Answer to Question #247965 in Accounting for DEEPTI

Question

Mr. Akbar provides you with the following information-(all the transactions are separate and independent of each other)

 Started business with cash Rs150000

 Purchased goods for cash Rs 25000

 Sold goods to C on credit Rs 20000

 Paid salary for cash Rs15000

 Deposited cash into the bank account Rs100000 

a. Identify the accounts being affected in the monetary transaction and Identify the type of accounts identified - real, personal or nominal

b. Discuss the rule of passing the journal entry applicable here and pass the journal entry (Golden rule or transaction analysis, any of these rule/s can be taken as a base to justify the answer) 

Answer 1

a) i) Cash account is personal account

Cash account is real account

Capital account is a personal account as it is related to a person and cash account is real account as it is related to assets.

ii) Purchased goods for Rs 25,000

Accounts involved:

purchase account is nominal

Cash account is real

purchase and cash are assets therefore, real account is an expense.

iii) Sold goods to C on credit Rs. 20000

Accounts involved:

Sales account is nominal

Debit account is personal

Sales is an income therefore it is nominal account.

iv) Paid salary for cash Rs. 15000

Accounts involved:

salary account is nominal

cash account is real

v) Deposit cash into bank account is 15000

cash account is real

bank account is personal account

b) rule of passing the journal entry as per the golden rule

Journal entries

1) Started business with cash 15,000

Cash account..... (debit) 15,000

To capital account (credit) 15,000

2) Purchased goods for cash Rs.25,000

Purchase account......... Debit 25,000

To cash account .......(credit) 25,000

3) Sold goods to C on credit Rs. 20,000

Debtor account is debit 20,000

To sales account is credit which is 20,000

4) Paid salary for cash Rs. 15000

Salary account (debit) is 15000

To cash account (credit) is 15000

5) Deposited cash into bank

Bank account (debit) is 15000

To cash account (credit) is 15000