GSEB Class 11 Solutions Chapter 9 Ledger Posting

 

Question 1. What is called a 'King of Books'?
(a) Journal book
(b) Journal proper book
(c) Ledger book
(d) Book for noting of transactions
Answer: (c) Ledger book
In simple words: The ledger book is often referred to as the 'King of Books' because it holds all the summarized accounts for a business. It gives a full overview of every account's financial position.

Exam Tip: Remember key terms like 'King of Books' for ledger and 'Original book' for journal, as these are common definitional questions in accounting exams.

 

Question 2. Which book is called the Original book?
(a) Journal
(b) Ledger
(c) Journal proper
(d) Cash book
Answer: (a) Journal
In simple words: The journal is known as the original book because all transactions are initially entered there. It is the first place where business events are documented.

Exam Tip: Understand the typical sequence of accounting records: transactions are first recorded in the journal (original book) and then transferred to the ledger.

 

Question 3. In which forms of ledger, the new pages can't be added as per requirement?
(a) Card ledger
(b) Computer accounts
(c) Loose leave ledger
(d) Bound book ledger
Answer: (d) Bound book ledger
In simple words: Bound book ledgers are like regular books where new pages cannot be inserted once it is full. This is different from other types where you can easily add or remove pages.

Exam Tip: Be aware of the physical characteristics of various ledger types, especially regarding the flexibility for adding or removing pages, as this affects their practicality.

 

Question 4. Which type of account is called Squared up account?
(a) When the total amount of the debit side is more.
(b) When the total amount of both the sides is equal.
(c) When the total amount of the credit side is more.
(d) When there is no transaction in the account.
Answer: (b) When the total amount of both the sides is equal.
In simple words: An account is 'squared up' or settled when the total money on the debit side is exactly the same as the total money on the credit side. This means there is no balance left in the account.

Exam Tip: A 'squared up' or 'settled' account fundamentally signifies a zero balance, indicating that all debits and credits for that account are in perfect alignment.

 

Question 5. Normally, which type of balance is found in asset account?
(a) Credit balance
(b) Debit balance
(c) Debit or credit balance
(d) Account is settled
Answer: (b) Debit balance
In simple words: Asset accounts typically show a debit balance. This is because assets represent things a business owns, and increases in assets are recorded on the debit side.

Exam Tip: Remember the basic accounting rule: Assets and Expenses usually carry debit balances, while Liabilities, Capital, and Incomes typically have credit balances.

 

Question 6. Goodwill is which type of asset and what is the type of its balance?
(a) Tangible asset, debit balance
(b) Fictitious asset, credit balance
(c) Tangible asset, credit balance
(d) Intangible asset, debit balance
Answer: (d) Intangible asset, debit balance
In simple words: Goodwill is an intangible asset, meaning you cannot physically touch it, like a company's good reputation. Like most assets, it usually holds a debit balance in accounting records.

Exam Tip: Distinguish carefully between tangible (physical) and intangible (non-physical) assets. Both categories of assets generally maintain a debit balance.

 

Question 7. How to show the closing balance of account in the column of particulars?
(a) Balance carried forward
(b) Balance carried down
(c) Difference of balance
(d) Difference of amount
Answer: (a) Balance carried forward
In simple words: To formally close an account, the remaining amount is indicated as 'balance carried forward'. This term means that the balance will be moved to the next accounting period.

Exam Tip: Clearly understand the terms 'balance carried forward' (c/f) and 'balance brought forward' (b/f) and their specific usage when closing and opening accounts across accounting periods.

 

Question 2. Answer the following questions in one or two sentences:

 

Question 2. (1) What is Ledger?
Answer: A ledger is a book maintained in a business where various accounts are set up. These accounts are based on information from journal entries or subsidiary books.
In simple words: A ledger is a book that holds all the different accounts a business uses. It organizes information first written in the journal.

Exam Tip: Define ledger clearly, highlighting its role as a book of accounts where transactions from journals or subsidiary books are systematically posted.

 

Question 2. (2) How many sides are there in an account? Which are they?
Answer: An account has two distinct sides. The left-hand part of an account is referred to as the debit side, and the right-hand part is known as the credit side.
In simple words: Every account has two parts: the left side is called the debit side, and the right side is called the credit side.

Exam Tip: Always remember the fundamental dual aspect of accounting: every transaction affects at least two accounts, one on the debit side and one on the credit side.

 

Question 2. (3) What is an Index of a Ledger?
Answer: At the start of a ledger, a comprehensive list of all the accounts is kept. This list is commonly known as an Index or Exponent of a Ledger.
In simple words: An index in a ledger is like a table of contents. It is a list at the front that shows all the accounts and where to find them in the ledger.

Exam Tip: Compare the ledger index to a book's index or table of contents; it helps in quickly locating specific accounts within the ledger.

 

Question 2. (4) When do we have a debit balance or credit balance in an account?
Answer:
(i) Debit balance: If the total amount on the debit side of an account is greater than the total on the credit side, that account is considered to have a debit balance.
(ii) Credit balance: If the total amount on the credit side of an account exceeds the total on the debit side, that account is understood to have a credit balance.
In simple words: You have a debit balance when you've put more money on the left (debit) side. You have a credit balance when you've put more money on the right (credit) side.

Exam Tip: Clearly distinguish between debit and credit balances by comparing the totals of both sides of an account. The higher total always determines the type of balance.

 

Question 2. (5) What is Squared up account?
Answer: When summing up the amounts in any account, if the totals of both the debit and credit sides are identical or equal, then there will be no remaining balance in that account since there is no extra amount on either side. Such an account is referred to as a Squared up account or a Settled account.
In simple words: A squared up account means both sides of the account add up to the same number. So, there is no money left over, and the account is considered closed or settled.

Exam Tip: A squared up account signifies that all transactions related to that account have been balanced, resulting in a zero net effect, which is important for understanding account closure.

 

Question 2. (6) Which columns are drawn in an account?
Answer: An account is split into two distinct parts: the left-hand side is called the Debit side, and the right-hand side is known as the Credit side. On each of these sides, four specific columns are used: Date, Particulars, J. F. No. (Journal Folio Number), and Amount (Rs.).
In simple words: Every account has two main sides: debit (left) and credit (right). On both sides, you will see columns for the date, details, a journal page number, and the amount in Rs.

Exam Tip: Memorize the specific columns present on both the debit and credit sides of a standard ledger account, especially J. F. No., which serves as a cross-reference to the original journal entry.

 

Question 2. (7) What is Posting?
Answer: Posting refers to the process of transferring financial information from the journal or subsidiary books and formally recording it into the appropriate accounts, either on their debit or credit side, following accounting rules.
In simple words: Posting is when you take information from the journal and write it into the correct debit or credit side of the right account in the ledger.

Exam Tip: Posting is the critical step that moves transactions from their initial record in the journal to their final resting place in the ledger accounts, allowing for summarization and balancing.

 

Question 2. (8) Which types of ledgers are popular?
Answer: Three main types of ledgers are widely used: 1. Bound book ledger, 2. Loose leaves ledger, and 3. Card ledger.
In simple words: There are three common kinds of ledgers: bound books, loose-leaf folders, and individual cards.

Exam Tip: Be able to name and briefly describe the common types of ledgers, noting their physical characteristics and common uses in different business contexts.

 

Question 2. (9) What is the classification of ledger?
Answer: Classification of a ledger refers to "an organized system for a ledger where accounts are grouped in an orderly manner, and these categorized accounts are then entered into individual, distinct ledgers."
In simple words: Ledger classification is about sorting accounts into groups. Each group then gets its own special ledger book where its accounts are kept.

Exam Tip: When defining classification, emphasize the systematic arrangement of accounts into separate ledgers for better organization and management within an accounting system.

 

Question 2. (10) Ledger of individuals are shown under which type of classification?
Answer: The ledger for individual accounts is categorized into two main types:

• Creditors ledger (Purchase ledger)
  • Alphabetically
  • Areawise
• Debtors ledger (Sales ledger)
  • Alphabetically
  • Areawise

This classification helps organize individual accounts systematically.
In simple words: Ledgers for people are separated into two types: Creditors (for purchases) and Debtors (for sales). Both of these can be further organized by alphabet or by area.

Exam Tip: Understanding this classification helps manage accounts effectively. Creditors and debtors are key individual accounts, which can be further sub-classified for better organization and quick reference.

 

Question 2. (11) Normally, which accounts are prepared in General ledger?
Answer: Typically, from all the accounts a business maintains, the general ledger includes the accounts of all remaining individuals and other accounts, with the exception of specific debtor and creditor accounts. These are usually kept separately.
In simple words: The general ledger holds most of the business's accounts. It includes all accounts except those specifically for debtors and creditors, which are usually in their own separate ledgers.

Exam Tip: The general ledger serves as a central repository for all accounts that do not warrant a separate subsidiary ledger, such as cash, bank, expenses, and capital accounts.

 

Question 3. Answer the following questions in detail:

 

Question 3. (1) What is an Account? Explain it.
Answer:
Account: An account is a structured summary that presents the debit and credit impacts of transactions occurring within a particular time frame. These transactions relate to a specific person, asset, income, or expense, and are kept in a separate record book.
Meaning of an account: An account represents a summary of specific transactions that influence particular items over a defined period. For instance, the Account of Bhaskarbhai Trivedi provides a summary of all financial dealings with him. Likewise, accounts such as salary, sales, and bank accounts summarize their respective economic events.
Definition:
(1) An Account is a systematic summary illustrating the debit and credit influences of transactions that happen over a particular time, involving a specific person, asset, income, or expense.
(2) An Account is also a systematic and time-ordered record, presented in a specific layout, of transactions that relate to a particular aspect, showing entries on both the debit and credit sides in accordance with accounting rules.
In simple words: An account is a clear record that sums up all the money movements (ins and outs) for one specific thing, like a person, a type of money, or an expense. It helps you see how that one thing changes over time.

Exam Tip: When explaining 'Account', ensure you cover both its function as a summary of transactions and its format in recording debit and credit effects, often specifying its relation to a person, asset, or expense.

 

Question 3. (2) Prepare a specimen of an account and explain its each column.
Answer: Here is a specimen of an account with an explanation of each column:

Explanation:
(1) The name of every account and the specific period for which it is prepared are always noted at the very top of the account.
(2) An account is generally divided into two main parts. The left-hand part belonging to a person is known as the Debit side, while the right-hand part is called the Credit side.
(3) On both the debit and credit sides of an account, four specific columns are provided: Date, Particulars, J. F. No. (Journal Folio Number), and Amount (Rs.).
(4) When making a posting from a journal entry, the transaction date is entered in the date column. The name of the relevant account is placed in the particulars column. The page number of the journal where the entry was recorded goes in the J. F. column, and the financial amount is recorded in the final column.
(5) On the debit side of an account, after noting the particulars, the amount is written, which is referred to as Debiting the account. Similarly, on the credit side, after writing the particulars, the amount is written, which is known as Crediting the account.
In simple words: An account template shows two sides: debit and credit. Each side has spaces for the date, details of the transaction, the journal page number, and the amount in rupees. These columns help organize all the financial information for that specific account.

Exam Tip: Be able to draw and label a specimen ledger account, and explain the purpose of each column. Pay attention to the dual-sided nature (debit and credit) and the importance of cross-referencing to the journal.

 

Question 3. (3) What is a ledger? Give the information regarding its utility.
Answer:
Meaning of ledger: A ledger is a book that contains various accounts within a business. These accounts are for individuals, goods, assets, and different types of income and expense. They are created from journal entries or subsidiary books. The word 'Ledger' comes from 'Legger', meaning 'To keep'. Therefore, transactions recorded in the journal are later entered into the ledger. In essence, a book where different accounts are prepared is called a Ledger or Book of Ledger.
Utility: The ledger serves as the main book of accounts where all kinds of accounts are kept. Postings are made to these accounts based on journal entries. One primary goal of accounting is to determine a business's financial position on any given day. The ledger's main purpose is to display the status of each individual account. Thus, by maintaining a ledger, the overall aim of accounting is readily achieved.
Initially, transactions are recorded in the journal, which is why it's known as the Primary book of accounts. Entries for various transactions are then transferred from the journal to the ledger. This makes the ledger recognized as the Principal or Main book of accounts.
(1) Accounts related to individuals, goods, assets, incomes, and expenses are kept separately in the ledger.
(2) Details about the transactions of all accounts are easily accessible from the ledger.
(3) With the assistance of the ledger, a businessperson can readily acquire important business information for future planning.
Hence, the purpose of accounting is not limited to just recording money received and paid. Based on the various accounts, a trader can gain insights into the financial status and the profit or loss of their business. By reviewing a summarized account, sound decisions about business strategy can be made. Traders can quickly and easily get the necessary and useful information from the ledger. The ledger is a vital book for obtaining information and conducting analysis. Therefore, it is also known as the King of Books.
In simple words: A ledger is a key book in accounting that holds all the different accounts like money, property, and expenses. It helps keep track of everything, showing the up-to-date position of each account. This information helps businesses make smart decisions.

Exam Tip: Be thorough in defining a ledger, explaining its origin, and then detailing its utilities, particularly how it aids in financial analysis and decision-making, and why it is considered the 'King of Books'.

 

Question 3. (4) Explain the importance of a ledger.
Answer: The importance of a ledger can be understood through the following points:
1. Necessary information: The ledger provides essential information about any account on any specific date.
2. Transaction Summary: A summary of all transactions can be found using the ledger. For example:
    (1) It helps in obtaining details about the total purchases, total sales, purchase returns, or sales returns for a specific period.
    (2) It gives information about the amounts owed by customers (debtors) and the amounts due to suppliers (creditors) on any given date.
    (3) Account-specific details about expenses and incomes are available for any particular date.
    (4) Account-specific information about the capital invested and the value of different assets over a specific period can be found.
3. Mathematical Verification: The mathematical accuracy of accounts can be checked by preparing a 'Trial balance' from the balance of each account at a certain date.
4. Policy-related Decisions: For making strategic decisions for the business, essential information and summary statements, which are prepared from the ledger, form the basis.
5. Clear Financial Position: The ledger reflects the financial transactions that have occurred. Based on this record, a trader can get a precise understanding of their financial standing.
In simple words: A ledger is important because it gives you key information about money. It summarizes all transactions, helps check math, supports business decisions, and shows a clear picture of how well the business is doing.

Exam Tip: Structure your answer by using clear headings for each point of importance. Provide brief explanations or examples for each to demonstrate a comprehensive understanding.

 

Question 3. (5) "Ledger is a principal book of accounts." OR "Ledger is a King of Books." Explain in detail.
Answer: The primary goals of maintaining accounts are to easily get financial information and understand the business's performance. From this perspective, the ledger is recognized as the second crucial step in the accounting process. Initially, every transaction is entered into the journal, which is therefore known as the Primary book of accounts. Subsequently, entries from the journal are transferred to the ledger, which makes the ledger known as the Principal or Main book of accounts. Among all accounting records, the ledger is considered extremely important because it allows for an easy understanding of all business transactions.
In essence, a ledger is a book where a systematic and individual summary of all transaction types is prepared. This means that the ledger makes information concerning all accounts readily available. From this, the financial health and outcomes of the business can be clearly ascertained. Therefore, considering its usefulness and importance, the ledger is indeed the principal book of accounts, or simply, the King of Books.
In simple words: The ledger is like the main record book for all money matters in a business. It comes after the journal and helps sort out all transactions. Because it shows the full financial picture and helps make sense of the business's money, it's called the "Principal book of accounts" or "King of Books."

Exam Tip: To fully explain this, highlight the ledger's role as the central compilation of all financial data after initial journal entries. Emphasize how it provides a consolidated view crucial for understanding business performance, justifying its titles as 'Principal book' and 'King of Books'.

 

Question 3. (6) Give the detailed information regarding different forms (types) of ledger.
Answer: The different forms or types of ledgers are as follows:
1. Bound book ledger: This kind of ledger appears as a bound book. Most small traders utilize this type of ledger to keep their accounts. It starts with an index, and then each page is numbered sequentially. New pages cannot be inserted into this ledger as needed because it is in a fixed, bound format. From a preservation standpoint, this ledger type is less costly and simple to manage.
2. Loose leaves ledger: This type of ledger is in a loose-leaf format. In this setup, instead of individual cards, loose leaves or registers with necessary columns are used. These loose leaves are kept between two thick covers or metal sheets. Sufficient blank space is left on the left-hand side of the page so it can be systematically punched and secured in a binder. In this system, old pages can be taken out, and new ones can be added, similar to a card ledger. The whole structure is secured with a special locking mechanism, which helps ensure safety. However, this form is generally more expensive. Banks, insurance companies, and large businesses frequently use this type of ledger.
3. Card ledger: In this system, a unique card is kept for each account. These cards are stored in a steel cabinet. They are arranged on a steel bar to allow easy access to the required card. In this system, unnecessary or unwanted cards can be taken out, and new cards can be placed in between. This type of ledger offers greater security because all the cards are preserved in a special steel or wooden cabinet, which can also be locked. However, this is also an expensive form.
In simple words: Ledgers come in different forms: bound books (like regular notebooks, hard to add pages), loose-leaf binders (easy to add/remove pages, more secure), and card ledgers (separate cards for each account kept in a cabinet, also flexible and secure). Each type has its own benefits and costs.

Exam Tip: When explaining ledger forms, discuss their physical structure, flexibility for adding/removing pages, security features, and typical users. Highlight the advantages and disadvantages of each type to show comprehensive knowledge.

 

Question 3. (7) What is posting? Explain the process of posting with the help of simple journal entry.
Answer:
Meaning of Posting: Posting is the action of formally recording the debit or credit impact of a transaction from the journal or subsidiary books into the relevant ledger accounts, following standard accounting procedures.

Process of posting simple journal entry: According to the double-entry accounting system, every transaction has two distinct effects: one on the debit side and another on the credit side. Consequently, if an amount is recorded on the debit side of one account, then an equivalent amount is recorded on the credit side of another account. When posting an amount to the debit side of an account, you write the amount and put the name of the credited account in the particulars column. Conversely, when posting an amount to the credit side of an account, you write the amount and include the name of the debited account in the particulars column. Let's explore this explanation with an example:
Example: On 10 June 2019, goods worth Rs. 2,000 were purchased from Mayur. Write the journal entry and then post it to the ledger.

In the journal entry for the transaction above, two accounts are involved. Therefore, two accounts will be opened in the ledger: Purchase account and Mayur's account. As per the posting rule discussed earlier, the account that is debited (here, the Purchase account) will have the amount (Rs. 2,000) written on its debit side. In the particulars column, the name of the credit account (here, Mayur's account) will be entered, and in the amount column, Rs. 2,000 will be written. Subsequently, for the account that is credited (here, Mayur's account), the amount (Rs. 2,000) will be written on its credit side. In the particulars column, the name of the account that is debited (here, Purchase account) will be entered, and the amount Rs. 2,000 will be written in the amount column.
In simple words: Posting means moving transaction details from the journal to the specific ledger accounts. For a simple purchase, you debit the Purchase account and credit the Seller's account, making sure names and amounts match correctly.

Exam Tip: Pay close attention to the dual aspect rule for every transaction. Practice posting simple journal entries to ensure you correctly identify the debit and credit accounts and their respective amounts.

 

Question 3. (8) Explain the process of posting of a combined journal entry.
Answer: When a combined journal entry is recorded, one effect impacts one account, and the second effect impacts two or more accounts. At that point, in the account where the first effect occurs, the names of all accounts with the second effect will be noted. Conversely, in the accounts that experience the second effect, the name of the first effect account will be written.
For instance: On June 10, 2019, Rs. 12,000 was paid for salary and Rs. 4,000 for rent. Pass the journal entry and post it in the ledger.

In this transaction, the Salary account, Rent account, and Cash account are all connected. The Salary and Rent accounts are debited, while only the Cash account is credited. Thus, on the debit side of both the Salary account and Rent account, the name of the credited account, i.e., Cash account, will be written in the particulars column, and the corresponding amount will be entered. Similarly, in the Cash account, on the credit side, the names of the debited accounts, i.e., Salary account and Rent account, will be entered in the particulars column, with each debited amount shown separately in the amount column.

However, in a combined journal entry, when the debit effect involves more than one account and the credit effect also involves more than one account, it becomes challenging to decide which account to credit against each debited account or which account to debit against each credited account. In such situations, for every account, whether debited or credited, 'Miscellaneous account' is written in the particulars column, along with the relevant account amount from the journal entry.
In simple words: Posting combined journal entries means handling transactions that affect multiple accounts at once. For example, paying salary and rent with cash involves debiting both expense accounts and crediting the cash account, with clear entries in each ledger.

Exam Tip: When dealing with combined entries, ensure all affected accounts are correctly identified as either debit or credit. The sum of debits must always equal the sum of credits, maintaining the fundamental accounting equation.

 

Question 3. (9) Give the meaning of the classification of ledgers and explain this classification in detail.
Answer:
Ledger: A ledger provides a systematic summary of transactions related to every individual, goods-assets, and income-expenditure. It is a book known as a Ledger where accounts of individuals, goods-assets, and income-expenses are kept.
Generally, when a business is small and the number of transactions is limited, all accounts are typically included in a single ledger. However, as the business grows and transactions increase, difficulties can arise in managing everything in one ledger, which leads to the need for ledger division.
Classification (i.e., division) of ledger means: "An arrangement of a ledger in which accounts are classified systematically, and these classified accounts are then recorded in separate ledgers." Various perspectives allow for ledger classification, but a trader can organize a ledger in the most convenient way. Ledgers are usually classified as follows:

Classification of Ledger

• Ledger for Personal Account (For accounts related to individuals, for credit purchases or credit sales)
  • Purchase ledger or Creditors ledger (Creditors accounts of only credit purchase)
    • Alphabetically (e.g., A-I div., J-R div., S-Z div.)
    • Areawise (e.g., Countrywise, Statewise, Districtwise, Talukawise, or East zone, West zone, North zone, South zone)
  • Sales ledger or Debtors ledger (Debtors accounts of only credit sales)
    • Alphabetically (e.g., A-I div., J-R div., S-Z div.)
    • Areawise (e.g., Countrywise, Statewise, Districtwise, Talukawise, or East zone, West zone, North zone, South zone)
• General Ledger
  • (1) Accounts of goods-assets or incomes-expenses
  • (2) Individual accounts except credit purchase or credit sales and the accounts of debtor and creditor

Generally, traders subdivide the ledger in the following manner:
(A) Ledger for Personal Accounts: At the end of a specific period, to ascertain the amounts receivable and payable by the business, credit transactions are recorded separately. Due to credit purchase and sales transactions, it is necessary to have individual accounts for the respective parties (debtors and creditors). When a separate ledger is kept for such individual accounts, it is called a Ledger of Personal Accounts. This ledger is further divided into two types:
    1. Creditors ledger: Accounts of creditors need to be opened because of credit purchase transactions. The Creditors ledger is prepared from entries in the purchase book and purchase return book, also known as the Purchase ledger. Large traders mostly maintain a separate creditors ledger.
    2. Debtors ledger: Accounts of debtors are required due to credit sales transactions. The Debtors ledger is prepared from entries in the sales book and sales return book, also known as the Sales ledger. Large traders mostly maintain a separate debtors ledger.
Above ledgers can be further classified as follows:
    (i) Alphabetically: A ledger is classified based on the first letter of an individual account when preparing the ledger. For instance, according to the English alphabet, it can be a ledger from A to I, J to R, and S to Z. Similarly, based on the Gujarati alphabet, it can be a ledger from અ થી ૠ, ઋ થી ઱, અને ળ થી ક્ષ.
    (ii) Areawise: This type of ledger is classified based on the residence area or business location of traders. For example, it can be divided by Village, City, Taluka, District, State, Country, or into zones for sales or purchases, such as East zone, West zone, etc.
(B) General ledger: When a separate ledger is prepared for accounts of goods-assets and income-expenses, excluding the specific accounts of debtors and creditors, it is known as a General ledger. This ledger also contains accounts for purchases, sales, and goods returns. The above classification can also be done as follows:
    (1) Debtors ledger,
    (2) Creditors ledger, and
    (3) General ledger.
In simple words: Ledger classification sorts accounts for better management. It can be divided into Personal Accounts (for people we deal with, like buyers and sellers, further split by alphabet or area) and General Ledger (for everything else like assets and expenses). This organization helps a business track specific financial details more easily.

Exam Tip: Clearly articulate the two main ledger classifications (Personal and General). For Personal Ledgers, explain the further subdivisions (Creditors/Debtors and then Alphabetical/Areawise). For General Ledgers, list the types of accounts included. This demonstrates a thorough understanding of ledger organization.

 

Question 3. (10) Explain the process of balancing an account with an illustration.
Answer:
Balance: A trader needs to close their account books to determine the profit or loss of their business. This process typically occurs at the conclusion of a specific accounting period. Consequently, it is important to find the balance for every account maintained in the books. "Balance refers to the difference between the total sums of an account's debit side and its credit side." In any given account, the surplus of the total credit side amount over the debit side amount, or the surplus of the total debit side amount over the credit side amount, is identified as the Balance for that account.
Process of balancing: To ascertain the balance of an account or to close it, the following steps must be carried out:
(1) From the totals of both sides of an account, the side that has a larger total than the other should have its total written on both sides.
(2) The difference in amount in the amount column, on the side with the smaller total, needs to be computed and recorded. In the particulars column, next to this difference, it is essential to write 'balance carried forward', often abbreviated as 'balance c/f'.
In simple words: Balancing an account helps you find the final amount left over. You add up both the debit and credit sides. The larger total is written on both sides. The difference between the two totals is the 'balance carried forward', which gets written on the side with the smaller total to make them equal.

Exam Tip: Describe balancing an account as a two-step process: first, finding the larger total between the debit and credit sides, and then calculating the difference to be carried forward as the closing balance. Make sure to use 'balance c/f' correctly.

 

Question 4. State whether the balances of the following accounts will have a debit balance or credit balance:
(1) Purchase Account
(2) Sales Account
(3) Sales Return Account
(4) Debtor's (Customer's) Account
(5) Capital Account
(6) Salary Account
(7) Rent Received Account
(8) Building Account
(9) Drawings Account
(10) Bad Debts Account
(11) Goods Burnt by Fire Account
(12) Loss by Theft Account
(13) Advertisement Expenses Account
(14) Contribution to Provident Fund Account
Answer:
Debit Balance
(1) Purchase Account
(3) Sales Return Account
(4) Debtor's (Customer's) Account
(6) Salary Account
(8) Building Account
(9) Drawings Account
(10) Bad Debts Account
(12) Loss by Theft Account
(13) Advertisement Expenses Account
(14) Contribution to Provident Fund Account
Credit Balance
(2) Sales Account
(5) Capital Account
(7) Rent Received Account
(11) Goods Burnt by Fire Account (Credited to Purchase A/c)
In simple words: Accounts that show assets or expenses usually have a debit balance, while accounts that show liabilities, capital, or income typically have a credit balance. Some special accounts, like Sales Return, act opposite to their main account.

Exam Tip: Remember the basic accounting equation: Assets = Liabilities + Capital. An increase in assets or expenses is debited, while an increase in liabilities, capital, or income is credited.

 

Question 5. In the books of Shri Katara, write journal entries, for the following transactions, draw necessary accounts in the ledger and post them accordingly:
(1) Brought Rs 3,30,000 in business. From this Rs 2,30,000 deposited in a bank.
(2) Cash purchase Rs 85,000.
(3) From Ajmal Furniture Mart, a furniture of Rs 11,500 is purchased for office use.
(4) A cheque of Rs 8,000 is given to Kanubhai against dues.
(5) Against the receivables of Rs 7,800 from Rajubhai, cheque received Rs 7,500 for full and final payment.
(6) Cash sales of Rs 15,000.
(7) Credit sales to Rameshbhai of Rs 75,000.
(8) Salary paid of Rs 6,200.
Answer:

In simple words: We recorded these financial events first in the journal, which is like a diary of transactions. Then, we moved each entry from the journal to the correct ledger account. For example, when cash was brought in, we updated the Cash and Capital accounts. When furniture was bought, we updated the Furniture account and the supplier's account. This method helps us keep track of all money movements and balances.

Exam Tip: Always make sure that for every debit entry in the journal, there is an equal and corresponding credit entry, maintaining the dual aspect of accounting. When posting to the ledger, ensure the correct account is debited or credited based on the transaction type.

 

Question 6. In the book of Panchal Stores, write journal entries, for the following transactions, draw the necessary accounts, in the ledger and post them accordingly :
2016
April 1 Cash Rs 40,000 and furniture of Rs 20,000 brought in business.
2 Goods of Rs 36,000 are sold to Dhaval Stores at 10 % trade discount. For this, Dhaval Stores had paid a cash Rs 15,000.
3 Rs 18,000 is deposited in a bank.
4 Goods of Rs 20,000 are purchased at 12 % trade discount from Dhara Stores. For this, a cheque of Rs 8,000 is given.
5 Withdrawn from the bank Rs 5,000 for office expenses and Rs 4,000 for the household expenses.
7 Office expenses paid Rs 2,200.
8 Against the dues of Rs 4,830, paid Rs 4,800 in cash for the final settlement to Jayeshbhai.
9 Due to the fire in godown, goods of Rs 3,200 is burnt by fire and insurance company has accepted a claim of Rs 2,600 for the same.
10 Goods of Rs 6,600 are purchased from Anil Traders and towards this, payment of Rs 2,600 is made in cash.
12 Paid Rs 4,800 for shop rent and Rs 6,000 for house rent.
13 Paid Rs 4,000 to Anil Traders by cheque.
Answer:

In simple words: For Panchal Stores, we first wrote down each transaction in the journal, like a detailed record. Then, these journal entries were transferred to their specific ledger accounts. This helps organize all financial information, showing how each account's balance changed over time.

Exam Tip: Always double-check your debits and credits in both the journal and ledger entries to ensure they balance, as per the double-entry system. Pay close attention to trade discounts and cash transactions.

 

Question 7. From the following transactions prepare subsidiary books of Amjad Garments and post them in necessary accounts in the ledger:
2016
Goods of Rs 48,000 are purchased at 10 % trade discount from Zuben Traders. Goods of Rs 42,000 are purchased at 5 % trade discount from Mazhar.
Goods of Rs 20,000 are purchased at 5 % trade discount from Mahesh Stores. Purchased furniture of Rs 12,000 from Ashraf Furniture Mart.
Goods of Rs 24,000 is sold at 20 % profit to Rajabhai at 10 % trade discount. Goods of Rs 36,000 are sold to Salman at 5% trade discount.
Goods of Rs 4,000 are returned to Dineshbhai.
Goods of Rs 12,000 are sold to Chinubhai at 10 % trade discount,
Goods of Rs 6,200 are returned by Rajabhai.
Goods of Rs 3,500 are returned to Salim.
Goods of Rs 1,600 are returned by Mitul.
Answer:

In simple words: We organized all transactions for Amjad Garments into specific subsidiary books like the Purchase Book, Sales Book, Purchase Returns Book, Sales Returns Book, and Journal Proper. Each entry was then moved to its appropriate ledger account, providing a clear and easy-to-understand record of the business activities.

Exam Tip: Remember that subsidiary books are essential for recording similar, frequent transactions, which then get periodically summarized and posted to the main ledger. This approach helps in reducing the volume of entries in the main ledger and simplifies the process.

 

Question 8. From the following transactions prepare subsidiary books of Janki Stores and post them in necessary accounts :
2016
June 1 Goods of Rs 9,000 are sold at 10 % profit to Shakil Traders. Outward invoice no. 251.
2 Goods of Rs 9,600 are purchased from Nargis at 10 % trade discount. Inward invoice no. 636.
3 Goods of 5,600 are sold at 15% profit to Nitin. Outward invoice no. 252.
4 Goods of Rs 6,000 are purchased from Paresh at 5 % trade discount. Inward invoice no. 525.
5 Goods of 750 are received back from Vishwas. Credit note no. 81.
7 Goods of Rs 900 returned to Bharat. Debit note no. 221.
8 Goods of Rs 1,100 returned by Nitin, as the goods were not according to sample. Credit note no. 82.
9 As the goods of Rs 920 are damaged, they are returned back to Nargis. Debit note no. 222.
10 Three cupboards at the rate of Rs 2,400 each are purchased from Ashwin Furniture Mart. Credit bill no. 67.
14 As one of the cupboard from those which were purchased from Ashwin Furniture Mart, is in damaged condition it is returned to them. Debit note no. 223.
Answer:

In simple words: For Janki Stores, we recorded all transactions in appropriate subsidiary books like the Purchase Book, Sales Book, Purchase Returns Book, Sales Returns Book, and Journal Proper. Each entry was then transferred to its respective ledger account, which helps maintain a clear and organized record of all financial movements.

Exam Tip: Pay careful attention to trade discounts, which are not recorded in the books of account but reduce the invoice amount. Also, remember that asset purchases and returns not involving cash or bank must be recorded in the Journal Proper.

 

Question 8. From the following transactions prepare subsidiary books of Janki Stores and post them in necessary accounts :
2016
June 1 Goods of Rs. 9,000 are sold at 10 % profit to Shakil Traders. Outward invoice no. 251.
2 Goods of Rs. 9,600 are purchased from Nargis at 10 % trade discount. Inward invoice no. 636.
3 Goods of Rs. 5,600 are sold at 15% profit to Nitin. Outward invoice no. 252.
4 Goods of Rs. 6,000 are purchased from Paresh at 5 % trade discount. Inward invoice no. 525.
5 Goods of Rs. 750 are received back from Vishwas. Credit note no. 81.
7 Goods of Rs. 900 returned to Bharat. Debit note no. 221.
8 Goods of Rs. 1,100 returned by Nitin, as the goods were not according to sample. Credit note no. 82.
9 As the goods of Rs. 920 are damaged, they are returned back to Nargis. Debit note no. 222.
10 Three cupboards at the rate of Rs. 2,400 each are purchased from Ashwin Furniture Mart. Credit bill no. 67.
14 As one of the cupboard from those which were purchased from Ashwin Furniture Mart, is in damaged condition it is returned to them. Debit note no. 223.
Answer:

Subsidiary Books of Janki Stores

Purchase Book

Sales Book

Purchase Returns Book

Sales Returns Book

Journal Proper

Ledger of Janki Stores

Purchase Account

Nargis's Account

Paresh's Account

Sales Account

Shakil Traders's Account

Nitin's Account

Purchase Returns Account

Bharat's Account

Sales Returns Account

Vishwas's Account

Furniture Account

Ashwin Furniture Mart's Account

In simple words: This solution shows how to record all the daily business deals into special books like the Purchase Book and Sales Book, then put them into the main ledger accounts. Each account tracks money going in and out for specific items or people.

Exam Tip: For comprehensive problems like this, ensure each transaction is correctly identified for its type (purchase, sale, return, journal proper) and recorded in the appropriate subsidiary book or journal, then posted to the correct ledger accounts with the correct debit and credit entries. Pay close attention to trade discounts, profits, and settlement terms.

 

Question 9. The following is the information relating to purchase of goods by Manglam Saree Centre. From this prepare their goodswise columnar purchase book and post them in ledger.
2016
Sept. 1 40 Cotton sarees at the rate of Rs. 450 and 20 Silk sarees at the rate of Rs. 600 are purchased from Ladli Fashion Stores at 10 % trade discount. Inward invoice no. 23.
2 25 Silk sarees at the rate of Rs. 750 and 10 Badhani at the rate of Rs. 1,000 are purchased from Poonam Saree Centres at 10% trade discount. Inward invoice no. 204.
3 20 Cotton sarees at the rate of Rs. 400, 30 Silk sarees at the rate of Rs. 800 and 15 Bandhani at the rate of Rs. 1,200 are purchased from Rajvi Stores at 20% trade discount. Inward invoice no. 321.
Answer:

Columnar (Goodswise) Purchase Book of Manglam Saree Centre

Ledger of Manglam Saree Centre

Purchase Account

Ladli Fashion Stores's Account

Poonam Saree Centres's Account

Rajvi Stores's Account

In simple words: This problem involves recording various types of saree purchases from different suppliers, including trade discounts. The purchases are listed in a special book, and then these entries are put into separate ledger accounts for each store. This helps track what was bought from whom and the total value.

Exam Tip: When preparing columnar purchase books, ensure each item (e.g., Cotton Sarees, Silk Sarees, Badhani) is recorded in its specific column, and trade discounts are deducted before calculating the final amount. Always post the total amounts from the purchase book to the respective ledger accounts correctly.

 

Question 10. From the following informations, prepare a columnar (expensewise) purchase book of John Fashion and post them in ledger:
2018
July 1 Goods of Rs. 14,000 are purchased from Pestanji at 10% trade discount. Trader has given a bill along with Wages of Rs. 240 and railway freight of Rs. 200.
2 Goods of Rs. 12,800 are purchased from Rustamji at 5 % trade discount. In the invoice of the trader is shown Rs. 220 for the railway freight and Rs. 100 for carriage.
3 Goods of Rs. 10,000 are purchased from Tomy Traders at 5 % trade discount. In the invoice which is sent by the trader, it is shown Rs. 200 for Wages and Rs. 80 for carriage.
Answer:

Columnar (Expensewise) Purchase Book of John Fashion

Ledger of John Fashion

Purchase Account

Wages Account

Carriage Account

Railway Freight Account

Pestanji's Account

Rustamji's Account

Tomy Traders's Account

In simple words: This solution records the purchases made by John Fashion, noting down the cost of goods and extra expenses like wages, carriage, and railway freight separately. It helps to see the full cost of each purchase from different suppliers in a detailed way.

Exam Tip: When preparing expensewise columnar purchase books, clearly separate the cost of goods from additional expenses (wages, carriage, freight). Remember to deduct trade discounts from the original value of goods before calculating their cost. Ensure all components are correctly posted to individual ledger accounts.

 

Question 11. From the following transactions prepare different subsidiary book with GST at 12% in the books of Amar Trading of Ahmedabad. Write journal entries also and make posting of them. GST is not included for following transactions. Add applicable amounts of GST and prepare subsidiary books, journal entries and posting of them.
2019
May 1 Goods purchased of Rs. 90,000 at 10 % trade discount from Jatin Traders of Jamnagar. Railway freight Rs. 3,000. Invoice no. 321.
3 Goods purchased of Rs. 80,000 from Vinod Traders of Pune (Maharashtra). Railway freight 3,200, labour charges Rs. 600 and invoice no. 322.
5 Goods sold of Rs. 72,000 at 10 % trade discount to Rajiv Trading of Rajkot. Railway freight Rs. 500, labour charge Rs. 300 and invoice no. 471.
7 Goods sold of Rs. 50,000 at 10% trade discount to Uday Trading of Udaipur (Rajasthan). Railway freight Rs. 600 and wages Rs. 300. Invoice no. 472.
12 50% goods returned by Rajiv Trading of Rajkot. Rs. 200 of railway freight and Rs. 150 of labour charge are adjusted. Credit note no. 16.
18 Goods of Rs. 20,000 returned to Vinod Traders of Pune (Maharashtra). Rs. 1,000 and railway freight and Rs. 200 of labour charge are adjusted. Debit note no. 31.
Answer:

Purchase Book of Amar Trading

Sales Book of Amar Trading

Purchase Returns Book of Amar Trading

Sales Returns Book of Amar Trading

Journal of Amar Trading

Ledger of Amar Trading

Purchase Account

Sales Account

Purchase Returns Account

Uday Trading Company Account

Input Central GST Account

Input State GST Account

Input Integrated GST Account

Output Central GST Account

Output State GST Account

Output Integrated GST Account

Railway Freight Account (About Purchase)

Railway Freight Account (About Sales)

Wages Account (About Purchase)

Wages Account (About Sales)

In simple words: This solution tracks various purchase and sales transactions, including their associated costs like railway freight and wages, and applies GST at a 12% rate. It uses special books to record everything, then posts these entries to detailed ledger accounts to keep track of all financial movements.

Exam Tip: When dealing with GST, always distinguish between Input (for purchases) and Output (for sales) GST, and further classify as Central, State, or Integrated GST based on the nature and location of the transaction. Carefully apply trade discounts and account for additional charges like freight and wages when calculating the net amount before GST.

 

Question 12. From the following informations prepare a petty cash book in the books of Anup Stores and post them in ledger:
2016
July
1 Cash balance 2,800.
2 Received 5,000 from the cashier, Ishan.
3 Paid 250 for wages and Rs. 120 for cartage.
4 320 paid for the purchase of stationery.
5 150 paid for sending the post.
7 Paid cartage of Rs. 130 for the goods purchased.
8 Rs. 250 paid for recharge of the office mobile.
10 Paid 80 for the photocopy of office work.
11 Paid Rs. 1,200 to Purvi and Rs. 800 to Hiya.
Answer:

Petty Cash Book of Anup Stores for July, 2016

Ledger of Anup Stores

Stationery Expense Account

Wages Account

Cartage Account

Post & Telegram Expense Account

Sundry Expense Account

Purvi's Account

Hiya's Account

In simple words: This solution tracks all small cash payments made by Anup Stores using a petty cash book, sorting each expense into specific categories like wages, cartage, and stationery. It also shows how to record these amounts in the main ledger accounts for clearer financial tracking.

Exam Tip: When preparing a petty cash book, ensure you accurately record all small expenses and classify them into appropriate categories. Remember to balance the petty cash book at the end of the period and carry forward the balance to the next period. Correctly posting these small amounts to the main ledger is crucial for complete accounting records.

 

Question 13. From the following information, prepare a petty cash book in the books of Anup Stores and post them in ledger:
1 Cash balance Rs. 2,800.
2 Received Rs. 5,000 from the cashier, Ishan.
3 Paid Rs. 250 for wages and Rs. 120 for cartage.
4 Rs. 320 paid for the purchase of stationery.
5 Rs. 150 paid for sending the post.
7 Paid cartage of Rs. 130 for the goods purchased.
8 Rs. 250 paid for recharge of the office mobile.
10 Paid Rs. 80 for the photocopy of office work.
11 Paid Rs. 1,200 to Purvi and Rs. 800 to Hiya.
Answer: To set up the petty cash book and corresponding ledger accounts for Anup Stores, first list all cash receipts and payments chronologically in the petty cash book. Then, transfer these entries to the relevant ledger accounts to show their impact on the business balances.
Petty Cash Book of Anup Stores for July, 2016

Ledger of Anup Stores
Stationery Expense Account

Wages Account

Cartage Account

Post & Telegram Expense Account

Sundry Expense Account

Purvi's Account

Hiya's Account

In simple words: First, record all small cash payments in the petty cash book, sorting them into different expense categories. Then, transfer each of these expense totals to their own separate ledger accounts to keep track of where the money went.

Exam Tip: Remember to carry forward the balance of the petty cash book to the next period. Also, make sure all ledger accounts are correctly balanced after posting. This process helps to manage minor expenses efficiently.

 

Question 14. From the following transactions pass journal entries in the books of Dharmendra and post them in ledger. Find out the balance of each account and decide which account has which balance.
2016
July
1 Commenced a business by bringing in cash of Rs. 80,000 and furniture of Rs. 20,000.
2 A bank account is opened, by depositing 30,000.
3 Goods of Rs. 12,000 are purchased from Mahendra at 6 % trade discount and paid cash Rs. 4,000.
5 Goods of Rs. 7,500 are sold to Narendra at 10% trade discount and he has paid Rs. 2,000.
6 Paid in cash Rs. 3,000 for shop board and Rs. 4,000 for advertisement in a newspaper.
7 Paid life insurance premium of Rs. 6,000 and son's school fees of Rs. 2,200 from the shop.
8 Given a cheque of Rs. 7,200 to Mahendra and settled his account.
10 Received a cheque of Rs. 4,700 from Narendra in full settlement.
11 Purchased the furniture of Rs. 5,000 from Surendra Hardware. Against this given Rs. 3,000 by cheque and Rs. 2,000 in cash.
Answer: To accurately record these transactions for Dharmendra, first create journal entries for each event, carefully noting debits and credits. Subsequently, post these entries to individual ledger accounts. Finally, determine the ending balance for each account and specify whether it is a debit or credit balance.
Journal of Dharmendra

Ledger of Dharmendra
Cash Account

... Debit balance of Cash A/c ₹30,800.

Furniture Account

... Debit balance of Furniture A/c ₹28,000.

Capital Account

... Credit balance of Capital A/c ₹1,00,000.

Bank Account

... Debit balance of Bank A/c ₹24,500.

Purchase Account

... Debit balance of Purchase A/c ₹11,280.

Mahendra's Account

... Account of Mahendra is squared up.

Narendra's Account

... Account of Narendra is squared up.

Sales Account

... Credit balance of Sales A/c ₹6,750.

Advertisement Expense Account

... Debit balance of Advertisement Expense A/c ₹4,000.

Allowance Allowed Account

... Debit balance of Allowance Allowed A/c ₹50.

Drawings Account

... Debit balance of Drawings A/c ₹8,200.

Allowance Received Account

Credit balance Allowance Received A/c ₹80.

Note:
(1) The amount paid for the shop board is debited to Furniture A/c.
(2) In the transaction on date 8, a cheque of Rs. 7,200 was given for a payable amount of Rs. 7,280 for full settlement. Therefore, the difference amount of Rs. 80 (Rs. 7,280 - Rs. 7,200) will be recorded as an allowance and it is credited.
(3) In the transaction on date 10, a cheque of Rs. 4,700 was received for a receivable amount of Rs. 4,750 for full settlement. Therefore, the difference amount of Rs. 50 (Rs. 4,750 - Rs. 4,700) will be recorded as an allowance and it is debited.
In simple words: First, record all cash and furniture brought into the business. Then, make journal entries for each transaction, like depositing money in the bank or buying goods. After journalizing, move these entries to their respective ledger accounts. Finally, check each ledger account to see if it has a debit or credit balance and note the amount.

Exam Tip: Always make sure to calculate trade discount correctly before recording the gross amount. Also, ensure that all journal entries are posted to the correct side (debit or credit) of the respective ledger accounts to maintain accuracy.

 

Question 15. From the following transactions pass journal entries in the books of Badshah. Post them in ledger. Find out the balance of each account and state whether it is a debit balance or credit balance and also mention the amount.
2016
November
1 Brought 75,000 cash and stock of goods of ₹ 15,000 in the business.
2 Deposited 40,000 in bank.
3 Goods of ₹ 15,000 are purchased from Aunti at 10 % trade discount and paid 3,000 cash.
5 Goods of 20,000 are sold at 30 % profit to Govind, at 10 % trade discount. Govind has given a cheque of ₹ 5,000, which is deposited in the bank.
7 Paid salary 4,500 and cartage ₹ 450.
8 Fire insurance premium of ₹ 2,000 is paid by cheque.
10 Paid 3,500 by cheque to Shah Agency for an advertisement in a newspaper.
12 Goods of ₹ 24,000 purchased from Chakan at 10 % trade discount and paid ₹ 9,600 cash to Chakan.
14 Paid ₹ 10,000 by cheque to Aunti and the balance amount in cash.
15 A cheque of ₹ 18,400 send by Govind. Which is deposited in the bank,
16 Paid ₹ 4,000 from the business for the school fees of daughter, Urja.
Answer: To correctly record these transactions for Badshah, first create detailed journal entries for each event. Next, transfer these entries to their respective ledger accounts. Finally, determine the closing balance for each account and indicate whether it's a debit or credit balance, along with the amount.
Journal of Badshah

Ledger of Badshah
Cash Account

... Debit balance of Cash A/c ₹12,950.

Stock of Goods Account

... Debit balance of Stock of Goods A/c ₹15,000.

Capital Account

... Credit balance of Capital A/c ₹90,000.

Bank Account

... Debit balance of Bank A/c ₹47,900.

Purchase Account

... Debit balance of Purchase A/c ₹35,100.

Aunti's Account

... Account of Aunti is squared up.

Govind's Account

... Account of Govind is squared up.

Sales Account

... Credit balance of Sales A/c ₹23,400.

Drawings Account

... Debit balance of Drawings A/c ₹4,000.

Fire Insurance Premium's Account

... Debit balance of Fire Insurance Premium's A/c ₹2,000.

Salary Account

... Debit balance of Salary A/c ₹4,500.

Cartage Account

... Debit balance of Cartage A/c ₹450.

Advertisement Expense Account

... Debit balance of Advertisement Expense A/c ₹3,500.

Chakan's Account

... Credit balance of Chakan A/c ₹12,000.
In simple words: First, list all the cash and stock that started the business. Then, for each transaction, create a journal entry by deciding which accounts to debit and credit. After that, move these journal entries to individual ledger accounts to see how each account's balance changes. Finally, calculate the total for each account and determine if it's a debit or credit balance.

Exam Tip: Remember to use the double-entry system, ensuring that every transaction affects at least two accounts with equal debits and credits. When posting to the ledger, clearly label the account type (e.g., asset, liability, expense, income) to help identify its normal balance.

 

Question 16. Record the following transactions in three columnar cash book of Mohan. Post them in necessary accounts. Find out the balance of each account and show the amount and type of balance.
1 Opening cash balance ₹ 24,000 and bank balance ₹ 20,000.
2 Cash deposited in bank ₹ 14,000.
3 Goods of 20,000 are sold to Sureshbhai, for which we received cash 8,000 and for the balance we received a cheque which is deposited in the hank.
5 Paid shop rent ₹ 1,500 by cheque and salary of ₹ 2,500 in cash.
7 Goods of ₹ 8,700 are purchased from Dineshbhai, for which paid ₹ 700 in cash. 9 Paid electricity bill of ₹ 1,870 and telephone bill of ₹ 530 by cheque.
11 Goods of 9,000 are sold to Kanji at 10% trade discount. For which, received ₹ 1,900 in cash.
13 Jayantibhai has paid ₹ 4,800 for his dues of ₹ 5,000 and settled his account.
16 Gave a cheque of ₹ 7,600 to Dineshbhai and settled his account.
17 Paid 1,800 in cash from business for gift on Shital's marriage function.
20 Goods of ₹ 11,000 are sold to Pandya Brothers and he has paid the full amount at 2% cash discount.
22 Received a cheque of ₹ 6,000 from Kanji in full settlement against his dues of ₹ 6,200.
24 Received a cheque of ₹ 1,600 for commission, which is deposited in the bank.
Answer: To handle these transactions for Mohan, first record them in a three-column cash book, detailing cash, bank, and discount entries. Then, transfer these entries to the required ledger accounts. Finally, determine the concluding balance for each account, specifying whether it's a debit or credit balance, along with the correct amount.
Three Columnar Cash Book of Mohan for August, 2016

In simple words: First, record all transactions in the cash book with separate columns for cash, bank, and discount. Then, transfer these entries to individual ledger accounts. Finally, calculate the final balance for each account and specify whether it is a debit or credit.

Exam Tip: Remember to always balance the cash book regularly. Pay special attention to contra entries, which involve both cash and bank accounts, and ensure they are marked with 'C' in the L.F. column.

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