Depreciation, Provisions and Reserves — Account STD 11 Commerce — Question

On July 1, 2016 Pushpak Ltd. purchased a machinery for ₹ 5,70,000 and paid ₹ 30,000 for its overhauling and installation. Depreciation is provided @20% p.a. on Original Cost Method and the books are closed on 31st March every year. The machine was sold on 31st January 2019 for a sum of ₹ 1,60,000. You are required to show the Machinery Account and Provision for Depreciation Account for three years.

Prepare Simple Cash Book from the following transactions of Suresh, Delhi:

2019						₹
April 1					Suresh commenced business with cash	80,000
April 3					He bought goods	50,000
April 5					Sold goods for Cash	40,000
April 6					Received cash from Mr. Manohar	3,600
April 9					Paid into Bank	30,000
April 13					Paid cash to Harikrishan	2,150
April 17					Paid for stationery	200
April 18					Paid for office furniture	3,000
April 21					Received from Mr. Kailash Chand	6,800
April 22					Paid for advertising	1,008
April 25					Purchased postage stamps	80
April 28					Paid Rent	1,120
April 30					Paid electricity charges	150

Following balances appeared in the books of Radhika Traders as on 1st April, 2017:
Assets: Cash ₹ 8,000; Cash at Bank ₹ 7,000; Stock ₹ 30,000; Debtors; ₹ 36,000 (Mohan ₹ 10,000; Sohan ₹ 12,000; Dinesh ₹ 14,000); Furniture ₹ 5,000; Building ₹ 25,000.
Liabilities: Creditors− X ₹ 5,000; Y ₹ 6,000.
In April, 2017, the following transaction took place:

2017		₹
April 2	Bought goods of the list price of ₹ 6,000 from Khanna Brothers less 15% trade discount and 2% cash discount and paid 40% price at the same time.
April 3	Received a draft from Mohan in full settlement and deposited it into Bank
April 5	Purchased goods from Suresh of the list price of ₹ 8,000 at 20% trade discount and paid him by cheque.	9,750
April 8	Sold goods and received a cheque	25,000
April 10	Deposited the above cheque into Bank	12,000
April 12	Sohan deposited in our Bank A/c	4,000
April 16	Paid Income Tax by Cheque	5,600
April 20	Received a cheque from Sohan and sent to Bank	7,800
	Discount allowed	200
April 21	Withdrew from Bank−for office	2,000
	for private use	4,000
April 23	Sent a cheque to X in full settlement of his A/c	4,900
April 27	Cheque of Sohan returned by the bank as dishonoured.
April 28	Dinesh was declared insolvent and a payment of 60 paise in a ₹ received from his estate by a Cheque
April 30	Bank allowed Interest	350
	Paid for Rent by cheque	1,500
	Paid for traveling expenses by cheque	500

Pass Journal entries for the above transactions.

Give the rules of Debit and Credit and explain them with imaginary examples.
Under Double Entry System of accounting each transaction has two aspects. One aspect is debit, i.e., receiving or incoming aspect. Another aspect is credit, i.e., giving or outgoing aspect. Debit and credit aspects of a transaction form the basis of Double Entry System.
Rules of Double Entry or Rules of Debit and Credit are formed on the basis of these two aspects in each of the business transactions. There are two approaches for deciding when to write on the debit side of account and when to write on the credit side of an account, i.e., which account is to be debited and which account is to be credited. The rules or: the basis of which such decision is taken are called Rules of Debit and Credit.
Rules of Debit and Credit (Traditional Classification) at a Glance:

S.No	Types of Account	Account to be Debited	Account to be Credited
1	Personal Account	Receiver	Giver
2	Real Account	What comes in	what goes out
3	Nominal Account	Expense and Loss	Income and Gain

From the following transactions, state the nature of accounts and state which account will be debited and which account will be credited:

S.No		₹
1	Mohan started business with cash	5,00,000
2	Purchased goods for cash	1,00,000
3	Sold goods for cash	1,50,000
4	Received interest from Ram in cash	500
5	Sold goods to Ashok	60,000
6	Purchased furniture for cash	50,000
7	Paid wages	20.000

Fill in the missing information in the following journal entries:

Prepare bank reconciliation statement of Dinesh on 30th June 2014 with following particulars:

1. Pass Book showed an overdraft of ₹ 15,000 on 30th June 2014.
2. A cheque of ₹ 200 was deposited in bank but not recorded in Cash Book.
3. Cheques of ₹ 17,000 were issued but cheques worth only ₹ 10,000 were presented for payment up to 30th June 2014.
4. Cheques of ₹ 2,000 were received and recorded in Cash Book but not sent to bank.
5. Cheques of ₹ 10,000 were sent to bank for collection; out of these cheques of ₹ 2,000 and of ₹ 1,000 were credited respectively on 8th July and 10th July and the remaining cheques were credited before 30th June 2014.
6. Bank paid ₹ 300 fee of Chamber of Commerce on behalf of Dinesh, which was not recorded in Cash Book.
7. Bank charged interest on overdraft ₹ 800 which was not recorded in Cash Book.
8. ₹ 40 for bank charges were recorded two times in Cash Book and bank expenses of ₹ 35 were not at all recorded in Cash Book.
9. Total of credit side of bank column of Cash Book was undercast by ₹ 1,000 by mistake.

Discuss the principle based on the premise "do not anticipate profits but provide for all losses."

Enter the following transactions in the Cash Book with Cash and Bank Columns:

2019
April 1	Balance of Cash in hand ₹ 4,000, overdraft at Bank ₹ 50,000.
April 4	Invested further capital ₹ 1,00,000 out of which ₹ 60,000 deposited into the bank.
April 5	Sold goods for cash ₹ 30,000 plus CGST and SGST @ 6% each.
April 10	Purchased goods ₹ 55,000 plus CGST and SGST @ 6% each and issued a cheque for the same.
April 11	Paid to Ram Vilas, our creditor ₹ 25,000; discount allowed by him ₹ 1,000.
April 14	Rent of ₹ 8,000 plus CGST and SGST @ 6% each paid by cheque.
April 15	Office Furniture purchased and a cheque of ₹ 22,400 issued for the same including CGST and SGST @ 6% each.
April 16	Drew cheque for personal use ₹ 5,000.
April 18	Collection from Atul ₹ 15,000, deposited in the bank on 19th April.
April 20	Goods sold to Amritraj for ₹ 80,000 plus CGST and SGST @6% each.
April 25	Received a cheque of ₹ 88,000 from Amritraj in full settlement of his account; deposited into bank on 28th April.
April 29	Drew from the bank for salary of the office staff ₹ 25,000.
April 29	Paid salary of the manager by cheque ₹ 10,000.