Principles or Rules of Debit and Credit - Accounting - Illustration

Illustration - Problem

Analyse the following transactions to find out the elements affected by the transaction, their nature and the treatment (i.e. which account is to be debited and which credited).
  1. Ibrahim a sole proprietor Commenced business with a capital of 2,00,000.
  2. Bought Furniture for cash 20,000.
  3. Paid Rent to the shop owner Mr. Murugan 5,000.
  4. Paid cash into bank 1,50,000
  5. Bought Goods for cash 10,000 from M/s Shamir Jain & Co.,
  6. Bought Goods on credit from M/s Ramdas & Bros. for 10,000.
  7. Sold goods for cash 12,000 to Mr. Naryan Tiwari
  8. Bought Machinery from M/s Boolani Machinery and paid by cheque 25,000.
  9. Sold goods on credit to Mr. Natekar for 8,000
  10. Paid weekly wages to workers 5,000
  11. Paid M/s Ramdas and Brothers by cheque 5,000
  12. Received from Mr. Natekar 2,000
  13. Received commission from M/s Orion Traders for giving a trade lead 500.

Illustration - Solution

  1. Commenced Business with a Capital of 2,00,000.

    Capital a/c

    Person

    Personal a/c

    Giving benefit

    Credit
    [Credit the benefit giver]
    Cash a/c

    Tangible aspect/Asset

    Real a/c

    Coming in

    Debit
    [Debit what comes in]
  2. Bought Furniture for cash 20,000.

    Furniture a/c

    Tangible aspect/Asset

    Real a/c

    Coming in

    Debit
    [Debit what comes in]
    Cash a/c

    Tangible aspect/Asset

    Real a/c

    Going out

    Credit
    [Credit what goes out]
  3. Paid Rent to the shop owner Mr. Murugan 5,000.

    Rent Paid a/c

    Expenditure

    Nominal a/c

    Expenditure

    Debit
    [Debit all expenses and losses]
    Cash a/c

    Tangible aspect/Asset

    Real a/c

    Going out

    Credit
    [Credit what goes out]
  4. Paid cash into bank 1,50,000

    Cash a/c

    Tangible aspect/Asset

    Real a/c

    Going out

    Credit
    [Credit what goes out]
    Bank a/c

    Organisation

    Personal a/c

    Receiving

    Debit
    [Debit the benefit receiver]
  5. Bought Goods for cash 10,000 from M/s Shamir Jain & Co.,

    Cash a/c

    Tangible aspect/Asset

    Real a/c

    Going out

    Credit
    [Credit what goes out]
    Goods/Stock a/c

    Tangible aspect/Asset

    Real a/c

    Coming in

    Debit
    [Debit what comes in]
  6. Bought Goods on credit from M/s Ramdas & Bros. for 10,000.

    M/s Ramdas & Bros. a/c

    Organisation

    Personal a/c

    Giving benefit

    Credit
    [Credit the benefit giver]
    Goods/Stock a/c

    Tangible aspect/Asset

    Real a/c

    Coming in

    Debit
    [Debit what comes in]
  1. Sold goods for cash 12,000 to Mr. Naryan Tiwari.

    Cash a/c

    Tangible aspect/Asset

    Real a/c

    Coming in

    Debit
    [Debit what comes in]
    Goods/Stock a/c

    Tangible aspect/Asset

    Real a/c

    Going out

    Credit
    [Credit what goes out]
  2. Bought Machinery from M/s Boolani Machinery and paid by cheque 25,000.

    Bank a/c

    Organisation

    Personal a/c

    Giving benefit

    Credit
    [Credit the benefit giver]
    Machinery a/c

    Tangible aspect/Asset

    Real a/c

    Coming in

    Debit
    [Debit what comes in]
  3. Sold goods on credit to Mr. Natekar for 8,000.

    Goods/Stock a/c

    Tangible aspect/Asset

    Real a/c

    Going out

    Credit
    [Credit what goes out]
    Mr. Natekar a/c

    Person

    Personal a/c

    Taking benefit

    Debit
    [Debit the benefit receiver]
  4. Paid weekly wages to workers 5,000

    Cash a/c

    Tangible aspect/Asset

    Real a/c

    Going out

    Credit
    [Credit what goes out]
    Wages Paid a/c

    Expenditure

    Nominal a/c

    Expenditure

    Debit
    [Debit all expenses and losses]
  5. Paid M/s Ramdas and Brothers by cheque 5,000.

    M/s Ramdas & Bros. a/c

    Organisation

    Personal a/c

    Taking benefit

    Debit
    [Debit the benefit receiver]
    Bank a/c

    Organisation

    Personal a/c

    Giving benefit

    Credit
    [Credit the benefit giver]
  6. Received from Mr. Natekar 2,000

    Cash a/c

    Tangible aspect/Asset

    Real a/c

    Coming in

    Debit
    [Debit what comes in]
    Mr. Natekar a/c

    Person

    Personal a/c

    Giving the benefit

    Credit
    [Credit the benefit giver]
  7. Received commission from M/s Orion Traders for giving a trade lead 500.

    Commission Received a/c

    Income

    Nominal a/c

    Income

    Credit
    [Credit all Incomes and Gains]
    Cash a/c

    Tangible aspect/Asset

    Real a/c

    Coming in

    Debit
    [Debit what comes in]