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10
11
12
13
14
15
Exercise - Part 1
To record transactions in double-entry book-keeping or
accounting equation format, we need to identify two accounts
that are affected by the transaction. For the following
transactons, identify the two accounts and describe the same.
The first one is an 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 & Co. for 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 Asset/Liabilities/
Real/Nomi
Name Equity/Revenue
nal
Account 1 Cash & Bank Real Asset
Account 2 Capital Personal Equity
Account 1 Cash & Bank Real Asset
Account 2 Indian Bank Loan Personal Liability
Account 1 Cash & Bank Real Asset
Account 2 Machine Real Asset
Account 1 Regal & Co Personal Liability
Account 2 Raw Material Real Asset
Account 1 Cash & Bank Real Asset
Account 2 Salary Nominal Expenses
Account 1 Cash & Bank Real Asset
Account 2 Maintenance Nominal Expenses
Account 1 Cash & Bank Real Asset
Account 2 Electricity Nomainal Expenses
Account 1 Keshav & Co Personal Revenue
Account 2 Sales Nominal Revenue
Account 1 Jain & Co. Personal Asset
Account 2 Sales Nominal Revenue
Account 1 Cash & Bank Real Asset
Account 2 Interest Nominal Expense
Account 1 Cash & Bank Real Asset
Account 2 Commission Real Expense
Account 1 Depreciation Nominal Expense
Account 2 Machine Real Liabilty
Account 1 Jain & Co. Personal Asset
Account 2 Cash & Bank Real Asset
Account 1 Regal & Co Personal Liability
Account 2 Cash & Bank Real Asset
Raw Material
Nomianl Expense
Account 1 Consumption
Account 2 Raw Material Real asset
move the asset to expenses.
terial Consumption" for Expense
