Double-Entry Accounting System

1
Double Entry System 3
DR
CR
2

• Objectives
• 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.

3
Expenses and Revenues
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Purchases Purchase of goods for resale purpose.
(Cost price) ? expense for the firm
Sales Sale of goods to customers.
(Selling price) ? revenue for firm
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(No Transcript)
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EXPENSES
REVENUES
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SO HOW DO YOU RECORD EXPENSES AND REVENUES?
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a) John purchased goods at 6000 on credit
from ABC Ltd on 26 November 2000.
2000 Nov 26
6000
Purchases
6000
Creditors-ABC
Purchases worth 6000 from ABC Ltd.
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b) John sold goods at 9000 on credit
to PCK Ltd on 8 July 2000.
2000 July 8
9000
Debtors-PCK
9000
Sales
Sales worth 9000 to PCK Ltd.
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c) The firm incurred the following expenses
19 March - Rent 2000 8 May - Wages
10,000
Double Entry
2000 Mar 19
2000
Rent expense
2000
Cash
Record rent expense of 2,000.
10,000
Wage expense
May 8
10,000
Cash
Record wages of 10,000.
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d) The firm received the following revenues
27 March - Rent 3000 19 June - Interest
500
Double Entry
2000 Mar 27
3000
Cash
3000
Rent revenue
Record rent revenue of 3,000.
500
Cash
June 19
500
Interest revenue
Record interest revenue of 500.
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e) The firm returned some damaged goods to
supplier (ABC) worth 2000 on 10 July.
Double Entry
2000 July 10
2000
Creditors-ABC
2000
Returns Outwards
Record returns outwards of 2,000.
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f) A customer, XYZ returned some damaged
goods to the firm worth 1500 on 8 August.
Double Entry
2000 Aug 8
1500
Returns Inwards
1500
Debtors-XYZ
Record returns inwards of 1,500.
14
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!
15
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?
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• The owner withdrew goods worth 2000 for
• his personal use on 10 April 2000.

2000 April 10
2000
Drawings
2000
Purchases
To record drawings of goods worth 2000.