DR CR

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.

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.
Examples:
Rent Insurance Wages Advertising Transport
Revenues: Items that generate profits and income for the firm.
Examples:
Rent Revenue Interest Revenue Commission

EXPENSES
DEBIT
CREDIT
REVENUES
DEBIT CREDIT

a) John purchased goods at $6000 on credit from ABC Ltd on 26 November 2000.
Date
2000
Double Entry
Particulars Debit
$
6000
Credit
$
Nov 26 Purchases
Creditors-ABC
6000
Purchases worth $6000 from ABC Ltd.

b) John sold goods at $9000 on credit to PCK Ltd on 8 July 2000.
Date
2000
July 8
Double Entry
Particulars Debit
$
9000
Debtors-PCK
Sales
Credit
$
9000
Sales worth $9000 to PCK Ltd.

c) The firm incurred the following expenses:
19 March - Rent $2000
8 May - Wages $10,000
Double Entry
Date
2000
Particulars
Mar 19 Rent expense
May 8
Cash
Record rent expense of $2,000.
Wage expense
Cash
Record wages of $10,000.
Debit
$
2000
10,000
Credit
$
2000
10,000

d) The firm received the following revenues:
27 March - Rent $3000
19 June - Interest $500
Double Entry
Date
2000
Mar 27 Cash
Particulars
June 19
Rent revenue
Record rent revenue of $3,000.
Cash
Interest revenue
Record interest revenue of $500.
Debit
$
3000
500
Credit
$
3000
500

e) The firm returned some damaged goods to supplier (ABC) worth $2000 on 10 July.
Double Entry
Particulars Date
2000
July 10
Creditors-ABC
Returns Outwards
Record returns outwards of $2,000.
Debit
$
2000
Credit
$
2000

f) A customer, XYZ returned some damaged goods to the firm worth $1500 on 8 August.
Double Entry
Particulars Date
2000
Aug 8
Returns Inwards
Debtors-XYZ
Record returns inwards of $1,500.
Debit
$
1500
Credit
$
1500

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?
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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?

g) The owner withdrew goods worth $2000 for his personal use on 10 April 2000.
Date
2000
General Journal
Particulars Debit
$
2000
Credit
$
April 10 Drawings
Purchases
2000
To record drawings of goods worth
$2000.