accounting cycle transaction journal entries ledger trial balance trading and profit & loss...

Accounting Cycle

Transaction

Journal Entries

Ledger

Trial Balance

Trading and Profit & Loss Account

Balance Sheet

illustration

• T- 1: Bharath started business with the investment of Rs.1,00,000

• Journal Entries in the Books of Bharath Enterprises

• Debit Credit• J-1:By.Cash A/C Dr. 1,00,000• To. Capital A/C 1,00,000• (Being money invested in business by

Mr.Bharath by cash)

Continue….2

• T-2: On the next day he has deposited Rs.50,000 in the Bank.

» Debit Credit

• J-2: Bank A/C Dr. 50,000

• To. Cash A/C 50,000

Continue….3

• T-3: He has purchased a machinery for Rs.10,000 and paid cash immediately

• J-3: Machinery A/C Dr. 10,000

• To.Cash A/C 10,000

Continue…..4

• T-4: He has purchased another machiery for Rs.5,000 and issued cheque immediately.

• J-4: Machinery A/C Dr. 5,000

• To. Bank A/C 5,000

Continue…5

• T-5: Purchased furniture for Rs.2,000 and paid Cash immediately.

• J-5: Furniture A/C Dr. 2,000

• To.Cash A/C 2,000

Continue ..6

• T-6: Purchased a building for Rs.20,000 and issued cheque immediately.

• J-6: Building A/C Dr. 20,000

• To.Bank A/C 20,000

Continue…7

• T-7: Purchased Rawmaterial for Rs.3000 and paid Cash immediately.

• J-7: Purchase A/C Dr. 3,000

• To. Cash A/C 3,000

Continue…8

• T-8: Purchased Rawmaterial from Ravi&Co. for 1,000

• J-8: Purchase A/C Dr. 1,000

• To.Ravi&Co.A/C 1,000

Continue…9

• T-9: Paid Cash to Ravi & Co Rs.990 towards full and final settlement.

• J-9: Ravi & Co A/C Dr. 1000

• To.Cash A/C 990

• To.Discount A/C 10

Continue…10

• T-10: Bought a Second hand computer for Rs.2000 and paid Cash immediately

• J-10: Office

• Equipment A/C Dr. 2,000

• To.Cash A/C 2,000

Continue..11

• T-11: Purchased 4 tube lights each Rs.200

• And 4 fans each Rs.800 from Rathna Fans House and paid cash immediately.

• J-11: Fixtures A/C Dr. 4,000

• To.Cash A/C 4,000

Continue..12

• T-12: Goods Sold to Rathna Stores for Rs.20,000 and received cash immediately.

• J-12: Cash A/C Dr. 20,000

• To.Sales A/C 20,000

Continue..13

• T-13: Goods sold to Saravana Stores for Rs.25,000 and received cheque immediately.

• J-13: Bank A/C Dr. 25,000

• To. Sales A/C 25,000

Continue..14

• T-14: Goods sold to Vivek & Co for Rs.20,000

• J-14: Vivek & Co A/C Dr. 20,000

• To.Sales A/C 20,000

Continue..15

• T-15: Telephone Charges Paid Rs.1000

• ( Since the mode of payment is not mentioned here we have to treat this as cash payment)

• J-15: Telephone

• Charges A/C Dr.1,000

• To.Cash A/C 1,000

Continue..16

• T-16: Salary paid to Mr.Kumar Rs.1000

• J-16: Salary A/C Dr. 1,000

• To. Cash A/C 1,000

Continue…17

• T-17: Wages paid to Mr.Ravi Rs.500

• J-17: Wages A/C Dr. 500

• To.Cash A/C 500

Continue…18

• T-18: Received Commission Rs.500 from Sekar.

• J-18: Cash A/C Dr. 500

• To.Commission A/C 500

LedgerCash A/c

To. Capital 1,00,000 By. Bank 50,000

To. Sales 20,000 By. Machinery 10,000

To. Commission 500 By. Furniture 2,000

By. Purchase 3,000

By. Ravi& Co 990

By. Equipment 2,000

By. Fixtures 4,000

By. Tel. Charges 1,000

By. Salary 1,000

By. Wages 500

By. Bal. C/d 46,010

--------------- --------------

1,20,500 1,20,500

-----------------------------------------------------------------------------------

To. Bal. B/d 46,010

LedgerCapital A/c

By. Cash 1,00,000 Next Step

Capital A/c

To. Bal. C/d 1,00,000 By. Cash 1,00,000 Next Step

Capital A/C

To. Bal. C/d 1,00,000 By. Cash 1,00,000

------------ ------------

1,00,000 1,00,000

By. Bal. B/d 1,00,000

Ledger

Bank A/c

To. Cash 50,000 By. Machinery 5,000

To. Sales 25,000 By. Building 20,000

By. Bal. C/d 50,000

------------- -----------

75,000 75,000

------------------------------------------------------------------

To. Bal. B/d 50,000

Ledger

Machinery A/c

To. Cash 10,000 By. Bal. C/d 15,000

To. Bank 5,000

------------- --------------

15,000 15,000

To. Bal. B/d 15,000

Furniture A/c

To. Cash 2,000 By. Bal. C/d 2,000

----------- -----------

2,000 2,000

-------------------------------------------------------------------------------------

To. Bal. B/d 2,000

Trial Balance

Trial Balance

To.Cash 46,010 By. Capital 1,00,000

To. Bank 50,000 By. Sales 65,000

To. Machinery 15,000 By. Commission 500

To. Furniture 2,000 By. Discount 10

To. Building 20,000

To. Office Equipment 2,000

To. Fixtures 4,000

To. Vivek & Co 20,000

(Debtors)

To. Salary 1,000

To. Wages 500

To. Tele. Charges 1,000

To. Purchases 4,000

--------------------------------------------------------------------------

1,65,510 1,65,510

Trading & Profit and Loss A/c

Trading Account

To. Op.Stock By.Sales 65,000

To. Purchases 4,000 By. Cl.Stock

To. Gross Profit 61,000

--------------------------------------------------

65,000 65,000

-----------------------------------------------------------------------

Profit and Loss

By.Gross Profit 61,000

Profit and Loss A/c By.Gross Profit 61,000

To. Salary 1,000 By. Commission 500

To. Wages 500 By. Discount 10

To. Tele 1,000

To. Net Profit 59,010

---------------------------------------------------------------

61,510 61,510

Balance SheetLiabilities AssetsCapital 1,00,000 Fixed Assets

Net Profit 63,010 1,63,010 Building 20,000

Machinery 15,000

Furniture 4,000

Office Equipment 2,000

Fixtures 4,000

Current Assets

Cash 46,010

Bank 50,000

Debtors 20,000