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Chapter 2
Processing accounting information
This chapter covers briefly the following topics:
● Double entry bookkeeping and ledger accounts
● The debit and credit rules
● Recording transactions
● Balancing off the accounts
● Trial balance
Double entry bookkeeping and ledger accounts
Double entry bookkeeping is a set of conventions for recording business trans-actions in a book called the ‘ledger’. The ledger is divided into sections calledaccounts. The ‘accounts’ are used to show the detailed increases and decreasesin each financial statement item.
Double entry bookkeeping is based on the same idea as the accounting equation.Every accounting transaction entered must involve an equal alteration to bothsides of the accounting equation. As a result, each transaction has two equalbut opposite effects, and the double entry bookkeeping means to record the dualeffects of each business transaction.
Each account is split into two halves:
● the LEFT half is called the DEBIT side (Dr)
● the RIGHT half is called the CREDIT side (Cr).
For that reason, identifying debits and credits is quite simple.In a system of double entry bookkeeping, every accounting transaction must be
entered in ledger accounts both as a debit and as an equal but opposite credit.The principal accounts are contained in a ledger called the nominal ledger.
When the total amount of money on the DEBIT side of an account is greater thanthat on the CREDIT side, the account is said to have a DEBIT BALANCE. Similarly,when the total amount of money on the CREDIT side of an account is greaterthan that on the DEBIT side, the account is said to have a CREDIT BALANCE.
An account which contains a DEBIT BALANCE represents either an ASSETor an EXPENSE.
Chapter 2 • Processing accounting information
An account with CREDIT BALANCE represents LIABILITY, CAPITAL orINCOME.
The debit and credit rules
The debit and credit rules in double entry bookkeeping are as follows:
Recording transactions: the process
Step 1Identify the transaction and specify each account affected by the trans-action (asset, liability, owners’ equity, revenue (income) or expense).
Step 2Determine whether each account is increased or decreased by the trans-action. Use the rules of debit and credit.
Step 3Create the double entry based on the debit and credit rules as described above.
Balancing off the accounts
At suitable intervals, the entries in each ledger account are totalled and a balance is struck (also known as closing off the accounts). This process createsnil balances in all revenue and expense accounts for the commencement of the new accounting period, while all balance sheet accounts have balances that arecarried down at the end of the accounting period and brought down in the newaccounting period.
Trial balance
A trial balance lists all the accounts of a business, with their balances. It is dividedbetween accounts with debit balances and accounts with credit balances.
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an entry on the DEBIT side is:
– an increase in an ASSET, orEXPENSE
– or, a decrease in a LIABILITY,CAPITAL or INCOME
an entry on the CREDIT side is:
– an increase in a LIABILITY,CAPITAL, or INCOME
– or, a decrease in an ASSET,or EXPENSE
The total of each balance must be the same (check by entering on the trial balance the balance of each account and then add each side).
The trial balance is used as a basis for preparing a profit and loss accountand a balance sheet.
Questions
Question 1
The transactions below are for the business ‘Consulting Services Ltd’ owned by Jere Duckin. The business began on 1 September 20x8 and has been operating for one month. The following transactions took place in the month of September:
20x8Sept. 2 The owner’s initial investment for the business to commence was
$85,000 cash.7 A small shop costing $50,000 was purchased and was paid for with a
cheque.14 Office equipment costing $14,500 was purchased and paid for with
cash.19 Shop fittings and furniture which cost $5,600 were purchased on credit
from Real Furniture Ltd.28 A loan for $15,000 was obtained from a local branch of the NatWest
Bank. The money was used to purchase a motor vehicle. The loanrepayments begin on 1 December 2008.
30 Paid $3,000 to Real Furniture Ltd for the fittings and furniture pur-chased on 19 Sept.
Required
1 For each transaction identify the accounts that will be involved.
2 Use the blank T-accounts supplied below to enter each transaction. You do notneed to enter dates.
Accounts involved with each transaction
Transaction number: Account title Account title(DEBIT) (CREDIT)
1
2
3
4
5
6
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Chapter 2 • Processing accounting information
BANK
Question 2
Interflow Plumbing Services Ltd began operating from its head office in Birminghamthree months ago. Transactions relating to these three months have been as follows:
20x7Sept. 5 The owner, Simon Collin, invested £155,000 of his own money for the
business.13 He purchased a small office and warehouse for £145,000. A deposit of
£35,000 was paid and a mortgage for the balance was taken out fromHSBC.
28 Office furniture costing £24,000 was purchased from PC World Ltd on credit.
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Oct. 5 Five vans were purchased from Motor Centre Ltd. Credit of £85,000was arranged with the car company while the balance of the purchasecost, £29,000 was paid for with cash.
20 A payment was made to PC World Ltd for £12,400.
Nov. 3 One van was sold to another business for £22,800 with an agreementfor the payment to be made within two months.
15 A bank overdraft facility for £25,000 was arranged with the local bank.21 Equipment was purchased for £27,000 and paid for with cash.29 Payment was made to PC World Ltd to settle the outstanding balance
owed on the account.
Required
1 For each transaction identify the accounts that will be involved.
2 Use the following blank T-accounts to enter each transaction. You do not need toenter dates.
Accounts involved with each transaction
Transaction number: Account title Account title(DEBIT) (CREDIT)
1.
2.
3.
4.
5.
6.
7.
8.
9.
BANK
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Chapter 2 • Processing accounting information
Question 3
You employ a very inexperienced book-keeper who, since you started in business afew days ago, has recorded the following in your accounts:
Cash account
£ £1 Sept. Capital 12,000 3 Sept. Office furniture 7007 Sept. Machinery 1,000 16 Sept. Office furniture 100
25 Sept. Capital 2,000 16 Sept. Strong Tools Ltd 4,55028 Sept. Bank 3,50030 Sept. Machinery 1,500
Capital account
1 Sept. Cash £12,000 25 Sept. Cash £2,000
Office furniture
16 Sept. Cash £100 3 Sept. Cash £700
Machinery
£7 Sept. Cash 1,000
30 Sept. Cash 1,500
Tools
12 Sept. LTS Ltd £5,000
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Strong Tools Ltd
£12 Sept. Tools 5,00016 Sept. Cash 4,550
Bank account
28 Sept. Cash £3,500
Required
1 Re-write the accounts as they should have been entered using the following blankT-accounts, and
2 Prepare a balance sheet as at 30 September from the information portrayed by therevised accounts. Use the blank balance sheet provided.
Cash account
£ £
Capital account
Office furniture
Machinery
Tools
Strong Tools Ltd
Bank account
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Chapter 2 • Processing accounting information
Balance sheet as at 30 September£
Fixed assetsMachineryOffice furnitureTools
Current assetsBankCash
Current liabilitiesCreditorsCapital
Question 4
1 Show the accounts involved in the transactions below under the main five headingsof the financial statements (i.e. assets, liabilities, equity, revenue and expenses):
Modern Decorating Services Ltd
April 1 Brian Smith started business by investing $10,000 in cash.3 Purchased premises for $14,000 payable in ten equal annual instalments.4 Paid the first instalment from 3 May.4 Purchased $1,500 decorating supplies on credit.5 Paid wages $2,000.8 Received $8,000 for services sold.8 Invested a further $3,000 in the business.
10 Bought a van for $2,000 cash.11 Sold services on credit for $4,000.12 Paid for the supplies from 4 May.15 Paid registration on van $300.16 Received $3,000 from clients from 11 May service.16 Withdrew $1,000 for own use.
2 Advise what accounts would be debited and credited.
Question 5
Show the general journal entries that are needed to record the following transactionsof Johnson’s Cleaning Services Ltd:
a The owner transferred $2,000 cash and a computer worth $5,000 to the business.b Cleaning fees received $1,283.c Purchased cleaning material on credit $766.d Purchased cleaning tools $240.
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e The business purchased cleaning equipment for $10,000, paid $2,500 by chequeand signed a one year, 12 percent loan payable for the remainder.
f Dry cleaning of uniforms $70.g Paid wages $810.h Drawings of cash by owner $200.i Drawings of cleaning materials by owner $80.j Cleaning fees invoiced $1,500.
Question 6
Even though a business’s trial balance balanced, the following errors have been detected.You are required to prepare the correcting journal entries.
a A payment of $550 for rent was incorrectly recorded as $55.
b A $210 debt to rent was incorrectly debited to insurance.
c A receipt of $90 from an account customer was incorrectly recorded as a debit totrade creditors and credit to cash at bank.
d An invoice for $200 for fees had not been recorded.
e Cash drawings of $100 was incorrectly debited to the bank loan account.
Question 7
The trial balance of Copying Specialist Service Ltd as at 31 July 20x8 was as follows:
Copying Specialist Service LtdTrial balance as at 31 July 20x8
Account name Debit ($) Credit ($)
Cash at bank 22,000Trade debtors 7,000Photocopy supplies 700Equipment 15,000Motor vehicles 16,200Trade creditors 7,800Capital 46,950Drawings 250Photocopying fees 43,000Supplies used 8,200Vehicle expenses 6,200Wages 18,000Office expenses 4,200
97,750 97,750
Questions
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Chapter 2 • Processing accounting information
Transactions for the month of August were:
20x8August 4 Purchased photocopy supplies $150.
7 Cash fees for photocopying $50.12 Receipts from debtor $4,000.13 Billed customers for photocopying services $8,000.16 Cash fees for photocopying $80.
Paid fortnightly accounts:vehicle expenses $250wages $1,000office expenses $310
18 Paid $7,000 owing to creditors.21 Purchased photocopy supplies $500.25 Cash fees for photocopying $110.26 Drawings by owner:
cash $100supplies $40
27 Billed customers for photocopying services $7,800.29 Paid fortnightly accounts:
vehicle expenses $210wages $1,000office expenses $290
30 Purchased photocopy supplies $600.31 Photocopying supplies used for the month $710.
Required
1 Record the above transactions in the general journal.
2 Prepare a trial balance as at 31 August 20x8.
Question 8
Five general ledger accounts are shown below in T-account format. Describe thetransactions that took place following the recording of double entries.
Cash at bank Purchases
$ $ $ $(c) 760 (a) 1,000
Trade creditors Purchase returns
$ $ $ $(b) 200 (a) 1,000 (b) 200(c) 800
Discount received
$ $(c) 40
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Question 9
Below is a list of transactions for July 20x6 for Painting Jobs Done Ltd in its first monthof operations:
20x6July 1 Elton John invested $10,000 cash to start Painting Jobs Done Ltd. He also
borrowed $5,000 from his bank as an interest-only loan for three years.3 He rented a shop and paid $440 rent for the first month.5 Purchased painting equipment for $2,800 cash and bought supplies on
credit for $1,120.6 Purchased a second-hand station wagon as a work vehicle for $5,500 cash.8 Paid $550 in advance for newspaper advertising.
10 Billed clients $2,400 for completed work.13 Billed clients for $900.15 Paid $250 for telephone installation.17 Received $500 from a client billed on 10 July.20 Received $750 for a job completed today.23 Paid wages of $1,180.25 Paid creditors $720.28 Withdrew $1,100 for his own use.31 Found that $750 worth of supplies were still on hand.
Required
1 Record all transactions in the general journal.
2 Prepare a trial balance as at 31 July 20x6.
3 Prepare a profit and loss statement for the month.
4 Prepare a balance sheet as at 31 July 20x6.
Question 10
Dixens Ltd, a wholesaler of electrical equipment, starts business on 1 January with£100,000 in cash.
Jan. 2 Purchases warehouse for £35,000 and pays cash.5 Purchases on credit stock of electrical equipment for £8,500 from CU
Supplies Ltd.7 Pays £25,000 cash into a business bank current account, and £5,500 into
a business bank savings account.9 Sales of electrical equipment for £6,100 and receives cash.
11 Pays advertising £1,140 by cheque.13 Buys a second-hand motor van for £4,500 and pays by cheque. Original
cost of van was £15,000.14 Pays van tax £180 by cheque.
Pays insurance on van £350 by cheque.Purchases petrol for £67 and pays cash.
17 Pays wages £500 in cash.19 Purchases packing machinery for £940 and pays by cheque.
Questions
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Chapter 2 • Processing accounting information
21 Sales on credit of electrical equipment to Small Electrical Shop Ltd for£3,100.
23 Purchases on credit stock of electrical equipment for £1,500 from CUSupplies Ltd.
25 Pays internet bill of £40 by cheque.26 Pays wages in cash £450.29 Sells on credit all remaining stock of electrical equipment for £8,500
to Dr X.30 Pays general expenses of £1,000 in cash.
Required
1 Record all transactions in T-accounts.
2 Prepare a profit and loss statement for the month.
3 Prepare a balance sheet as at 31 January.
Question 11
A university graduate student has extracted the following trial balance.Note: the amounts are correct per the ledger accounts, but entered under their
incorrect headings of debit balances or credit balances.
Trial balanceDr Cr£ £
Capital 51,000Premises 37,000Motor vehicles 8,000Office equipment 4,000Sales 16,400Purchases 9,200Rates 1,100Wages and salaries 4,100Insurances 500General expenses 1,100Trade debtors 6,700Trade creditors 5,000Advertising 700
48,300 96,500
RequiredRe-draft the above trial balance showing the amounts of the various accounts undertheir correct headings of debit balances or credit balances.
Question 12
David Beckam, a sole trader, does not have any accounting background, but he hasmanaged to extract the following trial balance from the books of his business as at30 November 2009:
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Answers
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Dr Cr£ £
Purchases 4,990General office expenses 990Bank overdraft 1,880Sales 10,880Wages and salaries 1,880Cash in hand 90Sundry debtors 6,100Sundry creditors 1,990Office furniture 2,900Capital account 1 December 2008 ???
18,830 12,870
Clearly, David is unable to ascertain the balance of the capital account at 1 December2008. Also, there are obviously errors in the above trial balance, as all the amountsare correct per the ledger accounts, but some entered under the incorrect column.
RequiredRe-draft the above trial balance showing the amounts of the various accounts undertheir correct headings of debit balances or credit balances, and insert the correct balanceof the capital account as at 1 December 2008.
Answers
Question 1
Requirement 1
Accounts involved with each transaction
Transaction number: Account title Account title(DEBIT) (CREDIT)
1 Bank Capital
2 Shop Bank
3 Equipment Bank
4 Fittings and furniture Trade creditors
5 Motor vehicle Loan
6 Trade creditors Bank
Requirement 2
Capital – Jere Duckin
$Bank 85,000
Chapter 2 • Processing accounting information
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Bank
$ $Capital 85,000 Shop 50,000
Equipment 14,500Trade creditors 3,000
Shop
$Bank 50,000
Office equipment
$Bank 14,500
Fittings and furniture
$Trade creditors 5,600
Loan
$Motor vehicle 15,000
Trade creditors – Real Furniture Ltd
$ $Bank 3,000 Fittings and furniture 5,600
Motor vehicle
$Loan 15,000
Question 2
No solution is given for this question. Students should attempt to answer it themselves.
Question 3
Requirement 1
Cash account
£ £1 Sept. Capital 12,000 3 Sept. Office furniture 700
25 Sept. Capital 2,000 7 Sept. Machinery 1,00016 Sept. Office furniture 10016 Sept. Strong Tools Ltd 4,55028 Sept. Bank 3,50030 Sept. Machinery 1,500
Answers
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Capital account
1 Sept. Cash £12,00025 Sept. Cash £2,000
Office furniture
3 Sept. Cash £70016 Sept. Cash £100
Machinery
£7 Sept. Cash 1,000
30 Sept. Cash 1,500
Tools
12 Sept. LTS Ltd £5,000
Strong Tools Ltd
£16 Sept. Cash 4,550 12 Sept. Tools 5,000
Bank account
28 Sept. Cash £3,500
Requirement 2Balance sheet as at 30 September
£Fixed assetsMachinery 2,500Office furniture 800Tools 5,000
Current assetsBank 3,500Cash 2,650
Current liabilitiesCreditors 450
14,000
Capital 14,000
Question 4
Requirement 1
Current assetsCash at bankTrade debtors (or accounts receivable)Decorating supplies
Chapter 2 • Processing accounting information
Fixed assetsPremisesMotor vehicles
Current liabilitiesTrade creditors (or accounts payable)
Long-term liabilitiesLoan
Owner’s equityCapitalDrawings
RevenueService fees
ExpensesCost of supplies usedVan expensesWages
Requirement 2
April 1 Cash at bank (A) Increase Dr $10,000Capital (E) Increase Cr $10,000
3 Premises (A) Increase Dr $14,000Loan (L) Increase Cr $14,000
4 Loan (L) Decrease Dr $1,400Cash at bank (A) Decrease Cr $1,400
Decorating supplies (A) Increase Dr $1,500Trade creditors (L) Increase Cr $1,500
5 Wages (E) Increase Dr $2,000Cash at bank (A) Decrease Cr $2,000
8 Cash at bank (A) Increase Dr $8,000Service fees (R) Increase Cr $8,000
Cash at bank (A) Increase Dr $3,000Capital (E) Increase Cr $3,000
10 Motor vehicles (A) Increase Dr $2,000Cash at bank (A) Decrease Cr $2,000
11 Trade debtors (A) Increase Dr $4,000Service fees (R) Increase Cr $4,000
12 Trade creditors (L) Decrease Dr $1,500Cash at bank (A) Decrease Cr $1,500
15 Van expenses (E) Increase Dr $300Cash at bank (A) Decrease Cr $300
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16 Cash at bank (A) Increase Dr $3,000Trade debtors (A) Decrease Cr $3,000
Drawings (E) Decrease Dr $1,000Cash at bank (A) Decrease Cr $1,000
Question 5
Requirement 1
General journalDr Cr$ $
a Cash at bank 2,000Computer equipment 5,000
Capital 7,000
b Cash at bank 1,283Cleaning fees 1,283
c Stock of cleaning materials 766Trade creditors 766
d Cleaning tools 240Cash at bank 240
e Cleaning equipment 10,000Cash at bank 2,500Loan 7,500
f Dry cleaning 70Cash at bank 70
g Wages 810Cash at bank 810
h Drawings 200Cash at bank 200
i Drawings 80Stock of cleaning materials 80
j Trade debtors 1,500Cleaning fees 1,500
Answers
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Chapter 2 • Processing accounting information
Question 6
Requirement 1
General journalDr Cr
a Rent 495Cash at bank 495
b Rent 210Insurance 210
c Cash at bank 180Trade creditors 90Trade debtors 90
d Trade debtors 200Fees revenue 200
e Drawings 100Bank loan 100
Question 7
Requirement 1No solution is given for this requirement. Students should attempt to answer it themselves.
Requirement 2
Copying Specialist Service LtdTrial balance as at 31 August 20x8
Account name Debit ($) Credit ($)
Cash at bank 15,930Trade debtors 18,800Photocopy supplies 1,200Equipment 15,000Motor vehicles 16,200Trade creditors 1,900Capital 46,950Drawings 390Photocopying fees 59,040Supplies used 8,910Vehicle expenses 6,660Wages 20,000Office expenses 4,800
107,890 107,890
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Question 8Requirement 1Goods to be placed in a shop as stock would have been bought on credit from a supplier. The source document would have been the supplier’s invoice.
Requirement 2Some of the goods originally purchased from the supplier have been returned reduc-ing the amount payable.
Requirement 3Payment of the outstanding balance to the trade creditor has occurred with $40 dis-count being allowed.
Question 9Requirement 1
Painting Jobs Done Ltd General journal
20x6 $ $July 11 Cash 10,000
Capital – Elton John 10,000Investment by ownerCash 5,000
Bank loan 5,000Interest-only three-year loan
3 Rent expense 440Cash 440
Shop rent for July
5 Equipment 2,800Cash 2,800
Painting equipment purchasedSupplies 1,120
Creditors 1,120Supplies purchased on credit
6 Motor vehicle 5,500Cash 5,500
Station wagon purchased
8 Advertising expense 550Cash 550
Newspaper advertising
10 Debtors 2,400Sales 2,400
Customers billed
13 Debtors 900Sales 900
Customers billed
Answers
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Chapter 2 • Processing accounting information
Painting Jobs Done Ltd General journal
20x6 $ $15 Telephone expense 250
Cash 250Installation of telephone
17 Cash 500Debtors 500
Debt received
20 Cash 750Sales 750
Cash sale
23 Wages expense 1,180Cash 1,180
Paid wages for month
25 Creditors 720Cash 720
Paid creditor
28 Drawings 1,100Cash 1,100
Monthly drawings
31 Supplies expense 370Supplies 370
Supplies used for July
Requirement 2Painting Jobs Done Ltd
Trial balance as at 31 July 20x6Debit Credit
Cash 3,710Debtors 2,800Supplies 750Equipment 2,800Motor vehicles 5,500Creditors 400Bank loan 5,000Capital – Elton John 10,000Drawings 1,100Sales 4,050Advertising expense 550Wages expense 1,180Supplies expense 370Telephone expense 250Rent expense 440
$19,450 $19,450
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Requirement 3
Painting Jobs Done LtdProfit and loss statement for July 20x6
$ $Sales 4,050Less Expenses
Advertising 550Wages 1,180Supplies 370Telephone 250Rent 440 2,790
Net profit 1,260
Requirement 4
Painting Jobs Done LtdBalance sheet as at 31 July 20x6
$ $Assets
Cash 3,710Debtors 2,800Supplies 750Equipment 2,800Motor vehicles 5,500 15,560
LiabilitiesCreditors 400Bank loan 5,000 5,400
Net assets 10,160
Owner’s equityCapital – E. John 10,000Add Net profit 1,260
11,260Less Drawings 1,100 10,160
Question 10
Requirement 1Students are advised to attempt the T-accounts first by themselves.
Capital
£ £30 Jan. Balance c/d 100,000 1 Jan. Cash 100,000
1 Feb. Balance b/d 100,000
Answers
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Chapter 2 • Processing accounting information
Cash
£ £1 Jan. Capital 100,000 2 Jan. Premises 35,0009 Jan. Sales 6,100 7 Jan. Bank 25,000
7 Jan. Bank savings 5,50014 Jan. Van expenses 6717 Jan. Wages 50026 Jan. Wages 45030 Jan. Gen. expenses 1,00030 Jan. Balance c/d 38,583
106,100 106,100
1 Feb. Balance b/d 38,583
Premises
£ £2 Jan. Cash 35,000 30 Jan. Balance c/d 35,000
1 Feb. Balance b/d 35,000
Trade creditor – CU Supplies Ltd
£ £30 Jan. Balance c/d 10,000 5 Jan. Purchases 8,500
23 Jan. Purchases 1,50010,000 10,000
1 Feb. Balance b/d 10,000
Bank savings
7 Jan. Cash 5,500 30 Jan. Balance c/d 5,500
1 Feb. Balance b/d 5,500
Bank
£ £11 Jan. Cash 25,000 11 Jan. Advertising 1,140
13 Jan. Motor van 4,50014 Jan. Van expenses 18014 Jan. Van expenses 35019 Jan. Machinery 94025 Jan. Internet 4030 Jan. Balance c/d 17,850
25,000 25,000
1 Feb. Balance b/d 17,850
Motor vans
13 Jan. Bank 4,500 30 Jan. Balance c/d 4,500
1 Feb. Balance b/d 4,500
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Machinery
19 Jan. Bank 940 30 Jan. Balance c/d 940
1 Feb. Balance b/d 940
Trade debtor – Small Electrical Shop Ltd
21 Jan. Sales 3,100 30 Jan. Balance c/d 3,100
1 Feb. Balance b/d 3,100
Trade debtor – Dr X
29 Jan. Sales 8,500 30 Jan. Balance c/d 8,500
1 Feb. Balance b/d 8,500
Purchases
£ £5 Jan. CU Supplies 8,500 30 Jan. P&L a/c 10,00023 Jan. CU Supplies 1,500
10,000 10,000
Sales
£ £30 Jan. P&L a/c 17,700 9 Jan. Cash 6,100
21 Jan. Small ElectricalShop Ltd 3,100
29 Jan. Dr X 8,50017,700 17,700
Advertising
£ £11 Jan. Bank 1,140 30 Jan. P&L a/c 1,140
Van expenses
£ £14 Jan. Cash 180 30 Jan. P&L a/c 59714 Jan. Bank 35014 Jan. Bank 67
597 597
Wages
£ £17 Jan. Cash 500 30 Jan. P&L a/c 95026 Jan. Cash 450
950 950
Answers
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Chapter 2 • Processing accounting information
Internet
£ £25 Jan. Bank 40 30 Jan. P&L a/c 40
General expenses
£ £30 Jan. Cash 1,000 30 Jan. P&L a/c 1,000
Requirement 2
Profit and loss account for month of JanuarySales 17,700Purchases 10,000Gross profit 7,700
Less expenses:Advertising 1,140Van expenses 597Wages 950Telephone 40General expenses 1,000 3,727Net profit 3,973
Requirement 3
Balance sheet as at 31 January£ £
Fixed assetsPremises 35,000Machinery 940Motor vans 4,500 40,440
Current assetsDebtors 11,600Bank 17,850Bank savings 5,500Cash 38,583 73,533
Current liabilitiesTrade creditors 10,000 10,000
103,973
Capital 100,000Profit for the year 3,973
103,973
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Question 11
Requirement 1Trial balance
Dr Cr£ £
Capital 51,000Premises 37,000Motor vehicles 8,000Office equipment 4,000Sales 16,400Purchases 9,200Rates 1,100Wages and salaries 4,100Insurances 500GeneralExpenses 1,100Trade debtors 6,700Trade creditors 5,000Advertising 700
72,400 72,400
Question 12
No solution is given for this question. Students should attempt to answer it themselves.
Answers
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