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Numerical Questions · Q15
Q.

Journalising

Prepare Journal from the transactions given below:

Transaction₹
(a)Cash paid for installation of machine500
(b)Goods given as charity2,000
(c)Interest charge on capital @7% p.a. when total capital were70,000
(d)Received ₹1,200 of a bad debts written-off last year.
(e)Goods destroyed by fire2,000
(f)Rent outstanding1,000
(g)Interest on drawings900
(h)Sudhir Kumar who owed me ₹3,000 has failed to pay the amount. He pays me a compensation of 45 paise in a rupee.
(i)Commission received in advance7,000
Sikkim CbseNCERTSubjective· 5mImportance★★★★★est
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Nine entries. Installation cost is capitalised to Machinery; charity and fire-loss reduce Purchases; interest on capital ₹4,900; bad debts recovered ₹1,200; Sudhir Kumar's part-recovery (₹1,350) with ₹1,650 written off; commission received in advance is a liability.

Treatment. Installation of a machine is a capital expenditure added to the Machinery cost. Goods given as charity or lost by fire are credited to Purchases (they leave stock) and debited to the respective loss/expense. Interest on capital is charged and credited to Capital. Bad debts recovered is a gain. Interest on drawings is charged to Drawings and credited to income. Commission received in advance is unearned income → a liability.

Journal

DateParticularsL.F.Debit (₹)Credit (₹)
(a)Machinery A/c Dr.500
  To Cash A/c500
(Installation charges of machine capitalised)
(b)Charity A/c Dr.2,000
  To Purchases A/c2,000
(Goods given as charity)
(c)Interest on Capital A/c Dr.4,900
  To Capital A/c4,900
(Interest on capital @7% p.a. on ₹70,000)
(d)Cash A/c Dr.1,200
  To Bad Debts Recovered A/c1,200
(Bad debts written off last year, now recovered)
(e)Loss by Fire A/c Dr.2,000
  To Purchases A/c2,000
(Goods destroyed by fire)
(f)Rent A/c Dr.1,000
  To Outstanding Rent A/c1,000
(Rent outstanding)
(g)Drawings A/c Dr.900
  To Interest on Drawings A/c900
(Interest charged on drawings)
(h)Cash A/c Dr.1,350
Bad Debts A/c Dr.1,650

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