Capital is liability account, so increase in the amount of capital will be also shown in the credit side of journal entry.Ī) Decrease in capital or increase in drawing will be debited.ī) Interest on drawing is an income of business.Ģ1. 1000Ī) This is not our expenses, but this is increase our current asset and its name is debtor, so we will apply what comes in rule on it.Ī) Goods are given for advertising, advertising is an expense of business, and so advertising account will be debited.ī) Goods go out at the cost price, so goods or purchase account will be credited.Ī) Interest is an expense of business, so it will be debited.ī) There is an increase in the amount of capital. 1000Ī) Carriage on purchase of machinery is part of cost of machinery, so machinery account will be debited.Ī) Depreciation on fixed assets is the loss of business, and every loss will be debited.ī) There is a decrease in asset and we will apply what goes from business on it. Carriage paid on machinery ( expenses on purchase of asset ) Rs. We are applying what goes from business, debtor is also our asset, if he does not pay, and it means this asset has gone from business, so its account will be credited.ī) Bad debts recovered are an income, so its account will be credited.ġ5. 3000Ī) Proprietor is the receiver of cash, but business will give him as drawing which is decrease in his capital, so proprietor’s drawing account will be debited.Ī) Charity is an expense of business, so it will be debited.ī) Goods go out, so goods or purchase account will be credited.Ī) Bad debt is loss of business due to not paying the amount by our debtors, so it will be debited.ī) There is decrease in debtor. Cash drawn by proprietor from business for personal use Rs. 2000Ī) Cash comes in the business, so cash account will be debited.ī) Bank is the giver, so bank account will be credited.ġ1. Cash withdrawn from bank for office use Rs. 1600Ī) Dev Raj is receiver of goods, so his personal account will be debited.ī) Goods go out, so, goods or sale account will be credited.Ī) Goods come in, so goods or purchase account will be debitedī) Cash goes out, so cash account will be credited.Ī) Cash comes in, so cash account will be debited.ī) Goods go out, so goods or sale account will be credited.Ī) Rent is an item of expenses, so it will be debited.ī) Cash is an item of asset and it goes out, so it will be credited.ī) Commission is an item of income, so commission account will be credited.Ī) Bank is receiver of cash, so bank account will be debited.ġ0. 2nd rule’s second part will be applied.Ĥ. In this transaction, furniture came in business, so we will open furniture account in the debit side of journal entry.ī) Cash is also asset and we paid for purchasing of furniture. 10000Ī) What comes in business will be debited. Madan lal is giver, so its account will be credited.ģ. Goods have come in business, so its financial value will be debited with the name of purchase account.ī) Name of person is given from whom we bought the goods on credit, so Ist rule’s second part will be applied. Goods purchased on credit from Madan Lal Rs. Proprietor’s capital Account Credit 30,000Ģ. Proprietor is giver of cash to business but he has business motive and he gives the money to business as capital. 30000Ī) What comes in business will be debitedĬash has come in business cash account will be debited in journal entry. Cash brought in by proprietor as capital Rs. Following are some examples of translations and Journal Entries, its analysis is done on the basis of rules of double entry system:ġ.
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