Page 53 - ISCDEBK-XI

7.8 Double Entry Book Keeping—ISC XI

(vi) D & Co. ...Dr. 2,550
To Cash A/c 2,500
To Discount Received A/c 50
(Being the amount of ` 2,500 paid to D & Co. in full settlement of their account
of ` 2,550; ` 50 gain credited to Discount Received Account)
(vii) Drawings A/c ...Dr. 670
To Cash A/c 500
To Purchases A/c (` 200 less 15% Trade Discount) 170
(Being the cash and goods withdrawn for personal use; 15% deducted from
goods because these were purchased from D & Co. at 15% trade discount)
(viii) Bank A/c ...Dr. 3,000
To Cash A/c 2,990
To Commission A/c 10
(Being the cheque of ` 3,000 encashed for T charging
him ` 10 commission)
(ix) Bank A/c ...Dr. 240
Bad Debts A/c ...Dr. 360
To L 600
(Being 40% of the amount of ` 600 due from L received and balance
written off as bad debts on his being declared insolvent)
(x) Car A/c ...Dr. 2,00,000
To Capital A/c 50,000
To Cash A/c 1,50,000
(Being the sale of personal car for ` 50,000 and bought a new car with the
proceeds of personal car for business plus ` 1,50,000 cash paid from office)

(xi) Cash A/c ...Dr. 320
Loss of Stock by Fire A/c (Profit & Loss A/c) ...Dr. 80
To Purchases A/c 400
(Being the amount of insurance claim received for 4/5 of the goods destroyed;
1/5 of the goods destroyed being loss—claim not admitted by the
insurance company—transferred to Profit & Loss Account)
(xii) K ...Dr. 300
Damaged Goods A/c (Profit & Loss A/c) ...Dr. 300
To Sales A/c 600
(Being the goods worth ` 600 spoiled and sold to K at a loss of ` 300)
(xiii) Furniture A/c (New) ...Dr. 12,000
Loss on Sale of Furniture A/c (Profit & Loss A/c) ...Dr. 2,000
To Furniture A/c (Old) 6,000
To Vendor 8,000
(Being the old furniture having book value of ` 6,000 valued at ` 4,000
exchanged for new furniture of ` 12,000)
Note:
Goodwill = Purchase Price – Net Assets* (i.e., Assets – Liabilities)
= ` 40,000 – ` 28,000 = ` 12,000.
*Net Assets = ` 25,000 (Stock) + ` 10,000 (Furniture) + ` 7,000 (Debtors) + ` 8,000
(Machinery) – ` 22,000 (Creditors)
= ` 28,000.