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DEPARTMENT OF TECHNICAL

EDUCATION :: AP
Name : K.HANUMANTHA RAO
Designation : Head of Section
Branch : Commercial & Computer Practice (CCP)
Institute : GPW, Guntur
Year/Sem : I Yr
Subject : ACCOUNTANCY-I
Sub-Code : CCP-102
Topic : Subsidary Books
Duration : 50 minutes
Sub Topic : Journal proper
Teaching Aids : PPT, ANIMATIONS

CCP102.74TO75 1
Objectives

On completion of this class you will be able to know :

 The purpose for which journal proper is used

 Enter the Transactions in Journal Proper

CCP102.74TO75 2
Recap

 Recall the journal entry

 Recording a transaction in the form of debit

 And credit (journal entry)

CCP102.74TO75 3
Journal Proper
The Transactions which cannot be recorded in any
one of the following subsidiary books, are recorded in the
Journal Proper

e) Purchases Book
f) Sales Book
g) Purchases Returns Book
h) Sales Returns Book
i) Cash Book
j) Bills Receivable Book
k) Bills Payable Book

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Example 1:
In the event of purchase of furniture for Rs. 10,000/- from
Mr.Srinivas, the transaction cannot be recorded in the purchases
book because it is not the purchase of goods. So, we record it in
the journal proper as under:

Date Particulars L.F NO Debit Credit

Furniture a/c Dr 10,000


To Mr.Srinivas a/c 10,000

(being the furniture brought from


Mr.Srinivas on Credit)

Note: If the purchase is made for cash, it must be recorded in the cash book.

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 Example 2: The firm owes to Mr. Chandra a rent of

Rs.3000/-.
The entry will be as follows:
Rent a/c Dr 3,000
To Mr. Chandra a/c 3,000
(Being rent to be paid to Mr. Chandra)

 Note : Had the rent been paid earlier, it would have


been recorded in the cash book. As it is not paid, it
is viewed as a liability of the firm.

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Ledger Posting
The ledger Postings are necessary for the entries in the
journal proper as is done in other subsidiary books.

 Journal Proper is used to record


1. Opening Entries
2. Rectification Entries
3. Adjustment Entries
4. Closing Entries
5. Other Entries

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1 Opening Entries:
 The Assets and capital brought in should be first
recorded in the journal proper and afterwards they are
posted to the respective accounts in the ledger. These
entries are called the Opening Entries.
 Example 3: Suppose Kumar commenced business on
January 1st, 1998 with the assets Rs.10,000/- in cash,
furniture worth Rs.5,000/-, Machinery worth Rs. 4,000/-
and stock worth Rs. 3,000/-. He writes journal entries as
under.

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Solution :
Journal Proper
Date Particulars L.F Debit Credit

1998 Cash a/c Dr 10,000


Furniture a/c Dr 5,000
Jan. 1st Machinery a/c Dr 4,000
Stock a/c Dr 3,000
To capital a/c
(being assets brought into the business as 22,000
capital along with books

In the above example the entries made to transfer the previous years
assets and liabilities to the current year are called the opening entries
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Example 4: Write down the opening entries on Jan 1st, 1998
for the following information provided by Mr. Sukumar. The
following are the ledger balances as on 31st December ,1997.

Cash in hand Rs. 1,000


Cash at bank Rs. 3,000
Buildings Rs.10,000
Creditors Rs. 5,000
Bills receivable Rs. 4,000
Debtors Rs. 6,000
Machinery Rs.8,000
Furniture Rs.8,000
Bills payable Rs. 2,000

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Solution:
Date Particulars L.F Debit Credit
NO Amount Amount
Rs Rs

1998 Cash a/c Dr 1,000


Jan 1 Bank a/c Dr 3,000
Debtors a/c Dr 6,000
Bills receivable Dr 4,000
Machinery a/c Dr 8,000
Buildings a/c Dr 10,000
Furniture Dr 8,000 5,000
To creditors a/c 2,000
To bills payable a/c 33,000
To capital a/c
(being the balances of the previous year brought into the
current year books

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Note :- 1. In the entry of the journal proper, if two or more debit or credit items
are shown, they are called compound entries.
2. It should be noted that in order to facilitate the recording of the opening
entries, cash item included in the journal proper .

Example 5: The balance sheet of Mr. X as on 31st December,1997 is as


under shows the opening entries in his book as on 01-01-1998.
Balance sheet of Mr. X as on 31-12-1997
Liabilities Amount Assets Amount
Bills Payable 15,000 Cash sundry 25,000
24,000 Debtors 15,000
Sundry Creditors Furniture
41,000 20,000
Stock 20,000
Capital
80,000 80,000

CCP102.74TO75 12
Solution:

Date Particulars L.F Debit Credit


NO Amount Amount
Rs Rs
1998 Cash a/c Dr 25,000
Jan 1 Bank a/c Dr 15,000
Debtors a/c Dr 20,000
Bills receivable Dr 20,000
Machinery a/c Dr
Buildings a/c Dr
Furniture Dr 15,000
To Creditors a/c 24,000
To Bills payable a/c 41,,000
To Capital a/c
(being the balances of the previous year brought into the
current year books)

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Example-6
The Ledger balances of the accounts of Sunitha as on Dec 31st
2005 are as under. You are required to show the opening
entries in their book as on January 1st 2006.
Cash Rs. 8,000,
Cash at Bank Rs. 10,000
Debtors Rs.20,000
Furniture Rs. 12,000
Machinery Rs.21,000
Bills Receivable Rs. 11,000
Buildings Rs.15,000
Creditors Rs.12,000
Stock Rs.5,000
Bills payable Rs.6,000
Capital Rs.84,000
CCP102.74TO75 14
Solution:
Date Particulars L.F Debit Credit
NO Amount Amount
Rs Rs
1998 Cash a/c Dr 8,000
Jan 1 Bank a/c Dr 10,000
Debtors a/c Dr 20,000
Bills receivable Dr 12,000
Machinery a/c Dr 11,000
Buildings a/c Dr 21,000
Furniture Dr 15,000
Stock Dr 5,000
12,000
To creditors a/c 6,000
To bills payable a/c 84,000
To capital a/c
(being the balances of the previous year brought into the current
year books)

CCP102.74TO75 15
2. Rectification Entries:

 Errors may occur while recording transactions,


posting them into the ledger or while balancing
the ledger accounts.
 In such cases, certain entries should be passed

in order to rectify the errors.


 Such entries are called ‘‘Rectification Entries’’.

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Example 7:- Rama paid Rs.100. This was erroneously
credited to Bheema’s a/c. The rectification entry will be as
follows:

Date Particulars L.F Debit Credit


NO Amount Amount Rs
Rs
1998 Bheema’s a/c Dr 100
Jan 1 To Rama’s a/c 100
(being the wrong credit given to Bheema’s
a/c,now rectified)

CCP102.74TO75 17
Example 8: A businessman, instead of debiting
the salary a/c with Rs.10,000 debited the insurance
a/c. Correct this entry.
Date Particulars L.F Debit Credit
NO Amount Amount
Rs Rs

Salary a/c Dr 10,000


To insurance a/c 10,000
(being wrong debit given to insurance a/c now
rectified)

CCP102.74TO75 18
3.Adjustment Entries

The value of the assets at the beginning of the year is not equal

to that at the end of the year.

The value of the asset decreases due to constant use.

When the value of an assets decreases it is called Depreciation

When it is increased it is called Appreciation.

To provide for these changes in the value of assets, adjustment

entries are passed.


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Example 9: Suppose a machinery costing Rs.30,000/-
is to be depreciated at the rate of 10%. The
adjustment entry for this will be as follows:
Date Particulars L.F Debit Credit
NO Amount Amount
Rs Rs
Depreciation a/c Dr 3,000
To Machinery a/c 3,000
(being the Machinery is depeciated by 10%)

CCP102.74TO75 20
4.Closing Entries
 At the end of every financial year, the balances of

all the nominal accounts are computed and


transferred to the trading and profit and loss
accounts.
These transferred entries will become the closing
entries.

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The following are the closing entries:

Date Particulars L.F Debit Credit


NO Amount Rs Amount Rs

Trading a/c Dr XXX


To opening stock XXX
To purchases XXX
To wages XXX
XXX
To carriage XXX
To sales returns
(for the closing entries of the balanced accounts)
XXX
Sales a/c Dr XXX
Purchase returns a/c Dr XXX
Closing stock a/c Dr
To trading a/c XXX
(for the closing entries of the balanced accounts)

CCP102.74TO75 22
Date Particulars L.F Debit Credit
NO Amount Amount
Rs Rs

Profit and Loss a/c Dr XXX


To Salaries a/c XXX
To Rent a/c XXX
To Taxes a/c XXX
To Insurance Premium a/c
XXX
To Advertisement a/c
XXX
To Discount Allowed a/c
XXX
To Bad Debts a/c
XXX
To Postage a/c
Being the transfer of various balances to profit and loss a/c XXX

CCP102.74TO75 23
Date Particulars L.F Debit Credit
NO Amount Amount Rs
Rs
XXX XXX
Interest received a/c Dr XXX
Discount received a/c Dr XXX
Dividend received a/c Dr XXX
Rent received Dr XXX
To profit and loss a/c XXX
(being accounts of revenue incomes balanced and transferred
to profit and loss a/c)

CCP102.74TO75 24
5. Other Entries:

The transactions which cannot be entered in the


subsidiary journal are recorded in the journal proper.
Some of them are as under

5.Goods taken from the business by the proprietor for his

personal use.
6.Goods lost due to theft, fire accident etc.
7.Goods sent on consignment for sale purpose.
8.Interest on capital, interest on drawings, provision for
doubtful debts, provision for depreciation etc.
CCP102.74TO75 25
Summary
The Transactions which cannot be recorded in any other
subsidiary books, are recorded in the Journal Proper.

The following entries are recorded in the Journal Proper


1. Opening Entries
2. Rectification Entries
3. Adjustment Entries
4. Closing Entries
5. Other Entries
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Quiz
1. Journal Proper contains:
• Opening Entries

(b) Closing Entries

(c) Both (a) and (b)

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2. The Journal Proper records
(a) All cash transactions

(b) Transactions NOT recorded in other


subsidiary books
(c) Only Bank transactions

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Frequently Asked Questions

3. From the following information, write down the opening


entries in the books of Shankar as on January 2006

Cash in Hand Rs.4,000


Cash at Bank Rs.13,000
Loan from Ramesh &Co Rs.6,000
Furniture & Fixtures Rs.6,000
Sundry Debtors Rs.20,000
Sundry Creditors Rs.11,000
Stock Rs. 27,000

CCP102.74TO75 29
2. From the following information, write down the opening
entries in the books of Sukumar as on 1-3-2007

Cash in Hand Rs.690


Cash at Bank Rs.12,900
Furniture & Fixtures Rs.14,000
Sundry Debtors Rs. 9,000
Sundry Creditors Rs. 6,000
Stock Rs. 24,190
Bills Receivable Rs. 10,000

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