Yes. Let's take a set of transactions and prepare all the requisite information asked. Following are the transactions for the period April 20x1 to March 20x2 in the books of Michael Traders 1-Apr Michael started business with cash 600,000, cash at Bank of America 700,000, furniture 200,000. 1-Apr PuRead more
Yes.
Let’s take a set of transactions and prepare all the requisite information asked.
Following are the transactions for the period April 20×1 to March 20×2 in the books of Michael Traders
1-Apr | Michael started business with cash 600,000, cash at Bank of America 700,000, furniture 200,000. |
1-Apr | Purchased Plant & Machinery worth 250,000 by cheque. |
25-Apr | Purchased goods from ABC Ltd worth 800,000 @10% trade discount. |
5-May | Cash Sales 1,000,000 @5% trade discount to XYZ Traders |
15-May | Deposited cash with Bank of America 500,000. |
5-Jun | Paid ABC Ltd 300,000 in cash. |
10-Jun | Received commission 75,000 by cheque. |
25-Jun | Cash Purchases 250,000. |
5-Jul | Sold goods to XYZ Traders 475,000. |
15-Jul | Received 275,000 by cheque from XYZ Traders. |
5-Aug | Loan taken from Bank of America 200,000 |
25-Aug | Purchased goods from ABC Ltd 50,000. |
27-Aug | Withdrew cash from bank 10,000. |
5-Sep | Received commission 55,000 in cash. |
10-Sep | Paid ABC Ltd 70,000 by cheque. |
20-Sep | Received 90,000 in cash from XYZ Traders. |
1-Oct | Bank loan repaid 50,000. |
25-Oct | Cash Purchases 25,000. |
5-Nov | Sold goods to XYZ Traders 47,000. |
15-Nov | Withdrew cash from bank 15,000. |
5-Dec | Received interest from bank 5,000. |
25-Dec | Purchased goods from ABC Ltd 75,000. |
5-Jan | Cash Sales 100,000. |
15-Jan | Deposited cash with Bank of America 35,000. |
25-Feb | Cash Purchases 450,000. |
28-Feb | Office was taken on rent in the month of Feb. Office rent paid in cash 50,000. |
28-Feb | Employees were hired in the month of Feb. Paid salary by cheque 30,000 & cash 30,000 for the month of Feb 20×2. |
5-Mar | Sold goods to XYZ Traders 675,000. |
31-Mar | Paid office rent by cheque 50,000. |
31-Mar | Paid salary in cash 30,000 for the month of March 20×2. |
You are required to:
(i) Journalize the above transactions and post them in Ledgers and prepare a Trial Balance.
(ii) Prepare Trading A/c, Profit & Loss A/c and Balance Sheet taking into consideration:
1. Closing Stock as on 31st March 20×2 is 200,000.
2. Salary outstanding for the month of March 20×2 is 30,000.
3. [email protected]% to be charged on Furniture & Fixtures and @15% on Plant & Machinery.
1. Journal Entries
2. Ledgers
3. Trial Balance
4. Trading A/c & Profit and Loss A/c
5. Balance Sheet
An excel sheet of the entire transactions along with the requisite information asked has been attached for your reference.
30-transactions-of-Journal-Ledger-Trial-Balance-Financial-Statements
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Posting Reference A posting reference column is used to indicate that the entry is posted in the respective ledger accounts and it links journal with the respective ledger account. The abbreviation used for posting reference is "PR". It is also called a folio. Purpose of PR Column When an entity traRead more
Posting Reference
A posting reference column is used to indicate that the entry is posted in the respective ledger accounts and it links journal with the respective ledger account. The abbreviation used for posting reference is “PR”. It is also called a folio.
Purpose of PR Column
When an entity transacts in a large number on daily basis it becomes a troublesome task then for the bookkeeper to ascertain whether the entries are posted in appropriate ledgers. And it may so happen that the entry is posted twice. Later on, tracking that transaction and correcting the same becomes a tedious and time-consuming job.
Hence, to avoid these issues its recommended to maintain a posting reference column. Thereby simplifying the job of a bookkeeper.
It can be seen in the third column of the journal book generally. You can also see the same in the image inserted below-
Example
when an entity purchases an immovable property for an amount of 100,000 it shall be recorded in the books of accounts as –
The reference of the page number of the journal book shall be given in the respective ledger accounts to interlink the same. The ledger given below indicates the same-
Similarly, Cash Account shall also have a PR column wherein the reference of the page consisting of the primary journal entry shall be given. The below-given image presents the same
I hope this was helpful.
Aastha Mehta.