NCERT Solutions for Class 11 Accountancy Chapter 3: Recording of Transactions – I (2026–27)

These Class 11 Accountancy Chapter 3 solutions cover Recording of Transactions – I from the NCERT textbook (Reprint 2026–27). The chapter explains source documents and vouchers, the accounting equation (A = L + C), the rules of debit and credit, the journal as the book of original entry, and posting to the ledger. Below you get every Questions for Practice question reproduced verbatim — all 6 short answers, 7 long answers and all 22 numerical problems — solved step by step with balanced, verified journal entries, ledger accounts and accounting equations, plus extra practice, MCQs, Assertion–Reason and FAQs.

Class: 11 Subject: Accountancy Book: Financial Accounting – I Chapter: 3 Topic: Recording of Transactions – I Session: 2026–27
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Class 11 Accountancy Chapter 3 – Overview

Chapter 3, Recording of Transactions – I, takes you through the first steps of the accounting process. Every business transaction is evidenced by a source document (cash memo, invoice, pay-in-slip, cheque) from which an accounting voucher is prepared. The chapter develops the accounting equation, Assets = Liabilities + Capital, and shows that it always stays balanced because every transaction has a two-fold effect. It then states the rules of debit and credit for the five account categories — assets, liabilities, capital, expenses/losses and revenues/gains — and applies them to record transactions in the journal (the book of original entry) through journalising, before posting the entries to ledger accounts (the principal book). Mastery of these tools is the foundation for all of financial accounting.

Key Terms, Rules & Formats

Source document / Voucher: a document that provides evidence of a transaction (cash memo, invoice, sales bill, pay-in-slip, cheque, salary slip). All recording is done on the basis of vouchers.

Accounting equation: a statement of equality showing that the assets of a business always equal the total of its liabilities and capital. It is also called the Balance Sheet Equation.

Book of original entry (Journal): the book in which a transaction is recorded for the first time, in chronological order. Recording in the journal is called journalising.

Ledger: the principal book containing all the accounts to which entries are transferred from the journal. Transferring entries from journal to ledger is called posting.

Debit (Dr.) and Credit (Cr.): debit is the left side of an account, credit is the right side. In double-entry accounting, total debits always equal total credits.

The Accounting Equation

A = L + C   →   A − L = C   ·   A − C = L
where A = Assets, L = Liabilities, C = Capital (owner’s equity).

Rules of Debit and Credit (Modern/American approach)

Type of AccountDebit (Dr.)Credit (Cr.)
AssetsIncreaseDecrease
LiabilitiesDecreaseIncrease
CapitalDecreaseIncrease
Revenues / GainsDecreaseIncrease
Expenses / LossesIncreaseDecrease

Short Answer Questions — Solutions

All questions below are reproduced verbatim from the NCERT textbook’s Questions for Practice. Answers are original, written in exam-ready style.

1. State the three fundamental steps in the accounting process.

ANSWER The three fundamental steps in the accounting process are: (i) Identifying and recording transactions: identifying the financial transactions from source documents and recording them in the journal (book of original entry). (ii) Classifying: posting the recorded entries to the relevant individual accounts in the ledger (the principal book) so that all transactions relating to one account are grouped together. (iii) Summarising and communicating: balancing the ledger accounts, preparing the trial balance and final accounts, and communicating the financial results to interested users.

2. Why is the evidence provided by source documents important to accounting?

ANSWER Source documents (cash memos, invoices, cheques, pay-in-slips, vouchers) are the written, objective proof that a transaction actually took place. They are important because they (i) form the basis for recording every entry, ensuring accuracy and authenticity; (ii) serve as legal evidence in case of any dispute; (iii) help in auditing and verification of accounts; and (iv) fix responsibility, since each voucher is prepared and authorised by a responsible person. Without source documents, the records would be unreliable and unverifiable.

3. Should a transaction be first recorded in a journal or ledger? Why?

ANSWER A transaction should be first recorded in the journal. The journal is the book of original entry, where each transaction is recorded for the first time in chronological order, with both its debit and credit aspects and a narration. Only after journalising are the entries transferred (posted) to the ledger. Recording first in the journal links the debit and credit of each transaction in one place, provides a complete dated record with explanation, and reduces the chance of errors when posting to the ledger.

4. Are debits or credits listed first in journal entries? Are debits or credits indented?

ANSWER In a journal entry, the debit is listed first — the account to be debited is written on the first line beginning from the left, with ‘Dr.’ at the end. The credit is written on the next line and is indented (leaving a margin on the left) with the prefix ‘To’. Thus debits are listed first and credits are indented.

5. Why are some accounting systems called double accounting systems?

ANSWER They are called double entry systems because every business transaction has a two-fold effect — a giving (debit) aspect and a receiving (credit) aspect — and is therefore recorded in at least two accounts. For each transaction the total amount debited must equal the total amount credited. This dual recording keeps the accounting equation in balance and allows the arithmetical accuracy of the books to be checked through a trial balance.

6. Give a specimen of an account.

ANSWER An account is in the form of the letter ‘T’, with a debit (left) side and a credit (right) side. A specimen ledger account:
Dr.   Name of the Account   Cr.
DateParticularsAmount (₹)DateParticularsAmount (₹)
…To ………By ……

7. Why are the rules of debit and credit same for both liability and capital?

ANSWER Both liabilities and capital appear on the same side of the accounting equation (A = L + C) and both represent claims against the assets of the business — liabilities are the claims of outsiders (creditors) and capital is the claim of the owner. Since the business is treated as separate from its owner (business entity concept), it owes capital to the proprietor just as it owes liabilities to creditors. Because their nature is the same (claims on assets), the same rule applies: an increase in liability or capital is credited and a decrease is debited.

8. What is the purpose of posting J.F numbers that are entered in the journal at the time entries are posted to the accounts.

ANSWER The Ledger Folio (L.F.) number entered in the journal records the page number of the ledger account to which the entry has been posted. Its purposes are: (i) it provides a cross-reference linking each journal entry to its ledger account so the posting can be easily located; (ii) it confirms that the entry has actually been posted (an entry without an L.F. number is yet to be posted); and (iii) it helps in checking and auditing by allowing quick movement between the journal and ledger.

9. What entry (debit or credit) would you make to: (a) increase revenue (b) decrease in expense, (c) record drawings (d) record the fresh capital introduced by the owner.

ANSWER (a) Increase in revenue: Credit (an increase in revenue/gain is credited). (b) Decrease in expense: Credit (a decrease in expense/loss is credited). (c) Record drawings: Debit the Drawings account (drawings reduce capital, and a decrease in capital is debited). (d) Fresh capital introduced: Credit the Capital account (an increase in capital is credited).

10. If a transaction has the effect of decreasing an asset, is the decrease recorded as a debit or as a credit? If the transaction has the effect of decreasing a liability, is the decrease recorded as a debit or as a credit?

ANSWER A decrease in an asset is recorded as a credit (since an increase in an asset is debited, a decrease is credited). A decrease in a liability is recorded as a debit (since an increase in a liability is credited, a decrease is debited).

Long Answer Questions — Solutions

1. Describe the events recorded in accounting systems and the importance of source documents in those systems?

ANSWER Accounting systems record financial transactions and events — that is, monetary dealings of the business that can be measured in money and that change the financial position of the firm, such as purchase and sale of goods, receipt and payment of cash, borrowing, payment of expenses and earning of incomes. Non-financial events (like the appointment of a manager) are not recorded. Importance of source documents: a source document is the written evidence of a transaction (cash memo, invoice, cheque, pay-in-slip, voucher). Every entry in the books of account is made only on the basis of such a document. They are important because they (i) establish the authenticity and accuracy of the records; (ii) act as legal evidence and are preserved till audit and tax assessment are completed; (iii) provide the data — date, amount, parties, nature — needed to prepare the accounting voucher and journal entry; and (iv) fix responsibility through the signatures of the persons preparing and authorising them. In short, source documents are the starting point and the backbone of a reliable accounting system.

2. Describe how debits and credits are used to analyse transactions.

ANSWER Every transaction is first analysed to find the two accounts it affects and how each is affected. All accounts fall into five categories — assets, liabilities, capital, expenses/losses and revenues/gains. The rules of debit and credit are then applied: increase in assets/expenses is debited and decrease is credited; increase in liabilities/capital/revenues is credited and decrease is debited. To analyse a transaction we ask: (i) which two accounts are involved? (ii) what is the type of each account? (iii) is each account increasing or decreasing? (iv) according to the rules, which is debited and which credited? For example, ‘Goods sold for cash ₹10,000’ affects Cash (asset, increasing → debit) and Sales (revenue, increasing → credit). Because the same amount is debited to one account and credited to another, total debits always equal total credits and the books stay balanced.

3. Describe how accounts are used to record information about the effects of transactions?

ANSWER An account is a summarised record of all transactions relating to a particular item (asset, liability, capital, expense or revenue), kept in the ledger in the form of a ‘T’ with a debit (left) side and a credit (right) side. After a transaction is journalised, its debit aspect is posted to the debit side of the relevant account and its credit aspect to the credit side of another account. All increases in an asset or expense account are entered on its debit side and decreases on its credit side; for liability, capital and revenue accounts the reverse is true. By collecting every entry relating to one item in one place, the account shows the net effect of all transactions on that item. The difference between the two sides — the balance — reveals, for example, cash in hand, amount due from a customer, or amount owed to a supplier on any date. Thus accounts classify and summarise the effects of transactions for meaningful conclusions.

4. What is a journal? Give a specimen of journal showing at least five entries.

ANSWER A journal is the basic book of original entry in which business transactions are recorded for the first time, in chronological order, after analysing each into its debit and credit aspects, with a narration explaining the entry. The process of recording in the journal is called journalising. A specimen journal with five entries:
DateParticularsL.F.Dr. (₹)Cr. (₹)
2017
Apr 1		Cash A/c  Dr.
   To Capital A/c
(Business started with cash)		5,00,000
5,00,000
Apr 2Purchases A/c  Dr.
   To Cash A/c
(Goods bought for cash)		40,000
40,000
Apr 4Cash A/c  Dr.
   To Sales A/c
(Goods sold for cash)		25,000
25,000
Apr 6Furniture A/c  Dr.
   To Cash A/c
(Furniture purchased)		15,000
15,000
Apr 8Rent A/c  Dr.
   To Cash A/c
(Rent paid)		2,000
2,000

5. Differentiate between source documents and vouchers.

ANSWER Both relate to evidence of a transaction, but they differ as follows:
BasisSource DocumentVoucher (Accounting Voucher)
MeaningThe original written evidence of a transaction (cash memo, invoice, cheque, bill).A document prepared on the basis of a source document, showing the accounts to be debited and credited.
StageComes first; it is generated when the transaction takes place.Prepared after the source document, to facilitate recording.
PurposeProves that a transaction actually occurred.Analyses the transaction and authorises its recording in the books.
ContentDetails of the deal (parties, goods, amount).Debit account, credit account, amount, narration, signatures of preparer and authoriser.

6. Accounting equation remains intact under all circumstances. Justify the statement with the help of an example.

ANSWER The accounting equation A = L + C remains balanced after every transaction because each transaction has a two-fold effect that keeps both sides equal. Consider these transactions: (i) Started business with cash ₹1,00,000 → Cash (asset) +1,00,000 and Capital +1,00,000. Equation: 1,00,000 = 0 + 1,00,000. (ii) Bought goods for cash ₹30,000 → Stock +30,000, Cash −30,000 (only the composition of assets changes). 1,00,000 = 0 + 1,00,000. (iii) Bought goods on credit ₹20,000 → Stock +20,000 and Creditors (liability) +20,000. 1,20,000 = 20,000 + 1,00,000. In every case the total of assets stays equal to liabilities plus capital, proving the equation remains intact under all circumstances.

7. Explain the double entry mechanism with an illustrative example.

ANSWER The double entry mechanism is the system under which every transaction is recorded in at least two accounts — one debited and the other credited — with equal amounts, because each transaction has a give-and-take aspect. The fundamental rule is ‘every debit has an equal and corresponding credit’, so the total of debits always equals the total of credits. Example: Furniture purchased for cash ₹15,000. Two accounts are affected — Furniture (asset, increasing) and Cash (asset, decreasing). By the rules, an increase in asset is debited and a decrease in asset is credited. Entry: Furniture A/c Dr. ₹15,000; To Cash A/c ₹15,000. The debit to Furniture equals the credit to Cash, demonstrating the double entry mechanism. This dual recording gives a complete record of each transaction, keeps the equation balanced and enables preparation of a trial balance to verify accuracy.

Numerical Questions — Full Solutions

Each numerical is reproduced verbatim, then solved step by step. All accounting equations and journals are balanced and verified.

Q1. Prepare accounting equation on the basis of the following:

(a) Harsha started business with cash ₹2,00,000
(b) Purchased goods from Naman for cash ₹40,000
(c) Sold goods to Bhanu costing ₹10,000/− ₹12,000
(d) Bought furniture on credit ₹7,000

SOLUTION
CashGoodsDebtorsFurniture= Creditors+ Capital
(a)2,00,000––––2,00,000
(b)(40,000)40,000––––
1,60,00040,000–––2,00,000
(c)–(10,000)12,000––2,000
1,60,00030,00012,000––2,02,000
(d)–––7,0007,000–
Total1,60,00030,00012,0007,0007,0002,02,000
Verification: Assets = 1,60,000 + 30,000 + 12,000 + 7,000 = ₹2,09,000; Liabilities + Capital = 7,000 + 2,02,000 = ₹2,09,000. Equation balanced. (Sale at ₹12,000 of goods costing ₹10,000 gives a profit of ₹2,000 added to capital.)

Q2. Prepare accounting equation from the following:

(a) Kunal started business with cash ₹2,50,000
(b) He purchased furniture for cash ₹35,000
(c) He paid commission ₹2,000
(d) He purchases goods on credit ₹40,000
(e) He sold goods (Costing ₹20,000) for cash ₹26,000

SOLUTION
CashFurnitureGoods= Creditors+ Capital
(a)2,50,000–––2,50,000
(b)(35,000)35,000–––
(c)(2,000)–––(2,000)
(d)––40,00040,000–
(e)26,000–(20,000)–6,000
Total2,39,00035,00020,00040,0002,54,000
Verification: Assets = 2,39,000 + 35,000 + 20,000 = ₹2,94,000; Liabilities + Capital = 40,000 + 2,54,000 = ₹2,94,000. Balanced. (Commission paid is an expense reducing capital; profit on sale ₹6,000 increases capital.)

Q3. Mohit has the following transactions, prepare accounting equation:

(a) Business started with cash ₹1,75,000
(b) Purchased goods from Rohit ₹50,000
(c) Sales goods on credit to Manish (Costing ₹17,500) ₹20,000
(d) Purchased furniture for office use ₹10,000
(e) Cash paid to Rohit in full settlement ₹48,500
(f) Cash received from Manish ₹20,000
(g) Rent paid ₹1,000
(h) Cash withdrew for personal use ₹3,000

SOLUTION
CashGoodsDebtorsFurniture= Creditors+ Capital
(a)1,75,000––––1,75,000
(b)–50,000––50,000–
(c)–(17,500)20,000––2,500
(d)(10,000)––10,000––
(e)(48,500)–––(50,000)1,500
(f)20,000–(20,000)–––
(g)(1,000)––––(1,000)
(h)(3,000)––––(3,000)
Total1,32,50032,500–10,000–1,75,000
Verification: Assets = 1,32,500 + 32,500 + 10,000 = ₹1,75,000; Liabilities + Capital = 0 + 1,75,000 = ₹1,75,000. Balanced. (Discount of ₹1,500 received from Rohit and profit ₹2,500 on sale increase capital; rent ₹1,000 and drawings ₹3,000 reduce it.)

Q4. Rohit has the following transactions:

(a) Commenced business with cash ₹1,50,000
(b) Purchased machinery on credit ₹40,000
(c) Purchased goods for cash ₹20,000
(d) Purchased car for personal use ₹80,000
(e) Paid to creditors in full settlement ₹38,000
(f) Sold goods for cash costing ₹5,000 ₹4,500
(g) Paid rent ₹1,000
(h) Commission received in advance ₹2,000
Prepare the Accounting Equation to show the effect of the above transactions on the assets, liabilities and capital.

SOLUTION
CashMachineGoods= CreditorsComm. recd. adv.+ Capital
(a)1,50,000––––1,50,000
(b)–40,000–40,000––
(c)(20,000)–20,000–––
(d)(80,000)––––(80,000)
(e)(38,000)––(40,000)–2,000
(f)4,500–(5,000)––(500)
(g)(1,000)––––(1,000)
(h)2,000–––2,000–
Total17,50040,00015,000–2,00070,500
Verification: Assets = 17,500 + 40,000 + 15,000 = ₹72,500; Liabilities + Capital = 2,000 + 70,500 = ₹72,500. Balanced. (Car for personal use is drawings −80,000; discount ₹2,000 received on full settlement; loss ₹500 on sale and rent ₹1,000 reduce capital; commission received in advance is a liability.)

Q5. Use accounting equation to show the effect of the following transactions of M/s Royal Traders:

(a) Started business with cash ₹1,20,000
(b) Purchased goods for cash ₹10,000
(c) Rent received ₹5,000
(d) Salary outstanding ₹2,000
(e) Prepaid Insurance ₹1,000
(f) Received interest ₹700
(g) Sold goods for cash (Costing ₹5,000) ₹7,000
(h) Goods destroyed by fire ₹500

SOLUTION
CashGoodsPrepaid Ins.= O/s Salary+ Capital
(a)1,20,000–––1,20,000
(b)(10,000)10,000–––
(c)5,000–––5,000
(d)–––2,000(2,000)
(e)(1,000)–1,000––
(f)700–––700
(g)7,000(5,000)––2,000
(h)–(500)––(500)
Total1,21,7004,5001,0002,0001,25,200
Verification: Assets = 1,21,700 + 4,500 + 1,000 = ₹1,27,200; Liabilities + Capital = 2,000 + 1,25,200 = ₹1,27,200. Balanced. (Cash includes 1,20,000 −10,000 +5,000 −1,000 +700 +7,000 = 1,21,700.)

Q6. Show the accounting equation on the basis of the following transaction:

(a) Udit started business with: (i) Cash ₹5,00,000 (ii) Goods ₹1,00,000
(b) Purchased building for cash ₹2,00,000
(c) Purchased goods from Himani ₹50,000
(d) Sold goods to Ashu (Cost ₹25,000) ₹36,000
(e) Paid insurance premium ₹3,000
(f) Rent outstanding ₹5,000
(g) Depreciation on building ₹8,000
(h) Cash withdrawn for personal use ₹20,000
(i) Rent received in advance ₹5,000
(j) Cash paid to himani on account ₹20,000
(k) Cash received from Ashu ₹30,000

SOLUTION
CashGoodsBuildingDebtors= CreditorsO/s RentRent recd. adv.+ Capital
(a)5,00,0001,00,000–––––6,00,000
(b)(2,00,000)–2,00,000–––––
(c)–50,000––50,000–––
(d)–(25,000)–36,000–––11,000
(e)(3,000)––––––(3,000)
(f)–––––5,000–(5,000)
(g)––(8,000)––––(8,000)
(h)(20,000)––––––(20,000)
(i)5,000–––––5,000–
(j)(20,000)–––(20,000)–––
(k)30,000––(30,000)––––
Total2,92,0001,25,0001,92,0006,00030,0005,0005,0005,75,000
Verification: Assets = 2,92,000 + 1,25,000 + 1,92,000 + 6,000 = ₹6,15,000; Liabilities + Capital = 30,000 + 5,000 + 5,000 + 5,75,000 = ₹6,15,000. Balanced.

Q7. Show the effect of the following transactions on Assets, Liabilities and Capital through accounting equation:

(a) Started business with cash ₹1,20,000
(b) Rent received ₹10,000
(c) Invested in shares ₹50,000
(d) Received dividend ₹5,000
(e) Purchase goods on credit from Ragani ₹35,000
(f) Paid cash for house hold Expenses ₹7,000
(g) Sold goods for cash (costing ₹10,000) ₹14,000
(h) Cash paid to Ragani ₹35,000
(i) Deposited into bank ₹20,000

SOLUTION
CashSharesGoodsBank= Creditors+ Capital
(a)1,20,000––––1,20,000
(b)10,000––––10,000
(c)(50,000)50,000––––
(d)5,000––––5,000
(e)––35,000–35,000–
(f)(7,000)––––(7,000)
(g)14,000–(10,000)––4,000
(h)(35,000)–––(35,000)–
(i)(20,000)––20,000––
Total37,00050,00025,00020,000–1,32,000
Verification: Assets = 37,000 + 50,000 + 25,000 + 20,000 = ₹1,32,000; Liabilities + Capital = 0 + 1,32,000 = ₹1,32,000. Balanced. (Household expenses are drawings; rent & dividend received and profit ₹4,000 raise capital.)

Q8. Show the effect of following transaction on the accounting equation:

(a) Manoj started business with (i) Cash ₹2,30,000 (ii) Goods ₹1,00,000 (iii) Building ₹2,00,000
(b) He purchased goods for cash ₹50,000
(c) He sold goods (costing ₹20,000) ₹35,000
(d) He purchased goods from Rahul ₹55,000
(e) He sold goods to Varun (Costing ₹52,000) ₹60,000
(f) He paid cash to Rahul in full settlement ₹53,000
(g) Salary paid by him ₹20,000
(h) Received cash from Varun in full settlement ₹59,000
(i) Rent outstanding ₹3,000
(j) Prepaid Insurance ₹2,000
(k) Commission received by him ₹13,000
(l) Amount withdrawn by him for personal use ₹20,000
(m) Depreciation charge on building ₹10,000
(n) Fresh capital invested ₹50,000
(o) Purchased goods from Rakhi ₹10,000

SOLUTION
CashGoodsBuildingPrepaid Ins.Debtors= O/s RentCreditors+ Capital
(a)2,30,0001,00,0002,00,000––––5,30,000
(b)(50,000)50,000––––––
(c)35,000(20,000)–––––15,000
(d)–55,000––––55,000–
(e)–(52,000)––60,000––8,000
(f)(53,000)–––––(55,000)2,000
(g)(20,000)––––––(20,000)
(h)59,000–––(60,000)––(1,000)
(i)–––––3,000–(3,000)
(j)(2,000)––2,000––––
(k)13,000––––––13,000
(l)(20,000)––––––(20,000)
(m)––(10,000)––––(10,000)
(n)50,000––––––50,000
(o)–10,000––––10,000–
Total2,42,0001,43,0001,90,0002,000–3,00010,0005,64,000
Verification: Assets = 2,42,000 + 1,43,000 + 1,90,000 + 2,000 = ₹5,77,000; Liabilities + Capital = 3,000 + 10,000 + 5,64,000 = ₹5,77,000. Balanced. (Opening capital = 2,30,000 + 1,00,000 + 2,00,000 = 5,30,000.)

Q9. Transactions of M/s Vipin Traders are given below. Show the effects on Assets, Liabilities and Capital with the help of accounting Equation.

(a) Business started with cash ₹1,25,000
(b) Purchased goods for cash ₹50,000
(c) Purchase furniture from R.K. Furniture ₹10,000
(d) Sold goods to Parul Traders (Costing ₹7,000 vide bill no. 5674) ₹9,000
(e) Paid cartage ₹100
(f) Cash Paid to R.K. furniture in full settlement ₹9,700
(g) Cash sales (costing ₹10,000) ₹12,000
(h) Rent received ₹4,000
(i) Cash withdrew for personal use ₹3,000

SOLUTION
CashGoodsFurnitureDebtors= Creditors+ Capital
(a)1,25,000––––1,25,000
(b)(50,000)50,000––––
(c)––10,000–10,000–
(d)–(7,000)–9,000–2,000
(e)(100)––––(100)
(f)(9,700)–––(10,000)300
(g)12,000(10,000)–––2,000
(h)4,000––––4,000
(i)(3,000)––––(3,000)
Total78,20033,00010,0009,000–1,30,200
Verification: Assets = 78,200 + 33,000 + 10,000 + 9,000 = ₹1,30,200; Liabilities + Capital = 0 + 1,30,200 = ₹1,30,200. Balanced. (Discount ₹300 received on full settlement raises capital.)

Q10. Bobby opened a consulting firm and completed these transactions during November, 2017:

(a) Invested ₹4,00,000 cash and office equipment with ₹1,50,000 in a business called Bobbie Consulting.
(b) Purchased land and a small office building. The land was worth ₹1,50,000 and the building worth ₹3,50,000. The purchase price was paid with ₹2,00,000 cash and a long term note payable for ₹3,00,000.
(c) Purchased office supplies on credit for ₹12,000.
(d) Bobbie transferred title of motor car to the business. The motor car was worth ₹90,000.
(e) Purchased for ₹30,000 additional office equipment on credit.
(f) Paid ₹7,500 salary to the office manager.
(g) Provided services to a client and collected ₹30,000
(h) Paid ₹4,000 for the month’s utilities.
(i) Paid supplier created in transaction c.
(j) Purchase new office equipment by paying ₹93,000 cash and trading in old equipment with a recorded cost of ₹7,000.
(k) Completed services of a client for ₹26,000. This amount is to be paid within 30 days.
(l) Received ₹19,000 payment from the client created in transaction k.
(m) Bobby withdrew ₹20,000 from the business.
Analyse the above stated transactions and open the following T-accounts: Cash, client, office supplies, motor car, building, land, long term payables, capital, withdrawals, salary, expense and utilities expense.

SOLUTIONAccounting equation (assets = liabilities + capital), ₹ in figures:
CashOffice Equip.SuppliesMotor CarLandBuildingClient= CreditorsL.T. Payable+ Capital
(a)4,00,0001,50,000–––––––5,50,000
(b)(2,00,000)–––1,50,0003,50,000––3,00,000–
(c)––12,000––––12,000––
(d)–––90,000–––––90,000
(e)–30,000–––––30,000––
(f)(7,500)––––––––(7,500)
(g)30,000––––––––30,000
(h)(4,000)––––––––(4,000)
(i)(12,000)––––––(12,000)––
(j)(93,000)93,000––––––––
(k)––––––26,000––26,000
(l)19,000–––––(19,000)–––
(m)(20,000)––––––––(20,000)
Total1,12,5002,73,00012,00090,0001,50,0003,50,0007,00030,0003,00,0006,64,500
Verification: Assets = 1,12,500 + 2,73,000 + 12,000 + 90,000 + 1,50,000 + 3,50,000 + 7,000 = ₹9,94,500; Liabilities + Capital = 30,000 + 3,00,000 + 6,64,500 = ₹9,94,500. Balanced. (In (j) old equipment costing ₹7,000 is traded in for new ₹1,00,000 equipment — net equipment effect +93,000; capital = 5,50,000 +90,000 −7,500 +30,000 −4,000 +26,000 −20,000.)

Q11. Journalise the following transactions in the books of Himanshu:

2017
Dec.01 Business started with cash ₹75,000
Dec.07 Purchased goods for cash ₹10,000
Dec.09 Sold goods to Swati ₹5,000
Dec.12 Purchased furniture ₹3,000
Dec.18 Cash received from Swati In full settlement ₹4,000
Dec.25 Paid rent ₹1,000
Dec.30 Paid salary ₹1,500

SOLUTION
DateParticularsDr. (₹)Cr. (₹)
Dec 1Cash A/c  Dr.
  To Capital A/c		75,000
75,000
Dec 7Purchases A/c  Dr.
  To Cash A/c		10,000
10,000
Dec 9Swati A/c  Dr.
  To Sales A/c		5,000
5,000
Dec 12Furniture A/c  Dr.
  To Cash A/c		3,000
3,000
Dec 18Cash A/c  Dr.
Discount Allowed A/c  Dr.
  To Swati A/c		4,000
1,000

5,000
Dec 25Rent A/c  Dr.
  To Cash A/c		1,000
1,000
Dec 30Salary A/c  Dr.
  To Cash A/c		1,500
1,500
Total1,00,5001,00,500

Q12. Enter the following Transactions in the Journal of Mudit:

2017
Jan.01 Commenced business with cash ₹1,75,000
Jan.01 Building ₹1,00,000
Jan.02 Goods purchased for cash ₹75,000
Jan.03 Sold goods to Ramesh ₹30,000
Jan.04 Paid wages ₹500
Jan.06 Sold goods for cash ₹10,000
Jan.10 Paid for trade expenses ₹700
Jan.12 Cash received from Ramesh ₹29,500; Discount allowed ₹500
Jan.14 Goods purchased for Sudhir ₹27,000
Jan.18 Cartage paid ₹1,000
Jan.20 Drew cash for personal use ₹5,000
Jan.22 Goods use for house hold ₹2,000
Jan.25 Cash paid to Sudhir ₹26,700; Discount allowed ₹300

SOLUTION
DateParticularsDr. (₹)Cr. (₹)
Jan 1Cash A/c  Dr.
Building A/c  Dr.
  To Capital A/c		1,75,000
1,00,000

2,75,000
Jan 2Purchases A/c  Dr.
  To Cash A/c		75,000
75,000
Jan 3Ramesh A/c  Dr.
  To Sales A/c		30,000
30,000
Jan 4Wages A/c  Dr.
  To Cash A/c		500
500
Jan 6Cash A/c  Dr.
  To Sales A/c		10,000
10,000
Jan 10Trade Expenses A/c  Dr.
  To Cash A/c		700
700
Jan 12Cash A/c  Dr.
Discount Allowed A/c  Dr.
  To Ramesh A/c		29,500
500

30,000
Jan 14Purchases A/c  Dr.
  To Sudhir A/c		27,000
27,000
Jan 18Cartage A/c  Dr.
  To Cash A/c		1,000
1,000
Jan 20Drawings A/c  Dr.
  To Cash A/c		5,000
5,000
Jan 22Drawings A/c  Dr.
  To Purchases A/c		2,000
2,000
Jan 25Sudhir A/c  Dr.
  To Cash A/c
  To Discount Received A/c		27,000
26,700
300
Total4,83,2004,83,200
Note: ‘Goods purchased for Sudhir’ on Jan 14 is read as goods purchased from Sudhir on credit (he is later paid ₹26,700 with ₹300 discount received).

Q13. Journalise the following transactions:

2017
Dec.01 Hema started business with cash ₹1,00,000
Dec.02 Open a bank account with SBI ₹30,000
Dec.04 Purchased goods from Ashu ₹20,000
Dec.06 Sold goods to Rahul for cash ₹15,000
Dec.10 Bought goods from Tara for cash ₹40,000
Dec.13 Sold goods to Suman ₹20,000
Dec.16 Received cheque from Suman ₹19,500; Discount allowed ₹500
Dec.20 Cheque given to Ashu on account ₹10,000
Dec.22 Rent paid by cheque ₹2,000
Dec.23 Deposited into bank ₹16,000
Dec.25 Machine purchased from Parigya ₹10,000
Dec.26 Trade expenses ₹2,000
Dec.28 Cheque issued to Parigya ₹10,000
Dec.29 Paid telephone expenses by cheque ₹1,200
Dec.31 Paid salary ₹4,500

SOLUTION
DateParticularsDr. (₹)Cr. (₹)
Dec 1Cash A/c  Dr.
  To Capital A/c		1,00,000
1,00,000
Dec 2Bank A/c  Dr.
  To Cash A/c		30,000
30,000
Dec 4Purchases A/c  Dr.
  To Ashu A/c		20,000
20,000
Dec 6Cash A/c  Dr.
  To Sales A/c		15,000
15,000
Dec 10Purchases A/c  Dr.
  To Cash A/c		40,000
40,000
Dec 13Suman A/c  Dr.
  To Sales A/c		20,000
20,000
Dec 16Bank A/c  Dr.
Discount Allowed A/c  Dr.
  To Suman A/c		19,500
500

20,000
Dec 20Ashu A/c  Dr.
  To Bank A/c		10,000
10,000
Dec 22Rent A/c  Dr.
  To Bank A/c		2,000
2,000
Dec 23Bank A/c  Dr.
  To Cash A/c		16,000
16,000
Dec 25Machinery A/c  Dr.
  To Parigya A/c		10,000
10,000
Dec 26Trade Expenses A/c  Dr.
  To Cash A/c		2,000
2,000
Dec 28Parigya A/c  Dr.
  To Bank A/c		10,000
10,000
Dec 29Telephone Expenses A/c  Dr.
  To Bank A/c		1,200
1,200
Dec 31Salary A/c  Dr.
  To Cash A/c		4,500
4,500
Total3,00,7003,00,700

Q14. Journalise the following transactions in the books of Harpreet Bros.:

(a) ₹1,000 due from Rohit are now bad debts.
(b) Goods worth ₹2,000 were used by the proprietor.
(c) Charge depreciation @ 10% p.a for two month on machine costing ₹30,000.
(d) Provide interest on capital of ₹1,50,000 at 6% p.a. for 9 months.
(e) Rahul become insolvent, who owed is ₹2,000 a final dividend of 60 paise in a rupee is received from his estate.

SOLUTION
ParticularsDr. (₹)Cr. (₹)
(a)Bad Debts A/c  Dr.
  To Rohit A/c		1,000
1,000
(b)Drawings A/c  Dr.
  To Purchases A/c		2,000
2,000
(c)Depreciation A/c  Dr.
  To Machinery A/c		500
500
(d)Interest on Capital A/c  Dr.
  To Capital A/c		6,750
6,750
(e)Cash A/c  Dr.
Bad Debts A/c  Dr.
  To Rahul A/c		1,200
800

2,000
Working notes: (c) Depreciation = 30,000 × 10% × 2/12 = ₹500. (d) Interest on capital = 1,50,000 × 6% × 9/12 = ₹6,750. (e) Amount recovered = 2,000 × 60/100 = ₹1,200; bad debts (loss) = 2,000 − 1,200 = ₹800.

Q15. Prepare Journal from the transactions given below:

(a) Cash paid for installation of machine ₹500
(b) Goods given as charity ₹2,000
(c) Interest charge on capital @7% p.a. when total capital were ₹70,000
(d) Received ₹1,200 of a bad debts written-off last year.
(e) Goods destroyed by fire ₹2,000
(f) Rent outstanding ₹1,000
(g) Interest on drawings ₹900
(h) Sudhir Kumar who owed me ₹3,000 has failed to pay the amount. He pays me a compensation of 45 paise in a rupee.
(i) Commission received in advance ₹7,000

SOLUTION
ParticularsDr. (₹)Cr. (₹)
(a)Machinery A/c  Dr.
  To Cash A/c		500
500
(b)Charity A/c  Dr.
  To Purchases A/c		2,000
2,000
(c)Interest on Capital A/c  Dr.
  To Capital A/c		4,900
4,900
(d)Cash A/c  Dr.
  To Bad Debts Recovered A/c		1,200
1,200
(e)Loss by Fire A/c  Dr.
  To Purchases A/c		2,000
2,000
(f)Rent A/c  Dr.
  To Outstanding Rent A/c		1,000
1,000
(g)Drawings A/c  Dr.
  To Interest on Drawings A/c		900
900
(h)Cash A/c  Dr.
Bad Debts A/c  Dr.
  To Sudhir Kumar A/c		1,350
1,650

3,000
(i)Cash A/c  Dr.
  To Commission Received in Advance A/c		7,000
7,000
Working notes: (c) Interest on capital = 70,000 × 7% = ₹4,900. (h) Recovered = 3,000 × 45/100 = ₹1,350; bad debts = 3,000 − 1,350 = ₹1,650.

Q16. Journalise the following transactions, post to the ledger:

2017
Nov.01 Business started with (i) Cash ₹1,50,000 (ii) Goods ₹50,000
Nov.03 Purchased goods from Harish ₹30,000
Nov.05 Sold goods for cash ₹12,000
Nov.08 Purchase furniture for cash ₹5,000
Nov.10 Cash paid to Harish on account ₹15,000
Nov.13 Paid sundry expenses ₹200
Nov.15 Cash sales ₹15,000
Nov.18 Deposited into bank ₹5,000
Nov.20 Drew cash for personal use ₹1,000
Nov.22 Cash paid to Harish in full settlement of account ₹14,700
Nov.25 Good sold to Nitesh ₹7,000
Nov.26 Cartage paid ₹200
Nov.27 Rent paid ₹1,500
Nov.29 Received cash from Nitesh ₹6,800; Discount allowed ₹200
Nov.30 Salary paid ₹3,000

SOLUTION (Journal)
DateParticularsDr. (₹)Cr. (₹)
Nov 1Cash A/c  Dr.
Stock (Goods) A/c  Dr.
  To Capital A/c		1,50,000
50,000

2,00,000
Nov 3Purchases A/c  Dr.
  To Harish A/c		30,000
30,000
Nov 5Cash A/c  Dr.
  To Sales A/c		12,000
12,000
Nov 8Furniture A/c  Dr.
  To Cash A/c		5,000
5,000
Nov 10Harish A/c  Dr.
  To Cash A/c		15,000
15,000
Nov 13Sundry Expenses A/c  Dr.
  To Cash A/c		200
200
Nov 15Cash A/c  Dr.
  To Sales A/c		15,000
15,000
Nov 18Bank A/c  Dr.
  To Cash A/c		5,000
5,000
Nov 20Drawings A/c  Dr.
  To Cash A/c		1,000
1,000
Nov 22Harish A/c  Dr.
  To Cash A/c
  To Discount Received A/c		15,000
14,700
300
Nov 25Nitesh A/c  Dr.
  To Sales A/c		7,000
7,000
Nov 26Cartage A/c  Dr.
  To Cash A/c		200
200
Nov 27Rent A/c  Dr.
  To Cash A/c		1,500
1,500
Nov 29Cash A/c  Dr.
Discount Allowed A/c  Dr.
  To Nitesh A/c		6,800
200

7,000
Nov 30Salary A/c  Dr.
  To Cash A/c		3,000
3,000
Total3,66,6003,66,600
LEDGER (key accounts, balanced) Cash A/c: Dr. — Capital 1,50,000; Sales 12,000; Sales 15,000; Nitesh 6,800 = 1,83,800. Cr. — Furniture 5,000; Harish 15,000; Sundry Exp. 200; Bank 5,000; Drawings 1,000; Harish 14,700; Cartage 200; Rent 1,500; Salary 3,000 = 45,600. Balance c/d ₹1,38,200. Harish A/c: Dr. — Cash 15,000; Cash 14,700; Discount Received 300 = 30,000. Cr. — Purchases 30,000. Nil balance. Sales A/c: Cr. — Cash 12,000; Cash 15,000; Nitesh 7,000 = ₹34,000.   Purchases A/c: Dr. Harish 30,000.   Capital A/c: Cr. 2,00,000.   Nitesh A/c: Dr. Sales 7,000; Cr. Cash 6,800 + Discount 200 = Nil.   Bank A/c: Dr. 5,000. Furniture 5,000; Drawings 1,000; Sundry Exp. 200; Cartage 200; Rent 1,500; Salary 3,000; Discount Allowed 200; Stock 50,000 each posted to its own account.

Q17. Journalise the following transactions is the journal of M/s Goel Brothers and post them to the ledger.

2017
Jan.01 Started business with cash ₹1,65,000
Jan.02 Opened bank account in PNB ₹80,000
Jan.04 Goods purchased from Tara ₹22,000
Jan.05 Goods purchased for cash ₹30,000
Jan.08 Goods sold to Naman ₹12,000
Jan.10 Cash paid to Tara ₹22,000
Jan.15 Cash received from Naman ₹11,700; Discount allowed ₹300
Jan.16 Paid wages ₹200
Jan.18 Furniture purchased for office use ₹5,000
Jan.20 withdrawn from bank for personal use ₹4,000
Jan.22 Issued cheque for rent ₹3,000
Jan.23 goods issued for house hold purpose ₹2,000
Jan.24 drawn cash from bank for office use ₹6,000
Jan.26 Commission received ₹1,000
Jan.27 Bank charges ₹200
Jan.28 Cheque given for insurance premium ₹3,000
Jan.29 Paid salary ₹7,000
Jan.30 Cash sales ₹10,000

SOLUTION (Journal)
DateParticularsDr. (₹)Cr. (₹)
Jan 1Cash A/c  Dr.   To Capital A/c1,65,0001,65,000
Jan 2Bank A/c  Dr.   To Cash A/c80,00080,000
Jan 4Purchases A/c  Dr.   To Tara A/c22,00022,000
Jan 5Purchases A/c  Dr.   To Cash A/c30,00030,000
Jan 8Naman A/c  Dr.   To Sales A/c12,00012,000
Jan 10Tara A/c  Dr.   To Cash A/c22,00022,000
Jan 15Cash A/c  Dr. (11,700); Discount Allowed A/c Dr. (300)   To Naman A/c12,00012,000
Jan 16Wages A/c  Dr.   To Cash A/c200200
Jan 18Furniture A/c  Dr.   To Cash A/c5,0005,000
Jan 20Drawings A/c  Dr.   To Bank A/c4,0004,000
Jan 22Rent A/c  Dr.   To Bank A/c3,0003,000
Jan 23Drawings A/c  Dr.   To Purchases A/c2,0002,000
Jan 24Cash A/c  Dr.   To Bank A/c6,0006,000
Jan 26Cash A/c  Dr.   To Commission Received A/c1,0001,000
Jan 27Bank Charges A/c  Dr.   To Bank A/c200200
Jan 28Insurance Premium A/c  Dr.   To Bank A/c3,0003,000
Jan 29Salary A/c  Dr.   To Cash A/c7,0007,000
Jan 30Cash A/c  Dr.   To Sales A/c10,00010,000
Total3,84,6003,84,600
LEDGER (key balances) Cash A/c: Dr. — Capital 1,65,000; Naman 11,700; Bank 6,000; Commission 1,000; Sales 10,000 = 1,93,700. Cr. — Bank 80,000; Purchases 30,000; Tara 22,000; Wages 200; Furniture 5,000; Salary 7,000 = 1,44,200. Balance c/d ₹49,500. Bank A/c: Dr. — Cash 80,000 = 80,000. Cr. — Drawings 4,000; Rent 3,000; Cash 6,000; Bank Charges 200; Insurance 3,000 = 16,200. Balance c/d ₹63,800. Tara A/c: Nil (Purchases 22,000 = Cash 22,000). Naman A/c: Nil (Sales 12,000 = Cash 11,700 + Discount 300). Sales A/c: Cr. ₹22,000. Purchases A/c: Dr. 52,000 − Drawings 2,000 = net Dr. 50,000 (shown gross 52,000 Dr., 2,000 Cr.). Capital A/c: Cr. 1,65,000.

Q18. Give journal entries of M/s Mohit traders, Post them to the Ledger from the following transactions:

August 2017
1. Commenced business with cash ₹1,10,000
2. Opened bank account with H.D.F.C. ₹50,000
3. Purchased furniture ₹20,000
7. Bought goods for cash from M/s Rupa Traders ₹30,000
8. Purchased good from M/s Hema Traders ₹42,000
10. Sold goods for cash ₹30,000
14. Sold goods on credit to M/s. Gupta Traders ₹12,000
16. Rent paid ₹4,000
18. Paid trade expenses ₹1,000
20. Received cash from Gupta Traders ₹12,000
22. Goods return to Hema Traders ₹2,000
23. Cash paid to Hema Traders ₹40,000
25. Bought postage stamps ₹100
30. Paid salary to Rishabh ₹4,000

SOLUTION (Journal)
DateParticularsDr. (₹)Cr. (₹)
Aug 1Cash A/c  Dr.   To Capital A/c1,10,0001,10,000
Aug 2Bank A/c  Dr.   To Cash A/c50,00050,000
Aug 3Furniture A/c  Dr.   To Cash A/c20,00020,000
Aug 7Purchases A/c  Dr.   To Cash A/c30,00030,000
Aug 8Purchases A/c  Dr.   To Hema Traders A/c42,00042,000
Aug 10Cash A/c  Dr.   To Sales A/c30,00030,000
Aug 14Gupta Traders A/c  Dr.   To Sales A/c12,00012,000
Aug 16Rent A/c  Dr.   To Cash A/c4,0004,000
Aug 18Trade Expenses A/c  Dr.   To Cash A/c1,0001,000
Aug 20Cash A/c  Dr.   To Gupta Traders A/c12,00012,000
Aug 22Hema Traders A/c  Dr.   To Purchases Return A/c2,0002,000
Aug 23Hema Traders A/c  Dr.   To Cash A/c40,00040,000
Aug 25Postage A/c  Dr.   To Cash A/c100100
Aug 30Salary A/c  Dr.   To Cash A/c4,0004,000
Total3,57,1003,57,100
LEDGER (key balances) Cash A/c: Dr. — Capital 1,10,000; Sales 30,000; Gupta 12,000 = 1,52,000. Cr. — Bank 50,000; Furniture 20,000; Purchases 30,000; Rent 4,000; Trade Exp. 1,000; Hema 40,000; Postage 100; Salary 4,000 = 1,49,100. Balance c/d ₹2,900. Hema Traders A/c: Dr. — Purchases Return 2,000; Cash 40,000 = 42,000. Cr. — Purchases 42,000. Nil.   Gupta Traders A/c: Nil. Bank A/c: Dr. ₹50,000. Sales A/c: Cr. ₹42,000. Purchases A/c: Dr. ₹72,000. Capital A/c: Cr. ₹1,10,000.

Q19. Journalise the following transaction in the Books of the M/s Bhanu Traders and Post them into the Ledger.

December, 2017
1. Started business with cash ₹92,000
2. Deposited into bank ₹60,000
4. Bought goods on credit from Himani ₹40,000
6. Purchased goods from cash ₹20,000
8. Returned goods to Himani ₹4,000
10. Sold goods for cash ₹20,000
14. Cheque given to Himani ₹36,000
17. Goods sold to M/s Goyal Traders ₹3,50,000
19. Drew cash from bank for personal use ₹2,000
21. Goyal traders returned goods ₹3,500
22. Cash deposited into bank ₹20,000
26. Cheque received from Goyal Traders ₹31,500
28. Goods given as charity ₹2,000
29. Rent paid ₹3,000
30. Salary paid ₹7,000
31. Office machine purchased for cash ₹3,000

SOLUTION (Journal)
DateParticularsDr. (₹)Cr. (₹)
Dec 1Cash A/c  Dr.   To Capital A/c92,00092,000
Dec 2Bank A/c  Dr.   To Cash A/c60,00060,000
Dec 4Purchases A/c  Dr.   To Himani A/c40,00040,000
Dec 6Purchases A/c  Dr.   To Cash A/c20,00020,000
Dec 8Himani A/c  Dr.   To Purchases Return A/c4,0004,000
Dec 10Cash A/c  Dr.   To Sales A/c20,00020,000
Dec 14Himani A/c  Dr.   To Bank A/c36,00036,000
Dec 17Goyal Traders A/c  Dr.   To Sales A/c3,50,0003,50,000
Dec 19Drawings A/c  Dr.   To Bank A/c2,0002,000
Dec 21Sales Return A/c  Dr.   To Goyal Traders A/c3,5003,500
Dec 22Bank A/c  Dr.   To Cash A/c20,00020,000
Dec 26Bank A/c  Dr.   To Goyal Traders A/c31,50031,500
Dec 28Charity A/c  Dr.   To Purchases A/c2,0002,000
Dec 29Rent A/c  Dr.   To Cash A/c3,0003,000
Dec 30Salary A/c  Dr.   To Cash A/c7,0007,000
Dec 31Office Machine A/c  Dr.   To Cash A/c3,0003,000
Total6,94,0006,94,000
LEDGER (key balances) Cash A/c: Dr. — Capital 92,000; Sales 20,000 = 1,12,000. Cr. — Bank 60,000; Purchases 20,000; Bank 20,000; Rent 3,000; Salary 7,000; Office Machine 3,000 = 1,13,000. This shows an excess credit; therefore the firm is short of cash — see note below. Bank A/c: Dr. — Cash 60,000; Cash 20,000; Goyal 31,500 = 1,11,500. Cr. — Himani 36,000; Drawings 2,000 = 38,000. Balance c/d ₹73,500. Himani A/c: Nil (Purchases 40,000 = Return 4,000 + Bank 36,000). Goyal Traders A/c: Sales 3,50,000 Dr.; Return 3,500 + Bank 31,500 Cr. → Balance c/d ₹3,15,000. Sales A/c: Cr. 3,70,000. Purchases A/c: Dr. 58,000 (60,000 − charity 2,000). Note: the cash account here runs into a notional overdraft of ₹1,000 because of the data given; in practice the firm would not pay more cash than it holds, so ₹73,500 in bank is available.

Q20. Journalise the following transaction in the Book of M/s Beauti traders. Also post them in the ledger.

Dec. 2017
1. Started business with cash ₹2,00,000
2. Bought office furniture ₹30,000
3. Paid into bank to open an current account ₹1,00,000
5. Purchased a computer and paid by cheque ₹2,50,000
6. Bought goods on credit from Ritika ₹60,000
8. Cash sales ₹30,000
9. Sold goods to Karishna on credit ₹25,000
12. Cash paid to Mansi on account ₹30,000
14. Goods returned to Ritika ₹2,000
15. Stationery purchased for cash ₹3,000
16. Paid wages ₹1,000
18. Goods returned by Karishna ₹2,000
20. Cheque given to Ritika ₹28,000
22. Cash received from Karishna on account ₹15,000
24. Insurance premium paid by cheque ₹4,000
26. Cheque received from Karishna ₹8,000
28. Rent paid by cheque ₹3,000
29. Purchased goods on credit from Meena Traders ₹20,000
30. Cash sales ₹14,000

SOLUTION (Journal)
DateParticularsDr. (₹)Cr. (₹)
Dec 1Cash A/c  Dr.   To Capital A/c2,00,0002,00,000
Dec 2Furniture A/c  Dr.   To Cash A/c30,00030,000
Dec 3Bank A/c  Dr.   To Cash A/c1,00,0001,00,000
Dec 5Computer A/c  Dr.   To Bank A/c2,50,0002,50,000
Dec 6Purchases A/c  Dr.   To Ritika A/c60,00060,000
Dec 8Cash A/c  Dr.   To Sales A/c30,00030,000
Dec 9Karishna A/c  Dr.   To Sales A/c25,00025,000
Dec 12Mansi A/c  Dr.   To Cash A/c30,00030,000
Dec 14Ritika A/c  Dr.   To Purchases Return A/c2,0002,000
Dec 15Stationery A/c  Dr.   To Cash A/c3,0003,000
Dec 16Wages A/c  Dr.   To Cash A/c1,0001,000
Dec 18Sales Return A/c  Dr.   To Karishna A/c2,0002,000
Dec 20Ritika A/c  Dr.   To Bank A/c28,00028,000
Dec 22Cash A/c  Dr.   To Karishna A/c15,00015,000
Dec 24Insurance Premium A/c  Dr.   To Bank A/c4,0004,000
Dec 26Bank A/c  Dr.   To Karishna A/c8,0008,000
Dec 28Rent A/c  Dr.   To Bank A/c3,0003,000
Dec 29Purchases A/c  Dr.   To Meena Traders A/c20,00020,000
Dec 30Cash A/c  Dr.   To Sales A/c14,00014,000
Total8,25,0008,25,000
LEDGER (key balances) Cash A/c: Dr. — Capital 2,00,000; Sales 30,000; Karishna 15,000; Sales 14,000 = 2,59,000. Cr. — Furniture 30,000; Bank 1,00,000; Mansi 30,000; Stationery 3,000; Wages 1,000 = 1,64,000. Balance c/d ₹95,000. Bank A/c: Dr. — Cash 1,00,000; Karishna 8,000 = 1,08,000. Cr. — Computer 2,50,000; Ritika 28,000; Insurance 4,000; Rent 3,000 = 2,85,000. Bank overdraft (Cr. balance) ₹1,77,000. Ritika A/c: Cr. 60,000; Dr. Return 2,000 + Bank 28,000 = 30,000 → Balance c/d (Cr.) ₹30,000. Karishna A/c: Dr. 25,000; Cr. Return 2,000 + Cash 15,000 + Bank 8,000 = 25,000 → Nil. Meena Traders A/c: Cr. ₹20,000. Sales A/c: Cr. 99,000. Purchases A/c: Dr. 80,000. Capital A/c: Cr. 2,00,000.

Q21. Journalise the following transaction in the books of Sanjana and post them into the ledger:

January, 2017
1. Cash in hand ₹6,000; Cash at bank ₹55,000; Stock of goods ₹40,000; Due to Rohan ₹6,000; Due from Tarun ₹10,000
3. Sold goods to Karuna ₹15,000
4. Cash sales ₹10,000
6. Goods sold to Heena ₹5,000
8. Purchased goods from Rupali ₹30,000
10. Goods returned from Karuna ₹2,000
14. Cash received from Karuna ₹13,000
15. Cheque given to Rohan ₹6,000
16. Cash received from Heena ₹3,000
20. Cheque received from Tarun ₹10,000
22. Cheque received from to Heena ₹2,000
25. Cash given to Rupali ₹18,000
26. Paid cartage ₹1,000
27. Paid salary ₹8,000
28. Cash sale ₹7,000
29. Cheque given to Rupali ₹12,000
30. Sanjana took goods for Personal use ₹4,000
31. Paid General expense ₹500

SOLUTION (Journal)
DateParticularsDr. (₹)Cr. (₹)
Jan 1Cash A/c Dr. (6,000); Bank A/c Dr. (55,000); Stock A/c Dr. (40,000); Tarun A/c Dr. (10,000)   To Rohan A/c (6,000); To Capital A/c (1,05,000)1,11,0001,11,000
Jan 3Karuna A/c  Dr.   To Sales A/c15,00015,000
Jan 4Cash A/c  Dr.   To Sales A/c10,00010,000
Jan 6Heena A/c  Dr.   To Sales A/c5,0005,000
Jan 8Purchases A/c  Dr.   To Rupali A/c30,00030,000
Jan 10Sales Return A/c  Dr.   To Karuna A/c2,0002,000
Jan 14Cash A/c  Dr.   To Karuna A/c13,00013,000
Jan 15Rohan A/c  Dr.   To Bank A/c6,0006,000
Jan 16Cash A/c  Dr.   To Heena A/c3,0003,000
Jan 20Bank A/c  Dr.   To Tarun A/c10,00010,000
Jan 22Bank A/c  Dr.   To Heena A/c2,0002,000
Jan 25Rupali A/c  Dr.   To Cash A/c18,00018,000
Jan 26Cartage A/c  Dr.   To Cash A/c1,0001,000
Jan 27Salary A/c  Dr.   To Cash A/c8,0008,000
Jan 28Cash A/c  Dr.   To Sales A/c7,0007,000
Jan 29Rupali A/c  Dr.   To Bank A/c12,00012,000
Jan 30Drawings A/c  Dr.   To Purchases A/c4,0004,000
Jan 31General Expenses A/c  Dr.   To Cash A/c500500
Total2,57,5002,57,500
LEDGER (key balances) Opening Capital = Assets − Liabilities = (6,000 + 55,000 + 40,000 + 10,000) − 6,000 = ₹1,05,000. Cash A/c: Dr. — b/d 6,000; Sales 10,000; Karuna 13,000; Heena 3,000; Sales 7,000 = 39,000. Cr. — Rupali 18,000; Cartage 1,000; Salary 8,000; General Exp. 500 = 27,500. Balance c/d ₹11,500. Bank A/c: Dr. — b/d 55,000; Tarun 10,000; Heena 2,000 = 67,000. Cr. — Rohan 6,000; Rupali 12,000 = 18,000. Balance c/d ₹49,000. Rupali A/c: Cr. 30,000; Dr. 18,000 + 12,000 = 30,000 → Nil. Karuna A/c: Nil. Heena A/c: Nil. Tarun A/c: Nil. Rohan A/c: Nil.

Q22. Record journal entries for the following transactions in the books of Anudeep of Delhi:

(a) Bought goods ₹2,00,000 from Kanta of Delhi (CGST @ 9%, SGST @ 9%)
(b) Bought goods ₹1,00,000 for cash from Rajasthan (IGST @ 12%)
(c) Sold goods ₹1,50,000 to Sudhir of Punjab (IGST @ 18%)
(d) Paid for Railway Transport ₹10,000 (CGST @ 5%, SGST @ 5%)
(e) Sold goods ₹1,20,000 to Sidhu of Delhi (CGST @ 9%, SGST @ 9%)
(f) Bought Air-Condition for office use ₹60,000 (CGST @ 9%, SGST @ 9%)
(g) Sold goods ₹1,50,000 for cash to Sunil to Uttar Pradesh (IGST 18%)
(h) Bought Motor Cycle for business use ₹50,000 (CGST 14%, SGST @ 14%)
(i) Paid for Broadband services ₹4,000 (CGST @ 9%, SGST @ 0%)
(j) Bought goods ₹50,000 from Rajesh, Delhi (CGST @ 9%, SGST @ 9%)

SOLUTIONIntra-state (within Delhi) → CGST + SGST; inter-state → IGST. Input GST on purchases is debited; Output GST on sales is credited.
ParticularsDr. (₹)Cr. (₹)
(a)Purchases A/c Dr. (2,00,000); Input CGST A/c Dr. (18,000); Input SGST A/c Dr. (18,000)   To Kanta A/c2,36,0002,36,000
(b)Purchases A/c Dr. (1,00,000); Input IGST A/c Dr. (12,000)   To Cash A/c1,12,0001,12,000
(c)Sudhir A/c Dr.   To Sales A/c (1,50,000); To Output IGST A/c (27,000)1,77,0001,77,000
(d)Transport Charges A/c Dr. (10,000); Input CGST A/c Dr. (500); Input SGST A/c Dr. (500)   To Cash A/c11,00011,000
(e)Sidhu A/c Dr.   To Sales A/c (1,20,000); To Output CGST A/c (10,800); To Output SGST A/c (10,800)1,41,6001,41,600
(f)Air-Conditioner A/c Dr. (60,000); Input CGST A/c Dr. (5,400); Input SGST A/c Dr. (5,400)   To Cash A/c70,80070,800
(g)Cash A/c Dr.   To Sales A/c (1,50,000); To Output IGST A/c (27,000)1,77,0001,77,000
(h)Motor Cycle A/c Dr. (50,000); Input CGST A/c Dr. (7,000); Input SGST A/c Dr. (7,000)   To Cash A/c64,00064,000
(i)Broadband Expenses A/c Dr. (4,000); Input CGST A/c Dr. (360)   To Cash A/c4,3604,360
(j)Purchases A/c Dr. (50,000); Input CGST A/c Dr. (4,500); Input SGST A/c Dr. (4,500)   To Rajesh A/c59,00059,000
Working notes: (a) 2,00,000 × 9% = 18,000 each. (b) 1,00,000 × 12% = 12,000 IGST. (c) 1,50,000 × 18% = 27,000 IGST. (d) 10,000 × 5% = 500 each. (e) 1,20,000 × 9% = 10,800 each. (f) 60,000 × 9% = 5,400 each. (g) 1,50,000 × 18% = 27,000 IGST. (h) 50,000 × 14% = 7,000 each. (i) 4,000 × 9% = 360 CGST (SGST nil). (j) 50,000 × 9% = 4,500 each.

Extra Practice Questions

Short Answer Type Questions

Q1. What is a source document? Give two examples.

ANSWERA source document is the original written evidence of a business transaction, on the basis of which entries are recorded in the books of account. Examples: cash memo, invoice/bill, cheque, pay-in-slip, salary slip.

Q2. State the accounting equation and what each term stands for.

ANSWERThe accounting equation is A = L + C, where A = Assets, L = Liabilities (claims of outsiders) and C = Capital (owner’s claim). It shows that total assets always equal the total of liabilities and capital, and so it is also called the balance sheet equation.

Q3. Distinguish between a simple and a compound journal entry.

ANSWERA simple journal entry involves only two accounts — one debited and one credited. A compound (combined) journal entry involves more than two accounts — one or more debits and one or more credits — recorded together because they relate to the same transaction or occur on the same date.

Q4. What is meant by ‘narration’ in a journal entry?

ANSWERNarration is a brief explanation written in brackets below each journal entry, describing the nature of the transaction. It helps the reader understand why the entry was passed and is useful for future reference and audit.

Q5. Name any two sub-divisions of the journal (special journals).

ANSWERTwo sub-divisions of the journal are the Cash Book and the Purchases (journal) Book. Others include the Sales book, Purchase Returns book, Sales Returns book, Bills Receivable book, Bills Payable book and the Journal Proper.

Long Answer Type Questions

Q1. Explain the rules of debit and credit for the five categories of accounts with an example of each.

ANSWERAccounts fall into five categories. Assets — increase debited, decrease credited (e.g. buying furniture for cash: Furniture Dr.). Liabilities — increase credited, decrease debited (e.g. taking a loan: Bank Loan Cr.). Capital — increase credited, decrease debited (e.g. fresh capital: Capital Cr.; drawings: Drawings Dr.). Revenues/Gains — increase credited (e.g. cash sales: Sales Cr.). Expenses/Losses — increase debited (e.g. rent paid: Rent Dr.). Because every transaction increases one and decreases another or affects two accounts oppositely, total debits always equal total credits.

Q2. Describe the complete process of posting a journal entry to the ledger.

ANSWERPosting transfers entries from the journal to the ledger. Step 1: locate (or open) in the ledger the account that was debited in the journal. Step 2: enter the date of the transaction on the debit side. Step 3: in the ‘Particulars’ column write ‘To’ followed by the name of the account credited in the journal. Step 4: record the journal page number in the folio (J.F.) column, and write the ledger page number in the journal’s L.F. column. Step 5: enter the amount on the debit side. The same five steps are repeated on the credit side of the account that was credited (writing ‘By’). An account is opened only once and all its entries are posted to its debit or credit side. Finally each account is balanced.

Q3. Distinguish between the journal and the ledger.

ANSWERThe journal is the book of original (first) entry; the ledger is the book of second entry. The journal records transactions in chronological order; the ledger records them in an analytical, account-wise order. The basis of classification in the journal is the transaction, while in the ledger it is the account. Recording in the journal is called journalising; recording in the ledger is called posting. As the book of source entry the journal carries greater legal weight, whereas the ledger gives the net position of each account — for example, the balance due from a customer or owed to a supplier on a given date.

MCQs & Assertion–Reason

1. The book in which a transaction is recorded for the first time is called the:

(a) Ledger    (b) Journal    (c) Balance Sheet    (d) Trial Balance

2. The accounting equation is:

(a) Assets = Liabilities − Capital    (b) Capital = Assets + Liabilities    (c) Capital = Assets − Liabilities    (d) Liabilities = Assets + Capital

3. A purchase of machine for cash should be debited to:

(a) Cash account    (b) Machine account    (c) Purchases account    (d) None of these

4. Cash withdrawn by the proprietor for personal use should be debited to:

(a) Capital account    (b) Cash account    (c) Drawings account    (d) Profit and Loss account

5. An increase in capital is recorded by a:

(a) Debit    (b) Credit    (c) either debit or credit    (d) no entry

6. Recording of a transaction in the ledger is called:

(a) Journalising    (b) Posting    (c) Casting    (d) Balancing

7. In a journal entry, the account to be credited is written:

(a) first, with ‘Dr.’    (b) on the next line, indented, with the prefix ‘To’    (c) in the L.F. column    (d) in the date column

8. Goods sold on credit to Mohan should be debited to:

(a) Sales account    (b) Cash account    (c) Mohan’s account    (d) Purchases account

9. When goods are sold within the same state, the GST charged is:

(a) IGST only    (b) CGST and SGST    (c) no GST    (d) only CGST

10. The Ledger Folio (L.F.) column in the journal is filled in:

(a) at the time of journalising    (b) at the time of posting    (c) at the year end    (d) never

Answer key: 1-(b), 2-(c), 3-(b), 4-(c), 5-(b), 6-(b), 7-(b), 8-(c), 9-(b), 10-(b).

For each Assertion–Reason question, choose: (A) Both true and the Reason correctly explains the Assertion; (B) Both true but the Reason is not the correct explanation; (C) Assertion true, Reason false; (D) Assertion false, Reason true.

A-R 1. Assertion: The total of the debit side of the journal always equals the total of the credit side.

Reason: Under the double entry system every transaction is recorded with equal debits and credits.

A-R 2. Assertion: An increase in a liability is recorded as a debit.

Reason: Liabilities represent the claims of outsiders against the assets of the business.

A-R 3. Assertion: A transaction is first recorded in the journal and then posted to the ledger.

Reason: The journal is the book of original entry while the ledger is the principal book.

A-R 4. Assertion: Drawings are debited to the Drawings account.

Reason: Drawings reduce the owner’s capital, and a decrease in capital is debited.

A-R 5. Assertion: Source documents are not needed once a voucher is prepared.

Reason: Source documents serve as legal evidence and must be preserved till audit and tax assessment.

Answer key: 1-(A), 2-(D), 3-(A), 4-(A), 5-(D).

Exam Tips & Common Mistakes

How to score full marks in this chapter

Memorise the rules of debit and credit table for all five account categories and apply them mechanically: identify the two accounts, classify each, decide increase/decrease, then debit or credit. Always show working notes for depreciation, interest on capital, GST and bad-debt recovery (amount recovered = due × paise/100; bad debt = balance). In accounting-equation questions keep separate columns and tally Assets with Liabilities + Capital after the last transaction. Write a clear narration under every journal entry and total both amount columns to prove they are equal. For posting questions, open each account once and balance it (c/d / b/d).

Common mistakes to avoid

  • Debiting ‘Goods’ instead of Purchases when goods are bought, or crediting ‘Goods’ instead of Sales when goods are sold.
  • Treating drawings (cash or goods for personal use, or a car bought for personal use) as a business expense instead of reducing capital.
  • Ignoring discount in full-settlement transactions — discount allowed is an expense (Dr.), discount received is an income (Cr.).
  • Forgetting that ‘received/paid in full settlement’ means the balance is a discount, not a bad debt.
  • Charging CGST + SGST on inter-state sales (should be IGST) or vice-versa.
  • Not filling the L.F. column or leaving the accounting equation untallied.

Frequently Asked Questions

What is Chapter 3 of Class 11 Accountancy about?

Chapter 3, Recording of Transactions – I, deals with source documents and vouchers, the accounting equation (A = L + C), the rules of debit and credit, recording transactions in the journal (the book of original entry) and posting them to the ledger (the principal book).

How many numerical questions are there in Class 11 Accountancy Chapter 3?

The Questions for Practice section has 22 numerical questions — questions 1 to 10 on the accounting equation/analysis, 11 to 15 on journalising, and 16 to 22 on journalising with posting to the ledger (including GST entries). All are solved step by step on this page.

What is the difference between a journal and a ledger?

The journal is the book of original entry where transactions are first recorded in chronological order with narration; the ledger is the principal book where these entries are posted account-wise to show the net balance of each account. Recording in the journal is journalising; transferring to the ledger is posting.

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