(HOTS) Questions - Books of Original Entry: Journal entries Commerce Notes | EduRev

Crash Course of Accountancy - Class 11

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Commerce : (HOTS) Questions - Books of Original Entry: Journal entries Commerce Notes | EduRev

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Higher Order Thinking Skills (HOTS) Questions

Q. 1. An account is not opened in the name of the proprietor in the books of firm. Give reason.

Ans: An account is not opened in the name of the proprietor, he is represented by Capital Account.

Q. 2. Why do we enter transactions in a Journal rather than directly into Ledger?

Ans: Book of original entry contains all the important information relating to a transaction. Ledger only contains a summary.

Q. 3. Debts written off as bad, if recovered subsequently, should be credited to the Debtors' Account. Is it correct? Give reasons.

Ans: No, Debt written off as bad, if recovered subsequently, is treated as a gain. It is credited to the Bad Debts Recovered Account because the debt had earlier been debited to expenses.

Q. 4. Exe Co. has purchased 50 computers from HCL and is allowed discount. of Rs.10,000 for purchase thereof. Is the discount allowed, Trade Discount or a Cash Discount? How will you record it in the books of Accounts?

Ans: Discount allowed by HCL is a Trade Discount, It is not recorded separately in the books of accounts instead purchase is recorded at net value, i.e., Invoice Price less Trade Discount.

Q. 5. Exe CO. which purchased 50 computers from HCL made payment immediately. As a result, HCL granted it a discount of Rs.10,000. Is the discount received Trade Discount or Cash Discount? How will you record it in the books of accounts?

Ans: Discount allowed by HCL is a Cash Discount. It is recorded in the books of accounts by crediting it to 'Discount Received Account'.

Q. 6. GSC Co. purchased goods from Mohan & Co. amounting to Rs.50,000. As per the terms, if GSC Co. made full payment to Mohan & Co. within 15 days it will get Cash Discbunt of 2%. GSC Co. paid Rs.25,000 within the stipulated time. Determine the amount of Cash Discount that GSC Co. may get.

Ans: GSC Co. will not get any Cash Discount because it has not paid the total amount due. It was entitled to 2% Cash Discount, if it paid the amount due in full.

Q. 7. Rahul sold 100 Cricket Bats to V. Sports @ Rs.5,000 each less 25% Trade Discount and 2% Cash Discount if V. Sports paid the amount in 14 days of sale. V. Sports paid the amount in full within 14 days. What will be the amount that Rahul should credit to Sales Account?

Ans: Rahul will credit Rs.3,75,000 to Sales Account, i.e., the amount of Gross Sales less Trade Discount.

Q. 8. What will be the Journal entries for the transaction in Q. 7 in the books of Rahul?

Ans: On Sales in the Books of Rahul      Rs.                  Rs.

V. Sports ...                                      Dr. 3,75,000

To Sales A/c                                                                         3,75,000

(Being 100 Cricket Bats sold to V. Sports @ Rs.5,000

each less 25% Trade Discount)

On Receipt of Payment

Cash A/c / Bank A/c ...   Dr. 3,67,500

Discount Allowed A/c ...Dr. 7,500

To V. Sports                                                           3,75,000

(Being the amount received from V. Sports and allowed

them discount of 2%, i.e., Rs.7,500)

Q. 9. Roshan purchased from Prem 500 items @ Rs.100 each on which he is given 20% Trade Discount. He is further given 2% Cash Discount as he made payment for the purchases immediately. Determine the amount that Roshan

will debit to Purchases Account.

Ans: Roshan will debit Rs.40,000 to Purchases Account, i.e., the amount of Purchases after Trade Discount.

Q. 10. What will be the Journal entries for the transactions in Q. 9 in the books of Roshan?

Ans: On Purchases Rs.                     Rs.

Purchases A/c ... Dr. 40,000

To Prem                                             40,000

(Being the purchases made from Prem of 500 items

@ Rs.100 each less Trade Discount of 20%)

On Payment

Prem ...               Dr.                         40,000

To Cash A/c / Bank A/c                                   39,200

To Discount Received A/c                                      800

(Being the payment made to Prem and availed

Cash Discount of 2%, i.e., Rs.800)

Alternatively Combined Entry

Purchases A/c …                      Dr. 40,000

To Discount Received A/c                                    800

To Cash A/c / Bank A/c                                     39,200

(Being the purchases of 500 items @ Rs.100 each less

Trade Discount and made payment immediately

availing 2% Cash Discount)

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