1.
Cash in hand ₹1,00,000 and Cash at bank ₹30,000 (Opening balance)
Entry:
Cash A/c Dr. ₹1,00,000
Bank A/c Dr. ₹30,000
To Opening Balance A/c ₹1,30,000
(Being the opening balance of cash in hand and bank)
Explanation:
Cash A/c: Cash is a Real Account. The rule for real accounts is “Debit what
comes in”. Since cash is coming into the business, we debit the Cash A/c.
Bank A/c: Bank is a Real Account. The rule for real accounts is “Debit what
comes in”. The cash in the bank is an asset to the business, so we debit the
Bank A/c.
Opening Balance A/c: This is just a way to recognize the opening balance of
both cash and bank.
2. Vicky sold goods to Kavi for ₹25,000 against a cheque and deposited the
same in the bank
Entry:
Bank A/c Dr. ₹25,000
To Sales A/c ₹25,000
(Being cheque received from Kavi for goods sold and deposited into the
bank)
Explanation:
Bank A/c: Bank is a Real Account. The rule for real accounts is “Debit what
comes in”. Since the cheque is deposited into the bank, the bank balance
increases, so we debit the Bank A/c.
Sales A/c: Sales is a Nominal Account. The rule for nominal accounts is
“Credit all incomes and gains”. Since selling goods results in income, we
credit the Sales A/c.
4. Received commission ₹5,000
Entry:
Cash A/c Dr. ₹5,000
To Commission Income A/c ₹5,000
(Being commission received in cash)
Explanation:
Cash A/c: Cash is a Real Account. The rule for real accounts is “Debit what
comes in”. Since the business is receiving cash, we debit the Cash A/c.
Commission Income A/c: Commission is a Nominal Account. The rule for
nominal accounts is “Credit all incomes and gains”. Since commission
income is a gain, we credit the Commission Income A/c.
8. Bank paid ₹15,000 directly for insurance premium of vicky
Entry:
Insurance Premium A/c Dr. ₹15,000
To Bank A/c ₹15,000
(Being bank paid insurance premium directly)
Explanation:
Insurance Premium A/c: Insurance premium is an expense (Nominal
Account). The rule for nominal accounts is “Debit all expenses and losses”.
Since insurance is an expense, we debit the Insurance Premium A/c.
Bank A/c: Bank is a Real Account. The rule for real accounts is “Credit what
goes out”. Since the bank is paying money, the bank balance decreases, so
we credit the Bank A/c.
15. Cash deposited into bank ₹30,000
Entry:
Bank A/c Dr. ₹30,000
To Cash A/c ₹30,000
(Being cash deposited into the bank)
Explanation:
Bank A/c: Bank is a Real Account. The rule for real accounts is “Debit what
comes in”. Since cash is being deposited into the bank, we debit the Bank
A/c.
Cash A/c: Cash is a Real Account. The rule for real accounts is “Credit what
goes out”. Since cash is leaving the business, we credit the Cash A/c.
20. Cash withdrawn from bank for personal use ₹45,000
Entry:
Drawings A/c Dr. ₹45,000
To Bank A/c ₹45,000
(Being cash withdrawn from the bank for personal use)
Explanation:
Drawings A/c: Drawings is a Personal Account. The rule for personal accounts
is “Debit the receiver”. Since Vicky (the owner) is withdrawing money for
personal use, we debit the Drawings A/c.
Bank A/c: Bank is a Real Account. The rule for real accounts is “Credit what
goes out”. Since money is being withdrawn from the bank, we credit the
Bank A/c.
