Journalise the following transactions in the books of Kunal Stores

2018 August 

1. Purchased goods of Rs. 90,000 at 10% Trade Discount and 10% Cash Discount from Rakesh and 1/3rd amount paid by cheque.   
5. Opened current account in State Bank of India by depositing Rs. 60,000. 
8. Cash Purchases Rs. 85,000. 
10. Goods sold on credit to Tushar Rs. 20,000 @10% Trade Discount. 
12. Paid Salary Rs. 4,000. 
16. Tushar returned goods of Rs. 250. 
17. Goods taken by Kunal for his private use Rs. 2,000. 
20. Purchased Laptop of Rs. 40,000 from Joshi Electronics @18% GST and paid by cheque. 
22. Rent paid by cheque Rs. 15,000. 
25. Purchased Motor car worth Rs. 2,00,000 for cash @18% GST and paid by bank.
26. Goods distributed as free sample Rs. 4,000. 
28. Purchased goods from Amit of Rs. 60,000 on credit. 
30. Paid by ECS cash to Amit Rs. 58,500, who allowed us discount Rs. 1,500. 
30. Sold goods Rs. 5,000 at a loss Rs. 1,000. 
31. Sold goods for Rs. 20,000.

In the Books of Kunal Stores.








Purchase A/c                   Dr.  
           To Discount allowed  
           To Cash A/c  
           To Bank A/c 
[Being Purchased goods at 10% Trade discount and 10% cash discount and 1/3rd amount paid by cheque] 





State Bank of India A/c Dr.   
        To Cash A/c 
[Being Opened cash account in state bank of India] 





Purchase A/c                  Dr.    
           To cash A/c  
[Being cash purchased] 





Tushar A/c                     Dr.     
           To sales A/c 
[Being sold good to Tushar on credit and allowed 10% trade discount] 





Salary A/c                     Dr.      
           To cash A/c  
[Being salary paid] 





Sales Return A/c         Dr.      
          To Tushar A/c  
[Being goods return from Tushar] 





Drawings A/c               Dr.  
          To Goods A/c 
[Being Goods taken by Proprietor for private use] 





Laptop A/c                   Dr. 
Input CGST 9%             Dr. 
Input SGST 9%             Dr. 
          To Bank A/c  
[Being purchased laptop from Joshi Electronics @18% GST] 





Rent A/c                 Dr. 
         To Bank A/c 
[Being paid rent by cheque] 





Motor Car A/c              Dr. 
Input CGST 9%           Dr. 
Input SGST 9%              Dr. 
            To Bank A/c 
[Being purchased motor car @18% GST and amount paid by Bank] 





Advertisement A/c     Dr.  
            To Cash A/c 
[Being paid for advertisement] 





Purchase A/c                Dr. 
            To Amit A/c  
[Being purchased goods on credit by Amit] 





Amit A/c                      Dr. 
           To Discount received 
           To Bank A/c  
[Being paid ECS cash to Amit and allowed discount] 





Cash A/c                    Dr. 
Loss A/c                       Dr. 
           To Sales A/c 
[Being sold goods at loss]                    





Cash A/c                      Dr. 
            To Sales A/c 
[Being Goods Sold] 




Cash Discount: It is the  allowance given by the seller of goods to the purchaser. Discount is a Nominal Account. Nominal Account Rule Says Debit all expense ad loss, Credit all income and gain. Here, Cash discount follow the same Rule. When seller give cash discount he had a loss of cash and a gain to the purchaser. Therefore, whenever cash discount is allowed, Account should be debited in the books of seller and credited in the books of buyer. It is to be calculated after deduction of Trade Discount. Cash Discount is Shown in the Books of account, whereas Trade Discount is not shown in Books of account, but deducted from the value.
Cash discount example
You can understand Cash Discount easily with this Purchase of goods example:

1. Purchased goods at 10% Trade Discount and 10% Cash Discount from rakesh and 1/3rd amount paid by cheque. Purchase account is Debited and 10% C.D is credited because proprietor is receiving discount from rakesh. And 1/3rd amount is paid by cheque and remaining amount will be paid by cash.   

5. Opened current account in State Bank of India and deposited 60,000. State bank of India is the receiver therefore it shown on debit side and On Credit Side Cash Account because credit the giver and here proprietor is giving cash to the bank.

8. Cash purchased. Purchase account to Cash account because debit what comes in and credit what goes out by real account formula. Cash is going out and goods coming in.  

10. Goods sold on credit to Tushar Rs. 20,000 @10%T.D. Tushar account is debited because Tushar is not paying cash immediately and T.D is not recorded in the books of account and Sale account is credited.

12. Paid salary: Salary is an expense therefore it is debited to debit side and Cash account is credited.

16. Tushar Return Goods. Refer Transaction 10 for solving this transaction. On debit side sales return and on credit side Tushar account because sale of goods is return to us which means proprietor is the receiver and Tushar is the giver.

17. Goods taken from Kunal for private use. Kunal is proprietor therefore when proprietor take Goods or Cash for private use it is recorded as Drawing account Hence Drawing account is Debited to debit side and Goods account is credited.

20. Purchased Laptop @18% GST and paid by cheque. Purchase account and CGST, SGST is Debited to Debit side. And Bank account is credited because amount is paid by cheque.

22. Rent paid by cheque. Rent is an expense therefore Rent account is Debited and Bank account is Credited.

25. Purchased Motor car @18% GST and paid by Bank.

On debit side Motor car account because motor car is an Asset for the Business and cash is going out. CGST and SGST because it is an expense. On credit side Bank account.

30. Paid by EGS cash to Amit and allowed us Discount Rs. 1,500.

Amit account Debited because Debit the receiver and Discount is Received to us therefore Credited to credit side [Refer Nominal account] and Bank account is credited because ECG means Electronic Clearing Service.

30. Sold goods at a Loss of Rs. 1,000.

Cash account is debited and loss account is also debited [Refer nominal account formula]
 and sales account is credited.


1. Trade Discount - 90,000 *10/100 = 9,000
    Cash Discount - 81,000 *10/100 = 8,100
     1/3rd amount by cheque and remaining by cash.
     Cash amount 72,900/3 = 24,300  
    Bank - 48,600

10. Trade Discount - 20,000 *10/100 = 2,000

20. GST 18% - 40,000 *18/100 = 7,200
      CGST 9% - 3,600
      SGST 9% - 3,600

25. GST 18% -  2,00,000 *18/100 = 36,000
      CGST 9% - 18,000 
      SGST 9% - 18,000

In summary, business travel during this period reflects a strategic mix of transactions that demonstrate economic acumen:

Negotiated purchases from Rakesh with trade and cash discounts leveraging various payment methods.
Setting up current account with substantial deposit in State Bank of India.
Various purchases including cash acquisition and credit transactions with Tushar and Amit.
Tactical sales strategies with a judicious approach to handling discounts and returns.
Significant capital investment, such as buying a laptop, motor car and rent payments.
A mix of promotional activities, items distributed as free samples and strategic sales at a slight loss of Rs. 5,000.

Journalise the following transactions in the books of Kunal Stores.

3 Gold Rule of  Accounting.
Personal Account: 1. Debit The Receiver.
                               2. Credit The Giver.

Real Account: 1. Debit What Comes In.
                        2. Credit What Goes Out.

Nominal Account: 1. Debit All Expenses And Losses.
                               2. Credit All Income And Gain.

Chapter 4, Ledger Solution


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