Financial Management & Cost Accounting

Lesson 7. PREPARATION OF JOURNAL

Module 2. Accounting procedure

Lesson 7

PREPARATION OF JOURNAL

7.1 First Step of Accounting Procedure:- “Preparation of Journal”.

Illustration 7.1

Consider the following transactions and pass journal entries for them and then post them into appropriate ledgers of “Wise Traders and Co.”

March

1. Started business with Rs.1,00,000 in Bank, Rs. 20,000 cash

1. Bought shop fittings Rs. 20,000 and a scooter Rs. 30,000, both by cheque.

2. Paid rent by cheque – Rs. 2500

3. Bought goods for Re sale on credit from “K. K. and Co.,” Rs. 25,000

4. Cash sales worth Rs. 2500

8. Paid wages of worker – Rs. 500 in cash.

10. Paid insurance by cheque – Rs. 250.

12. Cash sales – Rs. 4,000/-

15. Paid wages of worker – Rs. 500/-.

Goods returned to KK & Co. worth Rs. 3000/.

17. Paid to ‘K K and Co.,’ Rs. 15000 by cheque.

19. Bought goods for resale from “RC and Co” on credit – Rs. 12,500

19. Cash Sale - 3500

22. Paid wages to worker in cash Rs. 500

24. Bought stationary Rs. 250 by cash.

25. Cash sales Rs. 7500

27. Paid “RC and Co.” Rs. 7000 by cheque

29. Paid wages to worker Rs. 500.

31. Deposited Rs. 10,000 into bank.

JOURNAL

Date	Particulars	L.F. No.	Amount (Dr.)	Amount (Cr.)
March1	Bank a/c Dr.		1,00,000
	Cash a/c Dr.		20,000
	To capital a/c			1,20,000
	(Being the business started with given capital)
2	Furniture and Fittings a/c Dr.		20,000
	Scooter a/c Dr.		30,000
	To bank a/c			50,000
	(Being the purchase of fittings and scooter by cheque)
2	Rent a/c Dr.		2500
	To bank a/c			2500
	(Being the payment of Rent by cheque)
3	Goods a/c Dr.		25,000
	To “K K and Co.” a/c			25,000
	(Being the goods bought on credit)
4	Cash a/c Dr.		2500
	To sales a/c			2500
	(Being the cash sales)
8	Wages a/c Dr.		500
	To cash a/c			500
	(Being the wages paid in cash)
10	Insurance a/c		250
	To bank a/c			250
	(Being the insurance paid by cheque)
12	Cash a/c Dr.		4000
	To sales a/c			4000
	(Being cash sales)
15	Wages a/c		500
	To cash a/c			500
	(Being wages paid by cash)
15	“K K and Co.,” a/c Dr.		3000
	To returns outward a/c			3000
	(Being goods returned)
17	“KK and Co” a/c Dr.		15000
	To bank a/c			15000
	(Being paid to “K K and Co” by cheque)

Date	Particular		L.F.	Amount Dr.	Amount Cr.
19	Goods Ac	Dr		12500
	To RC and Co Ac				12500
	(Being goods brought on credit)
19	Cash Ac	Dr		3500
	To Sales Ac				3500
	(Being cash sales)
22	Wages Ac	Dr		500
	To Cash Ac				500
	(Being wages paid in cash)
24	Stationary Ac	Dr		250
	To Cash Ac				250
	(Being stationery bough by cash)
25	Cash Ac	Dr		7500
	To Sales Ac				7500
	(Being cash sales)
27	RC and Co' Ac	Dr		7000
	To Bank Ac				7000
	(Being paid to 'RC and Co by cheque)
29	Wages Ac	Dr		500
	To Cash Ac				500
	(Being wages paid in cash)
31	Bank Ac	Dr		10000
	To Cash Ac				10000
	(Being Cash deposited in to bank)