In the books of Krish Fitness and Wellness Club Income & Expenditure A/c for the year ended 31 March 2020 Expenditure Amt Income Amt To Doctors and Coaches Honorarium 25,000 By Subscription (600*100) 60,000 To Medicines 15,500 By Entrance Fees 25,000 To General Expenses 8,000 By Miscellaneous ReRead more
In the books of Krish Fitness and Wellness Club
Income & Expenditure A/c for the year ended 31 March 2020
Expenditure
Amt
Income
Amt
To Doctors and Coaches Honorarium
25,000
By Subscription (600*100)
60,000
To Medicines
15,500
By Entrance Fees
25,000
To General Expenses
8,000
By Miscellaneous Receipts
15,000
To Newspaper
8,000
By Deficit (excess of expenditure over income)
21,500
To Rent, Rates and Taxes
5,000
To Tournament Expenses (W.N.1)
25,000
To Loss on Sale of Medical Equipment (W.N.2)
10,000
To Depreciation on Medical Equipment
25,000
1,21,500
1,21,500
Working Notes:
1.Calculation of Tournament Fund
Tournament Fund as of 1 April 2019
15,000
Add: Donations to Tournament Fund
20,000
Less: Tournament Expenses
-60,000
              Tournament Expenses
-25,000
2. Calculation of Loss on Sale of Medical Equipment
Book Value of Medical Equipment
15,000
Less: Sold
-5,000
                Loss on Sale of Medical Equipment
Cash Book is called a journalized ledger because it is considered to be both a journal as well as a ledger. As you know Cash Book is a subsidiary book. But like a journal, the transactions in the Cash Book are recorded in it for the first time from the source documents/vouchers. Hence it is considerRead more
Cash Book is called a journalized ledger because it is considered to be both a journal as well as a ledger.
As you know Cash Book is a subsidiary book. But like a journal, the transactions in the Cash Book are recorded in it for the first time from the source documents/vouchers. Hence it is considered to be a journal for all cash transactions.
Cash Book can also be viewed as a Cash A/c because all transactions involving cash are recorded in it. It provides a summary of cash transactions. Hence it is considered to be a ledger account for cash transactions.
Since Cash Book is both a journal and ledger, you can very well call it a ‘journalized ledger’.
Here I've prepared the Income & Expenditure A/c. Income & Expenditure A/c for the year ended 31st March 2021 Expenditure Amt Income Amt To Salary     4,80,000 By Subscriptions     9,00,000 To Rent         50,000 By Donations         10,000 To Stationery         20,000 To Loss on sale ofRead more
Here I’ve prepared the Income & Expenditure A/c.
Income & Expenditure A/c for the year ended 31st March 2021
Expenditure
Amt
Income
Amt
To Salary
    4,80,000
By Subscriptions
    9,00,000
To Rent
        50,000
By Donations
        10,000
To Stationery
        20,000
To Loss on sale of furniture (WN)
        10,000
To Surplus
    3,50,000
    9,10,000
    9,10,000
Working Note: Calculation of Loss on sale of furniture
The following calculation is made to identify the loss incurred on the sale of furniture.
A cheque that has been issued but yet not presented to the bank for payment is known as an unpresented cheque Generally what happens is when a cheque is issued to a party or say, creditor, the business immediately records them in the bank column of the cash book but the creditor might not present thRead more
A cheque that has been issued but yet not presented to the bank for payment is known as an unpresented cheque
Generally what happens is when a cheque is issued to a party or say, creditor, the business immediately records them in the bank column of the cash book but the creditor might not present them immediately to the bank for payment on the same date. The bank will only debit the account when it will be presented to it, therefore as long as the cheque remains unpresented there will be a difference in both the books i.e cash book and passbook.
Let me give you a short example of the above treatment
Suppose on 27th January, in the books of Mr. Shyam, the balance of the bank column as per the cash book is Rs 10,000. He received a cheque of Rs 5,000 from Mr. Hari, one of his debtors, which was sent to the bank for collection. The amount of the cheque was not collected by the bank until 31st January. Due to this, there arises a difference of Rs 5,000 in the cash book and pass book of Mr. Shyam.
Following will be the entry in Mr. Shyam cash book and passbook
In the books of Mr. Shaym
Cash book (bank column only)
Date
Particulars
Bank (Rs)
Date
Particulars
Bank (Rs)
27th Jan
To balance b/d
10,000
27th Jan
To Hari
5,000
31st Jan
By balance c/d
15,000
15000
15000
 Mr. Shyam
  Bank Statement
Date
Particulars
Debit (Withdraw)
Credit (Deposite)
Debit or Credit
Balance
31st Jan
To balance b/d
credit
10,000
How it is treated in the bank reconciliation statement?
There lies a temporary difference in both the books as the represented cheques will eventually be presented. Therefore we will not alter the cash book. The bank statement shows the greater amount of Rs 5,000 as compared to the cashbook, therefore we will debit the amount of unpresented cheque which will eventually make it balance to the level of bank statement.
Unfavorable balance as per cash book generally means credit balance in the cash book. This is also known as bank overdraft. Making the above definition more clear, unfavorable balance or bank overdraft means an excessive amount of cash withdrawn than what is deposited in the bank. Simply it is the lRead more
Unfavorable balance as per cash book generally means credit balance in the cash book. This is also known as bank overdraft.
Making the above definition more clear, unfavorable balance or bank overdraft means an excessive amount of cash withdrawn than what is deposited in the bank. Simply it is the loan taken from the bank. When there is an overdraft balance the treatment is just the opposite of that of favorable balance.
Generally for business overdraft occurs when there is immediate or emergency funding for the short term. This can be seen for small and medium-sized businesses. This is considered to be convenient for these businesses because there is no requirement to pay interest on the lump-sum loan, only have to pay interest on the fund you use. Generally linked to an existing transaction account.
To reconcile this we need to prepare a Bank reconciliation statement. The procedure of preparing BRS under unfavorable conditions is as follows
If we start from the cash book balance then “ADD” all the transactions resulting in an increase in the passbook. “DEDUCT” all the transactions that resulted in a decrease in the balance of the passbook. Then the net overdraft balance should be the same as in the passbook.
If we start from the balance as per the passbook then “ADD” all the transactions resulting in an increase in the balance of the cashbook and “DEDUCT” all the transactions related to a decrease in the balance of the cash book. The net overdraft balance as per the passbook should reconcile with the cash book.
Let us take one example considering one of the above conditions.
The cash book of M/s Alfa ltd shows a credit balance of Rs 6,500.
A Cheque of Rs 3,500 was deposited but not collected by the bank.
The firm issued a cheque of Rs 1,000 but was not presented for payment.
There was a debit balance in the passbook of Rs 200 and Rs 400 for interest and bank charges.
Bank Reconciliation Statement
Particulars
Add
Deduct
1. Balance as per cash book
6,500
2. Cheque issued but not yet presented
1,000
3. cheque deposited but not yet credited by the bank
The difference between a ledger & a trial balance is as follows: Basis Ledger Trial Balance Meaning Ledger is a book/register in which all the accounts are put together. A Trial Balance is a statement showing the debit and credit balance of all the accounts to ascertain the arithmetical accuracyRead more
The difference between a ledger & a trial balance is as follows:
Basis
Ledger
Trial Balance
Meaning
Ledger is a book/register in which all the accounts are put together.
A Trial Balance is a statement showing the debit and credit balance of all the accounts to ascertain the arithmetical accuracy of the books of accounts.
Basis of preparation
Journal is the basis for recording transactions in the ledger.
The closing balances of different accounts in the ledger are the basis for preparing the trial balance.
Objective
It is prepared to see the net effect of various transactions affecting a particular account.
It is prepared to check the arithmetical accuracy of the books of accounts.
Format
A ledger has four identical columns on the debit and credit sides: 1. Date, 2. Particulars, 3. Journal Folio, 4. Amount.
A Trial Balance has five columns: 1. S.No, 2. Name of Accounts, 3. Ledger Folio, 4. Debit Balance, 5. Credit Balance.
Stage of Recording
A ledger is prepared after recording the transactions in the journal.
A trial balance is prepared after posting the transactions in the ledger.
A cash discount is a discount allowed to customers when they make payments for the items they purchased. This type of discount is generally based on time. The early the payment is made by the debtors, the more discount they earn. To be more precise cash discount is given to simulate or encourage earRead more
A cash discount is a discount allowed to customers when they make payments for the items they purchased. This type of discount is generally based on time. The early the payment is made by the debtors, the more discount they earn. To be more precise cash discount is given to simulate or encourage early payment by the debtors.
Trade discount is a discount allowed by traders on the list price of the goods to the customer at specified rate. Unlike cash discount, trade discount is based on number of sale i.e, more the sale more the discount earned. This is mainly given on bulk orders by the customers.
To understand trade discount and cash discount let me give you simple example
Mr. X purchased goods from Mr. Y of list price Rs 10,000. Mr. Y allowed a 10% discount to Mr.X on the list price for purchasing goods in bulk quantity. Further, he was provided with cash discount of Rs 500 for making an immediate payment. Therefore the entry for the above transaction in the books of Mr. X would be
Purchase A/c                                                       ……Dr
9,000
          To Cash A/c
8,500
          To Discount received
500
(Being goods purchased from Mr. Y worth Rs. 10,000@ 10% trade discount and cash discount of Rs. 500)
From the following Receipts and Payments Account of Krish Fitness and wellness Club for the year ended 31st March 2020 prepare Income and Expenditure Account?
In the books of Krish Fitness and Wellness Club Income & Expenditure A/c for the year ended 31 March 2020 Expenditure Amt Income Amt To Doctors and Coaches Honorarium 25,000 By Subscription (600*100) 60,000 To Medicines 15,500 By Entrance Fees 25,000 To General Expenses 8,000 By Miscellaneous ReRead more
In the books of Krish Fitness and Wellness Club
Income & Expenditure A/c for the year ended 31 March 2020
Working Notes:
1.Calculation of Tournament Fund
2. Calculation of Loss on Sale of Medical Equipment
why cash book is called journalised ledger?
Cash Book is called a journalized ledger because it is considered to be both a journal as well as a ledger. As you know Cash Book is a subsidiary book. But like a journal, the transactions in the Cash Book are recorded in it for the first time from the source documents/vouchers. Hence it is considerRead more
Cash Book is called a journalized ledger because it is considered to be both a journal as well as a ledger.
As you know Cash Book is a subsidiary book. But like a journal, the transactions in the Cash Book are recorded in it for the first time from the source documents/vouchers. Hence it is considered to be a journal for all cash transactions.
Cash Book can also be viewed as a Cash A/c because all transactions involving cash are recorded in it. It provides a summary of cash transactions. Hence it is considered to be a ledger account for cash transactions.
Since Cash Book is both a journal and ledger, you can very well call it a ‘journalized ledger’.
See lessPrepare Income and Expenditure Account for the Year Ended 31st March, 2020 from the Following?
Here I've prepared the Income & Expenditure A/c. Income & Expenditure A/c for the year ended 31st March 2021 Expenditure Amt Income Amt To Salary     4,80,000 By Subscriptions     9,00,000 To Rent         50,000 By Donations         10,000 To Stationery         20,000 To Loss on sale ofRead more
Here I’ve prepared the Income & Expenditure A/c.
Income & Expenditure A/c for the year ended 31st March 2021
Working Note: Calculation of Loss on sale of furniture
The following calculation is made to identify the loss incurred on the sale of furniture.
See lessHow to treat cheque issued but not presented for payment?
A cheque that has been issued but yet not presented to the bank for payment is known as an unpresented cheque Generally what happens is when a cheque is issued to a party or say, creditor, the business immediately records them in the bank column of the cash book but the creditor might not present thRead more
A cheque that has been issued but yet not presented to the bank for payment is known as an unpresented cheque
Generally what happens is when a cheque is issued to a party or say, creditor, the business immediately records them in the bank column of the cash book but the creditor might not present them immediately to the bank for payment on the same date. The bank will only debit the account when it will be presented to it, therefore as long as the cheque remains unpresented there will be a difference in both the books i.e cash book and passbook.
Let me give you a short example of the above treatment
Suppose on 27th January, in the books of Mr. Shyam, the balance of the bank column as per the cash book is Rs 10,000. He received a cheque of Rs 5,000 from Mr. Hari, one of his debtors, which was sent to the bank for collection. The amount of the cheque was not collected by the bank until 31st January. Due to this, there arises a difference of Rs 5,000 in the cash book and pass book of Mr. Shyam.
Following will be the entry in Mr. Shyam cash book and passbook
In the books of Mr. Shaym
Cash book (bank column only)
 Mr. Shyam
  Bank Statement
How it is treated in the bank reconciliation statement?
There lies a temporary difference in both the books as the represented cheques will eventually be presented. Therefore we will not alter the cash book. The bank statement shows the greater amount of Rs 5,000 as compared to the cashbook, therefore we will debit the amount of unpresented cheque which will eventually make it balance to the level of bank statement.
See lessWhat is the meaning of unfavourable balance as per cash book?
Unfavorable balance as per cash book generally means credit balance in the cash book. This is also known as bank overdraft. Making the above definition more clear, unfavorable balance or bank overdraft means an excessive amount of cash withdrawn than what is deposited in the bank. Simply it is the lRead more
Unfavorable balance as per cash book generally means credit balance in the cash book. This is also known as bank overdraft.
Making the above definition more clear, unfavorable balance or bank overdraft means an excessive amount of cash withdrawn than what is deposited in the bank. Simply it is the loan taken from the bank. When there is an overdraft balance the treatment is just the opposite of that of favorable balance.
Generally for business overdraft occurs when there is immediate or emergency funding for the short term. This can be seen for small and medium-sized businesses. This is considered to be convenient for these businesses because there is no requirement to pay interest on the lump-sum loan, only have to pay interest on the fund you use. Generally linked to an existing transaction account.
To reconcile this we need to prepare a Bank reconciliation statement. The procedure of preparing BRS under unfavorable conditions is as follows
Let us take one example considering one of the above conditions.
The cash book of M/s Alfa ltd shows a credit balance of Rs 6,500.
Bank Reconciliation Statement
What is the difference between ledger and trial balance?
The difference between a ledger & a trial balance is as follows: Basis Ledger Trial Balance Meaning Ledger is a book/register in which all the accounts are put together. A Trial Balance is a statement showing the debit and credit balance of all the accounts to ascertain the arithmetical accuracyRead more
The difference between a ledger & a trial balance is as follows:
What is the difference between cash discount & trade discount?
A cash discount is a discount allowed to customers when they make payments for the items they purchased. This type of discount is generally based on time. The early the payment is made by the debtors, the more discount they earn. To be more precise cash discount is given to simulate or encourage earRead more
A cash discount is a discount allowed to customers when they make payments for the items they purchased. This type of discount is generally based on time. The early the payment is made by the debtors, the more discount they earn. To be more precise cash discount is given to simulate or encourage early payment by the debtors.
Trade discount is a discount allowed by traders on the list price of the goods to the customer at specified rate. Unlike cash discount, trade discount is based on number of sale i.e, more the sale more the discount earned. This is mainly given on bulk orders by the customers.
To understand trade discount and cash discount let me give you simple example
Mr. X purchased goods from Mr. Y of list price Rs 10,000. Mr. Y allowed a 10% discount to Mr.X on the list price for purchasing goods in bulk quantity. Further, he was provided with cash discount of Rs 500 for making an immediate payment. Therefore the entry for the above transaction in the books of Mr. X would be