1
10
11
12
13
14
15
Exercise - Part 2
In Exercise 1, you identified the two accounts and types of
accounts. Now you try to record the transactions by entering
which account to be debited and which account has to be
credited. Note for each transaction, there is one debit account
and one credit account. The first one is example.
Ashok invested Rs. 10 lakhs to start a business venture.
The company borrowed Rs. 50 lakhs from Indian Bank
Purchased Machines for Rs. 15 lakhs by paying cash
Purchased Raw Materials and Component from Regal & [Link] Rs. 20 lakhs on credit
(See the Notes at the end before entering the transaction)
Paid salary to workers Rs. 3 lakhs
Paid Rs. 2 lakhs for maintenance of machine
Paid Electricity and expenses Rs. 4 lakhs
Sold Goods for Rs. 20 lakhs to Keshav & Co against cash
Sold Goods for Rs. 18 lakhs to Jain & Co on credit
Interest of Rs. 1 lakh paid to bank
Sales commission of Rs. 2 lakhs paid to Meha Agencies
Depreciation for the machine for the period Rs. 1 lakh
Received Rs. 12 lakhs from Jain & Co
Paid Rs. 8 lakhs to Regal & Co from whom Raw material was purchased on credit.
Raw materials and components are consumed in full
Tips: Transfer Raw Material from assets to expenses
Note: In Transaction 4, you are buying Raw Material and it is asset at that point
In transaction 15, you are consuming the Raw Material and here you need to move the asset
To differentiate the two, use "Raw Materials Inventory" for Asset and "Raw Material Consump
Personal/
Account
Real/Nomi Debit/Credit
Name
nal
Account 1 Cash & Bank Real Debit Rs. 10 lakhs
Account 2 Capital Personal Credir Rs. 10 lakhs
Account 1 Cash & Bank Real Debit 50 lacs
Account 2 Indian Bank Loan Personal credit 50 lacs
Account 1 Cash & Bank Real credit 15 lacs
Account 2 Machine Real debit 15 lacs
Account 1 Regal & Co Personal credit 20 lacs
Account 2 Raw Material Real debit 20 lacs
Account 1 Cash & Bank Real credit 3 lacs
Account 2 Salary Nominal debit 3 lacs
Account 1 Cash & Bank Real credit 2 lacs
Account 2 Maintenance Nominal debit 2 lacs
Account 1 Cash & Bank Real crdit 4 lacs
Account 2 Electricity Nomainal debit 4 lacs
Account 1 Keshav & Co Personal credit 20 lacs
Account 2 Sales Nominal debit 20 lacs
Account 1 Jain & Co. Personal debit 18 lacs
Account 2 Sales Nominal credit 18 lacs
Account 1 Cash & Bank Real credit 1 lac
Account 2 Interest Nominal debit 1 lac
Account 1 Cash & Bank Real credit 2 lacs
Account 2 Commission Real debit 2 lacs
Account 1 Depreciation Nominal debit 1 lac
Account 2 Machine Real credit 1 lac
Account 1 Jain & Co. Personal credit 12lacs
Account 2 Cash & Bank Real debit 12 lacs
Account 1 Regal & Co Personal debit 8 lacs
Account 2 Cash & Bank Real credit 8 lacs
Raw Material
Nomianl debit
Account 1 Consumption
Account 2 Raw Material Real credit
move the asset to expenses.
terial Consumption" for Expense
Relevant Rule
Debit What Comes In
Credit the Giver
