A business begins with £5,000 capital which is paid into the bank.
£1,000 is then spent on goods for resale,paying by cheque.
Half of these are then sold for £2,000 cash.
£3,000 is spent on a van,paying by cheque.
The double entry transaction for the sale of the goods is:

Question

Quizplus · Accepted Answer

Remember "PEARLS".P = Purchases, E = Expenses, A = Assets. These are all debit entries. R = Revenue, L = Liabilities, S = Sales. These are all credit entries. Also remember that the movement in the bank (or cash) account - in is a debit and out is a credit. We sell goods for £2,000. The cost is irrelevant for the transaction, and there is no "GOODS" account - we use SALES (or PURCHASES). We receive £2,000 of cash and so debit CASH. We SELL £2,000 so credit SALES. The total debit MUST be the same as the total credit!

A Business Begins with £5,000 Capital Which Is Paid into the Bank