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Personal Accounts
Personal accounts are the accounts of persons with whom the business is required to deal with. These include accounts of natural and artificial persons such as : Krishnas A/c, Tata co. A/c, Canara Bank A/c, Sundry debtors A/c etc. the rule of personal account is:Debit the Receiver Credit the Giver For example: Mr. Krishna received money from Canara Bank. Here the money receiver is Mr. Krishna so, Mr.Krishna is debited. And the money giver is Canara Bank so, Canara Bank is credited. Here Krishna receiver and Canara Bank is giver. Krishnas A/c - Dr Canara Bank A/c - Cr
Real Accounts
Real accounts are maintained for assets or properties of the business. For example: Building A/c, Machinery A/c, Cash A/c, Furniture A/c, Goodwill, Patent etc. the rules of real account is:Debit What comes in Credit What goes out For example: Building purchased by cash. Here Building comes in to the business so, Building is debited. And Cash goes out or cash given for the purchase of Building so, Cash is credited. Here Building comes in and Cash goes out therefore: Building A/c - Dr Cash A/c - Cr
Nominal Accounts
Nominal accounts are accounts where incomes and expenses are recorded. For example: Salaries A/c, Wages A/c, Rent paid A/c, Commission Received A/c, Discount Allowed A/c, Discount Received A/c etc. the rule of nominal account is:Debit All Expense and Losses Credit All Incomes and Gains For example: Building Rent paid and Commission Received Here Building rent is expenses and Commission received is income therefore: Rent A/c - Debit Commission received - Credit
I. Problems 1. Classify the following into Personal, Real and Nominal Account:
a) b) c) d) e) f) Sales account Bank account Drawings account Stock account Discount received account Carriage account g) h) i) j) k) l) Royal college account Capital account Purchases account Cash account Stationary account Vijays account
II. Problems: 1. Identify the two accounts involved in the following transactions and identify the type of account:
1) Pavan commenced business with cash Rs.50,000/2) Withdrawn cash from business for personal use Rs.8,000/3) Purchased machinery from H.M.T Rs.8,000/4) Purchased furniture from furniture mart for cash Rs.2,000/5) Received communication Rs.4,000/6) Paid wages Rs.3,000/7) Sold goods Rs.6,000/8) Received loan from Indian Bank Rs.40,000/9) Paid electricity charges Rs.1,000/10) Purchased paper, pen, etc for Rs.200/-
2. Identify the two accounts involved and classify them into following transactions.
1) Opened a current account with Bank of India Rs.20,000/2) Cash purchasesRs.10,000/3) Commission due to Raj Rs.100/4) Commission received from Ramya Rs.400/5) Commission charged to Amar Rs. 250/6) Received loan from Raghu Rs.10,000/7) Withdrawn from Bank of India for office use Rs.12,000/8) Paid rent for building in advance Rs.2,000/9) Salary due to office clerk Rs.1,800/10) Sold furniture for Rs.500/-
2. Journalize the following transactions in the books of Ravi (for Jan 2004)
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a) 01-01-2004: Commenced business with Rs.25,000/- by selling his bike. b) 02-01-2004: Purchased office furniture for cash Rs. 2000/c) 03-01-2004: Paid for office stationery Rs. 100/d) 04-01-2004: Bought goods from Raju on credit Rs. 3000/e) 06-01-2004: Purchased goods for cash from Vijay Rs.1000/f) 07-01-2004: Sold goods to Sundar on credit Rs.1500/g) 09-01-2004: Sold goods to manohar for cash Rs.500/h) 10-01-2004: Paid cash to raju on A/C Rs.1200/i) 12-01-2004: Received cash from Sundar on a/c Rs.800/j) 15-01-2004: Return goods to Raj Rs 300/k) 18-01-2004: Sunder returns goods to Ravi Rs.200/k) 19-01-2004: Cash sales Rs.600/l) 22-01-2004: Cash purchases Rs.900/m) 23-01-2004: Paid for sundry expenses Rs.50/n) 25-01-2004: Received commission from Singh Rs.550/o) 27-01-2004: Paid office rent of Rs.250/- to land lord p) 28-01-2004: Gave loan to Shankar trading company Rs.4,000/q) 29-01-2004: Paid Salary to manager Rs.700/r) 30-01-2004: Paid Advertisement charges of Rs.100/s) 31-01-2004: Cash withdrawn for personal purpose Rs.100/-
c) 3rd April 2004: Deposited cash into bank Rs.10,000/d) 5th April 2004: Bought goods from Arun for Rs.3,000/e) 8th April 2004: Sold goods to Rajesh Rs.2,000/f) 10th April 2004: Bought goods from Santhosh for Rs.800/g) 14th April 2004: Sold goods to Ranga for cash Rs.600/h) 16th April 2004: Paid Arun by cheque in full settlement. i) 19th April 2004: Goods purchased from happy traders Rs.900/j) 20th April 2004: Paid happy traders in cash. k) 21st April 2004: Received interest Rs.60/l) 22nd April 2004: Received commission Rs.40/m) 24th April 2004: Received cheque from Rajesh n) 26th April 2004: Returned goods to Arun Rs.100/o) 28th April 2004: Rajesh returned goods to us Rs.40/p) 29th April 2004: Paid office rent Rs.300/q) 30th April 2004: Paid Manager salary of Rs.700/- by cheque
i) 10-4-2005: As per our instruction banker paid electricity bill of Rs.300/j) 11-4-2005: Banker received Rs.1,000 by way of interest on investments from TATA chemicals Ltd. On behalf of business k) 12-4-2005: Mr. Harish a customer deposited Rs.1,000 directly to our bank A/c l) 13-4-2005: Cheque for Rs.35,000 received from Y Co. was deposited into bank for collection
4.
Sundry debtors Rs.40,000 Stock of goods Rs.1,20,000 Furniture Rs.40,000 Buildings Rs.2,00,000 Sundry Creditors Rs.20,000 Bills payable Rs.10,000
5.
Mr. Vijay started business with Rs.5,00,000 of which 1,50,000 borrowed from ICICI Bank, Rs.2,00,000 borrowed from his friend, and Rs.1,50,000 is his own cash.
1. Pass compound journal entry for the following: a) 1-7-2006 George commenced business with cash Rs.10,000, stock Rs.2,000 and furniture Rs. 8,000, machinery Rs.10,000. b) 2-7-2006 Purchased goods for cash Rs.2,000, from C Rs. 1,000 and D on credit Rs.3,000 c) 4-7-2006 Sold goods to Z for cash Rs.4,000 and on credit Rs.6,000 d) 6-7-2006 Sold goods to M Rs.4,000 and to N Rs.6,000
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e) 8-7-2006 Received cash from Z Rs.5,000 and allowed him discount of Rs.50 f) 10-7-2006 Paid C Rs.980 in full settlement of his account g) 11-7-2006 Paid salaries Rs.1,000, rent Rs.800, postage Rs.100 h) 13-7-2006 Received commission Rs.600 and rent Rs.1,500 i) 15-7-2006 Proprietor took cash of Rs.500 and goods of Rs.300 from business for personal use. j) 18-7-2006 Sold goods to Amar Rs.5,000 and received Rs.2,000 k) 20-7-2006 Purchased goods from Arjun Rs. 8,000 and paid him Rs.4,000 l) 22-7-2006 Brought goods worth Rs.2,000 and paid carriage Rs.100 2. Pass compound journal entry for the following: a) 1-1-2005 Madhu started business with cash Rs.24,000 a. Loan from Mr. Jain Rs.12,000 b. Furniture Rs.16,000 c. Stock of stationery Rs.800 b) 2-1-2005 Opened a bank account and deposited Rs.5,000 c) 3-1-2005 Bought stationary for cash Rs.1,400 d) 5-1-2005 Purchased from Shanti traders, furniture Rs.1,200 a. Instruments Rs.1,000 b. Stationery Rs.900 c. A cheque was sent to them in full settlement of their bill e) 8-1-2005 Cash sales Rs2,000 f) 10-1-2005 Cash sales Rs.2,000 g) 15-1-2005 Goods worth Rs.500 were defective and returned to Shanti traders h) 20-1-2005 Sold old furniture for cash Rs.1,000 i) 25-1-2005 Cash purchases Rs.1,100 j) 28-1-2005 Credit sales to Shanti traders Rs.500 k) 31-1-2005 Received amount due from Shanti traders. 3.