Double Entry System

The Double Entry System for Assets, Liabilities and Capital
The double entry system
Each transaction is entered twice. In an accounting transaction, something

always ‘gives’ and something ‘receives’ and both aspects of the transaction
must be recorded. In other words, there is a double entry in the accounting
books – each transaction is entered twice.
The accounts for double entry
Each account should be shown on a separate page in the accounting books.

The left-hand side of each page is called the debit side, while the right-hand
side is called the credit side. The title of each account is written across the top
of the account at the center.
Dr ---------Account Cr
Date Details Amount Date Details Amount
1
Worked examples
1. The owner starts the business with £10,000 in cash on 1 August 20X8.
2
2. A van is bought for £ 4,500 cash on 2 August 20X8.
3. Fixtures (e.g., shelves) are bought on credit from Shop Fitters for £1,250
on 3 August 20X8.
4. Paid the amount owing to Shop Fitters in cash on 17 August 20X8.
3
A further worked example
4
Exercise
1. Complete the following table:

Account to Account to
be debited be credited
(a) Bought office machinery on credit from XYZ Ltd.

(b) The proprietor paid a creditor, C Jones, from his
private funds.
(c) A debtor, G Fox, paid us in cash.
(d) Repaid part of loan from P Exeter by cheque.
(e) Returned some of office machinery to D Isaacs Ltd.
(f) Bought van by cheque.
(g) Bought lorry for cash.
(h) Paid creditor, T Lake, by cheque.
(i) Repaid P Logan’s loan by cash.
(j) Sold lorry for cash.
(k) Bought office machinery on credit from Ultra Ltd.
(l) Proprietor puts a further amount into the business by cheque.
(m) A loan of £200 in cash is received from L Lowe.
2. Write up the asset and liability and capital accounts to record the following
transactions in the records of F Murray.
2017
July 1 Started business with £15,000 in the bank.
2 Bought office furniture by cheque £1,200.
3 Bought machinery £1,400 on credit from Trees Ltd.
5 Bought a van paying by cheque £6,010.
8 Sold some of the office furniture – not suitable for the business for
£150 on credit to D Twing & Sons.
15 Paid the amount owing to Trees Ltd £1,400 by cheque.
23 Received the amount due from D Twing & Sons £150 in cash.
31 Bought more machinery by cheque £650.
1
3. You are required to open the asset and liability and capital accounts and record the
following transactions for June 2018 in the records of P Bernard.
2018
June 1 Started business with £12,000 in cash.
2 Paid £11,700 of the opening cash into a bank account for the business.
5 Bought office furniture on credit from Dream Ltd for £1,900.
8 Bought a van paying by cheque £5,250.
12 Bought equipment from Pearce & Sons on credit £2,300.
18 Returned faulty office furniture costing £120 to Dream Ltd.
25 Sold some of the equipment for £200 cash.
26 Paid amount owing to Dream Ltd £1,780 by cheque.
28 Took £130 out of the bank and added to cash.
30 F Brown lent us £4,000 – giving us the money by cheque.
(Trial- 18,300)
4. Write up the asset, capital and liability accounts in the books of D Gough to record
the following transactions:
2019
June 1 Started business with £16,000 in the bank.
2 Bought van paying by cheque £6,400.
5 Bought office fixtures £900 on credit from Old Ltd.
8 Bought van on credit from Carton Cars Ltd £7,100.
12 Took £180 out of the bank and put it into the cash till.
15 Bought office fixtures paying by cash £120.
19 Paid Carton Cars Ltd a cheque for £7,100.
22 A loan of £500 cash is received from B Berry.
24 Paid £400 of the cash in hand into the bank account.
30 Bought more office fixtures paying by cheque £480.
(Trial-17,400)
2
5. Write up the accounts to record the following transactions:
2020
March 1 Started business with £750 cash and £9,000 in the bank
2 Received a loan of £2,000 from B Blane by cheque.
3 Bought a computer for cash £600.
5 Bought display equipment on credit from Clearcount Ltd £420.
8 Took £200 out of the bank and put it in the cash till.
15 Repaid part of Blane’s loan by cheque £500.
17 Paid amount owing to Clearcount Ltd £420 by cheque.
24 Repaid part of Blane’s loan by cash £250.
31 Bought a printer on credit from F Jones for £200.
(Trial-11,200)

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The Double Entry System for Assets, Liabilities and Capital

The double entry system

Each transaction is entered twice. In an accounting transaction, something

The accounts for double entry

Each account should be shown on a separate page in the accounting books.

4. Paid the amount owing to Shop Fitters in cash on 17 August 20X8.

1. Complete the following table:

(a) Bought office machinery on credit from XYZ Ltd.

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