Commenced business with rs100000 of which rs 20000 were borrowed from ...
Cash a/c Dr. 100000
to capital a/c 80000
to Raman a/c 20000
Commenced business with rs100000 of which rs 20000 were borrowed from ...
Introduction:
In order to record the business transaction in the cash book, we need to follow the rules of double-entry bookkeeping. The cash book is a subsidiary book that records all cash transactions of a business. It helps in maintaining a record of all cash receipts and cash payments.
Recording the transaction:
To record the business transaction of commencing business with Rs. 100,000, out of which Rs. 20,000 were borrowed from Mr. Ratan, we need to follow the steps mentioned below:
Step 1: Create the Cash Book Format:
A cash book typically consists of the following columns:
- Date: The date of the transaction.
- Particulars: A brief description of the transaction.
- Voucher No.: The voucher number for reference.
- L.F. (Ledger Folio): The page number of the ledger account.
- Debit: The amount of cash received.
- Credit: The amount of cash paid.
Step 2: Identify the type of transaction:
In this case, the transaction involves borrowing cash, which is a cash receipt. Therefore, it will be recorded on the receipt side of the cash book.
Step 3: Record the transaction:
To record the transaction, follow these steps:
- In the "Date" column, write the date of the transaction.
- In the "Particulars" column, write "Cash A/c" to indicate that cash is being received.
- In the "Voucher No." column, write the voucher number if applicable.
- In the "L.F." column, write the page number of the ledger account.
- In the "Debit" column, write the amount borrowed from Mr. Ratan, which is Rs. 20,000.
- In the "Credit" column, leave it blank as no cash is being paid at this point.
Step 4: Balance the cash book:
After recording the transaction, update the "Balance" column of the cash book. In this case, as no cash is being paid, the balance will remain the same as before.
Step 5: Calculate the new balance:
To calculate the new balance, add the amount borrowed from Mr. Ratan (Rs. 20,000) to the previous balance.
Step 6: Update the cash book balance:
Write the new balance in the "Balance" column.
Conclusion:
By following the steps mentioned above, we can record the transaction of commencing business with Rs. 100,000, out of which Rs. 20,000 were borrowed from Mr. Ratan, in the cash book. It is important to maintain accurate records in the cash book to track all cash transactions of the business.
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