Q.(a) Pass Journal entries in the books of Sasikumar who is dealing in automobiles. 2017
Oct. 1 Commenced business with goods Rs. 40,000
Oct. 3 Cash introduced in the business Rs. 60,000
Oct. 4 Purchased goods from Arul on Credit Rs. 70,000
Oct. 6 Returned goods to Arul Rs. 10,000
Oct. 10 Paid cash to Arul's account Rs. 60,000
Oct. 15 Sold goods to Chandar on credit Rs. 30,000
Oct. 18 Chandar returned goods worth Rs. 6,000
Oct. 20 Received cash from Chandar in full settlement Rs. 23,000
Oct. 25 Paid Salaries through ECS Rs. 2,000
Oct. 30 Sasikumar took for personal use goods worth Rs. 10,000

Capital introduced by the proprietor is credited to the Capital account — option (c).

The entry

When the owner brings cash into the business:

Why credit Capital?

• By the business entity concept, the business is separate from its owner; whatever the owner supplies is owed back to him. This claim of the owner on the business is Capital — a liability of the business. …

Money brought in by the proprietor is credited to the Capital account, so the correct answer is option (a).

By the business entity concept, the business is separate from its owner. When the proprietor brings money into the business:

• The business receives cash, so Cash account is debited. …

Paid salary by cheque: Salary A/c is debited and Bank A/c is credited — option (a).

Applying the modern rules of debit and credit:

• Salary A/c is an expense — expenses are debited when incurred, so Salary A/c Dr. ₹3,000.
• Payment is by cheque, so the money leaves the bank, not the cash box. Bank A/c is an asset; an asset that decreases is credited, so To Bank A/c ₹3,000.

Journal entry:

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

|---|---|---|---| …