Chapter 4-Journal and Ledger

1.1 What is journal?

In accounting and bookkeeping, a journal is a record of financial transactions in order by date.

A journal is often defined as the book of original entry.

A journal is a detailed account that records all the financial transactions of a business, so
that they can then be used for future reconciling and transfer to other official accounting
records, such as the general ledger.

A journal states the date of a transaction, which accounts were affected and the amounts,
usually in a double-entry bookkeeping method.

Thus, journal is a simple book of accounts in which all the business transactions are originally
recorded in chronological order and from which they are posted to the ledger accounts at any
convenient time. Journalizing refers to the act of recording each transaction in the journal
and the form in which it is recorded, is known as a journal entry.

1.2 Importance of journal

1. Journal provides records of all business transactions in one place on the time and date
basis.
2. All the transactions are entered in the journal chronologically, a date wise record can
easily be maintained
3. If there is mistake in ledger, we can rectify it with the help of journal or rectify
journal entry in journal.
4. All the necessary information and the required explanations regarding all transactions
can be obtained from the journal.
5. All opening journal entries, closing journal entries and all other transactions which is
not recorded in any other subsidiary books, will be recorded in journal.
6. Errors can be easily located and prevented by the use of journal or book of prime
entry.
7. Journal is also needed in every type of accounting software. This accounting software
can make auto system of posting journal entries by their automatic processing, but
accountant must feed journal entries in journal and other specific vouchers of journal.
8. In journal, there is one column of ledger folio. It is very important for checking
reference of each account's posting with its original journal entry.

1.3 Limitations of journal

1. Journal is a main book of original entry which records all business transactions.
Sometimes, it becomes so bulky and voluminous that it cannot be handled easily.
2. Journal does not provide the required information on the prompt basis.
3. 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.
4. The actual position of ledger balances as purchases, sales, returns, bills etc. is not known
on a particular date from journal.
5. Unlike posting from subsidiary books, posting the transactions from journal to ledger
accounts take too much time because every time one has to post the transactions in
different ledger accounts.
6. Unlike other books of original entries like subsidiary books and cash book, journal does
not facilitate the internal control, because in journal only transactions are recorded in
chronological order.
7. It is sometimes accused of protecting established opinions and not being open to
genuinely new ideas. Ultimately it may not prevent the publication of poor research as
review standards may be lower in less prestigious journals.
8. It can cause lengthy delays in the dissemination of research findings.

1.4 Format of Journal

Date J.F Particulars L.F Amount Rs Amount Rs

(Debit) (Credit)

Journal

The journal has five columns, viz.

(1) Date
(2) Particulars;
(3)Journal Folio;
(4) Ledger Folio;
(5) Amount (Debit)
(6) Amount (Credit)

Brief explanation of the transaction by way of narration is given after passing the journal
entry.

(i) Date:

The Date column shows the date of transaction. It should be noted that all the transactions

are to be recorded in the journal in the chronological order.

(ii) Particulars:

In Particulars column, the accounts which are to be debited and credited are written. The

account(s) to be debited is written in the first row following the word Dr towards the end of

the row. Leaving sufficient margin on the left side in the next row, the account(s) to be

credited is written and prefixed with the word To. A brief description of the transaction is

written below the credited account. This description prefixed with Being or For, is known as

narration and is given in the brackets after writing these two types of accounts.

(iii) Ledger Folio:

This column is meant to record the reference of the main book, i.e., ledger and is not filled in
when the transactions are recorded in the journal. The page number of the ledger in which
the accounts are appearing is indicated in this column, while the debits and credits are posted
o the ledger accounts.
(iv)Journal Folio: It means page number of journal. This column is meant to record the journal
book. The page number of the journal from where the transaction has been posted, is
mentioned in this column. This will help in locating the entry in the journal easily. It is used in
ledger.

(v)Amount (Debit):
The amount to be debited along with its unit of measurement at the top of this column on
each page is written against the account debited.

(vi)Amount (Credit):
The amount to be credited along with its unit of measurement at the top of this column on
each page is written against the account credited.

1.5 Steps in Journalizing

1. Analyze the transactions and identify the two accounts (single entry and compound entry)
that are being affected by the transactions.
2. Ascertain the nature of the accounts involved as real, personal, or nominal.
3. Determine which rule of debit and credit is applicable for each of the accounts involved
4. Ascertain the amount to be debited and the account to be credited.
5. Write the name of the account to be debited along with the abbreviation Dr. on the
same line against the name of the account in the particulars column and the amount to be
debited in the debit column against the name of the account.
6. Write the name of the account to be credited in the next line preceded by the word To
at a few spaces towards the right in the particulars column, and the amount to be
credited in the credit column against the nature of the account.
 7. Write the narration (a brief description of the transaction) within brackets in the next
line in the particulars column.
1.6 Simple Entry and Compound Entry:

Every transaction effects two accounts - one is debited and another is account is credited.
Thus in recording a transaction in a journal one account is debited and another account is
credited. This type of entry is called simple entry.

The entry in which more than one account is debited or more than one account is credited, is
known as compound entry. Three or more accounts are connected with a compound entry.

Example of Simple Entry:

For example, on 28.02.17 we bought furniture from Mihir. The entry is:

Date Particulars L.F Amount RS Amount Rs

28.02.17 Furniture A/C .............................Dr. 10,000
Mihir A/C 10,000
(Being furniture purchased on credit)

Example Compound Entry:

For example on 28.02.17 we paid Rs 10,000 on account of salaries and Rs6,000 on account of
rent. For this the entry will be:

Date Particulars L.F Amount Amount

28.02.17 Salary A/C .............................Dr. 1,0000
Rent A/C 6000
Cash A/C 16,000
(Being salaries and rent)

Here tow accounts have been debited and the entry involves three accounts. Hence, it is
a compound entry.

1.7 Ledger

Ledger is a main book of account in which various accounts of personal, real and nominal
nature, are opened and maintained. In journal, as all the business transactions are recorded
chronologically, it is very difficult to obtain all the transactions pertaining to one head of
account together at one place.
Ledger maintains all types of accounts i.e. Personal, Real and Nominal Account.

All the business transactions are first recorded in Journal or Subsidiary books in a
chronological order when they actually take place and from there the transactions of similar
nature are transferred to Ledger and this process of transferring is called as Ledger Posting.
Ledger is also called the Principal Book of Accounts

Performa for Ledger

Date Particulars J.F Amount Date Particulars J.F Amount

Each ledger account is divided into two equal parts.

Left Hand Side Debit side (Dr)

Right Hand Side Credit side (Cr)

1.7.1 .Importance of posting

Posting is very important as it furnishes the result of all the transactions relating to a
particular person or service. After posting one can understand the position of an account at a
glance.

The posting process

1. Date column:
Write date of the transaction as recorded in the journal

2. Particulars column:
On Debit side: Write the name of the credited account in the journal entry after the
word To.

On Credit side: Write the name of the debited account in the journal entry after the
word By.

3. J.F. column:
Write page number of the journal from where it is posted.

4. Amount column:
Write the amount in the debit column of the journal on the debit side and the amount
in the credit column of the journal on the credit side.

1.7.2. Utilities of a Ledger:

1. A ledger is a very useful and important account of the organization.

2. The net result of all transactions in respect of a particular account on a given date can be
ascertained only from the ledger.

3. It facilitates easy posting and location of accounts

1.7.3. Types of Ledger

In a big business, the number of accounts is numerous and it is found necessary to maintain a
separate ledger for customers, suppliers and for others. Usually, the following three types of
ledgers are maintained in such big business concerns.

1. Debtors Ledger:
It contains accounts of all customers to whom goods have been sold on credit. From the
Sales Day Book, Sales Returns Book and Cash Book, the entries are made in this ledger.
This ledger is also known as sales ledger.

2. Creditors Ledger:
It contains accounts of all suppliers from whom goods have been bought on credit. From
the Purchases Day Book, Purchases Returns Book and Cash Book, the entries are made in
this ledger. This ledger is also known as Purchase Ledger.

3. General Ledger:
It contains all the residual accounts of real and nominal nature. It is also known as Nominal
Ledger.

1.7.4. Distinction between journal and ledger

1. Journal is a book of prime entry, whereas ledger is a book of final entry.

2. Accuracy of these books cannot be tested in journal, whereas it can be tested in
ledger.
3. Full details of a transaction (narrations) are recorded in these books, whereas all the
details are not recorded in this book.
4. Recording of transactions in the journal is called journalizing and recording of
transactions in the ledger is called posting.
5. A journal entry shows both the aspects debit as well as credit but each entry in the
ledger shows only one aspect.
6. Final accounts cannot be prepared with the books of original entry but can be prepared
with the help of ledger balances.
7. Journal has a wider scope than compared to ledger.
 8. Journal has various methods, whereas ledger has only one method.
9. Vouchers, receipts, debit notes, credit notes etc., from the basic documents form
journal entry, whereas journal constitutes basic record for ledger entries.
10. In the journal, information about a particular account is not found at one place,
whereas in the ledger information about a particular account is found at one place only.

1.8 Illustrations

Q.1. Journalize the following transactions:

2016
Feb. 03
Dhyay commenced business with a capital of Rs159, 500.
05 Purchased goods from Ronak Rs6, 550
07 Purchased goods on from Yash Rs35, 000 and paid half amount in cash.
10 Purchased furniture Rs24, 450.
11 Sold goods Rs39, 540.
15 Sold goods on credit to Arnav Rs2, 250.
20 Paid salaries Rs9060.
26 Returned goods to Sahil Rs6, 570.
27 Returned goods by Kavya Rs4750.
28 Received from Sahil Rs1,550

Solution:
 In the books of Mr. Dhyay

Amount Rs Amount Rs
Date J.F Particulars L.F (Debit) (Credit)

February1
6

Cash A/c Dr
03.02.16 To Capital A/c 159, 500 159500
(Being Dhyay started business with
cash)
Purchases A/cDr
05.02.16 To Ronak A/c 6550 6550
(Being purchased goods on credit)
Purchases A/c.Dr
07.02.16 To Yash A/c 35000 17500
To Cash A/c 17500
(Being purchased goods and paid half in
cash)
Furniture A/c.Dr
10.02.16 To Cash A/c 24450 24450
(Being bought furniture)
Cash A/cDr
11.02.16 To Sales A/c 39540 39540
(Being cash sales)
Raghav A/c.Dr
15.06.16 To Sales A/c 2250 2250
(Being credit sales )
 Salaries A/c.Dr
20.06.16 To Cash A/c 9060 9060
(Being salaries paid )
Sahil A/c..Dr
26.02.16 To Purchases Return A/c 6570 6570
(Being goods returned to Sahil)
Sales Return A/c.Dr
27.02.16 To Kavya A/c 4750 4750
(Being goods returned by Kavya )
Cash A/cDr
28.02.16 To Sahil A/c 1550 1550
(Being received payment from Sahil)

Total 289, 220 289, 200

Q.2. Journalize the following transactions:

2017
March
01 Shivam started business with cash Rs. 75750.
05 Paid life insurance premium of Rs. 25750.
08 Goods sold to Mukul work Rs 7500 with cash discount at 5%.
10 Paid insurance premium Rs. 6575.
15 Received interest Rs. 5750.
17 Payable commission to Riya Rs. 4570.
21 Returned goods by Tanya Rs. 4575.
24 Returned goods to Yash Rs. 3575.
28 Bought machinery Rs. 37450.
30 Paid office rent Rs. 7450.

Solution:
In the books of Mr. Shivam
Date J. Particulars L.F Amount Rs Amount Rs
2017 F (Debit ) (Credit )
March
01 Cash A/c .Dr 75750
To Capital A/c 75750
(Being , business started with cash)
05 Drawings A/cDr 25750
To Cash A/c 25750
(Being cash withdrawn for personal use)
08 Cash A/c..Dr 7152
Cash discount A/c.Dr 375
To Sales A/c 7500
(Being cash sales)
10 Insurance Premium A/c.Dr 6575
To Cash A/c 6575
(Being , insurance premium paid)
15 Cash A/c.Dr 5750
To Interest A/c 5750
(Being interest received )
17 Commission A/c Dr 4570
To Riya A/c 4570
(Being commission payable to Riya )
21 Sales Return A/c Dr 4575
To Tanya 4575
(Being , goods returned by Tanya )
24 Yash A/cDr 3575
To Purchases Return A/c 3575
(Being goods returned to Yash )
28 Machinery A/cDr 37450
To Cash A/c 37450
(Being , machinery bought )
30 Office Rent A/cDr 7450
To Cash A/c 7450
(Being office rent paid )
Total 178945 178945
Q.3 Journalize the following entire:

January
2017
03 Girish started business with cash Rs 75,450 and furniture worth Rs 42,750.
05 He gave cash to his wife Kate Rs7220 from business.
08 Purchased goods from Miss Sona Rs 7480
09 Sold goods on credit to Raju for Rs 8450
12 Received rent from Miss Nisha Rs 9475 and introduced this capital in the business.
15 Received cheque from Mike Rs 4250
22 Cash paid to broker as commission Rs 1750
27 Give loan to Yash Rs 7545
31 Paid electricity bill Rs 250
 In the books of Mr. Girish

Date J.F Particulars L.F Amount Rs Amount Rs

Januar (Debit) (Credit )
y
2017
03 Cash A/c ..Dr 75450
Furniture A/cDr 42750
To Capital A/c 118200
(Being business started with cash and furniture)
05 Drawings A/cDr 7220
To Cash A/c 7220
(Being cash withdrawn for personal use )
08 Purchases A/cDr 7480
To Sona A/c 7480
(Being credit purchases )
09 Raju A/c..Dr 8450
To Sales A/c 8450
(Being credit sales )
12 Cash A/c Dr 9475
To Capital A/c 9475
(Being cash introduced to capital )
15 Bank A/cDr 4250
To Mike A/c 4250
(Being payment received from Mike )
22 Commission A/cDr 1750
To Cash A/c 1750
(Being brokerage commission paid)
24 Salaries A/c Dr 25425
To Cash A/c 25425
(Being salaries paid )
27 Yash A/c ..Dr 7545
To Loan A/c 7545
(Being loan given to Yash )
31 Electricity A/cDr 250
To Cash A/c 250
(Being electricity bill paid)
Total 182500 182500
Q. 4. Journalize the following entire:

January
2017
03 Ganesh started business with cash Rs 95,450 and car worth Rs 42,750.
05 He gave cash to his wife Kate Rs7000 from business.
08 Purchased goods from Miss Sona Rs 7080
09 Sold goods on credit to Raju for Rs 8050
12 Received rent from Miss Nisha Rs 9475 and introduced this capital in the business.
15 Received cheque from Kapil Rs 4250
22 Cash paid to broker as commission Rs 1750
27 Give loan to Yashita Rs 8560
31 Paid electricity bill Rs 200

Solution:
 In the books of Mr. Ganesh

Date J.F Particulars L.F Amount Rs Amount Rs

Januar (Debit) (Credit )
y
2017
03 Cash A/c ..Dr 95450
Car A/cDr 42750
To Capital A/c 138200
(Being business started with cash and furniture)
05 Drawings A/cDr 7000
To Cash A/c 7000
(Being cash withdrawn for personal use )
08 Purchases A/cDr 7080
To Sona A/c 7080
(Being credit purchases )
09 Raju A/c..Dr 8050
To Sales A/c 8050
(Being credit sales )
12 Cash A/c Dr 9475
To Capital A/c 9475
(Being cash introduced to capital )
15 Bank A/cDr 4250
To Kapil A/c 4250
(Being payment received from Kapil )
22 Commission A/cDr 1750
To Cash A/c 1750
(Being brokerage commission paid)
24 Salaries A/c Dr 25425
To Cash A/c 25425
(Being salaries paid )
27 Yashita A/c ..Dr 8560
To Loan A/c 8560
(Being loan given to Yash )
31 Electricity A/cDr 200
To Cash A/c 200
(Being electricity bill paid)
Total 209990 209990
Q.6 Journalize the following entire:

May
2016
03 Shiva started business with cash Rs 905,550
05 He gave cash to his wife Rs2690 from business.
08 Purchased goods from Rs 8540 and paid cash
10 Sold goods on for Rs 8460
12 Received interest Rs9470
15 Received payment from Mina Rs 4030
22 Cash paid to broker as commission Rs 1750
27 Paid cash to Ethane Rs 70450
31 Paid electricity bill Rs 2590
 In the books of Mr. Shiva

Date J. Particulars L.F Amount Rs Amount Rs

May F (Debit ) (Credit )
2016
03 Cash A/c..Dr 905,550
To Capital A/c 905,550
(Being , business started with cash and furniture)
05 Drawings A/cDr 2690
To Cash A/c 2690
(Being cash withdrawn for personal use )
08 Purchases A/c Dr 8540
To Cash A/c 8540
(Being cash purchases )
10 Cash A/cDr 8460
To Sales A/c 8460
(Being cash sales )
12 Cash A/cDr 9470
To Interest A/c 9470
(Being introduced additional capital )
15 Cash A/cDr 4030
To Mina A/c 4030
(Being received payment from Mona )
22 Commission A/c..Dr 1750
To Cash A/c 1750
(Being commission paid )
27 Ethane A/cDr 70450
To Cash A/c 70450
(Being paid payment to Yash )
31 Electricity A/c.Dr 2590
To Cash A/c 2590
(Being paid electricity bill )
Total 1013530 1013530
 Sums with journal and ledger
Q.7. Journalize the following entire:

January
2017
03 Shivam started business with cash Rs 75,550 and furniture worth Rs 42,650.
05 He gave cash to his wife Rs7260 from business.
08 Purchased goods from Rs 8540
10 Sold goods on for Rs 8460
12 Received rent from Miss Nisha Rs 9470 and introduced this capital in the business.
15 Received payment from Mona Rs 4230
22 Cash paid to broker as commission Rs 1750
27 Paid cash to Yash Rs 7450
31 Paid electricity bill Rs 250

Prepare ledger accounts of following:

1. Capital A/c
2. Cash A/c
 Solution:

In the books Mr. Shivam

Date J. Particulars L.F Amount Rs Amount Rs
Januar F (Debit ) (Credit )
y
2017
03 Cash A/c..Dr 75550
Furniture A/c Dr 42650
To Capital A/c 118200
(Being , business started with cash and furniture)
05 Drawings A/cDr 7260
To Cash A/c 7260
(Being cash withdrawn for personal use )
08 Purchases A/c Dr 8540
To Cash A/c 8540
(Being cash purchases )
10 Cash A/cDr 8460
To Sales A/c 8460
(Being cash sales )
12 Cash A/cDr 9470
To Capital A/c 9470
(Being introduced additional capital )
15 Cash A/cDr 4230
To Mona A/c 4230
(Being received payment from Mona )
22 Commission A/c..Dr 1750
To Cash A/c 1750
(Being commission paid )
27 Yash A/cDr 7450
To Cash A/c 7450
(Being paid payment to Yash )
31 Electricity A/c.Dr 250
To Cash A/c 250
(Being paid electricity bill )
Total 165610 165610

Ledgers Account

Dr Capital Account Cr
Date Particulars J. Amount Rs Date Particulars J.F Amount Rs
Jan17 F Jan17
03 By Furniture A/c 42650
03 By Cash A/c 75550
31 To Balance c/fd 127670 12 By Cash A/c 9470
Total 127670 Total 127670
Feb17 Feb17
01 01 To balance c/d 127670

Dr Cash Account Cr
Date Particulars J. Amount Rs Date Particulars J.F Amount Rs
Jan17 F Jan17
03 To Capital A/c 75550 05 By Drawings A/c 7260
10 To Sales A/c 8460 08 By Purchases A/c 8540
12 To Capital A/c 9470 15 By Mona A/c 4230
22 By Commission A/c 1750
27 By Yash A/c 7450
31 By Electricity A/c 250
31 By Balance c/fd 64000
Total 93480 Total 93480
Feb17 Feb17
01 To balance c/d 64000 01
Q.8.Journalize the following entire:
March
2017

02 Divya started business with cash Rs 42755, furniture Rs 7505 and car van Rs 74750
05 Purchased goods from Yashita Rs 9750
07 Solds goods to Arjun Rs 10550
10 Paid salaries Rs 7560
12 Paid cash to Yashita Rs 5550
14 Received commission Rs 460
17 Received payment from Arjun Rs 8550
27 Goods lost by fire Rs7450
29 Paid income tax Rs 4500
Prepare following ledgers accounts
1. Cash Account
2. Arjun Account
3. Yashita Account

Solution
 Date J. Particulars L.F Amount Rs Amount Rs
March17 F
02 Cash A/c.Dr 42755
Furniture A/cDr 7505
Car Van A/c 74750
To Capital A/c 125010
(Being started business with cash and assets)
05 Purchases A/cDr 9750
To Yashita A/c 9750
(Being credit purchases )
07 Arjun A/cDr 10550
To Sales A/c 10550
(Being credit sales )
10 Salaries A/cDr 7560
To Cash A/c 7560
(Being salaries paid)
12 Yashita A/c..Dr 5550
To Cash A/c 5550
(Being cash sales )
14 Cash A/c..Dr 460
To Commission A/c 460
(Being received commission )
17 Cash A/c..Dr 8550
To Arjun A/c 8550
(Being received payment from Arjun)
27 Purchases A/c Dr 7450
To Loss by fire A/c 7450
(Being goods lost by fire )
 29 Drawings A/c.Dr 4500
To Cash A/c 4500
(Being income tax paid )
Total 179380 179380
In the books Miss Divya

Ledger Accounts

Dr Cash Account Cr
Date Particulars J.F Amount Date Particulars J.F Amount
March17 Rs March17 Rs
02 To Capital A/c 42755 10 By Salaries A/c 7560
14 To Commission A/c 460 12 By Yashita A/c 5550
17 To Arjun A/c 8550 29 By Drawings A/c 4500
31 By Balance c/fd 34155
Total 51765 Total 51765
April17 April 17
01 To Balance c/d 34155 01

Dr Yashita Account Cr
Date Particulars J.F Amount Date Particulars J.F Amount
March17 Rs March17 Rs
12 To Cash A/c 5550 05 By Purchases A/c 9750
31 To balance c/fd 4200
Total 9750 Total 9750
April17 April 17
01 01 To Balance c/d 4200

Date Particulars J.F Amount Date Particulars J.F Amount

March17 Rs March17 Rs
 07 To Sales A/c 10550 17 By Cash A/c 8550
31 By balance c/fd 2000
Total 10550 Total 10550
April17 April 17
01 To Balance c/d 2000 01
Dr Arjun Account CR

Q. 9.. Journalize the following entire in the books of Mr. Gera:

December
2016
02 Purchased goods and paid cash Rs.7750
07 Sold goods to Krish Rs12550
09 Cash Purchases Rs 3570
11 Credit Purchases from Ronak Rs 4500
13 Purchased goods from Jayesh for Rs 15900 and paid half in cash with 10% cash discount.
17 Paid office rent Rs 8900
19 Cash sales Rs 5010
20 Sold goods to James Rs 10050
29 Cash sales Rs 7450

Prepare following ledger accounts:

1. Purchases Account
2. Sales Account
 In the books of Mr. Gera
Date J. Particulars L.F Amount Rs Amount Rs
December F
2016
02 Purchases A/cDr 7750
To Cash A/c 7550
(Being cash purchases )
07 Krish A/c..Dr 12550
To Sales A/c 12550
(Being credit sales )
09 Purchases A/cDr 3570
To Cash A/c 3570
(Being cash purchases )
11 Purchases A/c.Dr 4500
To Ronak A/c 4500
(Being credit purchases )
13 Purchases A/c .Dr 15900
To Cash A/c 7155
To Discount Received A/c 795
To Jayesh A/c 7950
(Being cash and credit sales )
17 Rent A/c.Dr 8900
To Cash A/c 8900
(Being office rent paid )
 19 Cash A/c..Dr 5010
To Sales A/c 5010
(Being cash sales )
20 James A/cDr 10550
To Sales A/c 10550
(Being credit sales )
21 Cash A/c..Dr 7450
To Sales A/c 7450
(Being cash sales )
Total 76180 76180

Ledger Account
Dr Purchases Account Cr
Date Particulars J. Amoun Date Particulars J. Amount
Dec1 F t Dec17 F
7
02 To Cash A/c 7750 31 By balance c/fd 31720
09 To Cash A/c 3570
11 To Ronak A/c 4500
13 To Cash A/c 7155
13 To Discount Received A/c 795
13 To Jayesh A/c 7950

Total 31720 Total 31720

Dr Sales Account Cr
Date Particulars J. Amoun Date Particulars J. Amount
Dec1 F t Dec17 F
7
31 To balance c/fd 35560 07 By KrishA/c 12550
19 By Cash A/c 5010
20 By James A/c 10550
21 By Cash A/c 7450

Total 35560 Total 35560

Q.10. Journalize the following entire in the books of Mr. Gaurav:

December
2016
02 Purchased goods from Jay Rs.7750
07 Sold goods to Krishna Rs12550
09 Cash Purchases Rs 3570
11 Credit Purchases from Ronak Rs 4530
13 Purchased goods from Jay for Rs 14500 and paid half in cash with 10% cash discount.
17 Paid office rent Rs 7890
19 Cash sales Rs 5010
20 Sold goods to Maya Rs 10050
29 Cash sales Rs 7450

Prepare following ledger accounts:

3. Purchases Account
4. Sales Account
5. Cash Account
6. Jay Account
Solution

In the books of Mr. Gaurav

Date J. Particulars L.F Amount Rs Amount Rs

December F
2016
02 Purchases A/cDr 7750
To Jay A/c 7550
(Being credit purchases )
07 Krishna A/c..Dr 12550
To Sales A/c 12550
(Being credit sales )
09 Purchases A/cDr 3570
To Cash A/c 3570
(Being cash purchases )
11 Purchases A/c.Dr 4530
To Ronak A/c 4530
(Being credit purchases )
 13 Purchases A/c .Dr 14500
To Cash A/c 6525
To Discount Received A/c 725
To Jay A/c 7250
(Being cash and credit sales )
17 Rent A/c.Dr 7890
To Cash A/c 7890
(Being office rent paid )
19 Cash A/c..Dr 5010
To Sales A/c 5010
(Being cash sales )
20 Maya A/cDr 10550
To Sales A/c 10550
(Being credit sales )
21 Cash A/c..Dr 7450
To Sales A/c 7450
(Being cash sales )
Total 73600 73600

Ledger Account
Dr Purchases Account Cr
Date Particulars J. Amoun Date Particulars J. Amount
Dec1 F t Dec17 F
7
02 To Jay A/c 7750 31 By balance c/fd 30350
09 To Cash A/c 3570
11 To Ronak A/c 4530
13 To Cash A/c 6525
13 To Discount Received A/c 725
13 To JayA/c 7250

Total 30350 Total 30350

Dr Sales Account Cr
Date Particulars J. Amoun Date Particulars J. Amount
Dec1 F t Dec17 F
7
31 To balance c/fd 35560 07 By Krishna A/c 12550
19 By Cash A/c 5010
20 By Maya A/c 10550
21 By Cash A/c 7450

Total 35560 Total 35560

Dr Cash Account Cr
Date Particulars J. Amoun Date Particulars J. Amount
Dec1 F t Dec17 F
7
19 To Sales A/c 5010 09 By Purchases A/c 3570
21 To Sales A/c 7450 17 By Rent A/c 7890
31 By balance c/fd 1100
 Total 12460 Total 12560

Date Particulars J.F Amoun Date Particulars J.F Amount

Dec1 t Dec17
7
31 To balance c/fd 15000 02 By Purchases A/c 7750
13 By Purchases A/c 7250

total 15000 total 15000

Dr Jay Account Cr

I) Theory Questions
Q.1 Importance of Journal(Refer Section 1.2 )
Q.2. Difference between journal and ledger (Refer section 1.7.4.)
Q.3 Limitations of journal (Refer section 1.3)

II) Short Notes

Q.1 Journal
Q.2.Ledger
Q.3 Types of ledger
Q.4 Uses of ledger
Q.5 Compound entry and single entry

III) Multiple choice questions

1.______________ is the transactions as recorded in the journal
a. Date Column
b. Journal folio
c. Debit Amount
d. Cash leder

2._______________ is the pages number of journal from where it is posted

a. Journal folio
b. Ledger folio
c. Folio
d. Book-keeping

3.______________ is mostly the debit balance in the ledger account.

a. Cash
b. Sales
c. Creditor
d. Income

4. ______________________ is mostly the credit balance in the ledger account.

a. Sales
b. Purchases
c. House Rent
d. Staff Salaries
5._________ is withdrawn by sole trader for personal use.
a. Sales
b. Credit
c. Cash
d. Drawings
Answers 1-a, 2-a, 3-a, 4-a,5-d

IV ) Fills in the balance

1. ______ is called book of original entry
2. Journal does not provided information on _______ basis
3. ______ is called Principle book of accounts
4. ______ means page number
5. General ledger is also called __________
Answers
1-Journal , 2- prompt, 3-Ledger ,4- Folio ,5-Nonima ledger

V) True or False statements

1. Ledger is called book of original entry

2. Ledger only keeps accounts of real and personal accounts only
3. Journal is after ledger accounts are made
4. There 8 columns in the ledger account
5. Drawings is for business uses
Answers
True- 4
False 1,2,3,5

VI) Sums

Q.1. Journalize the following transactions:

2016
Feb. 03
Daya commenced business with a capital of Rs19, 500.
05 Purchased goods from Ronak Rs6,050
07 Purchased goods on from Yash Rs35, 000 and paid half amount in cash.
10 Purchased furniture Rs2450.
11 Sold goods Rs3940
15 Sold goods on credit to Arnav Rs2050.
20 Paid salaries Rs9000.
 26 Returned goods to Shreya Rs6, 570.
27 Returned goods by Kavya Rs4950.
28 Received from Sahil Rs1,550

Q.2. Journalize the following transactions:

2017
March
01 Shivani started business with cash Rs. 70750.
05 Paid life insurance premium of Rs. 2750.
08 Goods sold to Mukul work Rs 7900 with cash discount at 5%.
10 Paid insurance premium Rs. 6505.
15 Received interest Rs. 570.
17 Payable commission to Riya Rs. 4970.
21 Returned goods by Tanya Rs. 4150.
24 Returned goods to Yash Rs. 3505.
28 Bought machinery Rs. 3750.

Q. 3. Journalize the following entire:

January
2017
03 Shivam started business with cash Rs 25450 and furniture worth Rs 42,650.
05 He gave cash to his friend Rs7200 from business.
08 Purchased goods from Nick and paid cash Rs 8500
10 Sold goods to Sona and received cashRs 8460
12 Received rent from Miss Hina Rs 9400 and introduced this capital in the business.
15 Received cash payment from Maya Rs 4205
22 Cash paid to broker as commission Rs 1705
27 Paid cash to Arjun Rs 7455
31 Paid electricity bill Rs 255
Prepare ledger accounts of following:
1. Capital A/c
2. Cash A/c

Q.4.Journalize the following entire:

March
2017

02 Hina started business with cash Rs 42700,and car van Rs 74750

05 Purchased goods from Yashraj Rs 9750
07 Solds goods to Varun Rs 10550
10 Paid salaries Rs 7500
12 Paid cash to Yashraj Rs 4550
14 Received commission Rs 4675
17 Received payment from Varun Rs 8550
20 Paid Electricity bill Rs. 7450
27 Goods lost by fire Rs7750
29 Paid income tax Rs 4570
30 Insurance paid Rs 3670
Prepare following ledgers accounts
1. Cash Account
2. Varun Account
3. Yashraj Account

Q.5 Journalize the following entire in the books of Mr. Gaurav:

December
2016
02 Purchased goods from Ashwin Rs.7750
07 Sold goods to Kavya Rs 10070
09 Cash Purchases Rs 3570
11 Credit Purchases from Ronak Rs 4350
13 Purchased goods from Ashwin for Rs 10500 and paid half in cash with 10% cash discount.
17 Paid office rent Rs 7070
19 Cash sales Rs 5910
20 Sold goods to Maya Rs 10000
29 Cash sales Rs 7050
30 Goods lost by thief Rs 4570

Prepare following ledger accounts:

1. Purchases Account
 2. Sales Account
3. Cash Account
4. Ashwin Account

Q. 6. Journalize the following entire in the books of Mr. Gaurav:

October
2016
02 Purchased goods from Jay Rs.7600
07 Sold goods to Krishna Rs1750
09 Cash Purchases Rs 39700
11 Credit Purchases from Riya Rs 4030
13 Purchased goods from Jay for Rs 9500 and paid half in cash with 10% cash discount.
15 Sold goods to Yash Rs 7000 and paid one fourth in cash with 10 % cash discount
17 Paid office rent Rs 7890
19 Cash sales Rs 5010
20 Sold goods to Maya Rs 10050
29 Cash sales Rs 7450

Prepare following ledger accounts:

1. Purchases Account
2. Sales Account
3. Cash Account

Q.7 Journalize the following entire in the books of Mr. Gaurav:

October
2016
02 Purchased goods from Juile Rs.7670
07 Sold goods to Krish Rs12500 and paid half in cash
09 Purchases Rs 9700 paid in cash with 15% cash discount
11 Credit Purchases from Riya Rs 40300 and half in cash with 5% cash discount
13 Purchased goods from Jay for Rs 9500 and paid half in cash with 20% cash discount.
15 Sold goods to Yash Rs 10500 and paid one fourth in cash with 5 % cash discount
17 Paid office rent Rs 7800 and salaries Rs 7890
19 Cash sales Rs 5010
20 Sold goods to Sonia Rs 10050
29 Cash sales Rs 7450

Prepare following ledger accounts:

1. Purchases Account
2. Sales Account
3. Cash Account
 http://www.careerride.com/fa-ledger.aspx
http://gradestack.com/Class-11th-Commerce/Recording-of-Transactions/The-
Ledger/17605-3454-30027-study-wtw
http://www.svtuition.org/2009/09/advantages-of-journal.html
http://www.clicktoconvert.com
http://www.svtuition.org/2009/09/advantages-of-journal.html
http://www.accounts-assignment.com/limitations-of-journal
http://gradestack.com/CA-CPT/Journal-Entries/Limitations-of-Journal/22439-4547-
54296-study-wtw
http://www.accountingexplanation.com/journal.htm
http://www.myaccountingcourse.com/accounting-cycle/journal-entries
http://accountinginfo.com/study/je/je-01.htm
http://www.yourarticlelibrary.com/accounting/journal/journal-meaning-utility-
limitations-and-format/63102/
http://www.accountingexplanation.com/journal.htm