Question
Explain the procedure of balancing the personal accounts.
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Answer
From the balancing of these accounts we can ascertain as to how much amount is owing from each individual customer and how much amount is owed to each individual creditor. If a personal account shows a debit balance, it indicates the amount owing from him. On the contrary, if a personal account shows a credit balance, it indicates the amount owing to him.In case the total of the debit side is in excess of the credit side, the difference between the two is inserted on the credit side of the account in order to make their totals equal. The words ‘By Balance c/d’, i.e., balance carried down are written against the amount of the difference. In the next accounting period, the balance is brought down on the debit side by writing the words ‘To Balance b/d'.
On the contrary, if the total of the credit side is in excess of the debit side, the difference between the two is inserted on the debit side of the account in order to make their totals equal. The words ‘To Balance c/d' are written against the amount of the difference. In the next accounting period, the balance is brought down on the credit side by writing the words 'By Balance b/d’.
On the contrary, if the total of the credit side is in excess of the debit side, the difference between the two is inserted on the debit side of the account in order to make their totals equal. The words ‘To Balance c/d' are written against the amount of the difference. In the next accounting period, the balance is brought down on the credit side by writing the words 'By Balance b/d’.
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On the basis of the narrations, fill in the missing values:
What are ‘provisions’. How are they created? Give accounting treatment in case of provision for doubtful Debts.
Enter the following transactions in the Cash Book with Cash and Bank Columns:
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2019
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April 1
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Balance of Cash in hand ₹ 4,000, overdraft at Bank ₹ 50,000.
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April 4
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Invested further capital ₹ 1,00,000 out of which ₹ 60,000 deposited into the bank.
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April 5
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Sold goods for cash ₹ 30,000 plus CGST and SGST @ 6% each.
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April 10
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Purchased goods ₹ 55,000 plus CGST and SGST @ 6% each and issued a cheque for the same.
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April 11
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Paid to Ram Vilas, our creditor ₹ 25,000; discount allowed by him ₹ 1,000.
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April 14
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Rent of ₹ 8,000 plus CGST and SGST @ 6% each paid by cheque.
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April 15
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Office Furniture purchased and a cheque of ₹ 22,400 issued for the same including CGST and SGST @ 6% each.
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April 16
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Drew cheque for personal use ₹ 5,000.
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April 18
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Collection from Atul ₹ 15,000, deposited in the bank on 19th April.
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April 20
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Goods sold to Amritraj for ₹ 80,000 plus CGST and SGST @6% each.
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April 25
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Received a cheque of ₹ 88,000 from Amritraj in full settlement of his account; deposited into bank on 28th April.
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April 29
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Drew from the bank for salary of the office staff ₹ 25,000.
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April 29
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Paid salary of the manager by cheque ₹ 10,000.
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Prepare the Accounting Vouchers for the following transactions:?
Transactions marked with * are subject to levy of CGST and SGST @ 6% each.
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2019
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Particular
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₹
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Jan-1
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Started business with cash
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2,00,000
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Jan-1
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Purchased furniture vide Cash Memo No. 210*
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10,000
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Jan-5
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Opened a Bank Account in Canara Bank
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60,000
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Jan-10
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Purchased garments on credit from M/s Madras Store vide Bill No. 291*
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20,000
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Jan-12
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Sold shirts to Ram Parkash on credit vide Bill No. 1*
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5,000
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Jan-15
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Sold shirts for cash vide Cash Memo No. 1*
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7,000
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Jan-20
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Withdrew from bank for office use by cheque No. 23301
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20,000
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Jan-27
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Withdrew for personal use by cheque No. 51003
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5,000
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Use Accounting Equation to show the effect of the following transactions of M/s Royal Traders:
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(₹)
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(a)
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Started Business with Cash
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1,20,000
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(b)
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Purchased goods for cash
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10,000
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(c)
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Rent received
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5,000
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(d)
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Salary outstanding
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2,000
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(e)
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Received interest
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700
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(f)
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Sold goods for cash (costing ₹ 5,000)
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7,000
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(g)
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Goods destroyed by fire
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500
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What is Double-Entry System? Explain its principles and advantages.
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Cheque deposited in bank but not credited ₹ 3,000
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Cheque issued but not yet present for payment ₹ 1,500
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Insurance premium paid by the bank ₹ 2,000
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Bank interest credit by the bank ₹ 400
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Bank charges ₹ 100
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