Income

Revenue
(53,750-3000=50750 x 12)
Payment Received for Premium
(A) Total Income
Expenses
Depreciation
Collection Charges
(6,09,000-20,500=588,500 x 0.04)
Property Rate and Taxes
Insurance Premium
Repair
Interior Pinting
Exterior painting
Printing and Stationary
Postage and Teligrams
Bank Charges
(B) Total Expenses

Operating Profit (A-B)

Balance Shhet
Assets
Cash
Rent Receivable
Pre paid colle ction charges (4%@5,000)
Deferred Insurance Expenses
Deferred Painting Expenses
Accrued Payment
Land
Building (After Depreciation)
Total Assets
Liabilities
Owner's Equity

2000
609,000
100,000
709,000
120,000
23,540
240,000
10,000
1,770
10,000
30,000
250
500
280
436,340

272,660

Rs.
1999

Rs.
2000

1,289,420
4250

1,474,440
74500

1,200,000
2,520,000
5,013,670

200
10000
10000
25000
1,200,000
2,400,000
5,194,140

4,800,000

4,800,000

Retained Earnings
Outstanding Collection Charges
Outstanding Property Rate and Taxes
Advance Rent Received
Total Liabilities

3,26,160
153500 (2,72,660+1,5
3,5001,00,000)
170
2980
60000
60000
5,013,670

5000
5,194,140

If full comission is calculated on the basis of

6,09,000 then collection chrges will get increased
by 820. this will reduce the profit by 820. This 820
will be outstanding and it will increase libility by
820. Hence entire effect will be get addjusted in the
liability side.

Apr-71 Transaction
1
Cash A/c
To Share Capital A/c
Bank A/c
To Cash A/c
2

10

11

Building A/c
To Bank A/c
Legal Charges A/c
To Bank A/c
Cash A/c
To Bank A/c
Purchase
To Cash A/c

Rs.
Debit (Dr.)
500,000

500,000
500,000
500,000
150,000
150,000
500
500
25000
25000
10,000
10,000

Office Furniture A/c

To Bank A/c

8000

Cash A/c
To Sales A/c

8000

Fire Insurance A/c

To Bank A/c

8000

8000
10,000
10,000

Purchase A/c
To D'Souza Bros A/c
Carriage on Purchase A/c
To D'Souza Bros A/c

9000

Cash A/c
Cash Discount Allowed A/c
To Sales A/c

5130
270

Market Securities A/c

To Bank A/c
Bank A/c
Cash Discount A/c
To Sales A/c
D'Souza Bros A/c
To Purchase Return
D'Souza Bros A/c

Rs.
Credit (Cr.)

9000
50
50

5400
20,000
20,000
11400
600

600
12000

500
500
5000

To Bank A/c
To Discount Received
12

13

14

15

16

17

18

19

20

21

22

Purchase A/c
To Mazda & Company A/c

4750
250
12,600
12,600

Jagirdar & Sons A/c(7000-10%+70)

Tiko Traders A/c(5000-10%+50)
To Sales A/c

6370
4550

Cash A/c
To Sales A/c

1000

Sales Return A/c

To Jagirdar & Sons

10920

1000
300
300

Insurance Claim A/c

Fireloss A/c
To Purchase A/c

1600
400

Bank A/c Dr.

To Insurance Claim A/c

1600

Purchase A/c Dr.

To Jahangir Bros A/c
Johnson Traders A/c
To Sales A/c

8000

Cash A/c(60% of 6070)

Bad Debt A/c(40% of 6070)
To Jagirdar & Sons A/c

2000

1600

8000
10400
10400
3642
2428
6070

Sales Return A/c

To Johnson Traders A/c
Jahangir Bros A/c
To Purchase ReturN A/c

650

Advertising & Sales Promotion A/c

To Purchase A/c
Bank A/c
To Sales A/c

200

Bank Charges A/c

Insurance Premium A/c
To Bank A/c

650
500
500

200
10,000
10,000
20
1000
1020

Bank A/c
To Tikoo Traders A/c
23

25

Advertisement A/c
Electricity Charges A/c
Stationary and Printing A/c
Account Salary A/c
Sales Man's Salary A/c
Rent A/c
To Cash A/c
To Bank A/c
Bank A/c
To Cash A/c

400
400
500
100
200
400
1500
500
1200
2000
30,000
30,000

Explanation

Cash:-as our cash increses and when assest a/c increses it get debited(as per Asset a/c)
Capital:-It is are liability and increases when liability balance increases it get credited.(as per Liability
Bank:-It is an assest when assets get increases it will be debited.(as per Asset a/c).
Cash:-as it is are assest decreases that why gets credited.(as per Asset a/c)

Buidling:-Building is an assest incresing so when assest increses it gets debited(as per asset accoun
Bank:-Bank is an assest when payment make bank balance get reduce when assset get reduce it cre
Legal exp:-being an expenses is paid it is debited as per nominal a/c
Bank:-Bank is an assest when payment make bank balance get reduce when assset get reduce it cre

Cash:- as our cash increses and when assest a/c increses it get debited(as per Asset a/c)
Bank:- as cash withdraw from bank,bank balance get decreases and when assset a/c get decreases it
Purchases:- It is increases the stock or good that is an asset.that why gets debit (as per Nominal a/c
Cash:- as cash is paid so its balance will decrese and when assest balance get decrese it is credited.

Office Furniture:-it is an assest for the business and when assest comes in it is debited (as per Asse
Bank:-Bank a/c is an assest a/c and it is decresing so it get credited(as per Asset a/c).
Cash:-cash a/c is an asset and it is increases so it will be debited.(as per Asset a/c)
Sales:-sales is the revenue for the business and incomes gets credited(as per Nominal a/c)

Fire insurance:-it is an expenses and so debited (as per Nominal a/c)

Bank:-Bank is an assest when payment made bank balance get reduce & when assset get reduc

Purchases:- Considered as an expenses. As per Nominal Account gets debited.

D'Souza Bros:-as we purchases the goods on credit so its a liability to pay.liability increases its
Carriage inward or Carriage on Purchase:-It is an expenses and expenses increases get debited.
D'Souza Bros:- Its again a libility to be paid, Hence again credited (Liability A/c rule)

Cash:-cash a/c is an asset and it is increases so it will be debited.(as per Asset a/c)
Cash Discount Allowed:-as discount is an expenses for the business get debited.(as per Nominal a/
Sales:-sales is the revenue for the business and incomes gets credited(as per nominal a/c)

Market Securities:-it is investment of the business and assest increases that why get debited.(as pe
Bank:-Bank is an assest when payment make bank balance get reduce when assset get reduce it cre

Bank:-it is an asset and debited when increases.cheque deposited balance incresed. (as per Asset a/c
Cash discount:-as discount allowed so its an expenses for the business get debited. (as per Nominal
Sales:-sales is the revenue/income for the business and incomes gets credited. (as per Nominal a/c)

D'souza:-he is the person recieved that why debited (Personal A/c) or he is creditor and its balance g
Purchase return:-Purchase return means Purchase as an expenses gets down hence it is credited.(a
D'souza:-he the person getting money thats why get debited.(as per personal a/c)

Bank:-It is an assest and its balance get decreases that why get credited.(as per real a/c or Asset A/c
Discount recd:-it is an income for the business that why get credited.(as per Nominal a/c)
Purchases:-It is increases the Purchase Expenses.that why gets debit.(as per Nominal A/c)
Mazda:-we need to pay thats why liability increases and gets credited(as per Liability a/c)
Jagirdar:-he is are debtor an asset that why get debited. (as per Asset a/c)
Tiko:-he is are debtor an asset that why get debited.(as per Asset a/c)
Sales:- sales is the revenue for the business and incomes gets credited (as per Nominal A/c)
Cash:-it is an assest and debited when increses.(as per Asset a/c)
Sales:-sales is the revenue for the business and incomes gets credited(as per nominal a/c)

Sales return:-as it is a loss kind for the business revenue get decreases.so it is get debited.(as per n
Jagirdar& sons:-earlier he was are debtor an assest now he return good so not pay this much amoun

Insurance Claim:-Insurance company need to pay us and becomes debtors or a kind of asset becau
gets debited.(as per Asset A/c)
Fireloss:- as goods destroyed by fire its loss for the business and losses get debited.(as per Nominal
Purchases:- Here our Purchase expenses value has been reduced.(as per Nominal A/c)

Bank:-it is an assest a/c increases get debited(as per Asset a/c)

Insurance company:-it was are debtor.now paid so get credited to nullify the account. Decrease in A

Purchases:-It is increases the expenses.that why gets debit.(as per Nominal a/c)
Jahangir Bros:-we purchases the good from them so liability to pay.gets credit.(as per Liability a/c)
Johnson trader:-he purchsed the good from us on credit so he is a debtor or an asset for Us.thats wh
Sales:- Sales is the revenue for the business and incomes gets credited(as per Nominal a/c)

Cash:-as cash received from the debtor, So cash asset balance get increases and get debited(as per
Bad debt:-It is a debt wish went bad and can not be recovered. it is a loss for the business.that why g
Jagirdar & sons:-as he was are debtor and made full settlement.That means one of our debtor asset

Sales return:-as it is a loss kind for the business because our revenue get decreases.so it is get debi
Johnsons Trader:-earlier he was are debtor an assest now he return good so not pay this much amo
Jahangir Bros:-being are creditor we need to pay him but this much goods we return so liability redu
Purchase return:- Purchase expenses now decreases. Decrease in expenses gets credited.(as per N

Advertisement exp:-as goods distributed as sample so treated as expenses and get debited.(as per
Purchses:-as good distributed free so balance of purchses reduce. our expenses in the head of Purch
Bank:-it is an assest a/c increases get debited(as per Asset A/c rule)
Sales:-as its the incomes of the business.and incomes gets credited.(as per Nominal a/c)
Bank charges:-it is an expenses and expenses get debited(as per nominal a/c)
insurance premium:-it is an expenses and expenses get debited(as per nominal a/c)
Bank:-as bank is an assest and payment made so bank balance decreases.so if assest balance dec. It

Bank:-it is an assest a/c increases get debited(as per real a/c)

Tikoo:-he is the person paying that why getting credited.(as per personal a/c)

Advertisement:-it is an expenses and expenses get debited.(as per nominal a/c)

Electricity expenses:-it is an expenses and expenses get debited.(as per nominal a/c)
Stationery and Printing:-it is an expenses and expenses get debited.(as per nominal a/c)
Accountant's salary:-it is an expenses and expenses get debited.(as per nominal a/c)
Sales man salary:-it is an expenses and expenses get debited.(as per nominal a/c)
Rent:-as rent paid so it is an expenses and expenses get debited.(as per nominal a/c)
Cash:-as cash is an assest and payment made so cash balance decreases.so if assest balance dec. It
Bank:-as bank is an assest and payment made so bank balance decreases.so if assest balance dec. It

Bank:- bank a/c is an assest for the business and its balance increaes so will be debited.(as per Asset
Cash:-as cash deposited into bank are cash balance decreases so will be credited.(as per Asset a/c)

er Asset a/c)
t credited.(as per Liability a/c)
et a/c).

bited(as per asset account)

n assset get reduce it credited.(as per asset account)

n assset get reduce it credited.(as per asset account)

er Asset a/c)
ssset a/c get decreases it get credited.
debit (as per Nominal a/c)
et decrese it is credited.

it is debited (as per Asset a/c).

Asset a/c).

set a/c)
er Nominal a/c)

& when assset get reduce it credited.(as per Asset account)

ed.
o pay.liability increases its get credited.(as per Liability A/c)
es increases get debited.(as per Nominal a/c)
/c rule)

set a/c)
ebited.(as per Nominal a/c)
er nominal a/c)

at why get debited.(as per Asset a/c)

n assset get reduce it credited.(as per Asset account)

ncresed. (as per Asset a/c)

debited. (as per Nominal a/c)
ed. (as per Nominal a/c)

creditor and its balance get decrease that why get debited. (Liability A/c rule)
wn hence it is credited.(as per Nominal a/c)
nal a/c)

s per real a/c or Asset A/c rule)

er Nominal a/c)

er Nominal A/c)
r Liability a/c)

per Nominal A/c)

er nominal a/c)

it is get debited.(as per nominal a/c)

not pay this much amount thats why credited.(as per real a/c) or we can say that an assest in the form of debto
or a kind of asset because benefit will come in future.thats why

debited.(as per Nominal a/c)

Nominal A/c)

he account. Decrease in Asset hence credited (Asset A/c rule)

al a/c)
edit.(as per Liability a/c)
r an asset for Us.thats why debited.(as per Asset a/c)
per Nominal a/c)

s and get debited(as per Asset A/c)

or the business.that why get debited.(as per Nominal a/c)
ns one of our debtor asset is decreased so get credited.(as per Asset A/c)

decreases.so it is get debited.(as per Nominal a/c)

o not pay this much amount thats why credited.(as per real a/c) or we can say that an assest in the form of deb
we return so liability reduced and gets debited.(as per Liability a/c)
es gets credited.(as per Nominal A/c)

s and get debited.(as per nominal a/c)

nses in the head of Purchase get reduced so get credited.(as per Nominal A/c)

Nominal a/c)

c)
nal a/c)
o if assest balance dec. It is credited.(as per real a/c)

al a/c)
nominal a/c)
per nominal a/c)
nominal a/c)
inal a/c)
minal a/c)
o if assest balance dec. It is credited.(as per asset a/c)
o if assest balance dec. It is credited.(as per asset a/c)

l be debited.(as per Asset a/c)

dited.(as per Asset a/c)

Cash Book
Rs.
To
To
To
To
To
To

Share Capital A/c

Bank A/c
Sales A/c
Sales A/c
Sales A/c
Jagirdar & Sons A/c

500,000
25000
8000
5130
1000
3642

542,772

By
By
By
By
By
By
By
By

Bank A/c
Purchase
Advertisement A/c
Electricity Charges A/c
Stationary and Printing A/
Account Salary A/c
Bank A/c
Balance c/d

Rs.
500,000
10000
500
100
200
400
30000
1,572
542,772