Question

17. Journalise the following transactions in the books of Vijay Furnitures, Delhi: (i) Sold goods costing \( ₹ 1,50,000 \) to Asha at a profit of \( 20 \% \) on sales less \( 10 \% \) Trade Discount. Paid cartage of ₹ 1,250 to be charged from Asha. (ii) Goods sold to Mohan costing ₹ 75,000 at a Trade Discount of \( 10 \% \) and paid cártage of ₹ 750 (not to be charged from customer). (iii) Received ₹ 1,000 from Sohan, which were written off as bad debts in previous year. (iv) Purchased a machinery on credit for \( ₹ 75,000 \) from Usha Tools Ltd. Paid \( ₹ 10,000 \) for its loading and \( ₹ 2,500 \) for its installation. (v) Used timber of ₹ 20,000 for making office furniture. (vi) Timber costing \( ₹ 10,000 \) were used by the owner in making furniture to be used at his residence.

Answer 1

Concepts:

Journal entries, Trade discount, Bad debts, Machinery purchase, Personal use of goods

Explanation:

The transactions need to be recorded in the journal of Vijay Furnitures, Delhi. Each transaction involves different accounts, and the journal entries will reflect the financial impact of these transactions.

Step by Step Solution:

Step 1

Calculate the sale price to Asha: Cost = ₹ 1,50,000, Profit = 20% on sales. Let the sale price be x. Then, x - 0.2x = ₹ 1,50,000 => 0.8x = ₹ 1,50,000 => x = ₹ 1,87,500. Trade Discount = 10%. Net Sale Price = ₹ 1,87,500 - 10% of ₹ 1,87,500 = ₹ 1,68,750. Add cartage: ₹ 1,68,750 + ₹ 1,250 = ₹ 1,70,000. Journal Entry: Dr. Asha ₹ 1,70,000 Cr. Sales ₹ 1,68,750 Cr. Cartage ₹ 1,250

Step 2

Calculate the sale price to Arvind: Cost = ₹ 75,000, Trade Discount = 10%. Net Sale Price = ₹ 75,000 - 10% of ₹ 75,000 = ₹ 67,500. Journal Entry: Dr. Arvind ₹ 67,500 Cr. Sales ₹ 67,500. Cartage not charged to customer: Dr. Cartage ₹ 750 Cr. Cash ₹ 750

Step 3

Received from Anil previously written off as bad debts: Dr. Cash ₹ 1,000 Cr. Bad Debts Recovered ₹ 1,000

Step 4

Purchased machinery on credit and paid for loading and installation: Dr. Machinery ₹ 87,500 (₹ 75,000 + ₹ 10,000 + ₹ 2,500) Cr. Usha Tools Ltd. ₹ 75,000 Cr. Cash ₹ 12,500

Step 5

Used goods for making office furniture: Dr. Office Furniture ₹ 20,000 Cr. Purchases ₹ 20,000

Step 6

Goods used by owner for personal use: Dr. Drawings ₹ 10,000 Cr. Purchases ₹ 10,000

Final Answer:

The journal entries for the given transactions in the books of Vijay Furnitures, Delhi are as follows:

1. Dr. Asha ₹ 1,70,000 Cr. Sales ₹ 1,68,750 Cr. Cartage ₹ 1,250
2. Dr. Arvind ₹ 67,500 Cr. Sales ₹ 67,500 Dr. Cartage ₹ 750 Cr. Cash ₹ 750
3. Dr. Cash ₹ 1,000 Cr. Bad Debts Recovered ₹ 1,000
4. Dr. Machinery ₹ 87,500 Cr. Usha Tools Ltd. ₹ 75,000 Cr. Cash ₹ 12,500
5. Dr. Office Furniture ₹ 20,000 Cr. Purchases ₹ 20,000
6. Dr. Drawings ₹ 10,000 Cr. Purchases ₹ 10,000