Prepare Arun’s Ledger Account based on the following transactions: * 1/4/2019: Arun owed Rs 42000. * 2/4/2019: Sold goods worth Rs 40000 to Arun @ 10% trade discount and 5% ca... Prepare Arun’s Ledger Account based on the following transactions: * 1/4/2019: Arun owed Rs 42000. * 2/4/2019: Sold goods worth Rs 40000 to Arun @ 10% trade discount and 5% cash discount. * 7/4/2019: Cash sales to Arun amounted to Rs 10000. * 12/4/2019: Arun returned goods worth Rs 4000. * 18/4/2019: Received a cheque of Rs 18000 from Arun after allowing a discount of Rs 2000. * 30/4/2019: Arun is declared insolvent and 80 paisa in a rupee is recovered from her estate.
Understand the Problem
The question requires preparing Arun's Ledger Account based on a series of transactions that took place in April 2019. This includes sales (both cash and credit), returns, discounts, cash received, and a final settlement due to Arun's insolvency. The ledger account will reflect the debits and credits to Arun's account to determine the final balance, taking into account the partial recovery from the insolvent estate.
Answer
Arun's ledger account reflects the transactions, including sales, returns, cash received, discounts, and the final deficiency due to insolvency, with a total balance of 86,200.
Here is Arun's ledger account:
| Date | Particulars | Amount (Dr.) | Amount (Cr.) |
|---|---|---|---|
| 2019 April 1 | To Balance b/d | 42,000 | |
| 2019 April 2 | To Sales A/c (36,000-1800) | 34,200 | |
| 2019 April 7 | To Cash A/c | 10,000 | |
| 2019 April 12 | By Sales Return A/c | 4,000 | |
| 2019 April 18 | By Bank A/c | 18,000 | |
| 2019 April 18 | By Discount A/c | 2,000 | |
| 2019 April 30 | By Deficiency A/c | 62,200 | |
| Total | 86,200 | 86,200 |
Calculations
- April 2 - Sold goods:
- Trade discount: 10% of 40,000 = 4,000
- Value after trade discount: 40,000 - 4,000 = 36,000
- Cash discount: 5% of 36,000 = 1,800
- Amount to be recorded: 36,000
- April 18 - Cheque received:
- Cheque received: 18,000
- Discount allowed: 2,000
- April 30 - Deficiency:
- Total due amount before deficiency: 42000 + 34200 + 10000 - 4000 - 18000 - 2000 = 62,200
- 80 paisa recovered means 20 paisa is not recovered (deficiency).
- Deficiency = 62,200
Answer for screen readers
Here is Arun's ledger account:
| Date | Particulars | Amount (Dr.) | Amount (Cr.) |
|---|---|---|---|
| 2019 April 1 | To Balance b/d | 42,000 | |
| 2019 April 2 | To Sales A/c (36,000-1800) | 34,200 | |
| 2019 April 7 | To Cash A/c | 10,000 | |
| 2019 April 12 | By Sales Return A/c | 4,000 | |
| 2019 April 18 | By Bank A/c | 18,000 | |
| 2019 April 18 | By Discount A/c | 2,000 | |
| 2019 April 30 | By Deficiency A/c | 62,200 | |
| Total | 86,200 | 86,200 |
Calculations
- April 2 - Sold goods:
- Trade discount: 10% of 40,000 = 4,000
- Value after trade discount: 40,000 - 4,000 = 36,000
- Cash discount: 5% of 36,000 = 1,800
- Amount to be recorded: 36,000
- April 18 - Cheque received:
- Cheque received: 18,000
- Discount allowed: 2,000
- April 30 - Deficiency:
- Total due amount before deficiency: 42000 + 34200 + 10000 - 4000 - 18000 - 2000 = 62,200
- 80 paisa recovered means 20 paisa is not recovered (deficiency).
- Deficiency = 62,200
More Information
A ledger account is a principal book or computer file for recording and totaling economic transactions, usually measured in a monetary unit of account, with a debit and credit for each transaction.
Tips
Ensure all calculations for discounts (trade and cash) are accurately applied before posting to the ledger. Remember to account for returns and deficiency amounts correctly.
Sources
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