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Double EntryDouble Entry
System 3System 3
DR CR
ObjectivesObjectives
At the end of the lesson, students should be able to :
• know what are Purchases, Sales, Returns
Inwards and Returns Outwards.
• know what are Expense and Revenue items.
• know how to record them into Journals and
post to the Ledger Accounts.
Expenses and RevenuesExpenses and Revenues
Purchases:
Purchase of goods for resale purpose. (Cost price) expense for the firm
Sales:
Sale of goods to customers. (Selling price) revenue for firm
Expenses: Money that the firm spent in the process of operating the business to earn revenue.
Rent Insurance Wages Advertising Transport
Examples:
Revenues: Items that generate profits and income for the firm.
Rent Revenue Interest Revenue Commission
Examples:
EXPENSES
DEBIT CREDIT
CREDIT
REVENUES
DEBIT
SO HOW DO YOU SO HOW DO YOU
RECORD EXPENSES RECORD EXPENSES
AND REVENUES?AND REVENUES?
Debit CreditDate Particulars
$ $
Double Entry
a) John purchased goods at $6000 on a) John purchased goods at $6000 on
credit credit
from ABC Ltd on 26 November from ABC Ltd on 26 November 2000.2000.
2000
Nov 26 Purchases
Creditors-ABC
6000
6000
Purchases worth $6000 from ABC Ltd.
Debit CreditDate Particulars
$ $
Double Entry
b) John sold goods at $9000 on credit b) John sold goods at $9000 on credit
to PCK Ltd on 8 July 2000.to PCK Ltd on 8 July 2000.
2000
July 8 Debtors-PCK
Sales
9000
9000
Sales worth $9000 to PCK Ltd.
Debit CreditDate Particulars
$ $
Double Entry
c) The firm incurred the following c) The firm incurred the following
expenses:expenses:
19 March 19 March - Rent $2000- Rent $2000
8 May 8 May - Wages $10,000- Wages $10,000
2000
Mar 19 Rent expense
Cash
2000
2000
Record wages of $10,000.
Wage expense
Cash
10,000
10,000
May 8
Record rent expense of $2,000.
Debit CreditDate Particulars
$ $
Double Entry
d) The firm received the following d) The firm received the following
revenues:revenues:
27 March 27 March - Rent $3000- Rent $3000
19 June 19 June - Interest $500- Interest $500
2000
Mar 27 Cash
Rent revenue
3000
3000
Record interest revenue of $500.
Cash
Interest revenue
500
500
June 19
Record rent revenue of $3,000.
Debit CreditDate Particulars
$ $
Double Entry
e) The firm returned some damaged e) The firm returned some damaged
goods to supplier (ABC) worth $2000 goods to supplier (ABC) worth $2000
on 10 July. on 10 July.
2000
July 10 Creditors-ABC
Returns Outwards
2000
2000
Record returns outwards of $2,000.
Debit CreditDate Particulars
$ $
Double Entry
f) A customer, XYZ returned some f) A customer, XYZ returned some
damaged goods to the firm worth damaged goods to the firm worth
$1500 on 8 August. $1500 on 8 August.
2000
Aug 8 Returns Inwards
Debtors-XYZ
1500
1500
Record returns inwards of $1,500.
It is common for the owner to draw money or goods from the firm for personal use anytime.
According to the Accounting Entity concept, we must record the event even though he is the owner of the firm.
What do you call this?Click me!
It is common for the owner to draw money or goods from the firm for personal use anytime.
According to the Accounting Entity concept, we must record the event even though he is the owner of the firm.
DRAWINGS
What about drawings of
goods?
Debit CreditDate Particulars
$ $
General Journal
g)g) The owner withdrew goods worth The owner withdrew goods worth
$2000 for $2000 for
his personal use on 10 April 2000.his personal use on 10 April 2000.
2000
April 10 Drawings
Purchases
2000
2000
To record drawings of goods worth $2000.
