Practice Sheet-1 - Debit and Credit Ledger Account selection with Journal Entry

Practice Sheet - 1 of 12 (Transactions for the month of April' 2021) 

Students/learners can get benefit and complete knowledge on this Practical Project after completion of all the 12 Practice Sheets with a proper sequence.

Let's Practice the below mentioned transactions of a Business Unit to be more confident on Decision making for Debiting and Crediting of Ledger Accounts with Journal Entries. This practice sheet is prepared in such a way that one can gain complete knowledge about the procedure of Financial Accounting from Journal Entry to Final Accounts.

TRIMURTHY TRADERS

(Prop : Mr. Surya Krishnamurthy) 

Financial Year : 2021-22(April' 2021 to March' 2022)

Assessment Year : 2022-23(April' 2022 to March' 2023)

Select Debit and Credit Ledgers involved and pass necessary Journal Entries for the below mentioned Business Transactions.

In this Practice Sheet all the answers are in the following order.

Step - 1

Debit and Credit Ledgers involved with mentioning type and flow of Ledger Accounts.

Step - 2

Journal Entry

Step - 3

Entry in TallyPrime

Date : 01/04/2021 (Transaction No. 1)

Mr. Surya Krishnamurthy started a Proprietorship Business at Cuttack, Odisha with ₹10,00,000/- by Cash.

Trade Name - TRIMURTHY TRADERS, Nature of Business - Wholesale and Retail Trader of Electrical Goods.

GSTIN - 21AAECS0527O1ZY

Debit Ledger : Cash A/c

  • In Traditional Approach - Cash A/c is under type Real Account - Comes in.

  • In Modern Approach - Cash A/c is under type Asset Account - Increases.

Credit Ledger : Capital A/c

  • In Traditional Approach - Capital A/c is under Personal Account - Giver.

  • In Modern Approach - Capital A/c is under Capital Account - Increases.

Journal Entry:

Journal Entry for Capital introduced

Click here to know how to enter the above transaction using Accounting Software TallyPrime

Effect of this Journal Entry on Financial Statements.

1. Effect on Trial Balance

Cash A/c Ledger Balance in Debit side will be increased by ₹10,00,000/-

Capital A/c Ledger Balance in Credit side will be increased by ₹10,00,000/-

2. Effect on Profit & Loss Account

         No effect on Profit & Loss Account

3. Effect on Balance Sheet

Cash Balance in Assets side(under Current Assets) will be increased by ₹10,00,000/-

Capital Account Balance in Liabilities side(under Capital Account) will be increased by ₹10,00,000/-

You can verify effect of this Journal Entry on the above three Statements after entry in TallyPrime.

Key Points

Date : 01/04/2021 (Transaction No. 2)

Opened a Current Account with Axis Bank and deposited Cash for ₹5,00,000/-.

Debit Ledger : Axis Bank Current A/c

  • In Traditional Approach - Axis Bank Current A/c is under type Real Account - Comes in.
  • In Modern Approach - Axis Bank Current A/c is under type Asset Account - Increases.

Credit Ledger : Cash A/c

  • In Traditional Approach - Cash A/c is under Real Account - Goes Out.

  • In Modern Approach - Cash A/c is under Asset Account - decreases.

Journal Entry

Journal Entry for Cash Deposit into Axis Bank Current Account

Click here to know how to enter the above transaction using Accounting Software TallyPrime 

Effect of this Journal Entry on Financial Statements.

1. Effect on Trial Balance

'Axis Bank Current A/c' Ledger Balance in Debit side will be increased by ₹5,00,000/-

'Cash A/c' Ledger Balance in Debit side will be decreased by ₹5,00,000/-

2. Effect on Profit & Loss Account

         No effect on Profit & Loss Account

3. Effect on Balance Sheet

'Axis Bank Current A/c' Balance in Assets side(under Current Assets) will be increased by ₹5,00,000/-

'Cash A/c' Balance in Assets side(under Current Assets) will be decreased by ₹5,00,000/-

You can verify effect of this Journal Entry on the above three Statements after entry in TallyPrime.

Date : 01/04/2021 (Transaction No. 3)

Amount paid to Mr. Rakesh Das towards Security Deposit for Office & Godown Rent for ₹50,000/- vide Chq No-700101.

Debit Ledger : Security Deposit with Rakesh Das A/c

  • In Traditional Approach - Security Deposit with Rakesh Das A/c is under type Personal Account - Receiver.

  • In Modern Approach - Security Deposit with Rakesh Das A/c is under type Asset Account - Increases.

Credit Ledger : Axis Bank Current A/c

  • In Traditional Approach - Axis Bank Current A/c is under Real Account - Goes Out.

  • In Modern Approach - Axis Bank Current A/c is under Asset Account - decreases.

Journal Entry

Journal Entry for Payment of Security Deposit

Click here to know how to enter the above transaction using Accounting Software TallyPrime 

Effect of this Journal Entry on Financial Statements.

1. Effect on Trial Balance

'Security Deposit with Rakesh Das A/c' Ledger Balance in Debit side will be increased by ₹50,000/-

'Axis Bank Current A/c' Ledger Balance in Debit side will be decreased by ₹50,000/-

2. Effect on Profit & Loss Account

         No effect on Profit & Loss Account

3. Effect on Balance Sheet

'Security Deposit with Rakesh Das A/c' Balance in Assets side(under Current Assets) will be increased by ₹50,000/-

'Axis Bank Current A/c' Balance in Assets side(under Current Assets) will be decreased by ₹50,000/-

You can verify effect of this Journal Entry on the above three Statements after entry in TallyPrime.

Date : 01/04/2021 (Transaction No. 4)

Purchased Furniture & Fixture from Ankur Industries as pr Cash Memo No-5010 for ₹18,100/-.

Debit Ledger : Furniture & Fixtures A/c

  • In Traditional Approach - Furniture & Fixtures A/c is under type Real Account - Comes in.

  • In Modern Approach - Furniture & Fixtures A/c is under type Asset Account - Increases.

Credit Ledger : Cash A/c

  • In Traditional Approach - Cash A/c is under Real Account - Goes Out.

  • In Modern Approach - Cash A/c is under Asset Account - decreases.

Journal Entry

Journal Entry for purchase of Fixed Assets

Click here to know how to enter the above transaction using Accounting Software TallyPrime

Effect of this Journal Entry on Financial Statements.

1. Effect on Trial Balance

'Furniture & Fixtures A/c' Ledger Balance in Debit side will be increased by ₹18,100/-

'Cash A/c' Ledger Balance in Debit side will be decreased by ₹18,100/-

2. Effect on Profit & Loss Account

         No effect on Profit & Loss Account

3. Effect on Balance Sheet

'Furniture & Fixtures A/c' Balance in Assets side(under Fixed Assets) will be increased by ₹18,100/-

'Cash A/c' Balance in Assets side(under Current Assets) will be decreased by ₹18,100/-

You can verify effect of this Journal Entry on the above three Statements after entry in TallyPrime.

Date : 01/04/2021 (Transaction No. 5)

Purchased Computer from M/s. Computer Point as per Cash Memo No-201 for ₹28,500/-

Debit Ledger : Computer A/c

  • In Traditional Approach - Computer A/c is under type Real Account - Comes in.

  • In Modern Approach - Computer A/c is under type Asset Account - Increases.

Credit Ledger : Cash A/c

  • In Traditional Approach - Cash A/c is under Real Account - Goes Out.

  • In Modern Approach - Cash A/c is under Asset Account - decreases.

Journal Entry

Journal Entry for Purchase of Fixed Asset.

Click here to know how to enter the above transaction using Accounting Software TallyPrime

Effect of this Journal Entry on Financial Statements.

1. Effect on Trial Balance

'Computer A/c' Ledger Balance in Debit side will be increased by ₹28,500/-

'Cash A/c' Ledger Balance in Debit side will be decreased by ₹28,500/-

2. Effect on Profit & Loss Account

         No effect on Profit & Loss Account

3. Effect on Balance Sheet

'Computer A/c' Balance in Assets side(under Fixed Assets) will be increased by ₹28,500/-

'Cash A/c' Balance in Assets side(under Current Assets) will be decreased by ₹28,500/-

You can verify effect of this Journal Entry on the above three Statements after entry in TallyPrime.

Date : 02/04/2021 (Transaction No. 6)

Purchased office Stationery from M/s. Lily Stationery as per Cash Memo No-103 for ₹530/-.

Debit Ledger : Printing & Stationery A/c

  • In Traditional Approach - Printing & Stationery A/c is under type Nominal Account - Expense.

  • In Modern Approach - Printing & Stationery A/c is under type Expense Account - Increases.

Credit Ledger : Cash A/c

  • In Traditional Approach - Cash A/c is under Real Account - Goes Out.

  • In Modern Approach - Cash A/c is under Asset Account - decreases.

Journal Entry

Journal Entry for payment towards stationery expenses

Click here to know how to enter the above transaction using Accounting Software TallyPrime

Effect of this Journal Entry on Financial Statements.

1. Effect on Trial Balance

'Printing & Stationery A/c' Ledger Balance in Debit side will be increased by ₹530/-

'Cash A/c' Ledger Balance in Debit side will be decreased by ₹530/-

2. Effect on Profit & Loss Account

         'Printing & Stationery A/c' under 'Indirect Expenses' in Debit side will be increased by ₹530/-

         Net Profit will be decreased by ₹530/-

3. Effect on Balance Sheet

'Capital A/c' Balance in Liabilities side will be decreased by ₹530/- on Transfer of Net Profit to Capital A/c.

'Cash A/c' Balance in Assets side(under Current Assets) will be decreased by ₹530/-

You can verify effect of this Journal Entry on the above three Statements after entry in TallyPrime.

Date : 02/04/2021 (Transaction No. 7)

Purchased Motor Cycle from M/s. S.K. Automobiles as per Cash Memo No-1001 for ₹65,700/-.

Debit Ledger : Motor Cycle A/c

  • In Traditional Approach - Motor Cycle A/c is under type Real Account - Comes in.

  • In Modern Approach - Motor Cycle A/c is under type Asset Account - Increases.

Credit Ledger : Cash A/c

  • In Traditional Approach - Cash A/c is under Real Account - Goes Out.

  • In Modern Approach - Cash A/c is under Asset Account - decreases.

Journal Entry

Journal Entry for purchase of Fixed Assets

Click here to know how to enter the above transaction using Accounting Software TallyPrime

Effect of this Journal Entry on Financial Statements.

1. Effect on Trial Balance

'Motor Cycle A/c' Ledger Balance in Debit side will be increased by ₹65,700/-

'Cash A/c' Ledger Balance in Debit side will be decreased by ₹65,700/-

2. Effect on Profit & Loss Account

         No effect on Profit & Loss Account

3. Effect on Balance Sheet

'Motor Cycle A/c' Balance in Assets side(under Fixed Assets) will be increased by ₹65,700/-

'Cash A/c' Balance in Assets side(under Current Assets) will be decreased by ₹65,700/-

You can verify effect of this Journal Entry on the above three Statements after entry in TallyPrime.

Date : 02/04/2021 (Transaction No. 8)

Amount paid towards petrol for Vehicle for ₹230/-.

Debit Ledger : Vehicle Maintenance A/c

  • In Traditional Approach - Vehicle Maintenance A/c is under type Nominal Account - Expense.

  • In Modern Approach - Vehicle Maintenance A/c is under type Expense Account - Increases.

Credit Ledger : Cash A/c

  • In Traditional Approach - Cash A/c is under Real Account - Goes Out.

  • In Modern Approach - Cash A/c is under Asset Account - decreases.

Journal Entry

Journal Entry for Vehicle Maintenance Expenses.

Click here to know how to enter the above transaction using Accounting Software TallyPrime

Effect of this Journal Entry on Financial Statements.

1. Effect on Trial Balance

'Vehicle Maintenance A/c' Ledger Balance in Debit side will be increased by ₹230/-

'Cash A/c' Ledger Balance in Debit side will be decreased by ₹230/-

2. Effect on Profit & Loss Account

         'Vehicle Maintenance A/c' under 'Indirect Expenses' in Debit side will be increased by ₹230/-

         Net Profit will be decreased by ₹230/-

3. Effect on Balance Sheet

'Capital A/c' Balance in Liabilities side will be decreased by ₹230/- on Transfer of Net Profit to Capital A/c.

'Cash A/c' Balance in Assets side(under Current Assets) will be decreased by ₹230/-

You can verify effect of this Journal Entry on the above three Statements after entry in TallyPrime.

Date : 02/04/2021 (Transaction No. 9) 

Goods purchased for from Krishna Enterprises, Odisha as per Invoice No-925 for ₹2,31,438/-.

Item/Product/Taxable Value ₹1,98,600/-, CGST ₹16,419/- and SGST ₹16,419/-.

Total Invoice Value is ₹2,31,438/-(i.e Taxable Value ₹1,98,600 + CGST ₹16,419 + SGST ₹16,419).

See the Invoice details below.

Project Practice Sheet 1 - Krishna Enterprises - Invoice No.925

Debit Ledgers are :

  1. Purchases A/c

  2. CGST A/c

  3. SGST A/c

  • In Traditional Approach :

Purchases A/c is under type Nominal Account - Expense.

CGST A/c is under type Personal Account - Receiver.

SGST A/c is under type Personal Account - Receiver.

  • In Modern Approach :

Purchases A/c is under type Asset Account - Increase.

CGST A/c is under type Asset Account - Increase.

SGST A/c is under type Asset Account - Increase.

Credit Ledger : Krishna Enterprises A/c

  • In Traditional Approach - Krishna Enterprises A/c is under Personal Account - Giver.

  • In Modern Approach - Krishna Enterprises A/c is under Liability Account - Increases.

Journal Entry

Journal Entry for Credit Purchase of Trading Goods

Note : If you are from Country/Region other than Indian States/UTs, Debit your Regional Indirect Tax Account(as applicable) in place of CGST A/c and SGST A/c for the above mentioned example of Purchase Entry.

Click here to know how to enter the above transaction using Accounting Software TallyPrime

Date : 02/04/2021 (Transaction No. 10)

Amount paid to ABC Roadways vide Chq No-700102 towards transportation charges for ₹1986/-

Debit Ledger : Carriage & Freight A/c

  • In Traditional Approach - Carriage & Freight A/c is under type Nominal Account - Expense.

  • In Modern Approach - Carriage & Freight A/c is under type Expense Account - Increases.

Credit Ledger : Axis Bank Current A/c

  • In Traditional Approach - Axis Bank Current A/c is under Real Account - Goes Out.

  • In Modern Approach - Axis Bank Current A/c is under Asset Account - decreases.

Journal Entry 

Journal Entry towards Payment of Carriage & Freight Expenses

Click here to know how to enter the above transaction using Accounting Software TallyPrime.

Next >>

Related Articles :

Types of Account

Debit and Credit Rule

Double Entry System of Book Keeping

Journal 

Ledger 

Trial Balance

Trading and Profit & Loss Account

Balance Sheet

Bank Reconciliation Statement

Location: Cuttack, Odisha, India

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