Exercise:..1.

You Start a Business on 1st January with Rs 500,000/You buy a Machine with Rs2,80,000/You buy Raw Materials worth Rs 2,30,000/You convert 1,70,000/- worth materials to Finished Goods
You sell Finished Products for Rs2,00,000/- Cash/Cheques Collected 1,50,000/You incurred 90,000/- on Production Costs. Actual paid is 88,500/- the Balance is
outstanding
Can you Record the Transactions in the system and run a trial balance.

The Recordings:
1. The entrepreneur brings Capital
Dr Cash & Bank Balances
5,00,000
Cr Share Capital A/c
5,00,000
2. Fixed Assets are purchased
Dr Fixed Assets (PPE) A/c
Cr Cash & Bank Balances

2,80,000
2,80,000

3. Raw materials Purchased:

Cr Raw Materials Purchase A/c
Cr Cash & Bank Balances

2,30,000
2,30,000

4. Materials Consumed:
Dr Materials Consumption A/c
Cr Raw materials Purchase A/c

1,70,000
1,70,000

5. On Sales:
Dr Cash & Bank balances
Dr Receivables A/c
Cr Sales A/c

1,50,000
50,000
2,00,000

6. On Expenses being Incurred:

Dr Production Expenses
Cr Cash & Bank balances
Cr Payables A/c

90,000
88,500
1,500

To Draw up the Trial Balance.

Debits:

Credits:
Share Capital 5,00,000
Sales
Payables

2,00,000
1,500

Total Credits 7,01,500

Fixed Assets:
Current Assets:
Inventories (Raw materials)
Receivables
Cash Balances
Inventories Consumed
Expenses

2,80,000
60,000
50,000
51,500
1,70,000
90,000

TOTAL Debits

7,01,500