Enter the following transactions in the year 1999: | Date | Description | Amount (Rs.) | | :----- | :-------------------------------------------------------------------------- | :----------- | | Jan. 1 | Sridhar commenced business with capital of | 60,000 | | 2 | Purchased furniture for cash | 4,000 | | 3 | Purchased goods from Balu | 40,000 | | 5 | Sold goods for cash | 24,000 | | 7 | Purchased goods from Kali, the list price of which is Rs. 16,000 at 1% trade discount.
Answer (1)
To enter the transactions from the year 1999 into the books of accounts, we use a journal format. Each transaction is recorded in chronological order with a brief description. Here are the entries for the provided transactions:
Jan. 1: Sridhar commenced business with capital of Rs. 60,000
Journal Entry :
Debit: Cash Account ₹60,000
Credit: Capital Account ₹60,000
Explanation : Sridhar has invested Rs. 60,000 into the business, increasing the cash balance and capital.
Jan. 2: Purchased furniture for cash Rs. 4,000
Journal Entry :
Debit: Furniture Account ₹4,000
Credit: Cash Account ₹4,000
Explanation : Paid cash to purchase furniture. Increase in furniture is recorded as a debit and cash outflow as a credit.
Jan. 3: Purchased goods from Balu Rs. 40,000
Journal Entry :
Debit: Purchases Account ₹40,000
Credit: Balu's Account ₹40,000
Explanation : Purchased goods on credit from Balu, increasing purchases and recording a liability to pay Balu.
Jan. 5: Sold goods for cash Rs. 24,000
Journal Entry :
Debit: Cash Account ₹24,000
Credit: Sales Account ₹24,000
Explanation : Sold goods and received cash in return, increasing both cash and sales.
Jan. 7: Purchased goods from Kali, the list price of which is Rs. 16,000 at 1% trade discount
Calculation :
Trade Discount = 1% of Rs. 16,000 = ₹160
Net Purchase Price = ₹16,000 - ₹160 = ₹15,840
Journal Entry :
Debit: Purchases Account ₹15,840
Credit: Kali's Account ₹15,840
Explanation : Purchased goods on credit with a trade discount; recorded at net purchase price.
