Journal entries.

sir i am confused with the journal entries of the following can you please help me out soon as i have my exam tomorrow.
Journalise:
1) Bought goods worth Rs.5000 from popatlal off 10% trade discount.
2) Returned goods worth Rs.500 GROSS to popatlal as being of inferior quality.
3) Purchased a scooter for business in exchange of goods worth Rs. 4000.
4) Bought goods worth rs 3000 from Batliwala at 20% Tr.ade Discount.
5) Sold half the goods bought from batliwala to sodawala at 30% profit on invoice.
6) Remaining half of the goods sold on cash at COST PRICE.
7) Goods worth Rs.1000 were damaged in transit a claim was made on railway authorities for the same.
8) Goods worth Rs. 1000 sold to bapat and railway freight Rs.80 paid on behalf of him. Received cash Rs.300 from bapat.
9) On the last day of month there was an outstanding rent of Rs. 30
10) Goods of rs 1000 received as free samples from dealers
11) A clerk has stolen Rs. from office.

asked Oct 11, 2015 in Journal Entries by Mahima (21 points) 1,743 views

1 Answer

0 votes
1. Purchase A/c     Dr.  4500

      To Popatlal                            4500

(Trade discount :5000 x 10/100 = Rs.4500.  Trade discount is never recorded in books. The entry is always made net of trade discount)

2. Popatlal A/c       Dr.     500

      To Purchase Return A/c         500

3. Scooter A/c       Dr.    4000

       To Sales A/c                          4000

(Here it is assumed that goods are exchanged at selling price.  If goods were exchanged at purchase price, then Purchase A/c would have been credited).

4.  Purchase A/c   Dr.  2400

       To Batliwala A/c                    2400

5.  Sodawala A/c  Dr.   1714

        To Sales A/c                         1714

Note: Let sales price be = 100

           Less profit             =    30

           cost price              =    70

            Profit on cost       = (30/70) x 100 = 42.86%.  (Profit = 2400/2) x 42.86/100 = Rs.514.  Sales price = 1200 + 514 = Rs.1714

6.  Cash A/c           Dr.    1200

        To Sales A/c                        1200

7.  Claim for damages A/c  Dr.  1000

       To Purchase A/c                               1000

(It is assumed that goods purchased by us were damaged in transit)

7.  Bapat A/c          Dr.  1080

        To Sales A/c                       1000

        To Cash A/c                            80

      Cash A/c        Dr.          300

        To Bapat A/c                         300

8.  Rent A/c            Dr.  30

       To Rent Outstanding A/c    30

9.  In case of receipt of free samples, no journal entry will be passed, only stock account will be maintained.  If these samples are ever sold for cash then a normal entry for sales will be passed:

    Cash A/c   Dr.

        To Sales

10.  Loss due to Theft A/c  Dr.  100

           To Cash A/c                                100
answered Oct 11, 2015 by jbsclasses (3,805 points)
Sir,

Please i have a small doubt. In this for the the 3rd entry scooter has been purchased he is saying in exchange of goods . So, for this the entry would be if im not wrong, Scooter a/c dr

                                   to Cash a/c cr.

Scooter is asset for me so i've debited and cash is going out from my pocket so why it couldn't be like this?please clarify my doubt sir.

Thanks in advance.

 

Sir,

Please one more doubt. In this problem for 4th entry goods has been purchased at 2400 rs/- it has mentioned after trade discount that's ok i understood but after that in 5th entry it has been mentioned that goods has been sold at 30% profit on invoice profit means we have to add but here in this situation we are selling the goods at lesser price than we purchased from dealer goods we purchased from batiwala. Here ididn't understand in which procedure u've followed i checked the calculation part also u've mentioned in 5th entry. But my doubt when we are selling the goods we will sell at higher price compared to our purchases from dealer.

3) purchased a scooter for business in exhange of goods worth rs 4000,

Please note above that scooter has been purchassed against goods and not cash.  It is barter.  So in this case cash is not going out.  Instead goods are going out.  When goods go out at selling price, we credit sales account.  In case goods were given out at purchase price, purchase account would have been credited.

5) sold half the goods bought from batliwala to sodawala at 30% profit on invoice.

You have a solid point here.  According to your interpretation he sold goods after adding 30% profit to the invoice price of his purchase.  If we take your interpretation, then the question should have been done like you are saying.

My interpretation is that the seller has made a profit of 30% on his invoice price (invoice which he raised at the time of sales).  Now we are not informed about his selling price.  So to find out the  profit and selling price, we have used the above calculations.

I hope now you will understand the above calculation.  In case of doubt, please don't hesitate to discuss further.

 

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