Theory question 106
Double Entry and the Ledger6. Akua Amoah Enterprises: During the three months ended 31st March 2000; business transactions were as follows:
Jan. 1st Commenced business by introducing N500,000 into a bank account.
5th Bought N100,000 of fixtures and fittings from Adom Supplies Limited on credit.
15th Bought office stationery for N2,000 paying by cheque.
28th Bought goods for resale for N50,000 paying by cheque.
Feb. 2nd Paid Adom Supplies Limited a cheque for N100,000.
3rd Rent of N60,000 for business premises was paid by cheque.
10th Sold some of the goods for N40,000 on credit to K. Danso.
25th Bought goods on credit from Continental Traders Limited for N70,000.
Mar. 1st Bought N15,000 of fixtures and fittings from Adom Supplies Limited on credit.
8th Received cheque payment of N40,000 from K. Danso.
12th Bought office stationery for N1,000 paying by cheque.
31st Sold goods for N30,000 receiving cheque in payment.
You are required to enter the above transactions in the relevant ledger accounts, balance off and extract a trial balance as at March 31st, 2000.
Show the model answer
Ledger accounts: Bank – Dr capital 500,000, K. Danso 40,000, sales 30,000; Cr stationery 2,000, purchases 50,000, Adom Supplies 100,000, rent 60,000, stationery 1,000; balance c/d 357,000.
Capital – Cr bank 500,000. Fixtures and fittings – Dr Adom 100,000 + 15,000 = 115,000. Adom Supplies – Dr bank 100,000, balance c/d 15,000; Cr fixtures 100,000 + 15,000. Stationery – Dr 2,000 + 1,000 = 3,000. Purchases – Dr bank 50,000 + Continental 70,000 = 120,000. Rent – Dr 60,000. Sales – Cr K. Danso 40,000 + bank 30,000 = 70,000. K. Danso – Dr sales 40,000, Cr bank 40,000 (nil). Continental Traders – Cr purchases 70,000.
Trial balance at 31st March 2000: Debit – bank 357,000; fixtures 115,000; stationery 3,000; purchases 120,000; rent 60,000; total 655,000. Credit – capital 500,000; Adom Supplies 15,000; sales 70,000; Continental Traders 70,000; total 655,000.
Post each transaction to two accounts, balance each one, and list the balances.