Question No 14 Chapter No 8 - T.S. Grewal 11 Class

Question No 14 Chapter No 8

Record the following transactions in the Journal of Ashoka Furniture Traders, Ludhiana(Punjab):

2018		Rs
Jan-01	Started business with cash	50,000
Jan-02	Opened a Current Account by personal Cheque	3,50,000
Jan-10	Purchase Machinery against cheque	1,00,000
Jan-15	Paid wages for installation of Machinery	2,000
Jan-20	Purchased timber from Singh & Co. Ludhiana(Punjab) of the list price of Rs 20,000
	Allowed 10% trade discount
Jan-25	Out of the above, timber used for furnishing the office	5,000
Jan-31	Sold timber to Rakesh of the list price Rs 10,000 and allowed him 10% discount
Feb-10	Issued to Singh & Co. a cheque in full settlement.	20,000
Feb-15	Received from Rakesh in full settlement	10,000
Feb-20	Paid Wages	15,000
Feb-28	Issued a cheque for Rs 5,000 in favour of the landlord for rent of February

CGST and SGST @6% each on intra-state sale and purchase. IGST is lived @ 12% on inter-state sale and purchase.

Solution of Question No 14 Chapter No 8:

In the Books of Ashoka Furniture Trader, Ludhiana (Punjab)

Date	Particulars		L.F.	Debit	Credit
Jan 1	Cash A/c	Dr.		50,000
	To Capital A/c				50,000
	(Being commenced business with cash.)

Jan 2	Bank A/c	Dr.		3,50,000
	To Capital A/c				3,50,000
	(Being opened a current account by personal cheque)

Jan 10	Machinery A/c	Dr.		1,00,000
	CGST Input A/c	Dr.		6,000
	SGST Input A/c	Dr.		6,000
	To Bank A/c				1,12,000
	(Being Machinery purchased by cheque.)

Jan 15	Machinery A/c	Dr.		2,000
	To Cash A/c				2,000
	(Being wages paid for installation of Machine.)

Jan 20	Purchase A/c	Dr.		18,000
	CGST Input A/c	Dr.		1,080
	SGST Input A/c	Dr.		1,080
	To Singh & CO. Ludhiana A/c				20,160
	(Being purchased goods from Singh & CO. Ludhiana.)

Jan 25	Office furniture A/c	Dr.		5,000
	To Purchase A/c				5,000
	(Being wages paid for installation of Machine.)

Jan 31	Rakesh A/c	Dr.		10,080
	To Sales A/c				9,000
	To CGST Output A/c				540
	To SGST Output A/c				540
	(Being goods sold to Rakesh)

Feb 10	Singh & Co. Ludhiana A/c	Dr.		20,160
	To Bank A/c				20,000
	To Discount Received A/c				160
	(Being paid to Singh & Co. by cheque and received discount )

Feb 15	Cash A/c	Dr.		10,000
	Discount Allowed A/c	Dr.		80
	To Rakesh A/c				10,080
	(Being payment received from Rakesh and allow discount)

Feb 20	Wages A/c	Dr.		15,000
	To Cash A/c				15,000
	(Being wages paid)

Feb 28	Rent A/c	Dr.		5,000
	To Bank A/c				5,000
	(Being Rent paid by cheque.)

Explanation of All Transactions with images: –

This is not a part of the solution, So you don’t have to write it in the exam. So, why we explained if it is not needed. Because This explanation will help you to understand all transactions with logic and you don’t need to remember all the transactions but just understand and remember the logic use behind it.

Transaction No. 1

Name of Account	Type of Account	Rule which will Applicable	What happen in the transaction	Rule applied	According to Rule It will be
Cash	Assets	Real Account	Cash received by business	Cash Comes In	Debit
Capital (owner)	Personal	Personal Account	Giving cash to business	Owner is Giver	Credit

Transaction No. 2

Name of Account	Type of Account	Rule which will Applicable	What happen in the transaction	Rule applied	According to Rule It will be
Bank	Artificial Person	Personal Account	Bank receiving cheque	Bank is receiver	Debit
Capital (Owner)	Personal	Personal Account	Depositing cash into business bank account	Owner is Giver	Credit

Transaction No. 3

Name of Account	Type of Account	Rule which will Applicable	What happen in the transaction	Rule applied	According to Rule It will be
Machinery	Assets	Real Account	Machinery purchased	Comes In	Debit
CGST Input A/c	Expenses	Nominal Account	Tax collected from buyer	All Expenses and losses	Debit
SGST Input A/c	Expenses	Nominal Account	Tax collected from buyer	All Expenses and losses	Debit
Bank A/c	A/ Person	Personal Account	Payment made with cheque	Bank is Giver	Credit

Transaction No. 4

Name of Account	Type of Account	Rule which will Applicable	What happen in the transaction	Rule applied	According to Rule It will be
Machinery	Assets	Real Account	Machinery purchased	Comes In	Debit
Cash	Assets	Real Account	Payment made in cash	Cash goes out	Credit

Transaction No. 5

Name of Account	Type of Account	Rule which will Applicable	What happen in the transaction	Rule applied	According to Rule It will be
Purchase (Goods)	Assets	Real Account	Goods received by business	Goods comes in	Debit
CGST Input A/c	Expenses	Nominal Account	Tax collected from buyer	All Expenses and losses	Debit
SGST Input A/c	Expenses	Nominal Account	Tax collected from buyer	All Expenses and losses	Debit
M/s Singh & Co.	A/Person	Personal Account	Goods given	They are Giver	Credit

Transaction No. 6

Name of Account	Type of Account	Rule which will Applicable	What happen in the transaction	Rule applied	According to Rule It will be
Machinery	Assets	Real Account	Made Furniture	Goods Comes in Fixed assets	Debit
Purchase (Goods)	Assets	Real Account	Goods used as for assets	Goods goes out from stock	Credit

Transaction No. 7

Name of Account	Type of Account	Rule which will Applicable	What happen in the transaction	Rule applied	According to Rule It will be
Rakesh	Person	Personal Account	Goods received	He is receiver	Debit
Sales a/c (Goods)	Assets	Real Account	Goods giving by Business	Goods Goes out	Credit
CGST Output A/c	Income	Nominal Account	Tax collected from buyer	All income and gains	Credit
SGST Output A/c	Income	Nominal Account	Tax collected from buyer	All income and gains	Credit

Transaction No. 8

Name of Account	Type of Account	Rule which will Applicable	What happen in the transaction	Rule applied	According to Rule It will be
M/s Singh & Co. .	A/Person	Personal Account	Receiving payment	They are Receiver	Debit
Bank	A/Person	Personal Account	Bank issuing cheque	Bank is giver	Credit
Discount Received	gain	Nominal Account	Discount received	All income and gains	Credit

Transaction No. 9

Name of Account	Type of Account	Rule which will Applicable	What happen in the transaction	Rule applied	According to Rule It will be
Cash	Assets	Real Account	Cash received by business	Cash Comes In	Debit
Discount Allowed	Loss	Nominal Account	loss incurred	All Expenses and Losses	Debit
Ramesh & Co.	A/Person	Personal Account	making payment	He is giver	Credit

Transaction No. 10

Name of Account	Type of Account	Rule which will Applicable	What happen in the transaction	Rule applied	According to Rule It will be
Wages A/c	Expense	Nominal Account	Expenses incurred	All Expenses and Losses	Debit
Cash	Assets	Real Account	Payment made in cash	Cash goes out	Credit

Transaction No. 11

Name of Account	Type of Account	Rule which will Applicable	What happen in the transaction	Rule applied	According to Rule It will be
Rent A/c	Exp	Nominal Account	Expenses incurred	All Expenses and Losses	Debit
Bank	A/Person	Personal Account	Bank issuing cheque	Bank is giver	Credit

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Narindar Kapur says:

July 4, 2024 at 3:32 pm

Correct, GST should have been applied on 6th transaction.

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Riya says:

September 7, 2020 at 8:35 am

In 6th transaction, why is gst not applied? The goods are used for making assets so shouldn’t the gst be applied with purchases a/c as we paid gst when we purchased the goods

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- Narindar Kapur says:
  
  July 4, 2024 at 3:33 pm
  
  Yes it should have been applied.
  
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- Amanpreet Kaur says:
  
  August 4, 2024 at 6:12 pm
  
  No, GST is not applied to goods used for creating an asset. Because we can’t charge GST to ourselves.
  Please remember that in this transaction goods are not sold. We have to Charge GST on sale and have to pay GST on Purchase.
  in the 6th transaction, there is a change in assets only. Goods are brought to sell but now these are used to make an asset.
  
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Question No 14 Chapter No 8 – T.S. Grewal 11 Class