IGCSE Accounting Paper-1: Specimen Questions with Answers 255 - 255 of 338

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Question 255

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Short Answer▾

State the double entry for each of the following transaction in the books of Akram who sells mobile phones. (Marks 10)

Transaction in the Books
TransactionsDebitCredit
Obtained loan from a friend
Purchased shop furniture for cash
Sold a mobile phone to Shyam on credit
Took a mobile phone for personal use.
Purchased phones for cash

Explanation

Transaction in the Books
TransactionsDebitCredit
(I) Obtained loan from a friend (Aqsa)Cash A/cAqsa՚s Loan A/c
(II) Purchased shop furniture for cashFurniture A/cCash A/c
(III) Sold a mobile phone to Shyam on creditShyamSales A/c
(IV) Took a mobile phone for personal use.Drawings A/cPurchases A/c
(V) Purchased phones for cashPurchases A/cCash A/c
  • Cash is an Asset and Assets have a debit balance. When loan is taken, the balance of cash increases. To record its increase, Cash A/c should be debited.
  • Aqsa՚s Loan is a liability and liabilities have a credit balance. When loan is taken, liability increases. To record its increase, Aqsa՚s Loan A/c c should be credited.
  • Furniture & Cash are asset and assets have a debit balance. When furniture is purchased for cash, furniture increase whereas cash balance decreases. Therefore, Furniture A/c should be debited to record its increase. At the same time the cash A/c should be credited to record its decrease.
  • Sales is an income so it has a credit balance. To record a sale, sales A/c should be credited. Since the sale is on credit, Shyam becomes the debtor so Shyam should be debited.
  • Taking anything from the business for personal use is drawing. Drawing reduces the Capital so it has a debit balance. Therefore, Drawings A/c should be debited.
  • Drawing of goods (mobile phone) reduces the purchases, so Purchases A/c should be credited.
  • Purchase of goods are entered under Purchases A/c and Purchase being an expense has a debit balance. So, purchases A/c should be debited and Cash A/c should be credited to record the decrease in cash balance.

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