Question
Write the process of preparing ledger from a journal.
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Answer
The process of preparing ledger from Journal can be explained with the help of an example. Let us suppose that machinery is purchased from Mr. X, so, the journal entry will be:
In this example, Machinery Account is debited and Mr. X Account is credited. Let us understand the process of preparing ledger from the journal entry. Account which is debited in the entry:Step 1: Indentify the account in ledger that is debited, i.e., ‘Machinery Account’.
Step 2: Enter date in the debit side of the ‘Machinery Account’ in the ‘Date’ column.
Step 3: Enter the name of the account as ‘Mr. X Account’ (which is credited in the entry) in the ‘Particulars’ column in the debit side of the Machinery Account
Step 4: Enter the page number of the journal, where the entry is recorded in the ‘J.F.’ (journal folio) column.
Step 5: Post the corresponding amount in the ‘Amount’ column, which is recorded against ‘Machinery Account’ in the journal entry.
Account which is credited in entry:Step 1: Indentify the account in ledger that is credited, i.e., ‘Mr. X Account’.
Step 2: Enter date in the credit side of ‘Mr. X Account’ in the ‘Date’ column.
Step 3: Enter the name of the account as ‘Machinery Account’ (which is debited in the entry) in the ‘Particulars’ column in the credit side of the ‘Machinery Account’.
Step 4: Enter the page number of the journal where the entry is recorded in the ‘J.F.’ (journal folio) column.
Step 5: Post the corresponding amount in the ‘Amount’ column, which is recorded against ‘Mr. X Account’ in the journal entry.
In this example, Machinery Account is debited and Mr. X Account is credited. Let us understand the process of preparing ledger from the journal entry. Account which is debited in the entry:Step 1: Indentify the account in ledger that is debited, i.e., ‘Machinery Account’.
Step 2: Enter date in the debit side of the ‘Machinery Account’ in the ‘Date’ column.
Step 3: Enter the name of the account as ‘Mr. X Account’ (which is credited in the entry) in the ‘Particulars’ column in the debit side of the Machinery Account
Step 4: Enter the page number of the journal, where the entry is recorded in the ‘J.F.’ (journal folio) column.
Step 5: Post the corresponding amount in the ‘Amount’ column, which is recorded against ‘Machinery Account’ in the journal entry.
Account which is credited in entry:Step 1: Indentify the account in ledger that is credited, i.e., ‘Mr. X Account’.
Step 2: Enter date in the credit side of ‘Mr. X Account’ in the ‘Date’ column.
Step 3: Enter the name of the account as ‘Machinery Account’ (which is debited in the entry) in the ‘Particulars’ column in the credit side of the ‘Machinery Account’.
Step 4: Enter the page number of the journal where the entry is recorded in the ‘J.F.’ (journal folio) column.
Step 5: Post the corresponding amount in the ‘Amount’ column, which is recorded against ‘Mr. X Account’ in the journal entry.
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On 1st Jan. 2012, Panjim Dryfruits Ltd. bought a plant for ₹ 15,00,000. The company writes off depreciation @ 20% p.a. on Written Down Value Method and closes its books on 31st March every year. On 1st Oct. 2014, a part of the plant purchased on 1st Jan. 2012 for ₹ 3,00,000 was sold for ₹ 1,75,000. On 1st Jan. 2015 a fresh plant was purchased for ₹ 5,00,000. Prepare Plant A/c, Provision for Dep. A/c and Plant Disposal A/c.
Journalise the following transactions in the books of Manoj Store:
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- Sold goods for ₹ 10,000 and charged IGST @ 12% against cheque.
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- Machinery costing ₹ 4,00,000 for which order was placed earlier paying advance of ₹ 40,000. The balance amount was paid as follows:
- An old machine (personal) valued at ₹ 30,000 was given in exchange:
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- Balance by issue cheque from firm's bank account.
- Paid wages ₹ 2,500 for installation of machine.
Why is it necessary to sub-divide a Journal? What are its advantages?
Shri Krishan Manufacturing Company purchased 10 machines for ₹ 75,000 each on July 01, 2014. On October 01, 2016, one of the machines got destroyed by fire and an insurance claim of ₹ 45,000 was admitted by the company. On the same date another machine is purchased by the company for ₹ 1,25,000.
The company writes off 15% p.a. depreciation on written down value basis. The company maintains the calendar year as its financial year. Prepare the machinery account from 2014 to 2017.
The company writes off 15% p.a. depreciation on written down value basis. The company maintains the calendar year as its financial year. Prepare the machinery account from 2014 to 2017.
Rajesh Kumar was unable to reconcile his Trial Balance as on 31st March 2014 and has opened a suspense account from the difference. Later on the following errors were discovered:-
- There were three compensating errors:-
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- The total of one page of the Purchase Book was carried forward as ₹ 1,286 instead of ₹ 1,826.
- Goods purchased from C for ₹ 400 was debited to his account as ₹ 40.
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- Cash received from Ghanshyam ₹ 500 were correctly recorded in cash book but were posted to his account as ₹ 50.
- ₹ 720 paid to Kamal has been debited to Kamlesh A/c as ₹ 520.
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X draws upon Y a bill of ₹ 10,000 for three months on 1st July, 2016. The bill was duly accepted and returned by Y. On due date bill became dishonoured and noting charges paid under each of the following circumstances ₹ 75. Pass entries in the following cases:
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- If drawer discounts the same with his Banker and noting charges paid by the Banker.
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Prepare the Vouchers:
Transactions marked with * are subject to levy of CGST and SGST @ 6% each.
|
2019
|
Particular
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₹
|
|
Jan-5
|
Received cash from Wahi & Co. on account vide cash receipt No. 551
|
10,000
|
|
Jan-10
|
Commission received vide cash receipt No. 520*
|
10,000
|
|
Jan-15
|
Sold leather purses for cash vide Cash Memo Nos. 307-310*
|
6,000
|
|
Jan-24
|
Sold two old machines vide Cash Memo No. 1560*
|
3,000
|
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You are required to show: (i) Machinery Account, (ii) Depreciation Account, and (iii) Provision for Depreciation Account for four years ending 31st March, 2019.
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