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Mr. Saleem initiated his business with various assets totaling Rs. 250,000 and engaged in several transactions including purchases, sales, and cash deposits. The journal entries reflect the changes in assets, liabilities, and capital due to these transactions. Notably, a loss by fire impacted the building asset, and various accounts were adjusted accordingly.

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muneebcheema1201
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2 views3 pages

Solution

Mr. Saleem initiated his business with various assets totaling Rs. 250,000 and engaged in several transactions including purchases, sales, and cash deposits. The journal entries reflect the changes in assets, liabilities, and capital due to these transactions. Notably, a loss by fire impacted the building asset, and various accounts were adjusted accordingly.

Uploaded by

muneebcheema1201
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Problem

(i) [Link] started business with goods Rs.40,000 Building Rs.100,000 & Cash
Rs.110,000.
(ii) Purchases goods on account for Rs.30,000.
(iii) Sold goods on account for Rs.40,000.
(iv) Cash of Rs.20,000 deposited into bank.
(v) Paid cash to supplier of goods Rs.20,000.
(vi) Received cash from customers Rs.30,000.
(vii) A part of Building costing rupees Rs,30,000.
(viii) He made additional investment by Cheqe Rs.20,000.
(ix) Paid salaries Rs.4,000 by cheqe.
(x) Goods returned to supplier amounting to Rs. 40,000.

Solution:

Journal Dr. Cr.


Date Details L/F Amount Amount
Rs. Rs.
‘’ Cash A/C …Dr. 110,000
Goods A/C …Dr. 40,000
Building A/C …Dr. 100,000

Capital A/C 250,000

(Owner invested assets into


business, so asset increase and
capital increases.)
‘’ Purchase A/C …Dr. 30,000

Creditors A/C 30,000

(Goods purchased increases


purchases; amount unpaid
creates a liability.)

‘’ Debtors A/C …Dr. 40,000

Sales A/C 40,000

(Customers owes us money, so


debtor increases; sales increases
income.)

‘’ Bank A/C …Dr. 20,000

Cash A/C 20,000

(Cash decreases, bank balance


increases.)

‘’ Creditors A/C …Dr. 20,000

Cash A/C 20,000

(Liability (creditor) decreases and


cash reduces.)
‘’ Cash A/C …Dr. 30,000

Debtors A/C 30,000


(Debtor pays us, so debtor
decreases and cash increases.)

‘’ Loss by Fire A/C …Dr. 30,000

Building A/C 30,000


(Asset (building) decreases; loss is
recorded as expense.)

‘’ Bank A/C …Dr. 20,000

Capital A/C 20,000

(Bank balance increases and


capital increases.)

‘’ Salaries A/C …Dr. 4,000

Bank A/C 4,000

(Salary is an expense; bank


balance decreases)

‘’ Creditors A/C …Dr. 4,000

Purchase A/C 4,000

(Returning goods reduces our


liability and reduces purchase)

Zain Ali

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