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Accounting 12.pdf
1. CHAPTER 12
BOOKS OF PRIME ENTRY: THE GENERAL JOURNAL
Question 1
GENERAL JOURNAL
Date Details Dr Cr
$ $
July 3 Equipment 3 600
J Rajah Ltd 3 600
Purchase of new equipment on credit, invoice
number 7361
14 TM Williams 780
T Williams Ltd 780
Correction of misposted entry
19 J Rajah Ltd 520
Equipment 520
return of equipment damaged in transit
31 Income statement 156 000
Purchases 156 000
transfer of purchases to financial statements
31 Discounts received 943
Income statement 943
transfer of discounts received to financial statements
SALES LEDGER
Dr TM Williams account Cr
July 14 T Williams Ltd 780
Dr T Williams Ltd account Cr
TM Williams 780
GENERAL LEDGER
Dr J Rajah Ltd account Cr
July 19 Equipment 520 July 3 Equipment 3 600
Dr Equipment account Cr
July 3 J Rajah Ltd J8 3 600 July 19 J Rajah Ltd J8 520
Dr Discounts received account Cr
July 31 Income statement 943
Dr Purchases account Cr
July 31 Income statement 156 000
Income statement for the year ended 31 July 2014
$ $
Purchases 156 000
2. Income statement for the year ended 31 July 2014
$ $
Discounts received 943
Question 2
GENERAL JOURNAL
Date Details Dr Cr
$ $
May 1 Bank 5 000
Fixtures and fittings 23 000
Bank loan 8 000
Capital 20 000
entries to open books of account
12 Administration expenses 105
Purchases 105
correction of misposting of purchase of stationery
15 Fixtures 1 050
Falmouth Shelving Ltd 1 050
purchase of fixtures on credit, invoice number 3088
31 Sales (i.e. Revenue) 28 700
Income statement 28 700
transfer of sales to financial statements
31 Income statement 750
Rent 750
transfer of rent to financial statements
Dr CASH BOOK (Bank columns) Cr
Bank Bank
$ $
May 1 Balance 5 000
GENERAL LEDGER
Dr Falmouth Shelving Ltd account Cr
May 15 Fixtures 1 050
Dr Fixtures and fittings account Cr
May 1 Balance 23 000
15 Falmouth
Shelving Ltd 1 050
Dr Bank loan account Cr
May 1 Balance 8 000
3. Dr Capital account Cr
May 1 Balance 20 000
Dr Administration expenses account Cr
May 12 Purchases 105
Dr Purchases account Cr
May 1 Admin expenses 105
Dr Rent account Cr
May 31 Income statement 750
Dr Sales account Cr
May 31 Income statement 28 700
Income statement for the year ended 31 May 2014
$ $
Revenue 28 700
Income statement for the year ended 31 May 2014
$ $
Rent 750
Question 3
Feb 4 Received an invoice for goods for resale Purchases journal
7 Paid a trade payable by cheque Cash book
11 A voucher showed the payment of travel expenses in cash Petty cash book
15 Received a credit note from a trade payable for goods
damaged in transit
Purchases returns
journal
18 A cheque was drawn for the payment of wages Cash book
22 Received an invoice for a new vehicle for business use General journal
24 Issued a credit note to a trade receivable for goods
returned as unsuitable
Sales returns
journal
28 Corrected a mistake in the accounts where the wrong
amount had been debited and credited in the ledger
accounts
General journal
Question 4
Sept 3 Received an invoice for some new equipment for business
use
General journal
6 Cheque stub showed the payment of rent for the month Cash book
11 Entries were made to correct a mistake made by the
bookkeeper
General journal
14 Invoice was issued for the sale of goods on credit Sales journal
15 Credit note was issued for the return of goods by a
customer
Sales returns
journal
20 A voucher showed the purchase of postage stamps Petty cash book
23 Invoice was received for goods for resale Purchases journal
25 Some of the new equipment was found to be faulty and
was returned to the supplier
General journal
30 Expense accounts were closed and their balances
transferred to the profit and loss section of the income
statement for the year ended on this date
General journal
4. Question 5
GENERAL JOURNAL
Date Details Dr Cr
$ $
Jan 1 Bank 3 500
Vehicle 36 000
Equipment 19 000
Capital 58 500
entries to open books of account
15 Equipment 880
Bridge Products 880
purchase of equipment for business use on credit,
invoice number 478
19 Bridge Products 90
Equipment 90
return of equipment purchased on credit
Dr CASH BOOK Cr
Discounts Cash Bank Discounts Cash Bank
Allowed Received
$ $ $ $ $ $
Jan 1 Balance 3 500 Jan 10 Operating exp 280
7 Sales 1 240 11 Bank 800
11 Cash 800 24 MJT Ltd 93 4 557
29 Geeta Stores 24 911 31 Balances c/d 160 654
24 1 240 5 211 93 1 240 5 211
Feb 1 Balance b/d 160 654
Purchases Journal
Date Details
Invoice
No. $
Jan 4 MJT Ltd 302 4 800
Total purchases 4 800
Sales Journal
Date Details
Invoice
No. $
Jan 16 Geeta Stores 001 1 020
Total sales 1 020
Purchases Returns Journal
Date Details
Credit
Note
No. $
Jan 14 MJT Ltd 073 150
Total purchases returns 150
Sales Returns Journal
Date Details
Credit
Note
No. $
Jan 22 Geeta Stores 001 85
5. Total sales returns 85
PURCHASES LEDGER
Dr MJT Ltd account Cr
Jan 14 Purchases returns 150 Jan 4 Purchases 4 800
24 Bank 4 557
24 Disc received 93
SALES LEDGER
Dr Geeta Stores account Cr
Jan 16 Sales 1 020 Jan 22 Sales returns 85
29 Bank 911
29 Disc allowed 24
GENERAL LEDGER
Dr Bridge Products account Cr
Jan 19 Equipment 90 Jan 15 Equipment J1 880
Dr Vehicle account Cr
Jan 1 Balance 36 000
Dr Equipment Cr
Jan 1 Balance 19 000 Jan 19 Bridge Products 90
15 Bridge Products 880
Dr Capital account Cr
Jan 1 Balance 58 500
Dr Discounts allowed account Cr
Jan 31 Cash book 24
Dr Discounts received account Cr
Jan 31 Cash book 93
Dr Operating expenses account Cr
Jan 10 Cash 280
Dr Purchases account Cr
Jan 31 Purchases
journal 4 800
Dr Sales returns account Cr
Jan 31 Sales returns
journal 85
Dr Purchases returns account Cr
Jan 31 Purchases returns
journal 150
6. Dr Sales Cr
Jan 7 Cash 1 240
31 Sales journal 1 020
Trial Balance at 31 January 2014
Dr Cr
$ $
Cash 160
Bank 654
Bridge Products 790
Vehicle 36 000
Equipment 19 790
Capital 58 500
Discounts allowed 24
Discounts received 93
Operating expenses 280
Purchases 4 800
Sales returns 85
Purchases returns 150
Sales (i.e. Revenue) 2 260
61 793 61 793
Question 6
GENERAL JOURNAL
Date Details Dr Cr
$ $
20 Furniture and equipment 1 460
Deva Office Supplies 1 460
purchase of equipment for business use on credit,
invoice number 2789
Dr CASH BOOK Cr
Discounts Cash Bank Discounts Cash Bank
Allowed Received
$ $ $ $ $ $
Nov 1 Balance b/d 440 Nov 1 Balance b/d 1 480
7 Oldbridge 1 Operating exp 380
Retail Unit 140 2 660 13 Drawings 720
12 Sales 2 460 18 Bank 1 800
18 Cash 1 800 20 M Chin Ltd 160 3 040
29 Peterson Stores 110 3 430 30 Balances c/d 720 2 650
250 2 900 7 890 160 2 900 7 890
Dec 1 Balances b/d 720 2 650
PURCHASES JOURNAL
Date Details
Invoice
No. $
Nov 3 LDZ Ltd 891 3 000
Total purchases 3 000
7. SALES JOURNAL
Date Details
Invoice
No. $
Nov 17 Peterson Stores 407 1 960
Total sales 1 960
PURCHASES RETURNS JOURNAL
Date Details
Credit
Note
No. $
Nov 8 LDZ Ltd 223 220
Total purchases returns 220
SALES RETURNS JOURNAL
Date Details
Credit
Note
No. $
Nov 22 Peterson Stores 082 120
Total sales returns 120
PURCHASES LEDGER
Dr LDZ Ltd account Cr
Nov 8 Purchases returns 220 Nov 1 Balance b/d 4 500
3 Purchases 3 000
Dr M Chin Ltd account Cr
Nov 25 Bank 3 040 Nov 1 Balance b/d 3 200
25 Disc received 160
SALES LEDGER
Dr Oldbridge Retail Unit account Cr
Nov 1 Balance b/d 2 800 Nov 7 Bank 2 660
7 Disc allowed 140
Dr Peterson Stores account Cr
Nov 1 Balance b/d 1 700 Nov 22 Sales returns 120
17 Sales 1 960 29 Bank 3 430
29
Disc.
allowed 110
GENERAL LEDGER
Dr Deva Office Supplies account Cr
Nov 20 Furniture
and equipment 1 460
Dr Capital account Cr
Nov 1 Balance b/d 103 560
Dr Discounts allowed account Cr
8. Nov 1 Balance b/d 1 320
30 Cash book 250
Dr Discounts received account Cr
Nov 1 Balance b/d 1 890
30 Cash book 160
Dr Drawings account Cr
Nov 1 Balance b/d 37 320
13 Bank 720
Dr Furniture and equipment account Cr
Nov 1 Balance b/d 180 000
20 Deva Office
Supplies 1 460
Dr Operating expenses account Cr
Nov 1 Balance b/d 45 360
1 Cash 380
Dr Purchases account Cr
Nov 1 Balance b/d 578 270
30 Purchases
journal 3 000
Dr Sales returns account Cr
Nov 1 Balance b/d 4 890
30 Sales returns
journal 120
Dr Purchases returns account Cr
Nov 1 Balance b/d 5 130
30 Purchases returns
journal 220
Dr Sales account Cr
Nov 1 Balance b/d 732 340
12 Cash 2 460
30 Sales
journal 1 960
9. Trial Balance at 30 November 2014
Dr Cr
$ $
Cash 720
Bank 2 650
Capital 103 560
Discounts allowed 1 570
Discounts received 2 050
Drawings 38 040
Furniture and equipment 181 460
Operating expenses 45 740
Purchases 581 270
Sales returns 5 010
Purchases returns 5 350
Sales (i.e. Revenue) 736 760
Trade payable: LDZ Ltd 7 280
Deva Office Supplies 1 460
856 460 856 460
EXAM-STYLE QUESTIONS
Q Ans Q Ans Q Ans Q Ans Q Ans
7 C 8 B 9 C 10 A 11 A
12 B 13 B 14 B 15 B 16 B
17 C 18 C
Question 19
(a) (i) cheque counterfoil
(ii) till rolls
(iii) cash receipt
(iv) paying-in slip counterfoil
(v) bank statement
(b) The balance of the cash column shows that the business has cash in hand of
$165; the balance of the bank column shows that the business has an
overdraft of $140.
10. Question 20
(b) Sales journal
(c) Credit note
Question 21
Transaction Book of original
entry
Account to be
debited
Account to be
credited
1 A cheque counterfoil
showed the payment of
rent
Cash book Rent Bank
2 Bank statement showed
the deduction of bank
charges
Cash book Bank charges Bank
3 A paying-in slip counterfoil
showed a cheque from a
customer, AZX & Co., was
paid into the bank
Cash book Bank AZX & Co.
4 A credit note was received
from a supplier, BTX Ltd
Purchases
returns
BTX Ltd Purchases
returns
5 A petty cash voucher
showed a payment for
stationery
Petty cash book Stationery Petty cash
6 An invoice showed the
purchase of a new till for
shop use
General journal Equipment Supplier
Question 22
(a) Source documents are important because they provide information for
making entries in the accounting system. They are evidence for each
transaction.
No. K488
INVOICE
Quantity Description
Unit
price Total
$ $
6 Excel surfboards 320 (i) 1 920
(ii) 5 Supa surfboards 380 1 900
TOTAL (iii) 3 280
Less 20% (iv) trade discount (v) 656
NET AMOUNT DUE (vi) 2 614
Terms: payments within 30 days
Term: 5% (vii) cash discount for settlement within 20 days
11. (b)
Transaction Source document
(i) Some new office furniture was
purchased on credit
Invoice
(ii) Some goods were returned to a supplier Credit note (received)
(iii) Cash sales were paid into the bank Paying-in slip counterfoil
(iv) An employee was repaid the amount he
had spent on travel on behalf of the
business
Petty cash voucher
(v) Goods were sold on credit Sales invoice
Question 23
(a) Imprest
(b) $170
(c) Expenses of $140 will be charged to in the income statement.
(d) Balance of petty cash in hand $10 will be recorded as a current asset.
Question 24
(a) The general journal is used to make the first record of transactions which
are not recorded in the other books of prime entry (i.e. not recorded in
cash books or purchases, sales and returns journals).
(b)
GENERAL JOURNAL
Date Details Dr Cr
$ $
Tom Cheung 230
Office furniture 230
Sales of office equipment on credit
Delivery vehicle 15 400
Bestride Motors Ltd 15 400
Purchase of new vehicle on credit
Income statement 3 910
General expenses 3 910
Transfer of general expenses to financial statements
Question 25
(a) The cash in hand will be shown as a current asset; the bank overdraft will be
shown as a current liability.
(b) Discount columns are totalled in the cash book because the columns do not
form an account within the cash book, instead they show a note of any cash
discounts allowed and received (they are ‘memorandum columns’).
(c) Credit customers are allowed a cash discount to encourage them to pay
promptly. Prompt payment will improve Paloma’s cash flow.
(d) Discounts allowed will be debited to the discounts allowed account; discounts
received will be credited to the discounts received account. At the end of the
financial year the accounts will be closed and the balances transferred to the
income statement (discounts allowed as an expense; discounts received as
income).
