Accounting: Journal Proper and Worked out Example: Outstanding and Prepaid Expenses

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Transactions which are not come under any book which are mentioned above will be recorded in Journal Proper. Basically these transactions do not occur frequently. Transactions such as

(i) Outstanding expenses – Salaries outstanding, Rent outstanding, etc.

(ii) Prepaid expenses – Prepaid Rent, Salaries paid in advance.

(iii) Income received in advance – Rent received in advance, interest received in advance, etc.

(iv) Accrued Incomes – Commission yet to be received, interest yet to be received.

(v) Interest on Capital

(vi) Depreciation

(vii) Credit Purchase and Credit Sale of fixed Assets – Machinery, Furniture.

(viii) Bad debts.

(ix) Goods taken by the proprietor for personal use.

Will be recorded in Journal Proper.

Worked Out Example

Enter the following transactions in the Journal of Shan India Ltd.

Table Supporting: Worked out Example

Tablutation of: Date, Particulars, Amount (Rs.)

Date

Particulars

Amount (Rs.)

2011January 1

Shan started business with cash

50,000

January 3

Goods purchased for cash

30,000

January 3

Furniture purchased for cash

5,000

January 7

Sold goods for cash

10,000

January 9

Sold goods to Naresh kumar

8,000

January 12

Goods purchased from Vinod

5,000

January 16

Goods sold to Raja and allowed him 10% trade discount

6000

January 22

Cash received from Naresh Kumar in full settlement of his account

7600

January 25

Cash paid to Vinod and he allowed discount of Rs.100

1900

January 28

Cash paid for purchase of Stationary

250

January 31

Paid office Rent

800

January 31

Goods returned to Vinod

500

Journal of Shan India Ltd. For the month of January, 2011

Table Supporting: Worked out Example

Tablutation of: Date, Particulars, L.F, Amount (Rs.)

Date

Particulars

L.F

Amount (Rs.)

Dr.

Cr.

2011

Jan 1

Cash A/c Dr.

To Capital A/c

(Started Business with cash)

50000

50000

Jan 3

Purchases A/c Dr.

Furniture A/c Dr.

To Cash A/c

(Goods and Furniture purchased for cash)

30,000

5,000

35,000

Jan 7

Cash A/c Dr.

To Sales A/c

(For sale of goods on cash)

10,000

10,000

Jan 9

Naresh Kumar A/c Dr.

To Sales A/c

(Sale of goods to Naresh on credit)

8,000

8,000

Jan 12

Purchases A/c Dr.

To Vinod A/c

(Goods purchased from Vinod on Credit)

5,000

5,000

Jan 16

Raja’s A/c Dr.

To Sales A/c

(Sale of goods to Raja on 10% trade discount)

6,000

6,000

Jan 22

Cash A/c Dr.

Discount A/c Dr.

To Naresh Kumar A/c

(for receipt of sales amount)

7,600

4,00

8,000

Jan 25

Vinod A/c Dr.

To Cash A/c

To Discount A/c

(for payment made to Vinod)

2,000

1,900

1,00

Jan 28

Stationary A/c Dr.

To Cash A/c

(for purchase of stationary)

250

250

Jan 31

Rent A/c Dr.

To Cash A/c

(for the payment of rent)

800

800

Jan 31

Vinod A/c Dr.

To Purchases Return A/c

(for the return of goods to Vinod)

500

500

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