Page 39 - debkxi

Journal 8.9

(x) Bank A/c ...Dr. 2,500
To Interest on Fixed Deposits A/c 2,500
(Interest received from bank on Fixed Deposits A/c)
(xi) Drawings A/c ...Dr. 5,000
To Bank A/c 5,000
(Income tax paid) (WN 3)
(xii) Drawings A/c ...Dr. 3,000
To Purchases A/c 3,000
(Goods withdrawn for personal use)
(xiii) Advance to Manoj A/c ...Dr. 10,000
To Bank A/c 10,000
(Advance paid to Manoj)
(xiv) Drawings A/c ...Dr. 3,500
To Bank A/c 3,500
(Life insurance premium paid)
(xv) (a) Rent A/c ...Dr. 80,000
To Bank A/c 80,000
(Rent paid for building)
(b) Drawings A/c ...Dr. 40,000
To Rent A/c 40,000
(Rent for half building charged to proprietor)
(xvi) Mohan ...Dr. 9,000
To Cash A/c 9,000
(Cash paid to Mohan on account)
(xvii) Arun ...Dr. 20,000
To Ramesh 20,000
(Cheque of Arun endorsed to Ramesh dishonoured)
(xviii) Loss of Goods by Fire A/c ...Dr. 10,000
To Purchases A/c 10,000
(Loss of goods)

Working Notes:
1. Calculation of selling price for transaction No. iii:
Goods were sold @ 20% profit on sale price. So, when selling price is ` 100, cost would be ` 80 (i.e., 100 – 20).
Hence, profit % on cost = ` 20/` 80 × 100 = 25% (or 1/4th on cost)
`
Cost of the Goods 16,000
Add: 25% Profit on Cost 4,000
Selling Price 20,000
2. Calculation of invoice price and cash discount received:
`
200 cases of goods @ ` 350 per case 70,000
Less: Trade discount 10% 7,000
Invoice Price 63,000
60% of Invoice Price (60/100 × 63,000) 37,800
Less: Cash discount (15% of ` 37,800) 5,670
Amount paid 32,130

3. It is assumed that income tax was paid for the proprietor as it is not a company. Thus, it is treated as drawings
of the proprietor.