(16)-AN EXAMPLE FOR BOOKKEEPING

An Example for Bookkeeping

A business is established with capital of $ 4000, and this amount is paid into bank account by proprietor. During the first year’s trading, following transactions occurred.

Purchases of goods for resale on credit $ 8600
Payments to trade creditors $ 7200
Sales all on credit $ 11600
Payments from debtors $ 6400
Fixed assets purchased fir cash $ 3000
Other expenses all paid in cash $ 1800
You can see below how to prepare ledger accounts (Double entries).

The first thing is to open ledger accounts. Cash account, Capital account, Creditors account, Purchase account, fixed assets account, Sales account, Debtor account, other expenses account.
Double entries for above transactions

(1). Established with capital of $ 4000
Cash account ---------(Dr) 4000
Capital account -------(Cr) 4000

(2). Purchases of goods for resale on credit $ 8600
Purchases account ---(Dr) 8600
Creditors account ----(Cr) 8600

(3). Payments to trade creditors $ 7200
Creditors account ----(Dr) 7200
Cash account ---------(Cr) 7200

(4). Sales all on credit $ 11600
Debtors account ------(Dr) 11600
Sales account ---------(Cr) 11600

(5). Payments from debtors $ 6400
Cash account ---------(Dr) 6400
Debtors account ------(Cr) 6400

(6). Fixed assets purchased fir cash $ 3000
Fixed assets account --(Dr) 3000
Cash account ----------(Cr) 3000

(7). other expenses all paid in cash $ 1800
Other expenses account -(Dr) 1800
Cash account -------------(Cr) 1800