Question No. 27 - Chapter No.8 - T.S. Grewal +1 Book 2019

Question No 27 Chapter No 8

Journalise the following transactions in the books of Ashok.

  1. Received Rs 11,700 from Hari Krishan in full settlement of his account for Rs 12,000.
  2. Received Rs 11,700 from Shyam on his account for Rs 12,000.
  3. Received a first and final dividend of 70 paise in the rupee from the official receiver of Rajagopal who owed us Rs 7,000.
  4. Paid Rs 2,880 to A.K. Mandal in full settlement of his account for Rs 3,000.
  5. 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.DebitCredit
      
(i)Cash A/cDr. 11,700 
 Discount Allowed A/cDr. 300 
            To Hari Krishan A/c  12,000
 (Being payment received from Har Krishna and allow him discount)   
     
(ii)Cash A/cDr. 11,700 
           To Shyam A/c   11,700
 (Being payment received from Har Krishna on account)   
     
(iii)Cash A/cDr. 4,900 
 Bad debts A/cDr. 2,100 
            To Hari Krishan A/c  7,000
 (Being payment received from Har Krishna and allow him discount)   
     
(iv)A.K. Mandal A/cDr. 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/cDr. 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

Transaction No. 1 Question No.27 Chapter No.8 T.S. Grewal 1 Book 2019 - Question No 27 Chapter No 8 - T.S. Grewal 11 Class
Transaction No. 1 Question No.27 – Chapter No.8 – T.S. Grewal +1 Book 2019
Name of AccountType of AccountRule which will ApplicableWhat happen in the transactionRule appliedAccording to Rule It will be
Cash  Assets  Real Account  Cash received by business Cash Comes InDebit
Discount Allowed ExpensesNominal AccountDiscount allowed All Expenses and lossesDebit 
Hari Krishan Personal  Personal Account  He is paying cashHe is GiverCredit

Transaction No. 2

Transaction No. 2 Question No.27 Chapter No.8 T.S. Grewal 1 Book 2019 - Question No 27 Chapter No 8 - T.S. Grewal 11 Class
Transaction No. 2 Question No.27 – Chapter No.8 – T.S. Grewal +1 Book 2019
Name of AccountType of AccountRule which will ApplicableWhat happen in the transactionRule appliedAccording to Rule It will be
Cash  Assets  Real Account  Cash received by business Cash Comes InDebit
Shyam Personal  Personal Account  He is paying cashHe is GiverCredit

Transaction No. 3

Transaction No. 3 Question No.27 Chapter No.8 T.S. Grewal 1 Book 2019 - Question No 27 Chapter No 8 - T.S. Grewal 11 Class
Transaction No. 3 Question No.27 – Chapter No.8 – T.S. Grewal +1 Book 2019
Name of AccountType of AccountRule which will ApplicableWhat happen in the transactionRule appliedAccording to Rule It will be
Cash  Assets  Real Account  Cash received by business Cash Comes InDebit
Bad Debts LossNominal AccountDiscount allowed All Expenses and lossesDebit 
Rajagopal Personal  Personal Account  He is paying cashHe is GiverCredit

Transaction No. 4

Transaction No. 4 Question No.27 Chapter No.8 T.S. Grewal 1 Book 2019 - Question No 27 Chapter No 8 - T.S. Grewal 11 Class
Transaction No. 4 Question No.27 – Chapter No.8 – T.S. Grewal +1 Book 2019
Name of AccountType of AccountRule which will ApplicableWhat happen in the transactionRule appliedAccording to Rule It will be
A.K. MandalPerson Personal AccountReceiving paymentHe is ReceiverDebit
Cash  Assets  Real Account  Cash paid by business Cash Goes outCredit
Discount Allowed GainNominal AccountDiscount allowed All income and GainsCredit

Transaction No. 5

Transaction No. 5 Question No.27 Chapter No.8 T.S. Grewal 1 Book 2019 - Question No 27 Chapter No 8 - T.S. Grewal 11 Class
Transaction No. 5 Question No.27 – Chapter No.8 – T.S. Grewal +1 Book 2019
Name of AccountType of AccountRule which will ApplicableWhat happen in the transactionRule appliedAccording to Rule It will be
S.K. GuptaPerson Personal AccountReceiving paymentHe is ReceiverDebit
Cash  Assets  Real Account  Cash paid by business Cash Goes outCredit

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