Accounting of Goods and Services Tax (GST)

Q1. Journalise the following transactions in the books of Gurman of Delhi:

Sold goods to Krishna of Delhi at the list price 20,000 less trade discount 10% add CGST and SGST @9% each., and allowed cash discount 5%. He paid the amount immediately.
Supplied goods costing 6,000 to Mohan of Kolkata issued invoice at 10% above cost less 5% trade discount plus IGST @ 18%
Goods valued at 2,500 distributed from stock as samples as part of an advertising campaign. These goods were purchased paying CGST and SGST @ 9% each.
Sold goods costing 1, 00,000 to Anil of Delhi at a profit of 20% on sales less 20% Trade Discount plus CGST and SGST @ 9% each.

Solution – Journal Entries

Working Note:-

Sold Goods to Krishna = 20,000

Less Trade Discount (10%) = 2,000

= 18,000

Less Cash Discount (5%) = 900

= 17,100

Add: CGST (9%) = 1,539

SGST (9%) = 1,539

= 20,178

II. Cost of Goods Sold = 6,000

Add: 10% (Issue Invoice) = 600

= 6,600

Less: Trade Discount (5%) = 330

= 6270

Add: IGST 18% = 1,129

= 7,399

III. Goods given as Sample = 2,500

+ CGST (9%) = 225

+ SGST (9%) = 225

= 2,950

IV. Cost of Goods sold = 1,00,000

Add: Profit on cost (20%) = 20,000

= 1, 20,000

Less: Trade Discount = 24,000

= 1,00,000

Add: CGST (9%) = 9,000

SGST (9%) = 9,000

= 1, 18,000

Q2. Journalise the following transactions in the books of Paresh Bros., Lucknow (UP):

Solution – Journal Entry

Q3. Journalise the following in the books of Amit Saini, Gurugram (Haryana):

Goods of 5,000 out of goods purchased within the state were taken by him for personal use.
2,000 due from Sohan were bad debts.
Goods of 6,000 were destroyed by fire and were not insured. These good were purchased from outside the state.
Paid 4,000 in cash as wages on installation of machine. (GST is not to be Charged)
Sold goods to Arjun of Delhi of list price 20,000. Trade discount @ 10% and cash discount of 5% was allowed. He paid the amount on the same day and availed the cash discount.
Received 2,000 from Ramesh, whose account was written off as bad debts.
Goods costing 1,000 given as charity. These goods were purchased from within the state.
Received 9,750 from Ramesh in full settlement of his account of 10,000.
Paid rent in advance 4,000.

CGST and SGST is to be levied on intra state sale @6% each and IGST @12% on interstate sale.

Solution – Journal Entries

Q4. Journalise the following transactions in the books of Mohan, Delhi:

Raj of Alwar, Rajasthan who owed Mohan 25,000 became insolvent and received 60 paise in a rupee as full and final settlement.
Mohan owes to his landlord 10,000 as rent. GST payable @ 6% each.
Charge depreciation of 10% on furniture costing 50,000.
Salaries due to employee 20,000
Sold to Sunil goods in cash of 10,000 less 10% trade discount plus CGST and SGST @ 6% each and received a net of 8,500 plus CGST and SGST.
Provided interest on capital of 1, 00,000 @ 10% per annum.
Goods lost in theft 5,000 which were purchased paying IGST @ 12% from Alwar, Rajasthan.

Solution – Journal Entries

Working Note –

Last Price = 10,000

Less: Trade Discount (10%) = 1,000

= 9,000

Q5. Pass Journal Entries in the books of Puneet, Delhi for the following:

Received an order from Karan & Co. for supply of goods of 50,000.
Received an order from AK & Co. for goods of 1, 00,000 along with a cheque for 25,000 an advance.
Paid to staff 40,000 against outstanding salaries of 60,000.
Sold goods to Bharat, Kaithal (Haryana) of 10,000 plus IGST @ 12% out of which 1/5^th were returned by Bharat being defective.
Cheque of 20,000 issued by Feroz was dishonoured.
Received 40 paise in a rupee from Feroz against the above dues.
Received a cheque of 25,000 from Mohan after banking hours.
Purchased goods from Barun of Chandigarh of 10,000 plus IGST @ 12% and sold them to Arun of Shimla (HP) at 22,400, including IGST @ 12%
Arun returned goods of 6,720, including IGST which were returned to Barun.
Puneet purchased 10TV sets @ 20,000 per set and paid IGST @ 12%. It sold all the sets @ 25,000 per set plus CGST and SGST @ 6% each
Paid insurance of 11,200 including CGST and SGST @ 6% each for a period of one year.
Sold personal car for 1, 00,000 and invested the amount in the firm.
Goods costing 1, 00,000 were destroyed in fire. Insurance company admitted the claim for 75,000. These goods were purchased within Delhi paying CGST and SGST @ 6% each.
Purchased machinery for 56,000 including IGST of 6,000 and paid cartage thereon 5,000 and installation charges 10,000.
Goods costing 40,000 sold to Kapil at a profit of 20% on sales less 10% Trade Discount plus CGST and SGST @ 6% each and received a cheque under 2% cash discount.
Purchased machinery from New Machinery House for 50,000 and paid it by bank draft from bank. Paid bank charges 500. Bank charged CGST and SGST @ 6% each on Bank charges.