Cash a/c Dr. 50000
Furniture a/c Dr. 20000
Building a/c Dr. 80000
To capital a/c cr. 150000

( Being Prakash started business with cash, furniture nd building )

Journal Entries for Prakash's Business Transactions

When Prakash commenced his business, he invested cash of Rs. 50,000. Later, he purchased furniture for Rs. 20,000 and a building for Rs. 80,000. The journal entries for these transactions are as follows:

1. Commencement of Business:

Cash A/c Dr. 50,000
To Capital A/c 50,000

2. Purchase of Furniture:

Furniture A/c Dr. 20,000
To Cash A/c 20,000

3. Purchase of Building:

Building A/c Dr. 80,000
To Cash A/c 80,000

Explanation:

1. Commencement of Business:

• Cash A/c is a Real Account and is debited because cash is going out of the business.
• Capital A/c is a Personal Account and is credited because the owner is bringing in funds to start the business.

2. Purchase of Furniture:

• Furniture A/c is a Real Account and is debited because the value of furniture is coming in the business.
• Cash A/c is a Real Account and is credited because cash goes out of the business.

3. Purchase of Building:

• Building A/c is a Real Account and is debited because the value of the building is coming in the business.
• Cash A/c is a Real Account and is credited because cash goes out of the business.

In conclusion, these journal entries are important for the accounting process as they record transactions that affect the financial position of the business. By recording these transactions, the owner can track the inflow and outflow of funds and evaluate the profitability of the business.