Commerce Department Baghdad Campus IUB

QUESTION 1
Moosa Butt is a retailer of furniture. Some of his business transactions, which occurred during the month of
April 2009, are listed below:
(i) Paid wages, Rs.150, by cheque.
(ii) Sold on credit to D Sallis for Rs.1 650, goods which had cost Rs.950.
Page | 1
(iii) Returned surplus furniture, Rs.325, to Evans & Co.
(iv) Received cheque from a trade receivable, G Black, who settled her account of Rs.1 500 in full less 3
% cash discount.
(v) Closed the disposal of motor vehicle account. The vehicle had a net book value of Rs.1 400 when
it was sold for Rs.2 000.
REQUIRED
(a) Complete the table below. The first item has been completed as an example.
Item Book of original Account to be debited Account to be Effect on profit
entry and amount credited and amount for the year
Rs. Rs. Rs. Rs.
(i) Cash Book Wages Rs.150 Bank Rs.150  Rs.150
(ii)
(iii)
(iv)
(v)

The following balances were taken from the books of Salim Electrical Supplies on15 September 2009.
Rs.
Sales 14 950 Cr
Inventory 1 800 Dr
Eastern Retailers 1 200 Dr
Khan Ltd 2 150 Dr

The following transactions took place:

September 16 Sold goods, list price Rs.500 less 20 % discount, on credit to Khan Ltd
18 Received a cheque from Eastern Retailers in full settlement of their account less 5 %
cash discount
24 Khan Ltd returned goods, list price Rs.50, purchased on 16 September
25 Sold goods, Rs.250, on credit to Eastern Retailers
26 Sold goods, Rs.500, to Khan Ltd for cash
30 Khan Ltd ceased trading. Salim Electrical Supplies decided to write off the balance of
Khan Ltd as a bad debt.

From the desk of Jahanzaib Butt

 Commerce Department Baghdad Campus IUB
Additional information
1 The inventory was valued at Rs.1 470 on 30 September 2009.
2 The financial year of Salim Electrical Supplies ends on 30 September 2009.
REQUIRED
(a) Name the type of discount that was deducted on 16 September 2009.
(b) (i) Name the document issued to Khan Ltd on 24 September 2009. Page | 2
(ii) Name the document issued to Eastern Retailers on 25 September 2009
(c) Prepare the following ledger accounts.
Close the accounts at 30 September 2009 either by balancing the account or by transfer to the
income statement, as appropriate.
(i) Sales account
(ii) Inventory account
(iii) Eastern Retailers account
(iv) Khan account

QUESTION 3
John Trail recently started using computerised accounts software. He printed out the following account:
Marianne Hindle account
2009 Dr (Rs.) Cr (Rs.) Balance
(Rs.)
14 June Purchases 950 950
04 July Bank 931 19
04 July Discount 19 0
12 July Purchases 460 460

REQUIRED
(a) Identify two documents that Jack Trail would have used as a source of information in preparing
the above account. Tick the appropriate boxes
Document √
Cheque
Credit note
Debit note
Invoice
(b) State the type of discount recorded in the ledger account on 4 July.
(c) List the two books of original entry that would be used by John Trail if the transactions with
Marianne Hindle had been recorded in a manual book-keeping system.
(d) Identify the heading under which Marianne Hindle’s account would be recorded in John Trail’s balance sheet at 12
July. Tick the appropriate box
Heading √
Non-current assets
Current assets
Current liabilities
Non-current liabilities

From the desk of Jahanzaib Butt

 Commerce Department Baghdad Campus IUB

QUESTION 4
Rahman is a debtor in the books of Goldy. On 1 April 2010 the balance on the account of Rahman was
Rs.300.
The following transactions related to the account of Rahman for the month of April 2010. Page | 3
April 6 Sold goods to Rahman, list price Rs.500; allowed 20% trade discount.
12 Rahman returned goods bought on 6 April, list price Rs.150.
18 Sold goods to Rahman, list price Rs.200; allowed 15% trade discount.
30 Rahman paid the balance on his account on 1 April by cheque and was allowed 3% cash
discount.
REQUIRED
(a) Prepare the account of Rahman in the books of Goldy for the month of April 2010.
Balance the account and bring down the balance on 1 May 2010.
(b) (i) State two reasons why trade discount was given to Rahman.
(ii) Name the book of prime entry in which Goldy will record the transaction on 12 April.
(iii) Name the document to be issued by Goldy for the returned goods on 12 April.

QUESTION 5
The following balances were taken from the books of Dilshan on 1 September 2010:
Rs.
Insurance 280 Dr
Gul& Co 450 Dr
The following transactions took place during September 2010:
September 1 Dilshan paid, by cheque, the annual insurance premium, Rs.360, for the year to 31
August 2011.
September 15 Dilshan sold, on credit to Gul and Co, goods with a list price of Rs.1 600 and allowed
15% trade discount.
September 20 Gul& Co paid the balance at 1 September 2010 less 2% cash discount. Dilshan prepared
his financial statements on 30 September 2010.
REQUIRED
(a) (i) Name an alternative format to ‘T’ accounts.
(ii) State one benefit of this format compared with ‘T’ accounts.

(b) Prepare the following ledger accounts for the month of September 2010. Make any necessary
transfers to the income statement. Balance the accounts and bring down the balance.
(i) Insurance account
(ii) Gul & Co account
(c) State in which of Dilshan’s ledgers the following accounts would appear.
Account Ledger
Insurance
Gul & Co

(d) (i) Name the document which was sent to Gul & Co recording the transaction of 15
September 2010.
(ii) Name the book of prime (original) entry in which Dilshan recorded this transaction.
(e) (i) Explain why Dilshan did not include all of the insurance paid on 1 September 2010 in his
income statement for the year ended 30 September 2010.
(ii) State the accounting principle that Dilshan applied.

From the desk of Jahanzaib Butt

Commerce Department Baghdad Campus IUB
QUESTION 6
Joe’s business had the following assets and liabilities on 31 March 2011:
Rs.
Non-current assets 120 000
Liabilities due within one year 25 000
Current assets 35 000 Page | 4
Liabilities due in over one year 50 000
REQUIRED
(a) Calculate the:
(i) Capital
(ii) Capital employed
During the month of April 2011, Joe recorded the following transactions:
1 Bought goods on credit from Henry, Rs.200.
2 Sold goods costing Rs.300, to Mary for the selling price of Rs.500, on credit.
3 Sent Henry a cheque for Rs.190 in full settlement of his debt of Rs.200.
4 Mary returned goods with a selling price of Rs.50.
REQUIRED
(b) Complete the grid below and show the amount and effect on capital of each
transaction. The first transaction has been completed as an example.
Accounts to be Accounts to be
Transaction Book of prime entry Effect on capital
debited credited
(Rs.)
1 Purchases Journal Purchases Henry Rs. Nil
2
3
4

(c) State the purpose of the three documents used in transactions 2 to 4 above.
(i) Invoice
(ii) Cheque counterfoil
(iii) Credit note

QUESTION 7
Place a tick (✓) in the appropriate box to show whether each of the following is an account, a book of
prime entry or both an account and a book of prime entry. The first item has been completed as an
example.
a ledger account and a
ledger account book of prime entry
book of prime entry
Inventory ✓
Purchases journal
Cash book
Provision for depreciation

QUESTION 8
Christos is in business buying and selling goods on credit. The following details relate to the account of his
customer Michelle for the month of July 2011.

From the desk of Jahanzaib Butt

Commerce Department Baghdad Campus IUB
Rs.
July 1 Michelle owed Christos 200
July 7 Christos sent an invoice to Michelle 150
July 16 Christos sent a credit note to Michelle 8
July 31 Michelle sent Christos a cheque 195
July 31 Christos allowed Michelle cash discount 5 Page | 5
REQUIRED
(a) Prepare the account of Michelle in the books of Christos. Bring down the balance on 1 August
2011.
(b) Name the book of prime entry in which Christos would record the transaction of 16 July 2011.

QUESTION 9
Yang is a supplier of goods to Win. The following transactions took place in March 2012.
2012
March 01 Win owed Rs.3 000 to Yang.
March 17 Win purchased goods from Yang with a list price of Rs.1 000. Yang allowed Win 20%
trade discount.
March 20 Win returned goods purchased on 17 March, list price of Rs.200.
March 30 Win informed Yang that he had ceased trading and was unable to pay his debt in full. Win
offered Yang Rs.650 in full settlement, which Yang accepted.
REQUIRED
(a) Prepare the account of Win in the ledger of Yang.
(b) State the name of the document that Yang would send to Win, following delivery of the goods
returned on 20 March 2012.
(c) State the name of the book of prime entry used to write off the bad debt.

QUESTION 10
Giorgos commenced business on 1 May 2012 with the following assets and liabilities.
The following were some of the transactions completed in early May:
May 1 Paid Early Ltd Rs.570, after deducting Rs.30 cash
discount May 2 Bought office furniture on credit for
Rs.3000
May 3 Paid wages in cash, Rs.250
May 4 Customer returned goods selling price Rs.745 (cost price Rs.630)
REQUIRED
(b) Complete the following table for the above transactions. The first item has been
completed as an example. State clearly if there is no effect on owner’s capital.
Source Book of Effect on
document prime entry owner’s capital
May 1 Paid Early Ltd Rs.570, after deducting Cheque Cash book +Rs.30
Rs.30 counterfoil
cash discount
May 2 Bought office furniture on credit for Rs.3000
May 3 Paid wages in cash, Rs.250
May 4 Customer returned goods selling price
Rs.745
(cost price Rs.630)

From the desk of Jahanzaib Butt

Commerce Department Baghdad Campus IUB
(c) Prepare the account of Early Ltd.
Balance the account on 31 May 2012 and bring down the balance.

QUESTION 11
Savvas is a supplier of goods to Akmal. Savvas allows 15% trade discount on all purchases made by Akmal.
The following transactions took place in September 2011.
Page | 6
September 1 Akmal owed Rs.1 500 to Savvas.
September 8 Akmal purchased goods from Savvas with a list price of Rs.800.
September 10 Akmal returned some of the goods purchased on 8 September with a list price of Rs.240.
September 25 Akmal sent a cheque in full settlement for the amount owing on 1 September, less 4%
cash discount.
REQUIRED
(a) Write up the account of Savvas in the ledger of Akmal. Bring down the balance on 1 October
2011.
(b) State one reason why Savvas offers Akmal a trade discount.
(c) State the name of the document that Savvas would send to Akmal for the return of goods on 10
September 2011.
(d) Place a tick (√) under the correct heading to show the ledger in which Akmal would record each
of the following accounts.
Item (i) has been completed as an example.
Account Sales Ledger Purchase Ledger Nominal/general Ledger
(i) Sales √
(ii) Savvas (Supplier)
(iii) Heat & light
(iv) Capital
(v) G.R.G. Ltd (Customer)

QUESTION 12
The following balances were taken from the books of Asir on 1 July 2012.
Rs.
Stationery 60 Dr
Rapid Office Supplies 400 Cr
The following transactions took place in the three months ended 30 September 2012:
July 30 Paid the balance owing on 1 July 2012 to Rapid Office Supplies by cheque, after deducting
4% cash discount.
August 18 Purchased stationery on credit from Rapid Office Supplies, list price Rs.500, and received
10% trade discount.
August 20 Purchased stationery for cash, Rs.150.
September 3 Returned to Rapid Office Supplies stationery purchased on 18 August, list price Rs.50.
Asir prepared his financial statements on 30 September 2012. On that date inventory of stationery was
valued at Rs.225.
REQUIRED
(a) State the meaning of the debit balance on the stationery account on 1 July 2012.

From the desk of Jahanzaib Butt

 Commerce Department Baghdad Campus IUB
(b) Prepare Stationery account and Rapid Office Supplies account. Balance the accounts at 30
September 2012 and show the transfer to the income statement where appropriate.
(c) State the document sent by Rapid Office Supplies to Asir for the:
(i) Purchase of stationery on 18 August 2012
(ii) Return of stationery on 3 September 2012.
(d) On 30 September 2012 Asir extracted a trial balance and prepared his financial statements. State the amount for Page | 7
stationery which would appear in each of the following

Rs.
Trial balance
Income statement
Balance sheet

(e) State the section of Asir’s balance sheet on 30 September 2012 in which the following balances
would appear:
(i) Stationery
(ii) Rapid Office Supplies

(f) (i) Explain why Asir did not transfer all of the stationery purchased in the three month
period to the income statement.
(ii) Name the accounting concept applied by Asir.

QUESTION 13
Jane started business on 1 October 2012 with a motor van, Rs.1500, shop fixtures, Rs.250, and cash, Rs.500. To
start the business she had borrowed Rs.600 from Peter.
REQUIRED
(a) Complete the following trial balance showing clearly the value of the capital.
Trial Balance at 1 October 2012
Debit ($) Credit ($)
Motor van
Shop fixtures
Cash
Peter − loan
Capital _ _
_ _

(b) Jane buys and sells goods on credit. She maintains a full set of
accounts.
The table below contains a list of transactions carried out in the first week of trading. Complete
the table below for each transaction, stating clearly the amount, if any, of increase or decrease in
the value of capital. The first transaction has been completed as an example.
Book of Account to Account to Effect on
Transaction
original entry be debited be credited capital Rs.
Purchases
Purchased goods, Rs.600, on credit from Punto Purchases Punto No effect
journal
Sold goods for Rs.750 (cost price Rs.300) on
credit
to Yuen

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Commerce Department Baghdad Campus IUB
Sold all the shop fixtures for cash, Rs.200
Paid wages by cash, Rs.150
Yuen returned goods, valued at Rs.100

Page | 8
QUESTION 14
Mary started business on 1 January 2012, renting premises at Rs.12 000 per annum, paid by instalments on
the first day of January, April, July, and October.
On 1 August 2012 Mary let part of the premises to another business for Rs.5400 per annum, to be paid by
instalments on the first day of August, November, February, and May.
Mary paid the rent on 1 January, 1 April, and 1 July 2012.
The tenant paid rent to Mary on 1 August and 1 November 2012.
REQUIRED
(a) Prepare the rent payable account for the year ended 31 December 2012.
Balance the account and bring the balance down on 1 January 2013.
(b) Explain the meaning of the balance on 1 January 2013.
(c) Prepare the rent received account for the year ended 31 December 2012.
Balance the account and bring the balance down on 1 January 2013.
(d) Explain the meaning of the balance on 1 January 2013.
Mary bought a motor vehicle, Rs.15 000.
(e) State the section of Mary’s balance sheet (statement of financial position) where this will be
shown.

QUESTION 15
The following are some of the transactions carried out by Tay, a retailer, during April 2013.
(i) Paid insurance Rs.470 by cheque.
(ii) Sold goods on credit to J Dins, cost price Rs.6 400 plus 80% mark up.
(iii) Paid amount owing to P Lee by cheque, Rs.1 800, less 4% cash discount.
(iv) Returned damaged goods costing Rs.590 to R & R Ltd.

REQUIRED
(a) Complete the table below for transactions (ii) to (iv). Transaction (i) has been completed as an
example.
Accounts debited and Accounts credited Effect on profit for
Transaction Source document
amount and amount year
(i) Cheque counterfoil Insurance Rs.470 Bank Rs.470 −Rs.470
(ii)
(iii)
(iv)

(b) Explain why Tay received cash discount from P Lee.

QUESTION 16
Jamie provided the following information on 1 May 2012.

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Commerce Department Baghdad Campus IUB
Rs.
Non-current assets at net book value 14 000
Trade receivables 3 012
Trade payables 1 298
Prepayment of insurance 260
Accrual for rent 350 Page | 9
Bank overdraft 324
Capital ?
REQUIRED
(a) Prepare an opening journal entry at 1 May 2012 to show the capital at that date.
A narrative is required.
The following payments were made during the year.
1 Insurance, Rs.840, including Rs.300 for the quarter ended 30 June 2013.
2 Rent, Rs.11 350, not including Rs.1 000 for the month of April 2013.
REQUIRED
(b) Prepare the insurance account for the year ended 30 April 2013. Balance the account and bring
down the balance at 1 May 2013.
(c) Prepare the rent account for the year ended 30 April 2013. Balance the account and bring down
the balance on 1 May 2013.
(d) State the accounting principle applied in (b) and (c).

QUESTION 17
Mary buys goods on credit from Kim. Mary receives 14% trade discount on all purchases and takes
advantage of the 5% cash discount offered for payment within 14 days. The following information is
available:
2013
June 1 Mary owed Kim Rs.680 for goods purchased on 29 May 2013.
June 4 Kim sold goods to Mary, list price Rs.800.
June 5 Mary sent Kim a cheque for the balance owing on 1 June.
June 8 Mary returned goods purchased on 4 June, list price Rs.100, to Kim.
June 28 Kim sold further goods to Mary, list price Rs.300.
June 29 Kim received a cheque from Mary for goods purchased on 4 June.
June 30 Mary received details from Kim of her transactions during the month.
REQUIRED
(a) Name the document and book of prime entry used by Kim on the dates below:
Date Business document Book of prime entry
4 June
8 June

(b) State the name of the document Mary received on 30 June.

(c) Write up the ledger account of Mary in Kim’s books. Balance the account and bring down the
balance on 1 July 2013.
(d) Indicate with a tick (✓) the ledger in which the following accounts would appear. The first item
has been completed as an example.

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Commerce Department Baghdad Campus IUB
Account Sales ledger Purchase ledger General ledger
Sales 🗸
Drawings
Kline Ltd (Supplier)
Millar and Son (Customer)
Insurance Page | 10

(e) State three advantages of a computerised system of accounting.

QUESTION 18
Kulbir commenced trading on 1 January 2013 with cash Rs.350, bank Rs.3 000, motor vehicle Rs.6 500 and a
loan from Sanjay of Rs.5 000.
REQUIRED
(a) Prepare Kulbir’s opening entries in the general journal and show her capital at 1 January 2013. A
narrative is required.
On 28 January 2013 Kulbir sold her motor vehicle to Aktar Allam on credit for Rs.6 500. On the same
day she purchased on credit from Aston Motors Limited a new vehicle for Rs.10 000.
(b) Show the entries in the general journal to record the sale of the old motor vehicle and the
purchase of the new motor vehicle.

QUESTION 19
On 1 April, Trinity Stores owed Akma Rs.800. During the month of April, Akma recorded the following
transactions with Trinity Stores.

8 April Akma supplied goods to Trinity Stores with a list price of Rs.900, less 20% trade discount.
10 April Trinity Stores returned goods supplied by Akma on 8 April with a list price of Rs.100.
18 April Trinity Stores paid the balance due on 1 April less 2½% cash discount.
REQUIRED
(d) Prepare the account of Trinity Stores in the books of Akma. Balance the account and bring down
the balance.
(e) Name the document that Akma would issue to Trinity Stores on 10 April.
(f) State two reasons why Akma might give Trinity Stores trade discount.

QUESTION 20
Ghani is preparing his financial statements. He provided the following information.
1 April 2013 Balances b/d Insurance Rs.500 Dr
Commission receivable Rs.250 Cr

Cash book entries 1 April 2013 to 31 March 2014:

Insurance paid by cheque Rs.4 000
Commission received by cheque Rs.1 200
On 31 March 2014:
1 Insurance of Rs.150 was prepaid
2 Commission receivable of Rs.200 was due to Ghani.

From the desk of Jahanzaib Butt

Commerce Department Baghdad Campus IUB
REQUIRED
Prepare the following ledger accounts, for the year ended 31 March 2014, showing the transfer to the
income statement. Balance the accounts and bring down the balances.

QUESTION 21
Fashran sells goods to Hajar. On 1 April Hajar owed Fashran Rs.2 100. The following transactions occurred in Page | 11
April 2014.
5 April Fashran sold goods on credit to Hajar, list price Rs.2 000, less 20% trade discount.
7 April Hajar returned goods purchased on the 5 April, list price Rs.240.
18 April Hajar paid the balance of her account at 1 April and was allowed 2% cash discount.
REQUIRED
(b) Prepare the account of Hajar in the ledger of Fashran for April 2014. Balance the account and
bring down the balance.
(c) Name the document that Fashran will issue on the following dates:
Date Document
5 April Fashran sold goods on credit to Hajar
7 April Hajar returned goods to Fashran purchased on the 5 April
30 April Fashran issues a summary of Hajar’s account for the month of April

(d) State the sub division of the ledger in which the account of Hajar would appear.

QUESTION 22
Adil’s transactions in August 2014 included the following.
August 2 Purchased goods on credit from Tiara, Rs.1 500, less 20% trade
discount. August 5 Returned goods to Tiara, list price Rs.300.
August 7 Paid a cheque to Tiara, Rs.500, after deducting Rs.6 cash discount.
August 9 Sold non-current assets on credit to D Costa, at book value, Rs.4
000.
REQUIRED
(a) Complete the following table for the above transactions. The first item has been completed as an
example.
Date Source document Book of prime entry Effect on owner’s capital
August 2 Purchase invoice Purchases journal No effect
August 5
August 7
August 9

(b) State the sub division of the ledger containing each of the following
accounts:
Account Sub division of the ledger
Purchases
Tiara
Non-current assets
D Costa

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 Commerce Department Baghdad Campus IUB
QUESTION 23
Maria had the following assets and liabilities on 1 May 2014.
$
Inventory 1 950
Amount payable − Midland Telecoms 400
Bank 550 Dr Page | 12
5% Bank loan (repayable 30 April 2018) 2 500
Fixtures and fittings 1 500

REQUIRED
(a) Calculate the following.
(i) Owner’s capital
(ii) Capital employed

The following related to the purchase of telephone services for the three months to 31 July 2014.

31 May Paid Midland Telecoms’ balance on 1 May 2014 by cheque.

26 June Received a telephone bill from Midland Telecoms Rs.1 200.
15 July Paid telephone bill received on 26 June by cheque less 2% cash discount.
31 July Prepared an income statement for the three months to 31 July 2014. It was
estimated that Rs.130 was owing.
REQUIRED
(b) Prepare the following ledger accounts for the three months to 31 July 2014.
(i) Midland Telecoms account
(ii) Telephone expenses account
(c) Name and explain the accounting concept applied in estimating the telephone expenses owing
on 31 July 2014.
The following were some of the transactions which took place in July.

5 July Purchased inventory on credit.

10 July Goods returned by a credit customer.
20 July Paid wages in cash.
25 July Disposed of fixtures and fittings on credit.
REQUIRED
(d) Complete the following table for the above transactions naming the source document prepared by Maria and the
book of prime entry used. The first item has been completed as an example.
Source document Book of prime entry
5 July Purchase invoice Purchases journal
10 July
20 July
25 July

QUESTION 24
The following were some of the transactions completed in April 2015.

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Commerce Department Baghdad Campus IUB
April 9 Sold goods on credit to Yash.
April 11 Yash returned goods sold on 9 April as they were damaged.
April 14 Paid wages by cheque.
April 19 Purchased office fixtures on credit from Equip Limited.

REQUIRED Page | 13
Complete the following table. The first item has been completed as an example.
Source Book of Account Account
Date Transaction
Document prime entry Debited Credited
April 9 Sold goods on credit to Yash. Sales invoice Sales journal Yash Sales
April 11 Yash returned goods sold on 9
April as damaged.
April 14 Paid wages by cheque.
April 19 Purchased office fixtures on
credit from Equip Limited.

QUESTION 25
The following balances were available from the books of Priya on 1 April 2015.
Rs.
Putil 3 000 credit
Wages 1 750 debit
The following transactions took place in April 2015.
April 5 Paid Putil half of his outstanding balance on 1 April by cheque, less 2% cash discount
April 8 Bought goods on credit from Putil, Rs.800, less 20% trade discount
April 19 Paid wages in cash Rs.450
April 23 Returned goods, list price Rs.200, purchased on 5 April
April 26 Sold a non-current asset at book value, Rs.2 000, on credit
REQUIRED
(a) Complete the following table. The first item has been completed as an example. Where the
owner’s capital is not affected, write ‘No effect’.
Book of Effect on
Source
Date Transaction prime owner’s
document
entry capital (Rs.)
April 5 Paid Putil half of his outstanding balance on 1 Cheque
April by cheque, less 2% cash discount Counterfoil Cash book +30
April 8 Bought goods on credit from Putil, Rs.800,
less
20% trade discount
April 19 Paid wages in cash Rs.450
April 23 Returned goods, list price Rs.200, purchased on
8
April
April 26 Sold a non-current asset at book value,
Rs.2000,
on credit

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Commerce Department Baghdad Campus IUB
(b) Prepare the account of Putil for the month of April 2015. Balance the account and bring down
the balance on 1 May 2015.
Priya prepared her income statement on 30 April 2015. She calculated that wages, Rs.150, were prepaid
at that date.
REQUIRED
Page | 14
(c) Prepare the wages account for the month of April 2015 including the transfer to the income
statement. Balance the account and bring down the balance on 1 May 2015.

QUESTION 26
The following balances were taken from the books of Krul Limited on 1 July 2015.

Rs.
Carston Garages account

Motor van expenses account

The following transactions took place in July 2015.

July 12 Paid Carston Garages their outstanding balance by cheque, deducting 3% cash discount
July 15 Purchased fuel for the motor van, on credit, from Carston Garages, Rs.120
July 23 Paid motor van repairs by cheque, Rs.200
July 26 Purchased new motor van tyres from Carston Garages on credit, Rs.400, less 15% trade discount
Additional information
1 Krul Limited prepared financial statements on 31 July 2015.
2 Motor van expenses, Rs.125, were accrued on 31 July 2015.

REQUIRED
(a) Prepare the Carston Garages account for the year ended 31 July 2015. Balance the account and
bring down the balance on 1 August 2015.

(b) Prepare the motor van expenses account for the year ended 31 July 2015. Make the transfer to
the income statement. Balance the account and bring down the balance on 1 August 2015.

(c) Name the subdivision of the ledger containing each of the following accounts.

Account Subdivision of the ledger

Sales
T Wong (credit customer)

QUESTION 27
Abbie supplied the following information related to a credit customer, Izzat.
October 1 Balance owed by Izzat to Abbie Rs.750
5 Sold goods on credit to Izzat, Rs.1 800, less 20% trade discount
6 Izzat returned goods, list price Rs.350
21 Received a cheque from Izzat, Rs.800
22 The remaining balance on Izzat’s account was written off as irrecoverable.

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Commerce Department Baghdad Campus IUB
REQUIRED
(c) (i) Name the subdivision of the ledger containing Izzat’s account.
(ii) Name the document issued by Abbie to Izzat on 5 October 2015.
(d) Prepare the account of Izzat in the books of Abbie.
(e) Prepare the general journal entry for the transaction on 22 October. A narrative is required. Page | 15
(f) State three benefits to Abbie of using Information Communication Technology (ICT) to record her
transactions.

QUESTION 28
Faara had the following assets and liabilities on 1 May 2015.

Rs.
Inventory 2 850
Trade receivable − Jaafar 600
Other payables − Electricity 200
Bank 450 Credit
5% Bank loan (30 September 2020) 5 000
Motor vehicle 4 500

REQUIRED
(a) Calculate Faara’s capital.

The following transactions related to the account of Jaafar for the month ended 31 May 2015.
May 04 Sold goods to Jaafar, list price Rs.1 500, allowed 15% trade discount.
05 Jaafar returned goods purchased on 4 May, list price Rs.120.
16 Jaafar paid the amount owing on 1 May by cheque and was allowed 2% cash
discount.

REQUIRED
(b) Prepare the ledger account of Jaafar for the month of May 2015. Balance the account and bring
down the balance on 1 June 2015.
(c) State two possible reasons why Faara allowed trade discount to Jaafar.
The following information related to the electricity account for the month ended 31 May 2015.
May 17 Paid for electricity by cheque Rs.440
31 Prepared the income statement. It was estimated that Rs.55 was owed for
electricity at that date.

REQUIRED
(d) Prepare the electricity account for the month of May 2015. Balance the account and bring down
the balance on 1 June 2015.
(e) Name the accounting concept applied to the calculation of electricity expense when preparing
the income statement at 31 May 2015.
(f) Complete the following table for the transactions shown. Name the source document prepared
by Faara and the book of prime entry used, and state the effect of the transaction on her capital.
The first item has been completed as an example.

From the desk of Jahanzaib Butt

Commerce Department Baghdad Campus IUB
Source Book of Effect on
document prime owner’s
entry capital (Rs.)
May 9 Sold goods on credit for Rs.900, Sales Sales +300
(cost Rs.600) invoice journal
14 Customer returned goods, bought Page | 16
by him on 9 May for Rs.300.
21 Paid wages in cash Rs.150.

QUESTION 29
Gabi is in business buying and selling goods on credit. The following details relate to the account of her
customer, Kacela, for the month of September 2016.

Rs.
September 1 Opening balance owed by Kacela to Gabi 900
9 Invoice sent to Kacela 730
14 Credit note sent to Kacela 25
30 Cheque received and banked by Gabi 860
30 Discount allowed by Gabi 40

REQUIRED
(a) Prepare the account of Kacela in the books of Gabi. Balance the account and bring down the
balance on 1 October.
(b) Name the sub-division of Gabi’s ledger which will contain the account of Kacela.
(e) Complete the table for the transactions shown. Name the source document and the book of
prime entry used by Gabi. The first item has been completed as an example.
Source document Book of prime entry
Sold goods on credit Sales invoice Sales journal
Paid wages in cash
Purchased office fixtures on credit
Goods returned by a credit customer

QUESTION 30
Complete the following table for each of Fabio’s transactions in July 2016. If the capital is not affected
write ‘No effect’. The first transaction has been completed as an example.

Transaction Book of Account to Account to Effect on

prime entry be debited be credited capital Rs.
Sold goods costing Rs.900 on credit to Noah Sales Journal Noah Revenue +Rs.600
for (Sales)
the list price of Rs.1 500.
Noah returned goods with a list price of Rs.100
Paid Sophie a cheque for Rs.610.
A debt, Rs.230, owed by Zain was written off.

From the desk of Jahanzaib Butt

 Commerce Department Baghdad Campus IUB
QUESTION 31
Lyana is preparing her financial statements. She provides the following information.
1 October 2015 Rent receivable account Rs.2 500

Credit The bank account contained the following entries.

Receipts Page | 17
31 December 2015 Rent received by cheque $6 700
30 April 2016 Rent received by cheque $3 100
Payments
31 January 2016 Refund for overpayment of rent receivable $700

Additional information
The rent receivable amounts to Rs.12 000 a year.

REQUIRED
Prepare the rent receivable account for the year ended 30 September 2016. Make the transfer to the
income statement and bring down the balance on 1 October 2016.

QUESTION 32

Enter the following transactions in the books of Moosa Butt in double column cash book and balance the
same on 30th April 2023.
April 2023
1. Cash in hand Rs. 80,000 and bank over drawn Rs. 270,000.
2. Received two cheques
i. From Zainab Butt Rs. 120000
ii. From Zoya Butt Rs. 160,000.
3. Endorsed the first cheque to purchase furniture from Ahad Butt and the second cheque to Humna Butt to
settle her account.
4. Sold goods to Waqar Butt for cash Rs. 200,000 and deposited the same into the bank.
5. The cheque endorsed to Humna Butt was returned dishonored.
6. Purchased stationery for Rs. 10,000 by cheque.
7. Paid wages in cash Rs. 20,000.
8. Received from Nabiha Butt Rs. 160,000 on account.
9. Fatima Butt a customer deposited into bank Rs. 70,000.
10. Paid charges Rs. 4000.
11. Bought furniture for Rs. 120,000 on cash.
12. Bank debited Rs. 3,000 for charges.
13. Purchased goods Rs. 15000 and half are on account.
14. Deposit all cash over Rs. 40000 into bank.

From the desk of Jahanzaib Butt

CONTROL ACCOUNTS

From the desk of Jahanzaib Butt

QUESTION 1
Tsang is in business buying and selling goods on credit. The following information is available for the
month of March 2010.
Rs.
Revenue (sales) 65 000
Inventory 1 March 3 400
Trade payables 1 March 1 700
Payments to suppliers 47 000
Discount received 300
Inventory 31 March 2 900
Ordinary goods purchased 47 900
Wages & salaries expenses 2 500
REQUIRED
Prepare the purchase ledger control account showing the balance of trade payables at 31 March 2010.

QUESTION 2
Kya is a wholesaler. She prepares control accounts at the end of each month. The following information
relates to the month ended 30 April 2011.
Rs.
Sales ledger control account balance 1 April 2011 64 350
Cheques received from trade receivables 136 800
Discount allowed 5 250
Bad debts written off 7 900
Cash sales 10 750
Credit sales 153 400
Returns inwards 8 100
REQUIRED
(a) State two ways in which control accounts can be used by Kya in her business.
(b) Prepare the sales ledger control account for the month ended 30 April 2011.
Balance the account and bring down the balance on 1 May 2011.

QUESTION 3 A
Indrea prepares a sales ledger control account. At 30 September 2011 the following information available:
Rs.
Trade receivables at 1 October 2010 25 000
Credit sales for year 80 000
Receipts from credit customers for year 75 000
Trade receivables at 30 September 2011 30 000
REQUIRED
(a) Prepare the sales ledger control account for the year ended 30 September 2011.
(b) State two reasons why Andrea prepares a sales ledger control account.

From the desk of Jahanzaib Butt

QUESTION 4
Lau buys and sells goods on credit. The following information is provided by her for the month of March
2012:
Rs.
Trade payables 1 March 2012 15 300
Purchases returns 900
Payments by cheque 82 450
Discount received 1 350
Refunds from trade payables 700
Trade payables 31 March 2012 9 150
REQUIRED
(a) Prepare the purchases ledger control account for the month of March 2012 clearly showing the
value of the purchases for the month.
(b) State two benefits to Lau of maintaining control accounts.

QUESTION 5
Ann buys and sells on credit. She supplied the following information for the month ended 31 May 2013.
2013 Rs.
May 1 Trade receivables 5 687
31 Credit sales 72 641
Receipts from credit customers 64 500
Credit notes issued to customers 8 242
Cash discounts allowed 1 894
Bad debts 800
Contra entry 300
The sales journal had been under-cast by Rs.86. A cheque received and banked on 8 May from John Lee for
Rs.2 300 had been returned by the bank because of insufficient funds.
REQUIRED
(a) Prepare the sales ledger control account for the month ended 31 May 2013. Balance the account
at that date and bring the balance down on 1 June 2013.
(b) State three benefits of using control accounts.
(c) State two sources of information for the sales ledger control account.

QUESTION 6
On 1 April 2014, Yee’s sales ledger control account showed the following balances: Rs.20 450 debit and
Rs.600 credit.
During April the following transactions were recorded:
Rs.
Credit sales 50 500
Cash sales 10 000
Returns from credit customers 700
Receipts from credit customers 48 600
Refunds to credit customers 750
Discount allowed 1 200
Bad debt written off 800

From the desk of Jahanzaib Butt

On 1 May 2014, Yee’s sales ledger control account showed a credit balance of Rs.180. The debit balance is
to be determined.

REQUIRED
Prepare the sales ledger control account for the month of April 2014. Balance the account and bring down
the balances.

QUESTION 7
The following information is available from the books of Yana for August 2015.
Rs.
Trade receivables at 1 August 2015 27 520
Credit sales 32 400
Cash sales 19 970
Sales returns from credit customers 1 700
Cheques received from credit customers 40 150
Discount allowed 780
Bad debts written off 2 900
Interest charged on overdue accounts 600
REQUIRED
Prepare the sales ledger control account for August. Balance the account and bring down the balance on 1
September 2015.

QUESTION 8
Valda prepares a monthly control account for her sales ledger.
The following information relates to the month of August 2016.
Debit Credit
Rs. Rs.
Sales ledger control account balances 1 August 2016 18 410 720
Sales ledger control account balances 1 September 2016 ? 580

Rs.
Cheques received 40 500
Dishonoured cheque (included in cheques received) 800
Cash sales 8 950
Discount allowed 970
Bad debt written off 2 750
Credit sales 39 600
Returns inwards 3 900

REQUIRED
(a) Prepare the sales ledger control account for the month of August 2016. Balance the account and
bring down the balances on 1 September.
(b) State two reasons for preparing control accounts.

From the desk of Jahanzaib Butt