Double Entry System 3 DR CR Objectives At

Double Entry System 3 DR CR

Objectives At the end of the lesson, students should be able to : • know what are Purchases, Sales, Returns Inwards and Returns Outwards. • know what are Expense and Revenue items. • know how to record them into Journals and post to the Ledger Accounts.

Expenses and Revenues

Purchases: Purchase of goods for resale purpose. (Cost price) expense for the firm Sales: Sale of goods to customers. (Selling price) revenue for firm

Expenses: Money that the firm spent in the process of operating the business to earn revenue. Examples: Rent Insurance Wages Advertising Transport Revenues: Items that generate profits and income for the firm. Examples: Rent Revenue Interest Revenue Commission

EXPENSES DEBIT CREDIT REVENUES DEBIT CREDIT

SO HOW DO YOU RECORD EXPENSES AND REVENUES?

a) John purchased goods at $6000 on credit from ABC Ltd on 26 November 2000. Double Entry Date 2000 Nov 26 Particulars Purchases Creditors-ABC Purchases worth $6000 from ABC Ltd. Debit Credit $ $ 6000

b) John sold goods at $9000 on credit to PCK Ltd on 8 July 2000. Double Entry Date 2000 July 8 Particulars Debtors-PCK Sales worth $9000 to PCK Ltd. Debit Credit $ $ 9000

c) The firm incurred the following expenses: 19 March 8 May - Rent $2000 - Wages $10, 000 Double Entry Date 2000 Mar 19 Particulars Rent expense Debit $ 2000 Credit $ 2000 Cash Record rent expense of $2, 000. May 8 Wage expense Cash Record wages of $10, 000. 10, 000

d) The firm received the following revenues: 27 March 19 June - Rent $3000 - Interest $500 Double Entry Date 2000 Mar 27 Particulars Debit $ 3000 Cash Credit $ 3000 Rent revenue Record rent revenue of $3, 000. June 19 500 Cash Interest revenue Record interest revenue of $500. 500

e) The firm returned some damaged goods to supplier (ABC) worth $2000 on 10 July. Double Entry Date 2000 July 10 Particulars Creditors-ABC Returns Outwards Record returns outwards of $2, 000. Debit Credit $ $ 2000

f) A customer, XYZ returned some damaged goods to the firm worth $1500 on 8 August. Double Entry Date 2000 Particulars Aug 8 Returns Inwards Debtors-XYZ Record returns inwards of $1, 500. Debit Credit $ $ 1500

It is common for the owner to draw money or goods from the firm for personal use anytime. According to the Accounting Entity concept, we must record the event even though he is the owner of the firm. What do you call this? Click me!

It is common for the owner to draw money or goods from the firm for personal use anytime. According to the Accounting Entity concept, we must record the event even though he is the owner of the firm. DRAWINGS What about drawings of goods?

g) The owner withdrew goods worth $2000 for h) his personal use on 10 April 2000. General Journal Date 2000 April 10 Particulars Drawings Purchases To record drawings of goods worth $2000. Debit Credit $ $ 2000