Passing Journal entries by understanding three golden accounting principles part-1
Let us begin
with introduction of business. Business is treated as separate entity so, while
passing the journal entry you should treat it as artificial person. some simple
techniques are sufficient to pass entry. Here you have to assume you as
business that’s it.
Entry 1:-
Cash Bought into business of
Rs.100000/- by raj
SL.NO
|
PARTICULAR
|
DEBIT
|
CREDIT
|
1
|
Cash
A/c Dr
To Raj capital A/c
|
100000
|
100000
|
(Being Capital introduced into business)
Rule for
passing entry
On business
side:- It is receiving cash and liable to pay back to the person who invested.
Debit
Cash is
treated as asset. The real account rule is applicable:-Debit what comes into
business, here cash is coming into business.So, it is debited.
Credit
Raj is
person. The personal account rule is applicable:-Credit the giver account ,here
raj is giving cash he is a giver.So, it is credited.
Entry 2:-
Goods purchased of worth Rs. 10000/- by
paying cash
SL.NO
|
PARTICULAR
|
DEBIT
|
CREDIT
|
1
|
Purchase A/c Dr
To Cash A/c
|
10000
|
10000
|
(Being goods purchased on cash)
Rule for
passing entry
On business side:- It is receiving goods and
paying cash.
Debit
Goods are
treated as asset. The real account rule is applicable:-Debit what comes into
business, here goods are coming into business. So, it is debited.
Credit
Cash is
treated as asset. The real account rule is applicable:-Credit what goes out of
business, here cash is going out of business. So , it is credited.
Entry 3:-
Goods sold on cash of worth Rs.30000/-
SL.NO
|
PARTICULAR
|
DEBIT
|
CREDIT
|
1
|
Cash
A/c Dr
To Sales A/c
|
30000
|
30000
|
(Being goods
sold on cash)
Rule for
passing entry
On business side:- It is receiving cash and
goods are going out of business.
Debit
Cash is
treated as asset. The real account rule is applicable:-Debit what comes into
business, here Cash is coming into business. So, it is debited.
Credit
Goods are
treated as asset. The real account rule is applicable:- Credit what goes out of
business, here goods are going out of business. So, it is credited.
Entry 4:-
Rent paid of Rs.5000/-
SL.NO
|
PARTICULAR
|
DEBIT
|
CREDIT
|
1
|
Rent A/c Dr
To Cash A/c
|
5000
|
5000
|
(Being rent
paid by cash)
Rule for
passing entry
On business side:- It is incurring rent
expense and paying cash.
Debit
As rent paid
is treated as Expense. The Nominal account rule is applicable:-Debit all
expense or loss, here rent paid is expense. So, it is debited.
Credit
Cash is
treated as asset. The real account rule is applicable:-Credit what goes out of
business, here cash is going out of business. So , it is credited.
Entry 5:-
Commission received of Rs.3000/-
SL.NO
|
PARTICULAR
|
DEBIT
|
CREDIT
|
1
|
Cash
A/c Dr
To Commission income A/c
|
3000
|
3000
|
(Being
Commission received)
Rule for
passing entry
On business side:- It is receiving cash from
commission income .
Debit
Cash is
treated as asset. The real account rule is applicable:-Debit what comes into
business, here Cash is coming into business. So, it is debited.
Credit
Commission
Income are treated as income. The Nominal account rule is applicable:- Credit
all income or gains, here commission income is received by business. So , it is
credited.
Entry 6:-
Salary payable Rs.15000/-
SL.NO
|
PARTICULAR
|
DEBIT
|
CREDIT
|
1
|
Salary A/c Dr
To Salary payable A/c
|
15000
|
15000
|
(Being salary
for the previous month is payable)
Rule for
passing entry
On business side:- It is receiving cash and
goods are going out of business.
Debit
Salary paid
is treated as Expense. The Nominal account rule is applicable:-Debit all
expense or loss, here salary paid is expense. So, it is debited.
Credit
Salary
payable is representative person. The personal account rule is applicable:-
Credit the giver account, here salary payable is treated as representative
person because it represents salary of many persons. So, it is credited.
In above we covered six entries.
The remaining entries will be covered in part- 2
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