Journal Entries and Ledger Question and Answer

Q: Mr Robert commenced business on 1st January, 2011 with a capital of $100,000 in cash. On the same date he opened the bank account in ADCB and deposited $20,000. During the month of January 2011 the following transactions took place:


Jan 1 Bought goods for cash 70,000

2 Sold goods to Steve Co. (Credit) 38,000

15 Sold goods for cash 9,000

21 Steve Co. paid by cheque 35,000

22 Stationery bill paid by cheque 2,000

22 Telephone bill by cash 500

31 Paid rent by cash 2,000

Paid salaries by cash 3,000

Withdrew cash personal use 5,000

Required:
Make journal entries for the transactions and post them to ledgers.

A:


JOURNALS

Jan 1 Dr Cash on hand 80,000
Dr Bank 20,000
Cr Capital 100,000


Note that in most accounting questions you won't have to account for "Cash on hand" and "Bank" in separate accounts. In most questions I just combine these into "Bank." But in this question they specifically talk about opening the bank account with $20,000 of the $100,000, which indicates they kept cash on hand in addition to the bank account, which needs to be accounted for.

1 Dr Purchases/Inventory 70,000
Cr Cash on hand 70,000


Note that it's "Purchases" for a periodic system of inventory and "Inventory" if it's the perpetual system. See the tutorial on perpetual and periodic inventory for more information.

2. Dr Debtors 38,000
Cr Sales 38,000

15. Dr Cash on hand 9,000
Cr Sales 9,000

21. Dr Bank 35,000
Cr Debtors 35,000

22. Dr Stationery expense 2,000
Cr Bank 2,000

22. Dr Telephone expense 500
Cr Cash on hand 500

31. Dr Rent expense 2,000
Cr Cash on hand 2,000

31. Dr Salaries 3,000
Cr Cash on hand 3,000

31. Dr Drawings 5,000
Cr Cash on hand 5,000



T-ACCOUNTS

Cash on hand Bank T-accounts

Capital Purchases Inventory Debtors Control T-accounts

Sales Stationery Telephone Rent Expenses T-accounts

Salaries Expense Drawings T-accounts



There you go. Hope you enjoyed this detailed journal entries and ledger question and answer.

Thanks to Kay Khine, Kong Chenda and others for contributions below that helped solve this question!

Good luck with your studies!

- Michael Celender
Founder of Accounting Basics for Students


Tutorials relating to this Journal Entries and Ledger Question and Answer: Find more exercises like this on the Full Accounting Questions and Answers page.


Comments for Journal Entries and Ledger Question and Answer

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cheque
by: Anonymous

cheque received and cheque paid to bank

Post to Ledger Account
by: Kay Khine

Ans:
1-1-2011 Cash On Hand $100,000 Dr
Capital $100,000 Cr

1-1-2011 ADCB Bank $20,000 Dr
Cash On Hand $20,000 Cr

1-1-2011 Inventories $70,000 Dr
Cash On Hand $70,000 Cr

2-1-2011 A/R (Steve Co.) $38,000 Dr
Sales $38,000 Cr

15-1-2011 Cash On Hand $9,000 Dr
Sales $9,000 Cr

21-1-2011 ADCB Bank $35,000 Dr
A/R (Steve Co.) $35,000 Cr

22-1-2011 Stationery $2,000 Dr
ADCB Bank $2,000 Cr

22-1-2011 Telephone $500 Dr
Cash On Hand $500 Cr

31-1-2011 Rent $2,000 Dr
Cash On Hand $2,000 Cr

31-1-2011 Salaries $3,000 Dr
Cash On Hand $3,000 Cr

31-1-2011 Withdraw $5,000 Dr
Cash On Hand $5,000 Cr

All of ledger posting finished.

journal entries
by: Veronika

this is a big huge help. i have needed to run through things and revise. it has simplified my practice big time. i'm so appreciative

You're welcome Veronika!

- Michael

How to Post These Entries?
by: Friend

whatever you did is great but my question is HOW DO U POST THESE ENTRIES?

I just added all the T-accounts above so there is the full solution now.

- Michael

General Journal (incomplete)
by: .....

Date: Particulars Debit Credit
2011
Jan.1 Cash 100000
Capital 100000
Goods 70000
Cash 70000
To record the initial
transaction of mr. Robert
#
2 Accounts Recievable 38000
Revenue 38000
15 Cash 9000
Revenue 9000
21 Check 35000
Accounts Recievable 35000
22 Expenses 2000
Check 2000
Utilities Expense 500
Cash 500
31 Rent Expense 2000
Cash 2000
Salaries Expense 3000
Cash 3000
Drawing 5000
Cash 5000

Business
by: Muny

Jan 1 Goods 70,000
Cash 70,000
Jan 2 Cash 38,000
A/P 38,000
Jan 15 Cash 9,000
Goods 9,000
Jan 21 A/R 35,000
Check 35,000
Jan 22 Stationery 2,000
Check 2,000
Jan 22 Telephone 500
Cash 500
Jan 31 Rent 2,000
Cash 2,000
Salary 3,000
Cash 3,000
Cash 5,000
Withdrew 5,000

student. In India
by: John woja

Thank you so much. I found it helpful to me. God bless you.

Glad to hear and you're most welcome!

- Michael

Good!
by: Anonymous

Good!

journal entries and post to ledger account
by: Kong chenda

I. Make journal entries :

Jan 01. Cash on hand.....80,000.00
Cash in bank.....20,000.00
Capital.................100,000.00
To record investment by owner.

01. Inventory.........70,000.00
Cash on hand...............70,000.00
To record purchase inventory for cash.

02. A/R................38,000.00
Sales revenue..............38,000.00
To record sold merchandise on credit.

15. Cash on hand............9,000.00
Sales revenue..................9,000.00
To record sold merchandise for cash.

21. Cash..............35,000.00
A/R.......................35,000.00
To record received payment from customer.

22. Stationery...............2,000.00
Cash in bank...................2,000.00
To record purchase stationery for cash.

22. Telephone expense..........500.00
Cash on hand .................500.00
To record paid for telephone.

31. Rent expense...........2,000.00
Cash on hand ................2,000.00
To record paid rent.

31. Salaries expense......3,000.00
Cash on hand................3,000.00
To record paid for salaries.

31. Withdraw.............5,000.00
Cash on hand................5,000.00
To record withdraw by owner.

II. Post to Ledger account.

For ledger I did already but I can't put the table so small here...

good
by: Anonymous

good

Posting?
by: Anonymous

how do I do the posting?

Posting to T-accounts now shown above. Enjoy!

- Michael

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