CA Foundation Accounts Journal Entries Practice with Solutions

Journal entries are the building blocks of double-entry bookkeeping. Every year in Paper 1, students lose simple marks due to silly errors in compound journal entries or special transactions. Let's practice 3 high-yield questions with detailed solutions.

Question 1: Goods distributed as free samples

Transaction: Goods costing ₹5,000 (sales value ₹6,500) were distributed as free samples to promote a new product.

Solution: Since goods are given away for promotion, this is an advertisement expense. Goods must be recorded at cost price, not selling price.

Advertisement A/c ............ Dr.   ₹5,000
   To Purchases A/c ..........................   ₹5,000
(Being goods distributed as free samples)
        

Question 2: Recovery of Bad Debts

Transaction: Received ₹3,500 from Amit, whose account was written off as bad debts in the previous year.

Solution: Amit's account was already closed. This is a gain under Nominal Accounts, debited to Cash and credited to Bad Debts Recovered.

Cash/Bank A/c ................ Dr.   ₹3,500
   To Bad Debts Recovered A/c ................   ₹3,500
(Being cash received on account of written off bad debts)
        

Question 3: Interest on Capital

Transaction: Provide interest on capital at 6% per annum on capital of ₹2,00,000.

Solution: Interest on capital is an expense for the business (debited) and a benefit to the owner's capital (credited).

Interest on Capital A/c ...... Dr.  ₹12,000
   To Capital A/c ............................  ₹12,000
(Being interest on capital provided at 6% p.a.)