Theory question 109
Double Entry and the Ledger9. Amy Wadada started business as a retailer on 1st January, 2003 with an initial capital of N500,000. The following is a summary of her business transactions during the first six months of trading: (a) A delivery van was bought on 15th January, 2003 at a cost of N240,000 for cash. (b) Cash sales totalled N600,000 (c) Rent of N180,000 was paid on the commencement of the business (d) During the period Wadada withdrew goods worth N60,000 and cash of N70,000 from the business for personal use. (e) Credit sales amounted to N400,000 and N120,000 out of this amount was outstanding as at 30th June, 2003. (f) An amount of N85,000 was paid for general expenses (g) During the period suppliers were paid N450,000 for goods and invoices totalling N80,000 remained unpaid at 30th June, 2003.
You are required to: (i) Write up the Ledger Accounts, and (ii) Extract a Trial Balance as at 30th June, 2003.
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Ledger: Cash – Dr capital 500,000, sales 600,000, debtors 280,000 = 1,380,000; Cr van 240,000, rent 180,000, drawings 70,000, general expenses 85,000, creditors 450,000; balance 355,000.
Purchases 450,000 + 80,000 = 530,000, less goods withdrawn 60,000 = 470,000. Drawings 60,000 + 70,000 = 130,000. Sales 600,000 + 400,000 = 1,000,000. Debtors 400,000 − 280,000 = 120,000. Creditors 80,000.
Trial balance at 30th June 2003: Debit – cash 355,000; delivery van 240,000; rent 180,000; drawings 130,000; general expenses 85,000; purchases 470,000; debtors 120,000; total 1,580,000. Credit – capital 500,000; sales 1,000,000; creditors 80,000; total 1,580,000.
Goods taken by the owner: debit drawings, credit purchases.