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