2. Double Entry System 3 DRCR

3. 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.

4. Expenses and Revenues

5. Purchases: Purchase of goods for resale purpose. (Cost price)  expense for the firm Sales: Sale of goods to customers. (Selling price)  revenue for firm

6. Expenses: Money that the firm spent in the process of operating the business to earn revenue. RentInsuranceWagesAdvertisingTransport Examples: Revenues: Items that generate profits and income for the firm. Rent RevenueInterest RevenueCommission Examples:

7. EXPENSES DEBIT CREDIT REVENUES DEBIT

8. SO HOW DO YOU RECORD EXPENSES AND REVENUES?

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

10. DebitCreditDateParticulars $$ Double Entry b) John sold goods at $9000 on credit to PCK Ltd on 8 July 2000. to PCK Ltd on 8 July 2000. 2000 July 8 Debtors-PCK Sales 9000 Sales worth $9000 to PCK Ltd.

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

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

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

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

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. What do you call this? Click me!

16. 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?

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