Lcci Level I Solution Book

Level 1 Book-keeping
Solutions Booklet
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Level 1 Book-keeping
Solutions Booklet
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TABLE OF CONTENTS
1. 2. 3. 4.
The Accounting Equation and the Balance Sheet Double entry system for assets, liabilities and capital Recording double entry for stock The double entry system for Expenses and Revenues and the Effect of Profit (or loss) and drawings upon capital
1 4 7 11
5. 6. 7. 8. 9.
Balancing accounts and the Trial Balance Trading and Profit & Loss Accounts: An introduction The Balance Sheet Final Accounts with further considerations The Division of the Ledger and Books of Original Entry
16 25 28 31 38 39 41 44 48 53 56 59 62 68 71 75 77 81 82
10. Bank Facilities 11. Cash Books 12. The Sales and Purchases Day Books 13. The Returns Day Books 14. The Journal 15. The Petty Cash Imprest System 16. Adjusting for accruals and prepayments 17. Depreciation of Fixed Assets 18. Bad Debts 19. Bank Reconciliation Statements 20. Capital and Revenue Expenditure 21. Errors in the accounts and their corrections 22. Control Accounts 23. Final Accounts and year end adjustments
Chapter 1 The Accounting Equation and the Balance Sheet

Answers to Think about it Questions
Page 5 Why are liabilities shown on the right hand side of the balance sheet and not on the left? Because based on the accounting equation it has to be on the same side as capital.
Answers to Activities
Activity 1.1 (a) (b) (c) (d) L A A
A (e) L (f) A (g) C

Activity 1.2 ASSETS 5 000 4 200 4 100 3 500 6 900 CAPITAL 3 000 2 500 2 800 2 400 4 100 LIABILITIES 2 000 1 700 1 300 1 100 2 800
(a) (b) (c) (d) (e)
Solutions to Target Practice Questions Question 1

(a) (b) (c) (d) (e) (f) assets less liabilities equals capital. assets liabilities debtor creditor Balance Sheet
Question 2
ASSETS 3 100 800 2 200 LIABILITIES
Shop fittings Cash register Stock of goods Creditors Loan T Armani Bank
1 000 1 800 870 6 970 2 800
Capital = Assets Liabilities Capital = 6970 2800 = 4170
Question 3
M Williams Balance Sheet at 30 June 20X6
Cash at Bank Stock of goods Fixtures and Fitting Debtors Motor vehicles 2 614 5 860 1 900 3 750 4 200 18 324 Creditors Loan D Wong Capital (missing item)
4 150 3 600 10 574 _____ 18 324
Question 4
Transactions (a) The owner borrows 5000 from L Pole and the money is put into the business bank account. A debtor pays the business 250 by cheque. The owner buys a motor vehicle on credit 6200. The owner withdraws 160 from the businesss bank account for his personal use. The business sells goods on credit for 840. The owner puts a further 3000 in cash into the business. The money is put into the businesss bank account. The business pays a creditor 290 by cheque. Assets + Bank Effect upon Liabilities + Loan Capital
(b) (c) (d)
+ Bank - Debtors + Motor Vehicle - Bank + Creditors - Capital
(e) (f)
- Stock + Debtors + Bank + Capital
(g)
- Bank
- Creditors
Question 5
W Mandrake Balance Sheet at 30 June 20X5 5 360 4 500 1 845 2 800 5 100 19 605 2 900 3 000 13 705 _____ 19 605
Stock of goods Debtors Cash at Bank Fixtures and fittings Motor vehicles
Creditors Loan L Walter Capital (balancing figure)
W Mandrake Balance Sheet at 31 July 20X5 Stock of goods Creditors (5360 + 700 600) 5 460 (2900 + 700 400) Debtors Loan L Walter (4500 1100 + 600) 4 000 Capital Cash at Bank (balancing figure) (1845 400 + 1100) 2 545 Fixtures and Fittings 2 800 Motor Vehicles 5 100 19 905
3 200 3 000 13 705
19 905
Question 6
D Duncan Balance Sheet at 21 January 20X7 20 000 2 100 500 100 700 123 300 ______ 123 300 120 000 3 300
Motor Vehicles Stock of goods (1500 + 600) Debtor A Gianna Cash at Bank (101 000 300)
Capital Creditor Stax Suppliers (3000 + 600 300)
Question 7
The difference between a cash transaction and a credit transaction is based on when payment is made. With a cash transaction, payment is made immediately for goods and/or services purchased while in a credit transaction payment is made
Chapter 2 Double Entry System for Assets, Liabilities and Capital

Page 16 Why is it necessary to keep separate accounts for each debtor and creditor? So it can clearly be seen how much is owed to individual creditors and how much is owed by individual debtors.
Activity 2.1 (a) Bought office furniture for cash (b) Sold some office furniture on credit to C Bing (c) Bought motor vehicles on credit from Wong Ltd (d) A debtor, P Butler, pays the business by cheque (e) The owner puts a further amount into the business by cheque (f) Returned one of the motor vehicles to Wong Ltd (g) Paid a creditor, T Bird, by cash (h) Paid by cheque for the motor vehicle bought from Wong Ltd Debit Office Furniture C Bing Motor Vehicles Bank Bank Wong Ltd T Bird Wong Ltd Credit Cash Office Furniture Wong Ltd P Butler Capital Motor Vehicles Cash Bank

The left hand side of a T account is the debit side and the right hand side is the credit side. To debit an account the transaction is entered on the left hand side and to credit an account, the transaction is entered on the right hand side.
Question 2
There must be a debit entry and a corresponding credit entry of the same value (and vice versa) for every transaction that occurs.
Question 3
To know when to debit or credit an account, you will first need to determine the type of the account and decide how the transaction will affect the account ;( whether increase or decrease) and then apply the double entry rules as below: To increase an asset, DEBIT the account To decrease an asset, CREDIT the account To increase a liability or capital, CREDIT the account To decrease a liability or capital, DEBIT the account
Question 4
Bank 20X2 6 000 July 15 July 29
20X2 July 01
Capital
Office Machinery Elstead Garage
420 2 900
Capital 20X2 July 01
Bank
6 000
20X2 July 06
Motor Vehicle Elstead Garage 2 800
20X2 July 29
Bank
Elstead Garage 20X2 2 800 July 06
Motor vehicle
2 800
20X2 July 15
Bank
Office Machinery 420
20X2 July 23
Office Equipment Longmore & Sons 70
Longmore & Sons 20X2 July 23
Office equipment
370
Question 5
Cash 20X9 2 000 April 08 300 April 30
20X9 April 01 April 29
Capital Bank
Bank Furniture World
1 000 800
Bank
20X9 April 01 April 03 April 08 Capital Loan S Lee Cash 8 000 3 000 1 000 20X9 April 14 April 23 April 29 Delivery Van Loan S Lee Cash 1 500 1 200 300
Capital 20X9 April 01 April 01
Cash Bank
2 000 8 000
20X9 April 23
Loan S. Lee 20X9 1 200 April 03
Bank
3 000
20X9 April 14
Bank
Delivery Van 1 500
20X9 April 20
Furniture World
Office Furniture 20X9 1 100 April 26
Furniture World
200
Office Furniture Cash
Furniture World 20X9 200 April 20 800
Office Furniture
1 100
Chapter 3 Recording Double Entry for Stock

Activity 3.1 Debit Office Furniture Cash Purchases A Litton D Penarth Motor Van Returns Inwards Purchases Credit Cash Sales A Litton Returns Outwards Sales Grange Garage D Penarth Bank
(a) Bought office furniture for use in the business by cash (b) Sold goods for cash (c) (d) (e) (f) Bought goods on credit from A Litton Returned to A Litton some of the goods bought Sold goods on credit to D Penarth Purchased motor van on credit from Grange Garage
(g) D Penarth returned some goods to us (h) Bought goods paying immediately by cheque

Purchases means goods bought by the business with the intention of reselling them for profit as a part of its trading activities. Sales means goods sold by the business that were originally bought for resale purposes. In other words, the sale of those goods in which the business trades or deals.
Question 2
(a) This is not good practice. Parts returned to suppliers should be credited to a Returns Outwards Account and parts returned from customers should be debited to Returns Inwards Account. This is necessary to provide information on the totals of the returns and to assess whether these are increasing or decreasing over time. (b) Goods sold for cash is recorded by debiting the cash account and crediting the sales account. Goods sold on credit is first recorded by debiting the debtor account and crediting the sales account; when the debtor pays for the goods his account is credited and the bank/cash is debited.
Question 3
(a) (b) (c) (d) (e) (f) Sold goods on credit to F. Winter N. Armour returns goods to you You settle a creditors account by cheque F. Winter pays his account You pay Grange Garages by cheque the amount due on the delivery vehicle previously purchased You return goods to B. Smart Debit F Winter Returns Inwards Creditor Bank Grange Garages B Smart Credit Sales N Armour Bank F Winter Bank Returns Outwards
Question 4
20X7 March 01 Capital March 30 B Wright Bank 20X7 10 000 March 03 Office Furniture 70 March 23 Scales Motors March 26 T Hunt 460 3 600 320
Capital 20X7 March 01
Bank
10 000
20X7 March 03
Bank
Office Furniture 460
20X7 March 05
Purchases
Purchases 375
T Hunt 20X7 20X7 March 08 Returns Outwards 55 March 05 March 26 Bank 320
Purchases
375
Returns Outwards 20X7 March 08
T Hunt
55
20X7 March 12
Sales
B Wright 20X7 156 March 19 March 30
Returns Inwards Bank
26 70
Sales 20X7 March 12 B Wright
56
20X7 March 15
Scales Motors
Motor Vehicle 3 600
20X7 March 23 Bank
Scales Motors 20X7 3 600 March 15
Motor Vehicle
3 600
20X7 March 19 B Wright
Returns Inwards 26
Question 5
20X7 October 01 Capital October 17 Cash Cash 20X7 8 600 October 02 80 October 07 8 000 179
Bank Purchases
Capital 20X7 October 01
Cash
8 600
20X7 October 02 Cash October 23 Loan R Nandha October 31 J Durrant
Bank 20X7 8 000 October 21 October 29 1 200 303
Motor Vehicle M Price
1 990 100
20X7 October 03 October 07
M Price Cash
Purchases 250 179
20X7 October 13 Returns Outwards October 29 Bank
M Price 20X7 October 03 32 100
Purchases
250
Fixtures & Fittings
20X7 October 05
Display Ltd
2 750
20X7 October 07
Display Ltd
730
Display Ltd 20X7 20X7 October 09 Fixtures & Fittings 30 October 05 Fixtures & Fittings 2 750
20X7 October 11
Sales
J Durrant 20X7 345 October 26 Returns Inwards October 31 J Durrant
42 303
Sales 20X7 October 11 J Durrant October 17 Cash
345 80
Returns Outwards 20X7 October 13 M Price
32
20X7 October 21
Bank
Motor Vehicle 1 990
Loan R Nandha 20X7 October 23
Bank
1 200
20X7 October 26
J Durrant
Returns Inwards 42
10
Chapter 4 The Double Entry System for Expenses and Revenues and the Effect of Profit (or Loss) and Drawings upon Capital
Page 36 What kinds of expense and revenue accounts would you expect to see in the books of a Bank?
Revenue Accounts
Loan interest receivable Commission receivable Service charges (eg. bank charges)
Expense Accounts
Interest payable Salaries and wages Insurance Stationery Utilities
Activity 4.1 Transactions Paid general expenses in cash 150 Received commission by cheque 230 Paid for office stationery by cash 75 Paid telephone by cheque 230 Received interest of 350 by cheque Accounts General Expense Cash Bank Commission Receivable Office Stationery Cash Telephone Bank Bank Interest Receivable Type of account Expense Asset Asset Revenue Expense Asset Expense Asset Asset Revenue Transaction effect Increase Decrease Increase Increase Increase Decrease Increase Decrease Increase Increase Action in the account Debit Credit Debit Credit Debit Credit Debit Credit Debit Credit

(a) Revenue (b) The entries are on the credit side of the account.
11
Question 2
Expense accounts should be debited and revenue accounts should be credited.
Question 3
20X3 April 01 April 24 April 30 Bank 20X3 5 000 April 03 85 April 05 1 000 April 14 April 21 April 27 370 260 130 20 385
Capital Sales Capital
Office Equipment Rent Cash Stationery A Smart
Capital 20X3 April 01 April 30
Bank Bank
5 000 1 000
20X3 April 03
Bank
Office Equipment 370
20X3 April 05
Rent
Rent 260
20X3 April 08
A Smart
Purchases 420
Returns Outwards Bank
A Smart 20X3 35 April 08 385
Purchases
420
Returns Outwards 20X3 April 11
A Smart
35
12
20X3 April 14
Bank
130
Cash 20X3 April 15
Wages
115
20X3 April 15
Cash
Wages 115
20X3 April 18
Sales
R Squires 175
Sales 20X3 April 18 April 24
R Squires Bank
175 85
20X3 April 21
Bank
Stationery 20
Question 4
Bank 20X4 7 000 May 02 100 May 08 May 19 May 24 May 26 May 31 Capital 20X4 May 01
20X4 May 01 May 28
Capital D Langford
Rent Fixtures & Fittings Drawings Cash R Lester Office Equipment
280 170 160 240 470 215
Bank
7 000
20X4 May 02
Bank
Rent 280
13
20X4 May 05
R Lester
Purchases 520
20X4 May 12 May 26
Returns Outwards Bank
R Lester 20X4 45 May 05 475
Purchases
520
20X4 May 08
Bank
Fixtures & Fittings 170
Returns Outwards 20X4 May 12 R Lester
45
Sales 20X4 May 15
D Langford
32
20X4 May 15
Sales
D Langford 20X4 May 22 32 May 28
Returns Inwards Bank
24 100
20X4 May 19
Bank
Drawings 160
20X4 May 22
D Langford
Returns Inwards 30
20X4 May 24
Bank
Cash 20X4 240 May 30
Wages
80
14
20X4 May 30
Cash
Wages 80
20X4 May 31
Bank
Office Equipment 215
Question 5
Drawings are defined as money, goods, or services withdrawn from the business by the owner(s) for their personal use. Drawings reduce the capital of the business.
Question 6
(a) Answer = 2500 Workings: 1 February 20X7 Assets Equipment Stock Bank Liabilities Creditors Loan Capital 8 000 6 000 2 000 2 000 1 000
16 000
3 000
16 000 - 3000 = 13 000
28 February 20X7 Assets Equipment Stock Bank Liabilities Creditors Loan Capital
8 000 2 000 8 500 2 000 1 000
18 500
3 000
18 500 - 3000 = 15 500
Therefore, Opening Capital + Profit = Closing Capital 13 000 + ? = 15 500 15 500 - 13 000 = 2500 (b) Profits increase capital whereas losses reduce it.
15
Chapter 5 Balancing Accounts and the Trial Balance

Page 49 How the double entry principle relates to the balancing of accounts. For every balance c/d there is a corresponding balance b/d of the same amount on the opposite side of the account.
Activity 5.1 (a) An account will have a debit balance if the total of the debit entries is greater than the total of the credit entries. This means that the balance brought down from the last month (balance b/d) is on the debit side of the account. (b) An account will have a credit balance if the total of the credit entries is greater than the total of the debit entries. This means that the balance brought down from the last month (balance b/d) is on the credit side of the account. (c) The balance c/d is the amount transferred (carried down or carried forward) from one accounting period to the next; this is the balance at the last date of the accounting period (e.g. a month). The balance b/d is the amount transferred (brought down or brought forward) from a previous accounting period to the current one; this is the balance at the first date of the accounting period. (d) The double lines are necessary to show that the account has been balanced and that the totals are final figures. (e) Accounts are closed off when there is no balance on the account at the end of the accounting period. Activity 5.2
20X9 July 01 July 04 July 09 July 13 July 15 July 19 July 22 July 24 July 29 Capital Equipment Wages Sales Computers Wages Sales Motor vehicles Wages
Debit 55 000
Credit 5 000 900
Balance 55 000 50 000 49 100 58 650 50 650 49 750 53 630 47 630 46 530
9 550 8 000 900 3 880 6 000 1 100
16

E. Appleby 20X6 650 October 07 Returns Inwards 276 October 18 Bank 190 October 31 Balance c/d 1 116 506
20X6 October 03 Sales October 12 Sales October 24 Sales November 01 Balance b/d
120 490 506 1 116
Answer There is a debit balance of 506.
Question 2
N Small 145 215 185 ___ 545 365
20X3 March 04 March 18 March 23
Sales Sales Sales
20X3 March 13 March 26 March 30 March 31
Returns Inwards Returns Inwards Bank Balance c/d
20 35 125 365 545
April 01
Balance b/d
20X3 March 21 March 31
Bank Bank
A Smith 20X3 70 March 10 290 360
Purchases
360 ___ 360
20X3 March 07 March 28 March 31
T Dove 20X3 Returns Outwards 35 March 02 Bank 235 March 15 Balance c/d 310 580 April 01
Purchases Purchases
Balance b/d
270 310 ___ 580 310
N Small is a debtor and T Dove is a creditor. A Smith is neither.
17
Question 3
T Dove 20X3 March 02 March 07 March 15 March 28 Purchases Returns Outwards Purchases Bank Debit 35 310 235 Credit 270 Balance 270 Cr 235 Cr 545 Cr 310 Cr
N Small 20X3 March 04 March 13 March 18 March 23 March 26 March 30 Sales Returns Inwards Sales Sales Returns Inwards Bank Debit 145 215 185 35 125 Credit 20 Balance 145 Dr 125 Dr 340 Dr 525 Dr 490 Dr 365 Dr
A Smith 20X3 March 10 March 21 March 31 Purchases Bank Bank Debit 70 290 Credit 360 Balance 360 Cr 290 Cr NIL
Question 4
(a) 20X5 January 01 January 23 January 26 January 31 Capital Cash S Lee Capital Bank 20X5 25 000 January 01 6 000 January 25 5 500 January 29 5 000 January 30 January 30 January 31 _____ January 31 41 500 23 000 Rent 2 000 Cash 500 Midland Motors 4 000 D. Terry 8 000 E. Appleby 2 000 Electricity 2 000 Balance c/d 23 000 41 500
February 01 Balance b/d
20X5 January 31
Balance b/d
Capital 20X5 30 000 January 1 Bank ... January 31 Bank 30 000 February 01 Balance c/d
25 000 5 000 30 000 30 000
18
20X5 January 1
Bank
Rent 20X5 2 000 January 31 2 000 2 000
Balance c/d
2 000 2 000
20X5 January 03 January 05 January 15
D Terry E Appleby D Terry
Purchases 20X5 5 000 January 31 3 000 10 000 18 000 18 000
Balance c/d
18 000 . 18 000
20X5 January 22 January 30 January 31
Returns Outwards Bank Balance c/d
D Terry 20X5 January 03 Purchases 2 000 January 15 Purchases 8 000 5 000 15 000 February 01 Balance b/d
5 000 10 000 _____ 15 000 5 000
Motor Car 20X5 20X5 January 04 Midland Motors 4 000 January 31 February 01 Balance b/d 4 000
Balance c/d
4 000
20X5 January 29
Bank
Midland Motors 20X5 4 000 January 4 4 000
Motor Car
4 000 4 000
20X5 January 30 January 31
Bank Balance c/d
E Appleby 20X5 Purchases 2 000 January 5 1 000 3 000 February 01 Balance b/d
3 000 .. 3 000 1 000
19
20X5 January 10 January 25
Sales Bank
Cash 20X5 6 000 January 23 500 January 28 .. January 31 6 500 250
Bank Office expenses Balance c/d
6 000 250 250 6 500
20X5 January 31
Balance c/d
Sales 20X5 14 000 January 10 Cash January 20 S Lee 14 000 February 01 Balance b/d
6 000 8 000 14 000 14 000
20X5 January 20
Sales
S Lee 20X5 8 000 January 24 January 25 .. January 31 8 000 1 500
Returns Inwards Bank Balance c/d
1 000 5 500 1 500 8 000
20X5 January 31
Balance c/d
Returns Outwards 20X5 2 000 January 22 D Terry 2 000 February 01 Balance b/d
2 000 2 000 2 000
20X5 January 24
S Lee
Returns Inwards 20X5 1 000 January 31 1 000 1 000
Balance c/d
1 000 1 000
20
Office Expenses 20X5 Cash 250 January 31 250 February 01 Balance b/d 250 20X5 January 28
Balance c/d
250 250
20X5 January 31
Bank
Electricity 20X5 2 000 January 31 2 000 2 000
Balance c/d
2 000 2 000
(b) Steve Trial Balance at 31January 20X5 DR CR Bank Capital Rent Purchases D Terry Motor Car E Appleby Cash Sales S Lee Returns Outwards Returns Inwards Office Expenses Electricity 23 000 30 000 2 000 18 000 5 000 4 000 1 000 250 14 000 1 500 2 000 1 000 250 2 000 52 000
_____ 52 000
Question 5
Bank 20X8 5 000 May 16 700 May 27 May 30 .. May 31 5 700 1 300
20X8 May 01 May 18
Balance b/d Bank
Dodd Delivery Van Cash Balance c/d
2 900 1 200 300 1 300 5 700
June 01
Balance b/d
21
20X8 May 31
Balance c/d
Capital 20X8 20 000 May 01 20 000 June 01
Balance b/d Balance b/d
20 000 20 000 20 000
20X8 May 01 May 04 May 30 June 01
Balance b/d Sales Bank Balance b/d
Cash 20X8 1 000 May 07 2 000 May 23 300 May 31 3 300 900
Purchases Office Expenses Balance c/d
1 500 900 900 3 300
20X8 May 16 May 31
Bank Balance c/d
Dodd 20X8 2 900 May 01 2 100 May 02 5 000 June 01
Balance b/d Purchases Balance b/d
2 000 3 000 5 000 2 100
20X8 May 01 May 10 June 01
Balance b/d Sales Balance c/d
Fish 20X8 6 000 May 18 5 000 May 31 11 000 10 300
Bank Balance b/d 700 10 300 11 000
20X8 May 01 June 01
Balance b/d Balance b/d
Furniture 20X8 10 000 May 31 10 000 10 000
Balance c/d
10 000 10 000
20X8 May 02 May 07 June 01
Dodd Cash Balance b/d
Purchases 20X8 3 000 May 31 1 500 4 500 4 500
Balance c/d
4 500 .. 4 500
22
20X8 May 31
Balance c/d
Sales 20X8 7 000 May 04 ____ May 10 7 000 June 01
Cash Fish Balance b/d
2 000 5 000 7 000 7 000
20X8 May 23 June 01
Cash Balance b/d
Office Expenses 20X8 900 May 31 900 900
Balance c/d
900 900
20X8 May 27 June 01
Bank Balance b/d
Delivery Van 20X8 1 200 May 31 1 200 1 200
Balance c/
1 200 1 200
(b) Tom Trial Balance at 31 May 20X8 DR CR Bank Capital Cash Dodd Fish Furniture Purchases Sales Office Expenses Delivery Van 1 300 20 000 900 2 100 10 300 10 000 4 500 7 000 900 1 200 29 100 . 29 100
23
Question 6
(a) T. Lennon Trial Balance at 31 December 20X9 DR CR Motor Vehicle Purchases Sales Stock of Goods Cash at Bank Fixtures and Fittings Wages Debtors Creditors Rent Drawings General Expenses Loan from D. Waller Capital 4 500 2 960 4 230 1 800 6 740 7 900 2 310 1 960 2 600 1 250 180 930 2 000 21 700 30 530
30 530
(b) A trial balance checks the arithmetical accuracy of the double entry.
(c) Errors not revealed by the trial balance: 1. A transaction that has been completely omitted 2. A transaction that was entered correctly but using the wrong amount Errors revealed by the trial balance 1. Entering only one side of a transaction 2. Addition errors
Question 7
(a) (b) (c) (d) (e) (f) Credit Debit Debit Credit Credit Debit
24
Chapter 6 Trading and Profit & Loss Accounts: An Introduction

Activity 6.1
Year
Sales
Cost of goods sold 23 230 23 900 21 500
Gross Profit/Loss 5 890 2 889 7 000
Operating Expenses 3 311 3 600 2 900
Other Revenue 600 200 -
Net Profit / Loss 3 179 (511) 4 100
2005 2006 2007
29 120 26 789 28 500

Andrew Gordon Trading and Profit & Loss Account for the year ended 31 December 20X2 26 200 3 100 23 100 11 570 34 670 6 100 1 200 160 380 3 730 11 570 34 670 _____ 34 670 Gross profit b/d 11 570
Purchases Less Stock at 31 December 20X2 Cost of goods sold Gross profit c/d Wages Rent Insurance Lighting and heating Net profit
Sales
______ 11 570
25
Question 2
A. Darnell Trading and Profit & Loss Account for the year ended 30 September 20X7 23 380 3 650 19 730 11 140 30 870 900 320 860 4 200 165 4 695 11 140 30 870 _____ 30 870 Gross profit b/d 11 140
Purchases Less Stock at 30 September 20X7 Cost of goods sold Gross profit c/d Rent Insurance Motor vehicle expenses Wages General expenses Net profit
Sales
_____ 11 140
Question 3
B. Betty Trading and Profit & Loss Account for the year ended 30 June 20X5 21 160 2 800 18 360 10 280 28 640 2 240 5 100 190 315 2 435 10 280 28 640 _____ 28 640 Gross profit b/d 10 280
Purchases Less Stock at 30 June 20X5 Cost of goods sold Gross profit c/d Rent Wages Insurance Office expenses Net profit
Sales
______ 10 280
26
Question 4
Ada Cheung Trading and Profit & Loss Account for the year ended 31 March 20X3 Purchases Less Stock at 31 March 20X3 Cost of goods sold Gross profit c/d Wages Rent Advertising Lighting and heating Sundry expenses Net profit 46 820 9 140 37 680 16 020 53 700 7 360 2 370 840 765 1210 3 475 16 020 Sales 53 700 _____ 53 700 Gross profit b/d 16 020
______ 16 020
Question 5
(a) 1. Comparing performance with other businesses or with previous periods of time to see if the business is growing. Planning ahead profits will allow the firm to expand so information about how much profit has been made and how it was made will be important in deciding what to do in the future. To help the business to control and monitor its expenses.
2.
3.
(b) This means that his cost of goods sold was more than the sales revenue; he sold the goods for less than he paid for them.
27
Chapter 7 The Balance Sheet

Page 72 Why the balance sheet is prepared at a specified date while the trading and profit and loss is prepared for a period of time. Because it shows the financial position of a business at a particular date and not for a particular period of time. It shows the value of assets and liabilities as they are at a specific date.

1. Fixed assets are presented in order of decreasing permanence while current assets are presented in increasing order of liquidity.
Question 2
J Robinson Balance Sheet at 31 March 20X7 Fixed Assets Buildings Fixtures and fittings Motor vehicle Capital (missing figure) 47 020
35 000 2 860 6 400 44 260
Current Assets Stock Debtors Bank Cash
4 360 7 200 2 950 80 14 590 58 850
Current Liabilities Creditors Long-term Liabilities Loan
6 830 5 000
______ 58 850
28
Question 3
Andrew Gordon Balance Sheet as at 31 December 20X2 Fixed Assets Premises Fixtures and fittings Motor vehicle Capital Add: Net profit Less: Drawings 68 660 3 730 2 600 1 130 69 790 Current Liabilities Creditors
54 000 1 200 5 600 60 800
Current Assets Stock Debtors Bank
3 180 3 460 4 130 10 690 71 490
1 700
_____ 71 490
Question 4
A Darnell Balance Sheet as at 30 September 20X7 Fixed Assets Premises Fixtures and fittings Motor vehicle Capital Add: Net profit Less: Drawings 34 555 4 695 3 200 1 495 36 050 Current Liabilities Creditors
24 000 850 4 200 29 050
Current Assets Stock Bank Cash
3 650 2 130 70 9 900 38 950
2 900
38 950
29
Question 5
B Betty Balance Sheet as at 31 June 20X5 Fixed Assets Office furniture Motor vehicle Capital Add: Net profit Less: Drawings 7 500 2 435 1 230 1 205 8 705 Current Liabilities Creditors 1 870
650 2 800 ____ 3 450 2 800 2 360 1 890 75 _7,125 10 575
Current Assets Stock Debtors Bank Cash
_____ 10 575
Question 6
Ada Cheung Balance Sheet as at 31 March 20X3 Fixed Assets Premises Fixtures and fittings Motor vehicle Capital Add: Net profit Less: Drawings 68 335 3 475 3 700 __(225) 68 110 Current Liabilities Creditors
43 000 5 700 5 300 54 000
Current Assets Stock Debtors Bank
9 140 8 200 1 710 19 052 73 050
4 940
_____ 73 050
30
Chapter 8 Final Accounts with Further Considerations

Activity 8.1 T Antonio Trading Account for the month ending 30 April 20X8 Opening Stock Purchases Add Carriage inwards Less Returns outwards Less Closing Stock Cost of goods sold Gross profit c/d 3 855 2 680 102 2 782 139 Sales Less Returns inwards Turnover 5 280 139 5 141
2 643 6 498 2 631 3 867 1 274 5 141
5 141

(a) Carriage Inwards is associated with the cost of getting goods into the business and ready for resale so it is always added to the cost of purchases in the Trading Account. Carriage Outwards is a necessary cost of distribution of sales to customers and so it is debited to the Profit & Loss Account with other expenses. (b) It is necessary to include returns inwards and returns outwards in the trading account to adjust the purchases and sales figures to find the amounts actually bought and sold. (c) It shows the amount of resources a business has that can be readily turned into cash.
31
Question 2
R Knight Trading and Profit & Loss Account for the year ended 31 October 20X6 Sales Less: Returns inwards Turnover Less: Cost of goods sold Opening stock Purchases Add: Carriage inwards Net purchases Less: Closing stock Gross Profit Less: Expenses Carriage outwards Wages Sundry expenses Net Profit 120 500 740 119 760
15 200 75 400 2 150 77 550 92 750 13 600 79 150 40 610 3 200 28 500 2 230 33 930 6 680
32
Question 3
T Pearl Trading and Profit & Loss Account for the year ended 31 August 20X7 Sales Less: Returns inwards Turnover Less: Cost of goods sold Opening stock Purchases Add: Carriage inwards Less Returns outwards Net purchases Less: Closing stock Gross Profit Add: Rent Receivable Less: Expenses Carriage Outwards Rent Payable Lighting and heating Telephone Net Profit 34 350 1 230 33 120 4 360 26 500 940 27 440 1 050 26 390 30 750 4 210 26 540 6 580 600 7 180 540 2 100 430 215 3 305 3 875
33
Question 4
P Franks Trading and Profit & Loss Account For the year ended 28 February 20X8 Sales Less: Returns Inwards Turnover Less: Cost of goods sold Opening stock Purchases Less: Returns outwards Net purchases Less: Closing stock Gross Profit Less: Expenses Lighting and heating Salaries and wages Sundry expenses Rent and rates Net Profit 221 300 5 200 216 100
12 600 155 400 6 650 148 750 161 350 16 100 145 250 70 850 3 900 48 500 4 650 2 300 59 350 11 500
34
P Franks Balance Sheet at 28 February 20X8 Fixed assets Premises Equipment Motor vehicle Current assets Stock Debtors Bank Cash Less: Current liabilities Creditors Net current assets Long-term liabilities Loan 104 000 28 000 21 000 153 000 16 100 23 750 960 76 40 886 15 716 25 170 178 170 32 000 146 170
Financed by: Capital Balance b/d Add: Net profit Less: Drawings
145 270 11 500 156 770 10 600 146 170
35
Question 5
T Williams Trading and Profit & Loss Account for the year ended 31 May 20X8 Sales Less: Returns inwards Turnover Less: Cost of goods sold Opening Stock Purchases Add: Carriage inwards Less: Returns outwards Net purchases Less: Closing stock Gross Profit Less: Expenses Wages and salaries Rent Insurance Sundry expenses Carriage Outwards Net Profit 139 200 430 138 770 27 230 103 500 630 104 130 960 103 170 130 400 30 580 99 820 38 950 15 320 5 400 325 475 2 340 23 860 15 090
36
T Williams Balance Sheet at 31 May 20X8 Fixed assets Buildings Fixtures and fittings Current assets Stock Debtors Bank Cash Less: Current liabilities Creditors Net current assets Long-term liabilities Loan Financed by: Capital balance b/d Add: Net profit Less: Drawings
32 000 4 250 36 250 30 580 21 460 4 450 195 56 685 12 240 44 445 80 695 15 000 65 695 62 005 15 090 77 095 11 400 65 695
37
Chapter 9 The Division of the Ledger and Books of Original Entry

Page 93 What have you noticed about the Cash Book? It is a Book of Original Entry as well as a Ledger.
Activity 9.1 1. 2. 3. 4. 5. 6. General Ledger Sales Ledger General Ledger General Ledger General Ledger or Private Ledger General Ledger

(a) They provide documentation (proof) that a transaction has occurred. (b) 1. 2. They save time as they summarise similar transactions for the period, resulting in less information and less frequent postings to the General Ledger. They allow a business to have different individuals responsible for different journals therefore increasing internal control.
Question 2
(a) Debtors Ledger (b) Creditors Ledger (c) Nominal Ledger
Question 3
(a) (b) (c) (d) (e) Real Nominal Nominal Real Real
Question 4
(a) (b) (c) (d) (e) (f) Cash Book Cash Book Cash Book Cash Book Purchases Day Book Cash Book 38
Chapter 10 Bank Facilities

Activity 10.1 Payee Cheque number Drawer Counterfoil Crossed cheque
Mary White is writing a cheque for 200 to John Blue. As she is the drawer she must make sure that she signs the cheque. Her book-keeper told her to always fill out the counterfoil so she will have a record of the payment. As the cheque number is on the counterfoil as well as the cheque it will help her to trace the payment. She has decided to give John a crossed cheque as she is worried that the cheque might get lost. John is not very happy about this. As he is the payee it means he will not be able to get the money from the bank immediately.

Bank 20X7 145 December 15 December 22
20X7 November 30
Interest receivable
Interest payable Bank charges
320 45
Interest Receivable 20X7 November 30
Bank
145
20X7 December 15
Bank
Interest Payable 320
20X7 December 22
Bank
Bank Charges 45
Question 2
A bank overdraft occurs when the bank allows a current account holder to withdraw more money from the account than is actually in the account. For example, the account holder only has 800 in the account but with the permission of the bank is allowed to withdraw up to a maximum of 1500.
39
Question 3
A standing order is used for payments of fixed amounts at regular intervals at the request of the account holder while a direct debit is made at the request of the payee (the person/organisation that is owed) and can be used for either fixed or changing amounts and for payments at irregular intervals.
Question 4
(a) Interest receivable is the interest received on the balance of an interest bearing account; the amount the bank pays the account holder for the use of the money in the account. (b) Interest payable is the cost of borrowing; it is the payment to the lender (the bank) for the use of its money. (c) Bank charges is a charge by a bank for the services it provides.
Question 5
(a) (b) (c) (d) Direct Debit Credit transfer Standing order Dividend
Question 6
(a) 1. 2. Current account Deposit account
(b) Current accounts do not always earn interest, deposit accounts do.
Question 7
(a) (b) (c) (d) 2738.57 - 206.05 = 2532.52 Credit column Credit transfer Loan repayment through a standing order
40
Chapter 11 Cash Books

Page 111 Is it possible for the cash columns to have a credit balance? Give reasons for your answer. No because it is impossible to spend more cash than is available. If the business has cash in hand of only 50 then it cannot spend more than this amount.

(a) As a book of original entry it is the first place where all the cash and cheque transactions are recorded; it is also one side of the double entry. (b) Where the debit and credit entries for a transaction are in the same ledger or book.
Question 2
F. Patel Cash Book Bank 20X3 Details Bank (C) Nov 02 Rent 2 800 Nov 03 Purchases Nov 07 Stationery 230 Nov 10 Wages Nov 12 Cash (C) 200 Nov 14 Carriage in Nov 20 Drawings Nov 26 Bank (C) Nov 28 Purchases Nov 30 Balances c/d .. Nov 30 3 230 2 130
20X3 Nov 01 Nov 02 Nov 14 Nov 17 Nov 23 Nov 28
Details Capital Cash (C) Bank (C) Sales Sales Cash (C)
Cash 3 000 160 220
Cash 2 800 46 120
Bank 140 370 160
34 60 200 120 3 380 430 2 130 3 230
Dec 1
Balances b/d
.. 3 380 120
41
Question 3
T. Karekla Cash Book Cash Bank 20X9 Details Motor vehicle 6 000 July 3 150 Cash (C) July 4 Rent 2 000 July 8 100 Purchases July 10 390 Carriage in July 18 Cash (C) 540 July 20 Purchases 300 July 24 Wages July 24 Bank (C) July 30 Balances c/d July 31 ___ ____ 640 8 840 95 4 460
20X9 July 1 July 4 July 15 July 20 July 23 July 29 July 30
Details Capital Bank (C) Loan Bank (C) Sales Sales Cash (C)
Cash 85
Bank 3 000 150 460
40 100 20 300 95 670 100 4 460 8 840
Aug 1
Balances b/d
Question 4
Maria Metaxa Cash Book Cash Bank 20X7 DETAILS 65 3 196 2 610 1 250 2 730 2 945 1 760 Feb 02 Feb 06 Feb 06 Feb 12 Feb 12 Feb 15 Feb 16 Feb 19 Feb 21 Feb 25 Feb 27 Feb 28 Feb 28 Feb 28 Postage Purchases Wages Cash (C) Wages Electricity Stationery Wages Travelling expenses Telephone Wages P Barratt D Smart Balances c/d
20X7 Feb 01 Feb 04 Feb 08 Feb 10 Feb 12 Feb 19 Feb 23
DETAILS Balances b/d Sales D Pole Sales Bank (C) Sales E Holme
Discount Allowed 30
Discount Received
Cash 50
Bank 1 075 2 167 100 1 964 53
100 40
38 1 840 19 132 1 920 1 240 2 145 1 855 14 491
__ 70 Mar 1 Balances b/d
___ 165 58
_____ 14 491 1 855
20 55 __ 75
58 165
(b) Discount Allowed Total for the month 70
20X7 February 28
42
Discount Received 20X7 February 28 Total for the month
75
Question 5
(a) 20X2 Oct 01 Oct 02 Oct 10 Oct 12 Oct 18 Oct 20 Oct 21 Oct 21 Oct 26 DETAILS Balances b/d P Mace Sales G Lai Bank (C) Sales Loan interest Cash (C) B Chalke Discount Allowed 8 150 1 120 60 16 1 120 704 Sally Foon Cash Book Cash Bank 20X2 DETAILS 68 160 2 086 560 Oct 01 Oct 12 Oct 14 Oct 16 Oct 18 Oct 21 Oct 22 Oct 22 Oct 24 Oct 28 Oct 30 Oct 30 Oct 31 Balances b/d W Eastern Stationery F Samway Cash (C) Bank (C) Wages G Lai Telephone Office Expenses L. Hall Interest paid Balances c/d Discount Received Cash 35 4 1 120 35 560 147 40 13 __ 17 247 20 1 618 14 491 86 150 Bank 1 692 75
__ 24 Nov 1 Balances b/d
____ 1 398 203
_____ 4 630 1 618
203 1 398
(b) The 24 discount allowed will be posted to the debit side of the discount allowed account. The 17 discount received will be posted to the credit side of the discount received account.
(c) 20X2 October 31 Discount Allowed Total for the month 24
Discount Received 20X2 October 31 Total for the month
17
43
Chapter 12 The Sales and Purchases Day Books

Page 125 Why do you think the invoice numbers are not sequential in S Frenchs Purchases Day Book? Because S French has not assigned unique numbers to each invoice but is instead using the invoice numbers as received from the different sellers.

(a)
Sales Day Book

Date 20X8 Oct 01 Oct 04 Oct 09 Oct 15 Oct 23 Oct 29 Oct 31 Details F Law G Harding S Wilks L Ryle F Law G Harding Transferred to Sales Account Net Amount 612 436 370 810 354 508 3 090
(b)
Sales Ledger
20X8 October 01 F Law 612
Sales
20X8 October 04
Sales
G Harding 436
20X8 October 09
Sales
S Wilks 370
44
L Ryle 20X8 October 15 Sales 810
20X8 October 23
Sales
F Law 354
20X8 October 29
Sales k
G Harding 508
General Ledger
(c) Sales 20X8 October 30 Credit sales for the month 3 090
Question 2
(a)
Sales Day Book

Date 20X5 July 02 July 07 July 12 July 18 July 23 July 30 July 31 Details D Smith T Ronald N Smithers L Malt D Smith T Ronald Transferred to Sales Account Net Amount 488 480 256 186 221 435 2 066
(b)
Sales Ledger
20X5 July 02 D Smith 488
Sales
45
20X5 July 07 July 30
Sales Sales
T Ronald 480 435 N Smithers 256
20X5 July 12
Sales
20X5 July 18
Sales
L Malt 186
20X5 July 23
Sales
D Smith 221
General Ledger
Sales 20X5 July 31 Credit sales for the month 2 066
Question 3
(a)
Purchases Day Book

Date 20X3 April 01 April 03 April 10 April 14 April 21 April 27 April 30 Details D Bellamy A Browne Swift & Co D Bellamy R Green Swift & Co Transferred to Purchases Account Net Amount 306 215 438 280 176 342 1 757
46
(b)
Purchases Day Book

D Bellamy 20X3 April 01 April 14 306 280
Purchases Purchases
A Browne 20X3 April 03
Purchases
215
Swift & Co 20X3 April 10 April 27
Purchases Purchases
438 342
R Green 20X3 April 21
Purchases
176
General Ledger
Purchases 20X3 April 30 Credit purchases for the month 1 757
Question 4
(a) 1. 2. 3. 4. 5. Name of buyer Name of seller Quantity of units sold Total amount owed Unit price for goods
(b) Trade discounts do not appear in the books. Cash discounts are recorded in the Cash Book and then posted to the Purchases or Sales Ledger and the General Ledger.
47
Chapter 13 The Returns Day Books

Page 129 What are some of the possible reasons that a customer may return goods to the seller? Goods may be damaged or faulty Goods of the wrong type More received than ordered

(a)
Sales Day Book

Date 20X7 Sept 02 Sept 04 Sept 14 Sept 20 Sept 30 Details F Bloome T Francesca T Francesca T Sharpe Transferred to Sales Account Net Amount 236 370 284 405 1 295
Returns Inwards Day Book

Date 20X7 Sept 07 Sept 20 Sept 30 Details F Bloome T Francesca Transferred to Returns Inwards Account Net Amount 56 24 80
(b)
Sales Ledger
20X7 Sept 02 F Bloome 20X7 236 Sept 07 Returns Inwards 56
Sales
20X7 Sept 04 Sept 14
Sales Sales
T Francesca 20X7 370 Sept 20 Returns Inwards 284
24
48
20X7 Sept 26
Sales
T. Sharpe 405
General Ledger
Sales 20X7 Sept 30 Credit sales for the month 1 295
20X7 Sept 30 Returns for the month
Returns Inwards 80
Question 2
(a)
Purchases Day Book

Date 20X9 Jan 03 Jan 18 Jan 31 Details S Letts P Boyle Transferred to Purchases Account Net Amount 477 89 566
Sales Day Book

Date 20X9 Jan 01 Jan 15 Jan 21 Jan 28 Jan 31 Details K Devine K Devine D Lemon P Starkey Transferred to Sales Account Net Amount 280 234 416 245 1 175
Returns Outwards Day Book Date 20X9 Jan 12 Jan 24 Jan 31 Details S Letts P Boyle Transferred to Returns Outwards Account Net Amount 54 17 71
49
Returns Inwards Day Book

Date 20X9 Jan 06 Jan 31 Jan 31 Details K Devine D Lemon Transferred to Returns Inwards Account Net Amount 49 64 113
(b)
Purchases Ledger
20X9 Jan 12 S Letts 20X9 54 Jan 03 477
Returns Outwards
Purchases
20X9 Jan 24 Returns Outwards
P Boyle 20X9 17 Jan 18
Purchases
89
Sales Ledger
20X9 Jan 01 Jan 15 K Devine 20X9 280 Jan 06 Returns Inwards 234 49
Sales Sales
20X9 Jan 21
Sales
D Lemon 20X9 416 Jan 31 Returns Inwards
64
20X9 Jan 28
Sales
P Starkey 245
General Ledger
(c) Purchases Credit purchases for the month 566
20X9 Jan 31
50
Sales 20X9 Jan 31 Credit sales for the month
1 175
Returns Outwards 20X9 Jan 31 Returns for the month
71
20X9 Jan 31 Returns for the month
Returns Inwards 71
Question 3 Purchases Day Book

Date 20X1 Aug 04 Aug 11 Aug 31 Details G Mann B Jollie Transferred to Purchases Account Net Amount 300 200 500
Sales Day Book

Date 20X1 Aug 05 Aug 12 Aug 21 Aug 31 Details B Allen G Parker E Todd Transferred to Sales Account Net Amount 240 360 243 843
Cash Book
20X1 Aug 18 Aug 31 DETAILS G Parker B Allen Discount Allowed 36 Cash Bank 324 240 20X1 Aug 15 Aug 29 DETAILS B Jollie G Mann Discount Received 10 Cash Bank 190 300
51
Question 4
(a) (b) (c) (d) Purchases Day Book Sales Day Book Returns Inwards Day Book Returns Outwards Day Book
Question 5
A credit note is sent to the buyer (customer) by the supplier showing the amount of allowance to be given. A debit note is sent to the supplier from the buyer, giving details of returned goods and the reason for their return.
52
Chapter 14 The Journal

(a) Debit Premises Equipment Stock Debtors Creditors Loan Bank overdraft Cash Office equipment Capital (balancing figure) 25 000 3 500 1 400 2 100 3 400 7 600 2 500 500 5 000 37 500 37 500 _____ 13 500 24 000 37 500 Credit
(b) M Jones Journal 20X7 Jan 1 Premises Equipment Stock Debtors Cash Office equipment Creditors Loan Bank overdraft Capital Assets and liabilities at this date entered to open the books Debit 25 000 3 500 1 400 2 100 500 5 000 Credit
_____ 37 500
3 400 7 600 2 500 24 000 37 500
53
(c) M Jones Balance Sheet at 1 January 20X7 Fixed assets Premises Office equipment Current assets Stock Debtors Cash Less: Current liabilities Creditors Bank overdraft Net current liabilities Less: Long Term liabilities Loan Financed by: Capital account 25 000 3 500 _5 000 33 500 1 400 2 100 _500 4 000 3 400 2 500 5 900 (1 900) 31 600 (7 600) 24 000 24 000
Question 2
G Gunter Journal 20X8 Dec 10 Dec 12 Dec 15 Dec 20 Y Underberg Office furniture Delivery van KN Traders Drawings Sales Bank Bad debts F Fern Debit 120 14 500 14 500 340 340 130 100 230 Credit 120
54
Question 3
Journal 20X7 Aug 1 Aug 2 Aug 7 Aug 3 Aug 18 Computers Siskin Computers Drawings Cash Siskin Computers Computers Motor Van Motor Traders Bank Bad debts D Wong Drawings Telephone J Cummings Fixtures & fittings Debit 900 350 350 300 300 5 700 5 700 990 2 000 2 990 120 120 1 250 1 250 Credit 900
Aug 23
Aug 29
55
Chapter 15 The Petty Cash Imprest System

Solutions to Target Practice Questions Question 1 (a)
M Leighton Petty Cash book

Details Voucher Number Total Wages Stationery Postage Ledger
Receipts
Date 20X7
9.34 90.66
Feb 01 Feb 01 Feb 03 Feb 07 Feb 10 Feb 14 Feb 17 Feb 20 Feb 21 Feb 24 Feb 28 Balance b/d Bank Wages Stationery Wages Stationery Wages A. Bush Stationery Wages Balance c/d 21 22 23 24 25 26 27 28 17.52 5.88 18.22 4.56 17.68 8.32 9.00 16.96 98.14 1.86 100.00 Mar 01 Mar 01 Balance b/d Bank
17.52
5.88 18.22 4.56 17.68 8.32 9.00 16.96 70.38 13.56 5.88 8.32
100.00 1.86 98.14
(b)
20X7
Feb 28
Petty Cash
Wages 70.38
20X7
Feb 28
Petty Cash
Stationery 13.56
20X7
Feb 28
Petty Cash
Postage 5.88
20X7
Feb 28
Petty Cash
A Bush 8.32
56
(c) 1. 2. It deals with small payments. Enables the person looking after the Cash Book to concentrate on the bigger transactions.
Question 2
F Salmon Petty Cash Book
Receipts Date 20X6 Details Vouch No. Total Postage Travel Expns Motor Vehicle Expense Stationery Misc. Ledger
155 195
01 Mar 01 Mar 04 Mar 06 Mar 09 Mar 10 Mar 12 Mar 15 Mar 16 Mar 18 Mar 20 Mar 23 Mar 25 Mar 28 Mar 31 Mar Bal b/d Bank Postage Train fare Petrol Stationery Bus fare P Gates Stamps Repairs Stationery Petrol Misc. Parcel post Bal c/d Bal b/d Bank 36 37 38 39 40 41 42 43 44 45 46 47 20 25 15 38 2 16 30 35 47 28 17 19
20
25 15 38 2 16 30 35 47 28 17 19
292 58 350
69
27
78
85
17
16
350 58 292
Apr 1 Apr 1
57
Question 3 (a)
Receipts Date 20X3 Details Total Motor Vehicle Expense Stationery Postage Travel Expense Cleaning Expense Ledger
87.00 113.00
1 May 1 May 3 May 5 May 8 May 11 May 14 May 16 May 18 May 21 May 25 May 27 May 30 May 31 May Bal c/d Bank Motor exp Stationery Stamps Cleaning Travel exp D Kane Stamps Stationery Cleaning Petrol Post Bal c/d Bal b/d Bank 32.00 12.70 9.50 8.00 11.30 24.80 12.80 15.10 9.00 14.50 13.20 162.90 37.10 200.00
32.00
12.70 9.50 8.00 11.30 12.80 15.10 9.00 14.50 13.20 32.00 27.80 35.50 25.80 17.00 24.80 24.80
200.00 37.10 212.90
1 June 1 June
(b) General Ledger (c) Petty Cash Voucher
58
Chapter 16 Adjusting for Accruals and Prepayments

Page 160 Why are expense prepayment and income accrual shown as current assets on the Balance Sheet? Where an expense has been paid for before it is actually used, the supplier owes the business the amount until such time when the expense prepayment is used up. Since the expense supplier owes the business, he is similar to a debtor, which is a current asset. In terms of an income accrual, the amount has not be paid when due so it is owing similar to a debtor, which is a current asset.

(a) B. Kouzalai Trading and Profit & Loss Account For the year ended 30 June 20X7 Sales Less: Cost of goods sold: Opening stock Purchases Less: Closing stock Gross profit Add: Commission received (1210 + 141) Less: Expenses Wages + salaries (65840 + 820) Stationery Heat and light (2840 80) Motor vehicle expenses Rent payable (11920 + 300) Net profit 286 370
19 223 129 860 149 083 13 980 135 103 151 267 1 351 152 618 66 660 3 650 2 760 1 620 12 220 86 910 65 708
59
(b) B. Kouzalai Balance Sheet (extract) at 30 June 20X7 Current assets Debtors Prepayment Commission receivable Current liabilities Creditors Accruals (820 + 300) 9 430 80 141
7 620 1 120
(c) An accrual is an amount owing for an accounting or financial period which remains unpaid at the end of that period. A prepayment is an amount paid during the current accounting or financial period to cover an expense for the next period.
Question 2
Birch Trading and Profit & Loss Account For the year ended 31 December 20X6 Sales Less: Cost of sales: Opening stock Purchases (50925 + 665) Less: Closing stock Gross profit Less: Expenses Wages Rent, rates and insurance (6125 + 350 1312) Heat and light (5525 210) Motor expenses (3489 + 300 442) Telephone and stationery (1672 + 136 95) Net Profit 113 750
4 025 51 590 55 615 3 765
(51 850) 61 900
27 438 5 163 5 315 3 347 1 713
(42 976) 18 924
60
Birch Balance Sheet at 31 December 20X6 Fixed assets Motor vehicles: cost Current assets Stock Debtors Prepayments Bank Current liabilities Creditors Accruals Net current assets Financed by: Capital Balance b/d Add: Net profit Less: Drawings 9 843
3 765 3 553 2 059 195 9 572 (3 290) 1 451 4 831 14 674 13 250 18 924 32 174 (17 500) 14 674
61
Chapter 17 Depreciation of Fixed Assets

Page 168 What can be said about the yearly depreciation charge under the two different methods? Under the straight line method, the yearly depreciation charge is the same each year over the useful life of the asset. Under the reducing balance method the yearly depreciation charge is greater in the early years and lower in the later years; the yearly charge gets decreases over the useful life of the asset.
Activity 17.1 (a) Depreciation is an expense to the business and so like other expenses it is accounted for in the profit and loss account. If no allowance is made for depreciation in the profit and loss the profit for the year will be overstated, i.e. seem greater than it really is. (b) Straight line method = 10 400 - 4100 = 6300 = 2100 3 3 Depreciation charge = 2100 Net book value at 31 December 20X8 = 10 400 - 2100 = 8300 Reducing balance method = 10 400 x 40% = 4160 Depreciation charge = 4160 Net book value at 31 December 20X8 = 10 400 - 4160 = 6240 (c) As the asset concerned is a motor vehicle, the most suitable method is the reducing balance method.

(a) 25 000 - 1000 = 3000 8 (b) 18 400 - 200 10 = 1820
62
Question 2
(a) Cost 20X5 depreciation Net Book Value at 31 Dec 20X5 20X6 depreciation Net Book Value at 31 Dec 20X6 20X7 depreciation Net Book Value at 31 Dec 20X7 (25%) 25% x 6000 25% x 4500 8 000 2 000 6 000 1 500 4 500 1 125 3 375
(b) 20X5 Dec 31 20X6 Dec 31 Provision for Depreciation Machinery Account 20X5 Balance c/d 2 000 Dec 31 Profit & Loss 2 000 20X6 Balance c/d 3 500 Jan 1 Balance b/d ____ Dec 31 Profit & Loss 3 500 20X7 Balance c/d 4 625 Jan 1 Balance b/d ____ Dec 31 Profit & Loss 4 625 2 000 2 000 2 000 1 500 3 500 3 500 1 125 4 625
20X7 Dec 31
(c) Net Book Value
At 31 December 20X5 Machinery at cost Less Aggregate Depreciation At 31 December 20X6 Machinery at cost Less Aggregate Depreciation At 31 December 20X7 Machinery at cost Less Aggregate Depreciation 8 000 2 000
6 000 8 000 3 500 4 500 8 000 4 625 3 375
63
Question 3
Motor Vans 20X7 8 400 Dec 31 5 600 14 000 20X8 14 000
20X7 Jan 1 Aug 1 20X8 Jan 1
Bank Bank
Balance c/d
14 000 _____ 14 000
Balance b/d
20X7 Dec 31
Provision for Depreciation Motor Vans 20X7 Profit & Loss [W1] 2 147 Balance c/d 2 147 Dec 31 2 147 2 147 Jan 1 Balance b/d 2 147
Working 1 [W1] Depreciation charge 8400 x 20% x 12/12 = 5600 x 20% x 5/12 =
1 680 467 2 147
Question 4
(a) 20X4 Jan 1 20X5 Jan 1 20X6 Jan 1 20X7 Jan 1 Furniture & Fittings 20X4 9 200 Dec 31 9 200 20X5 9 200 Dec 31 9 200 20X6 9 200 Dec 31 9 200 20X7 9 200 Dec 31 9 200 9 200 9 200 9 200 9 200 9 200 9 200 9 200 9 200
Bank
Balance c/d
Balance b/d
Balance c/d
Balance b/d
Balance c/d
Balance b/d
Balance c/d
64
20X4 Dec 31 20X5 Dec 31
20X6 Dec 31
20X7 Dec 31
Provision for Depreciation Furniture & Fittings 20X4 Profit & Loss [W1] Balance c/d 975 Dec 31 975 20X5 Balance c/d 1 950 Jan 1 Balance c/d .. 31 Dec Profit & Loss 1 950 20X6 Balance c/d Balance c/d 3 900 Jan 1 Profit & Loss .. 31 Dec 3 900 20X7 Balance c/d 7 800 Jan 1 Balance c/d .. 31 Dec Profit & Loss 7 800
975 975 975 975 1 950 1 950 1 950 3 900 3 900 3 900 7 800
20X4 July 1 20X5 Jan 1 20X6 Jan 1 20X7 Jan 1
Bank
Balance b/d
Balance b/d
Balance b/d
Motor Vehicles 20X4 15 000 Dec 31 15 000 20X5 15 000 Dec 31 15 000 20X6 15 000 Dec 31 15 000 20X7 15 000 Dec 31 15 000
Balance c/d
15 000 15 000 15 000 15 000 15 000 15 000 15 000 15 000
Balance c/d
Balance c/d
Balance c/d
20X4 Dec 31 20X5 Dec 31
20X6 Dec 31
20X7 Dec 31
Provision for Depreciation Motor Vehicles 20X4 Profit & Loss [W2] Balance c/d 3 000 Dec 31 3 000 20X5 Balance c/d 7 800 Jan 1 Balance b/d Profit & Loss [W2] ____ Dec 31 7 800 20X6 Balance c/d 10 680 Jan 1 Balance b/d Profit & Loss [W2] _____ Dec 31 10 680 20X7 Balance c/d 12 408 Jan 1 Balance b/d Profit & Loss [W2] _____ Dec 31 12 408
3 000 3 000 3 000 4 800 7 800 7 800 2 880 10 680 10 680 1 728 12 408 65
Working 1 [W1] = 9200 - 1400 8 Working 2 [W2]
975
Cost 20X4 depreciation Net Book Value at 31 Dec 20X4 20X5 depreciation Net book Value at 31 Dec 20X5 20X6 depreciation Net Book Value at 31 Dec 20X6 20X7 depreciation Net Book Value at 31 Dec 20X7
(15 000 x 40% x 6/12) (12 000 x 40%) (7200 x 40%) (4320 x 40%)
15 000 3 000 12 000 4 800 7 200 2 880 4 320 1 728 2 592
(b) Tisha Lee Balance Sheet (extract) at 31 December 20X7 Net Book Value
Furniture and Fittings at cost Less Aggregate Depreciation (975 x4) Motor Vehicles at cost Less Aggregate Depreciation (3000 + 4800 + 2880 + 1728) 9 200 3 900
5 300 15 000 12 408 2 592
Question 5
(a) (i) (ii) (b) Profit and Loss Account Motor van Provision for Depreciation (c) The straight line method is calculated by: Cost Disposal Value Number of years of Life = Depreciation per annum The profit will be overstated; greater than it should be The value will be overstated Dr 3000 Cr 3000
The reducing balance method writes off a fixed percentage of the cost in the first year. In later years, the same percentage is written off the net book value. Under the straight line method the same amount is charged for each year of the useful life of the asset, while under the reducing balance method the charge gets lower over the useful life of the asset. 66
(d) 1. 2. Economic factors, i.e. the fixed asset may become obsolete or out of date due to an improved product being available, e.g. computers. Passage of time, i.e. even if an item is not used very often, as the years pass and it becomes older, it will lose value.
67
Chapter 18 Bad Debts

(a) 20X7 Jan 30 Feb 28 Mar 31 Mar 31 Bad Debts 20X7 348 Mar 31 268 125 420 1 161 1 161
C Lumas Dent and Son J Lowe B Down (560 -140)
Profit & Loss
.. 1 161
(b) M Kassolides Profit and Loss (Extract) for the year ended 31 March 20X7 Gross Profit Less: Expenses: Bad Debts (c) Debtor account - debit Bad Debts Recovered Account credit Bank/Cash - debit Debtor - credit xxxx
1 161
Question 2
(a) 20X7 Apr 01 Apr 30 Bad Debts 20X7 3 128 Apr 27 Apr 30 2 108 5 236 1 220 4 016 .. 5 236
Balance A Rover (2480 x 85%)
G West Profit & Los
(b) 20X6 Sept 01 20X7 Apr 27 G West 20X7 Jan 30 1 220 20X7 1 220 Apr 27 1 220 1220
Balance b/d Bad Debts
Bad Debts Bank
68
(c) C Shaw Profit and Loss (Extract) for the year ended 30 April 20X7 Gross Profit Less: Expenses: Bad Debts xxxx
4 016
Question 3
(a) 20X5 Dec 01 Dec 10 Bad Debts 20X5 4 340 Dec 31 1 875 6 215 6 215 ____ 6 215
Balance M Gorn
Profit & Loss
(b) 20X5 Dec 12 B Late 20X5 1 304 Dec 12 1 304 1 304 1 304
Bad Debts Recovered
Bank
(c) 20X5 Dec 31 Bad Debts Recovered 20X5 1 304 Dec 12 1 304 1 304 1 304
Profit and Loss
B Late
(d) P Zander Profit and Loss (Extract) for the year ended 30 April 20X7 Gross Profit Bad Debts Recovered Less: Expenses: Bad Debts xxxx 1 304
6 215
69
Question 4
(a) 20X7 July 1 July 4 F Turner 20X7 700 July 16 480 July 16 July 27 July 31 686 14 160 320 1 180
Balance Sales (600 x 80%)
.. 1 180
Bank (700 x 98%) Discount Allowed (700 x 2%) (200 x 80) Balance c/d
(b) Bad debts F Turner Bad debts written off
Dr 320
Cr 320
70
Chapter 19 Bank Reconciliation Statements

Page 184 Why items on the bank statement appear on the opposite side to the cash book? Because the bank statement is prepared from the point of view of the bank, while the cash book is prepared from the point of view of the business. To the bank the business is a creditor so money deposited in the account would show on the credit side instead of the debit side. Page 186 Why unpresented cheques and late lodgements are treated the way they are in the bank reconciliation statement? If the bank reconciliation statement starts with the cash book balance then unpresented cheques are added and late lodgements are subtracted in order to work towards the balance on the bank statement. As unpresented cheques reduces the cash book balance these are added back to get to the bank statement balance and as late lodgements increase the cash book balance these are subtracted to get to the bank statement balance. If the bank reconciliation statement starts with the bank statement balance then it would be the opposite of the explanation given.
Activity 19.1 Cash Book 1 800 Dishonoured cheque T Bell Bank charges . Balance c/d 1 800 1 560
Balance
200 40 1 560 1 800
Balance b/d

(a) Cash Book 2 716 Rates 268 Insurance 8 Balance c/d 2 992 2 703 136 153 2 703 2 992
Balance T Palmer Bank interest Balance b/d
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(b) N Swann Bank Reconciliation Statement at 31 August 20X9 Balance as per Bank statement Add: Late lodgements R Quaile Sales 2 670 185 640 _825 3 495 Less: Unpresented cheques Rent (1016) T Wagstaffe (1018) Balance as per cash book 290 502 _792 2 703
Question 2
(a) Cash Book 56 4 024 Bank and interest charges 97 185 Dishonoured Cheque (B Lampe) 350 420 Standing order (Rent) 4 126 .. Balance c/d 4 629 4 629 4 126
Balance Credit transfer (A Cox) Dividends received
Balance b/d
(b) 1. 2. 3. 4. 5. (c)
A Cox credit 185 Bank and interest charges debit 56 B Lampe debit 97 Rent debit 350 Dividends received credit 420
D Marr Bank Reconciliation Statement at 30 June 20X6 Balance as per Bank statement Add: Late lodgements Less: Unpresented cheques 363147 363152 363161 Balance as per cash book 4 075 1 068
720 39 258 1 017 4 126 72
Question 3
(a) Cash Book 23 399 Standing order (Rent) 814 Bank charges 270 Dishonoured cheque (D Holt) 626 Balance c/d 25 109 23 871 672 46 520 23 871 25 109
Balance Credit Transfer (T Brock) P May (740 - 470) Sales Balance b/d (b)
G Johnson Bank Reconciliation Statement at 31 March 20X8 Balance as per Bank statement Less: Unpresented cheques Add: Late lodgements Balance as per cash book 22 900 (1 215) 2 186 23 871
(c) A bank reconciliation statement is prepared to show an agreement between the balances on the bank statement and the cash book and to get an explanation for any differences.
Question 4
(a) Cash Book 528 Balance b/d Bank charges Bankers order (Subscription) Dishonoured Cheque (P Rose) ___ Balance c/d 528 114 271 62 37 44 114 528
Credit transfer (S Jolly)
Balance b/d
73
(b) T Merry Bank Reconciliation Statement at 31 July 20X1 Balance as per cash book Add: Unpresented cheques 114 91 67 211 369 453 233 250
Less: Late lodgement Balance as per Bank statement (c)
An overdraft is like a short-term loan. It is where the bank allows the account holder to withdraw more money than is actually in the account. (d) 1. 2. 3. The amount in words and figures did not agree. The cheque is more than 6 months old. P Rose did not have sufficient money in his account to cover the value of the cheque.
74
Chapter 20 Capital and Revenue Expenditure

Page 194 What is meant by the term fixed assets? Give examples. Fixed assets are bought for use in the business and are expected to have a long life. Examples include land and buildings, fixtures and fittings, machinery, motor vehicles, office equipment etc.
Activity 20.1 Expenditure Purchase of a delivery van for the business Maintenance of the van Signage on the van Purchase of stock Installation cost of a new computer Repainting the office Painting new offices Insurance for 1 year Wages to cleaners Wages to employees who are extending the offices Type of Expenditure Capital Revenue Revenue Revenue Capital Revenue Capital Revenue Revenue Capital

(a) (b) (c) (d) (e) (f) (g) Revenue Revenue Capital Capital Revenue Revenue Revenue
Question 2
No. 1. 2. 3. 4. 5. 6. Capital Expenditure 1050 150 12 000 890 Revenue Expenditure
210 2300
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Question 3
(a) 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. (b) (i) Capital expenditure is the expenditure on the purchase of fixed assets, or expenditure to increase the value of an existing fixed asset. Revenue expenditure is the cost incurred in the day-to-day running of the business; it is not concerned with increasing the value of fixed assets. Capital Revenue Revenue Revenue Capital Revenue Capital Capital Revenue Revenue
(ii)
Question 4
. Unicorn Trading Company Trading and Profit and Loss Account for year ended 31 December 20X7 Sales Less : Cost of goods sold : Opening stock Add Purchases Less : Closing stock of unsold goods Gross profit Less : Expenses : Wages Rent Other expenses Depreciation Net profit 43 600
0 24 050 24 050 (3 200)
(20 850) 22 750
6 890 2 400 280 750
(10 320) 12 430
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Chapter 21 Errors in the Accounts and their Corrections

Activity 21.1 Error (a) A purchases invoice for 452 had been entered into the books of account as 425. (b) A sales invoice for 200 was debited to the account of S. Smith instead of S. Smyth. (c) A purchases invoice for stationery, totalling 375, had not been entered into the books of account. (d) The purchase of a computer, costing 1200, had been posted to the Stationery Account. (e) A sales receipt from Co-Com Ltd was entered in the books of account as a debit in Co-Com Ltds Ledger Account and a credit in the Bank Account. (f) The additions on the Sales Account were overcast by 200 and the additions on the Rent Account were overcast by 200. Type of Error Error of Original entry Error of Commission
Error of Omission
Error of Principle
Reversal of entries
Compensating error
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Journal Dr Britsom Ltd Bryson Ltd Purchases incorrectly credited to Britsom Ltd Walters Ltd Sales Sales invoice for 295 incorrectly entered as 259 Carriage inwards Carriage outwards Carriage inwards posted as carriage outwards Slipshod Ltd Bank Purchase payment of 678 posted wrong way round Petrol Bank Petrol payment not entered in books 1 500 1 500 Cr
36 36
62 62
1 356 1 356
38 38
Question 2 (a)
Debit Overstated Understated Yes Yes Yes Credit Overstated Understated Yes -
(1) (2) (3) (4) (5) (6) (b)
Provisional net profit (1) (2) No effect (3) (4) (5) No effect (6) No effect 90 54 ___ 144
4 100 280 4 380 144 4 236
Revised net profit
78
Question 3
(a) J Gill Journal Dr Purchases P Sawyer A Rae Sales Interest Payable Interest Receivable Stock (Trading Account) Stock (Balance Sheet) Drawings Purchases Motor Vehicle cost Bank Depreciation Motor Vehicle aggregate depreciation R Chen R Chin 65 65 450 450 60 60 5 000 5 000 500 500 200 200 90 90 220 220 Cr
(b) Provisional net profit 4 820
(1) (2) (3) No effect (4) (5) (6) (7) No effect 90 450 500 .. 1 040
+
220 60 .. 5 100 1 040 4 060
Revised net profit
79
Question 4
(a) (i) 1. 2. 3. 4. 5. Omission Reversal Commission Compensating Principle
(ii) Henry Lim Journal Dr General expenses Bank Sales returns Kowloon Trading Co Insurance Light & heat Purchases Creditors Bank Wages Sales Equipment 320 320 660 660 103 103 250 250 250 250 1 198 1 198 Cr
(b) Provisional net profit Item Number (1) (2) (3) No effect (4) No effect (5) 14 560
+
320 660
1 198 2 178 12 382
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Chapter 22 Control Accounts

Sales Ledger Control Account 20X7 37 170 Bad Debts 100 819 Discounts allowed Bank _____ Balance c/d 137 989
20X7 Balance b/d Sales
1 198 597 96 371 39 823 137 989
20X7 Returns outwards Discounts received Bank Balance c/d
Purchase Ledger Control Account 20X7 2 901 Balance c/d 1 554 Purchases 56 381 20 715 81 551
20 372 61 179 _____ 81 551
Question 2
Sales Ledger Control Account 20X5 15 030 Returns inwards 93 478 Bank Bad debts Discounts allowed _____ Balance c/d 108 508
20X5 Balance b/d Sales
1 126 89 948 195 2 610 14 629 108 508
20X5 Bank Returns outwards Discounts received Balance c/d
Purchase Ledger Control Account 20X5 70 264 Balance b/d 518 Purchases 2 138 9 930 82 850
11 165 71 685 _____ 82 850
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Chapter 23 Final Accounts and Year-end Adjustments

J Cleaver Trading and Profit & Loss Account Year ended 31 December 20X6 Sales Less : Returns inwards Less : Cost of goods sold: Opening stock Add : Purchases Less : Returns inwards Less : Closing stock Gross profit Less : Expenses Loan interest Depreciation Bank interest Wages Rent Insurance Heat & light Advertising Carriage outwards Bad debts Net Profit 82 758 188 82 390 3 930 49 370 326 49 044 52 974 2 876
50 098 32 292
1 200 3 200 245 5 593 1 860 270 440 265 1 803 436
15 312 16 980
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Cleaver Balance Sheet at 31 December 20X6 Cost Fixed Assets Current Assets Stock Debtors Less : Current Liabilities: Loan (8,000 + 1,200) Creditors Bank overdraft Net Current Assets Financed by: Capital Net Profit Drawings 32 000 Aggregate Depn 6 400 Net Book Value 25 600
2 876 22 100 24 976 9 200 9 380 1 196
19 776 5 200 30 800 26 120 16 980 12 300 4 680 30 800
Question 2
M Tiong Trading and Profit & Loss Account Year ended 30 April 20X5 Sales Less : Cost of goods sold: Opening stock Add : Purchases (13 890 90) Less : Closing stock Gross profit Add : Discount received Less : Expenses Wages and salaries (9 350 + 280) Depreciation Delivery vehicle Furniture & equipment Rent, rates and insurance (2340 120) Discounts allowed Vehicle running expenses Sundry expenses Net Profit 35 030 2 970 13 800 16 770 3 160
13 610 21 420 390 21 810
9 630 1 200 500 2 220 1 170 1 840 410
16 970 4 840
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M Tiong Balance Sheet at 30 April 20X5 Cost Fixed Assets Furniture & equipment Delivery vehicle Aggregate Depn Net Book Value
6 000 7 400 13 400
500 3 200 3 700
5 500 4 200 9 700
Current Assets Stock Debtors Prepayment Insurance Bank Cash Less : Current Liabilities Accrual Wages Creditors Net Current Assets Financed by : Capital Net profit Drawings (4,500 + 90)
3 160 8 400 120 3 240 160 15 080 280 3 650
3 930 11 150 20 850 20 600 4 840 4 590 250 20 850
Question 3
(a) Net realisable value of microwave = 65 - 20 = 45 Cost of microwave = 47 Since the net realisable value (NRV) of the microwave is lower than the cost, the microwave should be valued at NRV (45) in the closing stock. (b) Stock should be valued at cost or net realisable value (NRV), which ever is lower. This is an example of using the concept of prudence.
Question 4
1. 2. 3. 4. 5. Yes, extending a fixed asset. It will increase the value of fixed assets. Appears under fixed assets heading in the balance sheet. No, as it is an expense. Expenses are accounted for in the Profit and Loss account. Yes, this is a prepayment which is shown as a current asset in the balance sheet. Yes, withdrawal of capital by the proprietor. Shown as a reduction of capital. Yes, stock is an asset and is shown as a current asset in the balance sheet.
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Level 1 Book-keeping

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Chapter 1 The Accounting Equation and the Balance Sheet

A (e) L (f) A (g) C

(a) (b) (c) (d) (e)

Solutions to Target Practice Questions Question 1

1 000 1 800 870 6 970 2 800

Capital = Assets Liabilities Capital = 6970 2800 = 4170

4 150 3 600 10 574 _____ 18 324

(b) (c) (d)

+ Bank - Debtors + Motor Vehicle - Bank + Creditors - Capital

- Stock + Debtors + Bank + Capital

Creditors Loan L Walter Capital (balancing figure)

3 200 3 000 13 705

Capital Creditor Stax Suppliers (3000 + 600 300)

Chapter 2 Double Entry System for Assets, Liabilities and Capital

Solutions to Target Practice Questions Question 1

Office Machinery Elstead Garage

Capital 20X2 July 01

Motor Vehicle Elstead Garage 2 800

Elstead Garage 20X2 2 800 July 06

Office Machinery 420

Office Equipment Longmore & Sons 70

Longmore & Sons 20X2 July 23

20X9 April 01 April 29

Bank Furniture World

Capital 20X9 April 01 April 01

Loan S. Lee 20X9 1 200 April 03

Delivery Van 1 500

Office Furniture 20X9 1 100 April 26

20X9 April 26 April 30

Office Furniture Cash

Furniture World 20X9 200 April 20 800

Chapter 3 Recording Double Entry for Stock

Solutions to Target Practice Questions Question 1

Capital 20X7 March 01

Office Furniture 460

Returns Outwards 20X7 March 08

B Wright 20X7 156 March 19 March 30

Returns Inwards Bank

Sales 20X7 March 12 B Wright

Motor Vehicle 3 600

20X7 March 23 Bank

Scales Motors 20X7 3 600 March 15

20X7 March 19 B Wright

Capital 20X7 October 01

20X7 October 02 Cash October 23 Loan R Nandha October 31 J Durrant

Bank 20X7 8 000 October 21 October 29 1 200 303

Motor Vehicle M Price

20X7 October 03 October 07

Purchases 250 179

20X7 October 13 Returns Outwards October 29 Bank

M Price 20X7 October 03 32 100

Fixtures & Fittings

J Durrant 20X7 345 October 26 Returns Inwards October 31 J Durrant

Sales 20X7 October 11 J Durrant October 17 Cash

Returns Outwards 20X7 October 13 M Price

Motor Vehicle 1 990

Loan R Nandha 20X7 October 23

Solutions to Target Practice Questions Question 1

Capital Sales Capital

Office Equipment Rent Cash Stationery A Smart