Theory question 105
Double Entry and the LedgerAlhaji Mohammed Garuba started business on January 1, 1991 with a capital of ₦16,000. The following transactions were carried out during the month of January:
Jan.
1. Purchased furniture by cash ₦2,400
2. Purchased stationery ₦200 cash
3. Purchased goods by cash ₦3,500
4. Purchased goods on credit from Mallam Nagogo ₦5,000
15. Sold goods for cash ₦6,000
18. Sold goods to Charlotte Umedo on credit ₦2,400
20. Paid advertisement expenses ₦200 cash
25. Paid Mallam Nagogo ₦3,500 cash being part of settlement of goods purchased
28. Paid rent in cash ₦300
31. Paid salaries and wages ₦600 cash.
You are required to write up Ledger Accounts recording the above transactions and extract a Trial Balance
Show the model answer
Cash Account: Dr capital 16,000; sales 6,000; total 22,000 / Cr furniture 2,400; stationery 200; purchases 3,500; advertising 200; Mallam Nagogo 3,500; rent 300; salaries and wages 600; balance c/d 11,300
Capital Cr 16,000; Furniture Dr 2,400; Stationery Dr 200; Purchases Dr 3,500 + 5,000 = 8,500; Mallam Nagogo: Cr 5,000, Dr 3,500, balance 1,500 Cr; Sales Cr 6,000 + 2,400 = 8,400; Charlotte Umedo Dr 2,400; Advertising Dr 200; Rent Dr 300; Salaries and wages Dr 600
Trial Balance as at 31 January 1991: Dr furniture 2,400, stationery 200, purchases 8,500, Charlotte Umedo 2,400, advertising 200, rent 300, salaries and wages 600, cash 11,300 = ₦25,900; Cr capital 16,000, Mallam Nagogo 1,500, sales 8,400 = ₦25,900
Every cash payment, including the furniture on 1 January, must appear in the cash account.