Example of Double Entry
Let us work through a Practical Example of Double Entry system in
Bookkeeping.
Task – Complete the ledger accounts for the above transactions and balance
accounts and complete a Trial Balance. The following are the transactions of
Mrs Martin in January 2012
Jan 1 Introduced Capital into the bank account for the business €40,000
Debit Bank Account €40,000
Credit Capital Account €40,000
Jan 4 Purchased Equipment, paid by cheque €23,000
Debit – Equipment Account €23,000
Credit – Bank Account €23,000
Jan 8 Purchased goods on credit for Hennessy Ltd €8,000
Debit – Purchases Account €8,000
Credit – Hennessy Ltd €8,000
Jan 10 Sold goods on credit to R. Murphy €550
Debit – R. Murphy Account €550
Credit – Sales Account €550
Jan 12 Paid Advertising by cheque €330
Debit – Advertising Account €330
Credit – Bank Account €330
Jan 13 Cash Sales €580
Debit – Cash Account €580
Credit – Sales Account €580
Jan 14 R. Murphy paid the business €550 owed
Debit – Bank Account €550
Credit – R. Murphy €550
Jan 16 Purchased goods on credit Hennessy Ltd €4,000
Debit – Purchases Account €4,000
Credit – Hennessy Ltd Account €4,000
Jan 20 Paid Hennessy Ltd €10,000
Debit – Hennessy Ltd €10,000
Credit – Bank Account €10,000
Jan 22 Purchased goods on credit from Peter & Co. for €1,500
Debit – Purchases Account €1,500
Credit – Peter & Co. Account €1,500
Jan 23 Paid rent by cheque €600
Debit – Rent Account €600
Credit – Bank Account €600
Jan 24 Returned goods to Peter & Co. to the value of €50
Debit – Peter & Co. €50
Credit – Purchases Returns €50
Jan 25 Sold goods on credit to K Shields €200
Debit – K. Shields Account €200
Credit – Sales Account €200
Jan 26 The owner of the business withdrew €500 for the bank account for own
personal use
Debit – Drawings Account €500
Credit – Bank Account €500
Jan 27 K. Shields returned goods to the value of €35
Debit – Sales Returns Account €35
Credit – K. Shields €35
Jan 28 Purchased goods on credit from Denver Ltd €1,000
Debit – Purchases Account €1,000
Credit – Denver Ltd €1,000
Jan 29 Paid Denver Ltd €950 and received €50 discount which cleared the
account
Debit – Denver Ltd Account €950 + €50
Credit – Bank Account €950
Credit – Discount received Account €50
Jan 30 Sold goods on credit K. Shields for €80
Debit – K. Shields Account €80
Credit – Sales Account €80
Jan 31 K. Shields cleared her account and was allowed 5% discount
Debit – Bank Account €233
Debit – Discount Allowed Account €12
Credit – K. Shields Account €233 + €12
Worksheet
Under the double-entry system, the full value of each transaction is recorded on the debit side
(Dr. Side) of one account and also on the credit side (Cr. Side) of another account. Therefore,
the combined debit balance of all accounts always equals the combined credit balance of all
accounts
Following is a list of transactions, write in the name of account and whether it is DEBIT or
CREDIT side.
Transaction of Green Ltd
Introduced Share Capital
€100,00, money was lodged
Purchased goods for cash
€50,000
Cash Sales €4,500
Cash Purchases €6,500
Paid wages by cheque
€38,000
Purchased Delivery Account
by cheque €65,000
Paid light and heat by cheque
€350
Drawings by cheque €30,000
Debtor J Reilly returned
goods €5,400
Returned goods to creditor G
Holmes €3,200
Paid G Holmes by cheque
€540
Sold goods on credit to J
Reilly €700
Account
Account
Worksheet Questions
Question
Draw up the ledger accounts for the following transactions of P. Ruttle for the
month of April.
April 1
Ruttle introduced capital of €40,000 into the business bank account
Debit _________________________________________________
Credit ________________________________________________
April 2
Purchased goods on credit from Hunt Ltd for €3,000
Debit _________________________________________________
Credit ________________________________________________
April 4
Sold goods for €900 cash
Debit _________________________________________________
Credit ________________________________________________
April 8
Sold goods on credit to P Murphy €860
Debit _________________________________________________
Credit ________________________________________________
April 9
Purchased Machinery on credit from Dexter Ltd for €4,000
Debit _________________________________________________
Credit ________________________________________________
April 11
Sold goods for €350 cash
Debit _________________________________________________
Credit ________________________________________________
April 14
sold goods on credit to S. Smith for €960
Debit _________________________________________________
Credit ________________________________________________
April 17
Purchased goods on credit from Roche Ltd for €3,500
Debit _________________________________________________
Credit ________________________________________________
April 18
Paid rates €650 by cheque
Debit _________________________________________________
Credit ________________________________________________
April 20
Purchased printer for use in the business, paid €300 by cheque
Debit _________________________________________________
Credit ________________________________________________
April 22
Purchased goods for €400 cash
Debit _________________________________________________
Credit ________________________________________________
Question
Record the following transactions of P. Health in the appropriate ledger
accounts and extract a Trial Balance for the month of June 2012.
June 1 Introduced Capital €95,000
June 2 Purchased goods on credit from Smith & Co. for €8,000
June 3Cash sales €320
June 5 Sold goods on credit to P. Jones for €700
June 6 Cash Purchases €300
June 8 Purchased goods on credit for Smith & Co. for €1,600
June 9 Paid Smith & Co. €7,000 by cheque
June 11 Paid wages €960 by cheque
June 12 Paid wages by cash €80
June 15 Sold goods on credit to S. Roche for €1,600
June 17 S. Roche returned goods, €700
June 19 P. Jones paid €90 and was allowed €6 discount to clear his account
June 22 Paid light and heat by cheque €400
June 23 Purchased delivery van by cheque €8,000
June 25 S. Roche cleared his account and was allowed 5% discount
June 27 Paid wages by cheque €820
June 28 Cash sales €1,000
June 29 Drawings by cheque €450
June 30 Paid wages by cheque €820
Use the Worksheet to help allocating the correct account from each transaction.
Transaction
Debit Side
Credit Side