Goods lost Stock destroyed or damaged by fire or accident etc.

1) When actual goods destroyed or damaged or lost

Loss of goods A/c Dr

(Amt of irrecoverable loss)

Insurance claim receivable A/c Dr

(To the extent of the loss recoverable )

To Purchase A/c

(Total amt of loss)

2) When Compensation received from Insurance Co./Railways etc

Bank A/c Dr

To Insurance claim receivable A/c

(Amt to the extent of the loss recovered )

Goods given Away Sometimes a business enterprise gives goods without

any consideration, such as giving free samples for sales promotion , giving goods in charity, gift for client entertainment & for sales promotion.

Sometimes owner uses the goods for his personal use.

The Journal Entry in such cases will be

Free samples A/C/ Donation A/C / Drawings A/C DrTo Purchase A/C

Drawings made by the proprietor

a) Cash drawnDrawings A/c Dr.To Bank/Cash A/c

b) Goods withdrawn for personal use :Drawings A/c Dr.To Purchase A/c

Loss on Account of Bad Debts Bad Debts is a loss on account of non recovery

of dues from credit customers. JE At the time of sale

Partys A/c DrTo Sales A/c

Writing off bad debtsCash/ Bank A/c Dr (Only if any cash received )Bad Debts A/c Dr (For the amount of loss)

To Partys A/c (Total amount)

Dishonour of Cheque Deposited in Bank The incidence of non-clearance of cheque due to certain

reasons is called Dishonour of Cheque . It is also called bouncing of cheque. Entry at the time of depositing the chequeBank A/C Dr.

To Partys A/cWhen Bank intimates about the Dishonour of

ChequePartys A/c Dr.

To Bank A/CIf Bank levied some bank charges for dishonourPartys A/c Dr.Bank charges A/c Dr

To Bank A/C

Compound Entry

Set of transactions take place on a single day which are of same nature

E.g. either expenses or revenue

Salary A/c Dr 10,000Rent A/c Dr 5,000

To Cash A/c 15,000

Journalize the following transactions in books of Varun Enterprises2010 July

1 Varun commenced business with 10,00,000 cash and a building worth Rs.70,00,000.

3 Purchased goods in the beginning 5,00,000 7 Sold goods to Dinesh & co. and received cheque & deposited in bank

Rs.65,000 8 The bank has informed that the Bank has returned the above cheque as it

was dishonoured. 17 Goods sold to Ramanuj & co Rs.60,000 18 Purchased goods worth Rs. 10000 less 10% Trade discount from Shekhar 19 Paid Commission Rs. 11,000 20 Goods burnt by the fires 39,000 21 Received cash on account from Dinesh 33,000 25 Goods distributed as free samples.50,000 26 Received Rs. 57,500 from Ramanuj & co in full settlement. 27 Withdraw cash for personal use 50,000 28 Purchased machinery by cheque 2,00,000 30 Purchased goods for cash 50,000 31 Borrowed a loan from Bank 5,00,000