Journal Entries for Diverse Business Transactions

Diverse Business Transactions Journal Entries

1. (i) Employees had taken stock worth 20,000 (Cost price 15,000) on the eve of Deepawali and the same was deducted from their salaries in the subsequent month.

   Stock taken by employees:

   • Debit: Salary Advance Account 20,000
   • Credit: Sales Account 20,000
   • Debit: Cost of Goods Sold Account 15,000
   • Credit: Inventory Account 15,000
   • Deduction from salaries:
   • Debit: Salaries Account 20,000
   • Credit: Salary Advance Account 20,000

2. (ii) Wages paid for erection of Machinery ` 16,000.

   Wages paid for machinery erection:

   • Debit: Machinery Account 16,000
   • Credit: Cash/Bank Account 16,000

3. (iii) Income tax liability of proprietor ` 3,400 was paid out of petty cash.

   Income tax paid from petty cash:

   • Debit: Drawings Account 3,400
   • Credit: Petty Cash Account 3,400

4. (iv) Purchase of goods from Naveen of the list price of 4,000. He allowed 10% trade discount, 100 cash discount was also allowed for quick payment.

   • Purchase of goods:
   • Debit: Purchases Account 3,600
   • Credit: Naveen Account 3,600
5. • Payment:
     • Debit: Naveen Account 3,600
     • Credit: Cash/Bank Account 3,500
     • Credit: Discount Received Account 100