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Learning Objectives
After studying this chapter you will be able to

 understand the meaning of books of original entry

 record the transactions in the journal
 record the transactions in single, double and triple column cash book
 prepare a petty cash book
 understand the meaning, utility and format of ledger
 record the transactions in day books
 explain the posting of transactions from journal, cash book and day books into the ledger
 explain the concept of balancing of ledger accounts.
In Chapter 1 we discussed the meaning and importance of accounting, the basic terms used in accounting,
the generally accepted accounting principles, the classification of accounts and the rules of debit and credit.
It was also stated that accounting is the art of identifying, analysing and recording of the business transaction,
classifying and summarizing their effects, and finally communicating it to the interested users of the accounting
information.
In the present chapter, we will discuss the recording of transactions in the books of original entry, i.e. the
journal, cash book and different day books, and the posting of these transactions from these books of original
entry to the ledger which is the principle book, and also the balancing of the ledger accounts.
2.1 Books of Original Entry
The books of accounts where in transactions are recorded for the first time from a source document
are called ‘Books of Original Entry’. A document which provides evidence of the transactions is called
a source document or voucher,for e.g. cash memo, invoice, sales bills, pay-in-slips, cheques, salary
slips, debit notes, credit notes, receipts etc. We will discuss about vouchers in greater detail in
Chapter 4. Journal is one of the basic books of original entry in which transactions are originally
recorded in a chronological order, i.e. one after the other in order of their happening according to the
principles of double entry system. When the size of the business is small then all its transactions
can be recorded in a single journal. But as the size of the business grows, it no longer remains
possible to record all the transactions in a single journal. In such a situation more than one journal
may be used - each such journal is called a sub-journal. A particular type of transaction may be
recorded in a sub-journal, or subsidiary book, for e.g., all credit purchases of goods may be recorded
in one journal called the purchases book and all credit sales of goods may be recorded in another
sub-journal called sales day book. These journals are called as ‘Special purpose subsidiary books’
or ‘books of original entry’. The important types of subsidiary books are Cash Book, Purchases Book

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Sales Book, Purchases Return Book, Sales Return Book, Bills Receivable Book, Bills Payable Book
and Journal Proper.
These books are called books of original entry because transactions are first of all recorded in these
books. An enterprise need not maintain all of the above books - it may maintain any of the above
books, according to its needs and requirements.

2.2. Journal
Journal is the basic book of original entry. Transactions in the journal are recorded in chronological
order, i.e., the transaction which happened first followed by the next transaction and so on. The journal
provides a date-wise record of all the transactions with details of the amounts debited and credited
and the amount of each transaction. The format of the journal is given below

JOURNAL

Date Particulars L.F. Debit Credit

Amount Amount
Rs Rs

Maintenance of the different columns of the journal has been discussed below.
(i) Date: The first column in the journal is the date column. In this column the date on which
the transaction took place is entered. The year and month is written only once till they change.
First the year of the transaction is written followed by the month and lastly the date of the
transaction is entered.
(ii) Particular: In the ‘particular’ column, the particulars of the transactions are recorded. We
know that every transaction affects at least two accounts - one account is debited and the
other account is credited. First the account to be debited is identified and the name of this
account is recorded in the particulars column. After writing the name of the account to be
debited in the first line in the particular column, in the second line we write the name of the
account which is to be credited after its identification. Some space is to be left before we start
writing the second line. This is done just to clearly distinguish between the account(s) to be
debited and the account(s) to be credited. The word ‘To’ is prefixed to the name of the account
to be credited. After writing the names of the accounts to be debited and credited a small
explanation of the transaction called ‘Narration’ is written. Narration explains the reasons for
the happening of the transactions. A line is drawn after the narration which touches both the
date column on the one hand and ledger folio column on the other hand indicating that the
recording of the transaction is completed.
(iii) Ledge Folio or L.F. : All entries from the journal are posted in the ledger which contains
different accounts. In the L.F. column the folio number of the ledger where the posting has
been done is recorded. For example, suppose the ‘Machinery Account’ in ledger appears at
folio number 151, if by a journal entry Machinery Account has been debited than 151 will be
written in the L.F. column against Machinery Account which will indicate that this transaction
has been debited at folio number 151 in the ledger where ‘Machinery Account’ exists.

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(iv) Debit Amount Column: In this column the amount of account being debited is written.
(v) Credit amount Column: In this column the amount of account being credited is written.
The process of recording the transactions in the journal is called journalisation and recording a single
transaction is called journal entry. Journal entry is the basic record of a business transaction. When
only two accounts are involved in recording a transaction then the entry is called a simple journal
entry, and when more than two accounts are involved in recording a transaction than the entry is
called a compound journal entry.

2.2.1 Steps in Journalising: The following steps may be taken for recording the transactions in the
journal.
(i) Read the transaction carefully and identify the two aspects of the accounts which are affected by the
transaction.
(ii) Find the category to which these accounts belong i.e. Personal, Real or Nominal.
(iii) Recall the rules of debit and credit and decide which rules will be applicable on these accounts. Here
we must remember that every rule has two parts, i.e. - one debit part and the other credit part, for
e.g., the rule for personal accounts is, ‘Debit the receiver and credit the giver’. In this rule the first
part states that if a person receives money, or something measurable in money, than his account
should be debited whereas the second part of the rule states that if the person gives money or money’s
worth to the business than his account should be credited. Therefore, after identifying the rule which
will be applicable we have to identify that part of the rule which will be applicable. This will help us
in deciding whether the concerned account will be debited or credited.
(iv) In the date column write the year, month and date on which the transaction took place.
(v) In the particulars column first write the name of the account which has to be debited and then the word
‘Dr’ against it. The amount by which the account is to be debited will be written against this account
in the ‘Debit Amount’ column.
(vi) Then before writing the next line leave some space and write the name of the account which is to be
credited prefixed with the word ‘To’. Against this account in the 'Credit Amount column' write the amount
by which the account is to be credited.
vi) Now in the particulars column write the narration of the transaction which should be a brief explanation
of the transaction.
(viii) After writing the explanation of the transaction, a line is drawn in the particulars column which separates
the preceeding entry from the succeeding entry. In this way all transactions are recorded one after
the other in chronological order in the journal. Once a page is complete the totals of both the columns,
‘debit amount column’ and ‘credit amount column’, are done and against these totals the word's ‘balance
carried forward‘ or ‘balance C/F’ are written. It must be noted that the totals of both the columns must
be the same because totals of debits are always equal to totals of credits. Before recording the
transactions in the next column, first, totals of the previous page are written in both the ‘debit amount
column’ and the ‘credit amount column’ as ‘Balance brought forward’ or ‘Balance b/f’.

Transaction1. Mahesh started business on 1.4.2007 with capital Rs 5,00,000.

Analysis of Transaction: This transaction affects Mahesh’s capital account and cash account. Capital account
is the proprietor’s personal account and the rule ‘Debit the receiver and credit the giver’ will be applicable.
Since Mahesh is the giver his capital account will be credited. Cash account is real account hence the rule
‘Debit what comes in and credit what goes out’ will be applicable. Since cash is coming into the business,
cash account will be debited. Therefore, the journal entry for this transaction will be
Rs. Rs.
Cash Account ……………. Dr 5,00,000
To Mahesh's Capital Account 5,00,000
(Mahesh started business with cash)
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Transaction 2. April I 2007. He opened a savings bank account with State Bank of India with Rs 3,00,000.

Analysis of Transaction: The two accounts affected by this transaction are cash account and bank account.
Cash a/c is real a/c and bank a/c is personal a/c The rule for real accounts is ‘Debit what comes in and
credit what goes out’. As bank is receiver of money, Bank account will be debited. Since cash from the
business is going out cash account will be credited. Therefore, the journal entry will be

Rs. Rs.
Bank Account……………..Dr 3,00,000
to Cash Account 3,00,000
(deposited cash into bank)

Transaction 3. April 3, 2007. He purchased goods from Bhola Nath on Credit for Rs. 50,000.

Analysis of Transaction: The two accounts affected by the transaction are ‘purchases account’ and Bhola
Nath's account. Purchases are expenses, hence, the rule ‘debit all expenses and losses and credit all
incomes and gains’ will be applicable and ‘Purchases Account’ will be debited. Bhola Nath’s account is a
personal account, therefore, the rule ‘Debit the receiver and Credit the giver’ will be applicable. Since Bhola
Nath is the supplier or giver of the goods to the business, therefore, his account will be credited. The journal
entry will be as follows.
Rs. Rs.
Purchases Account……………..Dr 50,000
To Bhola Nath's Account 50,000
(purchased goods from Bhola Nath)

Transaction 4. April 4. 2007. He purchased goods from Ashraf and paid him by cheque Rs. 10,000.

Analysis of Transaction: The two accounts affected by this transaction are purchases account and bank
account. It should be noted here that the transaction will not affect Ashraf’s account because payment has
been made simultaneously with purchase of goods therefore it is not credit purchase. Purchases account
is an expense account, therefore, the rule ‘debit all expenses and losses and credit all incomes and gains
will be used here. Since purchases are expenses, purchases account will be debited. The second account
affected is bank account. Cash at bank is an asset, therefore, the rule for real accounts i.e. ‘debit what comes
in and credit what goes out’ is applicable. Since cash from the bank is going out, bank account will be
credited. The transaction will be recorded as follows

Rs. Rs.
Purchases Account……………..Dr 10,000
To Bank Account 10,000
(purchased goods and paid by cheque)

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Transaction 5. April 5. 2007. Mahesh purchased furniture for Cash Rs 7500.

Analysis of Transaction: The two accounts affected by the transaction are ‘Furniture Account’ and ‘Cash
Account’. Both are real accounts. Therefore, the rule ‘debit what comes in and credit what goes out’ will be
applied. Since furniture is coming into the business furniture account will be debited, and cash is going out
so cash account will be credited. The transaction will be recorded as follows.

Rs. Rs.
Furniture Account……………..Dr 7,500
To Cash Account 7,500
(purchased furniture for cash)

Transaction 6. April 6, 2007. He sold goods for cash to Vijay, Rs 12,500.

Analysis of Transaction: Since goods have been sold for cash the two accounts affected by the transaction
will be ‘cash account’ and ‘sales account’. When goods are sold for cash, buyer’s account is not affected.
Cash account is a real account, therefore, the rule ‘debit what comes in and credit what goes out’ will be
applicable. As cash is coming into the business cash account will be debited. Sales is an income, hence,
the rule ‘debit all expenses and losses and credit all incomes and gains’ will be applied, therefore, sales
account will be credited. The transaction will be journalised as follows.

Rs. Rs.
Cash Account……………..Dr 12,500
to Sales Account 12,500
(sold goods for cash)

Transaction 7. April 9, 2007. Sold goods to Ravi Rs 8,000.

Analysis of Transaction: The two accounts affected by the transaction are Ravi’s account and ‘sales account’.
Ravi's account is a personal account, therefore, the rule for personal accounts i.e. ‘debit the receiver and
credit the giver’ will be applicable. Since Ravi is the receiver of goods from the business his account will be
debited. Sales is an income. Therefore, the rule ‘debit all expenses and losses and credit all incomes and
gains’ will be applied. As sales is an income sales account will be credited. The transaction will be journalised
as follows.

Rs. Rs.
Ravi's Account……………..Dr 8,000
To Sales Account 8,000
(Sold goods to Ravi)

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Transaction 8. April 10, 2007. Paid by cheque to Bholanath Rs 49,500 and he allowed discount Rs. 500.

Analysis of Transaction: Here the accounts affected by the transaction will be Bhola Nath’s account, bank
account and discount account. Bhola Nath’s account is a personal account, therefore, the rule for personal
accounts will be applied. Since Bhola Nath is the receiver, his account will be debited. Cash from bank is
going out, therefore, bank account will be credited. Bhola Nath allowed a discount of Rs 500. This means
that the business received a discount of Rs 500. Discount received is an income, therefore, discount account
will be credited. The transaction will be journalised as follows

Rs. Rs.
Bhola Nath’s Account……………..Dr 50,000
To Bank Account 49,500
To Discount Account 500
(paid Bhola Nath and he allowed discount)

Transaction 9. April 15, 2007. Received cash from Ravi Rs 14,400 and discount allowed to him Rs 100.

Analysis of Transaction: The accounts affected by the transactions are cash account, discount account
and Ravi's account. Cash account is a real account and since cash is being received this account will be
debited. Discount account is a nominal account. Discount received is an expense, therefore, discount account
will be debited. Ravi's account is a personal account. Ravi is paying cash to the business. Therefore, his
account will be credited. The transaction will be journalised as follows.

Rs. Rs.
Cash Account……………..Dr 12,400
Discount Account……. Dr 100
To Ravi's Account 12,500
(received cash from Ravi and discount allowed to him)
Note: Since more that two accounts have been affected by the transaction, this entry will be called as
‘Compound Entry’.

Transaction 10. April 30, 2007. Paid Rent Rs 5,000, Paid Salary Rs 10,000 by cheque.

Analysis of Transaction: The accounts affected by the transactions are rent account, salary account and
bank account. Rent account and salary account are nominal accounts and since these are expenses, these
accounts will be debited. Bank account is a personal a/c. Payment by cheques reduces the bank balance,
therefore, bank account will be credited. The transaction will be journalised as follows.

Rs. Rs.
Rent Account……………..Dr 5,000
Salary Account …………Dr 10,000
to Bank Account 15,000
(paid rent and salary by cheques)

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Transaction 11. April 30, 2007. Wages outstanding Rs 7000.

Analysis of Transaction: This transaction will affect two accounts, wages account and outstanding wages
account. Wages account is a nominal account. Since wages are an expense, wages account will be debited.
Outstanding wages account is a representative personal account. The worker who has provided (sold) his
labour has become due for payment. Since the worker is the giver, his account will be credited. The transaction
will be journalised as follows.

Rs. Rs.
Wages Account……………..Dr 7,000
To Outstanding wages Account 7,000
(outstanding wages)

Transaction 12 April 30, 2007. Paid Insurance Premium in advance Rs 4,000.

Analysis of Transaction: The two accounts affected by the transactions are pre-paid insurance account
and cash account. Pre-paid insurance account is a representative personal account since the insurance
company is being paid before the service provided by it, hence its account, or pre-paid insurance account,
will be debited. Cash account is a real account. Since cash is going out cash account will be credited. The
transaction will be journalised as follows.

Rs. Rs.
Pre-paid Insurance Premium Account………Dr 4,000
To Cash A/c 4,000
(paid insurance premium in advance)
The above discussed transactions have been shown in the proper format of the journal as follows

MAHESH'S JOURNAL

Date Particulars L.F. Debit Amount Credit Amount

Rs. Rs.

2007 Cash A/c…….…………………….....…Dr. 5,00,000

April 1 To Mahesh’s Capital A/c 5,00,000
(Started business with Cash)
Balance C/F

April 1 Bank A/c…………………………......…Dr. 3,00,000

To Cash A/c 3,00,000
(Deposited Cash into bank)

April 3 Purchases A/c…………………………Dr. 50,000

To Bhola Nath’s A/c 50,000
(Purchased goods from Bhola Nath)

April 4 Purchase A/c……………………..……Dr. 10,000

To Bank A/c 10,000
(Purchased goods and paid by cheques)

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April 6 Furniture A/c………………………....…Dr. 7,500
To Cash A/c 7,500
(purchased furniture for cash)

April 7 Cash A/c………………………......……Dr. 12,500

To Sales A/c 12,500
(sold goods for cash)

April 9 Ravi’s A/c…………………………... .…Dr. 8,000

To Sales A/c 8,000
(sold goods to Ravi)

April 10 Bhola Nath A/c…………..…......………Dr. 50,000

To Bank A/c 49,500
To Discount A/c 500
(paid Bhola Nath and he allowed discount)

2007 Cash A/c………………………….....….Dr. 12,400

April 15 Discount A/c……………………....……Dr. 100
To Ravi’s A/c 12,500
(received Cash from Ravi and allowed
him discount)

April 30 Rent A/c……………………………...…Dr. 5,000

Salary A/c………………………....……Dr. 10,000
To Bank A/c 15,000
(paid rent and salary by cheques)

April 30 Wages A/c…………………………..….Dr. 7,500

To outstanding wages A/C 7,500
(outstanding wages)

April 30 Pre-paid Insurance Premium A/c….….Dr. 4,000

To Cash 4,000
(paid insurance premium in advance)

Total 9,77,000 9,77,000

IIlustration 1. Journalise the following transactions in the books of Subash Chander.

2007
April 1. Started business with Cash Rs. 7,00,000, Furniture worth Rs. 1,00,000 and Machinery
worth Rs. 2,00,000.
” 2. Deposited Rs. 3,00,000 in bank.
” 3. Purchased goods from Vikram for Rs. 15,000 and from Sharma for Rs. 7,500.
” 4. Goods returned to Sharma worth Rs. 1000 since the same were not as per the sample.
” 5. Sold goods for cash worth Rs. 8,000.
” 6. Sold goods to Kiran worth Rs. 8,900.
” 7. Damanged goods returned by Kiran worth Rs. 900.
” 8. Purchased goods at list price for Rs. 18,000 from Rao at a trade discount of 10%.
” 9. Sold goods at list price of Rs. 6,000 to Sunil at a trade discount of 5%.

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” 10. Received Rs. 6,000 from Kiran on account.
” 11. Paid to Vikram by cheque Rs. 14,900 and he allowed discount of Rs. 100.
‘ 12. Paid to Sharma Rs. 6450 in full settlement of his account.
” 13. Paid for repair of furniture Rs. 700.
” 14. Paid for insurance of machinery Rs.1,000.
” 15. Sold goods for Cash worth Rs. 3,400.
” 16. Purchased goods from Hari for Rs. 13,500.
” 17. Received from Sunil the full amount due to him.
” 18. Kiran became insoluent and a final payment of 50 paise in a rupee was received from her official
receiver.
” 19. Paid wages Rs. 3,400.
” 20. Withdrew cash for personal use Rs. 5,000.
” 21. Depisited cash into bank Rs. 1,50,000.
” 22. Paid to Hari Rs. 10,000 on account.
” 23. Paid for petty expenses Rs. 200.
” 24. Paid trade expenses of Rs. 800.
” 25. Paid commission Rs. 1,200.
” 26. Withdrew goods of the cost price of Rs. 900 for personal use.
” 27. Withdrew cash from bank Rs. 5,000.
” 28. Purchased goods for cash Rs. 17,000.
” 29. Sold goods for cash Rs. 13,500.
” 30. Paid rent of Rs. 10,000 and salary, Rs. 28,000.

SUBASH CHANDER
JOURNAL

Date Particulars L.F. Debit Amount Credit Amount

Rs. Rs.

2007
April 1 Cash A/c………………………………Dr. 7,00,000
Furniture A/c…………………………..Dr. 1,00,000
Machinery A/c…………………………Dr 2,00,000
To Capital A/c 10,00,000
(Started business)

April 2 Bank A/c………………………………Dr. 3,00,000

To Cash A/c 3,00,000
(Deposited into bank)

April 3 Purchases A/c…………..……………Dr. 22,500

To Vikram’s A/c 15,000
To Sharma’s A/c 7,500
(Purchased goods )

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April 4 Sharma’s A/c……………………….....…Dr. 1,000
To Returns Outwards 1,000
(Returned goods to Sharma)

April 5 Cash A/c……………………......………..Dr. 8,000

To Sales 8,000
(Sold goods for cash)

April 6 Kiran’s A/c………………….....…………Dr. 8,900

To Sales A/c 8,900
(Sold goods for cash)

April 7 Returns Inward A/c………….....……… Dr. 900

To Kiran A/c 900
(Damaged goods returned by Kiran)

April 8 Purchases A/c………………...…………Dr. 16,200

To Rao 16,200
(Purchased goods from Rao at 10%
trade discount)

April 9 Sunil’s A/c…………………….....……….Dr. 5,700

To Sales’s A/c 5,700
(Sold goods to Sunil at 5% Trade discount)

April 10 Cash A/c……………………....…………Dr. 6,000

To Kiran A/c 6,000
(Received from Kiran on account)

April 11 Vikram’s A/c…………………...………...Dr. 15,000

To Bank A/C 14,900
To discount A/c 100
(Paid to Vikram and he allowed discount)

April 12 Sharma’s A/c……………………...……..Dr. 6,500

To Cash 6,450
To Discount 50
(Paid to Sharma in full settlement)

April 13 Repairs A/c……………………....………Dr. 700

To Cash A/c 700
(Paid for repair of furniture)

April 14 Insurance for Machinery A/c…....……..Dr.

To Cash 1,000
(Paid for insurance of machinery) 1,000

April 15 Cash A/c………………………...……….Dr. 3,400

To Sales A/c 3,400
(Sold goods for cash)

April 16 Purchases A/c…………………....……..Dr. 13,500

To Hari’s A/c 13,500
(Purchased goods from Hari)

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April 17 Cash A/c……………………….......……..Dr. 5,700
To Sunil’s A/c 5,700
(Received the full amount due from Sunil)

April 18 Cash A/c…………………………......…...Dr. 1,000

Bad Debts……………………......……….Dr. 1,000
To Kiran A/c 2,000
(Received 50 paise in a rupee from the
official receiver of Kiran on her becoming
insolvent and the balance will be bad debts)

April 19 Wages A/c………………………....……..Dr. 3,400

To Cash 3,400
(Paid wages)

April 20 Drawing’s A/c………………….......……..Dr. 5,000

To Cash 5,000
(Withdrew cash for personal use)

April 21 Bank A/c……………………….....……….Dr. 1,50,000

To Cash A/c 1,50,000
(Deposited cash into bank)

April 22 Hari’s A/c……………………….....………Dr. 10000

To Cash A/c 10000
(Paid to Hari on account)

April 23 Petty Expenses A/c……….......…………Dr. 200

To Cash A/c 200
(Paid petty expenses)

April 24 Trade Expenses A/c………......…………Dr. 800

To Cash 800
(Paid trade expenses)

April 25 Commission A/c……………..…………..Dr. 1,200

To Cash 1,200
(Paid commission)

April 26 Drawings A/c……………………....……..Dr. 900

To Purchase A/c 900
(Withdrew goods for personal use)

April 27 Cash A/c………………………......………Dr. 5,000

To Bank 5,000
(Withdrew cash from bank)

April 28 Purchase A/c…………………..………Dr. 1,700

To cash 1,700
(Purchased goods)

April 29 Cash A/c…………………………..……Dr. 13,500

To cash A/c 13,500
(Cash sales)

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April 30 Rent A/c…………………………..……Dr. 10,000
Salary A/c……………………...………Dr. 28,000
To Cash 38,000
(Paid Rent and Salary)

Total 16,62,500 16,62,500

2.3 Ledger
Ledger is the principal book of the accounting system. You know that all business transactions are recorded
separately and date-wise in the journal in chronological order. The transactions pertaining to a particular
person, asset, expense or income are recorded at different places in the journal as they occur on different
dates. Hence, with the help of journal, it is not possible to bring the similar transactions together at one place.
Thus, to have a consolidated view of similar transactions pertaining to a particular person, asset, expense
or income, a ledger is used. In a ledger different accounts are prepared item-wise. A ledger account can
be defined as a summary statement of all transactions relating to a person, asset, expense or income which
have taken place during a given period of time and shows their net effect.
A ledger may be in the form of a bound register or loose leaf forms printed on paper or cards. The bound
register is inflexible in that new accounts or additional space for old accounts must be placed where blank
pages are available, whereas, loose-leaf ledger is more flexible in the sense that it permits rearrangement
of the accounts and, if required, new accounts may be placed where desired and additional space may be
provided to an account merely by inserting a new sheet alongwith the old. For easy posting and location
accounts are opened in the ledger in a certain order. For example, the accounts in the ledger may be opened
in the same order in which they appear in the final accounts. An index of various accounts opened in the
ledger is given in the beginning for the purpose of easy reference. For easy identification, each account may
also be allotted a code number if the organisation is big and the number of accounts are large. A ledger is
called the principal book of accounts because it helps in achieving the objectives of accounting by providing
the following types of information.
 The total sales to an individual customer
 The total purchases from an individual supplier
 How much amount is to be paid to others?
 How much amount is to be received from others?
 What is the position of different assets of the business?
 What is the amount of profit earned of loss suffered during a particular period?
Following is the format of a ledger account.

NAME OF ACCOUNT
Dr. Cr.
Date Particulars J.F Amount Date Particulars J.F. Amount
Rs. Rs.

To Name of Credit By Name of Debit

Account Account

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As shown above, each account in the ledger is divided into two equal parts by a vertical line. The left hand
side of the account is known as the ‘debit side’ and the right hand side is known as the ‘credit side’. Each
of the two sides is further divided into four columns of date, particulars, folio and amount. ‘F’ stands for the
folio or page number of the journal from where posting has been made in the ledger.

2.3.1 Ledger Posting

The process of transferring the transactions from the journal and subsidiary books to the ledger is called
posting. It results in the grouping of all transactions in respect of an account at one place for meaningful
conclusion and to further the accounting process. The following are the guiding rules for posting transactions
in the ledger.
i) In the date column the date of the transaction is recorded.
ii) Posting to the debit side of the account that has been debited by the journal entry is done in the ledger
by writing the name of the account in the particulars column which has been credited. The amount
by which the account has been debited is written in the amount column.
iii) Posting to the credit side of the account that has been credited by the journal entry is done in the
ledger by writing the name of the account in the particulars column which has been debited. The
amount by which the account has been credited is written in the amount column.
iv) The word ‘To’ may be suffixed before writing the name of account in the particulars column on the
debit side. Similarly, the word ‘By’ is suffixed before writing the name of the account in the particulars
column on the credit side.
v) In the folio column ‘J.F.’ the page number of the journal from where the entry is posted to ledger
account is written.
This has been explaned with the help of the following examples.
Transaction. April 10, 2007. Sold goods for cash Rs. 7,400.
The journal entry will be as follows.

NAME OF ACCOUNT
Dr. Cr.
Date Particulars L.F. Debit Amount Credit Amount
Rs. Rs.

2007 Cash A/c………………………………Dr. 7,400

April 10 To sales A/c 7,400
(Sold goods for Cash)

Two accounts which have been affected by this transaction are cash account and sales account. Cash
account has been debited and sales account has been credited, therefore, at the time of ledger posting this
transaction will be posted in cash account and sales account. Since cash account has been debited by the
journal entry it will be posted to the debit side of the cash account. Sales account has been credited by the
journal entry, therefore, while doing ledger posting in sales account it will be posted on the credit side of the
sales account. The ledger posting in cash account and sales account has been shown as follows.

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CASH ACCOUNT
Dr. Cr.
Date Particulars F Amount Date Particulars F Amount
Rs. Rs.
2007
April 10 To Sales A/c 7,500

SALES ACCOUNT
Dr. Cr.
Date Particulars F Amount Date Particulars F Amount
Rs. Rs.
2007
April 10 By Cash A/c 7,400

It must be noted that a transaction is posted in as many accounts as are affected by it. By a simple journal
entry two accounts are affected, therefore, the posting is done in two accounts as shown by the above
example. Since more than two accounts are affected by a compound entry, therefore, posting for it will be
done in more than two accounts. This has been shown with the help of the following example.

Transaction. April 30, 2007. Paid Salary Rs. 10,000; Wages Rs. 3,000; Commission Rs. 500; Charity Rs.501.
JOURNAL
Date Particulars L.F. Debit Credit
Amount Amount
Rs. Rs.
2007 Salary A/c……………………………Dr. 10,000
April 30 Wages A/c……………………………Dr. 3,000
Commission A/c………………………Dr. 500
Charity A/c……………………………Dr. 501
To Cash A/c
(Paid salary, wages, commission and charity) 14,001

SALARY ACCOUNT
Dr. Cr.
Date Particulars F Amount Date Particulars F Amount
Rs. Rs.
2007 To Cash 10,000
April 30

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WAGES ACCOUNT
Dr. Cr.
Date Particulars F Amount Date Particulars F Amount
Rs. Rs.
2007
April 30 To Cash A/c 3,000

COMMISSION ACCOUNT
Dr. Cr.
Date Particulars F Amount Date Particulars F Amount
Rs. Rs.
2007
April 31 To Cash A/c 500

CHARITY ACCOUNT
Dr. Cr.
Date Particulars F Amount Date Particulars F Amount
Rs. Rs.
2007
April 31 To Cash A/c 501

Illustration 2. Pass journal entries for the following transactions and post them into the ledger.

2007 Rs.
Jan. 1. Prakash started business with cash 10,00,000
Jan 3. Purchased furniture for cash 70,000
Jan 4. Purchased goods for cash 30,000
Jan 7. Purchased goods from Sita Traders, 10,000
Raja Bros 18,000
Jan 10. Returned goods to Sita Traders 800
Jan 12. Paid cash to Sita Traders in full settlement of their
account and they allowed 10% discount.
Jan 13. Opened account in State Bank of India 5,00,000
Jan 14. Paid Raja Bros. by cheques in full settlement of 17,800
their account.
Jan 15. Sold goods for cash 19,000

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Jan 16. Sold goods to Venkat at list price and offered 8000
10% Trade Discount.
Jan 17. Purchased goods from Jyoti Bros. 3,400
Jan 18. Sold goods to M/s Swami 14,000
Jan 19. Received from Venkat by cheques on account 5,000
Jan 20. Paid for furniture repair 500
Jan 21. Purchased goods from Rajan 900
Jan 22. Sold goods to Satish 2,050
Jan 25. Sold goods to Poonam 4,000
Jan 31. Paid Rent 5,000
Salary 4,000

PRAKASH
JOURNAL

Date Particulars L.F. Debit Amount Credit Amount

Rs. Rs.

2007 Cash A/c…………………………....……Dr. 10,00,000

Jan. 1 To Capital A/c 10,00,000
(Started business)

Jan. 3 Furniture A/c………………………....…Dr. 70,000

To Cash A/c 70,000
(Purchased furniture)

Jan. 4 Purchases A/c………………….………Dr. 30,0000

To Cash A/c 30,000
(Purchased goods for cash )

Jan. 7 Purchases A/c……………………..……Dr. 28,000

To Sita Traders A/c 10,000
To Raja Bros. 18,000
(Purchased goods from Sita Traders &
Raja Bros.)

Jan. 10 Sita Traders A/c……………...…………Dr. 800

To Return outwards 800
(Returned goods to Sita Traders)

Jan. 12 Sita Traders A/c…………...……………Dr. 9,200

To Cash 8,280
To Discount 920
(Paid cash to Sita Traders in full
settlement of their account and they
allowed 10% discount)

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Jan. 13 Bank A/c………………..…..……………Dr. 5,00,000
To Cash A/c 5,00,000
(Opened bank account)

Jan. 14 Raja Bros. A/c…………………..………Dr. 18,000

To Bank 17,800
To Discount 200
(Paid to Raja Bros. & discount allowed
by them)

Jan. 15 Cash A/c……………………...………….Dr 19,000

To Sales’s A/c 19,000
(Sold goods)

Jan. 16 Venkat A/c………………...…...…………Dr. 7,200

To Sales A/C 7,200
(Sold goods to Venkat)

Jan. 17 Purchase A/c………………....………...Dr. 3,400

To Jyoti Bros. 3,400
(Purchased goods from Jyoti Bros.)

Jan. 18 M/s Swami A/c……………..…...…..…..Dr. 14,000

To Sales A/c 14,000
(Sold goods to M/s Swami)

Jan. 19 Bank A/c ………………………......……Dr. 5,000

To Venkat A/C 5,000
(Paid Vanket on account)

Jan. 20 Repair A/c………………….......….…….Dr. 500

To Cash 500
(Paid for furniture repair)

Jan. 21 Purchase A/c…………………...……….Dr. 9,000

To Rajan A/c 9,000
(Purchased goods from Rajan)

Jan. 22 Satish A/c……………………........…….Dr. 2,050

To Sales A/c 2,050
(Sold goods to Satish)

Jan. 25 Poonam A/c……………………..…...….Dr. 4,000

To Sales A/c 4,000
(Sold goods to Poonam)

Jan. 31 Rent A/c…………….……………......….Dr. 5,000

Salary A/c……………………......…….Dr. 4,000
To Cash A/c 9,000
(Paid rent and salary)

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CASH ACCOUNT
Dr. Cr.
Date Particulars F Amount Date Particulars F Amount
Rs. Rs.
2007 2007
Jan.1 To Capital A/c 10,00,000 Jan.3 By Furniture 70,000
Jan. 15 To Sales 19,000 Jan.4 By Purchases 30,000
Jan.12 By Sita Traders 8,280
Jan.13 By Bank 5,00,000
Jan.20 By Repair 500
Jan.31 By Rent 5000
Jan.31 By Salary 4000

CAPITAL ACCOUNT
Dr. Cr.
Date Particulars F Amount Date Particulars F Amount
Rs. Rs.

2007
Jan.1 By Cash 10,00,000

FURNITURE ACCOUNT
Dr. Cr.
Date Particulars F Amount Date Particulars F Amount
Rs. Rs.
2007 To Cash 70,000
Jan. 3

PURCHASE ACCOUNT
Dr. Cr.
Date Particulars F Amount Date Particulars F Amount
Rs. Rs.
2007
Jan.4 To Cash 30,000
Jan.7 To Sita Traders 10,000
Jan.7 To Raj Bros. 18,000
Jan.17 To Jyoti 3,400
Jan.21 To Rajan 9,000

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SALES ACCOUNT
Dr. Cr.
Date Particulars F Amount Date Particulars F Amount
Rs. Rs.
2007
Jan.15 By Cash 19,000
Jan.16 By Venkat 7,200
Jan.18 By M/s Swami 14,000
Jan.22 By Satish 2,050
Jan.25 By Poonam 4000

SITA TRADERS ACCOUNT

Dr. Cr.
Date Particulars F Amount Date Particulars F Amount
Rs. Rs.
2007 2007
Jan.10 To Return outward 800 Jan.07 By Purchases 10,000
Jan.12 To Cash 8,280
Jan.12 To Discount 920
2007

RAJ BROS. ACCOUNT

Dr. Cr.
Date Particulars F Amount Date Particulars F Amount
Rs. Rs.
2007 2007
Jan.14 To Bank 17,800 Jan.7 By Purchases 18,000
To Discount 200

RETURNS OUTWARDS ACCOUNT

Dr. Cr.
Date Particulars F Amount Date Particulars F Amount
Rs. Rs.
2007
Jan.11 By Sita Traders 800

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Dr. DISCOUNT RECEIVED ACCOUNT Cr.

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

Rs.
2007
Jan.14 Jan.12 By Sita Traders 920
Jan.14 By Raja Bros. 200

Dr. BANK ACCOUNT Cr.

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

Rs. Rs.
2007 2007
Jan.13 To Cash 5,00,000 Jan.14 By Raja Bros. 17,800
To Venkat 5,000

Dr. JYOTI ACCOUNT Cr.

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

Rs. Rs.
2007
Jan.17 By Purchases 3,400

Dr. M/S SWAMI ACCOUNT Cr.

Date Particulars F Amount Date Particulars F Amount

Rs. Rs.
2007
Jan.18 To Sales 14,000

Dr. REPAIRS ACCOUNT Cr.

Date Particulars F Amount Date Particulars F Amount

Rs. Rs.
2007
Jan.20 To Cash 500

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Dr. RAJAN ACCOUNT Cr.

Date Particulars F Amount Date Particulars F Amount

Rs. Rs.
2007
Jan.21 By Purchases 9,000

Dr. SATISH ACCOUNT Cr.

Date Particulars F Amount Date Particulars F Amount

Rs. Rs.
2007
Jan.22 To Sales 2,050

Dr. RENT ACCOUNT Cr.

Date Particulars F Amount Date Particulars F Amount

Rs. Rs.
2007
Jan.31 To Cash 5,000

Dr. SALARY ACCOUNT Cr.

Date Particulars F Amount Date Particulars F Amount

Rs. Rs.
2007
Jan.31 To Cash 4,000

Dr. VENKAT ACCOUNT Cr.

Date Particulars F Amount Date Particulars F Amount

Rs. Rs.
2007
Jan.16 To Sales 7,200 Jan.19 By Bank 5,000

Dr. POONAM ACCOUNT Cr.

Date Particulars F Amount Date Particulars F Amount

Rs. Rs.
2007
Jan.25 To Sales 4,000

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2.3.2 Balancing of Accounts

The ledger accounts are periodically balanced, generally at the end of the accounting period, with the object
of ascertaining the net position of each account and for preparing the final accounts. The procedure of balancing
accounts is as follows.
(i) Take the total of the two sides of the concerned account.
(ii) Ascertain the difference between the totals of both sides.
(iii) If the debit side is more than the credit side it means the account has a debit balance and the difference
is written on the credit side by writing ‘By balance c/d’ in the particulars column and the amount in
the amount column. ‘C/d’ means ‘carried down’. On the other hand, if the credit side is more than the
debit side it means that the account has a credit balance and the difference is written on the debit
side by writing the words ‘To Balance c/d’ in the particulars column and the amount in the amount
column.
(iv) In the beginning of the next accounting period the ‘balance c/d’ is posted as ‘balance b/d’ on the other
side as opening balance before posting any other transaction, for e.g., if in an account there is ‘By
balance c/d Rs. 6,000’ then in the beginning of the next accounting period it will be shown as ‘To
balance b/d’, ‘Balance c/d’ means ‘Balance Carried down’ and ‘Balance b/d’ means ‘balance brought
down’.

Illustration 3. Enter the following transactions in the journal of Jacob and post them into the
ledger and balance the ledger accounts.

2007 Rs.
Feb. 1 Started business with cash 90,000
Feb 2. Paid into Bank 50,000
Feb 3. Purchased goods for cash 30,000
Feb 5. Purchased furniture and paid by cheque 10,000
Feb 7. Sold goods for cash 19,000
Feb 9 Sold goods to A.Khan 8,000
Feb 11. Purchased goods from R.Rehman 14,000
Feb 14. Goods returned by A.Khan 400
Feb 17. Received cash from A.Khan. 7,400
Discount allowed to him. 200
Feb 22. Withdrew from bank for personal use, 2,000
for Office use. 10,000
Feb 24. Paid telephone bill 1,000
Feb 25. Paid cash to R.Rahman on account 10,000
Feb 28. Paid for : Stationery 2,000
Salary 10,000
Rent 4,000

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JACOB
JOURNAL

Date Particulars L.F. Debit Amount Credit Amount

Rs. Rs.

2007
Feb . 1 Cash A/c……………………....…………Dr. 90,000
To Capital A/c 90,000
(Started business)

Feb . 2 Bank A/c……………………….... ………Dr. 50,000

To Cash 50,000
(Paid to bank)

Feb . 3 Purchases A/c………………… ..………Dr. 30,000

To Cash A/c 30,000
(Purchased goods)

Feb . 5 Furniture A/c………………… ....………Dr. 10,000

To Bank 10,000
(Purchased furniture)

Feb . 7 Cash A/c………………… ……....……Dr. 19,000

To Sales A/c 19,000
(Sold goods for cash)

Feb . 9 A.Khan A/c…………………… .......……Dr. 8,000

To sales 8,000
(Goods sold to A.Khan)

Feb . 11 Purchase A/c……………… ……....……Dr. 14,000

To R. Rehamna 14,000
(Goods purchased from R.Rehman)

Feb . 14 Returned Inwards A/c………..……....…Dr. 400

To A.Khan A/c 400
(Goods returned by A.Khan)

Feb . 17 Cash A/c……………………...………….Dr. 7,400

Discount A/c……………………... ..……Dr. 200
To A.Khan A/c 7,600
(Cash received from A.Khan)

Feb . 22 Drawings A/c…………………...… ……Dr. 2,000

To Bank A/C 2,000
(Withdrew cash from Bank for personal use)

Feb . 22 Cash A/c…………………………......…...Dr. 10,000

To Bank. 10,000
(Cash withdrew for office use.)

Feb . 24 Telephone Charges A/c…………...….…Dr. 1,000

To cash 1,000
(Paid telephone bill)
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Feb . 25 R.Rehaman A/c………………………Dr. 10,000
To Cash 10,000
(Paid R. Rehaman on account)

Feb . 28 Stationery A/c………………………….Dr. 2,000

Salary A/c……………………..……….Dr. 10,000
Rent A/c…………………………….….Dr. 4,000
To Cash 16,000
(Paid for stationery, salary and rent)

Dr. CASH ACCOUNT Cr.

Date Particulars F Amount Date Particulars F Amount

Rs. Rs.
2007 2007
Feb.1 To Capital A/c 90,000 Feb.2 By Bank 50,000
Feb.7 To Sales 19,000 Feb.3 By Purchase 30,000
Feb.17 To A. Khan 7,400 Feb.24 By Telephone Charges 1,000
Feb.22 To Bank 10,000 Feb.25 By R. Rehman 10,000
Feb.28 By Stationery 2,000
Feb.28 By Rent 10,000
Feb.28 By Salary 4,000
Feb.28 By Bal c/d 19,400

1,26,000 1,26,000

March 1 To balance b/d 19,400

Dr. BANK ACCOUNT Cr.

Date Particulars F Amount Date Particulars F Amount

Rs. Rs.
2007 2007
Feb .22 To Cash A/c 50,000 Feb. 5 By Furniture 10,000
Feb. 5 By Drawings 2,000
Feb. 22 By Cash 10,000
Feb. 28 By Balance c/d 28,000
50,000 50,000
March1 To balance b/d 19,400

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Dr. CAPITAL ACCOUNT Cr.

Date Particulars F Amount Date Particulars F Amount

Rs. Rs.
2007 2007
Feb .1 To balance c/d 90,000 Feb.1 By Cash A/c 90,000
90,000
Mar. 1 By Balance old 90,000

Dr. PURCHASE ACCOUNT Cr.

Date Particulars F Amount Date Particulars F Amount

Rs. Rs.
2007 2007
Feb .3 To cash A/c 30,000 Feb.28 By balance c/d 44,000
To R.Rehman 14,000 Mar. 1
44,000 2007 (Trading A/c) 44,000

March 1 To Balance old 44,000

Dr. SALES ACCOUNT Cr.

Date Particulars F Amount Date Particulars F Amount

Rs. Rs.
2007
Feb .1 To balance c/d 27,000 Feb .7 By Cash A/c 19,000
(Trading A/c) Feb .8 By A.Khan 8,000

27,000 27,000

Mar 1 By balance c/d 27,000

Dr. A. KHAN ACCOUNT Cr.

Date Particulars F Amount Date Particulars F Amount

Rs. Rs.
2007
Feb .9 To Sales 8,000 Feb .14 By Returns
Inward 400
By Cash 7,400
By Discount 200
8,000 8,000

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Dr. R. REHAMAN ACCOUNT Cr.

Date Particulars F Amount Date Particulars F Amount

Rs. Rs.
2007 2007
Feb.25 To Cash 10,000 Feb.11 By Purchases 14,000
To balance c/d 4,000
14,000 14,000

By Balance b/d 4,000

Dr. FURNITURE ACCOUNT Cr.

Date Particulars F Amount Date Particulars F Amount

Rs. Rs.
2007
Feb.5 To Bank 10,000 Feb. 28 By Balance c/d 10,000

10,000 10,000
March 1 To balance b/d 10,000

Dr. RETURN INWARD ACCOUNT Cr.

Date Particulars F Amount Date Particulars F Amount
Rs. Rs.

2007 2007
Feb.12 To A.Khan 400 Feb. 1 By Balance c/d 400
(Trading A/c)
400 400

To balance b/d 400

Dr. DISCOUNT ACCOUNT Cr.

Date Particulars F Amount Date Particulars F Amount

Rs. Rs.
2007
Feb.17 To A.Khan 200 March 1 By Balance c/d 200
(Profit & Loss A/c)

200 200
To balance b/d 200

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Dr. DRAWINGS ACCOUNT Cr.

Date Particulars F Amount Date Particulars F Amount

Rs. Rs.
2007
Feb.22 To Bank 2,000 Feb. 28 By Balance c/d 2,000

2,000 2,000

Mar. 1 To balance b/d 2,000

Dr. TELEPHONE CHARGES ACCOUNT Cr.

Date Particulars F Amount Date Particulars F Amount

Rs. Rs.
2007
Feb.24 To Cash 1,000 Feb. 28 By Balance c/d 1,000
(Profit & Loss A/c)
1,000 1,000

Mar. 1 To balance b/d 1,000

Dr. STATIONERY ACCOUNT Cr.

Date Particulars F Amount Date Particulars F Amount

Rs. Rs.
2007 Feb 28 By Balance c/d 2,000
Feb.24 To Cash 2,000 (Profit & Loss A/c)

Mar. 1 To balance b/d 2,000

2,000

Dr. RENT ACCOUNT Cr.

Date Particulars F Amount Date Particulars F Amount

Rs. Rs.
2007 2007
Feb.28 To Cash 10,000 Feb.28 By Balance c/d 10,000
(Profit & Loss A/c)

10,000 10,000

Mar. 1 To balance b/d 10,000

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Dr. SALARY ACCOUNT Cr.

Date Particulars F Amount Date Particulars F Amount

Rs. Rs.
2007 2007
Feb.28 To Cash 4,000 Feb.28 By Bal c/d 4,000
(P/L A/c)

4,000 4,000

To bal b/d 4,000

2.4 Cash Book

Cash book is a special purpose subsidiary book. This book is used for recording cash transactions i.e. the
transactions involving the receipt of cash and the payment of cash. When a business enterprise maintains
a cash book then the cash transactions are not recorded in the journal. It serves the purpose of journal as
well as ledger. It means in the ledger a separate cash account is not opened when a business maintains
a cash book. There are different types of cash books. A business enterprise may maintain the following types
of cash books;

 Simple cash book or single column cash book

 Double column cash book

 Triple column cash book
 Petty cash book.

2.4.1 Single Colume Cash Book

The format of a single column cash book is similar to that of an account. On its debit side receipts
of cash are recorded and on its credit side cash payments are recorded. The debit side is also called
the receipts side and the credit side is also called the payment side. The format of a single column
cash book is given below.

CASH BOOK

Dr. Receipts Payments Cr.

Date Particulars LF Amount Date Particulars LF Amount

Rs. Rs.

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In the date column the date of the transaction is recorded. In the particulars column on the receipt side the
name of the account on account of which cash is received is written. The word ‘To’ is pre-fixed before writing
the name of the account. On the payment side in the particulars column the name of the account on account
of which payment is made is written. The word ‘By’ is pre-fixed before this name. In the ‘L.F.’ column the
folio or page number on which the transaction has been posted in the ledger is written.

Illustration 4: Enter the following transactions in a single column Cash Book.

2007
Jan 1 Shyam started business with cash Rs.1,00,000.
Jan 2 He2000 deposited Rs. 30,000 into the bank.
Jan 5 He purchased furniture for office use for Rs. 10,000.
Jan 10 He purchased goods worth Rs. 12,000.
Jan 15 Sold goods for Cash worth Rs. 8,000.
Jan 20 Sold goods for cash worth Rs. 9,000.
Jan 25 Paid wages Rs. 500.
Jan 31 Withdrew cash for personal use Rs. 2,000.
Jan 31 Paid rent of Rs. 2,000, Salary Rs. 3,500.
Jan 31 Withdrew cash from bank for office use Rs. 5,000.

Solution: IN THE BOOK OF SYHAM

CASH BOOK

Dr. Receipts Payments Cr.

Date Particulars LF Amount Date Particulars LF Amount

Rs. Rs

2007
Jan 1 To Capital A/c 1,00,000 Jan. 2 By Bank 30,000
Jan 15 To Sales A/c 8,000 Jan. 5 By Furniture 10,000
Jan 20 ToSales A/c 9,000 Jan 10 By Purchases A/c 12,000
Jan 31 ToBank 5,000 Jan 25 By Wages A/c 500
Jan 31 By Drawings A/c 2000
Jan 31 By Rent A/c 2000
Jan 31 By Salary 3500
Jan 31 By balance c/d 62,000

1,22,000 1,22,000

Feb. 1 To balance b/d 62,000

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Balancing of Single Column Cash Book
The balancing of the simple cash book, or single column cash book, is done periodically, generally at the end
of the month in the same manner in which the balancing of a ledger account is done. First the total of the
debit/receipt side is done, then the total of the credit/payment side of the amount column is ascertained.
From the total of the debit amount column the total of the credit amount column is deducted to find out the
cash balance and this is written in the amount column against the words 'By balance c/d' in the particulars
column. This balance indicates that at the time of balancing the cash book there must be cash in the hand
of the business equal to the balance indicated by the cash book.
It must be noted that while balancing the simple cash book the total of the debit/receipt column is ascertained
first because of the simple reason that the cash receipts are always more than the cash payments. In other
words we cannot make more payments than the amount of cash received. In the beginning of the next period
the balance carried down is first brought down to the debit/receipt side as opening balance before recording
the other transactions as ‘balance b/d’ of the period.

Ledger Posting from Single Column Cash Book

Ledger posting from the single column cash book is done into those ledger accounts whose names appear
in the particulars column on both the side i.e. the receipt side and the payment side. Posting in the ledger
of those accounts which appear on the debit side of the cash book is done on the credit side and the posting
in ledger of those accounts which appear on the credit side of the cash book is done on the debit side by
writing ‘By cash’ and ‘To Cash, respectively’. Here it is once again emphasised that when a business maintains
a single column cash book then cash account is not opened in the ledger because for cash transactions
cash book works as a journal as well as a ledger.
Illustration 5. Enter the following transactions in the Cash Book of John, post them into the ledger and
balance the cash book.
2007
March 1 Started business by introducing Capital in Cash Rs.2,40,000
March 2 Opened bank account with ICICI Bank Rs.1,00,000
March 3 Purchased computer for office Rs. 40,000
March 4 Purchased office furniture Rs. 20,000
March 5 Purchased goods Rs. 50,000
March 7 Purchased goods of list price Rs. 20,000 at 10%
Trade Discount.
March 15 Sold Goods for Cash Rs. 30,000
March 18 Sold goods of the list price of Rs. 15,000 at 5%
trade discount.
March 25 Paid wages Rs. 1,000
March 26 Sold goods Rs. 2,000
March 29 Sold goods Rs. 5,000
March 31 Paid- Rent Rs. 5,000
March 31 Salary Rs. 5,000
March 31 Withdrew Cash for office use Rs. 7,000

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IN THE BOOK OF JOHN
CASH BOOK
Dr. Cr.

Date Particulars LF Amount Date Particulars LF Amount

Rs. Rs.

2007
March 1 To Capital A/c 2,40,000 Mar 2 By Bank A/c 1,00,000
March 15 To Sales A/c 30,000 Mar 3 By Computer A/c 40,000
March 18 To Sales A/c 14,250 Mar 4 By Office Furniture A/c 20,000
March 26 To Sales A/c 2,000 Mar 5 By Purchases A/c 50,000
March 29 To Sales A/c 5,000 Mar 7 By Purchases A/c 18,000
March 31 To Bank 7,000 Mar 25 By Wages A/c 1,000
Mar 31 By Rent A/c 5,000
Mar 31 By Salary A/c 5,000
Mar 31 By Balance c/d 59,250

2,98,250 2,98,250

To balance b/d 59,250

CAPITAL ACCOUNT
Dr. Cr.

Date Particulars LF Amount Date Particulars LF Amount

Rs. Rs.

2007
Mar 1 By Cash 2,40,000

BANK ACCOUNT
Dr. Cr.

Date Particulars LF Amount Date Particulars LF Amount

Rs. Rs.

2007 2007
Mar 2 To Cash 1,00,000 Mar 31 By Cash 7,000

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COMPUTER ACCOUNT
Dr. Cr.

Date Particulars LF Amount Date Particulars LF Amount

Rs. Rs.

2007
Mar 3 To Cash 40,000

FURNITURE ACCOUNT
Dr. Cr.

Date Particulars LF Amount Date Particulars LF Amount

Rs. Rs.

2007
Mar 4 To Cash A/c 20,000

PURCHASES ACCOUNT
Dr. Cr.

Date Particulars LF Amount Date Particulars LF Amount

Rs. Rs.

2007
Mar 7 To Cash A/c 50,000
Mar 15 To Cash A/c 18,000

SALES ACCOUNT
Dr. Cr.

Date Particulars LF Amount Date Particulars LF Amount

Rs. Rs.

2007
Mar 15 By Cash A/c 30,000
By Cash A/c 14,250
By Cash A/c 2,000

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WAGES ACCOUNT
Dr. Cr.

Date Particulars LF Amount Date Particulars LF Amount

Rs. Rs.

2007
Mar 18 To Cash A/c 1,000

RENT ACCOUNT
Dr. Cr.

Date Particulars LF Amount Date Particulars LF Amount

Rs. Rs.

2007
Mar 31 To Cash A/c 5,000

SALARY ACCOUNT
Dr. Cr.

Date Particulars LF Amount Date Particulars LF Amount

Rs. Rs.

2007
Mar 31 To Cash A/c 5,000

2.4.2 Double Column Cash Book

When, to a single column cash book, discount column is added on both sides alongwith the amount column
then this cash book becomes a double column cash book. A double column cash book is an improvement
over a single column cash book in the sense that many times different transactions of discount take place
and just by glancing at the discount column the management is able to know the amount of discount allowed
to different parties and the amount of discount allowed by different parties. The format of a double column
cash book is given below.
Receipt CASH BOOK Payments
Dr. Cr.

Date Particulars LF Discount Cash Date Particulars LF Discount Cash

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The recording of the transaction in a double column cash book is similar to that in a single column cash book
except that the discount allowed is entered in the debit discount column and the discount received in entered
in the credit discount column. This has been shown with the help of the following illustration.

Illustration 6 : Fair Deals had an opening balance of Cash Rs. 21,340 on 1.1.2007. The following
transactions took place in the month of January. Enter these transactions in a double column cash
book.

2007
Jan 1 Received cash from Bobby Rs.5,070 and allowed him discount Rs. 30.
Jan 2 Paid to Zahir Cash Rs. 3,980 and he allowed discount Rs. 20.
Jan 8 Cash Sales of Rs. 10,000.
Jan 9 Cash purchases of Rs. 15,000.
Jan 12 Paid to Vikram Rs. 14,900 in full settlement of his account of Rs. 15,000.
Jan 17 Received from Munish Rs. 7,490 in full settlement of his account which had a debit balance of
Rs. 7,500.
Jan 19 Purchased on credit from Rajan goods worth Rs. 2,000.
Jan 20 Sold goods to Ravi on credit worth Rs. 3,000.
Jan 25 Paid to Rajan Rs. 1,950 in full settlement of his claim.
Jan 26 Received from Ravi Rs. 2,990 and allowed him discount of Rs. 10.
Jan 31 Withdrew cash from bank for office use Rs. 14,000.
Jan 31 Withdrew cash for personal use Rs. 5,000.
Jan 31 Paid telephone bill of Rs. 2,000; Rent Rs. 6,000 and Salary Rs. 9,000.

M/S FAIR DEALS

Receipt CASH BOOK Payments
Dr. Cr.

Date Particulars LF Discount Cash Date Particulars LF Discount Cash

Rs. Rs. Rs. Rs.

2007
Jan 1 To bal b/d 21,340 Jan 2 By Zahir 20 3,980
Jan 1 To Boby 30 5,070 Jan 9 By Purchases 15,000
Jan 8 To Sales 10,000 Jan 12 By Vikram 100 14,900
Jan 17 To Manish 10 7,490 Jan 25 By Rajan 50 1,950
Jan 26 To Ravi 10 2,990 Jan 31 By Drawings 5,000
Jan 31 To Bank 14,000 Jan 31 By Telephone 2,000
Charges
Jan 31 By Rent 6,000
Jan 31 By Salary 9,000

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Note: Transactions dated 19.1.2007 and 20.1.2007 will not be entered in the cash book because these are
credit transactions.

Balancing of Double Column Cash Book

While balancing the double column cash book, the balancing of the discount column is not done. Only the
total of both the discount columns, i.e. debit discount column and credit discount column, is done. The
balancing of the cash column is done in the same way in which the balancing of the cash column of the single
column cash book is done. First the total of the debit side of the cash column is found out. From this total
the total of the credit side of the cash column is subtracted and the difference is entered in the credit side
as ‘By balance c/d’. This ‘balance c/d’ is shown as opening balance on the debit side as ‘To balance b/d’.

Ledger Posting from Double Column Cash Book: Ledger posting from the double column cash
book is done in the same way as the ledger posting from the single column cash book. Ledger posting is
done on the credit side of those accounts which appear on the debit/receipt side of the double column cash
book. Similarly, ledger posting is done on the debit side of those accounts which appear on the credit/
payment side of the double column cash book. However, the totalof the discount column is posted on the
same side of the discount account indicating the total amount of discount allowed and discount received.
The total of the debit discount column is posted on the debit of the discount account by writing ‘To Sundry
Debtors’ in the particulars column. The total of the credit discount column is posted on the credit side of the
discount account by writing ‘By Sundry Creditors’ in the particulars column. This has been demonstrated with
the help of the following illustration.

Illustration 7 : Enter the following transactions in the double column Cash Book of M/s Kalu Ram
and Sons.

2007 Rs.
April 1 Opening balance 8,950
April 1 Paid to Karim 500
April 3 Received from Koshi 4,000
Discount allowed to him 10
April 4 Cash Sales 16,000
April 7 Paid for stationery 200
April 10 Received from Dina Nath in full settlement of his account of 520
Rs. 530
April 15 Paid to Gopal 1,980
Discount allowed by him 20
April 18 Purchased goods for cash on list price at 5% trade discount 4,000
April 20 Purchased goods on credit from Vakil 6,000
April 22 Purchased goods from Khushal on list price at 10% Trade Discount 6,000
April 26 Paid to Vakil in full settlement of his claim 5,790
April 27 Withdrew cash from bank for office use 2,000
April 28 Withdrew for personal use 200
April 29 Sold goods to Sunil 2,700
April 30 Paid rent 6,000
Salary 2,000
April 30 Received from Sunil on account
Any income should also be taken as a transaction.

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M/S KALU RAM & SONS
CASH BOOK
Dr. Cr.

Date Receipt LF Discount Cash Date Payment LF Discount Cash

Rs. Rs. Rs. Rs.
2007 2007

Apr. 1 To bal b/d 8,950 Apr. 1 By Karim A/c 500

Apr 3 To Koshi A/c 10 4,000 Apr. 7 By Stationery A/c 200

Apr 4 To Sales A/c 16,000 Apr. 15 By Gopal A/c 20 1,980

Apr 10 To Dina Nath A/c 10 520 Apr. 18 By Purchases A/c 3,800

Apr 27 To Bank A/c 2,000 Apr. 26 By Vakil A/c 210 5,790

Apr 30 To Sunil A/c 1,000 Apr. 27 By Drawings 200

Apr. 30 By Rent 6,000

Apr. 30 By Salary 2,000

Apr. 30 By bal c/d 12,000

20 32,470 230 32,470

May 1 To bal b/d 12,000

Note: Transactions dated 20 and 22 April will not be entered in the cash book since these are credit transactions.

Dr. BANK ACCOUNT Cr.

Date Particulars F Amount Date Particulars F Amount

Rs. Rs.
2007
Apr.30 By Cash 2000

Dr. DISCOUNT ACCOUNT Cr.

Date Particulars F Amount Date Particulars F Amount

Rs. Rs.

2007 2007
Apr.30 To Sundry Debtors 20 Apr. 30 By P/l A/c 20

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Dr. KOSHI ACCOUNT Cr.

Date Particulars F Amount Date Particulars F Amount

Rs. Rs.
2007
Apr. 3 By Cash 4,000
By Discount 10

Dr. STATIONERY ACCOUNT Cr.

Date Particulars F Amount Date Particulars F Amount

Rs. Rs.
2007
Apr. 1 To Cash 200

Dr. PURCHASE ACCOUNT Cr.

Date Particulars F Amount Date Particulars F Amount

Rs. Rs.
2007
Apr. 18 To Cash 3,800
Apr. 20 To Vakil 6,000
Apr. 22 To Khushal 5,400

Dr. SALES ACCOUNT Cr.

Date Particulars F Amount Date Particulars F Amount

Rs. Rs.
2007
Apr. 14 By Cash 16,000
Apr. 29 By Sunil 2,700

Dr. KARIM ACCOUNT Cr.

Date Particulars F Amount Date Particulars F Amount

Rs. Rs.
2007
Apr. 1 To Cash 500

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Dr. GOPAL ACCOUNT Cr.

Date Particulars F Amount Date Particulars F Amount

Rs. Rs.
2007
Apr. 15 To Cash 1,980
Apr. 15 To Discount 20

Dr. VAKIL ACCOUNT Cr.

Date Particulars F Amount Date Particulars F Amount

Rs. Rs.
2007 2007
Apr. 26 To Cash 5,790 Apr. 20 By Purchase 6,000
To Discount 210

Dr. DRAWINGS ACCOUNT Cr.

Date Particulars F Amount Date Particulars F Amount

Rs. Rs.
2007
Apr. 27 To Cash 200

Dr. RENT ACCOUNT Cr.

Date Particulars F Amount Date Particulars F Amount

Rs. Rs.
2007
Apr. 30 To Cash 6,000

Dr. KHUSHAL ACCOUNT Cr.

Date Particulars F Amount Date Particulars F Amount

Rs. Rs.
2007
Apr. 22 By Purchase 5,400

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Dr. SALARY ACCOUNT Cr.

Date Particulars F Amount Date Particulars F Amount

Rs. Rs.
2007
Apr. 30 To Cash 2,000

Dr. DINANATH ACCOUNT Cr.

Date Particulars F Amount Date Particulars F Amount

Rs. Rs.
2007
Apr. 10 By Cash 520
Apr. 11 By Discount 10

Dr. SUNIL ACCOUNT Cr.

Date Particulars F Amount Date Particulars F Amount

Rs. Rs.
2007 2007
Apr. 29 To Sales 2,700 Apr. 30 By Cash 1,000

2.4.3 Triple Column Cash Book

When bank column is added on both the sides of a double column cash book then it becomes a triple column
cash book. A triple column cash book, besides having date, particulars, LF, discount and cash also has a
bank column on both the sides, i.e. the debit / receipt and credit / payment sides. In such a cash book the
transactions with the bank are also recorded and separate bank account is not opened in the ledger because
both debit/receipt and credit/payment of cash into bank or out of bank are recorded in it. When, by a single
transaction, both cash and bank accounts are affected such a transaction is called a contra entry and no
ledger posting of such an entry is done because both the aspects of the transaction, i.e. the debit aspect
and the credit aspect, are completed in the cash book itself. Contra entries pertain to the deposit of cash
into bank or withdrawal of cash from the bank for office use. To make such entries distinct from the remaining
entries letter ‘C’ is written against such transactions in the folio column. ‘C’ means ‘Contra’ and no ledger
postings for such entries are required.

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Balancing of Triple Column Cash Book
The balancing of a triple column cash book is similar to the balancing of the double column cash book. The
discount columns are not balanced rather the totals of the discount columns is done. The total of the cash
column debit side is obtained first and from this total the total of the credit cash column is deducted to
ascertain the cash balance. But while balancing the bank column first we have to see whether the total of
the debit bank column or the total of the credit bank column is more. From the total of the greater side the
total of the shorter side is subtracted to find out the balance and this balance is written on the shorter side
as ‘To balance c/d’ or ‘By bal c/d’. If the total of the debit bank column is more than it indicates a balance
with the bank, i.e. the amounts deposited into the bank have been more than the amounts withdrawn. But
at times the total of the credit bank column may be more than the total of the debit bank column which means
the total amount withdrawn from the bank is more than deposited; this is a situation of bank overdraft. Therefore,
a business enterprise is said to have a situation of bank overdraft when the amounts withdrawn from the bank
are more than the amounts deposited. This can happen only when a special permission to do so is given
by the bank.

Ledger Posting From Triple Column Cash Book

Besides Cash Account we also do not open bank account when the enterprise maintains a triple column
Cash Book. Since both the debit and credit aspect of a transaction in the case of a contra entry are completed
in the cash book itself, such entries do not require ledger posting. Like a double column cash book, in case
of a triple column cash book, the total of the discount columns are posted on the same side of the discount
account as the side they appear in the triple column cash book. It means the total of the debit discount
column is posted in the debit side of the discount account by writing ‘To Sundry Debtors A/c’ in the particulars
column and the amount in the amounts column. Similarly, the total of the credit/discount column of the cash
book is posted in the credit side of the discount account by writing ‘By Sundry Creditors’ in the particulars
column of the discount account and the amount in the amounts column. The remaining accounts which
appear in the debit/receipt side, posting to the credit side of these accounts is done and the accounts which
appear in the credit/payment side of the cash book, posting in the debit side of these accounts is done.

Illustration 7: Enter the following transaction in a triple column cash book of M/s Ram Krishan for the
month of Jan. 2007.

2007
Rs.
Jan 1 Opening balance Cash Dr 7,850
Bank Cr 3,000
Jan 2 Sold goods for cash 5,000
Jan 3 Deposited cash into bank 10,000
Jan 4 Received cheque from Ashok 9,000
Discount allowed 50
Jan 5 Cheque received from Ashok Deposited into bank
Jan 6 Paid to Ravi by Cheque 2,000
He allowed discount 10
Jan 11 Sold goods for cash 7,300
Jan 11 Paid to Mohan 400
Jan 11 Received cheque from Vinod 7,000
Discount allowed to him 60

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Jan 11 Cheque received from Vinod Endorsed in favour of Gopal
In full settlement of his claim 7,100
Jan 11 Purchased goods for cash 2,400
Jan 13 Kumar who owned us Rs.8,000 paid 90 paise in a rupee
Jan 14 Received cheque from Karan and banked immediately 15,400
Discount allowed to him 100
Jan 18 Withdrawn Cash from Bank 10,000
Jan 20 Withdrawn cash for personal use 5,000
Jan 25 Cash sales 18,000
Jan 26 Deposited cash into bank 7,000
Jan 27 Sold goods for cash to Sant 6,000
Jan 29 purchased goods and issued cheque 3,000
Jan 30 Received cheque from Balwant and sent to bank immediately 10,000
Discount allowed to him 500
Jan 31 Withdrawn cash from bank 9,000
Jan 31 Paid Salary 2,000
Rent 3,000

M/S RAM KRISHAN

TRIPLE COLUMN CASH BOOK
Dr. Receipts Payments Cr.
Date Particulars F Discount Cash Bank Date Particulars F Discount Cash Bank
Rs. Rs. Rs. Rs. Rs. Rs.

2007 2007
Jan 1 To bal b/d 7,850 Jan 1 By Bal B/d 3,000
Jan 2 To Sales 5,000 Jan 3 By Bank C 10,000
Jan 3 To Cash C 10,000 Jan 5 By Bank C 9,000
Jan 4 To Ashok 50 9,000 Jan 6 By Ravi 10 2,000
Jan 5 To Cash C 9,000 Jan 8 By Mohan 400
Jan 7 To Sales 7,300 Jan 10 By Gopal 100 7,000
Jan 9 To Vinod 60 7,000 Jan 11 By Cash 2,400
Jan 13 To Kumar 7,200 Jan 18 By Cash C 10,000
Jan 14 To Karan 100 15,400 Jan 20 By Drawings 5,000
Jan 18 To Bank C 10,000 Jan 26 By Bank 7,000
Jan 25 To Sales 18,000 Jan 27 By Purchases 3,000
Jan 26 To Cash C 7,000 Jan 31 By Cash C 9,000
Jan 27 To Sales 6,000 Jan 31 By Salary 2,000
Jan 30 To Balwant 500 10,000 Jan 31 By Rent 3,000
Jan 31 To Bank C 9,000 Jan 31 By balance b/d 40,550 24,400

700 86,350 51,400 110 86,350 51,400

Feb 1 To bal b/d 40550 24400

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Petty Cash Book

A business, irrespective of its size, has to make a large number of small payments like bus fare, cartage,
collieage, postage, stationery, taxi charges etc. These payments are generally repetitive in nature. If all these
payments are recorded in the Cash Book, it will become very bulky. Usually, these payments are made by
a person other than the main cashier called the Petty Cashier. The Petty Cashier is given a certain sum of
money and then all small payments, say below Rs 100, are made by him. He records all such payments in
a separate and special cash book called Petty Cash Book. Petty Cashier produces all the vouchers concerning
the payments made by him before the main cashier. The main cashier checks these vouchers and hands
over the necessary cash equal to the payments made by the petty cashier to him.

The system which is adopted for recording the petty cash transactions by the petty cashier in the petty cash
book is called the imprest system. Under this system, in the beginning, a fixed sum of money is given to
the petty cashier who makes payments out of it. This amount is called imprest money. The petty cashier
makes all small payments out of this imprest amount and once he spends a large amount out of its say
Rs 4,900, he gets this amount reimbursed from the main cashier. For this purpose he produces all the
payment vouchers before the main cashier who, after verifying the same, reimburses the amount. Thus, the
petty cashier again has the same amount in the beginning of the next period. The reimbursement by the main
cashier may be made on checking fortnightly, or on a monthly basis, depending on the frequency of the small
payment.

The format of the petty cash book

Amount Date Vr. Particulars Total Convey- Cartage Postage Refresh- misc- Remarks
Received No. Amount ance & Collieage ment expenses
Rs.

Illustration 8: A Petty Cashier was paid Rs 2,500 as Petty Cash imprest money on March 1, 2007.
During the fortnight ended March 15 his expenses were as under.
March 2 Taxi fare for the manager Rs. 150
March 3 Wages to casual worker Rs. 125
March 4 Stationery Rs. 280
March 5 Bus fair Rs. 10
March 6 Courier charges Rs. 105
March 7 Cartage Rs. 115
March 8 Refreshment Rs. 450
March 9 Cartage Rs. 135
March 10 Repairs to furniture Rs. 200
March 11 Taxi fare to salesmen Rs. 200
March 12 Refreshment Rs. 275
March 13 Conveyance Rs. 85
March 14 Courier charges Rs. 117
March 15 Cartage Rs. 107
Record these translationin the Petty Cash book.

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PETTY CASH BOOK

Amt. Date Vr. Particulars Total Convey- Courier Cartage Refresh- Misc. Remarks
Recei- No. Amount ance Charges & Colli- ment Expenses
ved Rs. age
Rs.

2007
2,500 Mar. 1 1 Cash received
Mar. 2 2 Taxi fare for 150 150
Manager

Mar. 3 3 Wages to casual 125 125

workers

Mar. 4 4 Stationery 280 280

Mar. 5 5 Bus fare 10 10
Mar. 6 6 Courier charges 105 105
Mar. 7 7 Cartage 115 15
Mar. 8 8 Refreshment 450 450
Mar. 9 9 Cartage 135 135
Mar. 10 10 Repair to furniture 200 200
Mar. 11 11 Taxi fare to 200 200
Mar. 12 12 salesman 275
275
Refreshment
85
Mar. 13 13 Conveyance 85
117
Mar. 14 14 Courier charges 117
Mar. 15 15 Cartage 107 107

2,354 445 222 357 725 605

Total

146
Balance c/d
2,500 2,500

2007
146 March 16, Balance b/d
2354 2007 Cash Received

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2.5 Purchase Book

All credit purchases of goods are recorded in this book. Which is also called as ‘Purchases Journal’ or
‘Purchase day Book’. We have already discussed that in the Cash Book all cash transactions are recorded.
Similarly, when the number of credit transactions pertaining to purchases of merchandise or goods are very
large than the business may use a subsidiary book to record such transactions and such a subsidiary book
is called the purchases book. The source documents for recording transactions in this book are the invoices
on the bills received by the firm from the suppliers. Entries in this book are recorded with net amount of the
invoice. In this book only credit purchases are recorded and cash purchases are recorded in cash book.
The format of the purchases book can be understood from illustraton 10.

Illustration 10. Prepare Purchases Book of M/s Amar Electrical for Dec. 2006.

2006
Dec. 18 Purchased on credit from Patil & Co. 10 Waterheaters @ Rs. 600 each, 20 Electric kettle
@ Rs. 300 each. Trade discount 10%.

Dec. 20 Purchased on credit from M/s IMI 15 Water heaters @ Rs. 500 each, 10 Toasters @
Rs. 200 each. Trade discount 15%.

Dec. 25 Purchased on credit from Raghu 12 Electric Irons @ Rs. 230 each, 20 Toasters @
Rs. 300 each.

M/S AMAR ELECTRICALS

PURCHASES BOOK

Date Particulars Voucher L.F. Details Amount

No, Rs. Rs.

2006
Patel & Co. Vide invoice No.________.
Dec.15
10 Water Heaters @ Rs.600 each less 10%
trade discount. 5,400
20 Electric Kettles @ Rs.300 each less 10%
trade discount. 5,400 10,800

Dec.20 M/s IMI vide invoice No._________

15 Water Heaters @ Rs.500 each less 15%
trade discount 6,375
10 Toasters @ Rs.200 each less 15% trade 2,700
discount. 9,075

Dec.25 Raghu vide invoice No.________ 12 2,760

Electric Irons @ Rs. 230 each. 6,000 8,760
20 Toasters @ Rs. 300 each.

Purchases A/c Dr. Total 29,635

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Note (i) Transactions of different dealings are not taken.
(ii) Cash Transactions are taken in the cash book.

2.5.1 Posting from the Purchases Book

The total of the purchases book is periodically posted to the debit of the purchases account by writing ‘To
Sundries Account’ in the particulars column and the accounts of the individual suppliers are credited by
writing ‘By Purchases Account’ in the particulars column. The posting from the purchases book of M/s Amar
Electricals of Illustration 10 has been shown in the ledger as follows.

Dr. PURCHASES ACCOUNT Cr.

Date Particulars F Amount Date Particulars F Amount
Rs. Rs
2006 To Sundries A/c 29,635
Dec.31

Dr. PATEL & CO. ACCOUNT Cr.

Date Particulars F Amount Date Particulars F Amount
Rs. Rs
2006 By Purchases A/c 10,800
Dec.5

Dr. M/S I.M.I. ACCOUNT Cr.

Date Particulars F Amount Date Particulars F Amount
Rs. Rs
2006 By Purchases A/c 9,075
Dec.20

Dr. RAGHU ACCOUNT Cr.

Date Particulars F Amount Date Particulars F Amount
Rs. Rs
2006 By Purchases A/c 8,760
Dec.25

2.6 Sales Book.

The credit sales of goods to customers are recorded in this book. We have already discussed that all cash
transactions including cash sales of goods are recorded in the cash book. When the number of transactions
relating to credit sales of goods is very large, for recording such transactions a special journal called Sales
Book/Sales Day Book/Sales Journal may be used by the enterprise. In this journal only credit sales of goods
is recorded. The format of the Sales Book is given below.
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SALES BOOK
Date Particulars Invoice No. L.F. Details Rs. Amount
Rs.

2.6.1 Ledger Posting from the Sales Book

The total of the sales book is credited to the sales account by writing ‘By Sundries’ in the particulars column
and the accounts of the individual debtors / customers are debited by writing ‘To Sales A/c’ in their respective
accounts.

Illustration 11 : Enter the following transactions in the sales book of M/s Amar Electricals and post the same
in ledger.
2006
Dec.12 Sold on credit to Ram Nath
5 Water Heaters @ Rs. 1,000 each
6 Electric Kettles @ Rs. 400 each
Trade discount 5%.
Dec. 18 Sold on credit to Vishwa Nath
2 Toasters @ Rs. 350 each
2 Water heaters @ Rs. 1,100 each
Trade discount 10%.
Dec. 25 Sold on credit to Rameshwar
5 Electric Irons @ Rs. 400 each
Trade discount 5%.

M/S AMAR ELECTRICALS

0

Date Particulars Voucher L.F. Details Amount

No, Rs. Rs.

2006 Ram Nath

Dec. 12 5 Water Heaters @ Rs. 1,000 each less
5% Trade Discount.
6 Electric Kettles @ Rs. 400 each.Trade 4,750
Discount 5%. 2,280 7,030

Dec. 18 Vishwa Nath

2 Toasters @ Rs. 350 each less 10% Trade 630
Discount. 1,980
2 Water Heaters @ Rs. 1,100 each less
10%Trade Discount. 2,610

1,900
Dec. 25 Rameshwar
5 Electric irons @ Rs. 400 each less 5% 1,900
Trade Discount.
Sales A/c Cr. Total 11,540

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Note (i) Transactions of different dealing are not taken.
(ii) Cash Transactions are taken in the Cash book.

LEDGER
SALES ACCOUNT
Dr. Cr.
Date Particulars F Amount Date Particulars F Amount
Rs. Rs
2006
Dec.31 By Sundries 11,540

RAMANATH ACCOUNT
Dr. Cr.
Date Particulars F Amount Date Particulars F Amount
Rs. Rs
2006
Dec.12 To Sales A/c 7,030

VISHWANATH ACCOUNT
Dr. Cr.
Date Particulars F Amount Date Particulars F Amount
Rs. Rs
2006
Dec.18 To Sales A/c 2,610

RAMESHWAR ACCOUNT
Dr. Cr.
Date Particulars F Amount Date Particulars F Amount
Rs. Rs
2006
Dec.20 To Sales A/c 1,900

2.7 Purchases Return Book

Sometimes goods purchased are returned to the suppliers. This may be done because the goods are not
of the required quality, or as per the specifications of the sample sent by the supplier, or are defective etc.
The return of such goods to the suppliers is recorded in the purchases returns book. When the goods are
returned, a debit note is prepared in which the details of the goods returned are mentioned. The debit note
is sent to the supplier. On the basis of the information given in the debit note the supplier makes necessary
entries in his books. The format of the purchases returns journal is similar to the purchases book as given
below.

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PURCHASES RETURNS BOOK
Date Particulars Invoice No. L.F. Details Rs. Amount
Rs.

Illustration:12 Record the following transactions in the proper subsidiary books and post them into ledger
of Vivek.

Jan. 1 Assets: Cash in hand Rs. 18,000; cash at bank Rs. 2,00,000; stock in (Rs.)
hand Rs. 1,60,000; Bheem Rs. 60,000; Gullu Rs. 1,20,000 and furniture
Rs. 1,40,000.
Liabilities: Prakash Rs. 1,80,000.

Jan. 2 Purchased a Motor Cycle from Bajaj Co. on credit 40,000

Jan. 3 Cash purchases 10,000

Jan. 4 Bought goods from Prakash Bill No. 314

20 Vests @ Rs. 50 each
30 Shirts @ Rs. 250 each

Jan. 5 Goods sold for cash 36,000

Jan. 6 Received cash from Bheem 39, 500

Discount allowed him
Sold goods to Mohan Bill No. 412 500
1000 Trousers @ Rs. 300 each
500 Cardigans @ Rs. 500 each

Jan. 7 Paid cash into bank 60,000

Received cash from Gullu 20,600
Allowed him discount 400

Jan. 8 Paid salaries to staff 50,000

Jan. 9 Cash withdrawn from Bank 25,000

Jan. 10 Paid to Prakash by cheque 88,000

Discount allowed by him 2,000

Jan.11 Raised a loan at 12% p.a. from Gobind and Deposited in Bank 1,50,00

Jan. 13 Purchased a Machine and paid by cheque 60,000

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Jan. 15 Purchased goods from S.K.Singh & Co. Bill No. 6105
10 black shirts @ Rs. 300 each
20 black pullovers @ Rs. 400 each

Jan. 16 Sold goods to Gullu on credit bill No. 413

5 sweaters @ Rs. 200 each
15 Sarees @ Rs. 300 each

Jan. 17 Goods returned to S.K.Singh & Co. Debit Note 130

2 black shirts @ 300 each
5 black Pullovers @ Rs. 400 each

Jan. 17 Received Cheque from Gullu & Banked 19,800

Allowed him discount 200

Jan. 18 Goods returned by Gullu Credit Note. 201

5 Sarees @ Rs. 300 each
1 sweater @ Rs. 200 each

Jan. 19 Prakash gives a special allowance on some defective 3,500

goods purchased from him

Jan. 21 Cash sales to Rakesh Sharma 15,000

Cash Purchases from Vinod Gupta through bank 1,20,000

Jan. 22 Sale of Old Newspaper 1,500

Jan. 23 Two old tables sold 5,500

Jan. 24 Paid rent by cheque 6,600

Jan. 25 Cash drawn from bank for personal use 10,000

Jan. 26 Two shirts costing Rs. 500 each taken for personal use

Jan. 27 Cash paid for stationery 2,000

Jan. 28 Postage expenses paid 200

Jan. 31 Interest on Gobind’s Loan due @ 6% 1,500

Salaries outstanding 6,500
Depreciation on furniture 1,000
Cash paid into bank 15,000

Jan. 31 Bheem is insolvent and nothing received from his es-

tate, it is a bad debt

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Solution : Book Of Vivek
Cashbook (Three column)
Dr. Receipts Cr.
Date Particulars F Discount Cash Bank Date Particulars F Discount Cash Bank
Rs. Rs. Rs. Rs. Rs.
Rs.
2004

Jan. 1 To Bal b/d 18,000 2,00,000 Jan. 3 By Purchase A/c 10,000

Jan. 5 To sales A/c 36,000 Jan. 7 By Bank A/c C 60,000

Jan. 6 To Bheem 500 Jan. 8 By Salaries A/c 50,000

39,500
Jan. 7 To cash C 60,000 Jan. 9 By Cash C 25,000
To Gullu 400 20,600 Jan.10 By Prakash 2,000 88,000

Jan. 9 To Bank C 25,000 Jan.13 By Machine A/c 60,000

Jan. 11 Jan.21 By Purchase A/c 1,20,000

12% Loan A/c 1,50,000 Jan.24 By Rent A/c 6,600

Jan. 17 To Gullu 200 19,800 Jan.24 By Drawing 10,000

Jan. 21 To Sales A/c 15,000 Jan.27 By Stationery A/c 2,000

Jan. 22 To Sale of old 1,500 Jan.28 By Postage A/c 200

newspaper

Jan. 23 To Furniture A/c 5,500 Jan.31 By bank C 15,000

(Sold)

Jan. 31 To Cash C 15,000 Jan.31 By bal. C/d 23,900 1,35,200

1,100 1,61,100 4,44,800 2,000 1,61,100 4,44,800

Feb. 1 To bal b/d 23,900 1,35,200

Purchases Book
Date Invoice Bill No. Particulars (Supplier's Name) L.F. Details Amount
2004 (Rs.) (Rs.)
Jan. 4 314 Prakash
20 Vests @ Rs. 50 each 1,000
30 Shirts @ Rs. 250 each 7,500 8,500

Jan. 15 6105 M/s S.K.Singh & Co.

10 Black Shirts @ Rs. 300 each 3,000
20 Black Pullovers @ Rs. 400 each 8,000 11,000

Jan. 31 Purchase A/c-Dr. Total 19,500

Purchases Returns Book

Date Debit Note No. Particulars (Supplier's Name) L.F. Details Amount
2004 (Rs.) (Rs.)
Jan. 17 130 M/s S.K.Singh & Co.
2 Black Shirts @ Rs. 300 each 600
5 Black Pullovers @ Rs. 400 each 2,000 2,600

Jan. 31 Purchase Return A/c-Dr. Total 2,600

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Sales Book

Date Invoice Particulars (Name of Customer) L.F. Details Amount

Note No.
2004 (Rs.) (Rs.)
Jan. 6 412 Mohan
1000 Trousers @ Rs. 300 each 3,00,000
500 Cardigans @ Rs. 500 each 2,50,000 5,50,000

Jan. 16 413 Gullu

5 Sweaters @ Rs. 200 each 1,000
15 Sweaters @ Rs. 300 each 4,500 5,500
Jan. 31 Sales A/c-Dr. Total 5,55,500

Sales Return Book

Date Credit Particulars (Name of customer) L.F. Details Amount

Note No.
2004 (Rs.) (Rs.)
Jan. 18 201 Gullu
5 Sarees @ Rs. 300 each 1,500
1 Sweater @ Rs. 200 each 200 1,700
Jan. 31 Sales Return A/c-Dr. Total 1,700

Journal Proper

Date Particulars L.F. Debit Credit

Amount Amount

Jan. 1 Cash Account (Cash Book) Dr. 18,000

Bank Account (Cash Book) Dr. 2,00,000
Stock in hand Dr. 1,60,000
Bheem Dr. 60,000
Gullu Dr. 1,20,000
Furniture Dr. 1,40,000
To Capital Account (Balancing figure) 5,18,000
To Prakash (Creditor) 1,80,000
(Being the opening entry for the year 2005)

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Jan. 2 Motorcycle Account Dr. 40,000
To M/s Bajaj Company 40,000
(Being a MotorCycle purchased from Bajaj Co.
on credit)

Jan. 19 Prakash Dr. 3,500

To Special Allowance (gain) 3,500
(Being a special allowance given by
Prakash for defective goods)

Jan. 26 Drawings Account Dr. 1,000

To Purchases Account 1,000
(Being two shirts taken for personal
use by Gopi Nath)

Jan. 31 Interest on Loan Account Dr. 1,500

To Interest Due Account 1,500
(Being interest due on Loan)

Jan. 31 Salaries Account Dr. 6,500

To Salaries Outstanding Account 6,500
(Being salaries due to be paid)

Jan. 31 Depreciation Account Dr. 1,000

To Furniture Account 1,000
(Being Depreciation charged on furniture)

Jan. 31 Bad debts Account 20,000

To Bheem 20,000
(Bheem is insolvent and the entire debit is a bad debt)

Dr. Purchases Account Cr.

Date Particulars F. Amount Date Particulars F. Amount

2004 Rs. 2004 Rs.

Jan. 3 To Cash Book 10,000 Jan 26 By Drawing 1,000

To Cash Book (Bank) 1,20,000 Jan 31 Account
To Sundries as per 19,500
Purchases Book

Dr. Sales Account Cr.

Date Particulars F. Amount Date Particulars F. Amount

2004 Rs. 2004 Rs.

Jan. 5 By Cash Book 36,000

Jan 21 By Cash Book 15,000
Jan 31 By Sundries as 5,55,500
per Sales Book

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Dr. Purchases Return Account Cr.

Date Particulars F. Amount Date Particulars F. Amount

2004 Rs. 2004 Rs.

Jan. 31 By Sundries as
per Purchases
Returns Book 2,600

Dr. Sales Return Account Cr.

Date Particulars F. Amount Date Particulars F. Amount

2004 Rs. 2004 Rs.

Jan. 31 By Sundries as per

Purchases Returns Book 1,700

Dr. Stock – in – Hand Account Cr.

Date Particulars F. Amount Date Particulars F. Amount

2004 Rs. 2004 Rs.

Jan. 1 To Balance b/d 1,60,000

Dr. Bheem Account Cr.

Date Particulars F. Amount Date Particulars F. Amount

2004 Rs. 2004 Rs.

Jan. 1 To Balance b/d 60,000 Jan. 6 By Cash Book 39,500

By Discount 500
By Bad Debts 20,000
60,000 60,000

Dr. / Cr.

Date Particulars F. Amount Date Particulars F. Amount

2004 Rs. 2004 Rs.

Jan. 2 To M/s Bajaj Co. 40,000 Jan 31 By Balance b/d 40,000

40,000 40,000
Feb 1 To Balance b/d 40,000

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Dr. Furniture Account Cr.

Date Particulars F. Amount Date Particulars F. Amount

2004 Rs. 2004 Rs.

Jan. 1 To Balance b/d 1,40,000 Jan 23 By Cash Book 5500

(Sold)
Jan 31 By Depreciation 1000

Jan 31 By Balance C/d 1,33,500

1,40,000 1,40,000

Dr. Prakash Cr.

Date Particulars F. Amount Date Particulars F. Amount

2004 Rs. 2004 Rs.

Jan. 10 To Cash Book(Bank) 88,000 Jan. 1 By Balance b/d 1,80,000

To Discount 2,000 Jan. 4 By Purchases 8,500
Jan 19 To Special Allowance 3,500 Book
Jan 31 To Balance c/d 95,000
1,88,500 1,88,500
Feb. 1 By Balance b/d 95,000

Dr. Capital Account Cr.

Date Particulars F. Amount Date Particulars F. Amount

2004 Rs. 2004 Rs.

Jan. 31 To Balance c/d 5,18,000 Jan. 1 By Balance b/d 5,18,000

5,18,000 5,18,000

Feb. 1 By Balance b/d 5,18,000

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Dr. Gulu Account Cr.

Date Particulars F. Amount Date Particulars F. Amount

2004 Rs. 2004 Rs.

Jan. 1 To Balance b/d 1,20,000 Jan. 7 By Cash Book 20,600

Jan 16 To Sales Book 5,500 Jan. 7 By Discount Amt. 400
Jan. 17 By Cash Book 19,800
Jan. 17 (Bank)
Jan. 18 By Discount 200
Jan. 31 Account
By Sales Returns 1,700
A/c
By Balance c/d 82,800

Feb 1. 1,25,500 1,25,500

To Balance b/d
82,800

Dr. Bajaj Co. Cr.

Date Particulars F. Amount Date Particulars F. Amount

2004 Rs. 2004 Rs.

Jan. 31 To Balance c/d 40,000 Jan. 2 By Motor cycle A/c 40,000

40,000 40,000

Feb. 1 By Balance b/d 40,000

Dr. M/S N. K. Singh & Co. Cr.

Date Particulars F. Amount Date Particulars F. Amount

2004 Rs. 2004 Rs.

Jan. 17 To Puchases Return A/c 2,600 Jan. 15 By Purchase 11,000

To Balance c/d Book
8,400

11,000 Feb. 1 By Balance b/d 11,000

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Dr. Mohan Account Cr.

Date Particulars F. Amount Date Particulars F. Amount

2004 Rs. 2004 Rs.

Jan. 6 To Sales Book 5,50,000 Jan. 31 By Balance c/d 5,50,000

5,50,000 5,50,000

To Balance b/d 5,50,000

Dr. Salaries Account Cr.

Date Particulars F. Amount Date Particulars F. Amount

2004 Rs. 2004 Rs.

Jan. 8 To Cash A/c 50,000 Jan. 11 By Balance b/d 50,000

50,000 50,000
By
Feb 1 TO Balance b/d 50,000 Feb. 1

Dr. Depreciation Account Cr.

Date Particulars F. Amount Date Particulars F. Amount

2004 Rs. 2004 Rs.

Jan. 31 To Furniture Account 1,000

Dr. Machine Account Cr.

Date Particulars F. Amount Date Particulars F. Amount

2004 Rs. 2004 Rs.

Jan. 13 To Cash Book (Bank) 60,000 Jan. 31 By Balance c/d 60,000

60,000 60,000
Feb 1 To Balance b/d 60,000

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Dr. Special Allowance Account Cr.

Date Particulars F. Amount Date Particulars F. Amount

2004 Rs. 2004 Rs.

Jan 19. By Prakash 3,500

Dr. Old Newspaper Account Cr.

Date Particulars F. Amount Date Particulars F. Amount

2004 Rs. 2004 Rs.

Jan 22. By Cash Book 1,500

Dr. Rent Account Cr.

Date Particulars F. Amount Date Particulars F. Amount

2004 Rs. 2004 Rs.

Jan. 24 To Cash Book (Bank) 6,000

Dr. Drawings Account Cr.

Date Particulars F. Amount Date Particulars F. Amount

2004 Rs. 2004 Rs.

Jan 25. To Cash Book (Bank) 10,000 Jan. 31 By Balance c/d 11,000

Jan 26. To Purchases A/c 1,000

11,000 Feb. 1 By Balance b/d 11,000

Feb. 1 To Balance b/d
11,000

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Dr. Stationery Account Cr.

Date Particulars F. Amount Date Particulars F. Amount

2004 Rs. 2004 Rs.

Jan 27. To Cash Book 2,000

Dr. Postage Account Cr.

Date Particulars F. Amount Date Particulars F. Amount

2004 Rs. 2004 Rs.

Jan 28. To Cash Book 200

Dr. Interest on Loan Account Cr.

Date Particulars F. Amount Date Particulars F. Amount

2004 Rs. 2004 Rs.

Jan 31. To Interest Due Account 1,500

Dr. Interest Due Account Cr.

Date Particulars F. Amount Date Particulars F. Amount

2004 Rs. 2004 Rs.

Jan 31. To Balance b/d 1,500 Jan. 3 By Interest on Loan 1,500

1,500 1,500

Feb. 1 By Balance b/d 1,500

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Dr. Salaries Outstanding Account Cr.

Date Particulars F. Amount Date Particulars F. Amount

2004 Rs. 2004 Rs.

Jan 31. To Balance b/d 6,500 Jan. 3 By Interest on Loan 6,500

6,500 6,500

Feb. 1 By Balance b/d 6,500

Dr. Bad Debts Account Cr.

Date Particulars F. Amount Date Particulars F. Amount

2004 Rs. 2004 Rs.

Jan 31. To Bheem 20,000

Dr. Discount Allowed Account Cr.

Date Particulars F. Amount Date Particulars F. Amount

2004 Rs. 2004 Rs.

Jan 31. To Cash Book (Total) 1,100

Dr. Discount Received Account Cr.

Date Particulars F. Amount Date Particulars F. Amount

2004 Rs. 2004 Rs.

Jan 31. By Cash Book 2,000

(Total)

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Key Terms Introduced in the Chapter

 Books of Original Entry  Cash Book

 Source Documents  Sale Return Book
 Journal  Sales Book
 Ledger  Balancing of Accounts
 Posting  Purchase Book
 Petty Cash Book  Purchase Return Book

Summary with Reference to Learning Objectives

1. Source Document : A Document which provides evidence of transactions.
2. Journal : Basic book of original entry.
3. Cash Book : A book used to record all cash receipts and payments.
4. Petty Cash Book : A book used to record small cash payments.
5. Ledger : Principal book of accounting system, may be in the form of a bound register or loose leaf
forms printed on papers or cards.

Questions for Practice

Short Answer-Question
1. What is a Journal? Give a specimen.
2. What is a Cash Book? How is it prepared?
3. Why does the Cash Book always show a balance?
4. How does a Cash Book serve a dual purpose?
5. Name the various types of Cash Books.
6. What is the meaning of contra entry?
7. What are the special Purpose Books?
8. What do you mean by Imprest System of Petty Cash Book?
9. What do you mean by Balancing of Accounts?
10. What is a journal folio?

Long Answer-Question
1. Explain how debits and credits are used to analyse a transaction.
2. State the main advantages of subdivision of journal.
3. What are ‘Books of Original Entry’ ? What are the rules of Journalisng of different types of
accounts?
4. Explain the form and advantage of keeping a three column cash book.
5. What do you understand by Ledger? Explain its utility and importance.
6. What is Petty Cash Book? What are its advantages ?

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Numerical Questions
Journalising

1. Journalise the following transactions of Mr. Ramesh.

2000 Rs.
Feb 1 Ramesh started business with cash 10,000
Feb 3 Paid into bank 6,000
Feb 4 Brought goods from M/s R. Singh & Co. on Credit 2,000
Feb 5 Purchased Furniture 200
Feb 5 Purchased adding machine 800
Feb 5 Purchased Typewriter
(Payment in all cases made by cheque) 600
Feb 7 Paid for postage 15
Feb 9 Sold goods for cash 400
Feb 10 Sold goods on credit to M/s M.Sharda & Co. 1,000
Feb 11 Paid to M/s R. Singh & Co. 1,950
Discount allowed by them 50
Feb 14 Sold goods to M/S Rai & Co. 560
Feb 25 Received cheque from M/s M. Sharda & Co.
In full settlement of amount due from them 975
Feb 28 Paid salary 150
Feb 28 Paid rent by cheque 200
Feb 28 Drew for private use 350

2. The following are the transactions of P.Singh & Co. for the month of August. You are required
to Journalise them.

2001 Rs.
Aug 1 Capital paid into bank 5,000
Aug 2 Bought stationery for cash 30
Aug 3 Bought goods for cash 2,000
Aug. 4 Bought postage stamps 2,100
Aug. 6 Sold goods for cash 750
Aug. 7 Bought office furniture from Mamta 500
Aug.12 Sold goods to Rajendra 1,000
Aug 13 Received cheque from Rajendra 1,000
Aug.15 Paid Mamta. by Cheque 500
Aug 17 Sold goods to Suresh & Co. 500
Aug 21 Bought goods from K.Seth & Bros. 700
Aug 24 Bought goods for cash from S.Verma & Co. 225

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Aug 25 Sold goods to K.Kumar 350

Aug 27 Suresh & Co. Paid on account 250
Aug 29 Paid K.Seth & Bros. By cheque in full settlement 685
Aug 31 Rent is due to S.Verma but not yet paid 100

3. S. K. Singh commenced business on 1 March 2006. His transactions for the month are
given below. Journalise them.

2006 Rs.
Mar 1 Commenced business with cash capital 25,000
Mar 2 Paid into bank 23,500
Mar 3 Brought goods from R & Co. 5,400
Mar 3 Sold goods to Manjeet 4,800
Mar 7 Bought goods from S. Chand 6,450
Mar 8 Paid wages in cash 80
Mar 8 Sold goods to M. Chand 5,350
Mar 10 Received cheque from Manjeet (Discount allowed Rs 120) 4,680
Mar 11 Paid to R & Co. (Discount received Rs 270) 5,130
Mar 12 Paid rent for three months up to March 400
Mar 13 Bought from C.Hajara 7,400
Mar 15 Paid wages in cash 80
Mar 15 Paid office expenses in cash 70
Mar 16 Sold goods to Jagdish 3,200
Mar 17 Sold goods to Manjeet 1,600
Mar 21 Sold goods to M. Chand 2,500
Mar 21 Payment received by cheque from Jagdish 3,200
Mar 22 Paid wages in cash 80
Mar 22 Paid office expenses in cash 50
Mar 22 Paid S. Chand by cheque (discount Rs 320) 6,130
Mar 26 Received cheque from M. Chand (discount Rs 150) 5,200
Mar 27 M. Chand returned goods( not up to sample) 200
Mar 29 Paid wages in cash 80
Mar 31 Paid office expenses in cash 40
Mar 31 Paid salaries for the month 300

4. Enter the following transactions in journal of Anil who trades in readymade garments.

2006 Rs.
June 1 Anil Paid into bank as Capital 6,000
June 2 He Bought goods for cheque 2,400
June 3 Sold to M & Co. 670

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June 4 Sold goods for cash 1,090

June 5 Paid sundry expenses in cash 300
June 6 Cash sent to bank 1,500
June 7 Received cheque from M & Co. 650
Discount allowed 20
June 8 Paid wages in cash 100
June 8 Paid for office furniture and fittings by cheque 400
June 9 Bought goods from Ramesh 1,060
June10 Sold to Kiran 1,870
June11 Returned goods to Ramesh 150
June12 Sent cheque to Ramesh. In full settlement 900
June 14 Sold goods for cash 490
June 14 Paid into bank 400
June 15 Drew cash from office for personal use 50
June 30 Paid cash for stationery 30
June 30 Bought goods from Sohan & Co. Ltd 1,000
June 30 Received from Kiran on account 600
June 30 Banked (Cash sent to bank) 650

Simple Cash Book

5 Enter the following transactions in a single column Cash Book.

2004 Rs.
May 1 Commenced business with cash 25,000
3 Bought goods for cash 10,000
3 Paid Carriage 200
4 Sold goods for cash Received from Ram 6,000
10 Received from Ram 1,000
12 Paid to Shiv Kumar 2,600
15 Cash Sales 8,400
18 Purchased Furniture for cash for office 5,000
20 Paid for Advertisement 500
20 Purchased goods from Mahesh on Credit 6,000
24 Paid to Mahesh 4,000
25 Paid Wages 400
27 Received from Commission 1,500
28 Withdrew for personel use 2,200
31 Paid salary 700
Ans. Cash Balance Rs. 16,300

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6. Prepare a Simple cash book from the following transactions of Mr. Gopal of Delhi.

2006 Rs.
April 1 Mr. Gopal commenced business with cash 8,000
April 3 He bought goods for cash 5,000
April 5 Sold goods for cash 100
April 6 Received cash from Mr. Lal 360
April 9 Paid into bank 3,000
April 13 Paid cash to Hari 215
April 16 Sold goods for cash 1,500
April 17 Paid for stationery 15
April 18 Paid for office furniture 185
April 21 Received from Mr. Kailash 680
April 22 Paid for advertising 90
April 25 Purchased postage stamps 20
April 28 Paid rent 100
April 30 Paid electricity charges 15
Ans. : Cash Balance Rs. 2,000

7. Compile Cash Book from the following transactions given to you.

2005 Rs.
Mar 1 Mr. M. Lal commenced business with cash 8,500
Mar 2 Bought goods for cash 685
Mar 4 Paid Mr. Sohan Lal cash 145
Discount allowed 5
Mar 6 Deposited in bank 4,000
Mar 6 Paid for office furniture in cash 465
Mar 8 Sold goods for cash 3,000
Mar 12 Paid wages in cash 130
Mar 13 Paid for stationery 50
Mar 14 Sold goods for cash 2,500
Mar 16 Paid for miscellaneous expenses 65
Mar 19 Received cash from Mr. S. Chand 485
Allowed him discount 15
Mar 22 Purchased a radio set 250
Mar 22 Paid salary 300
Mar 25 Paid rent 100
Mar 28 Paid electricity bill 55
Mar 29 Paid for advertising 40
Mar 31 Paid into bank 4,500
Ans. Cash Balance Rs. 3,700

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Double Column Cash Book

8. Enter the following transactions in a Two Column Cash Book having Cash and Discount
Columns.
2003 Rs.
Dec 1 Cash in Hand 15,000
Dec 2 Cash Sales 12,000
Dec 4 Received from X on Behalf of Y 4,000
Dec 7 Bought goods for cash 10,000
Dec 9 Paid to Som Pal 4,900
Discount Received 100
Dec 11 Received from Vijay Kumar 7,800
And discount allowed 200
Dec 15 Sold goods in cash 6,500
Dec 16 Sold goods to Kabir on credit, the terms being 2 ½ % cash discount ,
If payment is received within one week 10,000
Dec 18 Paid Telephone expenses 450
Dec 20 Cash Purchase 9,000
Dec 21 Paid Cartage 200
Dec 22 Received cash from Kabir for the goods sold on 16 th Dec 1,880
Dec 23 Remmitted to Dharamvir and discount allowed by him 120
Dec 25 Received M.O. from Mohan 500
Dec 27 Borrowed from Mahabir 7,500
Dec 29 Received from Bhushan 3,900
Discount allowed 100
Dec 31 Received dividend on shares 400
Paid to Lalit Rs. 2,700 in full settlement of his account of Rs. 3,000.
Ans. : Cash Balance Rs. 38,220; Discount Dr. Rs.550 and Cr. Rs.520
9. Enter the following transactions in Cash Book having discount and Cash Columns.
2006. Rs.
March 1 Cash in hand 30,000
March 4 Paid for cash purchases 5,000
March 5 Received from cash sales 17,000
March 7 Prakash Paid us cash 3,950
We allowed him discount 50
March 11 Paid Satish & Co. 4,400
They allowed us discount 100
March 13 Received Commission 200
March 15 Issued a Cheque to Dinesh towards an account of
Rs. 10,000 less 5% cash discount
March 17 Issued a cheque for Rs. 3,800 to Faquir Chand in full settlement
of his account for Rs. 4,000
March 21 Bought goods for cash 9,200
March 25 A cheque issued by the proprietor for gift at the marriage of his wife's friend 500

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March 28 Purchased filing Cabinet for office 4,500
March 29 Drew Cheque for petty expenses 400
March 31 Paid office rent 1,500
Paid sales tax 3,000
Received interest 250
Ans. : Cash Balance Rs. 9,600; Discount Dr. Rs. 50 and Cr. Rs. 800.

10. Write up Cash Book of Bhanu Pratap with Cash and Bank Columns from the following
transactions.

2000 Rs.
March 1 Cash in Hand 2,710
Cash at bank 27,500
March 3 Received from Subhash 3,500
March 4 Sold goods for cash 10,000
March 7 Paid rent by Cheque 800
March 8 Paid Sohan By cheque 3,000
March 10 Bought goods for cash 15,000
March 12 Paid cash for stationery 200
Drew from bank for office use 8,000
March 15 Received cheque from Vinod and sent it to bank 6,600
March 16 Paid for advertisement 750
March 18 Issued cheque in favour of Nath Brothers 4,300
March 19 Cash sales 13,000
Paid into bank
March 20 Received cheque from Vinod and sent it to bank 16,000
March 22 Bought Scooter and paid for the same by cheque 2,400
March 25 Bank returned Surendra’s Cheque dishonoured 18,000
March 28 Paid salary by cheque 7,200
Paid trade expenses 2,000
March 29 Cash sales 95,00
March 30 Paid into Bank 10,000
Ans. : Cash Balance Rs. 2,760 and Bank Balance 14,600.

11. Enter the following transactions in Cash Book with discount columns.

2006 Rs.
Jan 1 Cash in hand 1,500
Jan 5 Paid to Ram 300
Discount allowed by him
Jan 8 Purchased goods 400
Jan 11 Received from S. Gupta 980
Discount allowed 20

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Jan 16 Sold goods 400
Jan 21 Paid to M. Sharma 300
Discount received 5
Jan 25 Paid wages 50
Jan 31 Paid to Shiv in full settlement of his account
which shows a credit balance of Rs. 400 390

Ans.: Cash Balance Rs. 1,440

Triple Column Cash Book

12. Prepare a three- column cashbook.

2007 Rs.
Jan 1 Cash in hand 5,000
Jan 1 Bank overdraft 1,000
Jan 2 Paid wages 1,500
Jan 3 Deposited into bank 2,000
Jan 4 Cash sales 7,500
Jan 5 Sold goods for cheque which was deposited in bank on the same day 5,000
Jan 6 Purchased goods from Shivam on credit 4,000
Jan 7 Drew from bank for personal use 1,000
Jan 8 Paid to Shivam in full settlement 3,500
Jan 9 Received from Ram, who owes Rs. 5,000, Rs. 2,000 only on account.
Ans.: Cash in hand Rs. 7,500; Bank Balance Rs. 5,000

13. Enter the following transactions in Triple column Cash book of Raj Traders.

2006 Rs.
Dec 1 Started business with cash 9,000
Dec 1 Deposited in the bank 4,000
Dec 2 Purchased office equipment 1,000
Dec 4 Cash Purchases, issued cheque 2,500
Dec 8 Received cheque from Anuj on account 3,250
Dec 10 Cash sales, received cheque 1,300
Dec 15 Office expenses 275
Dec 25 Office rent paid by cheque 300
Dec 28 Received cheque from Raju and endorsed the same to Rohit 400
Dec 30 Paid advance income tax by cheque 575
Dec 31 Deposited into bank, balance of cash in excess of Rs. 300
Ans. Cash balance Rs. 300; Bank Balance Rs. 8,600

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14 . Enter the following transactions in the Cash Book with Discount, Cash and Bank Columns.

2006
April 1 Balance of cash in hands Rs. 400 , overdraft at bank Rs. 5,000
4 Invested further capital of Rs. 10,000 out of which Rs. 6,000 deposited into the bank
5 Sold goods for cash Rs. 3,000
6 Received from Ghanshyam Rs. 8,000 ; discount allowed to him Rs. 200
10 Purchased goods for cash Rs. 5,500
11 Paid to Ram Vilas ,our creditor, Rs. 2,500; discount allowed by him Rs.65
13 Commission paid to our agent Rs. 530
14 Office furniture purchased from Keshav in cash Rs. 200
14 Rent paid Rs. 50
16 Drew cheque for personal use Rs. 850
17 Cash sales of Rs. 2,500.
18 Collection from Atul Rs. 4,000, deposited in the bank on 19 April
19 Drew from the bank for office use Rs. 500.
24 Dividend received by cheque Rs. 50, deposited in the bank on the same day
25 Commission received by cheque Rs. 230, deposited in the bank on 28th April
29 Drew from the bank for salary of office staff Rs. 1,500
29 Paid salary of the manager by cheque Rs. 500
30 Deposited cash in the banks Rs. 1,000

Ans. Cash Balance(Dr.) Rs. 8,610 and Bank Balance (Dr.) Rs. 2,930; Discount (Dr.)
Rs. 200;and Discount (Cr.) Rs. 65.

15. Prepare Triple Column Cash Book from the following transactions.

2007
Jan 1 Cash at office Rs. 72
Bank overdraft Rs. 1,250
4 Received from Prem Chand a cheque for Rs. 1,875 in full settlement of his account of
Rs. 1,900 . The Cheque was banked on the same day.
5 Bought goods and paid by cheque Rs.500
6 Narinder settled his account of Rs. 700 by Cheque . This was banked on the same day.
9 Paid to Manohar Lal by cheque for Rs. 420 . Discount received Rs.80.
12 Cash sales to date Rs.400 of which Rs.300 were banked.
17 Sold old typewriter for cash Rs.320.
20 Received a cheque for Rs.400 from Naresh in full settlement of his account of Rs.460.
The cheque was endorsed to suresh in full settlement of his account of Rs. 420.
25 Received a cheque from Hari Prakash for Rs. 150.
27 Cheque of hari Prakash was endorsed to Raj Prakash. Discount received Rs.30.
28 Withdrew from bank for office use Rs. 100 and for personal use Rs . 100.
29 Withdrew (from office) for payment of private bills Rs. 425.

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30 Paid by cheque salaries Rs. 160 and rent 100
31 Bank Charges as per Pass Book Rs. 5

Ans. Cash balance Rs. 167 ; Bank Balance (Dr.) Rs. 240;
Discount (Dr.) Rs. 85 ; (Cr.) Rs. 130 .

16. Enter the following transactions in the cash book with Discount , Cash and Bank
Columns.

2007 Rs.
Jan 1 Cash in hand 4,800
Bank overdraft 30,400
Jan 2 Fresh Capital introduced 20,000
Jan 3 Deposited into bank 15,000
Jan 4 Sold goods to Mahesh on credit 6,200
Jan 5 An Amount of Rs. 4,200 due from Ashok written off as bad debts in
the previous year , now recovered
Jan 6 Withdrew from bank for the payment of Life Insurance Premium 3,000
Jan 8 Received a cheque from Mahesh for Rs. 6,000 in full settlement
of his account and deposited the same into the bank
Jan 10 Sold goods to Varun on Credit 30,000
Jan 12 Received a Cheque for Rs. 28,000 from Varun in Full Settlement
Jan 15 Cheque received from Varun sent to bank
Jan 18 Varun,s cheque returned by Bank Dishonoured. Bank Charged
Rs. 25 on this Cheque
Jan 20 Received a cheque of Rs. 6,800 from Vijay which was endorsed to
Amrit Raj on the same day
Jan 25 Withdrew cash from Bank Rs.5,000 for paying gift to his daughter on her birthday
Jan 26 Bought goods from Gupta General Store for Rs.10,000 on credit and they
allowed us trade discount of 25%
Jan 28 Paid to Gupta General Stores in cash, full Settement 7,000
Jan 28 Sale of Old Machinery , payment received in cash Rs.7,700
Jan 30 Paid salary by cheque Rs.1,500. Paid Rent in cash Rs. 2,200
Jan 31 Paid into current Account the entire balance after retaining Rs. 5,000 at office

Ans. Discount (Dr.) Rs. 2,200 ; (Cr.) Rs. 2,500; Cash balance (Dr.) Rs.5,000; Bank Overdraft
Rs. 11,425; Excess Cash deposited into Bank on 31 May Rs. 7,500.

17. Compile a triple column cash book from the following transaction’s of Kavita Garments.

2003
Feb 1 Cash in Hand Rs. 7,500; Cash at bank Rs. 8,000.
Feb 2 Discounted a bill receivable for Rs. 6,000 at 2% through bank
Feb 3 Received two cheques from Kalpana each of Rs. 10,000
Feb 4 First cheque received from Kalpana is endorsed to Sunita in full settlement
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of Rs. 10,200. Second cheque is sent to bank for collection
Feb 5 Second cheque received from Kalpana is returned as dishonoured by the bank.
The bank has debited our account with Rs. 20 as bank charges on this cheque
Feb 6 Received cheque from sale of old furniture for Rs.1,950 . Cheque is endorsed to
a creditor Ramesh in full settlement of Rs. 2,000 due to him
Feb 8 Purchased goods from Mohan on credit for Rs. 8,000
Feb 10 Settled Mohan's account by giving a cheque for Rs.4,000 and cash Rs. 3,900
Feb 12 Goods sold to Pawan for Rs. 6,000. He paid the amount in cash immediately
after deducting 2 ½ % cash discount
Feb 15 A bill payable fro Rs. 5,000 paid by Cheque
Feb 18 Cash sale to date Rs. 50,000 of which Rs. 40,000 banked .
Feb 20 Paid electric bill of Rs.2,000 for Jan 2003 by cheque . paid rent for Jan 1998 Rs. 15,00
Feb 25 Cash purchases Rs. 5,000 , Issued a Cheque
26 Deposited into bank cash retaining Rs. 7,500

Ans. Discount (Dr.) Rs. 270 ; (Cr.) Rs. 350 ;cash in hand Rs. 7500 ; Cash at bank Rs. 48,310. Excess cas
deposited into bank on 28 Feb. Rs. 10,450

18. Write out the following transaction’s in Cashbook with discount and bank columns.

2006
Jan 1 Champa commences business with Rs. 20,000 in cash
Jan 3 He pays Rs. 19,000 into Bank Current A/c
Jan 4 He receives cheque for Rs. 600 from Riti & co. on account
Jan 10 He pays R & Co. by cheque Rs. 330 and is allowed discount Rs. 20
Jan 12 T & Co. pays into his bank A/c Rs. 475
Jan 15 He receives cheque for Rs. 450 from Wasi and allows him discount of Rs. 35
Jan 20 He receives cash Rs. 75 and cheque Rs. 100 for cash sales
Jan 27 He pays by cheque for cash purchases Rs. 275
Jan 30 He pays sundry expenses in cash Rs. 50
Jan 30 He pays S & Co. Rs. 375 in cash and is allowed discount of Rs. 35
Jan 31 He pays office rent by cheque Rs. 200
Jan 31 He draws a cheque for personal use of Rs. 250
Jan 31 He pays staff salaries by cheque Rs. 300
Jan 31 He draws a cheque for office use Rs. 400
Jan 31 He pays cash for stationery Rs. 25
Jan 31 He purchases goods for cash Rs. 125
Jan 31 He pays Pal by cheque for commission Rs. 300
Jan 31 He gives cheque to Saran for cash purchase of furniture for office of Rs. 1,575
Jan 31 He receives cheque for commission Rs. 500 from Rohan & Co.
Jan 31 He receives cheque from K & Co. for Rs. 450
Ans. Cash balance Rs. 900; Bank Balance Rs. 17,945

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Petty cash Book

19. A Petty cashier in a firm received Rs. 150 as the petty cash imprest on 4 June 2006. During
the week, his expenses were as follows.

2006 Rs.
Jane 4 Tonga charges for managers trip to the city 5
Jan 4 Wages to casual labourers 15
Jan 5 Bus fare to workmen sent to customers premises 2
Jan 5 Stationery purchased 10
Jan 6 Sent telegram to Head office 4
Jan 6 Postage stamps purchased 10
Jan 6 Revenue stamps for payment of wages 5
Jan 7 Repair of typewriter 4
Jan 7 Paid electric lighting bill 17
Jan 8 Wages paid to coolies for shifting furniture etc. 4
Jan 8 Taxi fare to assistant manager 5
Jan 8 Locks purchased 8
Jan 8 Stationery purchased 4
Jan 9 Refreshments to customers 2
Write up the Petty cashbook and draft the necessary Journal entry for the payments made.
Ans. Petty Cash Balance Rs. 55

20. Prepare an Analytical Petty Cash Book on the imprest system from the following.
2006
June 1 Received Rs 400 for Petty Cash.
June 3 Paid Cartage Rs 10.
June 4 Paid Bus Fare Rs 5; Postage Rs 12
June 6 Paid for Stationery Rs. 8
June 7 Paid for Postage Rs. 6
June 9 Paid for Taxi Fare Rs. 25;
June 10 Paid for Telegram Rs. 15; charity Rs. 21
June 11 Paid for Newspaper Rs. 20
June 12 Paid for Soap Rs 10; Printing Rs 30
June 13 Paid for Postage Rs 15
June 14 Paid for Repairs of Chairs Rs 20
June 15 Paid for Refreshment to customers Rs 10
Ans. Petty Cash balance Rs 203; Postage and Telegram Rs 48; Printing and Stationery Rs 38; Traveling
Rs 30; Cartage and Carriage Rs 10; Sundry expense Rs 81.

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21. Record the following transactions in a Petty cash book with suitable columns. The book is
kept on imprest system, amount of imprest being Rs 500.

2006
April 1 Petty cash in hand Rs. 54. Received cash to make up the imprest.
Paid for office cleaning Rs 10.
April 4 Paid railway fare Rs 32, bus fare Rs 28, Telegram Rs. 25
April 5 Bought shorthand note books for office Rs 37
April 7 Paid carriage on Parcels Rs 15, paid for telegram Rs 22
April 10 Bought stamps for Rs 30, Envelopes for Rs 45 and an accounts register for Rs 40
April 12 Paid for repairs Rs 20, gave tip to office peon Rs 15
April 12 Paid for repairs Rs 20, gave tips to office peon Rs 15
April 13 Gave charity Rs 10, served tea to customers Rs 25
April 15 Paid for telephone calls Rs 16, Coolie, carriage Rs 15; Sundry exp. Rs 90
Ans. : Petty Cash balance Rs 120; Postage and Telegram Rs 93; Printing and Stationery Rs 122; Travelling
Rs 122; Coolie, Cartage and Carriage Rs 15; Sundry expense Rs 90.

Other Subsidiary Books

22. Prepare Pruchases Book of Mangat Traders dealing in readymade garments, from the following
information.

2004
Feb. 10 Purchased from Sita Sons
20 Shirts @ Rs. 500 each
30 Shirts @ Rs. 500 each
15 Shirts @ Rs. 1,000 each

Feb. 15 Bought of Happy Garments

150 Vests @ Rs. 45 each
200 Ties @ Rs. 100 each
150 Skirts @ Rs. 250 each
Less: 15% Discount

Feb. 25 Bought of Laxmi Stores

70 Pairs of Socks @ Rs.100 each
90 Pairs of Socks @ Rs.150 each
110 undergarments @ Rs. 200 each
Less: 5% Discount

23. Record the following transactions in the Purchase Book of Silver Furnishers.

2004
Mar. 3 Purchased from Haryana Furnishers
3 Chairs @ Rs. 600 each
2 Tables @ Rs. 2,500 each
1 Showcase @ Rs. 4,000 each
Less: 10% Discount

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Mar. 13 Purchased from Star Furniture Store
5 Dining Sets @ Rs. 8,500 each
3 Double Beds @ Rs. 6,000 each
2 Dressing Tables @ Rs. 2,000 each
4 Writing Tables @ Rs 3,200 each

Mar. 28 Purchased from Chandigarh Furniture House

10 Folding Chairs @ Rs 400
20 Desks @ Rs 2,500
15 Beds @ Rs. 3,600
10 Computer Tables @ Rs. 4,000
25 Tables @ Rs 3,000
Less: 10% Discount

24. Enter the following transactions in the Books of Cheap Cloth House.

2004
June. 2 Purchased from Royal Silk Store
10 Sarees @ Rs. 1,300 each
20 Meters long cloth @ Rs. 100 per metre
30 Shirting @ Rs. 500 each
Less: 10% Discount

June. 10 Purchased from Zohra Fabrics

5 Nylone Sarees @ Rs. 500 each
20 Pant Pieces @ Rs. 300 each
30 Turbans @ Rs. 300 each

June. 20 Purchased from Delhi Cloth Mills

20 Metres Poplin @ Rs. 120 per metre
15 Metres Rough Cloth @ Rs. 20 per metre
10 Bundles of Muslin @ Rs. 1,200 each
Less: 10% Discount

25. Enter the following transactions in the Books of Bhushan Steel Co.

2004
Dec. 1 Purchased from Gupta Iron Merchants
10 tons of Steel Rods @ Rs. 1,200 per ton
15 Sheets of Black Iron @ Rs. 500 each
10 tons of Gill Iron @ Rs. 1,500 per ton
Less: 11% Discount

Dec. 10 Purchased from Raunaq Steel Co.

10 Corrugated Sheets @ Rs. 800 each
20 tons of pig iron @ Rs. 2,000 per ton
30 tons of Building iron rods @ Rs. 1,200
25 Galvanised Sheets @ Rs 800 each

Dec. 26 Purchased from Handa Steel House

20 Tata Steel Sheets @ Rs. 800 each
10 White Sheets @ Rs. 900 each
20 Corrugated Sheets @Rs. 800 each
Less: 20% Discount

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Dec. 28 Purchased goods for cash for Rs 16,000.

Sales Book

26. Enter the following transactions in the Books of Bombay Selections.

2004
Mar. 4 Sold to Sohan of Shimla
20 Trousers @ Rs. 850 each
10 Black Sweaters @ Rs. 700 each
30 Woolen Pairs of Socks @ Rs.200 each
30 Cardigans @ Rs 900 each
Less: 15% Discount

Mar. 12 Sold to Darshan of Delhi

12 Black Shirts @ Rs. 450 each
20 Blue Shirts @ Rs. 500 each
40 Dark Brown Shirts @ Rs. 425 each
30 Neck Ties @ Rs 250 each

27. Enter the following transactions in the Sale Book of Master Book Store.

2004
July 5 Sold to New Public School
50 Books on English @ Rs 60
25 Mathematics Books @ Rs 70
30 English Reading Books @ Rs 50
30 Grammar Books @ Rs 80

July. 12 Sold to K.V. School

40 Accountancy Books @ Rs 220
30 Business Studies Book @ Rs 150
40 Social Studies Books @ Rs 80
30 Economics Books @ Rs 170
Less: 20% Discount

Purchase Return Books

28 Enter the following transactions in the books of Mann Stationers.

2006
Jan. 1 Returned Goods to Fine Paper Stores
15 Registers @ Rs 40 Each
20 Note Pads @ Rs 15 each

Jan. 2 Returned Goods to Sunil Tata

25 File Covers @ Rs 40 Each
10 Packets of Envelopes @ Rs 30

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29. Prepare Purchase Return Books of Nirman Steel Store.

2006
Mar. 5 Returned Goods to Super Steel of Chandigarh
10 Corrugated sheets @ Rs 200 Each
5 Tons of Brass Sheets @ Rs 300 Each

Mar. 20 Returned to Suraj Steel of Delhi

10 tons of Rod Bar @ Rs 2,000 Each
2 tons of Almunium Bars @ Rs 3000
Less: 15% Discount

Sale Return Books

30. Prepare the Sale Return Book of Anita Bakers from the following Information.

2006
June 10 Goods returned to Verma of Ambala
25 Brown Breads @ Rs 20 each
10 Packets of Salt Cookies @ 15 each

June 19 Goods returned by Kiran of Agra

25 White Breads @ Rs 10 each
20 Packs of Choeo Bar @ Rs 40 each

June 21 Sold to Polka Bakery

20 Garlic Bread @ Rs 25
15 White Bread @ Rs 40
40 Packets of Sweet Choco Bar @ Rs 40

31. Enter the Following Transactions in the Sale Return Book of Lee Shoes.

2004
July 10 Goods returned by Boston Bros
25 Pairs of Kids Shoes @ Rs 200
10 Pairs of Ladies Shoes @ Rs 400
20 Pairs of Gents Shoes @ Rs 900
Less : 20% Discount

July 19 Goods returned by German Shoes

5 Pairs of Cotton Socks @ Rs 80
10 Pairs of Woolen Socks @ Rs 200
10 Pairs of Ladies Shoes @ Rs 400
10 Pairs of Black Shoes @ Rs 700
Less : 10% Discount

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RECODING, POSTING AND BALANCING OF SUBSIDIARY BOOKS
Cash Book and its Posting

32. Enter the following transactions in Triple columns cash book and post them into Ledger.
2006
May 1 Balance of cash in hands Rs. 14,400 , overdraft at bank Rs. 26,000.
May 3 Direct deposit by Mr. Ghosh in our bank account Rs 10,000. Discount allowed Rs 200.
May 5 Issued a cheque of Rs 7,700 to Mr. Suresh in full settlement of his account of Rs 8,000.
May 6 Received a cheque from X for Rs 12,000. Discount allowed Rs 500. This cheque was
deposited into bank on 7 May.
May 8 Received Cash Rs 22,000 and cheque of Rs 8,000 for cash sale.
May 12 Cash sale Rs. 70,000 of which Rs. 55,000 banked.
May 15 Cheque received on 8 May endorsed to Mr. Sunil. Discount received Rs 150.
May 20 Discounted a B/R of Rs 10,000 at 1% through bank.
May 24 Cheque received from X dishonoured, Bank debits Rs 20 in respect of bank charges.
May 25 Purchased goods for Rs 50,000 at a trade discount of 10%. Payment was made in cash
May 26 Withdrew from bank Rs 10,000 for office use and Rs. 2,000 for personal use
May 31 Interest debited by Bank Rs 4,500

Ans. Cash Balance Rs. 16,400; Bank Balance (Dr.) Rs.4,680;Discount (Dr.) Rs. 800; and
Discount (Cr.) Rs. 950.

Purchase Book and its Posting

33. Record the following transactions in Purchase Book of Modern.

2006
Nov 3 Purchased goods from Sachdeva Furniture Store
100 Chairs @ Rs 100 each
10 Tables @ Rs1,500 each
Less : 10% Discount
10 Purchased furniture from Mohan & Co valued at Rs. 20,000, Less 12 ½ % Trade Discount 18
Purchased furniture from Fashion Furniture House of the List Price of Rs 25,000.
Less 15%
20 Purchased furniture from India Furniture House 150 Chairs @100 Each
25 Purchased from Mohan Lal & Sons furniture of the value of Rs 8,000 each
Ans. Total of Purchase Book Rs. 76,250

SALE BOOK AND ITS POSTING

34. Record the following transaction in Sale Book of sh. Vivek Jain and Post them into Ledger.

2006
Dec 5 Sold to M/s Vikram & Sons
Goods valued at Rs 20,000 Less : Trade Discount 10%

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10 Sold to M/s Sohan Lal & Sons. Karol Bagh
60 Electric Fans @ Rs 800 each
40 Room Coolers @ Rs 1,250 each
Less : Trade Discount 8%
16 Manesh & Co. purchased from us goods of Rs 12,000, Less : 5%
24 Sold goods for cash Rs 16,000
Ans. Total of Sale Book Rs. 1,19,560

Purchase Return Book and its Posting

35. Record the following transaction in Sales Book of sh. Jain Dass and Post them into Ledger.
2006
Nov 7 Returned to Sachdeva Furniture Store
10 Chairs @ Rs 100 each
2 Tables @ Rs 750 each
Less : 10% Discount
22 Returned 8 chairs to India Furniture House @ Rs 150 Each being not of specified quality
24 Returned one Dining Table to Arora & Co., being not according to sample Rs 5,000
28 Allowance claimed from Delhi Furniture shop, on account of mistake in the
invoice Rs 1,600.
Ans. Total of Purchase Return Book Rs. 10,050

Sale Return Book and its Posting

36. Record the following transaction in Return inward Book and Post it into Ledger.

2006
Jan 5 Goods returned to us by Grish & Co. worth Rs 8,000, Less 10% trade discount.
10 Shah Brothers, Jaipur, returned goods, being not according to sample worth Rs 6,000
16 Allowance claimed by Jai Singh & Co., Mathura, on account of a mistake in the
invoice Rs 500
20 Goods returned by Mohan sons, being defective Rs 4,000
Ans.: Total of Sale Return Book Rs. 17,700

RECORDING, POSTING AND BALANCING

Proper Subsidiary Book

37. Enter the following transactions in proper subsidary book.

2007
Jan 1 Started business with cash Rs 80,000.
2 Deposited into bank Rs 50,000
3 Purchased from Sunil Lal Sons goods of the list price of Rs 20,000 at 10% trade discount
5 Returned to Sunil Lal & Sons goods of the list price of Rs 2,000
10 Issued a cheque to Sunil Lal & Sons in full settlement of their account
12 Sold to Sri. Krishan, goods worth Rs 25,000
15 Received Cash Rs 10,000 and a cheque for Rs. 8,000 from Sri. Krishan. The cheque was
immediately sent to bank
17 Sold to Ram Brothers, goods valued at Rs 16,000

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20 Cash Purchases Rs 15,000.
22 Withdrew from bank for office use Rs 10,000
23 Purchased from Bombay Trading Co. goods valued at Rs 24,000
24 Sri. Krishan returned goods worth Rs 2,000
25 Received from Ram Brothers Rs 9,800
27 Paid Rent by cheque Rs 2,800
Received commission in cash Rs 8,00
30 Paid salaries worth Rs 5, 000

Ans. Cash Balance Rs 40,600; Bank Balance 29,000; Total of Purchase Book Rs. 42,000; Sales Book Rs
41,000; Purchase Return Book Rs 1,800; Sales Return Book Rs 2,000;Trial Balance Total Rs. 1,47600
Dr. Balance: Cash Rs 30,600 ; Bank Rs 39,000; Purchases Rs 57,000
Sri Kirshan Rs 5,000 ; Ram Brothers Rs 6,000
Sales Returns Rs 2,000; Discount Rs 200; Rent Rs 2,800 and Salaries Rs 5,000.

Cr. Balances: Capital Rs 80,000; Purchases Return Rs 1,800; Sale Rs 41,000; Bombay Trading Co.
Rs 24,000 and commission Rs 800.

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