Theory question 107
Double Entry and the Ledger7. The following information relates to the business of Tunde, a petty trader for the month of May, 2002:
May 1 Started business with capital in cash N25,000
2 Bought goods on credit from: Dotun N5,400; Mebude N8,700; Kola N2,500; Bobo N7,600; Olowe N6,400
4 Sold goods on credit to: Bimbo N4,300; Hakeem N6,200; Sumbo N17,600
6 Paid rent by cash N1,200
9 Bimbo paid his account by cheque N4,300
10 Sumbo paid by cheque N15,000
12 Paid the following by cheque: Kola N2,500; Dotun N5,400
15 Paid for carriage on goods by cash N2,300
18 Bought goods on credit: Mebude N4,300; Bobo N11,000
21 Sold goods on credit to Hakeem N6,700
31 Paid rent by cheque N1,800
You are required to prepare the ledger accounts and extract a trial balance.
Show the model answer
Cash book: cash – capital 25,000 less rent 1,200 and carriage 2,300 = 21,500; bank – Bimbo 4,300 + Sumbo 15,000 = 19,300 less Kola 2,500, Dotun 5,400, rent 1,800 = 9,600.
Purchases 30,600 + 15,300 = 45,900; sales 28,100 + 6,700 = 34,800. Rent 1,200 + 1,800 = 3,000; carriage inwards 2,300.
Personal accounts: Dotun and Kola nil; Mebude 13,000 Cr; Bobo 18,600 Cr; Olowe 6,400 Cr; Bimbo nil; Hakeem 12,900 Dr; Sumbo 2,600 Dr.
Trial balance at 31st May 2002: Debit – purchases 45,900; Hakeem 12,900; Sumbo 2,600; rent 3,000; carriage 2,300; bank 9,600; cash 21,500; total 97,800. Credit – capital 25,000; sales 34,800; Mebude 13,000; Bobo 18,600; Olowe 6,400; total 97,800.
Open an account for each person and each type of income or expense, then list the closing balances.