Book 9 Account for 2077_final

PP-21 Journalize the following transactions: a) Purchased goods of Rs. 5,000 in cash at 10% discount. b) Sold goods for Rs. 4,000 at 5% discount. c) Received cash from Rajan Rs. 1,200 and allowed him discount Rs. 300. d) Paid cash Rs. 2,900 to Prabesh and received discount Rs. 100. e) Paid cash Rs. 5,700 to Ramesh for full settlement of his debt Rs. 6,000. f) Received a cheque of Rs.2,850 from Dinesh after deducting 5% discount. PP-22 Prepare journal entries for the following transactions: a) Purchased goods of Rs. 20,000 at 10% discount. b) Sold goods of Rs. 30,000 for cash at 5% discount. c) Received cash from Anuja Rs. 3,800 and allowed discount Rs. 200. d) Paid cash to Rachana Rs. 1,900 and received discount Rs. 100. e) Paid cash Rs. 9,000 to Harish for full settlement of his debt Rs. 10,000 f) Received cash Rs.1,200 from Sherpa after deducting 20% discount. g) Received a cheque of Rs. 900 from Kamal after deducting 10% discount. PP-23 Ashok started a new business called Ashok Enterprises and performed the following transactions during the month of Baishakh: Baishakh 1 He invested Rs. 10,00,000 cash into his business. Baishakh 3 Ashok opened bank account by depositing cash Rs. 6,00,000. Baishakh 5 Bought goods for Rs. 75,000. Baishakh 7 Bought computer for Rs. 80,000 paying by cheque. Baishakh 9 Purchased goods Rs. 1,40,000 paying by cheque. Baishakh 13 Purchased furniture and equipment for Rs. 20,000. Baishakh 17 Sold goods for cash Rs. 50,000. Baishakh 19 Withdrawn cash Rs. 15,000 from bank. Baishakh 23 Ashok withdrew cash Rs. 2,000 for personal use. Baishakh 25 Sold goods to Avatar for Rs. 23,000. Baishakh 27 Paid rent Rs. 10,000. Baishakh 28 Paid salaries Rs. 25,000. Baishakh 29 Sold goods to Radha for Rs. 4,000 at 10% trade discount. Baishakh 30 Depreciate furniture and equipment by Rs. 8,000. Required: Journal entries PP-24 The following transactions relate to Sujan, a sole proprietor: Bhadra 1 Sujan invested cash Rs. 16,00,000 into a business. Bhadra 2 Purchased goods for Rs. 8,00,000 at 10% discount Bhadra 4 Opened bank account by depositing cash Rs. 3,00,000 Bhadra 8 Purchased furniture from Himal Furniture Rs. 25,000. Journal 201

Bhadra 13 Bought goods for Rs. 60,000 from Hemanta. Bhadra 18 Sold goods for Rs. 40,000 to Rajesh on credit. Bhadra 20 Goods withdrawn by Sujan for domestic use Rs. 1,000. Bhadra 24 Purchased goods from Hama Traders for Rs. 25,000 and made partial payment of Rs. 6,000. Bhadra 25 Returned goods to Hemanta Rs. 2,000. Bhadra 27 Received commission Rs. 1,900 through cheque. Bhadra 29 Received cash Rs. 39,000 from Rajesh in full settlement. Bhadra 30 Sold goods for Rs. 30,000 and received a cheque. Bhadra 31 Paid electricity charges Rs. 2,000 by cheque. Required: Journal entries PP-25 Durga started business on 1st January 2018 and made the following transactions in the month : January 1 Durga started business with capital Rs. 7,50,000 paying this amount into a bank account. January 3 Bought plant and machinery for Rs. 2,00,000 paying by cheque. January 4 Withdrew cash Rs. 50,000 from bank for office use. January 10 Bought goods in cash from Rajan Rs. 29,000. January 13 Purchased goods from Sharma and Company for Rs. 57,000. January 20 Purchased computer from H. Trade Link for Rs. 25,000. January 22 Returned defective goods to Sharma and Company Rs. 1,000. January 24 Sold goods for Rs. 25,000 at 5% discount. January 29 Paid cash Rs. 20,000 to H. Trade Link by cheque. January 30 Sold goods to Anamika for Rs. 21,000 and received Rs. 6,000 as partial receipt. January 31 Depreciation Rs. 20,000 charged on plant and machinery. Required: Journal entries  202 Office Management and Accountancy

12 Chapter LEDGER Learning Objectives After studying this chapter, the readers will be able to :  define ledger and state the importance of ledger,  differentiate between journal and ledger,  mention the rules for preparing ledger accounts,  post the various transactions into ledger accounts,  balance and close the ledger accounts,  state the meaning of debit and credit balance in personal, real and nominal. Introduction As discussed in the previous chapter, a journal is the primary book which records all the financial transactions of business in order of date. The journal does not provide information and position about separate heads like cash, bank balance, purchase, sales, debtors, creditors, income, expenditure etc. In order to get all those information, the journalized transactions are classified according to their nature and heads in a separate book which is called ledger. The ledger is the second step of accounting process. It is also called principal book which contains a number of accounts relating to person, things or expenses and income. Ledger 203

Concept and definition Ledger is a major book of accounts where all similar transactions are collected at a place. For example, all the transactions relating to cash are collected under cash account, all the transactions relating to purchase and sales are accumulated under purchase account and sales account respectively. A ledger is the summarized record of different heads like expenses, losses, incomes, gains, assets, capital and liabilities. The following are the definitions of ledger: “The ledger is the chief book of accounts and it is in this book that all the business transactions would ultimately find their place under their accounts in a duly classified form.” J. R. Batliboi “A ledger is the most important book of accounts and is the final destination of the entries made in the subsidiary books.” W. Pickles “The ledger is the principal book of accounts where similar transactions relating to a particular person or thing are recorded. Mukharji and Hanif Ledger is a principal book of accounts in which the transactions are posted from the journal in the classified manner in order to get information on different heads. Short Notes to Remember (SNR 12.1)  A ledger is a thick book or register which contains a number of personal, real and nominal accounts.  Ledger accounts are the accounts of particular persons, things or expenses and income which are prepared for a certain period. Specimen of ledger account The ledger account can be prepared in English alphabet ‘T’ shape into two sides i.e. left hand side and right hand side (Dr. side and Cr. side). In each side, there are four columns and altogether eight columns as shown below: Dr. ……… Account Cr. Date Particulars J.F. Amount Date Particulars J.F. Amount 204 Office Management and Accountancy

In the above specimen, each column is used for the following details: Date The date columns of both sides are used for mentioning the dates Particulars of transaction shown in journal entry. J.F. (Journal Folio) The name of accounts for which the amount debited (if in debit Amount side) and credited (if in credit side) is mentioned in this column. The name of account is written with the words ‘To’ and ‘By’ in the debit and credit sides respectively. The page number (folio number) of the journal from where the transactions are posted into the ledger account are recorded in this column. The amount of the transactions i.e. debited or credited depending on the side and account is entered in this column. Importance of ledger Following are the importance of the ledger:  It helps to maintain the permanent record of all the financial transactions in classified manner.  It gives information about the debtors and creditors of the firm during a certain period.  It helps to know the total purchase and sales of a certain period.  It helps to know the value of business properties at the particular date.  It provides information about income and expenses of a business firm during a period.  It facilitates the preparation of a trial balance for checking arithmetical accuracy of the books of accounts. Short Notes to Remember (SNR 12.2) – knowledge of debtors and creditors – information about value of business properties  A ledger is important because it provides: – basis for the preparation of trial balance – permanent record of financial transactions – knowledge of total purchase and sales – knowledge of income and expenses Differences between journal and ledger The following are the main differences between journal and ledger: Basis of difference Journal Ledger 1. Meaning It is the primary recording of It is the secondary recording of 2. Purpose financial transactions. financial transactions. Its main purpose is to facilitate Its main purpose is to facilitate the the preparation of ledgers. preparation of trial balance. Ledger 205

3. Columns It contains five It contains eight columns. columns. 4. Way of recording It maintains the records in It maintains the records in head wise chronological order. basis. 5.   Nature of It is the registration of It is the analysis of registered financial recording financial transactions. transactions. 6. Need of narration It requires narration to make It is not compulsory to mention the the transaction clear. narration in a ledger. 7. Balancing It does not require to make It requires balancing and closing to find 8. Use of balancing. out the net result at the particular date. terminology The process of recording the The process of recording the financial transaction into the transactions from the journal into the journal is called entry. ledger is called posting. Rules of posting the transactions into ledger accounts Posting refers to the act of transferring the transactions from a journal into a ledger account. The following are the general rules to be followed for posting the transactions into ledger accounts:  The name of the account should be mentioned on the middle top of the ledger account  The account debited in the journal should be posted in the debit side and the account credited in the journal should also be posted in the credit side of the ledger account.  The words ‘To’ and ‘By’ should be used in the debit and credit side of the ledger account respectively.  The name of reference account should be mentioned in each side i.e. credited account in debit side and debited account in the credit side.  All the transactions relating to the same head should be posted into the same account. It does not require to draw another specimen.  Posting should be done date wise one after another. However, required accounts can be drawn as per the requirement.  After completion of posting the transactions, each ledger account should be totaled, balanced and closed to know the debit or credit balance. Short Notes to Remember (SNR 12.3)  The posting of transactions from a journal to a ledger is done in date wise basis, however, only the required accounts can be opened for practical purpose in teaching-learning process. 206 Office Management and Accountancy

For better understanding of the above mentioned rules, the following example is given: Transaction: 2074/01/01 Commenced business with cash Rs. 1,50,000 Journal Entry Date 2074/01/01 Particulars L.F. Debit Rs. Credit Rs. Cash a/c......................................Dr. 1,50,000 1,50,000 To Capital a/c (Being business commenced with cash) Posting into ledger accounts remains as follows: Dr. Cash Account Cr. Date Particulars J.F. Amount Date Particulars J.F. Amount 2074/01/01 To Capital a/c 1,50,000 Dr. Capital Account Cr. Date Particulars J.F. Amount Date Particulars J.F. Amount 2074/01/01 By Cash a/c 1,50,000 In the above example of journal entry, there are two accounts i.e. cash account and capital account. Thus, two accounts have been prepared. Since the cash account is debited in journal, transaction is also posted on the debit side of cash account writing the name of the reference account i.e. capital account. Similarly, the capital account is credited in journal, Thus, the posting is made in the credit side of the capital account writing name of reference account i.e. cash account. The words ‘To’ and ‘By’ have been used in the debit and credit sides respectively. Ill-1 Following are the transactions of Sugam Traders for the month of Baishakh: Baishakh 1 Started business with cash Rs. 80,000. Baishakh 5 Purchased goods for Rs. 25,000. Baishakh 10 Sold goods to Hari in cash Rs. 30,000. Baishakh 18 Paid commission Rs. 6,000 to Ashish. Baishakh 28 Received interest Rs. 12,000. Baishakh 30 Deposited cash Rs. 20,000 into bank. Required: a) Journal entries b) Posting into ledger accounts Ledger 207

Solution: Journal Entries a) Date Particulars L.F. Debit Rs. Credit Rs. Baishakh 1 Cash a/c...........................................................................Dr. 80,000 80,000 To Capital a/c (Being business started with cash) Baishakh 5 Purchase a/c...................................................................Dr. 25,000 25,000 To Cash a/c (Being goods purchased in cash) Baishakh 10 Cash a/c..........................................................................Dr. 30,000 30,000 To Sales a/c (Being goods sold in cash) Baishakh 18 Commission a/c............................................................Dr. 6,000 6,000 To Cash a/c (Being commission paid) Baishakh 28 Cash a/c...........................................................................Dr. 12,000 12,000 To Interest a/c (Being interest received) Baishakh 30 Bank a/c..........................................................................Dr. 20,000 20,000 To Cash a/c (Being cash deposited into bank ) b) The posting of transactions from journal into all ledger accounts is as under: Dr. Cash Account Cr. Date Particulars J.F. Amount Date Particulars J.F. Amount Baishakh 1 To Capital a/c 25,000 Baishakh 10 To Sales a/c 80,000 Baishakh 5 By Purchase a/c 6,000 Baishakh 28 To Interest a/c 30,000 Baishakh 18 By Commission a/c 20,000 12,000 Baishakh 30 By Bank a/c Dr. Capital Account Cr. Date Particulars J.F. Amount Date Particulars J.F. Amount 80,000 Dr. Particulars Baishakh 1 By Cash a/c To Cash a/c Cr. Date Particulars Purchase Account Baishakh 5 J.F. Amount J.F. Amount Date Particulars Dr. Cr. 25,000 Date J.F. Amount Sales Account 30,000 J.F. Amount Date Particulars Baishakh 10 By Cash a/c Dr. Commission Account Cr. Date Particulars J.F. Amount Date Particulars J.F. Amount Baishakh 18 To Cash a/c 6,000 208 Office Management and Accountancy

Dr. Interest Account Cr. Date Particulars J.F. Amount Date Particulars J.F. Amount 12,000 Baishakh 28 By Cash a/c Dr. Bank Account Cr. Date Particulars J.F. Amount Date Particulars J.F. Amount Baishakh 30 To Cash a/c 20,000 Note : In ledger accounts presented above, balancing and closing has not been made because the main purpose is to teach about how to post the transactions into ledger accounts. Ill-2 The following transactions are provided to you: Kartik 1 Bought a furniture for Rs. 30,000 from Kiran and paid cash Rs. 20,000 partially. Kartik 5 Sold a computer for Rs. 45,000 to Biren and received a cheque of Rs.25,000 as partial receipt. Required: a) Journal entries b) Posting into ledger accounts Solution: Journal Entries a) Date Particulars L.F. Debit Rs. Credit Rs. Kartik 1 Furniture a/c...................................................................Dr. 30,000 20,000 Kartik 5 To Cash a/c 25,000 10,000 To Kiran’s a/c 20,000 45,000 (Being furniture bought from Kiran and amount paid partially) Bank a/c...........................................................................Dr. Biren’s a/c........................................................................Dr. To Computer a/c (Being computer sold and partial amount received through cheque) b) Posting into ledger accounts Furniture Account Cr. Dr. J.F. Amount Date Particulars J.F. Amount Date Particulars Cr. Kartik 1 To Cash a/c 20,000 Kartik 1 To Kiran’s a/c 10,000 J.F. Amount 20,000 Dr. Cash Account Date Particulars J.F. Amount Date Particulars Kartik 1 By Furniture a/c Ledger 209

Dr. Kiran’s Account Cr. Date Particulars J.F. Amount Date Particulars J.F. Amount 10,000 Dr. Kartik 1 By Furniture a/c Cr. Date Bank Account Kartik 5 J.F. Amount Particulars J.F. Amount Date Particulars Dr. To Computer a/c Cr. 25,000 Date J.F. Amount Kartik 5 Biren’s Account Cr. Dr. Particulars J.F. Amount Date Particulars To Computer a/c J.F. Amount Date 20,000 25,000 20,000 Computer Account Particulars J.F. Amount Date Particulars Kartik 5 By Bank a/c By Biren’s a/c Short Notes to Remember (SNR 12.4)  In above illustration, in the journal entry of Kartik 1, two accounts are credited and in journal entry of Kartik, 5, two accounts are debited. Thus, these two are compound journal entries.  While posting in furniture account, name of two reference accounts i.e. cash account and Kiran’s account are written because for one debited account, there are two accounts credited.  While posting in cash account, name of reference account i.e. only furniture account is written since the cash account is credited due to furniture account. Similar posting is done in Kiran’s account too.  In cash account and Kiran’s account, amount of cash account and amount of Kiran’s account are written respectively not the account of furniture account. Thus, the amount should be written of that account which is opened.  While positng in computer account, name of two reference accounts i.e. Bank account and Biren’s account are written in credit side because for one credited account, there are two accounts debited.  If there is one account debited and another account credited in journal, it is called simple journal entry and if two or more accounts are debited or credited in journal, it is called compound journal entry. Balancing and closing of ledger account After all the transactions are posted into the concerned ledger accounts, they need to be balanced and closed. Generally, the accounts are balanced and closed at the end of an accounting period. However, it can be done as per the requirement of the business firm. Generally, the following steps should be followed for balancing and closing of the ledger accounts.  All the ledger accounts required for the business firm should be prepared.  The posting of all the transactions into the ledger accounts should be completed.  The total of both sides of accounts should be determined roughly and balance 210 Office Management and Accountancy

should be obtained.  If the credit total is higher than the debit total, the balancing figure (difference amount) should be added on the debit side writing the word “To balance c/d”.  If the debit total is higher than the credit total, the balancing figure (difference amount) should be added on the credit side writing the word “By balance c/d”.  After adding the balancing figure on any side, both sides should be made equal by drawing the lines.  The balancing figure appearing on the debit side should be shown in the credit side writing the word “By balance b/d” and the balancing figure appearing on the credit side should be shown in the debit side writing the word “To Balance b/d”. Meaning of debit and credit balance After closing of ledger accounts, it shows debit or credit or no balance in the account. If balance b/d appears on the debit side, it is called debit balance and if balance b/d appears on the credit side, it is called credit balance. Sometimes, there will be no balance in the account. The balance shown by any account has definite meaning. If the personal account has shown debit balance, it refers to the amount to be received from debtors and the credit balance refers to the amount to be paid to the creditors. The real account always shows the debit balance which means the value of assets at the particular date. The debit balance shown by nominal accounts signifies expenses or losses and credit balance signifies income or gains. The meaning of debit and credit balance under different accounts is summarized as below: Account Debit balance Credit balance Personal account Debtors Creditors Real account Value of assets - Nominial account Expenses or loss Income or gain Ill-3 The following transactions are given to you: January 1 Ganapati started business with capital Rs. 1,60,000. January 4 Purchased goods for Rs. 50,000. January 10 Sold goods for Rs. 40,000. January 17 Goods purchased from Jamuna for Rs. 10,000. January 26 Paid rent Rs. 9,000. Required: a) Journal entries b) Necessary ledger accounts with balancing and closing Ledger 211

Solution: Journal Entries a) Date Particulars L.F. Debit Rs. Credit Rs. January 1 Cash a/c...........................................................................Dr. 1,60,000 1,60,000 January 4 To Ganapati’s capital a/c 50,000 January 10 40,000 50,000 January 17 (Being business started with cash) 10,000 January 26 Purchase a/c...................................................................Dr. 9,000 40,000 To Cash a/c 10,000 (Being goods purchased in cash) Cash a/c..........................................................................Dr. 9,000 To Sales a/c Cr. (Being goods sold for cash) Purchase a/c...................................................................Dr. Amount 50,000 To Jamuna’s a/c 9,000 (Being goods purchased from Jamuna) Rent a/c...........................................................................Dr. 1,41,000 2,00,000 To Cash a/c (Being rent paid) Cr. b) Necessary ledger accounts Cash Account Amount Dr. 1,60,000 1,60,000 Date Particulars J.F. Amount Date Particulars J.F. 1,60,000 Jan. 1 To Ganapati’s capital a/c 1,60,000 Jan.4 By Purchase a/c Cr. Jan. 10 To Sales a/c 40,000 Jan. 26 By Rent a/c Jan. 31 By Balance c/d Amount 60,000 2,00,000 60,000 Feb. 1 To Balance b/d 1,41,000 Cr. Dr. Ganapati’s Capital Account Amount Date Particulars J.F. Amount Date Particulars J.F. 40,000 40,000 Jan. 31 To Balance c/d 1,60,000 Jan.1 By Cash a/c 40,000 1,60,000 Feb. 1 By Balance b/d Dr. Purchase Account Date Particulars J.F. Amount Date Particulars J.F. Jan. 4 To Cash a/c 50,000 Jan.31 By Balance c/d Jan. 17 To Jamuna’s a/c 10,000 60,000 Feb. 1 To Balance b/d 60,000 Dr. Sales Account Date Particulars J.F. Amount Date Particulars J.F. Jan. 31 To balance c/d 40,000 Jan.10 By Cash a/c 40,000 Feb. 1 By Balance b/d 212 Office Management and Accountancy

Dr. Particulars Jamuna’s Account Particulars Cr. To balance c/d By Purchase a/c Date J.F. Amount Date J.F. Amount Jan. 31 10,000 Jan.17 By Balance b/d 10,000 10,000 10,000 Feb. 1 10,000 Dr. Particulars Rent Account Particulars Cr. To Cash a/c By Balence c/d Date J.F. Amount Date J.F. Amount Jan. 26 9,000 Jan.31 9,000 9,000 9,000 9,000 Feb. 1 To Balance b/d Short Notes to Remember (SNR 12.5)  The process of determining the difference between the debit total and credit total of the account is called balancing of an account.  The process of completing the job of posting, balancing and transferring it to the next period is called closing of account.  The words c/d and b/d stand for carried down and brought down respectively which means closing balance and opening balance.  If the debit total and credit total of an account are equal with no difference, it is called no balance in the account.  If debit total is higher than credit total, it is called debit balance and if the credit total is higher than debit total, it is called credit balance. REVIEW ILLUSTRATIONS (ILL) Ill-1 The following transactions are provided to you: Bhadra 1 Rajan started business with capital Rs. 4,60,000. Bhadra 3 Purchased goods from Sohan for Rs. 26,000. Bhadra 13 Deposited cash Rs. 3,00,000 into bank. Bhadra 18 Paid wages Rs. 25,000 by cheque. Bhadra 27 Sold goods to Yogesh for Rs. 20,000. Required: a) Rajan’s capital account b) Sohan’s account c) Bank account d) Yogesh’s account Ledger 213

Solution: Rajan’s Capital Account Cr. a) Dr. Particulars J.F. Amount Date Particulars J.F. Amount To Balance c/d Date 4,60,000 Bhadra 1 By Cash 4,60,000 Bhadra 30 4,60,000 4,60,000 Aswin 1 By Balance b/d 4,60,000 b) Sohan’s Account Cr. Dr. Particulars J.F. Amount Date Particulars J.F. Amount Date To Balance c/d Bhadra 30 26,000 Bhadra 3 By Purchase a/c 26,000 26,000 26,000 Aswin 1 By Balance b/d 26,000 c) Bank Account Cr. Dr. Particulars J.F. Amount Date Particulars J.F. Amount Date To Cash a/c 25,000 Bhadra 13 3,00,000 Bhadra 18 By Wages a/c By Balance c/d 2,75,000 3,00,000 3,00,000 Aswin 1 To Balance b/d 2,75,000 d) Yogesh’s Account Cr. Dr. Particulars J.F. Amount Date Particulars J.F. Amount Date To Sales a/c 20,000 Bhadra 27 20,000 Bhadra 18 By Balance c/d 20,000 20,000 Aswin 1 To Balance b/d 20,000 Ill-5 Following transactions are given to you: Ashwin 2 Binita started business with cash Rs. 2,00,000. Ashwin 4 Purchased machinery for cash Rs. 50,000. Ashwin 7 Purchased goods for cash Rs. 66,000. Ashwin 18 Sold goods for cash Rs. 40,000. Ashwin 27 Purchased furniture for Rs. 27,000. Required: a) Cash account b) Machinery account c) Purchase account d) Furniture account 214 Office Management and Accountancy

Solution: Cash Account Cr. a) Dr. Date Particulars J.F. Amount Date Particulars J.F. Amount Ashwin 2 To Binita’s capital a/c 2,00,000 Aswin 4 By Machinery a/c 50,000 Ashwin 4 To Sales a/c 40,000 Aswin 7 By Purchase a/c 66,000 Aswin 27 By Furniture a/c 27,000 Aswin 30 By Balance c/d 97,000 2,40,000 2,40,000 Kartik 1 To Balance b/d 97,000 b) Machinery Account Cr. Dr. Particulars J.F. Amount Date Particulars J.F. Amount Date To Cash a/c 50,000 Aswin 30 By Balance c/d 50,000 Aswin 4 50,000 50,000 Kartik 1 To Balance b/d 50,000 c) Purchase Account Cr. Dr. Particulars J.F. Amount Date Particulars J.F. Amount Date To Cash a/c Aswin 7 66,000 Aswin 30 By Balance c/d 66,000 66,000 66,000 Kartik 1 To Balance b/d 66,000 d) Particulars Furniture Account Cr. Dr. To Cash a/c J.F. Amount Date Particulars J.F. Amount Date 27,000 Aswin 27 27,000 Aswin 30 By Balance c/d 27,000 27,000 Kartik 1 To Balance b/d 27,000 Ill-6 The following transactions are provided: Kartik 1 Started business with cash Rs. 3,00,000. Kartik 4 Paid wages for Rs. 20,000. Kartik 9 Opened bank account with cash Rs. 2,00,000. Kartik 25 Paid salary Rs. 50,000 by cheque. Kartik 27 Received commission Rs. 18,000. Required: b) Salary account c) Commission account a) Wages account Ledger 215

Solution: Wages Account Cr. a) Dr. Particulars J.F. Amount Date Particulars J.F. Amount To Cash a/c Date 20,000 Kartik 30 By Balance c/d 20,000 Kartik 4 20,000 20,000 Marga 1 To Balance b/d 20,000 b) Particulars Salary Account Cr. Dr. To Bank a/c J.F. Amount Date Particulars J.F. Amount Date 50,000 Kartik 30 By Balance c/d 50,000 Kartik 25 50,000 50,000 Marga 1 To Balance b/d 50,000 c) Particulars Commission Account Cr. Dr. To Balance c/d J.F. Amount Date Particulars J.F. Amount Date 18,000 Kartik 27 By Cash a/c 18,000 Kartik 30 18,000 18,000 Marga 1 By Balance b/d 18,000 Ill-7 Journalize the following transactions in the book of Binayak Trading Concern and post them into various ledger accounts: Magh 1 Binayak started business with cash Rs. 2,50,000. Magh 2 Purchased machinery for cash Rs. 40,000. Magh 4 Cash deposited into bank Rs.1,50,000. Magh 10 Purchased goods for cash Rs. 25,000. Magh 17 Purchased goods from Sarad for Rs. 45,000. Magh 20 Sold goods for cash Rs. 17,000. Magh 27 Paid rent Rs. 10,000 by cheque. Solution: Journal Entries Date Particulars L.F. Debit Rs. Credit Rs. Magh 1 Cash a/c...........................................................................Dr. 2,50,000 2,50,000 Magh 2 To Binayak’s capital a/c 40,000 40,000 (Being business started with cash) Machinery a/c................................................................Dr. To Cash a/c (Being machinery purchased in cash) 216 Office Management and Accountancy

Magh 4 Bank a/c..........................................................................Dr. 1,50,000 1,50,000 Magh 10 To Cash a/c 25,000 25,000 Magh 17 45,000 45,000 Magh 20 (Being cash deposited into bank) 17,000 17,000 Magh 27 Purchase a/c...................................................................Dr. 10,000 10,000 To Cash a/c (Being goods purchased on cash) Purchase a/c....................................................................Dr. To Sarad’s a/c (Being goods purchased from Sarad ) Cash a/c...........................................................................Dr. To Sales a/c (Being goods sold for cash) Rent a/c...........................................................................Dr. To Bank a/c (Being rent paid through cheque) Dr. Binayak’s Capital Account Cr. Date Particulars J.F. Amount Date Particulars J.F. Amount Magh 30 To Balance c/d 2,50,000 2,50,000 Magh 1 By Cash a/c 2,50,000 2,50,000 2,50,000 Falgun 1 By Balance b/d Dr. Cash Account Cr. Date Particulars J.F. Amount Date Particulars J.F. Amount Magh 1 To Binayak’s capital a/c Magh 20 To Sales a/c 2,50,000 Magh 2 By Machinery a/c 40,000 Falgun 1 To Balance b/d 17,000 Magh 4 By Bank a/c 1,50,000 Magh 10 By Purchase a/c 25,000 Magh 30 By Balance c/d 52,000 2,67,000 2,67,000 52,000 Dr. Machinery Account Cr. Date Particulars J.F. Amount Date Particulars J.F. Amount Magh 2 To Cash a/c 40,000 40,000 Magh 30 By Balance c/d 40,000 40,000 Falgun 1 To Balance b/d 40,000 Dr. Bank Account Cr. Date Particulars J.F. Amount Date Particulars J.F. Amount Magh 4 To Cash a/c 1,50,000 Magh 27 By Rent a/c 10,000 Magh 30 By Balance c/d 1,40,000 1,50,000 1,50,000 Falgun 1 To Balance b/d 1,40,000 Ledger 217

Dr. Purchase Account Cr. Date Particulars J.F. Amount Date Particulars J.F. Amount To Cash a/c Magh 10 To Sarad’s a/c 25,000 Magh 30 By Balance c/d 70,000 Magh 17 45,000 70,000 70,000 Falgun 1 To Balance b/d 70,000 Dr. Sarad’s Account Cr. Date Particulars J.F. Amount Date Particulars J.F. Amount Magh 30 To Balance c/d 45,000 Magh 17 45,000 By Purchase a/c 45,000 Falgun 1 45,000 By Balance b/d 45,000 Dr. Particulars Sales Account Particulars Cr. To Balance c/d By Cash a/c Date J.F. Amount Date J.F. Amount Magh 30 17,000 Magh 17 By Balance b/d 17,000 17,000 17,000 Falgun 1 17,000 Dr. Particulars Rent Account Particulars Cr. To Bank a/c By Balance c/d Date J.F. Amount Date J.F. Amount Magh 27 10,000 Magh 30 10,000 10,000 10,000 10,000 Falgun 1 To Balance b/d Ill-8 Following transactions are given to you: a) Chanda started business with cash Rs. 5,00,000 and furniture Rs.50,000. b) Purchased goods from Yunisha for Rs. 60,000 and paid cash Rs. 20,000 partially. c) Cash deposited into bank Rs. 3,50,000. d) Purchased furniture for Rs. 35,000 and paid by cheque. e) Commission received Rs. 20,000 through cheque. f) Withdrawn cash Rs. 5,000 by Chanda for domestic use. g) Sold goods to Ananta for Rs. 40,000 and received cash Rs. 15,000 partially. Required: Necessary ledger accounts 218 Office Management and Accountancy

Solution: Dr. Chanda’s Capital Account Cr. Date Particulars J.F. Amount Date Particulars J.F. Amount To Balance c/d 5,50,000 a) By Cash a/c 5,00,000 By Furniture a/c 50,000 5,50,000 5,50,000 By Balance b/d 5,50,000 Dr. Cash Account Cr. Date Particulars J.F. Amount Date Particulars J.F. Amount a) To Capital a/c g) To Sales a/c 5,00,000 b) By Purchase a/c 20,000 15,000 c) By Bank a/c 3,50,000 f) By Drawing a/c By Balance c/d 5,000 1,40,000 5,15,000 5,15,000 To Balance b/d 1,40,000 Dr. Furniture Account Cr. Date Particulars J.F. Amount Date Particulars J.F. Amount a) d) To Chanda’s capital a/c 50,000 By Balance c/d 85,000 To Bank a/c 35,000 Dr. 85,000 85,000 Date c) To Balance b/d 85,000 e) Bank Account Cr. Particulars J.F. Amount Date Particulars J.F. Amount To Cash a/c 3,50,000 d) By Furniture a/c 35,000 To Commission a/c 20,000 By Balance c/d 3,35,000 3,70,000 3,70,000 To Balance b/d 3,35,000 Dr. Purchase Account Cr. Date Particulars J.F. Amount Date Particulars J.F. Amount b) To Cash a/c 60,000 To Yonisha’s a/c 20,000 By Balance c/d 40,000 60,000 To Balance b/d 60,000 60,000 Dr. Commission Received Account Cr. Date Particulars J.F. Amount Date Particulars J.F. Amount To Balance c/d 20,000 20,000 e) By Cash a/c 20,000 20,000 20,000 By Balance b/d Ledger 219

Dr. Drawing Account Cr. Date Particulars J.F. Amount Date Particulars J.F. Amount f) To Cash a/c 5,000 5,000 By Balance c/d 5,000 Dr. To Balance b/d 5,000 Date Particulars To Balance c/d 5,000 Yonisha’s Account Cr. J.F. Amount Date Particulars J.F. Amount 40,000 b) By Purchase a/c 40,000 40,000 40,000 By Balance b/d 40,000 Dr. Sales Account Cr. Date Particulars J.F. Amount Date Particulars J.F. Amount To Balance c/d 15,000 40,000 g) By Cash a/c 25,000 By Ananta a/c 40,000 40,000 40,000 By Balance b/d Dr. Ananta’s Account Cr. Date Particulars J.F. Amount Date Particulars J.F. Amount g) To Sales a/c 25,000 25,000 By Balance c/d 25,000 To Balance b/d 25,000 25,000 Key Terms Balancing – act of making both sides of ledger account equal by adding insufficient amount in any side. Closing – process of posting, balancing and transferring the balancing to the next period. Credit balance – excess of credit side over debit side of an account. Debit balance – excess of debit side over credit side of an account. Ledger – principal book of accounts containing a large number of personal, real and nominal accounts. Ledger account – statement of all the transactions relating to a particular person, property or expenses and income during a period. Opening balance – balance of an account at the beginning of a period. Posting – act of transferring the financial records from journal to ledger. 220 Office Management and Accountancy

A. Very short answer questions 1. What is meant by ledger? 2. State the types of ledger account. 3. How many columns are there in a ledger account? 4. Write the full form of L.F. and J.F. 5. What is the meaning of the debit and credit balance in personal account? B. Short answer questions 1. What do you mean by ledger and ledger account? Explain. 2. Write down the importance of ledger. 3. Mention the rules to be followed for posting the transactions into ledger account. 4. Write the meaning of debit and credit balance under different accounts. C. Long answer questions 1. Show the specimen of ledger account and explain its columns. 2. Write down the differences between journal and ledger. 3. How and why is ledger account balanced and closed? Write its steps. PRACTICAL PROBLEMS(PP) PP-1 Following transactions are given to you: Baishakh 1 Business started with cash Rs. 2,00,000. Baishakh 3 Purchased goods for cash Rs. 50,000. Baishakh 7 Sold goods for cash Rs. 32,000. Baishakh 21 Purchased goods from Rahul Rs. 70,000. Baishakh 29 Machinery purchased for cash Rs. 29,000. Required: Ans: Balance: b) Rs. 2,00,000 c) Rs. 1,20,000 d) Rs. 29,000 a) Journal entries b) Capital account c) Purchase account d) Machinery account PP-2 The following transactions are provided to you: Bhadra 2 Business started with cash Rs. 5,00,000. Bhadra 4 Purchased goods for Rs. 95,000. Bhadra 10 Purchased goods from Kamal Rs. 1,35,000. Bhadra 17 Sold goods for cash Rs. 80,000. Bhadra 26 Purchased furniture for cash Rs. 65,000. Ledger 221

Required: Ans: Balance: b) Rs. 5,00,000 c) Rs. 2,30,000 d) Rs. 65,000 a) Journal entries b) Capital account c) Purchase account d) Furniture account PP-3 The following transactions are provided to you: Kartik 1 Started business with capital Rs. 6,00,000. Kartik 3 Purchased goods from Anish Rs. 1,20,000. Kartik 7 Computer purchased for Rs. 1,05,000. Kartik 9 Sold goods for Rs. 60,000. Kartik 17 Commission paid Rs. 15,000. Kartik 28 Sold goods to Amit for Rs. 45,000. Required: a) Journal entries b) Anish account c) Computer account d) Commission account Ans: Balance: b) Rs. 1,20,000 c) Rs. 1,05,000 d) Rs. 15,000 PP-4 Following transactions are given to you: Jestha 3 Krishna started business with cash Rs. 3,70,000. Jestha 8 Purchased goods from Sarika for Rs. 1,50,000. Jestha 20 Sold goods for Rs. 67,000. Jestha 27 Sold goods to John on credit Rs. 23,000. Jestha 28 Paid salary Rs. 8,000. Required: a) Journal entries b) Sarika account c) John account d) Salary account Ans: Balance: b) Rs. 1,50,000 c) Rs. 23,000 d) Rs. 8,000 PP-5 Following are the transactions of Sony Trade Concern: Jan. 1 Sony commenced a business with capital Rs. 5,50,000. Jan. 7 Purchased furniture for Rs. 35,000. Jan. 20 Purchased goods from Himal Trade Concern for Rs. 75,000. Jan. 25 Sold goods for Rs. 40,000. Jan. 30 Commission received Rs. 13,000. 222 Office Management and Accountancy

Required: a) Journal entries b) Himal Trade Concern account c) Cash account d) Commission received account Ans: Balance: b) Rs. 75,000 c) Rs. 5, 68,000 d) Rs. 13,000 PP-6 The following transactions are provided to you: July 3 Commenced business with cash Rs. 2,60,000 July 8 Paid for advertisement Rs. 15,000 July 13 Purchased goods from Sohan for Rs. 55,000 July 21 Cash deposited into bank Rs. 2,00,000 July 28 Paid wages Rs. 10,000 by cheque. Required: a) Journal entries b) Bank account c) Advertisement account d) Wages account Ans: Balance: b) Rs. 1,90,000 c) Rs. 15,000 d) Rs. 10,000 PP-7 Following transactions are provided to you: Marga 7 Sanju started a business with Rs. 5,25,000. Marga 10 Purchased computer and equipment for Rs. 67,000. Marga 12 Purchased goods for Rs. 55,000 from Seema in cash. Marga 18 Paid rent Rs. 40,000. Marga 22 Sold goods to Kebal for Rs. 40,000. Marga 27 Returned goods from Kebal for Rs. 2,000. Required: a) Cash account b) Kebal’s account Ans: Balance: a) Rs. 3,63,000 b) Rs. 38,000 PP-8 Following transactions of Ganesh Trading Concern are given to you: Shrawan 1 Commenced business with cash Rs. 4,90,000. Shrawan 13 Purchased goods from Sanju for Rs. 65,000. Shrawan 14 Cash deposited into bank Rs. 3,00,000. Shrawan 19 Sold goods for Rs. 45,000. Shrawan 25 Returned goods of Rs. 3,000 to Sanju. Shrawan 30 Purchased stationary for Rs. 16,000. Ledger 223

Required: a) Cash account b) Sanju account Ans: Balance: a) Rs. 2,19,000 b) Rs. 62,000 PP-9 Post the following transactions into bank account and Prime Supplier’s .. account: a) Business started with capital Rs. 4,70,000. b) Opened bank account by depositing cash Rs. 3,50,000. c) Paid rent Rs. 30,000 by cheque. d) Commission received Rs. 21,000 through cheque. e) Withdrawn cash from bank Rs. 23,000. f) Bought a computer for Rs. 25,000 from Prime Suppliers and paid cash Rs. 7,000 partially. Ans: Balance: Bank account Rs. 3,18,000, Prime Supplier’s account Rs. 18,000 PP-10 Post the following transactions into bank account and Yogesh account: a) Business started Rs. 4,10,000. b) Opened bank account with cash Rs. 3,00,000. c) Purchase goods for Rs. 49,000 from Yogesh and paid cash Rs. 19,000 partially. d) Paid wages Rs. 25,000 by cheque. e) Paid office expenses Rs. 10,000. Ans: Balance: Bank account Rs. 2,75,000 , Yogesh’s account Rs. 30,000 PP-11 The following transactions are provided: a) Rojita commenced a business with cash Rs. 5,00,000 and furniture of Rs. 20,000. b) Purchased goods for cash Rs. 1,00,000. c) Opened bank account with Rs. 3,50,000. d) Commission received Rs. 10,000 through cheque. e) Paid office expense Rs. 5,000 by cheque. f) Sold goods to Ajaya for Rs. 15,000. Required: a) Capital account b) Cash account c) Ajaya account d) Bank account Ans: Balance: a) Rs. 5,20,000 b) Rs. 50,000 c) Rs. 15,000 d) Rs. 3,55,000  224 Office Management and Accountancy

13 Chapter SUBSIDIARY BOOKS Learning Objectives After studying this chapter, the readers will be able to :  define subsidiary book and explain its importance,  mention the types of subsidiary book,  prepare different types of subsidiary book for the business firm,  tell the meaning of debit note and credit note,  understand the term ‘contra entry’ and show its effect into cash book,  post the transactions from subsidiary books into respective ledger accounts. Introduction In journal, we studied that the primary recording is made for a number of financial transactions when they take place in business. However, when the business organization becomes larger in its size and number of day to day financial transactions increase, the journal book becomes unsuitable for recording large number of transactions. On the other hand, journal does not provide the information in classified manner. It fails to provide the information separately on different heads like purchase, sales, purchase return, sales return, cash receipt and payment etc. Thus, in order to facilitate the primary recording of financial transactions and provide information in classified manner, a number of books are maintained in a business firm which are called subsidiary books. The different subsidiary books are purchase book, sales book, purchase return book, sales return book, cash book etc. Subsidiary Books 225

Concept and definition Subsidiary books are the different books used as the primary recording of financial transactions. It is the classification of large number of business transactions. It is also called the sub-division of journal. After recording the financial transactions in sets of subsidiary books, they are posted into required ledger accounts. As per the necessity of the business firm, different types of subsidiary books like purchase book, sales book, purchase return book, sales return book, cash book etc can be prepared. These subsidiary books provide the periodic information according to the nature of the transactions. All those books keep the primary recording of the transactions and help in preparing individual ledger accounts. Followings are some of the definitions relating to subsidiary books: “Subsidiary records are also known as books of original entry, as transactions are entered there in the first instance in order that they may be subsequently transfer to their respective accounts in the ledger” J.R Batliboi “Subsidiary books of accounts are also called books of original entry because all the transactions are recorded originally or in the first instance in these subsidiary books.” A.N. Agrawala Subsidiary books are the set of books maintained by the business firm as sub-division of journal in order to keep the primary recording of different transactions in classified manner as per their nature. Importance of subsidiary books Subsidiary books are the important types of primary book. These are suitable for the business firm having a large number of transactions of repetitive nature. It facilitates the systematic recording of financial transactions according to their nature. The importance of subsidiary books can be highlighted into the following points: a. Quick and classified information Memory Tips The use of subsidiary books provides information on different heads. According to  Quick and classified information the nature of transactions, they are recorded  Division of work separately on such books like purchase book,  Saving of time and labour sales book, cash book etc. Thus, to supply  Facility in posting the financial information of a certain period,  Quick rectification of errors subsidiary books are very useful.  Increase in efficiency b. Division of work The business firm using subsidiary books first classifies the transactions into different groups like purchase, sales, cash receipt, cash payment, purchase return, sales return etc. The different books are maintained for the transactions of different nature. Furthermore, the different staffs are given the job of recording the transactions. Thus, it ensures the division of work. 226 Office Management and Accountancy

c. Saving of time and labour While recording the financial transactions using subsidiary books, it saves the valuable time and labour of staffs. It does not require to prepare journal entry and avoids the burden of debiting and crediting the transactions. The transactions after recording into subsidiary books directly can be posted into ledger accounts. d. Facility in posting After recording of transactions into particular nature of subsidiary books, it can be posted into respective ledger accounts. It is not necessary to search in different pages of journal as it is not prepared. Thus, the job of posting also becomes easier due to use of subsidiary books. e. Quick rectification of errors While using subsidiary books, a particular person is assigned the job of recording in particular book. Each staff pays more attention regarding the accuracy in maintaining record. However, sometimes the errors may take place in the process of recording and posting the transactions. Due to use of separate books, errors can be quickly identified and rectified. Thus, there are less chances of being error in the books of account. f. Increase in efficiency The division of work among accounting staffs also increase their efficiency. A person maintaining a particular type of subsidiary book gets the specialization on his accounting job. As a result, recording and posting of financial transactions can be done in short period of time with more accuracy. Types of subsidiary books Subsidiary books refer to the subdivision of journal and thus require to maintain a number of books. In order to maintain the record of cash and credit transactions, different subsidiary books are used in the business firm. Some of them are explained below: Figure: 13.1 Types of subsidiary books Subsidiary books Purchase Sales Purchase Sales return Cash book book return book book book Purchase book All the transactions relating to the credit purchase of trading goods in the business firm are recorded in a subsidiary book which is called purchase book. It is the book in Subsidiary Books 227

which the first entry of all the goods purchased on credit is made. In other words, it is the primary recording of all the credit purchases which are made for resale purpose. However, the purchase of assets is not recorded in purchase book. It also does not keep the record of cash transactions. The purchase book is prepared on the basis of invoice provided by the supplier of goods. It is also known as purchase journal. The specimen of purchase book is as follows: Purchase Book Date Invoice No Particulars L.F. Details Total Rs. Ill-1 The following purchase transactions are abstracted from Ganesh Furniture Suppliers: 2073-11-1 Purchased from Shree Laxmi Furniture House, Bhaktapur on credit, invoice no. 4321 10 pcs Tables @ Rs. 1,000 each 30 pcs Chairs @ Rs. 500 each 2073-11-13 Purchased from Sunita Furniture Centre, Chitwan, invoice no.70532 5 pcs Coffee Tables @ Rs. 800 each 5 pcs Dressing Tables @ Rs. 1,500 each 2073-11-19 Purchased from Himalayan Furniture Suppliers, invoice no. 03945 2 Almirahs @ Rs. 6,000 each Required: Purchase book Solution: Purchase Book Date Invoice No. Particulars L.F. Details Total Rs. 2073-11-1 4321 Shree Laxmi Furniture House Bhaktapur 10,000 25,000 10 pcs Tables @ Rs. 1,000 each 15,000 30 pcs Chairs @ Rs. 500 each 2073-11-13 70532 Sunita Furniture Centre, Chitwan 4,000 11,500 5 pcs Coffee Table @ Rs. 800 each 7,500 5 pcs Dressing Table’s @ Rs. 1,500 each 2073-11-19 03945 Himalayan Furniture Suppliers 12,000 2 Almirahs @ Rs. 6,000 each 48,500 Total Ill-2 The following purchase transactions are abstracted from Binayak Traders: 2073-1-2 Purchased from Sujan Traders, Janakpur 10 pairs Sport Shoes @ Rs. 1,000 per pair 15 pcs Pants @ Rs. 600 each 2073-1-9 Purchased from Rahul Stores, Kathmandu 25 pcs T-shirts @ Rs. 500 each 9 pcs Silken Shirts @ Rs. 400 each (Less: Trade discount 10%) 228 Office Management and Accountancy

2073-1-18 Purchased from Rojina Traders for cash 13 pcs Trousers @ Rs. 300 each 5 Over coats @ Rs. 1,500 each 2073-1-23 Purchased computer from Prime Traders for office use Rs. 40,000 2073-1-29 Bought 10 Cotton Shirts @ Rs. 250 each from Bindu Suppliers at 5% trade discount. Required: a) Purchase book b) Purchase account Solution: a) Purchase Book Date Invoice No. Particulars L.F. Details Total Rs. 2073-1-2 Sujan Traders, Janakpur 10,000 19,000 2073-1-9 10 pairs Sport Shoes @ 1,000 per pair 9,000 15 pcs Pants @ Rs. 600 each 14,490 2073-1-29 Rahul stores, Kathmandu 12,500 2,375 25 pcs T-shirt @ Rs. 500 each 3,600 35,865 9 pcs Silken Shirt @ Rs.400 each 16,100 1,610 Less: Trade discount 10% Bindu Suppliers 2,500 10 Cotton Shirt @ Rs. 250 125 Less: Trade discount 5% Total b) Cr. Dr. Purchase Account J.F. Amount Date Particulars J.F. Amount Date Particulars 47,265 2073-1-18 To cash a/c 11,400 2073-1-30 By Balance c/d 47,265 2073-1-30 To Sundry creditors 35,865 47,265 2073-2-1 To Balance b/d 47,265 Note : Cash purchase = (13x300) + (5x1,500) = Rs 11,400 Short Notes to Remember (SNR 13.1)  Purchase book is a type of subsidiary book which is used for recording the credit purchase of trading goods of a business .  The transactions relating to cash purchase and assets purchases are not recorded in purchase book.  After recording the transactions into purchase book, the purchase account and the suppliers’ individual accounts can be prepared.  Purchase account includes both the credit purchase and cash purchase made during a certain period.  Invoice is the forwarding document prepared and sent by the supplier to the customer along with the goods delivered.  Invoice includes the important information about the goods like items, quantity, rate, total amount, expenses incurred, discount, terms of trade and payable amount. Subsidiary Books 229

Sales book All the transactions relating to the credit sale of trading goods of the business firm are recorded in a subsidiary book which is called sales book. It is the book in which the first entry of all the goods sold on credit is made. In other words, it is the primary book for recording all the credit sales relating to trading goods. However, the sale of assets (cash or credit) is not recorded in sales book. The sales book is prepared on the basis of outward invoice which is prepared and sent to the customer along with the goods dispatched. It is also known as sales journal. The specimen of sales book is as follows: Date Invoice No. Sales Book L.F. Details Total Rs. Particulars Ill-3 Following sales transactions are given to you: 2073-1-2 Sold to Rajanish Traders on credit, Bhaktapur, bill no. 8320 50 kg Tea @ Rs. 100 per kg 200 kg Sugar @ Rs. 50 per kg 25 kg Coffee @ Rs. 200 per kg 2073-1-13 Sold to Burja Store, Dharan, bill no. 4191 500 kg. Pokhareli Rice @ Rs. 30 per kg 75 kg. Pulse @ Rs. 60 per kg 2073-1-22 Sold to Joshi Suppliers, Pokhara, bill no.6251 15 bags Rice @ Rs. 200 per bag 20 tins Ghee @ Rs. 1,000 per tin Required: Sales book Solution: Sales Book Date Invoice No. Particulars L.F. Details Total Rs. 2073-1-2 8320 Rajesh Traders, Bhaktapur 5,000 20,000 2073-1-13 4191 50 kg. Tea @ Rs. 100 10,000 2073-1-22 6251 200 kg. Sugar @ Rs. 50 5,000 19,500 25 kg. Coffee @ Rs. 200 15,000 Burja Store, Dharan 4,500 23,000 500 kg. Pokhereli Rice @ Rs. 30 per kg. 3,000 62,500 75 kg. Pulse @ 60 per kg 20,000 Joshi Suppliers, Pokhara 15 Bags Rice @ Rs 200 per bag 20 tins Ghee @ Rs. 1,000 per tin Total 230 Office Management and Accountancy

Ill-4 The following sales transactions are abstracted from Shree Ganesh Electrical Suppliers: Marga 3 Sold to Prakash Electrical Shop, Lalitpur 10 pcs Transistors @ Rs. 1,200 each 15 pcs VCD players @ Rs. 2,000 each (Less: Trade discount 10%) Marga 7 Sold to Juna Electronics, Dhangadhi 18 pcs Electrical Irons @ Rs. 500 each 15 pcs Table fans @ Rs. 1,000 each Marga 13 Sold to Manoj Traders on cash 8 Rice Cookers @ Rs. 1,500 each 3 Ceiling Fans @ Rs. 600 each Marga 23 Sold old furniture to Laxman for Rs. 10,000 Marga 29 Sold 4 pcs Heaters @ Rs. 1,000 each to Niraj Store, Lalghat at 10% trade discount. Required: a) Sales book b) Sales account Solution: a) Sales Book Date Invoice No. Particulars L.F. Details Total Rs. Marga 3 Prakash Electrical Shop, Lalitpur 12,000 10 pcs Transistors @ Rs. 1,200 each 30,000 15 pcs VCD players @ Rs. 2,000 each 42,000 37,800 Less: Trade discount 10% 4,200 Marga 7 Juna Electronics, Dhangadhi 9,000 24,000 Marga 29 18 pcs Electrical Irons @ Rs. 500 each 15,000 15 pcs Table Fans @ Rs. 1,000 4,000 3,600 Niraj Store, Lalghat 65,400 4 pcs Heaters @ Rs. 1,000 400 Less: Trade discount 10% Total b) Sales Account Cr. Dr. Particulars J.F. Amount Date Particulars J.F. Amount Date To Balance c/d Marga 30 79,200 Marga 13 By Cash a/c 13,800 Marga 30 By Sundry debtors 65,400 79,200 By Balance b/d 79,200 Poush 1 79,200 Subsidiary Books 231

Note : Cash sales = (8x1,500) + (3x600) = Rs 13,800 Short Notes to Remember (SNR 13.2)  Sales book is a type of subsidiary book which is used for recording the credit sales of trading goods.  The transactions relating to cash sales and sales of assets are not recorded in sales book.  After recording the transactions into sales book, sales account and customers’ individual accounts can be prepared.  Sales account include both the credit sales and cash sales during a certain period. Purchase return book In a business firm, sometimes the goods purchased from supplier/creditor needs to be refunded due to defective items, low quality, high price, against the order or excess supply etc. So in order to record the transactions related to purchase return, a book is maintained which is known as purchase return book. It is also called return outward book. The purchase return book is prepared on the basis of debit note. A debit note is a note prepared by the buyer and sent to the supplier along with the goods returned to him/her. It informs the supplier regarding the quantity of the goods returned and the reasons for returning. The specimen of purchase return book is given below: Purchase Return Book Date Debit Note No. Particulars L.F. Details Total Rs. Short Notes to Remember (SNR 13.3)  After preparing the purchase return book, purchase return account and suppliers’ individual accounts can be prepared.  After preparing the purchase return book, purchase return account and suppliers’ individual accounts can be prepared.  Trade discount if any is deducted from the amount of respective transaction. Trade discount if any is deducted from the amount of respective transaction. Ill-5 Following purchase return transactions are given: Ashwin 4 Returned to Yojina, Rupandehi 15 pcs Caps @ Rs. 200 each 3 pcs Jackets @ Rs. 800 each 5 pcs Woolen Shirts @ Rs.300 each 232 Office Management and Accountancy

Ashwin 20 Returned to Sunita Stores, Kathmandu 13 pcs Trousers @ Rs. 300 11 pcs Overcoats @ Rs. 1,500 each (Less: Trade discount 10%) Ashwin 21 Returned to Tamrakar House, Birgunj 15 Bed Sheets @ Rs. 250 each 9 Pasmina Shawl @ Rs. 500 each Required: a) Purchase return book b) Purchase return account Solution: a) Purchase Return Book Date Debit Note No. Particulars L.F. Details Total Rs. Ashwin 4 Yojina, Rupandehi 3,000 6,900 Ashwin 20 15 pcs Caps @ Rs. 200 each 2,400 18,360 3 pcs Jackets @ Rs. 800 each 1,500 5 pcs Woolen Shirts @ Rs. 300 each Sunita Stores, Kathmandu 3,900 13 pcs Trousers @ Rs. 300 each 16,500 11 Over coat @ Rs. 1,500 each 20,400 2,040 Less: Trade discount 10% Ashwin 21 Tamrakar House, Birgunj 3,750 15 Bed Sheets @ Rs. 250 each 4,500 9 Pasmina Shawl @ Rs. 500 each 8,250 Total 33,510 Dr. Purchase Return Account Cr. Date Particulars J.F. Amount Date Particulars J.F. Amount Aswin 30 To Balance c/d 33,510 Aswin 30 By Sundry creditors a/c 33,510 33,510 33,510 Kartik 1 By Balance b/d 33,510 Sales return book Sometimes the goods sold to customers may also be returned to us due to various reasons. All types of return made by customers out of credit sales are recorded in a book which is called sales return book. It is a type of book in which the sales return transactions are systematically recorded. It is also called return inward book. Sales return book is prepared on the basis of credit note. A credit note is a note prepared by the supplier denoting the acceptance of the goods returned by the customer. It informs that the customer’s account is credited with the amount of goods returned for some specific reasons. The specimen of sales return book is as follows: Subsidiary Books 233

Sales Return Book Date Credit Note No. Particulars L.F. Details Total Rs. Short Notes to Remember (SNR 13.4)  Sales return book is a type of subsidiary book which is used for recording the return of goods sold on credit.  After preparing the sales return book, sales return account and customers’ individual accounts can be prepared. Ill-6 Following sales return transactions are given: Kartik 1 Returned from Sumnima Furniture Centre, Bara 13 Office Tables @ Rs. 3,000 each 7 Sofa sets @ Rs. 5,000 each Kartik 9 Returned from Shakya Furniture Centre, Bhaktapur 5 Dining Tables @ Rs. 2,000 each 15 Chairs @ Rs. 700 each Kartik 20 Returned from Rahul Furniture Stores, Kathmandu 7 Coffee Tables @ Rs. 600 4 Dressing Tables @ Rs. 5,000 (Less: Trade discount 10%) Kartik 28 Returned from Anu Furnitures, 2 Fancy Tables @ Rs. 4,000 per table Required: a) Sales return book b) Sales return account Solution: Sales Return Book a) Date Credit Particulars L.F. Details Total Rs. Note No. Kartik 1 Sumnima Furniture Centre, Bara 39,000 13 Office Tables @ Rs. 3,000 each 35,000 7 Sofa sets @ Rs. 5,000 each 74,000 Kartik 9 Shakya Furniture Centre, Bhaktapur 10,000 5 Dining Tables @ Rs. 2,000 each 10,500 15 Chairs @ Rs. 700 each 20,500 Kartik 20 Rahul Furniture Stores, Kathmandu 4,200 7 Coffee Tables @ Rs. 600 each 20,000 4 Dressing Tables @ Rs. 5,000 each Less: Trade discount 10% 24,200 21,780 2,420 Kartik 28 Anu Furnitures 8,000 2 Fancy Tables @ Rs. 4,000 per table Total 1,24,280 234 Office Management and Accountancy

b) Sales Return Account Cr. Dr. Particulars J.F. Amount Date Particulars J.F. Amount Date By Sundry debtors a/c 1,24,280 Kartik 30 1,24,280 Kartik 30 By Balance c/d 1,24,280 To Balance b/d Marga 1 1,24,280 1,24,280 Cash book Every business firm performs cash and banking transactions. A firm may receive cash or cheque and also make the payments in cash or through cheque. In order to keep the record of cash receipts and cash payments, a separate book is maintained in a business firm which is called cash book. It is a type of subsidiary book which maintains the record of cash and banking transactions. The banking transaction refers to the receipt of cheque for selling goods or providing services and making payment through bank by issuing cheque. Cash book helps to know the balance of cash in hand and at bank on a regular basis. The preparation of cash book acts as a ledger account and thus does not require to prepare separate cash account. Cash book is a type of subsidiary book which is used for recording the receipts and payments made in cash and through cheque during a certain period of time. Types of cash book Different business organizations perform the different types of cash and banking transactions. Thus, the organizations as per their nature may maintain any of the following types of cash book: Figure: 13.2 Types of cash book CASH BOOK Single column Double column Triple column cash book cash book cash book Simple Simple Cash book with Cash book Cash book with cash book bank book cash & discount with cash & bank & discount column bank column column Subsidiary Books 235

Single column cash book The cash book which is maintained for recording the receipt and payment of cash having single column on both sides is known as single column cash book. If the firm deals only on cash basis not the banking transactions, it prepares simple cash book. If the firms deal only with bank i.e. receipt and payment made through bank, the firm prepares the simple bank book instead of simple cash book. However, there is single column in both types of cash book for recording the amount. The specimen of single column cash book is given below: Dr. Single Column Cash Book Cr. Date Particulars L.F. Amount Date Particulars L.F. Amount Ill-7 Prepare a simple cash book from the following transactions: Magh 1 Business started with cash Rs. 2,55,000. Magh 2 Opened bank account by depositing cash Rs. 2,00,000. Magh 7 Purchased goods for cash Rs. 12,000. Magh 11 Paid wages Rs. 5,000. Magh 13 Purchased furniture for Rs. 9,000. Magh 17 Sold goods for cash Rs. 10,000. Magh 22 Withdrew cash from bank for office use Rs. 50,000. Magh 24 Paid salary Rs. 21,000. Magh 28 Purchased goods from Kishan for Rs. 25,000. Solution: Simple Cash Book Dr. Date Particulars L.F. Amount Date Particulars Cr. Magh 1 To Capital a/c 2,55,000 Magh 2 By Bank a/c Magh 17 To Sales a/c 10,000 Magh 7 By Purchase a/c L.F. Amount Magh 22 To Bank a/c 50,000 Magh 11 By Wages a/c 2,00,000 Magh 13 By Furniture a/c 12,000 Magh 24 By Salary a/c 5,000 Magh 30 By Balance c/d 9,000 3,15,000 21,000 68,000 68,000 3,15,000 Falgun 1 To Balance b/d 236 Office Management and Accountancy

Ill-8 Prepare a simple bank book from the following transactions: January 1 Commenced a business by depositing Rs. 3,00,000 into bank. January 4 Bought goods for Rs. 60,000 and paid by cheque. January 17 Paid rent by cheque Rs. 20,000. January 20 Sold goods for Rs. 40,000 and received cheque for the same. January 22 Sold goods to Nabina for Rs. 10,000. January 26 Cash withdrawn from bank for office use Rs. 25,000. January 28 Computer purchased for Rs. 35,000 and paid by cheque. January 29 Paid salary by cheque Rs. 18,000. Solution: Dr. Simple Bank Book Cr Date Particulars L.F. Amount Date Particulars L.F. Amount Jan 1 To Capital a/c 3,00,000 Jan 4 By Purchase a/c 60,000 Jan 20 To Sales a/c 40,000 Jan 17 By Rent a/c 20,000 Jan 26 By Cash a/c 25,000 Jan 28 By Computer a/c 35,000 Jan 29 By Salary a/c 18,000 Jan 31 By Balance c/d 1,82,000 3,40,000 3,40,000 Feb 1 To Balance b/d 1,82,000 Double column cash book A cash book having two columns on both sides maintained to record the different transactions relating to cash, bank and discount is called double column cash book. Double column cash book can be prepared by the two columns in one side i.e either cash and discount or bank and discount or cash and bank. The use of any of the columns made on cash book depends on the nature of cash and banking transactions. In this type of cash book, all the receipts in cash or through bank are recorded on debit side and all the payments made in cash or through bank are recorded on credit side. The discount allowed is debited and discount received is credited on double column cash book. It may be of the following three types: Cash book with cash and discount column It is a type of double column cash book having cash and discount column on both sides. In this book, the cash receipt and discount allowed is recorded on debit side and cash payment and discount received is recorded on credit side. At the end of the period, cash book is closed by obtaining the balance in cash column. However, the discount column is not balanced, merely it is totaled. The specimen of cash book with cash and discount column is as follows: Subsidiary Books 237

Dr. Cash book with Cash and Discount Column Cr. Date Particulars L.F. Disc. Cash Date Particulars L.F. Disc. Cash Ill-9 From the following information, prepare cash book with cash and discount column: Bhadra 2 Business started with cash Rs. 1,00,000. Bhadra 5 Bought goods Rs. 15,000 for cash at 20% discount. Bhadra 8 Sold goods for Rs. 10,000 at 10% discount. Bhadra 13 Purchased furniture for cash Rs. 13,000. Bhadra 15 Purchased goods from Kamal for Rs. 25,000 at 10% trade discount. Bhadra 20 Cash deposited into bank Rs. 35,000. Bhadra 23 Paid Rs. 14,000 for rent by cheque. Bhadra 27 Paid cash to Kamal Rs. 22,000 and received discount Rs. 500. Solution: Cash book with Cash and Discount Column Cr. Dr. Date Particulars L.F. Disc. Cash Date Particulars L.F. Disc. Cash Bhadra 2 To Capital a/c 1,000 1,00,000 Bhadra 5 By Purchase a/c 3,000 12,000 Bhadra 8 To Sales a/c 9,000 Bhadra 13 By Furniture a/c 500 13,000 Bhadra 20 By Bank a/c 35,000 Bhadra 27 By Kamal a/c 22,000 Bhadra 30 By Balance c/d 27,000 1,000 1,09,000 3,500 1,09,000 Aswin 1 To Balance b/d 27,000 Cash book with bank and discount column It is the type of cash book having bank and discount column in both sides. In this book, the amount received through cheque and discount allowed is debited and the payment made through cheque and discount received is recorded on credit side. The specimen of this type of cash book is as follows: Dr. Cash book with Bank and Discount Column Cr. Date Particulars L.F. Disc. Bank Date Particulars L.F. Disc. Bank Ill-10 Enter the following transactions into cash book with bank and discount column: Marga 1 Bank balance Rs. 70,000. Marga 5 Purchased goods for Rs. 19,000 and paid by cheque. 238 Office Management and Accountancy

Marga 9 Paid Rs. 10,000 for wages by cheque. Marga 10 Marga 13 Sold goods to Sohan for Rs. 13,000. Marga 25 A cheque of Rs. 12,000 received from Sohan and allowed discount Marga 27 of Rs. 1,000. Marga 28 Cash withdrawn from bank for office use Rs. 17,000. Marga 30 Paid to Anish by cheque of Rs. 9,800 in full settlement of Rs. 10,000. Solution: Received a cheque of Rs. 5,900 from Binod in full settlement of his debt of Rs. 6,000. Purchased office furniture for Rs. 14,000 and payment made through bank. Dr. Cash book with Bank and Discount Column Cr. Date Particulars L.F. Disc. Bank Date Particulars L.F. Disc. Bank Marga 1 200 19,000 Magh 13 To Balance b/d 1,000 70,000 Magh 5 By Purchase a/c 200 10,000 Magh 28 To Sohan a/c 100 12,000 Magh 9 By Wages a/c 17,000 To Binod a/c 5,900 Magh 25 By Cash a/c 9,800 Poush 1 Magh 27 By Anish a/c 14,000 Magh 30 By Furniture a/c 18,100 Magh 30 By Balance c/d 87,900 11,00 87,900 To Balance b/d 18,100 Cash book with cash and bank column It is the cash book having cash and bank column on both sides for recording cash and banking transactions. It is the combined form of simple cash book and simple bank book. In this book, the cash column records the receipt and payment made in cash and the bank column records the receipt and payment made through cheque. At the end of certain period, the cash and bank columns are totaled and balanced to know the periodical balance. The cash column always shows the debit balance however the bank column may show either debit or credit balance. The debit balance refers to the balance of cash at bank and credit balance is the overdraft balance of the bank which represents the liability to the firm. While withdrawing cash from bank or depositing cash into bank, it is recorded on both the sides of cash book having cash and bank column. It is called contra entry which means the double effect and denoted by into bank ‘c’ in ledger folio column. Hence, the contra entry is made only for the cash deposited and withdrawn cash for office use. The specimen of cash book with cash and bank column is as follows: Subsidiary Books 239

Dr. Cash book with Cash and Bank Column Cr. Date Particulars L.F. Cash Bank Date Particulars L.F. Cash Bank Ill-11 From the following information, prepare cash book with cash and bank column: Feb 2 Cash in hand Rs. 25,000 and cash at bank Rs. 30,000. Feb 9 Purchased goods for Rs. 10,000 and paid by cheque. Feb 10 Paid wages for Rs. 5,000. Feb 12 Sold goods for Rs. 9,000. Feb 15 Cash deposited into bank Rs. 7,000. Feb 20 Purchased furniture and paid by cheque Rs. 6,000. Feb 23 Received cash from Mohan Rs. 980 and allowed him discount Rs. 20. Feb 28 Purchased goods from Nisha Traders for Rs. 17,000. Feb 29 Cash withdrawn from bank for office use Rs. 4,000. Solution: Dr. Cash book with Cash and Bank Column Cr. Date Particulars L.F. Cash Bank Date Particulars L.F. Cash Bank Feb. 2 To Balance b/d C 25,000 30,000 Feb. 9 By Purchase a/c C 5,000 10,000 Feb. 12 To Salses a/c C 9,000 7,000 Feb. 10 By Wages a/c C 7,000 6,000 Feb. 15 To Cash a/c Feb. 15 By Bank a/c 26,980 4,000 Feb. 23 To Mohan a/c 980 Feb. 20 By Furniture a/c 17,000 Feb. 29 To Bank a/c 4,000 Feb. 29 By Cash a/c Feb. 29 By Balance c/d 38,980 37,000 38,980 37,000 March 1 To Balance b/d 26,980 17,000 Triple column cash book The cash book having cash, bank and discount column on both sides is known as triple column cash book. It is also called the cash book with cash, bank and discount column .The cheque received, cash receipt and discount allowed is recorded on debit side and payment made on cash, through cheque and discount received is recorded on credit side. Like in double column cash book having cash and bank column, here also the contra entry may take place while depositing cash into bank and withdrawing cash from bank for office use. The specimen of triple column cash book is given below: 240 Office Management and Accountancy

Dr. L.F. Disc. Triple Column Cash Book Disc. L.F. Cash Cr. Date Particulars Cash Bank Date Particulars Bank Ill-12 From the following information, you are required to prepare a triple column cash book: Chaitra 1 Balance of cash in hand Rs. 68,000 and at bank Rs. 1,10,000 C haitra 3 Bought goods and paid by cheque Rs. 30,000 C haitra 5 Sold goods for 20,000 at 10% discount Chaitra 10 Withdrawn cash from bank Rs. 6,000 for office use Chaitra 17 Paid to Nabin by cheque for Rs. 7,900 and received discount of Rs. 100 C haitra 22 Cash deposited into bank Rs. 20,000 Chaitra 24 Received cash Rs. 3,500 from Kamal after deducting discount of Rs. 500 C haitra 26 Sold goods to Binita for Rs. 14,000 at 10% trade discount Chaitra 29 Bought goods for Rs. 9,000, paid cash Rs. 4,000 and balance by cheque. Solution: Cash Book with Cash, Bank and Discount Column Cr. Dr. Date Particulars L.F. Disc. Cash Bank Date Particulars L.F. Disc. Cash Bank Chaitra 1 Chaitra 5 To Balance b/d ‘C’ 2,000 68,000 1,10,000 Chaitra 3 By Purchase a/c ‘C’ 100 30,000 Chaitra 10 To Sales a/c ‘C’ 500 18,000 20,000 Chaitra 10 By Cash a/c ‘C’ 20,000 6,000 Chaitra 22 To Bank a/c 6,000 Chaitra 17 By Nabin a/c 4,000 7,900 Chaitra 24 To Cash a/c 2,500 3,500 1,30,000 Chaitra 22 By Bank a/c 71,500 To Kamal a/c Chaitra 29 By Purchase a/c 5,000 Baishakh 1 95,500 Chaitra 29 By Balance c/d 100 95,500 81,100 1,30,000 To Balance b/d 71,500 81,100 Short Notes to Remember (SNR 13.5)  Simple cash book is suitable for those business firms which perform the transactions in cash not through cheque without discount provision.  Simple bank book is suitable cash book if the transactions are performed only through cheque not in cash basis.  If the business firm deals with large number of cash and banking transactions along with the discount, triple column cash book is suitable.  The cheque received and deposited on the same day is debited to bank account and if not deposited, cash account is debited instead of bank account. Subsidiary Books 241

REVIEW ILLUSTRATIONS (ILL) Ill-13 Following are the transactions relating to purchase: Baishakh 2 Purchased from Shree Ganesh Suppliers of Nepalgunj, invoice No 03469. 100 kg. Tea @ Rs. 100 per kg. 200 kg. Sugar @ Rs. 50 per kg. Baishakh 7 Purchased from R & D suppliers, Dharan for cash. 13 bags Grams @ Rs. 500 per bags. Baishakh 14 Purchased from Jayashree Stores, Janakpur, invoice No 04269. 25 bags Rice @ Rs. 1,000 per bag. 50 kg. Pulse @ Rs. 50 per kg. (Trade discount 10%) Baishakh 20 Purchased a computer for Rs. 35,000 from Jyoti Suppliers, Kathmandu. Baishakh 27 Purchased goods from Bhairab Traders for Rs. 4,000. Required: a) Purchase book b) Purchase account c) Creditors’ account Solution: a) Purchase book Date Invoice No. Particulars L.F. Details Total Rs. Baishakh 2 03469 Shree Ganesh Suppliers, Nepalgunj 10,000 100 kg. Tea @ Rs. 100 per kg. 10,000 200 kg. Sugar @ Rs. 50 per kg 20,000 Baishakh 14 04269 Jayashree Stores, Janakpur 25,000 25 bags Rice @ Rs. 1,000 per bag 2,500 50 kg. Pulse @ Rs. 50 per kg. Less : Trade discount @ 10% 27,500 24,750 2,750 Baishakh 27 Bhairab Traders 4,000 Total 48,750 b) Cr. Dr. Purchase Account J.F. Amount Date Particulars J.F. Amount Date Particulars 55,250 Baishakh 7 To Cash a/c 6,500 Baishakh 31 By Balance c/d 55,250 Baishakh 31 To Sundry creditors 48,750 55,250 Jestha 1 To Balance b/d 1,24,280 242 Office Management and Accountancy

c) Shree Ganesh Supplier’s Account Cr. Dr. Particulars J.F. Amount Date Particulars J.F. Amount Date To Balance c/d 20,000 20,000 Baishakh 2 By Purchase a/c 20,000 Baishakh 31 20,000 20,000 Jestha 1 By Balance b/d Dr. Jayashree Stores Account Cr. Date Particulars J.F. Amount Date Particulars J.F. Amount Baishakh 31 To Balance c/d 24,750 24,750 Baishakh 14 By Purchase a/c 24,750 24,750 24,750 Cr. Jestha 1 By Balance b/d J.F. Amount Dr. Bhairab Traders Account 4,000 4,000 Date Particulars J.F. Amount Date Particulars 4,000 Baishakh 31 To Balance c/d 4,000 Baishakh 27 By Purchase a/c 4,000 Jestha 1 By Balance b/d Ill-14 Following sales transactions are given to you: Shrawan 1 Sold to Rajanish Store, Damak 15 pcs Table Fan @ Rs. 1,000 per fan 20 pcs Rice Cooker @ Rs. 1,500 per piece Shrawan 9 Sold to Sunu Store, Dharan 19 pcs. Pressure Cooker @ Rs. 1,100 per unit 5 pcs Fan Heater @ Rs. 500 per piece (Trade discount 20%) Shrawan 20 Sold to Siddhi Binayak Traders for Rs. 14,000 Shrawan 23 Sold an old computer to Janak for Rs. 12,000 Shrawan 28 Sold to Nirman & Company Janakpur for cash, 14 pcs Electric Heater @ Rs. 600 per piece Required: a) Sales book b) Sales account c) Debtors’ account Solution: a) Sales Book Date Invoice No. Particulars L.F. Details Total Rs. Shrawan 1 Rajanish Store, Damak 15,000 15 pcs Table Fan @ Rs. 1,000 per fan 30,000 20 pcs Rice Cooker @ Rs. 1,500 per piece 45,000 Shrawan 9 Sunu Store, Dharan 20,900 19 pcs. Pressure Cooker @ Rs. 1,100 per unit 2,500 5 pcs Fan Heater @ Rs. 500 per piece Subsidiary Books 243

Less: Trade discount 20% 23,400 18,720 Siddhi Binayak Traders 4,680 14,000 Shrawan 20 Total 77,720 b) Sales Account Cr. Dr. Amount Date Particulars J.F. Amount Date Particulars J.F. 8,400 77,720 S h r a w a n To Balance c/d 86,120 Shrawan 28 By Cash a/c 86,120 30 Shrawan 30 By Sundry debtors a/c 86,120 86,120 Bhadra 1 By Balance b/d c) Cr. Dr. Rajanish Store Account J.F. Amount Date Particulars J.F. Amount Date Particulars 45,000 45,000 Shrawan 1 To Sales a/c 45,000 Shrawan 30 By Balance c/d 45,000 Bhadra 1 To Balance b/d 45,000 d) Sanu Store Account Cr. Dr. Particulars J.F. Amount Date Particulars J.F. Amount Date To Sales a/c 18,720 Shrawan 9 18,720 Shrawan 30 By Balance c/d 18,720 18,720 Cr. Bhadra 1 To Balance b/d 18,720 J.F. Amount 14,000 e) Siddhi Binayak Trader Account 14,000 Dr. Date Particulars J.F. Amount Date Particulars Shrawan 20 To Sales a/c 14,000 Shrawan 30 By Balance c/d 14,000 Bhadra 1 To Balance b/d 14,000 Ill-15 Following purchase return transactions are given to you: Jestha 3 Returned to Harati Traders, Biratnagar 5 pcs T-shirt @ Rs. 450 2 pcs Cotton Vest @ Rs. 100 Jestha 9 Returned to Bipin Traders, Nepalgunj 4 pcs Pant @ Rs. 500 7 pcs Coat @ Rs. 600 (Trade discount 10%) Jestha 19 Returned to Anjan Traders for Rs. 4,000 Jestha 28 Returned to Ram and Sons 3 pcs Jacket @ Rs. 1,000 244 Office Management and Accountancy

Required: a) Purchase return book b) Purchase return account c) Sundry creditors’ account Solution: Purchase Return Book a) Date Debit Note No. Particulars L.F. Details Total Rs. Jestha 3 Harati Traders, Biratnagar 5 pcs T-shirt @ Rs. 450 2 pcs Cotton-vest @ Rs. 100 2,250 2,450 200 Jestha 9 Bipin Traders, Nepalgunj 4 pcs Pant @ Rs. 500 7 pcs Coat @ Rs. 600 2,000 4,200 Less: Trade discount 10% 6,200 5,580 620 Jestha 19 Anjan Trader 4,000 Jestha 28 Ram and Sons 3 pcs Jacket @ Rs. 1,000 3,000 Total 15,030 b) Dr. Purchase Return Account Cr. Date Particulars J.F. Amount Date Particulars J.F. Amount Jestha 30 To Balance c/d 15,030 Jestha 30 By Sundry creditors 15,030 a/c 15,030 15,030 Ashadh 1 To Balance b/d 15,030 c) Harati Traders Account Cr. Dr. Particulars J.F. Amount Date Particulars J.F. Amount Date To Purchase 2,450 Jestha 3 return a/c 2,450 Jestha 30 By Balance c/d 2,450 2,450 Ashadh 1 To Balance b/d 2,450 d) Bipin Traders Account Cr. Dr. Particulars J.F. Amount Date Particulars J.F. Amount Date 5,580 Jestha 9 To Purchase return 5,580 Jestha 30 By Balance c/d a/c 5,580 Ashadh 1 To Balance b/d 5,580 5,580 Subsidiary Books 245

e) Anjan Traders Account Cr. Dr. Particulars J.F. Amount Date Particulars J.F. Amount Date 4,000 Jestha 19 To Purchase return 4,000 Jestha 30 By Balance c/d a/c 4,000 Ashadh 1 4,000 Cr. To Balance b/d 4,000 J.F. Amount 3,000 f) Ram and Sons Account Dr. 3,000 Particulars J.F. Amount Date Particulars Date Jestha 28 To Purchase return 3,000 Jestha 30 By Balance c/d a/c Ashadh 1 3,000 To Balance b/d 3,000 Ill-16 Following sales return transactions are given: Chaitra 2 Returned from Naresh 2 Tables @ Rs. 1,000 each 5 Chairs @ Rs. 500 each Chaitra 13 Returned from Nabina Decorate, Damak 1 Sofa set @ Rs. 5,000 each (Less 10% trade discount) Chaitra 19 Goods returned from R and B stores for Rs. 10,000 Chaitra 26 Returned from Harish Furniture Centre, Bhaktapur 1 Almirah @ Rs. 7,000 each 2 Fancy Tables @ Rs. 2,000 each (Trade discount 5%) Required: a) Sales return book b) Sales return account c) Sundry debtors’ account Solution: a) Sales Return Book Date Credit Note No. Particulars L.F. Details Total Rs. Chaitra 2 Naresh 2,000 2 Tables @ Rs. 1,000 2,500 5 Chairs @ Rs. 500 4,500 Chaitra 13 Nabina Decorate, Damak 5,000 1 Sofa set @ Rs. 5,000 500 Less: Trade discount 10% 4,500 Chaitra 19 R & B Store 10,000 Chaitra 26 Harish Furniture Centre, Bhaktapur 1 Almirahs @ Rs. 7,000 7,000 2 Fancy Tables @ Rs. 2,000 4,000 Less: Trade Discount 5% 11,000 10,450 Total 550 29,450 246 Office Management and Accountancy

b) Cr. Dr. Sales Return Account J.F. Amount Date Particulars J.F. Amount Date Particulars 29,450 Chaitra 30 To Sundry debtors 29,450 Chaitra 30 By Balance c/d 29,450 a/c Cr. 29,450 J.F. Amount Baishakh 1 To Balance b/d 29,450 4,500 4,500 c) Naresh Account 4,500 Dr. Particulars J.F. Amount Date Particulars Date To Balance c/d Chaitra 30 4,500 Chaitra 2 By Sales return a/c 4,500 Baishakh 1 By Balance b/d d) Nabina Decorate Account Cr. Dr. Particulars J.F. Amount Date Particulars J.F. Amount Date To Balance c/d Chaitra 30 4,500 Chaitra 13 By Sales return a/c 4,500 4,500 4,500 Baishakh 1 By Balance b/d 4,500 e) R & B Store Account Cr. Dr. Particulars J.F. Amount Date Particulars J.F. Amount Date To Balance c/d Chaitra 30 10,000 Chaitra 19 By Sales return a/c 10,000 10,000 10,000 Baishakh 1 By Balance b/d 10,000 f) Harish Furniture Centre Account Cr. Dr. Particulars J.F. Amount Date Particulars J.F. Amount Date To Balance c/d 10,450 Chaitra 30 10,450 Chaitra 26 By Sales return a/c 10,450 10,450 10,450 Baishakh 1 By Balance b/d Ill-17 The following transactions are given to you: Shrawan 1 Business started with cash Rs. 1,00,000. Shrawan 2 Opened bank account by depositing cash Rs. 60,000. Shrawan 5 Purchased goods for cash Rs. 10,000. Shrawan 7 Purchased machinery for Rs. 15,000. Shrawan 10 Sold goods for cash Rs. 9,000. Shrawan 14 Purchased goods from Manish for Rs. 20,000. Subsidiary Books 247

Shrawan 25 Paid rent Rs. 5,000. Shrawan 28 Withdrew cash from bank for office use Rs.3,000. Shrawan 29 Drawing for personal use Rs. 9,000. Shrawan 30 Received commission Rs. 7,000. Required : Simple cash book Solution: Dr. Simple Cash Book Cr. Date Particulars L.F. Amount Date Particulars L.F. Amount 60,000 Shrawan 1 To Capital a/c 1,00,000 Shrawan 2 By Bank a/c 10,000 Shrawan 10 To Sales a/c 9,000 Shrawan 5 By Purchase a/c 15,000 Shrawan 28 To Bank a/c 3,000 Shrawan 7 By Machinery a/c 5,000 Shrawan 30 To Commission a/c 7,000 Shrawan 25 By Rent a/c 9,000 Shrawan 29 By Drawing a/c 20,000 Shrawan 31 By Balance c/d 1,19,000 1,19,000 Bhadra 1 To Balance b/d 20,000 Ill-18 The following transactions are given to you: January 1 Started business with capital of Rs. 3,00,000 in the bank. January 5 Bought goods for Rs. 50,000 paying by cheque. January 7 Paid wages Rs. 15,000 by cheque. January 9 Purchased computer and paid by cheque for Rs. 40,000. January 20 Withdrew cash from bank for office use Rs. 25,000. January 22 Sold goods to Nisha for Rs. 35,000. January 27 Paid office expenses by cheque Rs, 9,000. January 28 Received commission by cheque Rs. 14,000. January 30 Received a cheque of Rs. 35,000 from Nisha. January 31 Withdrawn cash from bank for personal use Rs. 10,000. Required: Simple bank book Solution: Simple Bank Book Cr. Dr. Date Particulars L.F. Amount Date Particulars L.F. Amount January 1 To Capital a/c 3,00,000 January 5 By Purchase a/c 50,000 January 28 To Commission a/c 14,000 January 7 By Wages a/c 15,000 January 30 To Nisha a/c 35,000 January 9 By Computer a/c 40,000 January 20 By Cash a/c 25,000 January 27 ByOfficeexpensesa/c 9,000 January 31 By Drawing a/c 10,000 January 31 By Balance c/d 2,00,000 3,49,000 3,49,000 February 1 To Balance b/d 2,00,000 248 Office Management and Accountancy

Ill-19 Following cash and banking transactions are given to you: a) Opening cash balance Rs. 45,000. b) Purchased goods for Rs. 6,000 at 10% discount. c) Received cash from a debtor 1,900 after deducting cash discount 5%. d) Sold goods Rs.5,000 for cash at 20% discount. e) A cheque issued to a creditor Rs. 970 for full settlement of Rs.1,000. f) Purchased goods worth Rs. 9,000 and received discount of Rs. 500. g) Paid cash to Anil Rs. 5,900 and received discount of Rs. 100. h) Rajani who owed Rs. 2,000 settled her account by paying Rs. 1,850. i) Cash paid to Dipika Rs. 1,500 in full settlement of Rs. 1,600. j) Bought goods for Rs.30,000 and paid cash Rs. 10,000 and balance through cheque. Required: Cash book with cash and discount column Cr. Solution: Dr. Cash book with Cash and Discount Column Date Particulars L.F. Disc. Cash Date Particulars L.F. Disc. Cash a) To Balance b/d 45,000 b) By Purchase a/c 600 5,400 c) To Debtors a/c 100 1,900 f) By Purchase a/c 500 8,500 d) To Sales a/c 1,000 4,000 g) By Anil a/c 100 5,900 h) To Rajani a/c 150 1,850 i) By Dipika a/c 100 1,500 j) By Purchase a/c 10,000 By Balance c/d 21,450 1,250 52,750 1,300 52,750 To Balance b/d 21,450 Ill-20 Following transactions are given to you: a) Opening balance of bank Rs. 65,000. b) Bought goods worth Rs. 10,000 at 10% discount paying by cheque. c) Issued a cheque of Rs. 7,000 and paid cash Rs. 13,000 for purchase of goods. d) Bought a computer for Rs. 27,000 paying by cheque. e) Sold goods for Rs. 8,000 at 20% discount and received a cheque. f) A cheque of Rs. 9,800 issued to Yojana for full settlement of her debts of Rs.10,000. g) Received a cheque of Rs. 5,700 from Prakriti after deducting 5% discount. h) A cheque of Rs. 11,700 received from debtors and allowed discount Rs. 300. i) Goods sold to Manisha for Rs. 9,000. j) Manisha settled her account by cheque and allowed her discount Rs. 500. Required: Cash book with bank and discount column Subsidiary Books 249

Solution: Cash book with Bank and Discount Column Cr. Dr. L.F. Disc. Bank Date Particulars L.F. Disc. Bank Date Particulars 1,000 9,000 a) To Balance b/d 1,600 65,000 b) By Purchase a/c 7,000 e) To Sales a/c 300 6,400 c) By Purchase a/c 200 27,000 g) To Prakriti a/c 300 5700 d) By Computer a/c 1,200 9,800 h) To Debtor's a/c 500 11,700 f) By Yojana a/c 44,500 j) To Manisha a/c 8,500 By Balance c/d 91,600 To Balance b/d 2,700 97,300 44,500 Ill-21 Following cash and banking transactions for the month of June 2017 are given to you: June 1 Cash in hand Rs. 25,000 and at bank Rs. 7,000. June 3 Bought goods for Rs. 7,000 and paid by cheque Rs. 3,000 and balance in cash. June 8 Received a cheque of Rs. 5,800 from Girish for full settlement of Rs. 6,000. June 10 Cheque received from Girish deposited into bank. June 14 Withdrew Rs. 5,000 from bank by proprietor for domestic use. June 19 Sold goods for Rs. 5,000 at 10% cash discount. June 23 Deposited in to bank Rs. 4,000. June 26 Purchased goods from Kamalesh for Rs. 10,000 and issued a cheque of Rs. 3,000 only as partial payment. June 28 Sold goods for cash and received cheque of Rs. 6,000. June 30 Paid salary by cheque Rs. 25,000 and paid rent in cash Rs. 6,000. Required: Cash book with cash and bank column Solution: Dr. Cash book with Cash and Bank Column Cr. Date Particulars L.F. Cash Bank Date Particulars L.F. Cash Bank June 1 To Balance b/d C 25,000 7,000 June 3 By Purchases a/c C 4,000 3,000 June 8 To Girish a/c C 5,800 5,800 June 10 By Bank a/c C 5,800 5,000 June 10 To Cash a/c 4,500 4,000 June 14 By Drawing a/c 4,000 3,000 June 19 To Sales a/c 6,000 June 23 By Bank a/c 25,000 June 23 To Cash a/c 13,200 June 26 By Purchase a/c 6,000 June 28 To Sales a/c June 30 By Salary a/c 15,500 June 30 To Balance c/d June 30 By Rent a/c June 30 By Balance c/d 35,300 36,000 35,500 36,000 July1 To Balance b/d 15,500 July 1 By Balance b/d 13,200 Ill-22 You are given the following cash and banking transactions: Jestha 1 Balance of cash in hand Rs. 15,000 and overdraft balance at bank Rs.23,000. 250 Office Management and Accountancy