Transaction Banking

Entries of Some Typical Transactions

(1) Goods given away as Charity 
              If the donation is given in cash then the amount to be donated is deposited in the cash account after the name of the charity. But when the goods are donated, it is not a sale of the business. Therefore, the goods are not availed and they are valued at the purchase price, so the purchase account will be credited by not crediting the sales account. In this way, the goods purchased are reduced by following their entry. She goes :

Transaction Banking

Charity A / c Dr.

To Purchases A / c
(Being goods given away as charity)

(2) Goods or cash with drawers for personal use.

If the owner of the business needs cash or goods for personal expenses, he withdraws from the business, this is called withdrawal. When the merchant withdraws the cash for personal use, he will name the withdrawal account and deposit the cash account and if he withdraws the goods, he will deposit the purchase account. Its entry will be as follows.

Drawings A / c Dr.
To Cash A / c
To Purchases A / c
(Being goods and cash withdrew for personal use)

(3) Goods lost by theft or any loss
When an employee or person of a business steals goods from the business or any other kind of loss of goods, such as being destroyed by fire, destroyed by flood, etc. In these circumstances, there is a loss of goods, that is, goods are reduced in trade. This is not a sale, so the accounts affected by such practices are loss account and purchase account from theft/fire/ flood. Hence its entry will be as follows.
Loss by theft A / c Dr.

Loss by fire / flood / any loss A / c Dr.
           To Purchases A / c

(Being goods lost by theft, flood, and fire)
If the goods are insured and -
(A) Goods destroyed by fire
Loss by fire A / c Dr.
To Purchases A / c

(B) On accepting the claim by the insurance company -
Insurance Company Dr.
To Loss by fire A / c

(C) On receipt of the amount from the insurance company -
Cash bank A / c Dr.
       To Insurance Company

(D) On receiving less amount from the insurance company -
Profit & Loss A / c Dr.
                    To Loss by fire A / c
(Being lost by fire transferred to P & LA / c)

(4) Good distributed as free sample:
To increase trade, the merchant distributes his goods as a free sample, then it will not be considered as the sale of goods. This will be less in purchasing goods only. Therefore, the purchase account will be credited to the deposit and free sample or advertising account. Its entry is done as follows.

Free Sample / Advertisement A / c Dr.
To Purchases A / C (6)

(5) Sales Tax
When the merchant buys the goods, he makes the sales tax and sells the goods, then the sales tax is collected from the customers. If you make a tax on buying goods, it is not entered separately but the purchase price will be the same amount that has come after adding the tax. This will be clear from the following example - Rs. 2,000 from Sanjay. Of goods on which he levied an additional 2% sales tax:
Purchases - A / c Dr. 2, 020

To Sanjay 'SA / c 2, 020

(Being goods purchases from Sanjay and Sales tax Paid @ 2%)

When the merchant sells the goods, the sales tax is shown in a separate account. Because the sales tax amount has to be deposited in the government treasury. Hence sales tax is a personal account. Its entry is clear from the following example - Suresh 3. 000 rupees Of goods on which he imposed an additional 4 percent sales tax:

Suresh A / c Dr. 3, 120
To Sales A / c 3, 000
To Sales tax A / c 1, 20
(Being goods sold to Suresh and Sales tax charged @ 4%).

(6) trade discount
The trade discount has been told in the past. The merchant does not enter the trading discount separately. But sold. Enters subtract from the amount. This will be clear from the following example - Sourav gets Rs. 1,000. Sold goods and gave a 5 percent trade discount.
Sourav 's A / c Dr. 9, 50
To Sales A / c 9, 50
(Being Goods Sales to Sourav & give tread discount 5%)

(7) Cash Discount
Rajan paid Rs. 7000 in it. Rs 6, 300 in full payment from payment or Kailash after deducting a 10 percent cash rebate. 6, 300, received or received from Kailash. Discounted Rs. 7, 00
Cash A / c Dr. 6, 300
Discount A / c Dr. 7, 00
To Rajan 'SA / c 7, 000
(Being cash received from Rajan after deducting cash discount)

(8) Bad debts
The amount which is not received from the debtors after the customers go bankrupt is called bad debts. This is a loss for the business. In such a case, the band will name the loan account and from the amount received, he will name the cash account and deposit the account of the debtor. This will be clear from the following example - towards Arun, Rs. 2,500. Only Rs.2,200 was owed, he went bankrupt. Received only: Cash A / c Dr. 2, 200
Bad debts A/c Dr. 300
To Arun's A / c 2, 500
(Being Arun became insolvent and he paid only 2, 200 from his due amount)

(9) Bad debts recovered,
Sometimes a bad loan is returned from the customer. In such a situation, the client will not deposit the account as his account has been closed earlier. This is a benefit for the business, so bad debts will be credited to the reclaimed account and named to the cash account. Which will be clear from the following example - 3 from Arun. 00 Rs Those who were drowned earlier.
Cash A / c Dr 300
To Bad debts Recovered A / c 300
(Being cash received against previously written off bad debts)

Example 2:
Give the Journal entries for the following transactions.

Make journal entries of the following behaviors
Mav20 Business Owner 5. Rs 500 Goods of Rs. 8,000 and Rs. Withdraw cash (Proprieties withdraw for his personal use. Goods worth Rs. 5, 500 and Cash Rs. 8, 000.).

June 5 16, 000 rupees of goods were destroyed by fire. 13,000 by insurance company The claim was accepted. (Goods worth Rs. 16, 000 were destroyed by fire, the claim of Rs. 13, 000 accepted by Insurance Company.)

July 10 13, 500 Rs. The goods were stolen by the employee. (Goods worth Rs. 13, 500 were stolen by an employee).

July 15 8, 150 Rs. Donated the goods to (Goods worth Rs. 8, 150 were given as Charity.)

July 20 _ 975 Rs. The goods were distributed as a free sample. (Goods worth Rs. 975 given away as free samples

Amount (Rs.)
Dr.(Debit)                        Cr. (Credit)
May 20
Drawings A / c                                  Dr.
             To Cash A / c
             To Purchases A / c
( For goods worth Rs. 5, 500 and cash Rs . 8, 000 withdraw for personal use. )

June 5
Loss by Fire A / c                             Dr.
Insurance Company A / c               Dr.
      To Purchase A / c
( For goods worth Rs. 16, 000destroyed by fire, Insurance Co. Accepted claim for Rs. 13, 000 )

Juli 10
Loss by Theft A / c                         Dr.
          To Purchases A / c
( For goods stolen by an employee ).



Banking Transactions
Banks have played a significant role in the progress of the business and in bringing its sector to the international level, even in the significant contribution of banks and its operation. A large number of banks provide various types of services, support and assistance to the business to establish and operate the business.

Transaction Banking

Banking practices are explained in detail in the next chapter. Here the network of bank-related business is being given.

1. Accounts to be opened in banks.
     Often the following accounts are opened in banks:
1. Savings Bank account
2. Recurring Deposit Account
3. Current account
4. Fixed Deposit Account

Nowadays, the maximum payments and receipts of trade are through the bank. So for this, all traders should open a current account in the bank. Does matter.

2. Accounts entries for bank-related transactions can be made through all bank related accounts journals. The bank account will be debited to Bank a / c if it is about to receive the bank on a personal account basis, and if the lender is able to debit the bank / c for every month and if the bank is the lender, Bank a / c will be credited.

Rule: "Debit the bank on depositing the amount in the bank.
            "Credit the bank when withdrawing money from the bank"

It is worth mentioning here that the word "bank" is used for the current account ("current account" in current affairs ("current account") in trading books. The amount or the amount withdrawn in the bank was withdrawn. Here from the bank, The intent is from a chalk account. When dealing with other accounts, their name is used as savings. Account. Fixed Deposit Account etc. is used.

Some important behaviors are as follows:

(I) On opening a current account from the bank, the following entry will be made Bank A / c then Cash A / c

(II) Cash A / c to withdraw money from the bank for business A / c

(III) Drawings A / c To withdraw money from the bank for personal use

(IV) Purchases A / c To Bank A / c on payment of check on purchase of goods.
(V) Payee 'sA / C To Bank A / c on payment by check to a person / firm / institution

(VI) Expenses A / c Dr. To BankA / c
(V.) On payment of a property by payment by check (Particular) AssetsA / c Dr. To BankA / c

Entries to be made on receipt of check

If the business receives a check from another person, institution, firm, company, etc. then the following entries will be made:

 If the bank is credited to the bank account on the day it is received, the bank A / c Dr. To PersonalA / (from whom the check has been received) (I)

If the check is not deposited on the same day Cash A / c To PersonalA / c (

(III) Bank A / c To Cash A / c on depositing the above-mentioned check with the bank on the other day

(IV) Bank Charges A / c To Bank A / c on collection charges collected by the bank

(V) Personal A / c (from which the check was received) after the bank is demoted. _ To Bank A / c

The bank account can be any balance (debit or credit). The balance of the account gets credited after withdrawing more than the amount deposited in the current account. This credit balance is called the overdraft.

Example 3:

Vaibhav paid Rs 2,00,000 on 1 April 2001. Opened a current account in the bank with cash and the following transactions took place in the month of April. Provide journal entries. (Vaibhav opened a current account in Bank by depositing Rs. 2,00,000. His transactions during the month of April, 2001wereas as follows. Make Journal entries.)
2001 Rs.

April 3 Bought goods and paid by check. (Bought goods and paid by cheque) 3, 200

April 5 Bought Goods from Devesh 2, 500

April8 Furniture purchased paid by check (Purchased Furniture and paid by cheque) 6, 600

April 11 Sold goods to Jayesh (Sold goods to Jayesh) | 2, 200

April 13 Received check from Jayesh (Check received from Jayesh) 2, 200

April 16 Jayesh's check deposited in the bank (Jayesh's cheque deposited into Bank)

April 19 Devesh paid by check (Check issued to Devesh)

April 22 Bank Rs. 3,950 Submit (Cash deposit into bank)

Rs.5,000 to Hitesh on April24. Gave a check and received a cash discount of Rs. 50. (Issued achequeforRs5, 000 to Hiteshand received Rs. 50 as cash discount)

April 26 Rs 4, 700 for personal use from the bank and Rs 7, 800 for office use. Remove it. (Withdrew Rs. 4. 700 for personal use and Rs. 7, 800 for office use from Bank)

April27 Stationery purchased and paid by check (Bought stationary and paid by cheque) 12, 000

April 28 Goods sold to Lalit (Goods sold on credit to Lalit)

11,900 in full payment from April30 Fine. A check was received which was deposited in the bank on the same day. (Received achequeforRs. 6, 970from Latin full settle men to this account. It was deposited into Bankon the same day)

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