What is Single Entry System ? - Pros and Cons

What is Single Entry System ?

Single entry accounting systems record only one side of every transaction. This happens because they use one entry to record every transaction. Therefore single entry system does not use nominal and real accounts. The emphasis is on cash and accounts receivable.

Single entry accounting system can be described as a system that businesses use to get by rather than something that companies may find desirable.

Small Firms

Single entry system is used by small firms that have just started business. Such firms do not have the resources that are required to put up a full-fledged accounting system in place. Hence they begin with a single entry accounting system. However as and when their business grows most firms are compelled to adopt the double entry system. This is because the single entry system is highly inefficient and can be used only by sole proprietors when the scale of business is very small and the transactions to be undertaken are not very complicated.

Incomplete Records

The biggest problem with single entry bookkeeping system is that of incomplete records. Single entry system records only transactions that the firm is undertaking with external parties. There are numerous transactions within the firm that are of vital importance and need a place in the financial statements. However, the single entry system ignores these needs and gives incomplete information to the management.

No Reconciliation

Single entry accounting system does not have provisions for reconciliation of accounts. This means that the system does not have inbuilt error detection. Therefore, if a clerk is doing the task of making entries in the book, the system may be prone to clerical errors. This could lead to management having insufficient information or no information when they have to make decisions.

Possibility of Fraud

Single entry accounting system is highly prone to frauds and embezzlement. There is only one book of account rather than an elaborate accounting system. Hence, the internal checks are few. In fact they are non-existent. The person making the accounts could single handedly manipulate the books of accounts and misappropriate the resources of the firm.

To counter this problem, Luca Pacioli and other merchants of Venice created the double entry accounting system. This system proved to be very effective and useful and soon became the gold standard for the industry.

Key Differences Between Statement of Affairs and Balance Sheet

1.      The basis of preparation of the Statement of Affairs is a partly single entry and partly double entry system, whereas the basis of preparation of Balance Sheet is a double entry system.

2.     In the balance sheet, capital is derived from the ledger accounts. On the contrary, in the case of the statement of affairs, capital in merely a balancing figure.

3.     A Balance Sheet is a very important part of the financial statements, but the Statement of Affairs is not a part of the financial statement.

4.     The Balance Sheet is accurate as it is prepared after a complete procedure is followed, but the accuracy of the Statement of Affairs is very less, as it is ready from incomplete records.

5.     In the Balance sheet, there are no estimated figures, however, due to insufficient records, hypothetical figures are taken.

6.     Statement of Affairs is prepared on either opening or closing date, whereas Balance Sheet is prepared for a specific date.

7.     There is no specific format for the Statement of Affairs, whereas Balance Sheet has a particular format (Revised Schedule VI), on the basis of which it is prepared.

RECIPROCAL/ALGEBRIC METHOD OF COST ALLOCATION – SERVICE DEPARTMENT COSTING:

DEFINITION:

Reciprocal method is a method of allocating service department costs to other departments that gives full recognition to interdepartmental services.

EXPLANATION:

The reciprocal method gives full recognition to interdepartmental services. Under the step method, only partial recognition of interdepartmental services is possible. The step method always allocates costs forward never backward. The reciprocal method, by contrast, allocates service department costs in both directions. The reciprocal allocation requires the use of simultaneous equations. This method is also known as algebraic method and simultaneous equations method.

Under this method the true cost of the service departments are computed first with the help of simultaneous equations and these are then distributed to producing departments on the basis of given percentage or ratio. Remember that true cost of the service department means the cost of the service department which includes original cost of the department plus the share of the other service department. The main advantage of this method is to have an accurate distribution in a single step in the distribution summary.

EXAMPLE:

A company has two service and two producing departments. The two service departments serve not only to producing departments but also to each other. The departmental estimates for the next year are as follows.

Producing departments:A B Service departments:X Y			50,000 40,000 10,000 8,800
The service departments costs are to be distributed as under:Cost of X : 50% to A, 40% to B, and 10% to Y Cost of Y : 40% to A, 40% to B, and 20% to X
Required: Transfer the service departments costs to each other and to producing departments.
Solution: Now we solve the given illustration first using the simultaneous equation method as follows:Original costs of service departments: X = Rs.10,000 Y = Rs. 8,800 After getting the share from distribution of service departments: X = Rs. 10,000 + 20% Y Y = Rs. 8,800 + 10% X By putting the value of Y in equation (1) X = Rs. 10,000 + 20%(Rs.8,800 + 10%X) X = Rs. 10,000 + 1760 + 0.2X X – 0.02X = Rs. 10,000 + Rs.1,760 0.98X = Rs. 11,760 X = 11760 / 0.98 = Rs. 12,000 By putting the value of X in equation (2) Y = Rs. 8,800 + 10%(Rs. 12000) Y = Rs. 8,800 + Rs. Rs. 1,200 = Rs. 10,000
Distribution Summary
Department	Producing		Service
Original costs Distribution of service department costs: X Y Total departmental overheads	ARs 50,000 6,000 4,000 ——- 60,000 =====	BRs 40,000 4,800 4,000 —— 48,800 =====	XRs 10,000 (12,000) 2,000 ——- Nil =====	YRs 8,800 1,200 (10,000) ——- Nil =====

USE OF RECIPROCAL METHOD:

This method is rarely used in practice for two reasons. First, the computations are relatively complex. Although the complexity issue could be overcome by use of computers, there is no evidence that computers have made the reciprocal method more popular. Second, the step method usually provides results that are a reasonable approximation of the results that the reciprocal method would provide. Thus, companies have little motivation to use the more complex reciprocal method.

Audit & Financial Reporting Requirements

The audit and financial reporting requirements of Pakistan are summarized by type of company..

• Listed Public Companies
• Public Unlisted and Private Companies
• Banks
• Non-Banking Financial Institutions
• Listed Insurance Companies

The qualification, independence and

appointment of auditors requirements are as follows:

Qualification of auditors

Auditors must be members of the Institute of Chartered Accountants of Pakistan (ICAP). A firm where all of its partners are members of the ICAP, can be appointed as an auditor and act in firm's name. The private companies may appoint auditors who are not members of the ICAP. The auditors of a listed company must also possess a satisfactory quality control rating from the ICAP.

Independence

Independence is required by the Companies Ordinance, 1984. An auditor cannot be a director or officer of the company, be a partner or employee of a director or officer, or be indebted to the company. The firm of external auditors auditing a listed company or any partner in the firm and their spouse and minor children are prohibited to hold, purchase, sell or take any position in shares of the listed company or any of its associated companies or undertakings.

 Appointment of Auditors

The first auditors of the company are appointed by the directors of the company within 60 days from the date of incorporation of the company. For subsequent years, the auditors are appointed at each annual general meeting of the company and hold office till the conclusion of next annual general meeting. Where appointment of auditors is not made at any annual meeting the Securities and Exchange Commission of Pakistan (SECP) may, upon application of any shareholder of the company, appoint the auditors and fix their remuneration and in case of causal vacancy, the directors may fill any casual vacancy within 30 days. Otherwise the SECP may appoint the auditors and fix their remuneration as well. For public sector companies, two auditors are normally appointed.

The auditors once appointed cannot

be removed or changed except in next annual general meeting. However, a notice proposing the change must be sent by a shareholder to the company at least 14 days before the meeting and the company must communicate this notice to the retiring auditors and give notice to all of its shareholders at least seven days before the meeting.

Auditing Standards

Members of the ICAP are required to observe the pronouncements of the International Federation of Accountants, as long as these do not conflict with Pakistani laws.

Preliminary expenses

Preliminary expenses

Costs incurred in the formation of a firm, and in advertising, promotional activities, employee training, etc., before the firm can open its doors for business. Also called preliminary expenses or start up expenses.

Treatment of Preliminary Expenses

When we start a company level business, its promoters pay some expenses like legal fees, company registration fees and MOA and AOA making fees  and others which are helpful to incorporate the company. So, preliminary expenses are those primary expenses which are paid before the incorporation of company. So, when company comes into existence after incorporation, it is the duty of company to repay all these expenses to its promoters. So, after paying all these expenses, we treat all these preliminary expenses with following ways : - 

1. When company repays preliminary expenses 

Preliminary expenses account Dr. 

Cash or Bank account Cr. 

2. Treatment in financial statements of company 

Only written off part preliminary expenses will show in expenses side of profit and loss account and balance sheet  will show as balance part in asset side because it is a capital item, so we will not whole preliminary expenses in profit and loss account. 

3. We divide it with five years or others years as per your company rules and one part of these expenses are written off by transferring it to profit and loss account. 

4. Expenses on share issue will not be included in preliminary expenses. 

5. It is the duty of company auditor to check preliminary expenses whether these are paid by promoters and have bill or receipt for this. 

6. Treatment of Preliminary expenses as per company law

What are Preliminary expenses and Accounting for preliminary expenses?

Before incorporation and commencement of business, company and the promoters of the company may incurred so many types of expenses like statuary fees and company logo designing, in some cases rent for the office premises during the time of incorporation not after incorporation etc... These are all comes under preliminary expenses .in simple words preliminary expenses are the expenses that spent by the promoters before the incorporation of company.

Examples:

• Expenses paid for CA for incorporation of company
• Expenses paid for name approve of the company
• Expenses for printing of statutory documents like MOA, AOA
• Stamp duties paid
• Any other expenses paid to take the company into existence
• Expenses for raising initial share capital

Accounting for preliminary Expenses:

The benefit of the preliminary expenses is long-term so it is treated as intangible asset and shown in Balance sheet under Missilinous assets. These expenses will be written off in 5 equal year installment in profit and loss A/c. you can also transfer whole amount in single year but for income tax purpose 1/5 of the amount will consider.

Accounting Entries:

1. Preliminary Expense - Dr (Current Asset)

                             To Cash\Bank

                             

2. Preliminary Expenses Written Off - Dr (Indirect Expenses)

                                        To Preliminary Expenses

3. Profit & Loss A\c. - Dr

                To Preliminary Expenses

Pre commencement expenses:

These are the expenses that are incurred by the company after incorporation and before commencement of business. For example a private company and a public ltd company without share capital can commence business after getting certificate of incorporation from ROC. But a public company having share capital is not allowed to commencement of business until it get certificate if commencement of business. In this mean time they can inure some expenses like recruiting employees etc… these expenses are called as pre commencement expense. The company will written off this expenses in that year only.

Accounting Equation:

Learning Objective:

1.     Define and explain accounting equation.

2.     Give an example of accounting equation.

Definition and Explanation of Accounting Equation:

Dual aspect may be stated as "for every debit, there is a credit." Every transaction should have twofold effect to the extent of the same amount. This concept has resulted in accounting equation which states that at any point of time the assets of any entity must be equal (in monetary terms) to the total of equities. In other words, for every business enterprise, the sum of the rights tithe properties is equal to the sum of the properties owned. The properties of the business are called "assets". The rights tithe properties are called "equities". Equities may be sub-divided into two principle types: The rights of the creditors and the rights of the owners. The equity of the creditors represents debts of the business and is called liabilities. The equity of the owner is called capital, or proprietorship or owner's equity.

The formula known as the accounting equation, thus arrived at is as follows:

Assets = Equities OR Assets = Liabilities + Proprietorship

Another method of demonstrating the mathematical relationship involves a simple variation in the form of equation. Again it begins with the position that every business owns or has interest in certain assets. It also owes certain amounts to its creditors. The difference between what it owns and what it owes represents the owner's capital or proprietorship. Thus the original equation is changed into:

Assets - Liabilities = Proprietorship

Effects of Transactions on the Accounting Equation:

Each and every business transaction affects the elements of accounting equation. The effect is shown by the use of (+) or (-) placed against the elements affected. Note particularly that the equation remains in balance after each transaction. The accounting equation can be understood with the help of the following example:

Example:

Transaction 1:

Mr. Ritz commences his business with cash £50,000. This is an example of investment of asset in the business by the owner. The effect of this transaction on the accounting equation is that cash asset is increased by £50,000 and the proprietorship (Ritz’s capital) is also increased by the same amount such as:

Assets	=	Liabilities	+	Proprietorship
Cash				Ritz, Capital
+ 50,000	=	----		+ 50,000

Note that assets and equities increased by equal amounts

Transaction 2:

Purchased furniture on cash £10,000. This transaction effected accounting equation as the increase in one new asset furniture and decreases in assets cash with the same amount. Thus

Assets		=	Liabilities	+	Proprietorship
Cash	Furniture				Ritz, Capital
+ 50,000		=	----		+ 50,000
- 10,000	+ 10,000
40,000	+ 10,000	=			50,000

Note that this transaction has affected assets side only and no change is made in equities side of the equation.

Transaction 3:

Purchased merchandise for cash £10,000. This transaction will introduce a new element (merchandise) on the assets side and decrease the cash by £10,000.

Assets			=	Liabilities	+	Proprietorship
Cash	Furniture	Merchandise				Ritz, Capital
+ 40,000	+ 10,000		=	----		+ 50,000
-10,000	--	+ 10,000
30,000		+ 10,000	=			50,000

Note that this transaction has affected assets side only and no change is made in equities side of the equation.

Transaction 4:

Purchased merchandise on account (on credit) £5,000.

Assets			=	Liabilities	+	Proprietorship
Cash	Furniture	Merchandise		Creditors		Ritz, Capital
+ 30,000	+ 10,000	+ 10,000	=			+ 50,000
		+ 5,000		+ 5,000
30,000	+10,000	+ 15,000	=	+ 5,000		+ 50,000

Note that this transaction has affected assets side  and liabilities. Both the sides of equation have increased with the same amount.

Transaction 5:

Sold merchandise for cash £2,000 cost of these merchandise were £1,500.

Assets			=	Liabilities	+	Proprietorship
Cash	Furniture	Merchandise		Creditors		Ritz, Capital
+ 30,000	+ 10,000	+ 15,000	=	+ 5,000		+ 50,000
+ 2,000		- 1,500				+ 500 (Profit)
+ 32,000	+10,000	+ 13,500	=	+ 5,000		+ 50,500

Note that this transaction has affected assets side  and also the proprietorship. Difference between sales price and cost price is treated as profit and has been added to capital.

Transaction 6:

Sold merchandise on credit for £4,000 costing £3,000.

Assets				=	Liabilities	+	Proprietorship
Cash	Furniture	Merchandise	Debtors		Creditors		Ritz, Capital
+ 32,000	+ 10,000	+ 13,500		=	+ 5,000		+ 50,500
		- 3,000	+ 4,000				+ 1,000
32,000	+10,000	+ 10,500	+ 4000	=	+ 5,000		+ 51,500

Note that this transaction has affected assets side  and also the proprietorship. Anew element "debtors" has been introduced. Difference between sales price and cost price is treated as profit and has been added to capital.

Transaction 7:

Paid £1,000 to creditors for merchandise purchased.

Assets				=	Liabilities	+	Proprietorship
Cash	Furniture	Merchandise	Debtors		Creditors		Ritz, Capital
+ 32,000	+ 10,000	+ 10,500	+ 4,000	=	+ 5,000		+ 51,500
- 1,000					- 1,000
31,000	+10,000	+ 10,500	+ 4000	=	+ 4,000		+ 51,500

Transaction 8:

Received cash from a debtor £ 1,000 whom a sale on credit was made earlier. This is an example of collection from debtors. This transaction is an exchange of one asset for another. the effect is on one side of the equation, i.e., asset side. Thus:

Assets				=	Liabilities	+	Proprietorship
Cash	Furniture	Merchandise	Debtors		Creditors		Ritz, Capital
+ 31,000	+ 10,000	+ 10,500	+ 4,000	=	+ 4,000		+ 51,500
+ 1,000			- 1,000
32,000	+10,000	+ 10,500	+ 3000	=	+ 4,000		+ 51,500

Transaction 9:

Paid salaries £1,000 in cash. This transaction affected the equation by decrease in a cash asset and decrease in proprietorship (i.e., capital). Thus:

Assets				=	Liabilities	+	Proprietorship
Cash	Furniture	Merchandise	Debtors		Creditors		Ritz, Capital
+ 32,000	+ 10,000	+ 10,500	+ 4,000	=	+ 4,000		+ 51,500
- 1,000							- 1,000
31,000	+10,000	+ 10,500	+ 3000	=	+ 4,000		+ 50,500

Effects of all the transactions explained above are presented in the following table:

Assets					=	Liabilities	+	Proprietorship
	Cash	+ Furniture	+ Merchandise	+ Debtors		Creditors		+ Ritz, Capital
1	+ 50,000							+50,000
	50,000				=		+	50,000
2	- 10,000	+ 10,000
	40,000	10,000			=		+	50,000
3	- 10,000		+ 10,000
	30,000	10,000	10,000		=		+	50,000
4			+ 5,000			+ 5,000
	30,000	10,000	15,000		=	5,000	+	50,000
5	+ 2,000		- 1,500					+ 500 (Profit)
	32,000	10,000	13,500		=	5,000	+	50,500
6			- 3,000	+ 4,000				+ 1,000 (Profit)
	32,000	10,000	10,500	4,000	=	5,000	+	51,500
7	- 1,000					- 1,000
	31,000	10,000	10,500	4,000	=	4,000	+	51,500
8	+1,000			1,000
	32,000	+ 10,000	+ 10,500	+ 3,000		4,000	+	51,500
9	1,000							1,000
	31,000	10,000	10,500	3,000	=	4,000	+	50,500

The elements of the equation of Mr. Ritz that is,

Cash	+	Furniture	+	Merchandise	+	Debtors	=	Creditors	+	Capital
31,000	+	10,000	+	10,500	+	3,000	=	4,000	+	50,500

This may also be stated in vertical form as shown below:

EQUITIES		ASSETS
Creditors	£4,000	Cash	£31,000
Capital	£50,500	Debtors	3,000
		Merchandise	10,500
		Furniture	10,000
	£54,500		£54,500

The presentation of the effects of transactions in tabular form is only a device which helps beginners to understand the analysis of different types of transactions. It is not practically feasible to record the effects of transactions in this form. The increases and decreases in the various elements are recorded in the journal in a special technical form.

JOURNAL

Definition and Explanation:

The word "journal" has been derived from the French word "jour". Jour means day. So journal means daily. Transactions are recorded daily in journal and hence it has been named so. It is a book of original entry to record chronologically (i.e. in order of date) and in detail the various transactions of a trader. It is also known Day Book because it contains the account of every day's transactions.

Characteristics of Journal:

Journal has the following features:

1. Journal is the first successful step of the double entry system. A transaction is recorded first of all in the journal. So the journal is called the book of original entry.
2. A transaction is recorded on the same day it takes place. So, journal is called Day Book.
3. Transactions are recorded chronologically, So, journal is called chronological book
4. For each transaction the names of the two concerned accounts indicating which is debited and which is credited, are clearly written in two consecutive lines. This makes ledger-posting easy. That is why journal is called "Assistant to Ledger" or "subsidiary book"
5. Narration is written below each entry.
6. The amount is written in the last two columns - debit amount in debit column and credit amount in credit column.

Advantages of Journal:

The following are the advantages of journal:

1. Each transaction is recorded as soon as it takes place. So there is no possibility of any transaction being omitted from the books of account.
2. Since the transactions are kept recorded in journal, chronologically with narration, it can be easily ascertained when and why a transaction has taken place.
3. For each and every transaction which of the two concerned accounts will be debited and which account credited, are clearly written in journal. So, there is no possibility of committing any mistake in writing the ledger.
4. Since all the debits of transaction are recorded in journal, it is not necessary to repeat them in ledger. As a result ledger is kept tidy and brief.
5. Journal shows the complete story of a transaction in one entry.
6. Any mistake in ledger can be easily detected with the help of journal.

Objective of an Entry:

While recording transactions in journal the following two objects must be aimed at:

1. That each entry in the journal should be so clear that at any future time we may, without the aid of memory, perceive the exact nature of the transactions.
2. That each transaction should be so classified that we may easily obtain the aggregate effect of such transactions at the end of a certain period.

Narration of an Entry:

It is the remark or explanation put below each entry in the journal. The journal is a book of original entry and all possible details have to record in connection with each and every transaction entered there. The details are laid out in the form of a remark at the end of each journal entry, which is called narration.

Form of Journal:

Date (1)	Particulars (2)	L.F. (3)	Dr. Amount	Cr. Amount

Column (1)	Is meant for writing the date of the transaction.
Column (2)	Is used for recording the names of the two accounts affected by transactions.
Column (3)	Is meant for noting the number of the page of the ledger on which the particular account appears in that book.
Column (4)	Shows the amount to be debited to the account named.
Column (5)	Shows the amount to be credited to the account stated.

Rules of Journalizing:

The act of recording transactions in journal is called journalizing. The rules may be summarized as follows:

1. Use two separate lines for writing the names of the two accounts concerned in each transaction.
2. write the name of the debtor or account to be debited in the first line and the name of the creditor or the account to be credited in the next line
3. Write the name of the account to be debited close to the line starting the particulars column and that of the account to be credited at a short distance from this line.
4. Use "Dr" after each debit item and "To" before each credit. The term "Cr." after a credit item is unnecessary, as if one account is debtor, the other must be creditor.
5. To separate one entry from another a line is drawn below every entry to cover particulars column only. The line does not extend to amount column.

Example 1:

On first January, 1991 a started business with capital of £20,000 and his transactions of the month were as follows:
 

Jan.2	Purchased building for cash	8,000
Jan.8	Purchased goods from C	1,000
Jan.15	Sold goods for cash	500
Jan.20	Goods returned to C	100
Jan.22	Sold goods to R	400
Jan.25	R returned goods	25
Jan.31	Salaries paid for the month	200
Jan.31	Rent paid for the month	150

Solution:

Journal of A
 

Date	Particulars	L.F	Debit	Credit
Jan. 1	Cash Account          ...Dr.		20,000
	To Capital Account			20,000
	(Capital introduced)
Jan 2.	Building Account       ...Dr.		8,000
	To Cash Account			8,000
	(Building purchased for cash)
Jan. 8	Purchases Account   ...Dr.		1,000
	To Sales Account			1,000
	(Goods purchased on credit form C)
Jan. 15	Cash Account          ...Dr.		500
	To Sales Account			500
	(Goods sold for cash)
Jan. 20	C                           ...Dr.		100
	To purchases Returns Account			100
	(Goods returned to C)
Jan. 22	R                           ...Dr.		400
	To Sales Account			400
	(Goods sold on credit)
Jan. 25	Sales returns Account..Dr.		25
	To R			25
	(Goods returned by him)
Jan. 31	Salaries Account        ...Dr.		200
	To Cash Account			200
	(Salaries paid)
Jan. 31	Rent Account            ...Dr.		150
	To Cash Account			150
	(Rent paid in cash)
	Total		30,375	30,375

Capital Account:

The proprietor's account in the business books is called "capital account". Whenever the proprietor invests money in the business, instead of giving credit to his name, capital account should be credited.

Drawings Account:

Any cash or goods taken away by the proprietor for his personal use are called his drawings and are debited to "Drawings Account". Drawings account like the capital account is personal account of the proprietor.

Casts and Carry Forwards:

In bookkeeping casting means totaling. The first page of the journal will be cast by drawing a line across the money column. The total of this page will be carried forward to the  top of second page. The total of the second page will be carried forward to the third page and so on until the last page gives the final total.

When carrying forward the total of the one page to another, the words "carried forward" or "carried over" should be written at the bottom of the first page and words "brought forward" the top of the next page. The abbreviations c/f or c/o and b/f can also be used.

Compound Journal Entries:

When two or more transactions of the same nature take place on the same date, a compound journal entry may be made instead of making separate entries for each transaction.

Trade Discount:

No entry is passed for trade discount. The purchases or sales should be recorded at net price i.e., after deducting the trade discount from the list price.

Goods Given Away:

Sometimes goods are (a) given away as charity (b) taken by the proprietor for his private use (c) distributed free as samples. Such goods are not sales. Therefore they are not credited to sales account but are credited to purchases account because they reduce the amount of goods purchased.

Example 2:

On first April 1991 a merchant started business with a capital of £15,000 and his transactions of the month were as follows:
 

April 2	Purchased machinery for £7,000.
April 3	Bought furniture from S £300.
April 7	Purchased goods for cash £2,500
April 8	Sold goods to R & Sons £1,500
April 10	Bought goods from B, £1,000 and from C £2,000
April 12	Received cash from R & Sons £1,450, allowed him discount of £50.
April 15	Paid B cash £975, discount received £25.
April 16	Returned goods to C £500
April 17	Sold goods to Din Mohammad £800
April 20	Goods returned by Din Mohammad £200
April 21	Purchased from K goods of the list price of £600 subject to a 10 percent trade discount.
April 22	Paid C cash £1,500
April 25	Gave away charity cash £50 and goods worth £30.
April 27	Distributed goods worth £200 as free samples and goods taken away by the proprietor for personal use £100
April 28	Amount withdrawn by the proprietor for private use £200
April 31	Salaries paid for the month £500

Record these transactions in the journal.

Solution:

Journal
 

Date	Particulars	L.F	Debit	Credit
April 1	Cash Account          ...Dr.		15,000
	To Capital Account			15,000
	(Capital introduced)
April 2	Machinery Account		7,000
	To Cash Account			7,000
	(Machinery purchased)
April 3	Furniture Account		2,500
	To Cash Account			2,500
	(Goods purchased for cash C)
April 7	Purchases Account		3,000
	To Cash Account			3,000
	(Goods purchased for cash)
April 8	R & Sons		1,500
	To Sales Account			1,500
	(Goods sold on credit)
April 10	Purchases Account		3,000
	To B			1,000
	To C			2,00
	(Goods purchased on credit)
April 12	Cash Account		1,450
	Discount		50
	To R & Sons			1,500
	(Cash received and discount allowed)
April 15	B		1,000
	To Cash Account			975
	To Discount account			25
	(Salaries paid)
April 16	C		500
	To Purchases Return Account			500
	(Goods returned to C)
April 17	Din Mohammad		800
	To Sales Account			800
	(Goods sold on credit)
April 20	Sales Returns Account		200
	To Din Mohammad			200
	(Goods returned by him)
April 21	Purchases Account		540
	To K			540
	(Goods purchased on credit)
April 22	C		1,500
	To Cash Account			1,500
	(Cash paid to C)
April 25	Charity Account		80
	To Cash Account			50
	To Purchases Account			30
	(Cash and goods given in charity)
April 27	Free samples Account		200
	Drawings Account		100
	To Purchases Account			300
	(Goods distributed free and taken by the proprietor for private use)
April 28	Drawings Account		200
	To Cash			200
	(Cash drawn by the proprietor)
April 31	Salaries Account		500
	To Cash Account			500
	(Salaries paid in cash)

Note:

(a) In actual practice even the word "Dr." is not written after the name of the account to be debited, because it is also implied.

(b) When writing the name of a personal account, it is not considered necessary to add the word "account" after the name of the person.