cash received from Swati in full settlement; discount allowed ₹1,000)* | | | |
| Dec. 25 | Rent A/c   Dr. | | 1,000 | |
| |   To Cash A/c | | | 1,000 |
| | *(Being rent paid)* | | | |
| Dec. 30 | Salary A/c   Dr. | | 1,500 | |
| |   To Cash A/c | | | 1,500 |
| | *(Being salary paid)* | | | |
| | Total | | 95,500 | 95,500 |

Journal of Mudit

| Date | Particulars | L.F. | Dr. (₹) | Cr. (₹) |
|---|---|---|---|---|
| 2017 | | | | |
| Jan. 01 | Cash A/c   Dr. | | 1,75,000 | |
| | Building A/c   Dr. | | 1,00,000 | |
| |   To Capital A/c | | | 2,75,000 |
| | *(Being business commenced with cash and building)* | | | |
| Jan. 02 | Purchases A/c   Dr. | | 75,000 | |
| |   To Cash A/c | | | 75,000 |
| | *(Being goods purchased for cash)* | | | |
| Jan. 03 | Ramesh A/c   Dr. | | 30,000 | |
| |   To Sales A/c | | | 30,000 |
| | *(Being goods sold to Ramesh on credit)* | | | |
| Jan. 04 | Wages A/c   Dr. | | 500 | |
| |   To Cash A/c | | | 500 |
| | *(Being wages paid)* | | | |
| Jan. 06 | Cash A/c   Dr. | | 10,000 | |
| |   To Sales A/c | | | 10,000 |
| | *(Being goods sold for cash)* | | | |
| Jan. 10 | Trade Expenses A/c   Dr. | | 700 | |
| |   To Cash A/c | | | 700 |
| | *(Being trade expenses paid)* | | | |
| Jan. 12 | Cash A/c   Dr. | | 29,500 | |
| | Discount Allowed A/c   Dr. | | 500 | |
| |   To Ramesh A/c | | | 30,000 |
| | *(Being cash received from Ramesh in full settlement; discount allowed ₹500)* | | | |
| Jan. 14 | Purchases A/c   Dr. | | 27,000 | |
| |   To Sudhir A/c | | | 27,000 |
| | *(Being goods purchased from Sudhir on credit)* | | | |
| Jan. 18 | Cartage A/c   Dr. | | 1,000 | |
| |   To Cash A/c | | | 1,000 |
| | *(Being cartage paid)* | | | |
| Jan. 20 | Drawings A/c   Dr. | | 5,000 | |
| |   To Cash A/c | | | 5,000 |
| | *(Being cash withdrawn for personal use)* | | | |
| Jan. 22 | Drawings A/c   Dr. | | 2,000 | |
| |   To Purchases A/c | | | 2,000 |
| | *(Being goods used for household purposes)* | | | |
| Jan. 25 | Sudhir A/c   Dr. | | 27,000 | |
| |   To Cash A/c | | | 26,700 |
| |   To Discount Received A/c | | | 300 |
| | *(Being cash paid to Sudhir in full settlement; discount received ₹300)* | | | |
| | Total | | 3,83,200 | 3,83,200 |

Journal of Hema

| Date | Particulars | L.F. | Dr. (₹) | Cr. (₹) |
|---|---|---|---|---|
| 2017 | | | | |
| Dec. 01 | Cash A/c   Dr. | | 1,00,000 | |
| |   To Capital A/c | | | 1,00,000 |
| | *(Being business commenced with cash)* | | | |
| Dec. 02 | Bank A/c   Dr. | | 30,000 | |
| |   To Cash A/c | | | 30,000 |
| | *(Being bank account opened with SBI)* | | | |
| Dec. 04 | Purchases A/c   Dr. | | 20,000 | |
| |   To Ashu A/c | | | 20,000 |
| | *(Being goods purchased from Ashu on credit)* | | | |
| Dec. 06 | Cash A/c   Dr. | | 15,000 | |
| |   To Sales A/c | | | 15,000 |
| | *(Being goods sold to Rahul for cash)* | | | |
| Dec. 10 | Purchases A/c   Dr. | | 40,000 | |
| |   To Cash A/c | | | 40,000 |
| | *(Being goods purchased from Tara for cash)* | | | |
| Dec. 13 | Suman A/c   Dr. | | 20,000 | |
| |   To Sales A/c | | | 20,000 |
| | *(Being goods sold to Suman on credit)* | | | |
| Dec. 16 | Bank A/c   Dr. | | 19,500 | |
| | Discount Allowed A/c   Dr. | | 500 | |
| |   To Suman A/c | | | 20,000 |
| | *(Being cheque received from Suman in full settlement; discount allowed ₹500; cheque deposited same day)* | | | |
| Dec. 20 | Ashu A/c   Dr. | | 10,000 | |
| |   To Bank A/c | | | 10,000 |
| | *(Being cheque given to Ashu on account)* | | | |
| Dec. 22 | Rent A/c   Dr. | | 2,000 | |
| |   To Bank A/c | | | 2,000 |
| | *(Being rent paid by cheque)* | | | |
| Dec. 23 | Bank A/c   Dr. | | 16,000 | |
| |   To Cash A/c | | | 16,000 |
| | *(Being cash deposited into bank)* | | | |
| Dec. 25 | Machine A/c   Dr. | | 10,000 | |
| |   To Parigya A/c | | | 10,000 |
| | *(Being machine purchased from Parigya on credit)* | | | |
| Dec. 26 | Trade Expenses A/c   Dr. | | 2,000 | |
| |   To Cash A/c | | | 2,000 |
| | *(Being trade expenses paid)* | | | |
| Dec. 28 | Parigya A/c   Dr. | | 10,000 | |
| |   To Bank A/c | | | 10,000 |
| | *(Being cheque issued to Parigya in full payment)* | | | |
| Dec. 29 | Telephone Expenses A/c   Dr. | | 1,200 | |
| |   To Bank A/c | | | 1,200 |
| | *(Being telephone expenses paid by cheque)* | | | |
| Dec. 31 | Salary A/c   Dr. | | 4,500 | |
| |   To Cash A/c | | | 4,500 |
| | *(Being salary paid)* | | | |
| | Total | | 2,70,700 | 2,70,700 |

Journal of Harpreet Bros.

Calculations:
- (c) Depreciation = $\frac{10}{100} \times 30{,}000 \times \frac{2}{12} = ₹500$
- (d) Interest on Capital = $\frac{6}{100} \times 1{,}50{,}000 \times \frac{9}{12} = ₹6{,}750$
- (e) Cash received from Rahul = $60 \text{ paise} \times 2{,}000 = ₹1{,}200$; Bad Debt = ₹2,000 − ₹1,200 = ₹800

| Date | Particulars | L.F. | Dr. (₹) | Cr. (₹) |
|---|---|---|---|---|
| (a) | Bad Debts A/c   Dr. | | 1,000 | |
| |   To Rohit A/c | | | 1,000 |
| | *(Being amount due from Rohit written off as bad debt)* | | | |
| (b) | Drawings A/c   Dr. | | 2,000 | |
| |   To Purchases A/c | | | 2,000 |
| | *(Being goods used by proprietor for personal use)* | | | |
| (c) | Depreciation A/c   Dr. | | 500 | |
| |   To Machine A/c | | | 500 |
| | *(Being depreciation charged @ 10% p.a. for 2 months on machine costing ₹30,000)* | | | |
| (d) | Interest on Capital A/c   Dr. | | 6,750 | |
| |   To Capital A/c | | | 6,750 |
| | *(Being interest on capital ₹1,50,000 @ 6% p.a. for 9 months)* | | | |
| (e) | Cash A/c   Dr. | | 1,200 | |
| | Bad Debts A/c   Dr. | | 800 | |
| |   To Rahul A/c | | | 2,000 |
| | *(Being Rahul became insolvent; received 60 paise per rupee as final dividend; balance written off as bad debt)* | | | |
| | Total | | 12,250 | 12,250 |

Calculations:
- (c) Interest on Capital = $\frac{7}{100} \times 70{,}000 = ₹4{,}900$ (assuming for 1 year)
- (h) Cash received from Sudhir = $0.45 \times 3{,}000 = ₹1{,}350$; Bad Debt = ₹3,000 − ₹1,350 = ₹1,650

Journal

| Date | Particulars | L.F. | Dr. (₹) | Cr. (₹) |
|---|---|---|---|---|
| (a) | Machine A/c   Dr. | | 500 | |
| |   To Cash A/c | | | 500 |
| | *(Being installation charges of machine paid in cash — capitalised as part of machine cost)* | | | |
| (b) | Charity A/c   Dr. | | 2,000 | |
| |   To Purchases A/c | | | 2,000 |
| | *(Being goods given as charity)* | | | |
| (c) | Interest on Capital A/c   Dr. | | 4,900 | |
| |   To Capital A/c | | | 4,900 |
| | *(Being interest on capital ₹70,000 @ 7% p.a.)* | | | |
| (d) | Cash A/c   Dr. | | 1,200 | |
| |   To Bad Debts Recovered A/c | | | 1,200 |
| | *(Being bad debt written off last year now recovered)* | | | |
| (e) | Loss by Fire A/c   Dr. | | 2,000 | |
| |   To Purchases A/c | | | 2,000 |
| | *(Being goods destroyed by fire)* | | | |
| (f) | Rent A/c   Dr. | | 1,000 | |
| |   To Outstanding Rent A/c | | | 1,000 |
| | *(Being rent outstanding/accrued)* | | | |
| (g) | Capital A/c   Dr. | | 900 | |
| |   To Interest on Drawings A/c | | | 900 |
| | *(Being interest charged on drawings)* | | | |
| (h) | Cash A/c   Dr. | | 1,350 | |
| | Bad Debts A/c   Dr. | | 1,650 | |
| |   To Sudhir Kumar A/c | | | 3,000 |
| | *(Being Sudhir Kumar paid 45 paise per rupee as compensation; balance written off as bad debt)* | | | |
| (i) | Cash A/c   Dr. | | 7,000 | |
| |   To Commission Received in Advance A/c | | | 7,000 |
| | *(Being commission received in advance)* | | | |
| | Total | | 22,500 | 22,500 |

JOURNAL

| Date | Particulars | L.F. | Dr. (₹) | Cr. (₹) |
|---|---|---|---|---|
| Nov. 01 | Cash A/c   Dr. | | 1,50,000 | |
| | Purchases A/c   Dr. | | 50,000 | |
| |   To Capital A/c | | | 2,00,000 |
| | *(Being business commenced with cash and goods)* | | | |
| Nov. 03 | Purchases A/c   Dr. | | 30,000 | |
| |   To Harish A/c | | | 30,000 |
| | *(Being goods purchased from Harish on credit)* | | | |
| Nov. 05 | Cash A/c   Dr. | | 12,000 | |
| |   To Sales A/c | | | 12,000 |
| | *(Being goods sold for cash)* | | | |
| Nov. 08 | Furniture A/c   Dr. | | 5,000 | |
| |   To Cash A/c | | | 5,000 |
| | *(Being furniture purchased for cash)* | | | |
| Nov. 10 | Harish A/c   Dr. | | 15,000 | |
| |   To Cash A/c | | | 15,000 |
| | *(Being cash paid to Harish on account)* | | | |
| Nov. 13 | Sundry Expenses A/c   Dr. | | 200 | |
| |   To Cash A/c | | | 200 |
| | *(Being sundry expenses paid)* | | | |
| Nov. 15 | Cash A/c   Dr. | | 15,000 | |
| |   To Sales A/c | | | 15,000 |
| | *(Being goods sold for cash)* | | | |
| Nov. 18 | Bank A/c   Dr. | | 5,000 | |
| |   To Cash A/c | | | 5,000 |
| | *(Being cash deposited into bank)* | | | |
| Nov. 20 | Drawings A/c   Dr. | | 1,000 | |
| |   To Cash A/c | | | 1,000 |
| | *(Being cash drawn for personal use)* | | | |
| Nov. 22 | Harish A/c   Dr. | | 15,000 | |
| |   To Cash A/c | | | 14,700 |
| |   To Discount Received A/c | | | 300 |
| | *(Being cash paid to Harish in full settlement; discount received ₹300)* | | | |
| Nov. 25 | Nitesh A/c   Dr. | | 7,000 | |
| |   To Sales A/c | | | 7,000 |
| | *(Being goods sold to Nitesh on credit)* | | | |
| Nov. 26 | Cartage A/c   Dr. | | 200 | |
| |   To Cash A/c | | | 200 |
| | *(Being cartage paid)* | | | |
| Nov. 27 | Rent A/c   Dr. | | 1,500 | |
| |   To Cash A/c | | | 1,500 |
| | *(Being rent paid)* | | | |
| Nov. 29 | Cash A/c   Dr. | | 6,800 | |
| | Discount Allowed A/c   Dr. | | 200 | |
| |   To Nitesh A/c | | | 7,000 |
| | *(Being cash received from Nitesh in full settlement; discount allowed ₹200)* | | | |
| Nov. 30 | Salary A/c   Dr. | | 3,000 | |
| |   To Cash A/c | | | 3,000 |
| | *(Being salary paid)* | | | |
| | Total | | 3,16,900 | 3,16,900 |

---
LEDGER

Cash Account

| Dr. | | | | Cr. | | | |
|---|---|---|---|---|---|---|---|
| Date | Particulars | J.F. | Amount (₹) | Date | Particulars | J.F. | Amount (₹) |
| Nov. 01 | To Capital A/c | | 1,50,000 | Nov. 08 | By Furniture A/c | | 5,000 |
| Nov. 05 | To Sales A/c | | 12,000 | Nov. 10 | By Harish A/c | | 15,000 |
| Nov. 15 | To Sales A/c | | 15,000 | Nov. 13 | By Sundry Expenses A/c | | 200 |
| Nov. 29 | To Nitesh A/c | | 6,800 | Nov. 18 | By Bank A/c | | 5,000 |
| | | | | Nov. 20 | By Drawings A/c | | 1,000 |
| | | | | Nov. 22 | By Harish A/c | | 14,700 |
| | | | | Nov. 26 | By Cartage A/c | | 200 |
| | | | | Nov. 27 | By Rent A/c | | 1,500 |
| | | | | Nov. 30 | By Salary A/c | | 3,000 |
| | | | | Nov. 30 | By Balance c/d | | 1,38,200 |
| | Total | | 1,83,800 | | Total | | 1,83,800 |

Capital Account

| Dr. | | | | Cr. | | | |
|---|---|---|---|---|---|---|---|
| Nov. 30 | To Balance c/d | | 2,00,000 | Nov. 01 | By Cash A/c | | 1,50,000 |
| | | | | Nov. 01 | By Purchases A/c | | 50,000 |
| | Total | | 2,00,000 | | Total | | 2,00,000 |

Purchases Account

| Dr. | | | | Cr. | | | |
|---|---|---|---|---|---|---|---|
| Nov. 01 | To Capital A/c | | 50,000 | Nov. 30 | By Balance c/d | | 80,000 |
| Nov. 03 | To Harish A/c | | 30,000 | | | | |
| | Total | | 80,000 | | Total | | 80,000 |

Harish Account

| Dr. | | | | Cr. | | | |
|---|---|---|---|---|---|---|---|
| Nov. 10 | To Cash A/c | | 15,000 | Nov. 03 | By Purchases A/c | | 30,000 |
| Nov. 22 | To Cash A/c | | 14,700 | | | | |
| Nov. 22 | To Discount Received A/c | | 300 | | | | |
| | Total | | 30,000 | | Total | | 30,000 |

Sales Account

| Dr. | | | | Cr. | | | |
|---|---|---|---|---|---|---|---|
| Nov. 30 | To Balance c/d | | 34,000 | Nov. 05 | By Cash A/c | | 12,000 |
| | | | | Nov. 15 | By Cash A/c | | 15,000 |
| | | | | Nov. 25 | By Nitesh A/c | | 7,000 |
| | Total | | 34,000 | | Total | | 34,000 |

Furniture Account

| Dr. | | | | Cr. | | | |
|---|---|---|---|---|---|---|---|
| Nov. 08 | To Cash A/c | | 5,000 | Nov. 30 | By Balance c/d | | 5,000 |

Bank Account

| Dr. | | | | Cr. | | | |
|---|---|---|---|---|---|---|---|
| Nov. 18 | To Cash A/c | | 5,000 | Nov. 30 | By Balance c/d | | 5,000 |

Drawings Account

| Dr. | | | | Cr. | | | |
|---|---|---|---|---|---|---|---|
| Nov. 20 | To Cash A/c | | 1,000 | Nov. 30 | By Balance c/d | | 1,000 |

Discount Received Account

| Dr. | | | | Cr. | | | |
|---|---|---|---|---|---|---|---|
| Nov. 30 | To Balance c/d | | 300 | Nov. 22 | By Harish A/c | | 300 |

Nitesh Account

| Dr. | | | | Cr. | | | |
|---|---|---|---|---|---|---|---|
| Nov. 25 | To Sales A/c | | 7,000 | Nov. 29 | By Cash A/c | | 6,800 |
| | | | | Nov. 29 | By Discount Allowed A/c | | 200 |
| | Total | | 7,000 | | Total | | 7,000 |

Discount Allowed Account

| Dr. | | | | Cr. | | | |
|---|---|---|---|---|---|---|---|
| Nov. 29 | To Nitesh A/c | | 200 | Nov. 30 | By Balance c/d | | 200 |

Sundry Expenses, Cartage, Rent, Salary Accounts — each debited with respective amounts and balanced.

JOURNAL of M/s Goel Brothers

| Date | Particulars | L.F. | Dr. (₹) | Cr. (₹) |
|---|---|---|---|---|
| Jan. 01 | Cash A/c   Dr. | | 1,65,000 | |
| |   To Capital A/c | | | 1,65,000 |
| | *(Being business commenced with cash)* | | | |
| Jan. 02 | Bank A/c   Dr. | | 80,000 | |
| |   To Cash A/c | | | 80,000 |
| | *(Being bank account opened in PNB)* | | | |
| Jan. 04 | Purchases A/c   Dr. | | 22,000 | |
| |   To Tara A/c | | | 22,000 |
| | *(Being goods purchased from Tara on credit)* | | | |
| Jan. 05 | Purchases A/c   Dr. | | 30,000 | |
| |   To Cash A/c | | | 30,000 |
| | *(Being goods purchased for cash)* | | | |
| Jan. 08 | Naman A/c   Dr. | | 12,000 | |
| |   To Sales A/c | | | 12,000 |
| | *(Being goods sold to Naman on credit)* | | | |
| Jan. 10 | Tara A/c   Dr. | | 22,000 | |
| |   To Cash A/c | | | 22,000 |
| | *(Being cash paid to Tara in full)* | | | |
| Jan. 15 | Cash A/c   Dr. | | 11,700 | |
| | Discount Allowed A/c   Dr. | | 300 | |
| |   To Naman A/c | | | 12,000 |
| | *(Being cash received from Naman; discount allowed ₹300)* | | | |
| Jan. 16 | Wages A/c   Dr. | | 200 | |
| |   To Cash A/c | | | 200 |
| | *(Being wages paid)* | | | |
| Jan. 18 | Furniture A/c   Dr. | | 5,000 | |
| |   To Cash A/c | | | 5,000 |
| | *(Being furniture purchased for office use)* | | | |
| Jan. 20 | Drawings A/c   Dr. | | 4,000 | |
| |   To Bank A/c | | | 4,000 |
| | *(Being cash withdrawn from bank for personal use)* | | | |
| Jan. 22 | Rent A/c   Dr. | | 3,000 | |
| |   To Bank A/c | | | 3,000 |
| | *(Being rent paid by cheque)* | | | |
| Jan. 23 | Drawings A/c   Dr. | | 2,000 | |
| |   To Purchases A/c | | | 2,000 |
| | *(Being goods used for household purposes)* | | | |
| Jan. 24 | Cash A/c   Dr. | | 6,000 | |
| |   To Bank A/c | | | 6,000 |
| | *(Being cash drawn from bank for office use)* | | | |
| Jan. 26 | Cash A/c   Dr. | | 1,000 | |
| |   To Commission Received A/c | | | 1,000 |
| | *(Being commission received in cash)* | | | |
| Jan. 27 | Bank Charges A/c   Dr. | | 200 | |
| |   To Bank A/c | | | 200 |
| | *(Being bank charges debited by bank)* | | | |
| Jan. 28 | Insurance Premium A/c   Dr. | | 3,000 | |
| |   To Bank A/c | | | 3,000 |
| | *(Being insurance premium paid by cheque)* | | | |
| Jan. 29 | Salary A/c   Dr. | | 7,000 | |
| |   To Cash A/c | | | 7,000 |
| | *(Being salary paid)* | | | |
| Jan. 30 | Cash A/c   Dr. | | 10,000 | |
| |   To Sales A/c | | | 10,000 |
| | *(Being goods sold for cash)* | | | |
| | Total | | 3,84,400 | 3,84,400 |

---
LEDGER (Selected Accounts)

Cash Account

| Dr. | | | | Cr. | | | |
|---|---|---|---|---|---|---|---|
| Jan. 01 | To Capital | | 1,65,000 | Jan. 02 | By Bank | | 80,000 |
| Jan. 15 | To Naman | | 11,700 | Jan. 05 | By Purchases | | 30,000 |
| Jan. 24 | To Bank | | 6,000 | Jan. 10 | By Tara | | 22,000 |
| Jan. 26 | To Commission | | 1,000 | Jan. 16 | By Wages | | 200 |
| Jan. 30 | To Sales | | 10,000 | Jan. 18 | By Furniture | | 5,000 |
| | | | | Jan. 29 | By Salary | | 7,000 |
| | | | | Jan. 31 | By Balance c/d | | 49,500 |
| | Total | | 1,93,700 | | Total | | 1,93,700 |

Bank Account

| Dr. | | | | Cr. | | | |
|---|---|---|---|---|---|---|---|
| Jan. 02 | To Cash | | 80,000 | Jan. 20 | By Drawings | | 4,000 |
| | | | | Jan. 22 | By Rent | | 3,000 |
| | | | | Jan. 24 | By Cash | | 6,000 |
| | | | | Jan. 27 | By Bank Charges | | 200 |
| | | | | Jan. 28 | By Insurance | | 3,000 |
| | | | | Jan. 31 | By Balance c/d | | 63,800 |
| | Total | | 80,000 | | Total | | 80,000 |

Capital Account

| Dr. | | | | Cr. | | | |
|---|---|---|---|---|---|---|---|
| Jan. 31 | To Balance c/d | | 1,65,000 | Jan. 01 | By Cash | | 1,65,000 |

Purchases Account

| Dr. | | | | Cr. | | | |
|---|---|---|---|---|---|---|---|
| Jan. 04 | To Tara | | 22,000 | Jan. 23 | By Drawings | | 2,000 |
| Jan. 05 | To Cash | | 30,000 | Jan. 31 | By Balance c/d | | 50,000 |
| | Total | | 52,000 | | Total | | 52,000 |

Sales Account

| Dr. | | | | Cr. | | | |
|---|---|---|---|---|---|---|---|
| Jan. 31 | To Balance c/d | | 22,000 | Jan. 08 | By Naman | | 12,000 |
| | | | | Jan. 30 | By Cash | | 10,000 |
| | Total | | 22,000 | | Total | | 22,000 |

*(Other accounts — Tara, Naman, Furniture, Drawings, Wages, Rent, Discount Allowed, Commission, Bank Charges, Insurance, Salary — are posted similarly from the journal entries above.)*

JOURNAL of M/s Mohit Traders (August 2017)

| Date | Particulars | L.F. | Dr. (₹) | Cr. (₹) |
|---|---|---|---|---|
| Aug. 01 | Cash A/c   Dr. | | 1,10,000 | |
| |   To Capital A/c | | | 1,10,000 |
| | *(Being business commenced with cash)* | | | |
| Aug. 02 | Bank A/c   Dr. | | 50,000 | |
| |   To Cash A/c | | | 50,000 |
| | *(Being bank account opened with HDFC)* | | | |
| Aug. 03 | Furniture A/c   Dr. | | 20,000 | |
| |   To Cash A/c | | | 20,000 |
| | *(Being furniture purchased for cash)* | | | |
| Aug. 07 | Purchases A/c   Dr. | | 30,000 | |
| |   To Cash A/c | | | 30,000 |
| | *(Being goods purchased for cash from M/s Rupa Traders)* | | | |
| Aug. 08 | Purchases A/c   Dr. | | 42,000 | |
| |   To Hema Traders A/c | | | 42,000 |
| | *(Being goods purchased from M/s Hema Traders on credit)* | | | |
| Aug. 10 | Cash A/c   Dr. | | 30,000 | |
| |   To Sales A/c | | | 30,000 |
| | *(Being goods sold for cash)* | | | |
| Aug. 14 | Gupta Traders A/c   Dr. | | 12,000 | |
| |   To Sales A/c | | | 12,000 |
| | *(Being goods sold to M/s Gupta Traders on credit)* | | | |
| Aug. 16 | Rent A/c   Dr. | | 4,000 | |
| |   To Cash A/c | | | 4,000 |
| | *(Being rent paid)* | | | |
| Aug. 18 | Trade Expenses A/c   Dr. | | 1,000 | |
| |   To Cash A/c | | | 1,000 |
| | *(Being trade expenses paid)* | | | |
| Aug. 20 | Cash A/c   Dr. | | 12,000 | |
| |   To Gupta Traders A/c | | | 12,000 |
| | *(Being cash received from Gupta Traders in full)* | | | |
| Aug. 22 | Hema Traders A/c   Dr. | | 2,000 | |
| |   To Purchase Returns A/c | | | 2,000 |
| | *(Being goods returned to Hema Traders)* | | | |
| Aug. 23 | Hema Traders A/c   Dr. | | 40,000 | |
| |   To Cash A/c | | | 40,000 |
| | *(Being cash paid to Hema Traders)* | | | |
| Aug. 25 | Postage A/c   Dr. | | 100 | |
| |   To Cash A/c | | | 100 |
| | *(Being postage stamps purchased)* | | | |
| Aug. 30 | Salary A/c   Dr. | | 4,000 | |
| |   To Cash A/c | | | 4,000 |
| | *(Being salary paid to Rishabh)* | | | |
| | Total | | 3,57,100 | 3,57,100 |

---
LEDGER (Selected Accounts)

Cash Account

| Dr. | | | | Cr. | | | |
|---|---|---|---|---|---|---|---|
| Aug. 01 | To Capital | | 1,10,000 | Aug. 02 | By Bank | | 50,000 |
| Aug. 10 | To Sales | | 30,000 | Aug. 03 | By Furniture | | 20,000 |
| Aug. 20 | To Gupta Traders | | 12,000 | Aug. 07 | By Purchases | | 30,000 |
| | | | | Aug. 16 | By Rent | | 4,000 |
| | | | | Aug. 18 | By Trade Expenses | | 1,000 |
| | | | | Aug. 23 | By Hema Traders | | 40,000 |
| | | | | Aug. 25 | By Postage | | 100 |
| | | | | Aug. 30 | By Salary | | 4,000 |
| | | | | Aug. 31 | By Balance c/d | | 2,900 |
| | Total | | 1,52,000 | | Total | | 1,52,000 |

Hema Traders Account

| Dr. | | | | Cr. | | | |
|---|---|---|---|---|---|---|---|
| Aug. 22 | To Purchase Returns | | 2,000 | Aug. 08 | By Purchases | | 42,000 |
| Aug. 23 | To Cash | | 40,000 | | | | |
| Aug. 31 | To Balance c/d | | 0 | | | | |
| | Total | | 42,000 | | Total | | 42,000 |

*(Note: Hema Traders balance = ₹42,000 − ₹2,000 − ₹40,000 = ₹0)*

Gupta Traders Account

| Dr. | | | | Cr. | | | |
|---|---|---|---|---|---|---|---|
| Aug. 14 | To Sales | | 12,000 | Aug. 20 | By Cash | | 12,000 |
| | Total | | 12,000 | | Total | | 12,000 |

*(Other accounts posted similarly.)*

Note: The amount on Dec. 17 appears as ₹3,50,000 in the OCR but given the context (small business, returns of ₹3,500, cheque of ₹31,500), it is likely ₹35,000. We proceed with ₹35,000.

JOURNAL of M/s Bhanu Traders (December 2017)

| Date | Particulars | L.F. | Dr. (₹) | Cr. (₹) |
|---|---|---|---|---|
| Dec. 01 | Cash A/c   Dr. | | 92,000 | |
| |   To Capital A/c | | | 92,000 |
| | *(Being business commenced with cash)* | | | |
| Dec. 02 | Bank A/c   Dr. | | 60,000 | |
| |   To Cash A/c | | | 60,000 |
| | *(Being cash deposited into bank)* | | | |
| Dec. 04 | Purchases A/c   Dr. | | 40,000 | |
| |   To Himani A/c | | | 40,000 |
| | *(Being goods purchased from Himani on credit)* | | | |
| Dec. 06 | Purchases A/c   Dr. | | 20,000 | |
| |   To Cash A/c | | | 20,000 |
| | *(Being goods purchased for cash)* | | | |
| Dec. 08 | Himani A/c   Dr. | | 4,000 | |
| |   To Purchase Returns A/c | | | 4,000 |
| | *(Being goods returned to Himani)* | | | |
| Dec. 10 | Cash A/c   Dr. | | 20,000 | |
| |   To Sales A/c | | | 20,000 |
| | *(Being goods sold for cash)* | | | |
| Dec. 14 | Himani A/c   Dr. | | 36,000 | |
| |   To Bank A/c | | | 36,000 |
| | *(Being cheque given to Himani)* | | | |
| Dec. 17 | Goyal Traders A/c   Dr. | | 35,000 | |
| |   To Sales A/c | | | 35,000 |
| | *(Being goods sold to M/s Goyal Traders on credit)* | | | |
| Dec. 19 | Drawings A/c   Dr. | | 2,000 | |
| |   To Bank A/c | | | 2,000 |
| | *(Being cash drawn from bank for personal use)* | | | |
| Dec. 21 | Sales Returns A/c   Dr. | | 3,500 | |
| |   To Goyal Traders A/c | | | 3,500 |
| | *(Being goods returned by Goyal Traders)* | | | |
| Dec. 22 | Bank A/c   Dr. | | 20,000 | |
| |   To Cash A/c | | | 20,000 |
| | *(Being cash deposited into bank)* | | | |
| Dec. 26 | Bank A/c   Dr. | | 31,500 | |
| |   To Goyal Traders A/c | | | 31,500 |
| | *(Being cheque received from Goyal Traders)* | | | |
| Dec. 28 | Charity A/c   Dr. | | 2,000 | |
| |   To Purchases A/c | | | 2,000 |
| | *(Being goods given as charity)* | | | |
| Dec. 29 | Rent A/c   Dr. | | 3,000 | |
| |   To Cash A/c | | | 3,000 |
| | *(Being rent paid)* | | | |
| Dec. 30 | Salary A/c   Dr. | | 7,000 | |
| |   To Cash A/c | | | 7,000 |
| | *(Being salary paid)* | | | |
| Dec. 31 | Office Machine A/c   Dr. | | 3,000 | |
| |   To Cash A/c | | | 3,000 |
| | *(Being office machine purchased for cash)* | | | |
| | Total | | 3,79,000 | 3,79,000 |

---
LEDGER (Selected Accounts)

Cash Account

| Dr. | | | | Cr. | | | |
|---|---|---|---|---|---|---|---|
| Dec. 01 | To Capital | | 92,000 | Dec. 02 | By Bank | | 60,000 |
| Dec. 10 | To Sales | | 20,000 | Dec. 06 | By Purchases | | 20,000 |
| | | | | Dec. 22 | By Bank | | 20,000 |
| | | | | Dec. 29 | By Rent | | 3,000 |
| | | | | Dec. 30 | By Salary | | 7,000 |
| | | | | Dec. 31 | By Machine | | 3,000 |
| | | | | Dec. 31 | By Balance c/d | | (1,000) |

*Cash Balance = 92,000 + 20,000 − 60,000 − 20,000 − 20,000 − 3,000 − 7,000 − 3,000 = −1,000*

*Note: This negative balance suggests the business may have used bank funds. Let us recheck — Dec. 22 cash deposited ₹20,000 into bank means cash decreases. Cash = 92,000 + 20,000 − 60,000 − 20,000 − 20,000 − 3,000 − 7,000 − 3,000 = −1,000. This seems like an error in the question data. Students should note this discrepancy.*

Goyal Traders Account

| Dr. | | | | Cr. | | | |
|---|---|---|---|---|---|---|---|
| Dec. 17 | To Sales | | 35,000 | Dec. 21 | By Sales Returns | | 3,500 |
| | | | | Dec. 26 | By Bank | | 31,500 |
| | Total | | 35,000 | | Total | | 35,000 |

Himani Account

| Dr. | | | | Cr. | | | |
|---|---|---|---|---|---|---|---|
| Dec. 08 | To Purchase Returns | | 4,000 | Dec. 04 | By Purchases | | 40,000 |
| Dec. 14 | To Bank | | 36,000 | | | | |
| | Total | | 40,000 | | Total | | 40,000 |

JOURNAL of M/s Beauti Traders (December 2017)

| Date | Particulars | L.F. | Dr. (₹) | Cr. (₹) |
|---|---|---|---|---|
| Dec. 01 | Cash A/c   Dr. | | 2,00,000 | |
| |   To Capital A/c | | | 2,00,000 |
| | *(Being business commenced with cash)* | | | |
| Dec. 02 | Furniture A/c   Dr. | | 30,000 | |
| |   To Cash A/c | | | 30,000 |
| | *(Being office furniture purchased for cash)* | | | |
| Dec. 03 | Bank A/c   Dr. | | 1,00,000 | |
| |   To Cash A/c | | | 1,00,000 |
| | *(Being cash deposited to open current account)* | | | |
| Dec. 05 | Computer A/c   Dr. | | 2,50,000 | |
| |   To Bank A/c | | | 2,50,000 |
| | *(Being computer purchased and paid by cheque)* | | | |
| Dec. 06 | Purchases A/c   Dr. | | 60,000 | |
| |   To Ritika A/c | | | 60,000 |
| | *(Being goods purchased from Ritika on credit)* | | | |
| Dec. 08 | Cash A/c   Dr. | | 30,000 | |
| |   To Sales A/c | | | 30,000 |
| | *(Being cash sales)* | | | |
| Dec. 09 | Karishna A/c   Dr. | | 25,000 | |
| |   To Sales A/c | | | 25,000 |
| | *(Being goods sold to Karishna on credit)* | | | |
| Dec. 12 | Mansi A/c   Dr. | | 30,000 | |
| |   To Cash A/c | | | 30,000 |
| | *(Being cash paid to Mansi on account)* | | | |
| Dec. 14 | Ritika A/c   Dr. | | 2,000 | |
| |   To Purchase Returns A/c | | | 2,000 |
| | *(Being goods returned to Ritika)* | | | |
| Dec. 15 | Stationery A/c   Dr. | | 3,000 | |
| |   To Cash A/c | | | 3,000 |
| | *(Being stationery purchased for cash)* | | | |
| Dec. 16 | Wages A/c   Dr. | | 1,000 | |
| |   To Cash A/c | | | 1,000 |
| | *(Being wages paid)* | | | |
| Dec. 18 | Sales Returns A/c   Dr. | | 2,000 | |
| |   To Karishna A/c | | | 2,000 |
| | *(Being goods returned by Karishna)* | | | |
| Dec. 20 | Ritika A/c   Dr. | | 28,000 | |
| |   To Bank A/c | | | 28,000 |
| | *(Being cheque given to Ritika)* | | | |
| Dec. 22 | Cash A/c   Dr. | | 15,000 | |
| |   To Karishna A/c | | | 15,000 |
| | *(Being cash received from Karishna on account)* | | | |
| Dec. 24 | Insurance Premium A/c   Dr. | | 4,000 | |
| |   To Bank A/c | | | 4,000 |
| | *(Being insurance premium paid by cheque)* | | | |
| Dec. 26 | Bank A/c   Dr. | | 8,000 | |
| |   To Karishna A/c | | | 8,000 |
| | *(Being cheque received from Karishna)* | | | |
| Dec. 28 | Rent A/c   Dr. | | 3,000 | |
| |   To Bank A/c | | | 3,000 |
| | *(Being rent paid by cheque)* | | | |
| Dec. 29 | Purchases A/c   Dr. | | 20,000 | |
| |   To Meena Traders A/c | | | 20,000 |
| | *(Being goods purchased from Meena Traders on credit)* | | | |
| Dec. 30 | Cash A/c   Dr. | | 14,000 | |
| |   To Sales A/c | | | 14,000 |
| | *(Being cash sales)* | | | |
| | Total | | 8,25,000 | 8,25,000 |

---
LEDGER (Selected Accounts)

Cash Account

| Dr. | | | | Cr. | | | |
|---|---|---|---|---|---|---|---|
| Dec. 01 | To Capital | | 2,00,000 | Dec. 02 | By Furniture | | 30,000 |
| Dec. 08 | To Sales | | 30,000 | Dec. 03 | By Bank | | 1,00,000 |
| Dec. 22 | To Karishna | | 15,000 | Dec. 12 | By Mansi | | 30,000 |
| Dec. 30 | To Sales | | 14,000 | Dec. 15 | By Stationery | | 3,000 |
| | | | | Dec. 16 | By Wages | | 1,000 |
| | | | | Dec. 31 | By Balance c/d | | 95,000 |
| | Total | | 2,59,000 | | Total | | 2,59,000 |

Karishna Account

| Dr. | | | | Cr. | | | |
|---|---|---|---|---|---|---|---|
| Dec. 09 | To Sales | | 25,000 | Dec. 18 | By Sales Returns | | 2,000 |
| | | | | Dec. 22 | By Cash | | 15,000 |
| | | | | Dec. 26 | By Bank | | 8,000 |
| | Total | | 25,000 | | Total | | 25,000 |

Ritika Account

| Dr. | | | | Cr. | | | |
|---|---|---|---|---|---|---|---|
| Dec. 14 | To Purchase Returns | | 2,000 | Dec. 06 | By Purchases | | 60,000 |
| Dec. 20 | To Bank | | 28,000 | | | | |
| Dec. 31 | To Balance c/d | | 30,000 | | | | |
| | Total | | 60,000 | | Total | | 60,000 |

JOURNAL of Sanjana (January 2017)

Opening Entry (Jan. 01):
Capital = Assets − Liabilities = (Cash ₹6,000 + Bank ₹55,000 + Stock ₹40,000 + Tarun ₹10,000) − (Rohan ₹6,000) = ₹1,11,000 − ₹6,000 = ₹1,05,000

| Date | Particulars | L.F. | Dr. (₹) | Cr. (₹) |
|---|---|---|---|---|
| Jan. 01 | Cash A/c   Dr. | | 6,000 | |
| | Bank A/c   Dr. | | 55,000 | |
| | Stock/Goods A/c   Dr. | | 40,000 | |
| | Tarun A/c   Dr. | | 10,000 | |
| |   To Rohan A/c | | | 6,000 |
| |   To Capital A/c | | | 1,05,000 |
| | *(Being opening balances recorded)* | | | |
| Jan. 03 | Karuna A/c   Dr. | | 15,000 | |
| |   To Sales A/c | | | 15,000 |
| | *(Being goods sold to Karuna on credit)* | | | |
| Jan. 04 | Cash A/c   Dr. | | 10,000 | |
| |   To Sales A/c | | | 10,000 |
| | *(Being cash sales)* | | | |
| Jan. 06 | Heena A/c   Dr. | | 5,000 | |
| |   To Sales A/c | | | 5,000 |
| | *(Being goods sold to Heena on credit)* | | | |
| Jan. 08 | Purchases A/c   Dr. | | 30,000 | |
| |   To Rupali A/c | | | 30,000 |
| | *(Being goods purchased from Rupali on credit)* | | | |
| Jan. 10 | Sales Returns A/c   Dr. | | 2,000 | |
| |   To Karuna A/c | | | 2,000 |
| | *(Being goods returned by Karuna)* | | | |
| Jan. 14 | Cash A/c   Dr. | | 13,000 | |
| |   To Karuna A/c | | | 13,000 |
| | *(Being cash received from Karuna)* | | | |
| Jan. 15 | Rohan A/c   Dr. | | 6,000 | |
| |   To Bank A/c | | | 6,000 |
| | *(Being cheque given to Rohan in full payment)* | | | |
| Jan. 16 | Cash A/c   Dr. | | 3,000 | |
| |   To Heena A/c | | | 3,000 |
| | *(Being cash received from Heena)* | | | |
| Jan. 20 | Bank A/c   Dr. | | 10,000 | |
| |   To Tarun A/c | | | 10,000 |
| | *(Being cheque received from Tarun in full)* | | | |
| Jan. 22 | Bank A/c   Dr. | | 2,000 | |
| |   To Heena A/c | | | 2,000 |
| | *(Being cheque received from Heena)* | | | |
| Jan. 25 | Rupali A/c   Dr. | | 18,000 | |
| |   To Cash A/c | | | 18,000 |
| | *(Being cash paid to Rupali)* | | | |
| Jan. 26 | Cartage A/c   Dr. | | 1,000 | |
| |   To Cash A/c | | | 1,000 |
| | *(Being cartage paid)* | | | |
| Jan. 27 | Salary A/c   Dr. | | 8,000 | |
| |   To Cash A/c | | | 8,000 |
| | *(Being salary paid)* | | | |
| Jan. 28 | Cash A/c   Dr. | | 7,000 | |
| |   To Sales A/c | | | 7,000 |
| | *(Being cash sales)* | | | |
| Jan. 29 | Rupali A/c   Dr. | | 12,000 | |
| |   To Bank A/c | | | 12,000 |
| | *(Being cheque given to Rupali)* | | | |
| Jan. 30 | Drawings A/c   Dr. | | 4,000 | |
| |   To Purchases A/c | | | 4,000 |
| | *(Being goods taken by Sanjana for personal use)* | | | |
| Jan. 31 | General Expenses A/c   Dr. | | 500 | |
| |   To Cash A/c | | | 500 |
| | *(Being general expenses paid)* | | | |
| | Total | | 3,06,500 | 3,06,500 |

---
LEDGER (Selected Accounts)

Cash Account

| Dr. | | | | Cr. | | | |
|---|---|---|---|---|---|---|---|
| Jan. 01 | To Balance b/d | | 6,000 | Jan. 25 | By Rupali | | 18,000 |
| Jan. 04 | To Sales | | 10,000 | Jan. 26 | By Cartage | | 1,000 |
| Jan. 14 | To Karuna | | 13,000 | Jan. 27 | By Salary | | 8,000 |
| Jan. 16 | To Heena | | 3,000 | Jan. 31 | By General Expenses | | 500 |
| Jan. 28 | To Sales | | 7,000 | Jan. 31 | By Balance c/d | | 11,500 |
| | Total | | 39,000 | | Total | | 39,000 |

Karuna Account

| Dr. | | | | Cr. | | | |
|---|---|---|---|---|---|---|---|
| Jan. 03 | To Sales | | 15,000 | Jan. 10 | By Sales Returns | | 2,000 |
| | | | | Jan. 14 | By Cash | | 13,000 |
| | Total | | 15,000 | | Total | | 15,000 |

Heena Account

| Dr. | | | | Cr. | | | |
|---|---|---|---|---|---|---|---|
| Jan. 06 | To Sales | | 5,000 | Jan. 16 | By Cash | | 3,000 |
| | | | | Jan. 22 | By Bank | | 2,000 |
| | Total | | 5,000 | | Total | | 5,000 |

Rupali Account

| Dr. | | | | Cr. | | | |
|---|---|---|---|---|---|---|---|
| Jan. 25 | To Cash | | 18,000 | Jan. 08 | By Purchases | | 30,000 |
| Jan. 29 | To Bank | | 12,000 | | | | |
| | Total | | 30,000 | | Total | | 30,000 |

Key Concepts:
- CGST and SGST apply when both buyer and seller are in the same state (intra-state transaction).
- IGST applies when buyer and seller are in different states (inter-state transaction).
- Anudeep is in Delhi.
- Input Tax Credit (ITC): GST paid on purchases is debited to Input CGST/SGST/IGST A/c.
- GST collected on sales is credited to Output CGST/SGST/IGST A/c.

Calculations:

(a) Kanta, Delhi (intra-state): CGST = 9% × 2,00,000 = ₹18,000; SGST = 9% × 2,00,000 = ₹18,000
(b) Rajasthan (inter-state): IGST = 12% × 1,00,000 = ₹12,000
(c) Sudhir, Punjab (inter-state): IGST = 18% × 1,50,000 = ₹27,000
(d) Railway Transport, Delhi (intra-state): CGST = 5% × 10,000 = ₹500; SGST = 5% × 10,000 = ₹500
(e) Sidhu, Delhi (intra-state): CGST = 9% × 1,20,000 = ₹10,800; SGST = 9% × 1,20,000 = ₹10,800
(f) AC for office, Delhi (intra-state): CGST = 9% × 60,000 = ₹5,400; SGST = 9% × 60,000 = ₹5,400
(g) Sunil, UP (inter-state): IGST = 18% × 1,50,000 = ₹27,000
(h) Motor Cycle, Delhi (intra-state): CGST = 14% × 50,000 = ₹7,000; SGST = 14% × 50,000 = ₹7,000
(i) Broadband, Delhi (intra-state): CGST = 9% × 4,000 = ₹360; SGST = 0% × 4,000 = ₹0
(j) Rajesh, Delhi (intra-state): CGST = 9% × 50,000 = ₹4,500; SGST = 9% × 50,000 = ₹4,500

JOURNAL of Anudeep, Delhi

| Date | Particulars | L.F. | Dr. (₹) | Cr. (₹) |
|---|---|---|---|---|
| (a) | Purchases A/c   Dr. | | 2,00,000 | |
| | Input CGST A/c   Dr. | | 18,000 | |
| | Input SGST A/c   Dr. | | 18,000 | |
| |   To Kanta A/c | | | 2,36,000 |
| | *(Being goods purchased from Kanta, Delhi on credit; CGST & SGST @ 9% each)* | | | |
| (b) | Purchases A/c   Dr. | | 1,00,000 | |
| | Input IGST A/c   Dr. | | 12,000 | |
| |   To Cash A/c | | | 1,12,000 |
| | *(Being goods purchased for cash from Rajasthan; IGST @ 12%)* | | | |
| (c) | Sudhir A/c   Dr. | | 1,77,000 | |
| |   To Sales A/c | | | 1,50,000 |
| |   To Output IGST A/c | | | 27,000 |
| | *(Being goods sold to Sudhir, Punjab on credit; IGST @ 18%)* | | | |
| (d) | Transport/Freight A/c   Dr. | | 10,000 | |
| | Input CGST A/c   Dr. | | 500 | |
| | Input SGST A/c   Dr. | | 500 | |
| |   To Cash A/c | | | 11,000 |
| | *(Being railway transport charges paid; CGST & SGST @ 5% each)* | | | |
| (e) | Sidhu A/c   Dr. | | 1,41,600 | |
| |   To Sales A/c | | | 1,20,000 |
| |   To Output CGST A/c | | | 10,800 |
| |   To Output SGST A/c | | | 10,800 |
| | *(Being goods sold to Sidhu, Delhi on credit; CGST & SGST @ 9% each)* | | | |
| (f) | Air Conditioner A/c   Dr. | | 60,000 | |
| | Input CGST A/c   Dr. | | 5,400 | |
| | Input SGST A/c   Dr. | | 5,400 | |
| |   To Cash A/c | | | 70,800 |
| | *(Being AC purchased for office use; CGST & SGST @ 9% each)* | | | |
| (g) | Cash A/c   Dr. | | 1,77,000 | |
| |   To Sales A/c | | | 1,50,000 |
| |   To Output IGST A/c | | | 27,000 |
| | *(Being goods sold for cash to Sunil, UP; IGST @ 18%)* | | | |
| (h) | Motor Cycle A/c   Dr. | | 50,000 | |
| | Input CGST A/c   Dr. | | 7,000 | |
| | Input SGST A/c   Dr. | | 7,000 | |
| |   To Cash A/c | | | 64,000 |
| | *(Being motor cycle purchased for business use; CGST & SGST @ 14% each)* | | | |
| (i) | Broadband Expenses A/c   Dr. | | 4,000 | |
| | Input CGST A/c   Dr. | | 360 | |
| |   To Cash A/c | | | 4,360 |
| | *(Being broadband charges paid; CGST @ 9%, SGST @ 0%)* | | | |
| (j) | Purchases A/c   Dr. | | 50,000 | |
| | Input CGST A/c   Dr. | | 4,500 | |
| | Input SGST A/c   Dr. | | 4,500 | |
| |   To Rajesh A/c | | | 59,000 |
| | *(Being goods purchased from Rajesh, Delhi on credit; CGST & SGST @ 9% each)* | | | |