11ACCOUNTINGTransactions

Double Entry Practice — 20 Worked Examples

Intensive practice module — 20 worked journal entries from Sunrise Retail's books covering all account types, plus 10 self-test exercises

Module 11 of 26 — Core Accounting. Intensive practice session — 20 worked journal entries and 10 self-test exercises drawn entirely from Sunrise Retail's April–May 2025 books. 75 min.

Prerequisites: Module 10 — Contra Entry

Learning Objectives

By the end of this module, you will be able to:

  • Record any business transaction as a correct journal entry
  • Handle compound entries (multiple Dr or Cr)
  • Record special situations: drawings, free samples, bad debts, discounts
  • Identify and correct common journal entry mistakes

How to Approach Any Journal Entry

Identify the accounts affected Name every account touched by the transaction (minimum 2). For Sunrise Retail: Cash in Hand, SBI Current Account, TechWorld Distributors, Samsung Mobile Phones, Sales — Electronics, etc.

Classify each account Determine the type: Real (assets/stock), Personal (persons/companies/banks), or Nominal (expenses/income). When in doubt — if it appears on the Balance Sheet it's Real or Personal; if it hits the P&L it's Nominal.

Apply the golden rules

  • Real account: Debit what comes in, Credit what goes out
  • Personal account: Debit the receiver, Credit the giver
  • Nominal account: Debit all expenses/losses, Credit all incomes/gains

Verify the arithmetic Total debits must equal total credits — always. If they don't match, an account is missing or an amount is wrong.

20 Worked Examples — April & May 2025

Example 1: Opening Capital Deposit (Apr 1)

Kiran Sharma starts Sunrise Retail with ₹17,00,000 — ₹8,00,000 in bank, ₹50,000 cash, rest in assets.

AccountDr (₹)Cr (₹)
Cash in Hand50,000
SBI Current Account8,00,000
Stock — Opening6,00,000
Furniture & Fixtures1,50,000
Computer & Equipment80,000
Security Deposit2,00,000
   To Capital — Kiran Sharma17,00,000
   To TechWorld Distributors1,80,000

Example 2: Credit Purchase with GST (Apr 5)

100 phones from TechWorld @ ₹12,000 on credit, IGST 18%.

AccountDr (₹)Cr (₹)
Purchases — Electronics12,00,000
IGST Input Credit2,16,000
   To TechWorld Distributors14,16,000

Example 3: Compound Payment — Rent with GST (Apr 8)

Rent ₹30,000 + CGST ₹2,700 + SGST ₹2,700, paid by cheque.

AccountDr (₹)Cr (₹)
Rent30,000
CGST Input Credit2,700
SGST Input Credit2,700
   To SBI Current Account35,400

Example 4: Credit Sale — Intrastate (Apr 10)

30 phones to Digital Hub @ ₹16,000, CGST+SGST 9% each.

AccountDr (₹)Cr (₹)
Digital Hub Retail5,66,400
   To Sales — Electronics4,80,000
   To CGST Output43,200
   To SGST Output43,200

Example 5: Credit Sale — Interstate (Apr 12)

20 phones to CloudStore @ ₹16,500, IGST 18%.

AccountDr (₹)Cr (₹)
CloudStore Online Pvt Ltd3,89,400
   To Sales — Electronics3,30,000
   To IGST Output59,400

Example 6: Cash Expense — Electricity (Apr 15)

Electricity ₹8,500 paid cash.

AccountDr (₹)Cr (₹)
Electricity8,500
   To Cash in Hand8,500

Example 7: Receipt from Debtor via NEFT (Apr 18)

₹5,66,400 from Digital Hub into SBI.

AccountDr (₹)Cr (₹)
SBI Current Account5,66,400
   To Digital Hub Retail5,66,400

Example 8: Part Payment to Creditor (Apr 20)

₹5,00,000 paid to TechWorld via NEFT.

AccountDr (₹)Cr (₹)
TechWorld Distributors5,00,000
   To SBI Current Account5,00,000

Example 9: Salary Payment (Apr 25)

Total gross salaries ₹1,50,000 paid via bank transfer.

AccountDr (₹)Cr (₹)
Salary1,50,000
   To SBI Current Account1,50,000

Example 10: Monthly Depreciation (Apr 30)

Furniture ₹1,250 + Computer ₹2,667 = ₹3,917.

AccountDr (₹)Cr (₹)
Depreciation3,917
   To Furniture & Fixtures1,250
   To Computer & Equipment2,667

Example 11: Goods Taken by Director (Drawings) (May 2)

Kiran Sharma takes 2 phones (cost ₹12,000 each) for personal use.

Goods taken for personal use = Drawings. Record at cost price. No GST on drawings (internal consumption).

AccountDr (₹)Cr (₹)
Drawings — Kiran Sharma24,000
   To Purchases — Electronics24,000

Example 12: Free Samples Distributed (May 5)

5 phone accessories (cost ₹800 each) distributed as free samples to potential clients.

Free samples = Advertisement expense. Record at cost.

AccountDr (₹)Cr (₹)
Advertisement Expense4,000
   To Purchases — Electronics4,000

Example 13: Discount Received from Supplier (May 8)

TechWorld gives 2% settlement discount on ₹1,80,000 outstanding (the old balance). Discount = ₹1,80,000 × 2% = ₹3,600.

Discount received = income (Indirect Income). We pay less, so it's a gain.

AccountDr (₹)Cr (₹)
TechWorld Distributors1,76,400
   To SBI Current Account1,76,400

Wait — should we record the discount separately?

AccountDr (₹)Cr (₹)
TechWorld Distributors1,80,000
   To SBI Current Account1,76,400
   To Discount Received3,600

TechWorld's account is fully cleared (₹1,80,000 Dr), we paid ₹1,76,400, and ₹3,600 is income.

Example 14: Bad Debt Written Off (May 10)

Sunrise Retail writes off ₹50,000 owed by a small retailer (Meena Electronics) who shut down.

AccountDr (₹)Cr (₹)
Bad Debts50,000
   To Meena Electronics50,000

Example 15: Bad Debt Recovered (May 25)

Surprise — Meena Electronics' liquidator sends ₹20,000 as partial settlement.

Recovery of a previously written-off debt = income.

AccountDr (₹)Cr (₹)
SBI Current Account20,000
   To Bad Debts Recovered20,000

Example 16: Cash Sale (May 3)

3 phones sold for cash to a walk-in customer @ ₹17,000 each. CGST+SGST 9% each. Sale: ₹51,000 | CGST: ₹4,590 | SGST: ₹4,590 | Total: ₹60,180.

AccountDr (₹)Cr (₹)
Cash in Hand60,180
   To Sales — Electronics51,000
   To CGST Output4,590
   To SGST Output4,590

Example 17: Cheque Bounced (May 12)

A ₹80,000 cheque from Digital Hub was dishonoured (bounced). Bank reverses the credit.

Bounced cheque: reverse the receipt entry.

AccountDr (₹)Cr (₹)
Digital Hub Retail80,000
   To SBI Current Account80,000

Also record bank charges if any: Dr Bank Charges, Cr SBI Current Account.

Example 18: Bank Interest Received (May 31)

SBI credits ₹1,200 as monthly interest on current account balance.

AccountDr (₹)Cr (₹)
SBI Current Account1,200
   To Interest Received1,200

Example 19: Stationery Purchase (Cash) (May 4)

Office stationery purchased for ₹1,800 cash. (No GST — amount below limit for invoicing.)

AccountDr (₹)Cr (₹)
Printing & Stationery1,800
   To Cash in Hand1,800

Example 20: Error Correction (May 15)

Electricity bill of ₹8,500 was wrongly debited to Telephone & Internet instead of Electricity account.

Correction: reverse the wrong entry, make the right one.

Reverse wrong entry:

AccountDr (₹)Cr (₹)
Electricity8,500
   To Telephone & Internet8,500

(This cancels the wrong debit to Telephone and correctly charges Electricity.)

10 Self-Test Exercises

Now it's your turn. Write the journal entries for each:

Q1. May 6: Purchased 30 tablets from Galaxy Electronics, Delhi at ₹22,000 each on credit. IGST 18%.

Q2. May 9: Tech Park Retail Store pays ₹1,00,000 advance received on April 28, now adjusted against an invoice for 6 phones at ₹16,500 each + CGST/SGST.

Q3. May 14: Suresh (employee) given ₹2,000 as travel advance from petty cash for a courier trip.

Q4. May 18: Insurance premium of ₹24,000 paid by cheque for one year (May 2025 to April 2026). Record both the initial payment and the prepaid adjustment for May 31.

Q5. May 20: Old computer (fully depreciated, book value ₹0) sold for scrap at ₹4,500 cash.

Q6. May 21: Received ₹3,89,400 from CloudStore via NEFT (April 12 invoice).

Q7. May 22: Paid ₹9,16,000 to TechWorld (₹14,16,000 outstanding − ₹5,00,000 already paid = ₹9,16,000 balance). Full settlement.

Q8. May 26: Discovered that ₹3,00,000 cash sale was recorded twice (error on May 3 cash sale). Reverse the duplicate entry.

Q9. May 28: Kiran Sharma withdraws ₹80,000 cash from bank for personal use.

Q10. May 31: Accrue outstanding salary ₹1,50,000 (to be paid June 1).

Click to reveal solutions to all 10

Q1 — Galaxy Electronics Purchase (Interstate, Credit): 30 tablets × ₹22,000 = ₹6,60,000 | IGST 18% = ₹1,18,800 | Total: ₹7,78,800

AccountDr (₹)Cr (₹)
Purchases — Electronics6,60,000
IGST Input Credit1,18,800
   To Galaxy Electronics7,78,800

Q2 — Advance Adjusted Against Invoice: Invoice: 6 × ₹16,500 = ₹99,000 | CGST: ₹8,910 | SGST: ₹8,910 | Total: ₹1,16,820 Advance held: ₹1,00,000 | Balance receivable: ₹16,820

First, raise the invoice:

AccountDr (₹)Cr (₹)
Tech Park Retail Store1,16,820
   To Sales — Electronics99,000
   To CGST Output8,910
   To SGST Output8,910

Then adjust advance against invoice:

AccountDr (₹)Cr (₹)
Advance from Tech Park1,00,000
   To Tech Park Retail Store1,00,000

Tech Park now owes ₹16,820 balance.

Q3 — Travel Advance to Employee:

AccountDr (₹)Cr (₹)
Advance to Staff — Suresh2,000
   To Cash in Hand2,000

Q4 — Insurance (Initial + Prepaid Adjustment): Initial payment (May 1):

AccountDr (₹)Cr (₹)
Insurance24,000
   To SBI Current Account24,000

May 31 adjustment — 11 months prepaid (June to April): Prepaid = ₹24,000 × 11/12 = ₹22,000

AccountDr (₹)Cr (₹)
Prepaid Insurance22,000
   To Insurance22,000

May insurance expense = ₹24,000 − ₹22,000 = ₹2,000 (1 month).

Q5 — Scrap Sale of Fully Depreciated Asset: Book value = ₹0, cash received = ₹4,500 → Profit on sale of asset

AccountDr (₹)Cr (₹)
Cash in Hand4,500
   To Profit on Sale of Asset4,500

(The computer's asset account is already at ₹0, so no credit needed there.)

Q6 — Receipt from CloudStore:

AccountDr (₹)Cr (₹)
SBI Current Account3,89,400
   To CloudStore Online Pvt Ltd3,89,400

Q7 — Full Settlement to TechWorld: Balance = ₹14,16,000 − ₹5,00,000 = ₹9,16,000

AccountDr (₹)Cr (₹)
TechWorld Distributors9,16,000
   To SBI Current Account9,16,000

Q8 — Reverse Duplicate Cash Sale: Duplicate entry to reverse: Dr Cash ₹3,00,000... no wait — the duplicate would have Dr Cash and Cr Sales. To reverse:

AccountDr (₹)Cr (₹)
Sales — Electronics2,54,237
CGST Output22,881
SGST Output22,881
   To Cash in Hand3,00,000

Note: Assuming the May 3 cash sale was 3 phones × ₹17,000 = ₹51,000 + taxes = ₹60,180 (see Example 16). The "₹3,00,000" in Q8 is a different hypothetical cash sale to test the reversal concept. Reverse whatever the original amounts were.

Q9 — Drawings — Cash Withdrawal for Personal Use:

AccountDr (₹)Cr (₹)
Drawings — Kiran Sharma80,000
   To SBI Current Account80,000

(Bank withdrawal for personal = Drawings from bank, not contra. If withdrawn to bank then to personal — first do contra to get cash, then drawings from cash.)

Q10 — Accrued Salary:

AccountDr (₹)Cr (₹)
Salary1,50,000
   To Outstanding Salary Payable1,50,000

(When paid June 1: Dr Outstanding Salary Payable ₹1,50,000, Cr SBI Current Account ₹1,50,000)

Key Terms

TermMeaning
DrawingsOwner/director taking goods or cash from business for personal use — reduces capital
Free SamplesGoods given free for promotion — expense at cost, credited to Purchases
Compound EntryJournal entry with more than one debit or more than one credit
Dishonoured ChequeBounced cheque — reverse the receipt, restore the debtor balance
Bad Debt RecoveredPreviously written-off debt partially collected — credit income
Scrap SaleSale of a fully depreciated asset — proceeds = profit (or loss) on disposal
Error CorrectionReverse the wrong entry, then post the correct entry

Module Summary

  • Every transaction affects at least two accounts; compound entries affect more
  • Special situations: Drawings (credit Purchases at cost), Free samples (debit Advertisement), Bad debt (debit Bad Debts, credit Debtor)
  • Dishonoured cheques reverse the original receipt entry
  • Error corrections require: (1) reverse the wrong entry, (2) record the correct entry
  • Always verify: Total Dr = Total Cr at the end of every entry

Quick Quiz

  1. Kiran Sharma takes 1 laptop (cost ₹35,000) for personal use. The entry is:
    • a) Dr Laptop Expense ₹35,000, Cr Cash ₹35,000
    • b) Dr Drawings ₹35,000, Cr Purchases ₹35,000
    • c) Dr Capital ₹35,000, Cr Inventory ₹35,000
    • d) Dr Salary ₹35,000, Cr Bank ₹35,000
Show answer

b) Dr Drawings ₹35,000, Cr Purchases ₹35,000 — goods taken for personal use are drawings at cost price; no cash changes hands.

  1. 10 accessories given as free samples (cost ₹500 each) are recorded as:
    • a) Dr Advertisement ₹5,000, Cr Purchases ₹5,000
    • b) Dr Drawings ₹5,000, Cr Purchases ₹5,000
    • c) Dr Sales Returns ₹5,000, Cr Sales ₹5,000
    • d) Not recorded — no money changed hands
Show answer

a) Dr Advertisement ₹5,000, Cr Purchases ₹5,000 — samples are a promotional expense recorded at cost, credited to Purchases.

  1. TechWorld gives 1% discount on full payment of ₹9,16,000. Discount = ₹9,160. Entry:
    • a) Dr TechWorld ₹9,16,000, Cr Bank ₹9,16,000
    • b) Dr TechWorld ₹9,16,000, Cr Bank ₹9,06,840, Cr Discount Received ₹9,160
    • c) Dr TechWorld ₹9,16,000, Cr Bank ₹9,25,160
    • d) Dr Discount Allowed ₹9,160, Cr TechWorld ₹9,160
Show answer

b) Dr TechWorld ₹9,16,000, Cr Bank ₹9,06,840, Cr Discount Received ₹9,160 — the creditor account is fully cleared; the saving is income to Sunrise Retail.

Next: Module 12 — Accounts with Inventory — Enable full inventory tracking in Tally: create stock groups, units of measure, and record the April 5 TechWorld purchase with complete item-level details.

Contra EntryAccounts with Inventory

On this page

Learning ObjectivesHow to Approach Any Journal Entry20 Worked Examples — April & May 2025Example 1: Opening Capital Deposit (Apr 1)Example 2: Credit Purchase with GST (Apr 5)Example 3: Compound Payment — Rent with GST (Apr 8)Example 4: Credit Sale — Intrastate (Apr 10)Example 5: Credit Sale — Interstate (Apr 12)Example 6: Cash Expense — Electricity (Apr 15)Example 7: Receipt from Debtor via NEFT (Apr 18)Example 8: Part Payment to Creditor (Apr 20)Example 9: Salary Payment (Apr 25)Example 10: Monthly Depreciation (Apr 30)Example 11: Goods Taken by Director (Drawings) (May 2)Example 12: Free Samples Distributed (May 5)Example 13: Discount Received from Supplier (May 8)Example 14: Bad Debt Written Off (May 10)Example 15: Bad Debt Recovered (May 25)Example 16: Cash Sale (May 3)Example 17: Cheque Bounced (May 12)Example 18: Bank Interest Received (May 31)Example 19: Stationery Purchase (Cash) (May 4)Example 20: Error Correction (May 15)10 Self-Test ExercisesKey TermsModule SummaryQuick Quiz