The following balances of ledger of M/s Marble Traders on April 01, 2017: Cash in hand 6,000 Cash at bank 12,000 Bills receivable 7,000 Ramesh (Cr.) 3,000 Stock (Goods) 5,400 Bills payable 2,000 Rahul (Dr.) 9,700 Himanshu (Dr.) 10,000
Transactions during the month were: April 01 Goods sold to Manish 3,000 02 Purchased goods from Ramesh 8,000 03 Received cash from Rahul in full settlement 9,200 05 Cash received from Himanshu on account 4,000 06 paid to Ramesh by cheque 6,000. 08 Rent paid by cheque 1,200 10 Cash received from Manish 3,000 12 Cash sales 6,000 14 Goods returned to Ramesh 1,000 15 Cash paid to Ramesh in full settlement 3,700; Discount received 300 18 Goods sold to Kushal 10,000 20 Paid trade expenses 200 21 Drew for personal use 1,000 22 Goods return from Kushal 1,200 24 Cash received from Kushal 6,000 26 Paid for stationery 100 27 Postage charges 60 28 Salary Paid 2,500 29 Goods purchased from Sheetal Traders 7,000 30 Sold goods to Kirit 6,000 30 Goods purchased from Handa Traders 5,000
Journalise the above transactions and post them to the ledger.
Books of M/s Marble Traders Journal Entries
| Date | Particulars | L.F. | Dr. Amount (₹) | Cr. Amount (₹) |
|---|---|---|---|---|
| 2017 | ||||
| Apr 01 | Manish Dr. | 3,000 | ||
| To Sales A/c | 3,000 | |||
| (Being goods sold to Manish) | ||||
| Apr 02 | Purchases A/c Dr. | 8,000 | ||
| To Ramesh A/c | 8,000 | |||
| (Being goods purchased from Ramesh) | ||||
| Apr 03 | Cash A/c Dr. | 9,200 | ||
| Discount Allowed A/c Dr. | 500 | |||
| To Rahul A/c | 9,700 | |||
| (Being cash received from Rahul in full settlement) | ||||
| Apr 05 | Cash A/c Dr. | 4,000 | ||
| To Himanshu A/c | 4,000 | |||
| (Being cash received from Himanshu on account) | ||||
| Apr 06 | Ramesh A/c Dr. | 6,000 | ||
| To Bank A/c | 6,000 | |||
| (Being payment made to Ramesh by cheque) | ||||
| Apr 08 | Rent A/c Dr. | 1,200 | ||
| To Bank A/c | 1,200 | |||
| (Being rent paid by cheque) | ||||
| Apr 10 | Cash A/c Dr. | 3,000 | ||
| To Manish A/c | 3,000 | |||
| (Being cash received from Manish) | ||||
| Apr 12 | Cash A/c Dr. | 6,000 | ||
| To Sales A/c | 6,000 | |||
| (Being goods sold for cash) | ||||
| Apr 14 | Ramesh A/c Dr. | 1,000 | ||
| To Purchase Return A/c | 1,000 | |||
| (Being goods returned to Ramesh) | ||||
| Apr 15 | Ramesh A/c Dr. | 4,000 | ||
| To Cash A/c | 3,700 | |||
| To Discount Received A/c | 300 | |||
| (Being cash paid to Ramesh in full settlement) | ||||
| Apr 18 | Kushal A/c Dr. | 10,000 | ||
| To Sales A/c | 10,000 | |||
| (Being goods sold to Kushal) | ||||
| Apr 20 | Trade Expenses A/c Dr. | 200 | ||
| To Cash A/c | 200 | |||
| (Being trade expenses paid) | ||||
| Apr 21 | Drawings A/c Dr. | 1,000 | ||
| To Cash A/c | 1,000 | |||
| (Being cash withdrawn for personal use) | ||||
| Apr 22 | Sales Return A/c Dr. | 1,200 | ||
| To Kushal A/c | 1,200 | |||
| (Being goods returned by Kushal) | ||||
| Apr 24 | Cash A/c Dr. | 6,000 | ||
| To Kushal A/c | 6,000 | |||
| (Being cash received from Kushal) | ||||
| Apr 26 | Stationery A/c Dr. | 100 | ||
| To Cash A/c | 100 | |||
| (Being payment made for stationery) | ||||
| Apr 27 | Postage Charges A/c Dr. | 60 | ||
| To Cash A/c | 60 | |||
| (Being postage charges paid) | ||||
| Apr 28 | Salary A/c Dr. | 2,500 | ||
| To Cash A/c | 2,500 | |||
| (Being salary paid) | ||||
| Apr 29 | Purchases A/c Dr. | 7,000 | ||
| To Sheetal Traders A/c | 7,000 | |||
| (Being goods purchased from Sheetal Traders) | ||||
| Apr 30 | Kirit A/c Dr. | 6,000 | ||
| To Sales A/c | 6,000 | |||
| (Being goods sold to Kirit) | ||||
| Apr 30 | Purchases A/c Dr. | 5,000 | ||
| To Handa Traders A/c | 5,000 | |||
| (Being goods purchased from Handa Traders) |
Ledger Accounts
Dr. Cash Account Cr.
| Date | Particulars | J.F. | Amount (₹) | Date | Particulars | J.F. | Amount (₹) |
|---|---|---|---|---|---|---|---|
| 2017 | 2017 | ||||||
| Apr 01 | To Balance b/d | 6,000 | Apr 15 | By Ramesh | 3,700 | ||
| Apr 03 | To Rahul | 9,200 | Apr 20 | By Trade Expenses | 200 | ||
| Apr 05 | To Himanshu | 4,000 | Apr 21 | By Drawings | 1,000 | ||
| Apr 10 | To Manish | 3,000 | Apr 26 | By Stationery | 100 | ||
| Apr 12 | To Sales | 6,000 | Apr 27 | By Postage | 60 | ||
| Apr 24 | To Kushal | 6,000 | Apr 28 | By Salary | 2,500 | ||
| Apr 30 | By Balance c/d | 26,640 | |||||
| Total | 34,200 | Total | 34,200 |
Dr. Bank Account Cr.
| Date | Particulars | J.F. | Amount (₹) | Date | Particulars | J.F. | Amount (₹) |
|---|---|---|---|---|---|---|---|
| 2017 | 2017 | ||||||
| Apr 01 | To Balance b/d | 12,000 | Apr 06 | By Ramesh | 6,000 | ||
| Apr 08 | By Rent | 1,200 | |||||
| Apr 30 | By Balance c/d | 4,800 | |||||
| Total | 12,000 | Total | 12,000 |
Dr. Ramesh Account Cr.
| Date | Particulars | J.F. | Amount (₹) | Date | Particulars | J.F. | Amount (₹) |
|---|---|---|---|---|---|---|---|
| 2017 | 2017 | ||||||
| Apr 06 | To Bank | 6,000 | Apr 01 | By Balance b/d | 3,000 | ||
| Apr 14 | To Purchase Return | 1,000 | Apr 02 | By Purchases | 8,000 | ||
| Apr 15 | To Cash | 3,700 | |||||
| Apr 15 | To Discount Received | 300 | |||||
| Total | 11,000 | Total | 11,000 |
Dr. Rahul Account Cr.
| Date | Particulars | J.F. | Amount (₹) | Date | Particulars | J.F. | Amount (₹) |
|---|---|---|---|---|---|---|---|
| 2017 | 2017 | ||||||
| Apr 01 | To Balance b/d | 9,700 | Apr 03 | By Cash | 9,200 | ||
| Apr 03 | By Discount Allowed | 500 | |||||
| Total | 9,700 | Total | 9,700 |
Dr. Himanshu Account Cr.
| Date | Particulars | J.F. | Amount (₹) | Date | Particulars | J.F. | Amount (₹) |
|---|---|---|---|---|---|---|---|
| 2017 | 2017 | ||||||
| Apr 01 | To Balance b/d | 10,000 | Apr 05 | By Cash | 4,000 | ||
| Apr 30 | By Balance c/d | 6,000 | |||||
| Total | 10,000 | Total | 10,000 |
Dr. Manish Account Cr.
| Date | Particulars | J.F. | Amount (₹) | Date | Particulars | J.F. | Amount (₹) |
|---|---|---|---|---|---|---|---|
| 2017 | 2017 | ||||||
| Apr 01 | To Sales | 3,000 | Apr 10 | By Cash | 3,000 | ||
| Total | 3,000 | Total | 3,000 |
Dr. Kushal Account Cr.
| Date | Particulars | J.F. | Amount (₹) | Date | Particulars | J.F. | Amount (₹) |
|---|---|---|---|---|---|---|---|
| 2017 | 2017 | ||||||
| Apr 18 | To Sales | 10,000 | Apr 22 | By Sales Return | 1,200 | ||
| Apr 24 | By Cash | 6,000 | |||||
| Apr 30 | By Balance c/d | 2,800 | |||||
| Total | 10,000 | Total | 10,000 |
Dr. Sales Account Cr.
| Date | Particulars | J.F. | Amount (₹) | Date | Particulars | J.F. | Amount (₹) |
|---|---|---|---|---|---|---|---|
| 2017 | 2017 | ||||||
| Apr 30 | To Balance c/d | 25,000 | Apr 01 | By Manish | 3,000 | ||
| Apr 12 | By Cash | 6,000 | |||||
| Apr 18 | By Kushal | 10,000 | |||||
| Apr 30 | By Kirit | 6,000 | |||||
| Total | 25,000 | Total | 25,000 |
Dr. Purchases Account Cr.
| Date | Particulars | J.F. | Amount (₹) | Date | Particulars | J.F. | Amount (₹) |
|---|---|---|---|---|---|---|---|
| 2017 | 2017 | ||||||
| Apr 02 | To Ramesh | 8,000 | Apr 30 | By Balance c/d | 20,000 | ||
| Apr 29 | To Sheetal Traders | 7,000 | |||||
| Apr 30 | To Handa Traders | 5,000 | |||||
| Total | 20,000 | Total | 20,000 |
(Note: Other ledger accounts like Stock, Bills Receivable, Bills Payable, Discount Allowed/Received, Rent, Drawings, Sales/Purchase Return, Stationery, Postage, Salary, Sheetal Traders, Kirit, and Handa Traders will also be prepared similarly.)
Explanation
This solution demonstrates the fundamental accounting cycle: recording transactions in the journal and posting them to the ledger.
- Journalising: Each transaction is analyzed to identify the accounts affected (Personal, Real, or Nominal) and the rules of debit and credit are applied. For example, 'Goods sold to Manish' increases Sales (Credit) and creates a debtor (Manish - Debit).
- Full Settlement Transactions: Special attention is paid to transactions dated April 3 and April 15. When a debtor pays less than the amount owed to settle the account, the difference is recorded as 'Discount Allowed' (a loss). When a creditor accepts less to settle a debt, the difference is 'Discount Received' (a gain).
- Posting to Ledger: The amounts from the journal are transferred to the relevant ledger accounts. Opening balances (Assets like Cash, Bank, Stock, Debtors are Debit balances; Liabilities like Creditors are Credit balances) are written first.
- Balancing: The ledger accounts are balanced to find the difference between the debit and credit sides, representing the closing balance to be carried forward.
Solution Steps
Step 1: Identify the two aspects of every transaction based on the Double Entry system (e.g., for April 01, the aspects are 'Manish (Debtor)' and 'Sales (Revenue)').
Step 2: Apply the Golden Rules of Accounting: 'Debit the receiver, Credit the giver' for Personal accounts; 'Debit what comes in, Credit what goes out' for Real accounts; 'Debit expenses and losses, Credit incomes and gains' for Nominal accounts.
Step 3: Record the journal entries chronologically. Calculate discount amounts for settlement transactions (e.g., Rahul owed 9,700 but paid 9,200, so Discount Allowed = 9,700 - 9,200 = 500).
Step 4: Post entries to the Ledger. Open an account for each item. Enter opening balances first (Debit balances on the Dr. side, Credit balances on the Cr. side).
Step 5: Post the transaction amounts to the corresponding sides of the accounts (If journal says 'Cash Dr.', post to Debit side of Cash A/c; 'To Sales' means post to Credit side of Sales A/c).
Step 6: Balance the accounts by totaling both sides and finding the difference (Closing Balance).