DEBIT CREDIT
ASSET INCREASE DECREASE
EXPENSE INCREASE DECREASE
LIABILITY DECREASE INCREASE
REVENUE DECREASE INCREASE
CAPITAL DECREASE INCREASE
1-Jan Owner started the business with Rs. 800,000 cash
DATE PARTICULER DEBIT CREDIT
1-Jan CASH 800,000
CAPITAL 800,000
JOURNAL ENTRIES
JOURNAL LEDGER
TRIAL BALANCE
PROFIT AND LOSS
BALANCE SHEET
FOLLOWING TRANSECTIONS HAVE BEEN TAKEN FROM THE BOOKS OF MR. SUNNY
MR. SUNNY INVESTED IN BUSINESS CASH $ 200,000, FURNITURE $ 400,000 AND BUILDING $ 900,000
S.NO PARTICULAR DEBIT CREDIT
1 CASH 200,000
FURNITURE 400,000
BUILDING 900,000
CAPITAL 1,500,000
(TO RECORD INVESTMENTS IN BUSINESS)
MR. SUNNY PURCHASED GOODS ON CASH $ 150,000 AND ON CREDIT $ 400,000
2 PURCHASE/ GOODS 550,000
CASH 150,000
ACCOUNT PAYABLE 400,000
(TO RECORD GOODS PURCHASE)
MR. SUNNY SOLD GOODS ON CASH $ 500,000 AND ON CREDIT $ 600,000
3 CASH 500,000
ACCOUNT RECEIVABLE 600,000
SALE 1,100,000
(TO RECORD SALE OF GOODS)
MR. SUNNY PAID HALF AMOUNT TO SUPPLIER
4 ACCOUNT PAYABLE 200,000
CASH 200,000
(TO RECORD PAYMENTS TO SUPPLIERS)
MR. SUNNY RECEIVED AMOUNT FROM CUSTOMER 50%
5 CASH 300,000
ACCOUNT RECEIVABLE 300,000
(TO RECORD RECEIVING FROM CUSTOMER)
THE COMPANY HAS ELECTRICITY EXPENSE OF $ 40,000 BUT MR. SUNNY PAID ONLY $ 10,000
6 ELECTRICITY EXPENSE 40,000
CASH 10,000
ELECTRICITY PAYABLE 30,000
(TO RECORD ELECTRICITY BILL)
MR. SUNNY PAID COMMISION TO MR. HASSAN IN ADVANCE $ 10,000
7 PREPAID COMMISION 10,000
CASH 10,000
(TO RECORD PREPAID COMMISSION)
MR. SUNNY RECEIVED $ 50,000 IN ADVANCE FROM CUSTOMER AS FEES
8 CASH 50,000
UNEARNED FEE 50,000
(TO RECORD UNEARNED INCOME)
MR. HASSAN FULFILLED HIS OBLIGATION
9 COMMISSION EXPENSE 10,000
PREPAID COMMISION 10,000
(TO RECORD PREPAID INTO EXPENSE)
MR. SUNNY FULFILLED HIS SIDE OF OBLIGATION
9 UNEARNED INCOME 50,000
FEE INCOME 50,000
(TO RECORD UNEARNED INTO INCOME)
LEDGER
CASH
200,000
(150,000)
500,000
(200,000)
300,000
(10,000)
(10,000)
50,000
680,000
MR. SUNNY INVESTED IN BUSINESS CASH $ 200,000, FURNITURE $ 400,000 AND BUILDING $ 900,000
MR. SUNNY PURCHASED GOODS ON CASH $ 150,000 AND ON CREDIT $ 400,000
MR. SUNNY SOLD GOODS ON CASH $ 500,000 AND ON CREDIT $ 600,000 110000
MR. SUNNY PAID HALF AMOUNT TO SUPPLIER
MR. SUNNY RECEIVED AMOUNT FROM CUSTOMER 50%
THE COMPANY HAS ELECTRICITY EXPENSE OF $ 40,000 BUT MR. SUNNY PAID ONLY $ 10,000
MR. SUNNY PAID COMMISION TO MR. HASSAN IN ADVANCE $ 10,000
MR. SUNNY RECEIVED $ 50,000 IN ADVANCE FROM CUSTOMER AS FEES
MR. HASSAN FULFILLED HIS OBLIGATION
MR. SUNNY FULFILLED HIS SIDE OF OBLIGATION
Assets
Increase Decrease Current Assets
Income Credit Non Current Assets
Expense Debit
Equity Credit
Assets Debit
Liabilities Credit
Revenue is subclass of income
Capital Increase Credit
Equity
Equity
Share capital
Debt Equity
Cash
less than accounting period 12months Inventory
more than accounting priod 5 years Property, Machinery
Sr. No. Particulars Debit Credit
1 Cash 200,000
Building 900,000
Furniture 400,000
Capital (Equity) - Credited upon increase 1,500,000
2 Purchases/Inventory/Raw Material (Current Asset) 550,000
Cash 150,000
Purchases Payable (Liability) 400,000
3 Cash 500,000
Accounts Receivable (Shahid Receivables) 600,000
Sales - Shahid 1,100,000
4 Purchases Payable - Debit 200,000
Cash 200,000
5 Cash 300,000
Accounts Receivable (Shahid Receivables) 300,000
6 Eletricity Expense 40,000
Cash paid 10,000
Expense Payable - Electricity 30,000
7 Prepaid Expense - Commission 10,000
Cash 10,000
8 Cash 50,000
Unearned Income / Accrued Income 50,000
9 Expense - Commission 10,000
Prepaid Expense - Commission 10,000
10 Accrued Income 50,000
Income - Fee 50,000
ASSET
CURRENT ASSETS (THESE ASSETS HAVE LIFE WITHIN A YEAR)
CASH (AMOUNT OF CASH IN YOUR BUSINESS)
BANK (AMOUNT OF BANK BALANCE OF YOUR COMPANY ACCOUNT)
ACCOUNT RECEIVABLE (AMOUNT ABOUT TO BE RECEIVED FROM YOUR CUSTOMERS)
PREPAID ASSETS (EXPENSES YOU HAVE PAID IN ADVANCE)
MERCHANDIZE INVENTORY (GOODS PURCHASED FOR THE PURPOSE OF SELL)
NON-CURRENT ASSETS (THESE ASSETS HAVE LIFE MORE THEN A YEAR)
BUILDING
LAND
VEHICLES
MACHINERY
EQUIPMENT
FURNITURE
LIABILITIES
CURRENT LIABILITIES (THESE LIABILITIES HAVE LIFE WITHIN A YEAR)
ACCOUNT PAYABLE (AMOUNT TO BE PAID TO OUR SUPPLIERS)
UNEARNED INCOME (AMOUNT YOU HAVE RECEIVED IN ADVANCE)
ANYTHING PAYABLE (ANYTHING YOU’VE TO BE PAID)
NON-CURRENT LIABILITIES (THESE LIABILITIES HAVE LIFE MORE THEN A YEAR)
BANK LOAN
LONG TERM LOANS
EXPENSE (ANY OBLIGATION WHICH HAVE BEEN FULFILLED BY ANOTHER PARTY)
