Theory question 106
Books of Original Entry6. Dan Jumbo started business on 1/1/94 with the following:
Building N100,000
Stock of goods N40,000
Motor van N50,000
Cash N10,000
During the month, he undertook the following transactions:
5/1/94 Sold goods for cash N5,000
10/1/94 Sold goods on credit N20,000
12/1/94 Bought goods on credit N10,000
15/1/94 Cash Sales Banked N15,000
18/1/94 Paid cash for office stationery N2,000
20/1/94 Received cash from debtors for goods N5,000
22/1/94 Paid cash for office expenses N1,000
23/1/94 Paid salaries by cheque N4,000
24/1/94 Sold goods for cash N7,000
25/1/94 Sold goods on credit N5,000
26/1/94 Bought goods on credit N3,000
27/1/94 Bought goods for cash N2,500
28/1/94 Withdrew money from bank for owner's use N1,500
29/1/94 Office cash banked N5,000
31/1/94 Paid electricity by cheque N1,500
You are required to record the above transactions in the appropriate books of original entry.
Show the model answer
(i) Journal (opening entry) 1/1/94: Dr Building 100,000; Stock 40,000; Motor van 50,000; Cash 10,000; Cr Capital 200,000 (being assets introduced).
(ii) Cash book (cash and bank columns)
Dr cash: 1/1 balance 10,000; 5/1 sales 5,000; 20/1 debtors 5,000; 24/1 sales 7,000 = 27,000.
Dr bank: 15/1 cash (contra) 15,000; 29/1 cash (contra) 5,000 = 20,000.
Cr cash: 15/1 bank (contra) 15,000; 18/1 stationery 2,000; 22/1 office expenses 1,000; 27/1 purchases 2,500; 29/1 bank (contra) 5,000; balance c/d 1,500.
Cr bank: 23/1 salaries 4,000; 28/1 drawings 1,500; 31/1 electricity 1,500; balance c/d 13,000.
(iii) Sales day book: 10/1 debtor 20,000; 25/1 debtor 5,000; total 25,000 to the sales account.
(iv) Purchases day book: 12/1 supplier 10,000; 26/1 supplier 3,000; total 13,000 to the purchases account.
Credit sales go to the sales day book, credit purchases to the purchases day book, all cash and bank movements to the cash book, and the opening assets to the journal.