Tutorial 2 Cash Cycle 1
Tutorial 2 – The Cash Cycle 16 Todds paid for the amount owing by cheque, less 5% discount (calculate
the amount)
Section A: 20 Withdrew cash for own use RM120
24 Purchased goods with office cash RM28
1. (a) What is the difference between cash and credit transactions? 25 Paid Zen & Co a cheque in full settlement of the amount owing, less 5%
discount (calculate the amount)
(b) What is the difference between trade discounts and cash discounts? 26 Sold goods on credit to Tali RM450
28 Paid transport by cash RM10
(c) What are the differet types of cash in a business? Briefly explain.
30 Transferred cash from office to bank RM400
2. (a) What is the purpose of preparing a three column cash book? Briefly 30 Credit purchase from Zen & Co RM300
explain its format. 31 Refund cash to Todds for returning empty containers for recycling RM5
31 Bought office furniture, paid by cheque RM200
(b) Why is the cash book both a book of prime entry and ledger account? 31 Paid Samuel a cheque in settlement of outstanding invoice of RM700 and
Explain. deducting RM35 cash discount
31 Receive a cheque from Kenneth RM475 after deducting RM25 cash
(c) What is an overdraft? How does it work? discount
3. (a) What is the purpose of preparing an analysed petty cash book? Required:
(a) Enter the above transactions in a three-column Cash Book and close the
(b) Explain what is an imprest system? How does it work? Cash Book at the end of May (ignore those transactions that do not
involve the Cash Book).
4. The following are the transactions of Axis Trading in May:
(b) Post those items involving the Cash Book to the appropriate ledgers .
May
1 Start a business with Cash in hand RM800 and Cash at bank RM1,000
2 Purchased goods by cheque RM400
2 Paid rates to Dewan Bandaraya Kuala Lumpur by cheque RM40
4 Bought goods on credit from Zen & Co RM200
8 Sold goods to Todds on credit RM300
9 Cash sales RM80
10 Paid transport by cash RM12
13 Credit sales to Todds RM300
14 Paid for stationery in cash RM16
15 Introduced further capital RM1,000 by cheque
Tutorial 2 Cash Cycle 2
Section B: Extra exercise questions (for students’ own practice) 31 Received a cheque from Joy for RM1,254 after deducting cash discount of
RM66. However, the cash discount was wrongly deducted (not allowed).
Question 1 Joy needs to pay up for the shortfall of RM66 very soon.
Maxwell buys and sells machinery. During the month of March, the Required:
following receipts and payments occurred. (a) Enter the above transactions in a three-column Cash Book and close the
Cash Book at the end of March (ignore those transactions that do not
March involve the Cash Book).
1 Balances as per Cash Book: Bank RM2,100; Cash RM1,010
3 Cash sales paid into bank RM620 (b) Post those items involving the Cash Book to the appropriate ledgers.
4 Cash purchases RM380
6 Paid an electricity bill of RM660 by cheque
9 Sales by cheque RM530
10 Drew a cheque for RM400 in respect of wages
12 Cash sales RM440
15 Paid RM190 in cash for travelling expenses
16 Paid water bill by cheque RM560
19 Drawings by cheque RM300
20 Purchases by cheque RM470
21 Paid postage of RM30 in cash
22 Paid cash of RM450 into the bank
24 Introduced further capital of RM650 by cheque
25 Purchased a delivery vehicle for RM4,000 and paid by cheque
26 Received a cheque for RM3,500 from Morris as a three year loan
28 Paid road tax and insurance on delivery vehicle of RM430 in cash
29 Withdrew cash of RM330 from bank for office use
30 Received cheque from Kenny RM475 after deducting RM25 cash discount
30 Received cheque from Donny RM722 after deducting RM38 cash
discount
31 Paid Sammy a cheque in settlement of outstanding invoice of RM700, and
deducting RM35 cash discount
31 Paid Gracey a cheque in settlement of outstanding invoice of RM360, and
deducting RM18 cash discount
Tutorial 2 Cash Cycle 3
Question 2
Vincent K is a sole trader who records all his cash and bank transactions in a Required:
three-column Cash Book. On 1 August, his cash in hand was RM68 but he (a) State three (3) purposes for preparing a Cash Book.
had a bank overdraft of RM1,692.
(b) Define the two (2) types of cash discounts in the 3-column Cash Book
The following are her transactions for the month of August: and the purpose of a cash discount.
August (c) Draw up the 3-column Cash Book of Vincent K for the month of
2 Received a cheque of RM160 from Patrick in full settlement of a debt of August. Balance up the cash and bank columns, bringing down the
RM168 balances at 1 September.
10 Cash sales paid directly to bank RM2,086
12 Drew a cheque RM75 in favour of Winifred Engineering, in settlement of (d) Total up the two discount columns and post the amounts to the relevant
an outstanding debt accounts in the General Ledger.
14 Paid RM35 cash for stationery
16 Paid Frederick Sung the sum of RM86 by cheque in settlement of an
amount owed to him of RM90
18 Drew a cheque for office cash RM150
20 Cash sales RM1,120; cash kept in the office safe
21 Received interest of RM60 and paid this into the bank
The sales of the previous day were also banked in
24 Paid telephone charges by cheque RM147
26 Received a cheque of RM704 from Benny Chan in settlement of his
account amounting to RM720
28 Paid RM40 out of cash for office expenses
30 Paid RM254 to Larry Heng by cheque in full settlement of the RM270
balance on his account
30 The bank notified Vincent K that it had charged RM20 bank charges to his
account
Tutorial 2 Cash Cycle 4
Question 3
Prepare a petty cash book with analysis columns for office expenses, motor (a) Write up the petty cash book to record relevant analysis as
expenses, cleaning expenses and casual labour. The cash float is RM 1,000 indicated.
and the amount spent is reimbursed on 1 December 2017. (b) Balance the petty cash book on 30 November 2017 and carry down
the balance
2017 RM (c) Make the entry on 1 December 2017 to restore the petty cash
Nov 1 Siti – casual labour 10.00 imprest amount.
Envelopes 4.80
2 Jif – cleaning liquid 4.20
Adhesive tapes 6.80
3 Paper clips 1.40
4 Petrol WAY 44 5.00
5 May – casual labour 10.00
6 Nathan casual labour 10.00
7 A4 copy papers 14.30
Pens 7.20
8 Andy 22.00
9 Change oil 12.00
10 Motor tax 8.00
11 Correction tape 2.20
12 White coffee 13.90
13 A3 copy papers 10.70
14 Sponge and cleaning liquid 14.35
15 Wipers 28.90
16 Tim – casual labour 15.00
Sakdon – casual labour 15.00
18 Carbon papers 5.40
20 Cardboard files 3.5” 3.60
21 Rubber bands 11.20
22 Petrol BAB 12 5.00
23 Broom, brushes and soap 24.60
24 Printer ribbon 26.60
25 Taxi fare 12.20
26 Photocopy repair 34.40
27 Postage stamps 11.50
27 Office boy services (outsourced) 7.70
Petrol WAY44 10.00
