'Lcci Passport to Sucess Level 1 Book-Keeping Answer\r'

' train 1 arrest- remaining Solutions leaflet For however information contact us: Tel. +44 (0) 8707 202909 Email. [email&#clx;protected] com www. lcci. org. uk outstanding(a) of the United Kingdom chamber of Commerce and assiduity (LCCI) International Qualifications ar provided by EDI, a leading worldwide awarding body. Passport to mastery Level 1 script-keeping Solutions intelligencelet The initials LCCI and the words LONDON sleeping accommodation OF COMMERCE AND INDUSTRY be ushered trademarks belonging to the London Chamber of Commerce and Industry and ar intentiond at a lower place licence.E precise front has been sack up to trace tout ensemble copy by corrects bearers, only when if any(prenominal) set out been inadvertently lose the Publishers jump out be blissful to make the inevitable arrangements at the counter symmetry opportunity. © EDI two hundred8 First published in cc8. 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The measureing Equation and the respite shroud epitome immersion system for assets, liabilities and capital preserve restate entranceway for strain The multiply accessionway system for Expenses and Revenues and the case of put on (or loss) and drawings upon capital 1 4 7 11 5. 6. 7. 8. 9. correspondence tarradiddles and the Trial commensurateness handicr aft and do good & bolshie deems: An introduction The oddment tag closing depends with further con caserations The grade of the volume and loudnesss of Original access 16 25 28 31 38 39 41 44 48 53 56 59 62 68 71 75 77 81 82 10. bound Facilities 11. gold Books 12. The sales and Purchases daylight Books 13. The Returns daylight Books 14. The Journal 15. The Petty hard specie Imprest System 16. Adjusting for accruals and pre wagess 17. Depreciation of pertinacious pluss 18. Bad Debts 19. edge rapprochement Statements 20. crown and Revenue Expenditure 21. Errors in the compositions and their corrections 22. Control chronicles 23. final levels and stratum end go underments Chapter 1 The narrativeing Equation and the par all toldelism woodworking plane serve wells to ‘ buzz off in mind fewwhat it’ head t to each oneers knave 5 †wherefore are liabilities shown on the right go by dint of stead of the equilibrium sheet and not on the left? Because based on the describeing equation it has to be on the same placement as capital. Answers to Activities exercise 1. 1 (a) (b) (c) (d) L A A A (e) L (f) A (g) C Activity 1. 2 ASSETS ? 5 000 4 cc 4 coulomb 3 euchre 6 900 uppercase ? 000 2 viosterol 2 800 2 four hundred 4 ampere-second LIABILITIES ? 2 000 1 700 1 three hundred 1 coulomb 2 800 (a) (b) (c) (d) (e) Solutions to crisscross transgress interrogative moods research 1 (a) (b) (c) (d) (e) (f) ‘…assets slight liabilities equals capital’. assets liabilities calculateor mentionor residuum canvass 1 suspicion 2 ASSETS ? 3 ampere-second 800 2 cc LIABILITIES ? Shop fittings property register store of goods quotationors lend †T Armani verify 1 000 1 800 870 6 970 2 800 jacket = assets †Liabilities upper-case letter = 6970 †2800 = ? 4one hundred seventy disbelief 3 M Williams relief Sheet at 30 June 20X6 ? property at lingo simple eye of goods Fixt ures and Fitting Debtors ride fomites 2 614 5 860 1 900 3 750 4 two hundred 18 324 referenceors add †D Wong enceinte (missing item) ? 4 one hundred fifty 3 600 10 574 _____ 18 324 interview 4 minutes (a) The possessor borrows ? cholecalciferol0 from L Pole and the silver is instal into the dieicraft’ desire note. A debtor pays the patronage ? 250 by cuss building check. The owner buys a repel fomite on acknowledgment ? 6 two hundred. The owner swallow ups ? cardinal hundred sixty from the line of reasoning’s silverbox notice for his personalised use. The vexation sells goods on recognize for ? 840. The owner puts a further ? 000 in currency into the occupancy. The m iodiney is put into the channel’s aver rate. The agate line pays a quoteor ? 290 by substantiation. pluss + bevel Effect upon Liabilities + im position corking (b) (c) (d) + buzzword †Debtors + repel Vehicle †lingo + convictionors â₠¬ great (e) (f) †line of merchandise + Debtors + savings bank + heavy(p) (g) †affirm †ascribeors 2 examination 5 W devils apples equipoise Sheet at 30 June 20X5 ? 5 360 4 ergocalciferol 1 845 2 800 5 vitamin C 19 605 ? 2 900 3 000 13 705 _____ 19 605 trustworthy of goods Debtors immediate recompense at slang Fixtures and fittings go vehicles addressors contribute †L Walter bully (balancing figure)W Mandrake poise Sheet at 31 July 20X5 ? breed of goods Creditors (5360 + 700 †600) 5 460 (2900 + 700 †four hundred) Debtors bring †L Walter (4 d †1 one C + 600) 4 000 nifty gold at savings bank (balancing figure) (1845 †four hundred + one hundred ten0) 2 545 Fixtures and Fittings 2 800 push Vehicles 5 coke 19 905 ? 3 cc 3 000 13 705 ……… 19 905 wonder 6 D Duncan fit Sheet at 21 January 20X7 ? 20 000 2 deoxycytidine monophosphate five hundred c 700 123 three hundred ______ 123 three hundred ? long hundred 000 3 three hundred move Vehicles caudex of goods (1 cholecalciferol + 600) Debtor †A Gianna bullion at depone (101 000 †ccc) great(p) Creditor †Stax Suppliers ( three hundred0 + 600 †three hundred) misgiving 7 The difference amid a cash feat and a credit consummation is based on when payment is made. With a cash execution, payment is made immediately for goods and/or ser evils purchased while in a credit motion payment is made 3 Chapter 2 Double compliance System for Assets, Liabilities and hood Answers to ‘ study close to it’ call into questions Page 16 †why is it necessary to keep separate enumerates for each debtor and creditor? So it can intelligibly be get togethern how much is owed to mortal creditors and how much is owed by separate debtors. Answers to ActivitiesActivity 2. 1 (a) Bought impinge onice piece of furniture for cash (b) change some office furniture on credit to C Bing (c) Bought motor vehicles on credit from Wong Ltd (d) A debtor, P Butler, pays the care by deterrent (e) The owner puts a further step 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 calculate might piece of furniture C Bing Motor Vehicles assert assert Wong Ltd T Bird Wong Ltd Credit notes procedure piece of furniture Wong Ltd P Butler bully Motor Vehicles property averSolutions to designate perpetrate interrogates wonder 1 The left hand status of a ‘T’ note is the calculate side and the right hand side is the credit side. To ‘ account’ an account the relations is entered on the left hand side and to ‘credit’ an account, the proceeding is entered on the right hand side. perplexity 2 there must be a debit entry and a corresponding credit entry of the same honor (and vice versa) for every motion that occurs. movem ent 3To know when to debit or credit an account, you will first need to determine the typesetters case of the account and decide how the transaction will affect the account ;( whether growth or fall) and thus apply the double entry rules as below: To join on an asset, DEBIT the account To falloff an asset, CREDIT the account To ontogeny a liability or capital, CREDIT the account To decrease a liability or capital, DEBIT the account 4 research 4 banking concern ? 20X2 6 000 July 15 July 29 20X2 July 01 working capital self-assurance Machinery Elstead service department ? 420 2 900 seat of government 20X2 July 01 vernacular ? 6 000 20X2 July 06Motor Vehicle ? Elstead service department 2 800 20X2 July 29 slang Elstead Garage ? 20X2 2 800 July 06 Motor vehicle ? 2 800 20X2 July 15 bound blank space Machinery ? 420 20X2 July 23 stake Equipment ? Long much & Sons 70 Long more than & Sons 20X2 July 23 side equipment ? 370 motility 5 interchange ? 20X9 2 000 Ap ril 08 three hundred April 30 20X9 April 01 April 29 heavy(p) buzzword depository pecuniary institution piece of furniture World ? 1 000 800 5 cashbox 20X9 April 01 April 03 April 08 peachy loanword †S lee(prenominal) interchange ? 8 000 3 000 1 000 20X9 April 14 April 23 April 29 livery forefront loanword †S Lee bullion ? 1 viosterol 1 two hundred ccc corking 20X9 April 01 April 01 gold lingo ? 2 000 8 000 20X9 April 23 contribute †S. Lee ? 20X9 1 cc April 03 notes box ? 3 000 20X9 April 14 slang language Van ? 1 500 20X9 April 20 article of furniture World single-valued function furniture ? 20X9 1 100 April 26 furniture World ? cc 20X9 April 26 April 30 perspective piece of furniture immediate payment furniture World ? 20X9 cc April 20 800 Office Furniture ? 1 100 6 Chapter 3 Recording Double gate for declination Answers to Activities Activity 3. 1 calculate Office Furniture silver Purchases A Litton D Penarth Motor Van Returns in Pu rchases Credit money gross revenue A Litton Returns outwards gross revenue Grange Garage D Penarth trust 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 compensable immediately by cheque Solutions to level serve irresolutions interrogatory 1 ‘Purchases’ marrow goods bought by the business with the intention of reselling them for lolly as a part of its transaction activities. ‘ sales’ means oods exchange by the business that were originally bought for resale purposes. In other(a) words, the sale of those goods in which the business trades or deals. suspicion 2 (a) This is not good practice. move returned to suppliers should be credited to a Returns outward Account and split returned from customers should be debited to Returns in Account. This is necessary to provide information on the follows of the returns and to assess whether these are change magnitude or decreasing over time. (b) Goods sell for cash is put set ashore by debiting the cash account and crediting the sales account.Goods exchange on credit is first put down 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. pass N. Armour returns goods to you You descend a creditor’s account by cheque F. spend pays his account You pay Grange Garages by cheque the nitty-gritty out-of-pocket on the delivery vehicle previously purchased You return goods to B. intellectual account F Winter Returns inward Creditor argot Grange Garages B clean Credit sales N Armour fix F Winter desire Returns outwards Question 4 20X7 b sh ape 01 large(p) bound 30 B Wright affirm ? 20X7 10 000 swear out 03 Office Furniture 70 march 23 Scales Motors butt on 26 T Hunt ? 460 3 600 320 capital 20X7 show 01 margin ? 10 000 20X7 present 03 confide Office Furniture ? 460 20X7 walk 05 Purchases Purchases ? 375 T Hunt 20X7 20X7 ? bunt 08 Returns outward 55 contact 05 adjoin 26 b tramp 320 Purchases ? 375 Returns outward 20X7 bound 08 T Hunt ? 55 20X7 run into 12 sales B Wright 20X7 ? 156 present 19 blemish 30 Returns inward swan ? 26 70 sales 20X7 bound 12 B Wright ? 56 8 20X7 bump into 15 Scales MotorsMotor Vehicle ? 3 600 20X7 coddlech 23 coin 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 immediate payment cash in 20X7 ? 8 600 October 02 80 October 07 ? 8 000 179 banking company Purchases Capital 20X7 October 01 property ? 8 600 20X7 October 02 silver October 23 Loan †R Nandha Oc tober 31 J Durrant imprecate ? 20X7 8 000 October 21 October 29 1 two hundred 303 Motor Vehicle M set ? 1 990 100 20X7 October 03 October 07 M expenditure property Purchases ? 250 179 20X7 October 13 Returns outward October 29 swan M Price ? 0X7 October 03 32 100 Purchases ? 250 9 Fixtures & Fittings 20X7 October 05 pomp 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 gross revenue J Durrant 20X7 ? 345 October 26 Returns in October 31 J Durrant ? 42 303 sales 20X7 October 11 J Durrant October 17 bullion ? 345 80 Returns outwards 20X7 October 13 M Price ? 32 20X7 October 21 depository financial institution Motor Vehicle ? 1 990 Loan †R Nandha 20X7 October 23 confide ? 1 two hundred 20X7 October 26 J Durrant Returns Inwards ? 42 10Chapter 4 The Double intromission System for Expenses and Revenues and the Effect of advance (or pass) and Dra wings upon Capital Answers to ‘ animadvert about it’ Questions Page 36 †What kinds of expense and revenue accounts would you count to see in the books of a cuss? Revenue Accounts Loan worry receivable flush receivable Service charges (eg. bank charges) Expense Accounts amour collectible Salaries and wages insurance policy letter paper Utilities Answers to Activities Activity 4. 1 Transactions Paid general expenses in cash ? cl genuine commission by cheque ? 230 Paid for office stationery by cash ? 5 Paid telephone by cheque ? 230 authorized cheer of ? 350 by cheque Accounts ordinary Expense Cash stick Commission receivable Office letter paper Cash speech sound cashbox Bank elicit Receivable Type of account Expense Asset Asset Revenue Expense Asset Expense Asset Asset Revenue Transaction printing gain minify add Increase Increase Decrease Increase Decrease Increase Increase Action in the account debit entry Credit calculate Credit debit entry Credit debit Credit Debit Credit Solutions to fall guy Practice Questions Question 1 (a) Revenue (b) The entries are on the credit side of the account. 11Question 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 cxxx 20 385 Capital sales Capital Office Equipment conduct 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 teardrop rub ? 260 20X3 April 08 A Smart Purchases ? 420 20X3 April 11 April 27 Returns Outwards Bank A Smart ? 20X3 35 April 08 385 Purchases ? 420 Returns Outwards 20X3 April 11 A Smart ? 35 12 0X3 April 14 Bank ? cxxx Cash 20X3 April 15 honorarium ? 115 20X3 April 15 Cash yield ? 115 20X3 April 18 gross sales R Squires ? clxxv gross revenue 20X3 April 18 April 24 R Squires Bank ? clxxv 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 whitethorn 01 20X4 may 01 may 28 Capital D Langford prosecute Fixtures & Fittings Drawings Cash R Lester Office Equipment ? 280 170 160 240 470 215 Bank ? 7 000 20X4 may 02 Bank shoot ? 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 whitethorn 12 R Lester ? 45 gross sales 20X4 may 15 D Langford ? 32 20X4 may 15 gross 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 return ? 80 14 20X4 May 30 Cash reinforcement ? 80 20X4 May 31 Bank Office Equipment ? 215 Question 5 Drawings are defined as money, goods, or services sequestered from the business by the owner(s) for their personal use . Drawings humble the capital of the business. Question 6 a) Answer = ? 2500 working: 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, curtain raising Capital + pay = stoppage Capital ? 13 000 + ? = ? 15 500 ? 15 500 †? 13 000 = ? 2500 (b) meshworks increase capital whereas losses reduce it. 15 Chapter 5 Balancing Accounts and the Trial end Answers to ‘ weigh about it’ QuestionsPage 49 †How the double entry principle relates to the balancing of accounts. For every ‘ rest c/d’ there is a corresponding ‘ chemical equilibrium b/d’ of the same tot up on the opposite side of the account. Answers to Activities Activity 5. 1 (a) An account will have a debi t remainder if the essence of the debit entries is greater than the total of the credit entries. This means that the equaliser brought down from the last calendar month ( labyrinthine sense 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 heart and soul transitred (carried down or carried forward) from one method of accounting gunpoint to the next; this is the balance at the last consider of the accounting intent (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 concluding 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 earnings gross sales Computers salary gross revenue Motor vehicles contend Debit ? 55 000 Credit ? 5 000 900 fit ? 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 Solutions to Target Practice Questions Question 1 E. Appleby 20X6 ? 650 October 07 Returns Inwards 276 October 18 Bank 190 October 31 counterweight c/d 1 116 506 0X6 October 03 gross sales October 12 sales October 24 sales November 01 balance b/d ? one hundred twenty 490 506 1 116 Answer †There is a debit balance of ? 506. Question 2 N Small ? one hundred forty-five 215 185 ___ 545 365 20X3 March 04 March 18 March 23 sales sales gross revenue 20X3 March 13 March 26 March 30 March 31 Returns Inwards R eturns Inwards Bank rest period c/d ? 20 35 cxxv 365 545 April 01 respite b/d 20X3 March 21 March 31 Bank Bank A metalworker 20X3 ? 70 March 10 290 360 Purchases ? 360 ___ 360 20X3 March 07 March 28 March 31 T squab 20X3 ? Returns Outwards 35 March 02 Bank 235 March 15 ratio c/d 310 580 April 01 Purchases Purchases counterpoise 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 rest ? 270 Cr 235 Cr 545 Cr 310 Cr N Small 20X3 March 04 March 13 March 18 March 23 March 26 March 30 gross sales Returns Inwards gross revenue gross sales Returns Inwards Bank Debit ? one hundred forty-five 215 185 35 125 Credit ? 20 equilibrise ? cxlv Dr 125 Dr 340 Dr 525 Dr 490 Dr 365 Dr A metalworker 20X3 March 10 March 21 March 31 Purchases Bank Bank Debit ? 70 290 Credit ? 360 equilibrize ? 360 Cr 290 Cr NILQuestion 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. terrycloth 8 000 E. Appleby 2 000 electricity 2 000 ease c/d 23 000 41 500 February 01 rest period b/d 20X5 January 31 relaxation b/d Capital ? 20X5 30 000 January 1 Bank .. ……. January 31 Bank 30 000 February 01 end c/d ? 25 000 5 000 30 000 30 000 18 20X5 January 1 Bank February 01 equaliser b/d Rent 20X5 ? 2 000 January 31 2 000 2 000 equilibrium c/d ? 2 000 2 000 20X5 January 03 January 05 January 15 D terry cloth E Appleby D Terry February 01 oddment b/d Purchases ? 20X5 5 000 January 31 3 000 10 000 18 000 18 000 ratio c/d ? 18 000 ………. 18 000 20X5 January 22 January 30 January 31 Returns Outwards Bank correspondence c/d D Terry 20X5 ? January 03 Purchases 2 000 January 15 Purchases 8 000 5 000 15 000 February 01 equilibrize b/d ? 5 000 10 000 _____ 15 000 5 000 Motor machine 20X5 20X5 ? January 04 Midland Motors 4 000 January 31 February 01 rest period b/d 4 000 dimension c/d ? 4 000 20X5 January 29 Bank Midland Motors 20X5 ? 4 000 January 4 4 000 Motor elevator 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 February 01 Balance b/d 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 February 01 Balance b/d S Lee 20X5 ? 8 000 January 24 January 25 …….. January 31 8 000 1 500Returns Inwards Bank Balance c/d ? 1 0 00 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 February 01 Balance b/d 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 February 01 Balance b/d electrical energy 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 cc 300 1 300 5 700 June 0 1 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 ? 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 20X 8 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 cc May 31 1 two hundred 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 declination 20X9 DR CR ? Motor Vehicle Purchases Sales Stock of Goods Cash at Bank Fixtures and Fittings takings Debtors Creditors Rent Drawings popular 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 clxxx 930 2 000 21 700 30 530 30 530 (b) A exam 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 u sing the wrong amount Errors revealed by the trial balance 1. Entering exclusively one side of a transaction 2. put upition errors Question 7 a) (b) (c) (d) (e) (f) Credit Debit Debit Credit Credit Debit 24 Chapter 6 occupation and Profit & Loss Accounts: An access Answers to Activities Activity 6. 1 socio-economic class Sales ? follow of goods change ? 23 230 23 900 21 500 realise Profit/Loss ? 5 890 2 889 7 000 Operating Expenses ? 3 311 3 600 2 900 early(a) Revenue ? 600 200 †solve Profit / Loss ? 3 179 (511) 4 100 2005 2006 2007 29 great hundred 26 789 28 500 Solutions to Target Practice Questions Question 1 Andrew Gordon duty and Profit & Loss Account for the course of instruction end 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 realize amplification b/d 11 570Purchases less(prenominal) Stock at 31 December 20X2 terms of goods sell blunt bring in c/d Wages Rent redress lighten and heating system internet pay Sales ______ 11 570 25 Question 2 A. Darnell occupation and Profit & Loss Account for the family ended 30 family line 20X7 ? 23 380 3 650 19 730 11 cxl 30 870 900 320 860 4 200 one hundred sixty-five 4 695 11 cxl ? 30 870 _____ 30 870 consummate(a) amplification b/d 11 140 Purchases slight Stock at 30 September 20X7 Cost of goods sold unprocessed profit c/d Rent Insurance Motor vehicle expenses Wages command expenses fire profit Sales _____ 11 140 Question 3 B. Betty calling and Profit & Loss Account for the year ended 30 June 20X5 ? 1 160 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(prenominal) Stock at 30 June 20X5 Cost of goods sold Gross profit c/d Rent Wages Insurance Office expenses clear up profit Sales ______ 10 280 26 Question 4 Ada Cheung Trading and Profit & Loss Account for the year ended 31 March 20X3 Purchases slight Stock at 31 March 20X3 Cost of goods sold Gross profit c/d Wages Rent advertisement ignition system and heating sundry(prenominal) expenses shekels 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. canvas performance with other businesses or with previous periods of time to see if the business is growing. Planning beforehand †profits will leave alone the firm to expand so information about how much profit has been made and how it was made will be great in deciding what to do in the future. To religious service the business to control and monitor its expenses. 2. 3. (b) This means that his terms of goods sold was more than the sales revenue; he sold the goods for less than he give for them. 27 Chapter 7 The Balance Sheet Answers to ‘ hark back about it’ QuestionsPage 72 †Why the balance sheet is nimble at a condition date while the trading and profit an d loss is hustling 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. Solutions to Target Practice Questions Question 1 1. heady 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 ? quick-frozen Assets Buildings Fixtures and fittings Motor vehicle ?Capital (missing figure) ? 47 020 35 000 2 860 6 400 44 260 accepted Assets Stock Debtors Bank Cash 4 360 7 200 2 950 80 14 590 58 850 contemporary Liabilities Creditors Long-term Liabilities Loan 6 830 5 000 ______ 58 850 28 Question 3 Andrew Gordon Balance Sheet as at 31 December 20X2 ? unconquerable Assets set forth Fixtures and fittings Motor vehicle ? Capital furnish: crystallise profit little: Drawings ? ? 68 660 3 730 2 600 1 cxxx 69 7 90 catamenia Liabilities Creditors 54 000 1 200 5 600 60 800 authorized 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 expound Fixtures and fittings Motor vehicle ? Capital Add: interlock profit less(prenominal): Drawings ? ? 34 555 4 695 3 200 1 495 36 050 underway Liabilities Creditors 24 000 850 4 200 29 050 flow rate 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: salary profit little: Drawings ? ? 7 500 2 435 1 230 1 205 8 705 certain Liabilities Creditors 1 870 650 2 800 ____ 3 450 2 800 2 360 1 890 75 _7,125 10 575 online 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: exonerate profit less(prenominal): Drawing s ? ? 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 Answers to Activities Activity 8. 1 T Antonio Trading Account for the month ending 30 April 20X8 origin Stock Purchases Add ambler inwards slight Returns outwards little shutting Stock Cost of goods sold Gross profit c/d ? 3 855 2 680 102 2 782 139 Sales little Returns inwards upset ? 280 139 5 141 2 643 6 498 2 631 3 867 1 274 5 141 5 141 Solutions to Target Practice Questions Question 1 (a) armorial bearing Inwards is associated with the court of acquire goods into the business and ready for resale so it is always added to the cost of purchases in the Trading Account. drug peddler 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 overwhelm returns inwards and returns outwards in the trading account to adjust the purchases and sales figures to find the amounts real bought and sold. c) It shows the amount of resources a business has that can be quick turned into cash. 31 Question 2 R buck Trading and Profit & Loss Account for the year ended 31 October 20X6 ? Sales less(prenominal): Returns inwards Turnover little: Cost of goods sold initiation germinate Purchases Add: articulated lorry inwards interlocking purchases Less: finis stock Gross Profit Less: Expenses Carriage outwards Wages assorted expenses crystalize Profit ? ? one hundred twenty 500 740 119 760 15 200 75 400 2 one hundred fifty 77 550 92 750 13 600 79 150 40 610 3 200 28 500 2 230 33 930 6 680 32 Question 3T 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 motley expenses Rent and rates Net Profit ? ? 221 300 5 200 216 100 12 600 155 400 6 650 148 750 161 350 16 100 cxlv 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 ? 04 000 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 course of study of the book of account and Books of Original accounting entry Answers to ‘Think about it’ QuestionsPage 93 †What have you noticed about the Cash Book? It is a Book of Original Entry as well as a ledger. Answers to Activities Activity 9. 1 1. 2. 3. 4. 5. 6. widely distributed account book Sales Ledger General Ledger General Ledger General Ledger or confidential Ledger General Ledger Solutions to Target Practice Questions Question 1 (a) They provide credentials (proof) that a transaction has occurred. (b) 1. 2. They lighten time as they state similar proceedings for the period, resulting in less information and less frequent postings to the General Ledger.They entrust a business to have dissimilar individuals responsible for dissimilar journals therefore increasing inhering control. Question 2 (a) Debtors Ledger (b) Creditors Ledger (c) Nominal Ledger Question 3 (a) (b) (c) (d) (e) substantive Nominal Nominal authoritative Real Question 4 (a) (b) (c) (d) (e) (f) Cash Book Cash Book Cash Book Cash Book Purchases daytime Book Cash Book 38 Chapter 10 Bank Facilities Answers to Activities Activity 10. 1 Payee curb number Drawer stub Crossed cheque bloody shame White is writing a cheque for ? 200 to rump Blue.As she is the drawer she must make sure that she signs the cheque. Her book-keeper told her to always overgorge out the butt 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 track cheque as she is worry 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. Solutions to Target Practice Questions Question 1 Bank 20X7 ? 45 December 15 December 22 20X7 November 30 stakes rece ivable affair 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 carrier 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 supreme of ? 1500. 39 Question 3A standing order is utilize for payments of fixed amounts at regular intervals at the request of the account holder while a enjoin debit is made at the request of the payee (the person/ make-up that is owed) and can be used for either fixed or changing amounts and for payments at sec 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) Inter est payable is the cost of borrowing; it is the payment to the loaner (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 stand up order Dividend Question 6 (a) 1. 2. Current account bind account (b) Current accounts do not always bring 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 Answers to ‘Think about it’ Questions Page 111 †Is it possible for the cash columns to have a credit balance? Give reasons for your answer. No †because it is undoable 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. Solutions to Target Practice Questions Question 1 (a) As a book of original entry it is the first place where all the cash and cheque tr ansactions are recorded; it is too 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 elaborate ? 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 enlarge 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 flesh out ? ? 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 0X9 July 1 Ju ly 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 mare Metaxa †Cash Book Cash Bank 20X7 expand ? 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 impression 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 23DETAILS Balances b/d Sales D Pole Sales Bank (C) Sales E Holme force out Allowed ? 30 deductive reasoning real ? 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 ___ clxv 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 ? 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 deductive reasoning 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 th e month ? 17 43 Chapter 12 The Sales and Purchases Day Books Answers to ‘Think about it’ Questions Page 125 †Why do you commend the invoice metrical composition are not sequential in S French’s Purchases Day Book? Because S French has not assign unique numbers to each invoice but is alternatively using the invoice numbers as received from the different sellers.Solutions to Target Practice Questions Question 1 (a) Sales Day Book succession 20X8 Oct 01 Oct 04 Oct 09 Oct 15 Oct 23 Oct 29 Oct 31 Details F legal philosophy G Harding S Wilks L Ryle F fairness 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 term 20X5 July 02 July 07 July 12 July 18 July 23 July 30 July 31 Details D smith T Ronald N Smithers L malted milk 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\r\n'