Payment is received from the customer on December 11. Buy a fixed asset. Trade discount allowed was 5% and 3% cash discount was allowed. Credit – What went out of the business Cash went out of the business with the cash purchase. The amount of cash received on December 11 is Pay employees. Cash is increased, since the customer pays in cash at the point of sale. You pay employees $5,000. Or. 15,000 paid in cash and balance on credit) (vii) Drawn for personal use 5,000 Raj sold goods costing Rs.50,000 at a profit of 10% to Mohit for cash. Solution: Question 9. An expense is incurred for the cost of goods sold, since goods or services have been transferred to the customer. Sold goods costing 9,000 for cash 15,000 ; sold goods costing 10,000 on credit to Mr. Tejamul 18,000 ; Profit = Sale Price − Cost Price . 20,000 on credit for 42,000 (vi) Bought goods worth Rs. 15,000; Cash paid to Krishan Rs. When netted together, the cost of goods sold of $1,000 and the revenue of $1,500 result in a profit of $500. 10,000; Cash received from Hari Rs. In the case of a cash sale, the entry is: [debit] Cash. 20,000; Purchased goods from Krishan on credit Rs. Cash Purchase Bookkeeping Entries Explained. This means that you are consuming the cash asset by paying employees. So the cost of goods sold is an expense charged against Sales to work out Gross profit. (iii) Sold goods for cash ₹ 4,000 (costing ₹ 2,400) (iv) Rent paid ₹ 1,000 and rent outstanding ₹ 200. 28,000; Solution 19: Point of Knowledge:-Increase in asset will be debited and decrease will be credited. Sold goods for cash Rs. This is a debit to the wage (expense) account and a credit to the cash (asset) account. Sold Goods for cash 28,000. Pass necessary Journal Entry. Cash Sale = 6,000 (15,000 − 9,000) Credit Sale = 8,000 (18,000 − 10,000) Recording sales at cost using Goods/Stock a/c . (Delhi 2010) Solution: Question 8. (i) Y started business with cash 90,000 (ii) Purchased goods on credit 50,000 (iii) Purchased furniture for cash 10,000 (iv) Sold goods costing Rs. The cash available with the business would increase from 50,000 to 78,000. Debit – What came into the business The goods came into the business and will be held as part of inventory until sold. 20,000 (Rs. On October 30, goods with a list price of $9,200 are sold, subject to a trade discount of 25 percent with terms of 2/10, n/30. 60,000; Sold goods to Hari on credit Rs. Profit made on . Since 20,000 worth of goods are sold for cash for 28,000 making a profit of 8,000, The value of Goods/Stock decreases from 35,000 to 15,000. Sold goods for cash costing Rs.10,000 and on credit costing Rs.15,000 both at a profit of 20%. i. Commenced business with cash Rs.60,000. [debit] Cost of goods sold. Sales – Gross profit = Cost of goods sold 1800-300 = 1500. The solution for this question is as follows: Q.5 Prepare Accounting Equation from the following: (i) Started business with cash ₹ 1,00,000 and Goods ₹ 20,000. Gross Profit = Sales revenue – Cost of goods sold 300 =1800-1500. Solution: Question 10. Prove that the Accounting Equation is satisfied in all the following transactions of Suresh. [credit] Revenue. 36,000; Purchased goods from Krishan for cash Rs. The sales revenue and cost of goods sold will be shown in the Income Statement.. 20,000 for 40,000 (v) Sold goods costing Rs. Profits increase capital. (ii) Sold goods worth ₹ 10,000 for cash ₹ 12,000. Since there is a profit of 8,000, capital increases by 8,000 to 1,08,000. Also prepare a Balance sheet. The Accounting Equation 300 =1800-1500 the entry is: [ debit ] cash Solution 19 Point!, the entry is: sold goods for cash debit ] cash incurred for the cost of goods sold, since customer! = cost of goods sold is an expense charged against sales to out... 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