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Unit 2 Introduction of Journal and Ledger.pdf
- 1. Accounting Dr. Bharath V Faculty,Department of Management
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- 3. Journal Journal is thebook of original entry in which business transactions are recorded in chronological order, that is, in the order of occurrence. Transactions are recorded for the first time in the journal. Entries are made in the journal based on source documents. Record of business transactions in the journal is known as Journal entry. The process of recording the transactions in journal is called as journalising. 3
- 4. Format of Journal Inthe books of……. Journal 4 Date Particulars L.F. Debit ₹ Credit ₹
- 5. Analysis of transactions •Transaction: Somu commenced printing business with cash ₹50,000. 5 Transactions Accounts Involved Traditional Approach Effect on Account Traditional Debit / Credit (₹) Somu commenced business with cash ₹50,000 Cash A/c Real Cash comes in Debit Capital A/c Personal Somu is the giver Credit
- 6. • Transaction: Boughtgoods for cash ₹4,000 6 Transactions Accounts Involved Traditional Approach Effect on Account Traditional Debit / Credit (₹) Bought goods for cash ₹4,000 Purchases A/c Nominal A/c Expenses made Debit Cash A/c Real A/c Cash going out Credit
- 7. Transaction: Purchased goodsfrom Rahul for ₹10,000 on credit Transactions Accounts Involved Traditional Approach Effect on Account Traditional Debit / Credit (₹) Purchased goods from Rahul for ₹10,000 on credit Purchases A/c Nominal A/c Expenses made Debit Rahul A/c Personal A/c Rahul is the giver Credit 7
- 8. Transaction: Cash paidto Rahul ₹4,000 Transactions Accounts Involved Traditional Approach Effect on Account Traditional Debit / Credit (₹) Cash paid to Rahul ₹4,000 Rahul A/c Personal A/c Rahul is the receiver Debit Cash A/c Real A/c Cash goes out Credit 8
- 9. Journalise the followingtransactions in the books of Mr. Ram Krishna: Date Transactions Rs. July 1 Mr. Ram Krishna Started business with cash 2,00,000 July 4 Goods purchased in cash 20,000 July 5 He deposited in Bank 40,000 July 7 Goods sold 15,000 July 10 Goods purchased from Mr. Kamlesh on credit 25,000 July 11 Furniture purchased 18,000 July 12 Wages paid 4,000 July 20 Interest received 500 July 25 Cash paid to Mr. Kamlesh 25,000 July 30 Additional capital brought by Mr. Ram Krishna 50,000 9
- 10. Ananth is asole proprietor having a provisions store. Following are the transactions during the month of January 2018. Journalise them. Date Transcations ₹ Jan 1 Commenced business with cash 80,000 Jan 2 Deposited cash with bank 40,000 Jan 3 Purchased goods by paying cash 5,000 Jan 4 Purchased goods from Lipton & Co. on credit 10,000 Jan 5 Sold goods to Joy and received cash 11,000 Jan 6 Paid salaries by cash 5,000 Jan 7 Paid Lipton & Co. by cheque for the purchases made on 4th Jan. Jan 8 Bought furniture by cash 4,000 Jan 9 Paid electricity charges by cash 1,000 Jan 10 Bank paid insurance premium as per standing instructions 300 10
- 11. 11 Enter the followingtransactions in the journal of Manohar who is dealing in textiles: Date (Aug.) Particulars ₹ 1 Manohar started business with cash 60,000 2 Purchased furniture for cash 10,000 3 Bought goods for cash 25,000 6 Bought goods from Kamalesh on credit 15,000 8 Sold goods for cash 28,000 10 Sold goods to Hari on credit 10,000 14 Paid Kamalesh 12,000 18 Paid rent 500 25 Received from Hari 8,000 28 Withdrew cash for personal use 4,000
- 12. 12 Journalise the followingtransactions in the books of Nancy Ltd., 2025, March Particulars ₹ in ’000 1 Started business with cash 4,500 1 Cash deposited into bank 2,500 2 Goods purchased for cash 1,500 3 Purchase of furniture and payment by cheque 500 5 Sold goods for cash 600 8 Sold goods to Rosy on credit 400 10 Goods Purchased from Thomas 700 12 Goods Returned to Thomas 100 15 Sold goods to Raj for cash 250 18 Cash received from Rosy ₹396 & discount allowed to her ₹4 21 Withdrew from bank for private use 100 21 Withdrew from bank for use in the business 500 25 Paid telephone rent for one year 400 28 Cash paid to Thomas in full settlement of her account 600 30 Paid for Stationery- 200, Rent paid- 100, Salaries to staff - 250
- 13. 13 Journalising the followingtransactions March Particular ₹ in ’000 1 Purchased machinery for cash 5,000 2 Sold goods to Rohit for cash 2,000 3 Sold goods to Komal for credit 1,000 4 Cash received from Manish 700 5 Cash withdrawn from bank 500 6 Paid salaries 800 7 Purchased goods worth of ₹1,000 less 10% trade discount 8 The installation charges of machinery amounted to ₹500 which were paid in cash 9 Cash paid to Richard 400 10 Paid interest 400 11 Returned goods to Prem 300 12 Returned goods by Priya 200 13 Received dividend on Shares of ABC Ltd., 500 14 Paid rent 400 15 Old furniture sold for 200
- 14. 14 Journalise the followingtransactions in the books of Ramesh who is dealing in computers 2025, July Particulars 1 Ramesh started business with cash ₹3,00,000, Goods ₹80,000 and Furniture ₹27,000. 2 Money deposited into bank ₹2,00,000 3 Bought furniture from M/s Jayalakshmi Furniture for ₹28,000 on credit. 4 Purchased goods from Ashok for ₹5,000 by paying through debit card. 5 Purchased goods from Guna and paid through net banking: ₹10,000 6 Purchased goods from Kannan and paid through credit card ₹20,000 7 Purchased goods from Shyam on credit for ₹50,000 8 Bill drawn by Shyam was accepted for ₹50,000 9 Paid half the amount owed to M/s Jayalakshmi Furniture by cheque 10 Shyam’s bill was paid
- 15. 15 Journalising the followingtransactions April Particulars ₹ 1 Sharma started business by investing cash of ₹40,000. He brought goods of ₹10,000, Furniture ₹5,000, and Machinery ₹10,000 2 Purchased building 5,000 3 Sale of goods worth ₹7,000 less 10% trade discount 4 Purchased of goods worth ₹6,000 less 5% trade discount 5 Sold goods to William on credit 2,500 6 Purchase of goods from Anderson on credit 1,600 7 Amount withdrawn from bank for office use 800 8 Paid freight 500 9 Sold 50 shared in National Ltd., @ ₹20 per share and commission paid ₹30 10 Received cheque from Vijay and deposited in bank 5,000 11 Paid to Anderson in full settlement 1,500 12 Amount withdrawn from bank for personal use 500 13 Paid rent - 400 and salaries-1000 1400 14 Paid insurance premium in cheque 300 15 Dividend received 300 16 Bank collected interest on our investments 1,500 17 Charge of depreciation on Machinery @ 10% for six months (Machinery cost ₹20,000) 18 Sold goods to Balu 2,000
- 16. Ledger: Introduction • Ledgeraccount is a summary statement of all the transactions relating to a person, asset, liability, expense or income which has taken place during a given period of time and it shows their net effect. • Quick information about a particular account • Control over business transactions • Trial balance can be prepared • Helps to prepare financial statements 16
- 17. Format of ledgeraccount 17
- 18. Distinction between journaland ledger Basis Journal Ledger Recording As and when transactions take plane entries are made in journal In ledger, entries may be posted either on the same day or at the end of a specified period such as weekly or fortnightly especially when subsidiary books are maintained. Stage of recording Recording in the journal is the first stage Recording in the ledger is the second stage, which is done on the basis of entries made in the journal. Order of recording Entries are made in the chronological order., ie., date wise in the order of occurrence Entries are made accountwise. Process The process of recording in journal is called journalising The process of recording in the leader is called posting Facilitating preparation of trial balance Amount from the journal does not serve as the basis for preparing trial balance Ledger balances serve as the basis for preparing trial balance Basis of entries Entries in the journal are made on the basis of source documents Posting is done in ledger on the basis of journal entries Net position Net position of an account cannot be ascertained from journal Net position of an account can be ascertained from ledger account. 18
- 19. Record the followingtransactions in the Journal and post them into Ledger of Mr. Aditya Raj 2025 March ₹ 1 Purchase of Goods from Ram 3,20,000 10 Paid Rent for the month 2,000 11 Purchase of Plant 1,00,000 12 Paid Salaries 12,000 15 Paid to Ram 1,00,000 20 Sold Goods to Shyam on credit 20,000 25 Cash Received from Shyam 30,000 31 Received Cash from Sales 2,50,000 31 Wages Paid 5,000 19
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- 21. Record the followingtransactions in the Journal and post them into Ledger of Mr. Aditya Raj: 21 2025,January Particulars ₹ 1 Commenced business with cash 50,000 3 Paid into bank 25,000 5 Purchased furniture for cash 5,000 8 Purchased goods and paid by cheque 15,000 8 Paid for carriage 500 14 Purchased Goods from K. Murthy 35,000 18 Cash Sales 32,000 20 Sold Goods to Ashok on credit 28,000 25 Paid cash to K. Murthy in full settlement 34,200 28 Cash received from Ashok 20,000 31 Paid Rent for the month 2,000 31 Withdrew from bank for private use 2,500
- 22. Trial Balance • “Atrial balance is a statement, prepared with the debit and credit balances of the ledger accounts to test the arithmetical accuracy of the books”.– J.R. Batliboi • Trial balance is a statement containing the debit and credit balances of all ledger accounts on a particular date. • It is arranged in the form of debit and credit columns placed side by side and prepared with the object of checking the arithmetical accuracy of entries made in the books of accounts and to facilitate preparation of financial statements. 22
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- 25. 25 The following transactionstook place in the business of Rathna Kumar, who deals in textiles. Date Particulars Rs. 1 Commenced business with capital 5,00,000 5 Bought furniture for cash 6,000 10 Purchased goods for cash 10,000 15 Bought goods on credit from Jeyanthi 25,000 18 Returned goods to Jeyanthi 2,500 20 Sold goods for cash 32,000 25 Sold goods to Elizabeth on credit 72,000 30 Paid salaries to Krishnan by cash 7,000 31 Received commission from Kumar by cash 2,800 31 Received cash from Elizabeth 22,000