GSEB Class 11 Solutions Chapter 4 Journal

 

Question 1. Write the correct option from those given below each question :
(1) Journal is a __________ of accounting transactions.
(a) original book
(b) main book
(c) closing book
(d) other book
Answer: (a) original book
In simple words: The journal serves as the initial record of all financial dealings in a business.

Exam Tip: Remember that the journal is where transactions are first recorded, making it the primary or original book of entry.

 

Question 1. Write the correct option from those given below each question :
(2) An amount withdrawn from bank account for personal expense will be debited to __________ account.
(a) Bank
(b) Cash
(c) Drawings
Answer: (c) Drawings
In simple words: When someone takes money from the business bank account for their own use, it is recorded under the Drawings account.

Exam Tip: Personal expenses paid from a business account are always debited to the Drawings account to separate business and owner finances.

 

Question 1. Write the correct option from those given below each question :
(3) Expense incurred to purchase asset is debited to __________ account.
(a) Expense
(b) Asset
(c) Cash
(d) Sundry
Answer: (b) Asset
In simple words: When you spend money to buy an asset, that cost is added to the asset's own account.

Exam Tip: Costs associated with acquiring an asset, including purchase price and installation, are generally capitalized by debiting the asset account directly.

 

Question 1. Write the correct option from those given below each question :
(4) The total of debit and credit side of journal are __________.
(a) non-identical
(b) identical
(c) debit
(d) credit
Answer: (b) identical
In simple words: In a journal, the total amounts on the debit side and the credit side must always be exactly the same.

Exam Tip: The principle of dual aspect means that for every transaction, the total debits must always equal the total credits, ensuring the accounting equation remains balanced.

 

Question 1. Write the correct option from those given below each question :
(5) Goods goes out for sample is debited to __________ account.
(a) Advertisement Expense
(b) Goods Issued for Sample
(c) Purchase
(d) Sale
Answer: (a) Advertisement Expense
In simple words: When a business gives away goods as samples, it is treated as a cost related to advertising.

Exam Tip: Giving out goods as samples is a form of promotion, so it is appropriately categorized under advertisement expenses.

 

Question 2. Answer the following questions in one sentence :
(1) What is Journal ?
Answer: Journal means a book of accounts where all financial transactions are first recorded chronologically (serially), along with a brief explanation for each transaction.
In simple words: A journal is a book where business dealings are written down in order, with short notes.

Exam Tip: Define journal clearly, highlighting its role as the first record and its chronological nature.

 

Question 2. Answer the following questions in one sentence :
(2) Describe types of discount.
Answer: There are two common types of discount:
1. Trade discount and
2. Cash discount.
In simple words: There are two main kinds of discounts: one given when buying a lot, and another given for paying quickly.

Exam Tip: Simply listing the two types of discount is enough for this single-sentence answer format.

 

Question 2. Answer the following questions in one sentence :
(3) When combined journal entries are written ?
Answer: A combined journal entry is prepared when more than two accounts are involved simultaneously in an accounting transaction.
In simple words: You write a combined journal entry when a single business event affects three or more accounts at the same time.

Exam Tip: Focus on the condition of "more than two accounts" and "at the same time" to correctly identify when combined entries are used.

 

Question 2. Answer the following questions in one sentence :
(4) When is purchase returns made ? To which account it will be credited ?
Answer: Purchase returns are made when acquired goods are faulty, not as expected, or of poor quality; in such situations, the Purchase Returns Account will be credited.
In simple words: We return things we bought if they are broken or wrong, and the Purchase Returns account gets the credit.

Exam Tip: Explain both the reason for returns and the specific account credited, linking it to the decrease in purchases.

 

Question 2. Answer the following questions in one sentence :
(5) Give three illustrations of goods going out in other ways.
Answer: Three examples of goods leaving the business in different ways are:
1. Goods taken for personal use,
2. Goods given out as free samples for advertisement and
3. Goods donated for charity.
In simple words: Goods can leave the business for personal use, as free ads, or as donations.

Exam Tip: Remember these common non-sales reasons for goods to exit the inventory, as they require distinct journal entries.

 

Question 2. Answer the following questions in one sentence :
(6) Describe main types of exchange transactions of business with bank.
Answer: Two key types of financial dealings a business has with a bank are:
1. Cash transactions and
2. Non-cash transactions.
In simple words: A business deals with its bank in two main ways: cash transactions and non-cash transactions.

Exam Tip: Distinguish between direct cash deposits/withdrawals and other transactions like cheques or electronic transfers.

 

Question 2. Answer the following questions in one sentence :
(7) To which account bad debts return will be credited, which is received from the debtor solvent in past ?
Answer: An amount received from a debtor who became insolvent in the past will be credited to the Bad Debts Return Account.
In simple words: If money is received from a customer whose debt was written off before, it goes into the Bad Debts Return account.

Exam Tip: This specific account is used to record recoveries of debts that were previously deemed uncollectible.

 

Question 3. Describe whether the following statements are true or false :
(1) Income tax of sole proprietor is an expense of business, this will be debited to income tax account.
Answer: This statement is false.
In simple words: Income tax for a business owner is not a business cost.

Exam Tip: The income tax of a sole proprietor is considered a personal expense, not a business expense, and is usually treated as drawings.

 

Question 3. Describe whether the following statements are true or false :
(2) Cheque received from customer is debited to bank account.
Answer: This statement is true.
In simple words: When a customer gives a cheque, it increases the money in the bank.

Exam Tip: Receiving a cheque from a customer means the bank balance will increase once deposited, hence the debit to the bank account.

 

Question 3. Describe whether the following statements are true or false :
(3) House rent and shop rent both are business expenses.
Answer: This statement is false.
In simple words: Only the shop rent is a business cost, not the house rent.

Exam Tip: Distinguish carefully between personal expenses (house rent) and business expenses (shop rent) to avoid miscategorization.

 

Question 4. Answer the following questions in brief :
(1) Describe the characteristics of Journal.
Answer: Following are the features of Journal :
1. Basic books of accounts: The initial step for a business transaction involves recording the transaction. Transactions are first noted chronologically (serially) in the Journal. Thus, it serves as the fundamental, primary, and basic set of accounts.
2. Dual effect: As per the debit and credit principles, the dual effect of an accounting transaction is documented within it.
3. Amount column: To reflect the dual effect, two columns are maintained for writing amounts. In the debit amount column, the sum to be debited is entered, and in the credit amount column, the sum to be credited is entered.
4. Transactions in chronological order of date: The transactions are recorded daily in the journal, following the sequence of dates.
5. Brief explanation: Immediately after completing a journal entry, a concise explanation of the transaction is given in brackets as a narration. This ensures that comprehensive information about the journal entry is readily available.
In simple words: A journal is the first record of business deals, listed by date, showing both sides of each deal (debit and credit) in separate columns, and includes a short note for more details.

Exam Tip: Remember to mention the chronological recording, dual aspect, specific columns for debit/credit, and the narration feature when describing a journal's characteristics.

 

Question 4. Answer the following questions in brief :
(2) Distinguish between Cash discount and Trade discount.
Answer:

In simple words: Cash discount encourages fast payment, is recorded in books, and changes based on amount. Trade discount reduces the list price, isn't recorded, and is always the same rate.

Exam Tip: Focus on the key differences: when they are given, how they are calculated, and whether they are recorded in the books of accounts.

 

Question 4. Answer the following questions in brief :
(3) Why journal is known as the first book of accounts?
Answer: The initial step for a business transaction involves entering the transaction. The first book in which such entries are made is called a Journal. In short, all financial transactions are recorded chronologically, by date and occurrence, for the first time. Based on vouchers, entries are written in the journal in serial order. While some traders may not keep a rough book, transactions are not systematically recorded in it. Therefore, a rough book is not considered part of the books of accounts. Hence, the journal is recognized as the fundamental, basic, or first book of accounts. Just as a tree relies on its base, the detailed description of accountancy depends on the Journal.
In simple words: The journal is called the first book because it's where all business deals are initially written down, in order, for the very first time.

Exam Tip: Emphasize the chronological recording and initial entry of all transactions as the primary reasons for the journal's designation as the first book.

 

Question 4. Answer the following questions in brief :
(4) Write a note on the significance of journal.
Answer: The Journal serves as the basic book of accounts. Just as a tree depends on its base, the detailed description of accountancy relies on the Journal, and its significance is highlighted by the following points :

• The Journal is a book in which transactions are recorded by date in the order they occur, ensuring no transaction is missed from recording.
• Financial transactions can be clarified with the help of a journal entry.
• Necessary information regarding the transaction can be presented through a journal entry.
• Since the dual effects of transactions are recorded in the journal according to accounting principles, the likelihood of accounting errors is reduced.
• There are two distinct columns for entering debit and credit amounts. This simplifies posting, removing any confusion about which account should be debited and which credited.
• As both effects of every transaction are given in the journal, the ledger can be easily prepared.

In simple words: The journal is important because it records every deal by date, makes it easy to explain transactions, lowers mistakes, shows both debit and credit clearly, and helps create the main ledger books.

Exam Tip: Highlight the benefits of chronological recording, dual effect, error reduction, and facilitation of ledger posting when discussing the journal's importance.

 

Question 4. Answer the following questions in brief :
(5) Write journal for any two imaginary transactions. Write journal entries in the books of Dhaval :
(1) Started business with a capital of Rs. 10,000.
(2) Purchased goods of Rs. 2,000 from Ashwin for cash.
Answer:

Explanation:
(1) Cash comes into the business \( \implies \) Cash A/c \( \implies \) Debit what comes \( \implies \) Cash A/c will be debited.
Pranjal (Owner) is the giver of cash \( \implies \) Capital A/c \( \implies \) Owner (Pranjal) is the giver \( \implies \) Capital A/c will be credited.
(2) Goods come into the business \( \implies \) Purchase A/c \( \implies \) Debit what comes \( \implies \) Purchase A/c will be debited.
Cash goes out \( \implies \) Cash A/c \( \implies \) Credit what goes out \( \implies \) Cash A/c will be credited.
In simple words: When the business starts with cash, Cash is debited and Capital is credited. When goods are bought with cash, Purchase is debited, and Cash is credited.

Exam Tip: Clearly identify the two accounts affected by each transaction, determine whether they are debited or credited based on the rules of debit and credit, and always write a concise narration.

 

Question 5. From the following transactions write journal in the books of Pranjal :
(1) Introduced Rs. 10,000 cash and commenced business.
(2) Goods of Rs. 5,000 purchased on cash.
(3) Goods of Rs. 8,000 purchased on credit from Rajan.
(4) Goods of Rs. 2,000 given for donation.
(5) Given order to Shivani to dispatch goods of Rs. 3,000.
(6) Shivani has dispatched the goods as per our order.
(7) Paid Rs. 2,500 for life insurance premium.
Answer:

Explanation:
(1) Cash comes into the business \( \implies \) Cash A/c \( \implies \) Debit what comes \( \implies \) Cash A/c will be debited.
Pranjal (Owner) is the giver of cash \( \implies \) Capital A/c \( \implies \) Owner (Pranjal) is the giver \( \implies \) Capital A/c will be credited.
(2) Goods come into the business \( \implies \) Purchase A/c \( \implies \) Debit what comes \( \implies \) Purchase A/c will be debited.
Cash goes out \( \implies \) Cash A/c \( \implies \) Credit what goes out \( \implies \) Cash A/c will be credited.
(3) Goods come into the business \( \implies \) Purchase A/c \( \implies \) Debit what comes \( \implies \) Purchase A/c will be debited.
Rajan is the giver of goods \( \implies \) Rajan A/c \( \implies \) Credit the giver \( \implies \) Rajan A/c will be credited.
(4) Charity / Donation is a business expense \( \implies \) Charity / Donation A/c \( \implies \) Debit the expense and loss \( \implies \) Charity/Donation A/c will be debited.
Goods go out by donation \( \implies \) Purchase A/c \( \implies \) Credit what goes out \( \implies \) Purchase A/c will be credited at its cost price.
(5) This is a non-economic transaction, so it will not be recorded.
(6) Life insurance premium is a personal expense \( \implies \) Drawings A/c \( \implies \) Debit the receiver \( \implies \) Drawings A/c will be debited.
Cash goes out from the business \( \implies \) Cash A/c \( \implies \) Credit what goes out \( \implies \) Cash A/c will be credited.
In simple words: Journal entries record cash brought in by the owner, goods bought with cash or credit, donations, and personal expenses. An order for goods is not recorded until the goods are received.

Exam Tip: Carefully analyze each transaction to determine if it's economic, the accounts affected, and whether they should be debited or credited, especially distinguishing between business and personal expenses.

 

Question 6. Transactions of Capital and Drawings : Write journal entries for the following transaction in the books of Shubham:
2014
Jan. 1 Introduced goods of Rs. 10,000, cash Rs. 15,000, furniture Rs. 5,000, debtors of Rs. 10,000 and commenced business.
12 Personal motor-car sold for Rs. 80,000 and introduced Rs. 50,000 in business.
13 Rs. 1,000 withdrawn from bank for personal use.
15 Income tax refund of Rs. 500 of owner of sole proprietor deposited with bank account of business.
20 From business goods of Rs. 1,000 and cash Rs. 400 are withdrawn for personal use.
21 Travelling expense of daughter Rs. 1,500 paid from business.
28 Furniture of Rs. 2,000, purchased from Ganga Furniture Mart for house.
31 Life insurance premium of Rs. 500 paid by cheque.
Answer:

Explanation: Date
Jan. 1 Stock of goods, cash, furniture, and debtors come into the business \( \implies \) Assets come into the business; therefore, they will be debited separately.
The owner is the giver of all assets, which represents the owner's investment in the business, called capital \( \implies \) Capital A/c will be credited.
Jan. 13 Cash withdrawn for personal use is a personal expense \( \implies \) Drawings A/c will be debited.
Jan. 15 Income tax refund is an income of the owner, which, when brought into the business, will credit Capital A/c.
Jan. 20 Cash and goods withdrawn for personal use \( \implies \) Drawings A/c will be debited.
Goods going out from the business \( \implies \) As per the rule \( \implies \) Purchase A/c credited with its cost price.
In simple words: When a business begins, all assets brought in are debited, and capital is credited. Personal withdrawals are debited to Drawings. Income tax refunds are credited to Capital if deposited in the business bank. Goods and cash taken for personal use are debited to Drawings, with Purchase Account credited for goods.

Exam Tip: Clearly differentiate between business assets/liabilities and the owner's personal transactions. Capital is credited for owner investments, and Drawings are debited for personal withdrawals, including expenses and goods taken.

 

Question 7. Transactions of Loan and Interest : Write following transactions in the journal of Pushkar:
2014
Feb. 1 Due to additional requirement of funds, 12% loan of Rs. 20,000 borrowed from Ram.
3 Rs. 8,000 lent to Laxman at interest rate of 8%.
8 Received cash Rs. 800 for loan lent to Bharat and Rs. 200 for interest.
10 Rs. 5,000 returned back to Seeta for borrowed loan and paid interest Rs. 400.
12 Received interest Rs. 200, for loan lent to Kaushal.
15 Interest for one month paid for loan obtained from Ram.
18 Rs. 75 became receivable for interest on loan of Laxman.
Answer:

Explanation: Date
February 3 Given loan on interest is considered an investment \( \implies \) It is receivable \( \implies \) Loan lent to Laxman A/c will be debited.
8 Cash received from loan lent to Bharat \( \implies \) Cash A/c will be debited and Loan lent to Bharat A/c will be credited.
8 Interest on lent loan is an income \( \implies \) Interest on Loan A/c will be credited.
In simple words: Record borrowing and lending loans, cash received from loans and interest, and payments made for loans and interest. Also, note when interest becomes due.

Exam Tip: Distinguish carefully between loans taken (liability), loans given (asset), and the associated interest income or expense, ensuring the correct accounts are debited and credited.

 

Question 8. Transaction of Bank : Write Journal Entry for Krishna for the following transaction:
2014
March 1 Rs. 20,000 deposited with bank and opened account.
5 A cheque of Rs. 5,000 received from Hari, which immediately deposited with bank.
6 A cheque of Rs. 2,000 received from Ramaniklal for dues.
10 Goods sold to Rupali Rs. 14,000, out of which cheque received for half amount which deposited with bank.
12 Goods of Rs. 10,000 purchased from Deepkala and paid half amount by cheque.
15 Rs. 400 withdrawn from bank for personal expenses and Rs. 800 for office expense.
18 Life insurance premium Rs. 300 and fire insurance premium Rs. 450 paid by cheque.
20 Bank has approved overdraft of Rs. 25,000.
25 Bank has credited interest of Rs. 250 and debited bank charges of Rs. 100.
31 A cheque of Rs. 5,000 issued for foreign visit of son of owner from business.
Answer:

Explanation: Date
March 6 There is no mention about the type of cheque. On assuming that the cheque is to be deposited into the bank, Bank A/c is debited.
15 On withdrawing an amount from the bank for personal expenses, Drawings A/c is debited, while on withdrawing an amount for office expense, Cash A/c is debited because the office expense is not yet paid.
20 Being a non-economic transaction, it will not be recorded.
25 Bank interest is an income for the business, so Bank Interest A/c will be credited. Conversely, bank charges are an expense for the business, so Bank Charges A/c will be debited.
In simple words: All bank deposits, cheques received, and sales where payment is banked are debited to the Bank A/c. Withdrawals for personal use or for expenses not yet paid are debited to Drawings or Cash A/c respectively. Bank interest received is credited, and bank charges paid are debited.

Exam Tip: Pay close attention to whether transactions involve cash or bank, and whether the funds are for personal use or business expenses. Remember to record bank interest as income and bank charges as expenses.

 

Question 9.
★ Transactions of Goods :
Write journal entry for the following transactions in the books of Ramesh:
2014
April 1 Cash purchase Rs. 15,000 and cash sale Rs. 14,000.
5 A personal goods of Rs. 10,000, brought into the business.
7 Goods of Rs. 12,000 purchased from Harsh.
10 Out of goods purchased due to defective goods half goods returned to Harsh.
12 Goods of 10,000 purchased from Ramila and half amount paid by cheque.
15 Goods purchased from Ramila sold to Mita after adding 30 % profit, at 10% trade discount.
20 Goods of Rs. 1,000.
20 Goods of 20,000 sold to Kalpana at 10 % trade discount and 5 % cash discount.

Answer:
Explanation: Date
April 15: Goods bought from Ramila were sold to Mita with a 30% profit and a 10% trade discount. The calculation for this transaction is as follows:
Purchase price of goods: Rs. 10,000
Add 30% profit: \( 10,000 \times 0.30 = 3,000 \)
Selling price before discount: Rs. 13,000
Less 10% trade discount: \( 13,000 \times 0.10 = 1,300 \)
Final selling price to Mita: Rs. 11,700
20: No mention of cash payment, so cash discount cannot be figured out.
25: Goods worth Rs. 500 were damaged by rain. Only Rs. 200 was received from selling them. The difference, Rs. 300, will be debited to the Loss by Rain A/c.
29: Transactions involving goods received as free samples are not entered into the books of accounts. Therefore, the Sales A/c will be credited when these goods are sold.
In simple words: The journal entries for Ramesh show various business activities. Calculations for sales with profit and discounts are included, and explanations clarify why certain amounts are recorded or why specific transactions are not entered into the accounts. Losses from damaged goods are also accounted for.

Exam Tip: Always show clear calculations for profit margins and discounts when preparing journal entries. This helps in understanding the final sale price and ensures accuracy.

 

Question 10.
★ Transactions of Asset :
Write journal entry for the following transactions in the books of Shri Laxman Chandera :
(1) A machine purchased by cheque f 20,000 and paid wages for machine installation 500 in coch
(2) Furniture of Rs. 3,000 purchased from Kaveri Furniture Mart and carriage paid in cash z 60.
(3) 50 shares of Mahalaxmi Mill purchased at Rs. 100 per share and brokerage 20 paise per share, paid by cheque.
(4) For furniture of Rs. 5,000 goods given of Rs. 4,000.
(5) An old machine of Rs. 6,000 sold for X 5,000.
(6) Land purchased Rs. 50,000 and incurred Rs. 2,000 for documentation and legal charges Payment is made in cash.

Answer:
(1) The installation wages paid for a machine will be added to the machine's cost. So, Machine A/c will be debited by Rs. 20,500.
(3) Share-investment calculation: 50 Shares \( \times \) Rs. 100 per share = Rs. 5,000. Brokerage: 50 Shares \( \times \) Rs. \( \frac { 20 }{ 100 } \) = Rs. 10. The total Share-investment A/c debited will be Rs. 5,010.
(6) The total cost of land will include the purchase price and additional charges: Rs. 50,000 (land) + Rs. 2,000 (documentation and legal charges) = Rs. 52,000. Land A/c will be debited by Rs. 52,000.
In simple words: When you buy an asset like a machine or land, any costs to get it ready for use, like installation or legal fees, are added to its total price. For shares, both the share price and any brokerage fees become part of the investment cost.

Exam Tip: Remember to capitalize all direct costs associated with acquiring and preparing an asset for its intended use, as these expenses increase the asset's value.

 

Question 11.
For following transactions of May 2014, write journal entry in the books of Shashank: Date
1 Paid 500 for refreshment at inaugural function of shop.
2 Purchased necessary books of accounts Rs. 400 for business.
3 Paid 200 for wages and 100 for carriage.
5 Paid 500 for shop rent and Rs. 300 for house rent.
10 400 received for commission.
12 A cheque of Rs. 800 received for brokerage.
15 Paid advertisement bill of Gujarat Samachar Rs. 300.
20 Received equity share dividend Rs. 500.
24 Essar company has paid debenture interest by cheque Rs. 1,000.
25 3,000 paid for signboard of business.

Answer: The journal entries for Shashank's transactions in May 2014 are provided above, showing the debits and credits for each event. Personal expenses like house rent are debited to Drawings A/c, while business expenses are debited to their respective expense accounts. Incomes such as commission, dividend, and debenture interest are credited to their respective accounts. Assets purchased for business, like signboard (Furniture A/c), are debited, and the cash or bank account is credited for payment.
In simple words: The table lists all the money moves for Shashank's business in May. It shows what money came in, what went out, and how it was categorized for things like shop expenses, rent, and commissions. Personal money taken out is noted separately from business costs.

Exam Tip: Differentiate clearly between business expenses and personal drawings. Personal expenses paid from business funds should always be debited to the Drawings account, not a business expense account.

 

Question 12.
★ Transactions of Trade Discount, Cash Discount and Bad Debts:
Write journal entry for the following transactions in the books of Parmeshwar:
2014
June 1 Introduced cash Rs. 50,000, stock of goods Rs. 10,000, debtors of Rs. 15,000 and commenced business.
2 10% loan of 20,000 is borrowed from Smt. Sharda.
3 Goods of Rs. 8,000 purchased from Rameshwar Stores at 10% trade discount.
5 Goods of Rs. 5,000 sold to Gayatri Stores at 10 % trade discount.
7 Goods of 15,000 purchased from Radha-Kishan Stores at 10% trade discount and 10 % cash discount, issued cheque for half amount.
10 An order of Rs. 5,000 received from Vibhuti to sent goods.
12 As per order of Vibhuti, goods sent at 10 % trade discount. Paid Rs. 50 carriage in cash.
15 Vibhuti became insolvent and bad debts recorded of Rs. 300, a cheque received for remaining amount.
16 On payable amount to Anup Rs. 1,050, paid Rs. 1,000 by cheque and settled the account.
20 Received 1,500 for written off bad debts of Imandar.

Answer:
Explanation:
(i) June 7: Goods worth Rs. 15,000 were purchased. A 10% trade discount of Rs. 1,500 was applied, making the net purchase Rs. 13,500. This amount was paid half by cheque, which means Rs. 6,750 was paid through the bank, and the remaining half, Rs. 6,750, was considered for cash discount. A 10% cash discount on Rs. 6,750 is Rs. 675. So, Rs. 6,075 was paid in cash.
(ii) June 16: An amount of Rs. 1,050 was payable to Anup. Rs. 1,000 was paid by cheque to settle the account, implying an allowance or discount of Rs. 50 was received.
In simple words: Parmeshwar's journal entries cover various transactions like starting a business, taking loans, and buying/selling goods. It includes calculations for trade and cash discounts and records for bad debts. Each entry shows how money moves in and out of the business, along with detailed explanations for more complex transactions like discounts and partial payments.

Exam Tip: Always clearly separate trade discounts from cash discounts. Trade discounts reduce the purchase price directly, while cash discounts are recorded as a separate expense or income when payment is made early.

 

Question 13.
★ Transactions of inclusive of all :
Write journal entry of business commenced by Shri Maulik Shah with a name of Shah Traders:
2014
July 1 Brought Rs. 50,000 cash, debtors Rs. 20,000, stock of goods Rs. 10,000 and creditors of Rs. 5,000 and commenced business.
2 Deposited cash Rs. 20,000 with Vijaya Bank and opened account.
3 Goods of Rs. 20,000 purchased from Sumul at 10 % trade discount and 10% cash discount.ara half amount by cheque.
4 A furniture of Rs. 15,000 purchased on credit from 'Punit Furniture Mart'. A carriage of 100 paid in cash.
5 A defective goods of Rs. 3,000 returned to Sumul.
6 Goods of Rs. 12,000 sold to Rajshri at 10 % trade discount and 10 % cash discount. Received half amount by cheque.
8 Goods of 15,000 sold to Mahendra on cash at 10% trade discount and 10% cash discount.
10 Withdrawn goods of Rs. 300 and cash Rs. 200 for personal use.
11 Purchased plastic bags of 200 for goods packing by cash.
12 2,000 paid by cheque for salary and wages.
13 Bad debts took place Rs. 300, which was due from Rajshri and get the remaining amount.
14 Due to additional requirement of funds, 12 % loan of Rs. 25,000 obtained from Axis Bank.
15 Goods of 2,000 destroyed by fire, for which insurance company has admitted claim of Rs. 1,500. Realized 200 from goods burnt by fire.
16 Both life insurance premium of son Rs. 450, and fire of Rs. 550 paid by cheque.
18 Nirma Company gave 30 number of soap insurance prer free of cost as a sample, which are sold for 250.
20 Received Rs. 100 from Rajshri for bad debts written off.
25 Axis Bank has charged loan interest of Rs. 250.
28 Paid Rs. 2,000 for painting work of personal building and Rs. 1,000 for painting work of shop.
29 Paid internet connection deposit Rs. 2,000 by cheque.

Answer:
Explanation:
Date July 3: Goods worth Rs. 20,000 were purchased. A 10% trade discount of Rs. 2,000 was applied, resulting in a purchase price of Rs. 18,000. Half of this amount, Rs. 9,000, was received. A 10% cash discount on this Rs. 9,000 is Rs. 900. Thus, the bank received Rs. 8,100.
In simple words: The journal entries for Shri Maulik Shah's business cover all kinds of financial events. This includes starting the business, bank deposits, purchases with discounts, sales with discounts, returns, personal withdrawals, payment of salaries, loan acquisition, dealing with damaged goods, and paying various expenses. Each entry shows the debits and credits, giving a full picture of the company's financial activities.

Exam Tip: When a question involves both trade and cash discounts, always calculate the trade discount first to reduce the actual cost, and then calculate the cash discount on the remaining amount if payment terms allow.

 

Question 14.
A learner student has written following journal entry. Journal entry which are incorrect, correct them and rewrite:

Answer: The rectified journal entries are as follows:
Date
2014 Aug.
1 Drawings A/c Dr 700
To Cash A/c 700
(Being life insurance premium paid.)
5 Cash A/c Dr 300
To Brokerage A/c 200
To Commission A/c 100
(Being cash received for brokerage and commission.)
7 Purchase A/c Dr 5,000
To Cash A/c 4,500
To Discount A/c 500
(Being purchased goods from Vivek at 10% cash discount on cash.)
10 Being a non-economic transaction, it will not be recorded.
11 Cash A/c Dr 900
Discount A/c Dr 100
To Purchase Returns A/c 1,000
(Being 20% goods returned to Vivek, cash received for that.)
12 Cash A/c Dr 500
To Bad Debts Return A/c 500
(Being cash received from debtor out of the bad debts written off in past.)
13 Repairing Expense A/c Dr 500
Drawings A/c Dr 1,000
To Cash A/c 1,500
(Being paid repairing expenses of Rs. 500 for shop and of 1,000 for house.)
15 Machine A/c Dr 800
To Cash A/c 800
(Being cash paid for installing the machine.)
Total 9,800 9,800
In simple words: The student's original journal entries had some mistakes, so they needed to be corrected. The rectified entries show the correct debits and credits for each transaction, fixing errors in account classification, amounts, and explanations to follow proper accounting rules.

Exam Tip: Always review journal entries for correctness, especially regarding personal expenses (drawings), recognition of income (brokerage, commission), and correct application of discounts. Non-economic transactions should never be recorded.

 

Question 15.
An accountant has written following journal entry without narration. You are required to give information for transactions from the following journal entry:

Answer: Narration of the transaction from journal is as under:
(1) Goods worth Rs. 2,400 were destroyed in an accident. The Insurance Company accepted a claim of Rs. 2,000, and the remaining Rs. 400 is debited to Loss by Accident A/c.
(2) Interest of Rs. 500 was credited by the bank.
(3) An old bicycle was sold for Rs. 1,600 in cash.
(4) A dividend of Rs. 700 was credited by the bank.
(5) Goods worth Rs. 8,000 were sold for cash at a 10% cash discount.
(6) Cash of Rs. 1,000 and goods of Rs. 1,500 were given as a donation from the business.
In simple words: These journal entries explain various business events. They show that goods were damaged and partially covered by insurance, interest and dividends were received via the bank, an old bicycle was sold, and goods were sold with a discount. Also, cash and goods were given away as donations.

Exam Tip: Narration should always be concise and clearly explain the nature of the transaction. For complex entries, break down the explanation into parts that describe each element of the debit and credit.

 

Question 16.
From the following transaction write journal entries in the books of Shri Dineshbhai of Dahod:
The following GST rates are applicable to business transactions of Shri Dineshbhai. GST is not included for follwing transactions. Add applicable amount of GST and write journal entries.

2019
April 1 Goods of Rs. 50,000 purchased at 10 % trade discount from Sureshbhai of Surendranagar. The payment is made by cheque.
4 Goods of Rs. 40,000 purchased at 10 % cash discount from Vishnubhai of Varansi (UP).
7 Goods of Rs. 60,000 sold at 10 % trade discount to Himanshubhai Himatnagar.
11 Goods of Rs. 50,000 sold at 10% trade discount to Shashikant of Simla (H.P.) and payment received through cheque.
15 \( \frac{1}{4} \) goods returned to Vishnubhai and proportionate GST is adjusted.
18 \( \frac{1}{3} \) goods returned by Himanshubhai and proportionate GST is adjusted.
25 A cupboard of Rs. 20,000 purchased from Sahajanand Furniture Mart of Ahmedabad.
28 Shop rent paid 8,000.

Answer: Shri Dineshbhai's journal entries for April 2019 are shown above, incorporating GST where applicable. Goods purchased or sold involve calculations for trade discounts and the corresponding GST (Central, State, or Integrated) based on whether the transaction is intrastate or interstate. Goods returns also include proportionate GST adjustments. Assets purchased for business use, like furniture, also have GST applied and are debited accordingly. Expenses such as shop rent are recorded with GST components.
In simple words: These journal entries for Dineshbhai show all the business transactions in April 2019, including GST. When goods are bought or sold, the GST amount is added. When items are returned, the GST is adjusted. Expenses like rent and furniture purchases also include GST in their records.

Exam Tip: Always remember to apply GST rates correctly for both purchases (Input GST) and sales (Output GST), ensuring proper categorization as Central, State, or Integrated GST based on the location of the parties involved.

 

Question 17.
From the following transactions write journal entries in the books of Kiyansh Patel of Vocod.
The following GST rates are applicable to business transactions of Shri Kiyansh. GST is not included in these transactions. Add applicable amount of GST and write journal entries :

2019
May 1 Goods of Rs. 40,000 purchased at 10 % trade discount and 10 % cash discount from Savan Patel of Surat.
3 Goods of Rs. 30,000 purchased at 10 % trade discount from Ayush Shah of Amravati (Maharashtra). The payment is made by cheque.
5 Goods of 50,000 sold at 10% trade discount to Ansh Avasthi of Ahmedabad. Half amount received through cheque.
8 Goods of 20,000 sold at 10 % trade discount and at 5 % cash discount to Neel Mehta of Nagpur (Maharashtra).
11 \( \frac{1}{4} \) goods returned to Savan Patel of Surat. The proportionate amount of GST is adjusted.
16 \( \frac{1}{5} \) goods received book from Neel Mehta of Nagpur the proportionate amount of GST is adjusted.
24 A computer of Rs. 40,000 for office from Shubh Infotech. The payment is made by cheque.
30 Office rent of Rs. 10,000 paid by cheque.
31 Godown rent of Rs. 20,000 received by cheque.
31 Rs. 25,000 received for commission by cheque from trader of Bhopal (Madhya Pradesh)

Answer: The journal entries for Kiyansh Patel in May 2019 are provided above, including GST calculations for various transactions. Purchases and sales of goods involve trade and cash discounts, with corresponding input or output GST. Goods returns also lead to proportionate GST adjustments. Assets like computers are recorded with input GST. Rent payments and commission receipts are also accounted for with their respective GST components, ensuring all financial activities are accurately logged.
In simple words: These are all the money records for Kiyansh Patel in May, with GST added. Every time goods are bought or sold, we calculate discounts and include GST. If goods are returned, the GST is adjusted. Things like buying a computer, paying rent, or getting commission also have their GST recorded.

Exam Tip: For transactions involving both trade and cash discounts along with GST, always calculate the trade discount first, then the GST on the net amount, and finally the cash discount on the GST-inclusive amount if applicable.

 

Question 15. An accountant has written following journal entry without narration. You are required to give information for transactions from the following journal entry:

Answer: Narration of the transaction from journal is as under:
(1) Being goods of Rs 2,400 destroyed in accident, for which Insurance Company accepted a claim of Rs 2,000 and remaining amount is debited to Loss by Accident A/c.
(2) Being interest of Rs 500 credited by bank.
(3) Being sold old bicycle for Rs 1,600 for cash.
(4) Being dividend of Rs 700 credited by bank.
(5) Being sold goods of Rs 8,000 for cash at 10 % cash discount.
(6) Being cash Rs 1,000 and goods of Rs 1,500 given as donation from the business.
In simple words: The journal entries show what happened in the business. They tell us about goods lost in an accident, interest received, an old bicycle sold, dividends received, goods sold with a discount, and items given as donations.

Exam Tip: Always make sure that the debits and credits in each transaction are equal to maintain the accounting equation. A common mistake is to overlook the dual aspect of every transaction.

 

Points to be Remembered When Write the Journal with GST Transactions

• SGST with CGST is applicable for the Intrastate Supply.
• UTGST with CGST is applicable for the Union Territory Supply.
• IGST is applicable for the Interstate Supply.

 

Question 16. From the following transaction write journal entries in the books of Shri Dineshbhai of Dahod:
The following GST rates are applicable to business transactions of Shri Dineshbhai. GST is not included for follwing transactions. Add applicable amount of GST and write journal entries.

2019
April 1 Goods of Rs 50,000 purchased at 10 % trade discount from Sureshbhai of Surendranagar. The payment is made by cheque.
4 Goods of Rs 40,000 purchased at 10 % cash discount from Vishnubhai of Varansi (UP).
7 Goods of Rs 60,000 sold at 10 % trade discount to Himanshubhai Himatnagar.
11 Goods of Rs 50,000 sold at 10% trade discount to Shashikant of Simla (H.P.) and payment received through cheque.
15 \( \frac {1}{4} \) goods returned to Vishnubhai and proportionate GST is adjusted.
18 \( \frac {1}{3} \) goods returned by Himanshubhai and proportionate GST is adjusted.
25 A cupboard of Rs 20,000 purchased from Sahajanand Furniture Mart of Ahmedabad.
28 Shop rent paid Rs 8,000.

Answer:

Journal of Shri Dineshbhai

In simple words: These journal entries show all the transactions for Shri Dineshbhai in April 2019, including buying and selling goods, dealing with returns, and paying rent, all with the correct GST calculations.

Exam Tip: When dealing with GST, remember to differentiate between intrastate (CGST and SGST) and interstate (IGST) transactions, and always apply the discount before calculating GST if it's a trade discount.

 

Question 17. From the following transactions write journal entries in the books of Kiyansh Patel of Vadodara.
The following GST rates are applicable to business transactions of Shri Kiyansh. GST is not included in these transactions. Add applicable amount of GST and write journal entries :

2019
May 1 Goods of Rs 40,000 purchased at 10 % trade discount and 10 % cash discount from Savan Patel of Surat.
3 Goods of Rs 30,000 purchased at 10 % trade discount from Ayush Shah of Amravati (Maharashtra). The payment is made by cheque.
5 Goods of Rs 50,000 sold at 10% trade discount to Ansh Avasthi of Ahmedabad. Half amount received through cheque.
8 Goods of Rs 20,000 sold at 10 % trade discount and at 5 % cash discount to Neel Mehta of Nagpur (Maharashtra).
11 \( \frac {1}{4} \) goods returned to Savan Patel of Surat. The proportionate amount of GST is adjusted.
16 \( \frac {1}{5} \) goods received book from Neel Mehta of Nagpur the proportionate amount of GST is adjusted.
24 A computer of Rs 40,000 for office from Shubh Infotech. The payment is made by cheque.
30 Office rent of Rs 10,000 paid by cheque.
31 Godown rent of Rs 20,000 received by cheque.
31 Rs 25,000 received for commission by cheque from trader of Bhopal (Madhya Pradesh)

Answer:

Journal of Kiyansh Patel

In simple words: These journal entries cover all the transactions for Kiyansh Patel in May 2019, including purchases, sales, returns, and expense and income entries, all correctly reflecting GST.

Exam Tip: For complex transactions involving both trade and cash discounts, calculate the trade discount first to get the net value, then consider the cash discount if payment terms are met. Also, carefully identify if the transaction is intrastate or interstate for correct GST application.