Question No 27 Chapter No 8 - T.S. Grewal 11 Class

Question No 27 Chapter No 8

Table of Contents

Solution of Question No 27 Chapter No 8: –

Explanation of All Transactions with images: –

Journalise the following transactions in the books of Ashok.

Received Rs 11,700 from Hari Krishan in full settlement of his account for Rs 12,000.
Received Rs 11,700 from Shyam on his account for Rs 12,000.
Received a first and final dividend of 70 paise in the rupee from the official receiver of Rajagopal who owed us Rs 7,000.
Paid Rs 2,880 to A.K. Mandal in full settlement of his account for Rs 3,000.
Paid Rs 2,880 to S.K. Gupta on his account for Rs 3,000.

Solution of Question No 27 Chapter No 8: –

To solve this question first you have to understand the difference between the following points

Full Settlement vs on his account
Discount allowed vs Bad debts

Full Settlement vs on his account

The full settlement means when one business offers a cash discount to another business on making payment earlier. It means, in this type of transactions, there will exist some amount of cash discount.

“On his account” means, when one business makes the partial payment of their own total outstanding amount, then this amount was deducted from his account. In this type of transaction, there will not be any amount of cash discount offered by the receiver business because he did not give any offer.

Discount allowed vs Bad debts

Full settlement or discount allowed are same thing

Bad debts mean when the business has received less than the total outstanding amount without offering any discount. This less amount will be treated as bad debts.

In the Books of M/s Oswal Woollen Mills, Amritsar(Punjab)

Date	Particulars		L.F.	Debit	Credit

(i)	Cash A/c	Dr.		11,700
	Discount Allowed A/c	Dr.		300
	To Hari Krishan A/c				12,000
	(Being payment received from Har Krishna and allow him discount)

(ii)	Cash A/c	Dr.		11,700
	To Shyam A/c				11,700
	(Being payment received from Har Krishna on account)

(iii)	Cash A/c	Dr.		4,900
	Bad debts A/c	Dr.		2,100
	To Hari Krishan A/c				7,000
	(Being payment received from Har Krishna and allow him discount)

(iv)	A.K. Mandal A/c	Dr.		3,000
	To Cash A/c				2,880
	To Discount Received A/c				120
	(Being amount paid to A.K. Mandal and Received discount)

(v)	S.K. Gupta A/c	Dr.		2,880
	To Cash A/c				2,880
	(Being amount paid to S.K. Gupta)

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
Discount Allowed	Expenses	Nominal Account	Discount allowed	All Expenses and losses	Debit
Hari Krishan	Personal	Personal Account	He is paying cash	He 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
Cash	Assets	Real Account	Cash received by business	Cash Comes In	Debit
Shyam	Personal	Personal Account	He is paying cash	He 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
Cash	Assets	Real Account	Cash received by business	Cash Comes In	Debit
Bad Debts	Loss	Nominal Account	Discount allowed	All Expenses and losses	Debit
Rajagopal	Personal	Personal Account	He is paying cash	He 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
A.K. Mandal	Person	Personal Account	Receiving payment	He is Receiver	Debit
Cash	Assets	Real Account	Cash paid by business	Cash Goes out	Credit
Discount Allowed	Gain	Nominal Account	Discount allowed	All income and Gains	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
S.K. Gupta	Person	Personal Account	Receiving payment	He is Receiver	Debit
Cash	Assets	Real Account	Cash paid by business	Cash Goes out	Credit

Question No 27 Chapter No 8 – T.S. Grewal 11 Class

Solution of Question No 27 Chapter No 8: –

Full Settlement vs on his account

Discount allowed vs Bad debts

Explanation of All Transactions with images: –

Transaction No. 1

Transaction No. 2

Transaction No. 3

Transaction No. 4

Transaction No. 5

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