Question No 7 Chapter No 8 - T.S. Grewal 11 Class

Question No 7 Chapter No 8

Journalise the following transactions:

(a)	Shyam became insolvent. A first and final compensation of 75 paise in a rupee was received from his official receiver. He owed a debt of 50,000
(b)	Received cash for a bad debt written off last year 25,000
(c)	Rent due to landlord 40,000
(d)	Depreciation on office furniture 5,000
(e)	Salaries due to staff 50,000
(f)	Paid Income tax 1,50,000
(g)	Received commission Rs 25,000, half of which in in advance

Solution of Question No 7 Chapter No 8: –

Date	Particulars		L.F.	Debit	Credit
(a)	Cash A/c	Dr.		37,500
	Bad Debts A/c	Dr.		12,500
	To Shyam A/c				50,000
	(Being first and last compensation received from Shyam.)

(b)	Cash A/c	Dr.		25,000
	To Bad Debts Recovered A/c				25,000
	(Being Received cash for a bad debt written off last year.)

(c)	Rent A/c	Dr.		40,000
	To outstanding Rent A/c				40,000
	(Being rent due to landlord but not paid.)

(d)	Depreciation A/c	Dr.		5,000
	To Office Furniture A/c				5,000
	(Being Depreciation charged on Office furniture.)

(e)	Salary A/c	Dr.		50,000
	To outstanding Salary A/c				50,000
	(Being salary due but not paid.)

(f)	Drawing A/c	Dr.		1,50,000
	To Cash A/c				1,50,000
	(Being salary due but not paid.)

(g)	Cash A/c	Dr.		25,000
	To Commission Received A/c				12,500
	To Advance Commission A/c				12,500
	(Being Commission received actual and in advance.)

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	Payment received in cash	Cash comes in	Debit
Bad debt	Loss	Nominal Account	Loss for not receiving due amount	All Expenses and Losses	Debit
Mr. Shyam	Person	Personal Account	Making payment	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	Payment received in cash	Cash comes in	Debit
Bad debts recovered	Gain	Nominal Account	Loss of last year recovered	All Income and gains	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
Rent A/c	Loss	Nominal Account	Expenses incurred	All Expenses and Losses	Debit
Outstanding Rent A/c	Representative Person	Personal Account	Actually landlord is giving his cash to business.	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
Depreciation	Loss	Nominal	Value of assets diminished	All Expenses and Losses	Debit
Office Furniture	Assets	Real	Assets decreasing	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
Salary A/c	Loss	Nominal Account	Expenses incurred	All Expenses and Losses	Debit
Outstanding Salary A/c	Representative Persons	Personal Account	Actually employees are giving their cash to business.	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
Drawing A/c	Person (Owner)	Personal Account	Cash withdrawal for personal use	owner receiver	Debit
Cash A/c	Assets	Real Account	Cash paid by business	Cash goes out	Credit

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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
Cash	Assets	Real Account	Payment received in cash	Cash comes in	Debit
Commission	Income	Nominal Account	Business earing Income	All Income and gains	Credit
Advance Commission	Representative Person	Personal Account	Making advance payment	Giver	Credit

Question No 7 Chapter No 8 – T.S. Grewal 11 Class