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Journal in spite of its above advantages suffers from the following limitations:

1. Huge and bulky size. A single journal for the entire business will be bulky and difficult to operate and handle.

2. Balance of accounts at a glance not available. The actual position of ledger balances as purchases, sales, returns, bills etc. is not known on a particular date from journal.

3. Difficulty in reconciling cash balance. In case all transactions including cash transactions are recorded in the journal and no cash book is maintained, it will be very difficult to reconcile daily cash balance.

In order to overcome the limitations of Journal, business units sub-divide the journal into convenient parts and prepare subsidiary books i.e., Purchases book, Sales book1 Returns Inward and Outward book, Bills receivable and Payable book. Other transactions which do not

(ASSIGNMENTS) 

THEORETICAL QUESTIONS 

A. Objective Type Questions:

I. In each of the following indicate the correct alternative:

            1. Interest on drawing……

                (a) Increases assets and decreases capital.  (b) Increases expense and decreases liability.

(c) Increases and decreases of capital.        (d) Increases liability and decreases capital.  

            2. Goods drawn by the proprietor from the business for person3: l use……

                 (a) Increases capital and decreases assets.    (b) Increases assets and decreases expense.

(c) Decreases capital and decreases assets.       (d) Increases and decreases assets.

3. Recovery of bad debts previously written off……

(a) Increases assets and revenue.           (b) Decreases assets and expenses.

(c) Increases assets and capital.             (d) Increases expenses and assets.

4.         The rule of debit and credit as regards …… should be ‘debit the debtor and credit and creditor’.

(a) Personal Account.                          (b) Impersonal Account.

(c) Real Account.                                (d) Nominal Account. 

5.         Wages owing is……

(a) Personal Account.                          (b) Impersonal Account.

              (c) Real Account.                              (d) Nominal Account.

6.         Recording of transaction in the journal is called:

            (a) Posting.                                          (b) Joumalising.

            (c) Tallying.                                         (d) Casting.

7.         The journal is a book of:

(a) Only cash transactions.                  (b) Original entry.

(c) Credit sales and purchases.                        (d) Secondary entry. 

Ans. 1; (f.’) 2. (c) · 3. (a) 4. (a) . 5. (a). 6. (b) · 7. (b). 

II. Identify the following accounts as personal, real and nominal. 

            1. Drawings account                           2. State Bank of India account

            3. Prepaid Insurance account              4. Appreciation account

            5. Loan account                                  6. Bad debts account

7. Bad debts recovered account         8. Purchases account

            9. Stationery account.

Ans. Personal Accounts: Drawings, Prepaid Insurance, Loan A/c, State Bank of India A/c,

            Nominal Account: Bad debts recovered A/c, Stationary A/c, Appreciation A/c Bad Debts A/c, and Purchases A/c 

B. Very Short Answer Type Questions:

            1. Name the types of Personal Accounts.

2. What is the classification of 1m personal Account?

3. Define the term Journal.

            4. Mention three situations, where, in liability of the business towards proprietors decreases.

5. Define the term Asset.

6. What is the net effect of interest on capital on proprietor’s equity?

7. According to the modern approach of debiting and crediting accounts are classified in five basic terms. Name these terms.

8. What is always the balance of Cash Account whether Debit or Credit?

9. What is rule of debiting and crediting Assets Accounts?

            10. We receive lesser amount in case of discount allowed and also bad debts. In what respects are these two situations different. 

            [Hint: Discount is· allowed willingly to good debtors so it is an expense· whereas bad debts is loss and an unwanted burden.]        

            11. Every transaction has two aspects debit and credit. How is it true in case of Nominal Accounts?

            12. Write short notes on any two of the following (a) Compound entries, (b) Opening entries, (c) Trade discount.

            13. State to which class of account does each of the following belong?

(i) Trade mark (ii) Commission received in advance (iii) Accrued commission (iv) Commission received. 

            [Hint: (i) Real A/c (ii) Personal A/c (iii) Personal A/c (iv) Nominal A/c.] 

C. Short Answer Type Questions: 

            1. What are the different types of Accounts? Give three examples of each.

2. Give the classification of Personal Accounts.

3. Discuss briefly the limitations of the Double Entry System of Book-Keeping.

            4. Point out to which type of account. the following accounts belong :

(a) Capital A/c                         (b) Interest on Capital A/c

            (c) Drawings                           (d) Debtors A/c

            (e) Creditors A/c                      (f) Machine A/c

            (g) Wages A/c                         (h) Purchases A/c

(i) Sales A/c                             (j) Sales Return A/c. 

5. In what respects Bad debts and Bad debts recovered Accounts are different from each other from accounting points of view?

6.  Name basic accounting terms which are debited for increase.

7. Mention basic accounting terms which are debited for decrease.

8. Name and state three types of accounts.

9. Explain the meaning and purpose of the ledger folio (L.F).

            10. Why are the rules of debit and credit same for both liability and capital? 

D. Long Answer Type Questions: 

            1. What is meant by Journal? Give a specimen of its format. Explain the contents of its columns.

2. ‘Every transaction has double aspects’. Explain the statement with suitable examples.

3. Explain the rule of debit and credit in case of the following:

(a) Revenue     (b) Expense    (c) Real Account

(d) Capital       (e) Nominal Account. 

4. What is meant by ‘Double Entry System’ of Book-keeping? Explain it clearly. Enumerate its advantages and disadvantages.

5. Explain the rules of debit and credit in regards to the expenses and income with two examples each.

6. What are the different types of accounts? Explain with examples their rules of debit and credit.

7. Explain the term:

(a) Opening journal entry                    (b) Compound journal entry

(c) Narration                                        (d) Ledger folio.

8. ‘Every debit must have its corresponding credit.’ Discuss this statement.

9. Explain the procedure of recording the journal entries in a journal. Give specimen of a journal with five transactions recorded in it.

10. Explain the double entry mechanism with an illustrative example. 

(PRACTICAL QUESTIONS) 

1. Pass the opening journal entry with the following information:

(a) Cash in hand ·        5,000               (b) Debtors                  15,000

(c) Closing stock         20,000             (d) Furniture                  3.000

            (e) Building                 40,000             (f) Creditors                 12,000

            (g) Bank overdraft      8,000               (h) Capital                   63,000

 

2. Pass the opening journal entry with the following information :

(a) Cash at Bank         3,000               (b) Debtors                 7.000

(c) Closing stock         20,000             (d) Machine                 50.000

            (e) Building                 1.00,000          (f) Creditors                 12,000

(g) Bills Payable          3,000

 

3. Record the following transactions in journal:

2005                                                                                                                            $

Mar.1   purchased goods for cash…………………………………………………………..1000

Mar.3   purchased goods from Imti…………………………………………………………7000

Mar.5   Sold goods to M/s Avi and Adi for cash…………………………………………..1200

Mar.8   sold g00ds to Mr. Michael………………………………………………………….800

Mar.9   Paid salaries…………………………………………………………………………500

Mar.10Payment received from Michael in full settlement of his account…………………750

Mar.13Received Commission………………………………………………………………15

Mar.16Deposited into bank…………………………………………………………………1400

Mar.18Paid. General Trade Expenses………………………………………………………40

Mar.22Withdrew from bank for office use………………………………………………….500

Mar.4Paid rent……………………………………………………………………………….125

Mar.27 Paid cash to Imti in full settlement of his account………………………………….6750

Mar.31 Paid for miscellaneous expenses………………………………………………………….. …….. 175

 

4. Enter the following transactions in journal:

2004                                                                                                               $

June l   Purchased Machinery for business use ……………………………………….. .. 5,000

June 2  Purchased goods from Akho Bros. . . .. …………………………………………..4,000

June4   Novelty Trading Co. cleared their account less 5% cash discount …………..3,610

June 6  Paid Insurance Premium …… ………………… ……………. ……………………… ..70

June 8  Paid Rent of the Godown ……………….. ……………………………………………….40

June 8  Withdrew cash for private use …………………………………………………………..100

June 9  Returned goods to Mehra Bros………………………………………………….140

June 10 Purchased a Jeep for proprietor’s private use ……………….. ………….. ……..4,000

June ll Purchased goods from Adi……………………………………………………….825

Paid car.tage on above …………. ………………………………………. … …………….15

June 13 Paid Mfs Ashu Bros. on account through Bank ………………………… ……….3,860

June 13 Sold goods to M/s John & Co ……….. ……………………………… ……………..1,700

 

5. Prepare journal from transactions given below: 

    $

(a)   Charge depreciation on building @ 5% for one month

(building = 20,000)

     (b) Charge depreciation on machinery ………………………….. ……………………… …. …. 125

(c) Salaries and wages due to Manager…… …………… …………………….. ….. …………….725

(d) Carriage Outstanding ……………………………. ….. ………………….. ………………. …. 100

(e) Rent Outstanding……………………… …………………………………………… ……………. 200

      (f) Tomar compounded with his debtor. Accepted a composition of 30 P.

in the rupee out of a debt of Rs. 2,000

(g) Received cash for a Bad Debt written off last year ………….. … ………………. ……… 225

(h) Charge depreciation on furniture @ 5% for one month

(Furniture= 2,000)

 

6. Journalism the following transactions:

(a) Mr. Raran is declared insolvent. I received from his official receiver a first and final dividend of 55 P in a rupee on a debt of Rs. 2.500.

(b) Received a V.P.P. for Rs. 640. Sent a worker to take delivery of it and he paid Rs. 5 for cartage.

(c) Received interest on loan from the debtor Rs. 1.100. 

   (d) Provide interest on Capital (10,000) at 5,1/2% for six. Months. 

  (e) Received Rs. 765 from Mr. Sharma in full settlement of a debt to his account for Rs. 800.

 

7. Give journal entries for the following: 

   (a) Goods worth Rs. 500 given as charity.

(b) Received Rs. 9,975 from Suhail in full settlement of her account for Rs. 10,000.

(c.) Received a first and final dividend of 70 paisa in a rupee from the Official Receiver of Mr. raveen who owed us Rs. 10,000.

 

8. Record the following transac1ions into journal:

(a) Commenced business with cash Rs. 30,000.

(b) Paid rent in advance $ 500.

(c) Purchased goods for cash 15.000 and for Credit $ lOOOO. 

(d) Bought Motor cycle-for personal use for $ 6,000 and the payment made out of business money. 

(e) Received Cash for a bad debt written off last year Rs. 100.

(f) Gulati, a debtor of the firm became insolvent. A first and final payment @ 80 paisa in a rupee was received from her official receiver towards her total dues of $ 200.

 

9. Journalism the following.

(a) Commenced business with cash $ 20.000.

(b) Patel Insurance m advance $ 500.

(c) Purchased equipment for cash $ l5.000 and for Credit $ 10,000. 

(d) Bought Motor cycle for personal use for $ 16.000 and the payment made out of business money.

(e) Received Cash for a bad debt written off last year $ 1,100.

(j) Shyam, a debtor of the firm, became insolvent. A first and final payment of 30 paise in a rupee was received towards his total dues of $ 2,000:

 

10. Journalise the following transactions  

(a) Paid $ 25 as wages for installation of machine.

(b) Sold goods to Gopal. List price $ 2,000. Sales subject to 10% Trade Discount and 5% Cash   discount. Payment is made immediately. Ape availed of cash discount. 

(c) Supplied goods costing $ 600 to Rajesh. Issued invoice at 10% above cost less 5%  trade discount. 

(d) Goods worth $ 700 distributed as sample.

(e) Goods costing $ 11,000 was stolen in transit.

(f) Cash embezzled by Hussain $ 33,000.

 

11. journalese the following 1ransactions :

2006                                                                                                                                          $

Jan. 1 Sold goods to Shyam………………………………………………….……………..700

Jan. 5 Employed Gopal as cashier,

received from her security deposit………………….……………………………..…2,000

Jan. 7 Paid M/s Atul and Sons Cash……………………………………………………..…..380

Discount allowed ……… ….. ………………… ………… ………………………………………20

Jan. 9 issued a cheque for Rs. 7,410 in favour of Anup after deducting 5% cash discount

Jan. 12 Wages outstanding ……………… ……………………………………………………………. 300

Jan. 15 Insurance paid in advance ……………………… ………. ……… ………………. .. ……. 450

Jan. 18 Rent due to landlord ……………………………………………………………………. ……. 400

Jan. 21 Paid interest on Miss Sonia security deposit @ 10% for 15 days

Jan. 24 Subscribed for newspapers and magazines……………………………………. …………. 200

Jan. 31 Received rent for a portion of shop sublet to Kavita

 

12. Journalise the following :

a)      Goods worth $ 400 were given as charity out of business. 

b)      Received cash $ 500 of a bad debts written off last year. 

c)      Interest charged on drawings @ 5%. When total drawings were $ 10,000.

 

13. Give Journal entries for the following : 

a)      Goods worth $ 500 given as charity.

b)      Received $ 975 from David in full settlement of his account $ 1,000.

c)      Received a first and final dividend of 60 paise in a rupee from the official receiver of Miss Naro, who owed us $ 100.

 

14. Pass the opening journal entries in the following cases:

a)      On April 1, 2000 the position of M/s Garg was as under:

Cash $ 20,000, Debtors $ 6,000, Stock $ 3,000, Building $ 5,000, Bills Receivable $ 3,000,

Creditors Rs. 4,000 and Bills Payable Rs. 2,000.

b)      From the following balance of a firm pass the journal entry:

Capital $ 50,000, Deqtors $ 4,000 ; Creditors $ 7,000, Stock $ 4,000, Cash in hand $ 4,000,

Cash at bank $ 7,000 and furniture $ 4,000.

[Hint: (a) Ascertain capital which is : Total assets- Liabilities

(b) Calculate Goodwill, which will be Liability+ Capital- Assets.]

 

15. Poim out what is wrong with the following entries. Also pass the correct entry : 

Journal Entries

(Hint: (a) Instead of Amit, Cash Ale will be debited (b) Instead of Wages, Building A/c will be debited (c) Instead of Harsh, Bad debts recovered A/c will be credited (d) Instead of Sales; Purchases A/c will be credited (e) Instead of Repair, Furniture A/c will be debited.] 

16. Journalise the following items in the books of Mr. lmti giving suitable narrations:

(a) Bought goods from Adi for Cash $ 1,500.

(b) Paid to Tarun $ 965 in full payment of her dues of $ 1,000.

(c) Paid $ 250 in cash as wages on installation of a machine.

 

17. Journalise the following transactions in the books of Miss Babita, timber merchan1 giving suitable narrations:

(a) Received a cheque from Mr. Rajesh $ 5,450. Allowed him discount $ 150.

(b) Returned goods to Heera of the value of $ 350.

(c) Issued a cheque in favour of M/s Novelty Timber Company on account of the purchase of Timber of $ 7,500.

 

18. Journalise the following transactions:

(a) Goods destroyed by fire for $ 500.

(b) Paid $ 2,500 in cash as wages on installation of a machinery.

(c) Issued a cheque in favour of Mls Garg & Sons on account of purchase of goods $ 7,500.

(d) Goods sold costing $ 6,000 to M/s. Gupta & Sons at an invoice price 10% above cost less 5% Trade discount.

 

19. Journalise the following transactions :

(a) On 1st April, 2001 Mr. D’souza brings $ 1,00,000 as his capital.

(b) On 2nd April, 2001 Mr. D’souza purchases land for $ 35,000 for cash.

(c) On 30 April, 200 I paid $ 23,000 on completion of building constructed by contractor.

(d) On 3rd May, 2001 purchased stock for $ 18,000 for cash.

(e) On 8th May, 2001 purchased furniture for $ 4,000.

(f) On lOth May, 2001 deposited in bank account opened in the name of business $ 15,000.

(g) Purchased goods on II May 2001 from Eastend and Co. on Credit for $ 3000.

 

 

20. Prepare Journal from the transaction given below:                                    $

(a) Cash paid for installation of machine                                                                    500

(b) Goods given as charity                                                                                          2,000

(c) Interest charged on capital @ 7% p.a. when total capital were                            70,000

(d) Received $ 1,200 of a bad debts written off last year

(e) Goods destroyed by fire                                                                                        2,000

(f) Rent outstanding                                                                                                    1,000

(g) Interest on drawing                                                                                               900

(h) Neeraj who owed me $ 3,000 has failed to pay the amount.

He pays me a composition of 45P in a rupee.

(i) Commission received in advance                                                                           7,000

 

21. Mr. Sohan started his business with the following assets and liabilities:

Jan.1 2002                                                                                                                $

Cash in hand ………………………………………………………………………………………. .. 20,000.

Stock in hand……… ……………. ……….. ……………. ………………………. ….. … 25,000

Debtors : M/s Sahil Bros …………………………………………………………… …..  20000

M/s Garg & Co …………………………….. ……………… ………………. ……….. 15000

Creditors : M/s A shu Bros …………………….. …. …………………… ……… ………….10000

M/s Sumit & Co ………………………………………………… ………………. ..        5000 

His transactions for the month were :

Jan. 2 Sold goods to Rajesh subject to a trade discount of 10% ………………………. .

Jan. 4 Received from M/s Sahil & Co …………………………………………….. · ………………… ..

         Discount allowed … ……. …….. …. ……………………….. .. , …………………………………… 

Jan. 8. Settled M/s Anita & Co.’s account deducting 5% for cash discount 

Jan. 10  Purchased stationery articles ………………………… ………………………………………. .. . 

Jan. 12  Paid rent for the month …………………………………………………………………………. . 

Jan. 13 Bought goods from M/s San jay & Co ………………………. ……………………… ………. . 

Jan. 16 Paid M/s Ashu Bros. in full settlement of account… …………………………………….. . 

Jan. 20 Withdrew cash for personal expenses ………………………………………… · …………… .. 

Jan. 26 Returned goods to San jay & Co. and received their Credit Note ………………….. . 

Jan. 29 Paid San jay & C?. on account …………………………………………………………….. .. 

Discount allowed …………………………………………………………………… …… … .

Record the above transactions in journal.

 

22. Pass the necessary journal entries with the following information: 

1999                                                                                                                         $ 

Jan. 1 Started business with cash ……. …………………………………………………….. 20000 

Jan. 3 Deposited into bank … , …………………………………… …………… ……………..10000 

Jan. 5 Purchased machinery for cash ………………… …………………………………………5000 

Jan. 9 Purchased goods from M/s Tobesh Ltd. at the list price of  $ 5,000 

They allowed 5% trade discount. Payment made by cheque. 

Jan. 11 Paid for electric charges …………………… …………………………………………… 35 

Jan. 11 Paid rent for January, 1999 ………………….. ………………… …… ………. ,……….. 125 

Jan. 11 Stationery purchased ………………………………………………… .. ………………. .. .. 65 

Jan. 11 Drew for private use …………………………………………………………… …… .. .. …. 100 

(Payment in all cases made by cheque)

Jan. 20 Sold goods to M/s Ankit & Co……………………………………………… …….. ……… 3,500 

Jan. 29 Cheque of M/s Ankit & Co. dishonored 

Jan. 30 Salaries due tb Clerk. ……………………………………………………………………… 125 

Jan. 31 Interest on capital .. …. ………………………………………………… …. ………… 15