Q.Journalise the following in the books of a trader:

Goods can leave a business for reasons other than a sale — each needs its own careful treatment.

(i) Drawings A/c Dr. 2,000; To Purchases A/c 2,000. (ii) Advertisement A/c Dr. 1,500; To Purchases A/c 1,500. (iii) Loss by Fire A/c Dr. 4,000; To Purchases A/c 4,000, followed by Insurance Company A/c Dr. 3,000; To Loss by Fire A/c 3,000 — leaving a net loss of ₹1,000. …

In each case, goods leave the business's stock without being sold, so Purchases A/c (Real, goods going out) is credited each time; only the account debited on the other side changes, depending on WHY the goods left.

(i) Goods taken by the proprietor for personal use. This is exactly like cash drawings, except it is goods instead of cash — Drawings A/c (Personal, the receiver) is debited.

(ii) Goods distributed as free samples. This is a business expense incurred to promote sales — Advertisement A/c (Nominal, an expense) is debited.

(iii) Goods destroyed by fire, partly recovered from insurance. The FULL cost of goods lost is first debited to Loss by Fire A/c (Nominal, a loss); once the insurance company admits a claim, that admitted amount is transferred out of the loss, since it is no longer a genuine loss to the business — it is now a recoverable amount receivable.

| Date | Particulars | L.F. | Debit (₹) | Credit (₹) |

|---|---|---:|---:|---:| …

For any goods leaving stock without a sale, always credit Purchases A/c for the FULL cost first; the only question is which account to debit — Drawings (personal use), an expense account (samples/advertisement/charity), or …

A common mistake in part (iii) is recording only the NET loss of ₹1,000 directly, in one entry, instead of first recording the FULL loss of ₹4,000 and then separately recording the ₹3,000 insurance claim — the two-step treatment is required because the claim may not b …