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CHAPTER 9: BOOK OF ORIGINAL ENTRY: SPECIFIC ENTRIES, ASSIGNMENT # 12, ANSWER TO ASSIGNMENT # 11







Recording of Transactions with Specific Entries:


After going through this lesson, you shall be able to understand the concept related to 
'Entries for some specific transactions'.
Some Specific Entries


HELLO BOYS!!

KEEP A SMILE ON YOUR FACE. YOU ARE SIMPLY LEARNING THE LANGUAGE OF THE BUSINESS.

BUSINESS IS A RICH ENTITY. WHERE ONLY FINANCIAL TRANSACTIONS ARE RECORDED.


TASK # 2

TODAY WE WILL FIRST CHECK OUR ANSWERS TO THE ASSIGNMENT # 11




ASSIGNMENT # 11

Following transactions are based on compound entry, opening entry, trade discount and cash discount, as discussed in the previous class.

1.Received ₹1250 from Raman in full settlement of his account for ₹ 1300.

2. Paid ₹ 370 to Ram in full settlement of his account for ₹ 400.

3..Cheque received from Shyam ₹1120 in full settlement of ₹1200. Cheque is deposited on the same date.

4. The following balances existed in the books of Shyam traders as on 1st April, 2019. Pass the opening entry.
Assets: Cash ₹100000, Debtors ₹40000 (Amit ₹ 12000, Shyam, ₹ 17000, Kapil ₹ 11000), Furniture ₹ 20,000, Plant and machinery ₹ 70000
Liabilities: Creditors ₹ 55000, Bank Loan ₹ 30000.

5. Sold goods to Pankaj at a list price of ₹ 50000 less 20% trade discount.

6. Pankaj returned goods of the list price of ₹ 4,000.

7. Received from Pankaj the amount due from him under a cash discount of 5%.

8. Bought goods for cash of the list price ₹100000 at 20% trade discount and 5% cash discount.

9. Sold goods for cash of the list price ₹ 20000 at 10% trade discount and 3% cash discount.

10. Bought goods from Nupur for ₹ 200000 at 5% cash discount and 10% trade discount. Half the amount paid by cheque at the time of purchase.

11. Sold goods to Anuradha for ₹ 100000 on terms 10% trade discount and 5% cash discount if the payment is received within 15 days. 80% payment is received within the time frame by cheque.

12. Purchased goods costing ₹ 100000 from Sahil & Co. Paid 60% immediately by cheque to avail 5% discount.


ANSWER TO ASSIGNMENT # 11

DATE
PARTICULARS
LF
DEBIT (Rs.)
CREDIT (Rs.)
1
Cash A/c…        Dr Disc.allowed A/c...Dr 
To  Raman A/c

(Being cash received in full settlement)

1250
   50


  1300
2
Ram A/C…  Dr
To Cash A/c
To Disc. recd.A/c

(Being cash paid to Ram in full settlement)

 400

  370
    30
3
Bank A/C…    Dr
Disc.allowed... Dr.
To Shyam's A/c

(Being cheque recd in full settlement)

1120
    80

 2,000
4
Cash A/C…Dr
Debtors' A/c...Dr
Furniture A/c ...Dr.
Plant & Machinery...Dr
               To Creditors' A/c
               To Bank Loan A/c
               To CapitalA/c

(Being opening entry passes))

100000
  40000
  20000
  70000




 55000
 30000
145000
5
Pankaj's  A/C…Dr
To Sales A/C 

(Being goods sold)

 40000

 40000
6
Sales Return  A/C…Dr
To Pankaj"s A/C

(Being goods returned by Pankaj)

 3200

  3200
7
Cash A/c…Dr
Disc. allowed...Dr
To Pankaj's A/C

(Being amount received from Pankaj at discount)

  34960
    1840


 36800
8
Purchases A/c…Dr
To Cash A/C
To Disc. recd. A/c

(Being goods purchased for cash at discount)

80000

76,000
  4,000
9
Cash A/C…Dr
Disc. allowed A/c...Dr.
To Sales A/c

(Being goods sold for cash at a discount)

 17460
     540


18000
10
Purchases A/C…Dr
To Bank A/C
To Disc. Recd. A/c
To Nupur's A/c

(Being goods purchased for cash at discount and credit)

1,80,000

 85,500
   4,500
 90,000
11
Bank  A/C…Dr 
Disc. all. A/C....Dr
Anuradha's A/c...Dr.
To Sales A/C

 (Being goods sold for cash and credit)

68400
  3600
18000



90000
12
Purchases A/C…Dr
To Sahil & Co. A/C
To Bank A/c
To Disc. Recd. A/c

(Being goods purchased for cash and credit)

1,00,000

40,000
57,000
  3,000












TASK # 3


Some Specific Entries


Interest on Capital: 
Interest on capital is an expense for the business, so it is charged from the profits of the firm. 
The balance profits are the real profits of the firm and represent the true efficiency of the business.
And according to the rules of accounting, interest being an expense for the business will be debited (increase in the expenses) while it is a gain for the proprietor in the form of increased capital.
 As we know, decrease in capital is debited and increase is credited, so the increase in capital will be credited. 
It is recorded as follows.

Date
Particulars
L.F.
Debit
Amount
(Rs)
Credit
Amount
(Rs)
Interest on Capital A/c
Dr.
xxx
To Capital A/cxxx
(Interest on capital provided)


Interest on Drawings: 
Business not only allows interest on capital but also charges for the drawings made by the proprietor. Such an interest is an income for the business and loss for the proprietor. It is recorded as follows.

Date
Particulars
L.F.
Debit
Amount
(Rs)
Credit
Amount
(Rs)
Drawings A/c
Dr.
xxx
To Interest on Drawings A/cxxx
(Interest on drawings charged)


In the above entry, interest on drawings being income for the business is credited as increase in income and gains is credited while Drawings Account being representative account of capital account is debited as capital is decreasing by the amount of interest being charged.
Here, drawings account has been used instead capital account just to make accounts more comprehensible and specific even though use of capital account is not wrong.



Loss by Theft or Fire:
 The business may incur losses due to theft or fire at its place of business. In both the cases, the real outcome will be loss to the business.


Date
Particulars
L.F.
Debit
Amount
(Rs)
Credit
Amount
(Rs)
Loss by Theft or Fire A/c
Dr.
xxx
To Purchases A/cxxx
(Loss of goods by theft or fire)


In the above entry, Loss by Theft or Fire Account is debited as loss is an expense which is increasing and accordingly it is debited. And Purchases Account will be credited because stock decreases with the value of loss of goods.
The actual amount of loss and its treatment varies with the situation and is as follows.

1) When goods are fully insured, loss is borne by the insurance company
In case the goods are insured, then loss by theft or fire is made good by the insurance company. In such cases, insurance company or insurance claim becomes the asset for the firm and will make payment in future.
 Now, till the time amount is received it is shown as an asset in the Balance Sheet. Due to such loss, stock of goods gets reduced so it is credited and Insurance Claim Account or Insurance Company Account, being increase in asset, is debited.
 The entry for this is as follows.


Date
Particulars
L.F.
Debit
Amount
(Rs)
Credit
Amount
(Rs)
Insurance Co. or Insurance Claim A/c
Dr.
xxx
To Loss by Theft or Fire A/cxxx
(Loss of goods by theft or fire)


2) When goods are not insured

In case the goods are not insured, then whole of the loss is transferred to Profit & Loss Account as it is borne by the firm itself. 
It is recorded with help of following Journal Entry.

Date
Particulars
L.F.
Debit
Amount
(Rs)
Credit
Amount
(Rs)
Profit & Loss A/c
Dr.
xxx
To Loss by Theft or Fire A/cxxx
(Loss transferred to P & L A/c)


3) When goods are partly insured

In case the goods are partly insured, then the treatment would be a combination of treatments as if they are insured and if they are uninsured.
This will be recorded as follows.


Date
Particulars
L.F.
Debit
Amount
(Rs)
Credit
Amount
(Rs)
Insurance Co. or Insurance Claim A/c
Dr.
xxx
Profit & Loss A/c
Dr.
xxx
To Loss by Theft or Fire A/cxxx
(Claim received for Loss of goods by theft or fire and remaining loss transferred to P & L A/c)


In the above entry, the share of loss borne by the insurance company is debited to Insurance Company Account with the amount due to be received from insurance company and the remaining loss borne by the firm is debited to the Profit and Loss Account.

Note: In the above cases, when the amount due from the insurance company, in respect of insurance claim, is received,
 it is journalised as follows.

Date
Particulars
L.F.
Debit
Amount
(Rs)
Credit
Amount
(Rs)
Bank A/c
Dr.
xxx
To Insurance Co. or Insurance Claim A/cxxx
(Insurance Claim received)


TASK # 4
DO THE ASSIGNMENT # 12

FOLLOWING TRANSACTIONS ARE BASED ON:
BAD DEBTS, BAD DEBTS RECOVERED, OUTSTANDING EXPENSES, PREPAID EXPENSES, ACCRUED INCOME (UNEARNED INCOME), INCOME RECEIVED IN ADVANCE AND SOME OTHER PRACTICE ENTRIES AS DISCUSSED IN THE PREVIOUS CLASS.

Journalise the following transactions in the books of Journal.
1.Z became insolvent and 40 paise in a rupee could be received for ₹ 8000 due, from his estate by cheque which is deposited into Bank.

 2.Received ₹20000 from Subhash which was written off as bad debts in the previous year.

 3. Salaries due to clerks ₹ 50000.

 4. Out of the rent paid this year, ₹10,000 is related to next year.

 5. ₹10,000 due from Rohan are now bad debts.

 6. Interest due but not received ₹ 2400.

7. Commission received in advance ₹ 700.

 8. The following balances existed in the books of Shyam traders as on 1st April 2019 cash ₹85000 bank ₹40000 debtors ₹80000 furniture₹ 45000 liabilities creditors ₹55000 bills payable₹ 20000

 9. Sold goods costing ₹60000 to Shalini, at a profit of 20% on sales less 10% trade discount. Paid cartage of ₹ 500 to be charged from Shalini.

 10. Goods sold to Manish costing rupees 30000 at trade discount of 10% and paid cartage ₹ 300 (not to be charged from the customer)

 11. Received an order of goods of 7000 from Jaidev

12. Paid cash ₹ 5000 to Ankit on behalf of Kamal












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