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

    Expense

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

    Tangible Aspect (Asset)

    Real a/c

    Going out

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

    Bank a/c

    Organisation

    Personal a/c

    Receiver

    Debit
    [Debit the benefit receiver]
    Cash a/c

    Tangible Aspect (Asset)

    Real a/c

    Going out

    Credit
    [Credit what goes out]
  2. Bought Goods for cash 10,000 from M/s Shamir Jain & Co.,

    Goods/Stock 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. Bought Goods on credit from M/s Ramdas & Bros. for 10,000.

    M/s Ramdas & Bros. a/c

    Organisation

    Personal a/c

    Giver

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

    Tangible Aspect (Asset)

    Real a/c

    Coming in

    Debit
    [Debit what comes in]
  4. 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]
  1. Bought Machinery from M/s Boolani Machinery and paid by cheque 25,000.

    Bank a/c

    Organisation

    Personal a/c

    Giver

    Credit
    [Credit the benefit giver]
    Machinery a/c

    Tangible Aspect (Asset)

    Real a/c

    Coming in

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

    Mr. Natekar a/c

    Person

    Personal a/c

    Receiver

    Debit
    [Debit the benefit reciever]
    Goods/Stock a/c

    Tangible Aspect (Asset)

    Real a/c

    Going out

    Credit
    [Credit what goes out]
  3. Paid weekly wages to workers 5,000

    Wages Paid a/c

    Expenditure

    Nominal a/c

    Expense

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

    Tangible Aspect (Asset)

    Real a/c

    Going out

    Credit
    [Credit what goes out]
  4. Paid M/s Ramdas and Brothers by cheque 5,000.

    M/s Ramdas & Bros. a/c

    Organisation

    Personal a/c

    Receiver

    Debit
    [Debit the benefit reciever]
    Bank a/c

    Organisation

    Personal a/c

    Giver

    Credit
    [Credit the benefit giver]
  5. 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

    Giver

    Credit
    [Credit the benefit giver]
  6. 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/gains]
    Cash a/c

    Tangible Aspect (Asset)

    Real a/c

    Coming in

    Debit
    [Debit what comes in]