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SOPHIA RAMLOCHAN AND HELENA DEBIQUE-EUGENE
SOPHIA RAMLOCHAN AND HELENA DEBIQUE-EUGENE
1/2 Introduction to Principles of Accounts/
The classified Balance Sheet
1 Introduction to accounting
6 1 Obtain source documents.
 Enter information from the source documents in the journals.
2 
3 Post entries to the relevant ledgers.
4 Extract a Trial Balance.
5 Making adjustments and closing entries.
6 Prepare final accounts.
7 a) A = L + C = 4 000 [example]
b) L = A – C = $2 000
c) L = A – C = $3 800
d) A = L + C = $11 800
e) A = L + C = $13 780
f) C = A – L = $5 180
g) C = A – L = $5 100
h) L = A – C = $30 500
i) A = L + C = $78 030
j) C = A – L = $13 325
8 Assets: a, c, e, f, h, i, k, l
Liabilities: b, d, g, j
9 Assets = Premises $15 000 + Motor vehicle $7 400 + Stock $4 200 + Bank $1 400 + Cash $700 = $28 700
Liabilities = Creditor $1 000 + Loan $3 500 = $4 500
Capital = Assets – Liabilities = $28 700 – $4 500 = $24 200
10 Assets = Fixtures and fittings $12 700 + Inventory $7 950 + Cash $1 380 + Machinery $8 400 + Accounts
receivable $3 625 + Motor vehicles $8 500 = $42 555
Liabilities = Bank overdraft $2 000 + Accounts payable $2 490 + Loan $7 000 = $11 490
Owner’s equity = Assets – Liabilities = $31 065

2
 Answers Chapter 1

11 Effect on
Items affected Assets Liabilities Capital
b) Motor van Motor van ↑
Bank Bank ↓
c) Stock Stock ↑
Cash Cash ↓
d) Stock Stock ↑ Creditor ↑
Creditor
e) Capital Bank ↑ Capital ↑
Bank
f) Stock Stock ↓
Debtor Debtor ↑
g) Stock Stock ↑
Debtor Debtor ↓
h) Loan Cash ↑ Loan ↑
Cash

12 Effect on
Items affected Assets Liabilities Capital
b) Cash Cash ↓ Creditor ↓
Creditor
c) Capital Bank ↓ Capital ↓
Bank
d) Land Land ↑
Bank Bank ↓
e) Loan Cash ↓ Loan ↓
Cash
f) Debtor Debtor ↓
Bank Bank ↑
g) Stock Stock ↓ Creditor ↓
Creditor
h) Bank Bank ↓
Cash Cash ↑

3
Answers Section 1/2

13 Assets = Liabilities + Capital

Items affected (A) = (L) + (C)
25 000 = 3 000 + 22 000
c) Creditor ↓ (L)
Cash ↓ (A) – 1 000 – 1 000
24 000 = 2 000 + 22 000
d) Cash ↓ (A) – 8 000
Bank ↑ (A) + 8 000
24 000 = 2 000 + 22 000
e) Stock ↑ (A)
Creditor ↑ (L) + 2 000 + 2 000
26 000 = 4 000 + 22 000
f) Capital ↑
Cash ↑ (A) + 5 000 + 5 000
31 000 = 4 000 + 27 000
g) Stock ↓ (A) – 400
Debtors ↑ (A) + 400
31 000 = 4 000 + 27 000

4
 Answers Chapter 1

14 Assets = Liabilities + Capital

Items affected (A) = (L) + (C)
10 000 = 2 000 + 8 000
a) Loan ↑ (L)
Bank ↑ (A) + 1 500 + 1 500
11 500 = 3 500 + 8 000
b) Capital ↓
Cash ↓ (A) – 1 000 – 1 000
10 500 = 3 500 + 7 000
c) Bank ↓ (A)
Creditor ↓ (L) – 500 – 500
10 000 = 3 000 + 7 000
d) Loan ↓ (L)
Cash ↓ (A) – 1 500 – 1 500
8 500 = 1 500 + 7 000
e) Debtor ↓ (A) – 700
Bank ↑ (A) + 700
8 500 = 1 500 + 7 000
f) Stock ↓ (A)
Creditor ↓ (L) – 600 – 600
7 900 = 900 + 7 000
g) Capital ↑
Creditor ↓ (L) – 400 + 400
7 900 = 500 + 7 400
h) Expense owing ↓ (L)
Bank ↓ (A) –300 – 300
7 600 = 200 + 7 400

15 Internal users External users

• Managers (for decision-making) • Creditors (to determine the business’ credit
• Owners (to evaluate their investment) worthiness)
• Employees (for decision-making, wage • Banks/Lending institutions (to assess the
negotiations) business’ credit worthiness)
• Government (to calculate taxes owed by the
business)

5
Answers Section 1/2

2 Accounting concepts and conventions

6 a) Business entity
 ) Going concern
b
c) Prudence
d) Consistency
e) Principle of double entry
7 a) Cost concept
b) Money measurement
c) Accrual concept
d) Consistency
e) Business entity
8 a) Cost concept
b) Business entity
c) Consistency
d) Accrual/Matching
e) Objectivity
9 a) Accrual concept
b) Business entity
c) Cost concept
d) Monetary concept
e) Prudence concept
10 a) Going concern: assumes that the business is able to carry out its trade indefinitely.
b) Prudence: the accountant is cautious about declaring a business’ profit.
c) Dual aspect/principle of double entry: balancing the accounting equation by recording the two aspects
of business activity – receiving and giving.
d) Accounting period: the period, consisting of 12 months, in which a business prepares its accounting
books.
e) Money measurement: when only business transactions that can be expressed in terms of money are
recorded in the accounts.

6
3 Books of original entry
3 Sales and Purchases Journals, the Sales and Purchases Ledgers and the
Returns Journals

6 a) Sales Day Book/Sales Journal (p. 70)

Date Details Invoice No Folio Amount

Apr. $
2019
1 P. Charlie 001 SL 25 250
3 F. Rachel 002 SL 30 360
10 B. Stormie 003 SL 16 135
13 K. Tanker 004 SL 27 500
18 J. Sailer 005 SL 8 765
30 Sales A/c GL 63 2 010

b)  Sales Ledger

P. Charlie (p. 25)

2019 $
Apr. 1 Sales SJ70 250

F. Rachel (p. 30)

2019 $
Apr. 3 Sales SJ70 360

B. Stormie (p. 16)

2019 $
Apr. 10 Sales SJ70 135

K. Tanker (p. 27)

2019 $
Apr. 13 Sales SJ70 500

7
Answers Section 3

J. Sailer (p. 8)
2019 $
Apr. 18 Sales SJ70 765

c) General Ledger

Sales (p. 63)
2019 $
Apr. 30 Total credit sales 2 010

7 a) Company: N. Dory Wholesalers INVOICE

Address: 6 Millan Street
Parktown Date: 4 August 2018
Invoice no: 111
Bill to: A. Farmer
Address: 5 John Lane
Siparia

Description
Date Item Quantity Unit cost Discount Amount
$ $ $
4 Aug. Baskets 3 20.00 – 60.00
Pots 4 40.00 – 160.00
Chairs 9 10.00 – 90.00
310.00

8
 Answers Chapter 3

Company: N. Dory Wholesalers INVOICE

Address: 6 Millan Street
Parktown Date: 10 August 2018
Invoice no: 112
Bill to: L. Jankee
Address: 12 Rodney Street
Las Thomas

Description
Date Item Quantity Unit cost Discount Amount
$ $ $
10 Aug. Baskets 5 20.00 100.00
Glass bowls 6 5.00 30.00
Chairs 12 10.00 120.00
Less: 20% discount 50.00 250.00
200.00

Company: N. Dory Wholesalers INVOICE

Address: 6 Millan Street
Parktown Date: 18 August 2018
Invoice no: 113
Bill to: V. Stanley
Address: 22 Kemba Rd
Bonapart

Description
Date Item Quantity Unit cost Discount Amount
$ $ $
18 Aug. Pots 15 40.00 600.00
Chairs 24 10.00 240.00
Less: 25% discount 210.00 840.00
630.00

9
Answers Section 3

Company: N. Dory Wholesalers INVOICE

Address: 6 Millan Street
Parktown Date: 20 August 2018
Invoice no: 114
Bill to: D. Jason
Address: 7 Freelane Street
Carson Field

Description
Date Item Quantity Unit cost Discount Amount
$ $ $
20 Aug. Baskets 4 20.00 80.00
Glass bowls 12 5.00 60.00
Pots 7 40.00 280.00
Chairs 12 10.00 120.00
Less: 33 ​ _13​% discount 180.00 540.00
360.00

Company: N. Dory Wholesalers INVOICE

Address: 6 Millan Street
Parktown Date: 31 August 2018
Invoice no: 115
Bill to: P. Bowen
Address: 30 Monor Rd
Londonville

Description
Date Item Quantity Unit cost Discount Amount
$ $ $
31 Aug. Baskets 10 20.00 200.00
Pots 5 40.00 200.00
Chairs 5 10.00 50.00
Glass bowls 10 5.00 50.00
Less: 25% discount 125.00 500.00
375.00

Note: You can use a different invoice format.

10
 Answers Chapter 3

b) Sales Day Book/Sales Journal (p. 37)

Date Details Invoice No Folio Amount

2018 $
Aug. 4 A. Farmer 111 SL 6 310
10 L. Jankee 112 SL 8 200
18 V. Stanley 113 SL 5 630
20 D. Jason 114 SL 16 360
31 P. Bowen 115 SL 28 375
31 Sales A/c GL 45 1 875

c)  Sales Ledger

A. Farmer (p. 6)
2018 $
Aug. 4 Sales SJ37 310

L. Jankee (p. 8)
2018 $
Aug. 10 Sales SJ37 200

V. Stanley (p. 5)
2018 $
Apr. 18 Sales SJ37 630

D. Jason (p. 16)

2018 $
Aug. 20 Sales SJ37 360

P. Bowen (p. 28)

2018 $
Aug. 31 Sales SJ37 375

11
Answers Section 3

d) General Ledger

Sales Account (p. 63)

2018 $
Aug. 31 Sales Journal 5537 1 875

8 a) R. Nolan
Sales Day Book/Sales Journal (p. 22)

Date Details Invoice No Folio Amount

2022 $
Mar. 9 K. Pine 1241 SL 42 816.75
12 E. Baby 1242 SL 27 1 579.50
19 D. Sasha 1243 SL 86 530.00
23 M. Pooran 1244 SL 50 2 280.00
28 C. Dingo 1245 SL 73 1 000.00
31 Sales A/c GL 59 6 206.25

b) General Ledger

Sales Account (p. 59)

2022 $
Mar. 31 Sales Journal 6 206.25

9 a) D. Lowry
Purchases Journal (p. 65)

Date Details Invoice No Folio Amount

2020 $
Feb. 1 K. Dairy 001 12 PL 450
8 B. Fenroy 004 30 PL 630
13 J. Bentley 009 29 PL 142
22 L. Zentar 011 41 PL 570
28 Q. Liam 015 32 PL 294
29 Transfer to Purchases A/c GL 90 2 086

12
 Answers Chapter 3

b) K. Dairy (p. 12)

2020 $
Feb. 1 Purchases PJ 65 450

B. Fenroy (p. 30)

2020 $
Feb. 8 Purchases PJ 65 630

J. Bentley (p. 29)

2020 $
Feb. 13 Purchases PJ 65 142

L. Zentar (p. 41)

2020 $
Feb. 22 Purchases PJ 65 570

Q. Liam (p. 32)

2020 $
Feb. 28 Purchases PJ 65 294

c) General Ledger

Purchases Account (p. 90)
2020 $
Feb. 28 Purchases Journal PJ 65 2 086

10 a) V. Alan
Purchases Journal (p. 96)

Date Details Invoice No Folio Amount

2025 $
Oct. 3 L. Wiseman 135 PL 50 700
8 M. Isaiah 238 PL 42 945
13 J. Warris 154 PL 29 1 304
17 F. Cameron 098 PL 16 560
25 D. Victory 312 PL 80 484
31 Purchases A/c GL 200 3 993

13
Answers Section 3

b) Purchases Ledger

L. Wiseman (p. 50)

2025 $
Oct. 3 Purchases PJ 96 700

M. Isaiah (p. 42)

2025 $
Oct. 8 Purchases PJ 96 945

J. Warris (p. 29)

2025 $
Oct. 13 Purchases PJ 96 1 304

F. Cameron (p. 16)

2025 $
Oct. 17 Purchases PJ 96 560

D. Victory (p. 80)

2025 $
Oct. 25 Purchases PJ 96 484

c) General Ledger

Purchases Account (p. 200)
2025 $
Oct. 31 Total credit purchases PJ 96 3 993

14
 Answers Chapter 3

11 a) B. Goodheart
Purchases Day Book (p. 1)

Date Details Invoice No Folio Amount

2019 $
May 1 H. Ninco 042 PL1 640
5 P. Jayden 043 PL2 212
7 L. Ruth 044 PL3 340
9 V. Ezekiel 045 PL4 89
12 H. Ninco 046 PL1 270
12 L. Ruth 047 PL3 320
22 P. Jayden 048 PL2 150
26 V. Ezekiel 049 PL4 152
28 P. Jayden 050 PL2 463
31 K. Lead 051 PL5 716
31 Purchases A/c GL15 3 352

b)  Purchases Ledger

H. Ninco (p. 1)

2019 $
May 1 Purchases PDB 1 640
12 Purchases PDB 1 270

P. Jayden (p. 2)

2019 $
May 5 Purchases PDB 1 212
22 Purchases PDB 1 150
28 Purchases PDB 1 463

L. Ruth (p. 3)

2019 $
May 7 Purchases PDB 1 340
12 Purchases PDB 1 320

15
Answers Section 3

V. Ezekiel (p. 4)

2019 $
May 9 Purchases PDB 1 89
26 Purchases PDB 1 152

K. Lead (p. 5)

2019 $
May 31 Purchases PDB 1 716

c) General Ledger

Purchases Account (p. 15)
2019 $
May 31 Total credit purchases PDB 1 3 352

12 a) R. Manor
Purchases Journal (p. 8)

Date Details Invoice No Folio Amount

2021 $
Aug. 1 C Lovely 307 PL20 125.40
14 G Tomlin 318 PL56 1 000.00
19 C Lovely 331 PL20 230.10
23 G Tomlin 345 PL56 730.00
27 F Cinders 364 PL42 640.12
30 Purchases A/c GL 39 2 725.62

R. Manor
Sales Journal (p. 10)

Date Details Invoice No Folio Amount

2021 $
Aug. 6 D Alexi 020 SL17 720.00
8 Z Wood 021 SL23 590.25
20 Z Wood 022 SL23 400.00
25 D Alexi 023 SL17 350.80
30 Sales A/c GL 22 2 061.05

16
 Answers Chapter 3

b) Purchases Ledger

C. Lovely (p. 20)

2021 $
Aug. 1 Purchases PJ 8 125.40
19 Purchases PJ 8 230.10

G. Tomlin (p. 56)

2021 $
Aug. 14 Purchases PJ 8 1 000
21 Purchases PJ 8 730

F. Cinders (p. 42)

2021 $
Aug. 27 Aug. 27 PJ 8 640.12

S ales Ledger
D. Alexi (p. 17)
2021 $
Aug. 6 Sales SJ 10 720.00
25 Sales SJ 10 350.80

Z. Wood (p. 23)

2021 $
Aug. 8 Sales SJ 10 590.25
20 Sales SJ 10 400.00

c)  General Ledger
Purchases Account (p. 39)
2021 $
Aug. 31 Total credit PJ 8 2 725.62
purchases

Sales Account (p. 22)

2021 $
Aug. 31 Total credit sales SJ 10 2 061.05

17
Answers Section 3

13 a) J. Caleb
Purchases Day Book (p. 138)

Date Details Invoice No Folio Amount

2023 $
Sept. 1 N. Yuclid 1235 PL20 800
10 D. Call 1004 PL13 630
15 K. Molly 980 PL22 400
26 N. Yuclid 1350 PL20 500
30 Purchases A/c GL100 2 330

J. Caleb
Sales Day Book (p. 8)

Date Details Invoice No Folio Amount

2023 $
Sept. 5 V. Lander 860 SL45 520
18 A. Danny 861 SL28 220
22 V. Lander 862 SL45 960
30 A. Danny 863 SL28 300
30 Sales A/c GL50 2 000

b)  Purchases Ledger

N. Yuclid (p. 20)

2023 $
Sep. 1 Purchases PDB138 800
26 Purchases PDB138 500

D. Call (p. 13)

2023 $
Sep. 10 Purchases PDB138 630

K. Molly (p. 13)

2023 $
Sep. 15 Purchases PDB138 400

18
 Answers Chapter 3

S ales Ledger
V. Lander (p. 45)
2023 $
Sep. 5 Sales SDB 8 520
22 Sales SDB 8 960

A. Danny (p. 28)

2023 $
Sep. 18 Sales SDB 8 220
30 Sales SDB 8 300

c) General Ledger

Purchases Account (p. 100)
2023 $
Sep. 30 Total credit PDB138 2 330
purchases

Sales Account (p. 50)

2023 $
Sep. 30 Sales Journal SDB 8 2 000

14 a) Sales Journal (p. 5)

Date Details Invoice No Folio Amount

2023 $
Nov. 1 J. Angus 101 SL15 570
1 N. Tina 102 SL22 260
3 P. Nolan 103 SL13 604
3 B. Ralph 104 SL35 300
12 J. Angus 105 SL15 220
12 P. Nolan 106 SL13 390
12 B. Ralph 107 SL35 200
30 Sales A/c GL10 2 544

19
Answers Section 3

Returns Inwards Journal (p. 7)

Date Details Credit note No Folio Amount

2023 $
Nov. 7 N. Tina 25 SL22 52
7 P. Nolan 53 SL13 84
15 J. Angus 54 SL15 73
15 B. Ralph 55 SL35 45
15 N. Tina 56 SL22 10
30 Returns Inwards A/c GL12 264

b) S ales Ledger

J. Angus (p. 15)
2023 $ 2023 $
Nov. 1 Sales SJ 5 570 Nov. 15 Returns inwards RIJ 7 73
12 Sales SJ 5 220

N. Tina (p. 22)

2023 $ 2023 $
Nov. 1 Sales SJ 5 260 Nov. 7 Returns inwards RIJ 7 52
15 Returns inwards RIJ 7 10

P. Nolan (p. 13)

2023 $ 2023 $
Nov. 3 Sales SJ 5 604 Nov. 7 Returns inwards RIJ 7 84
12 Sales SJ 5 390

B. Ralph (p. 35)

2023 $ 2023 $
Nov. 3 Sales SJ 5 300 Nov. 15 Returns inwards RIJ 7 45
12 Sales SJ 5 200

c)  General Ledger

Sales Account (p. 10)
2023 $
Nov. 30 Total credit sales SJ 5 2 544

20
 Answers Chapter 3

Returns Inwards (p. 12)

2023 $
Nov. 30 Total returns for the RIJ 7 264
month

15 a) Purchases Journal (p. 10)

Date Details Invoice No Folio Amount

$
Oct. 1 C. Goodwin 14 PL21 809
1 V. Miley 128 PL30 620
5 D. Exon 106 PL42 395
5 W. Carrie 245 PL54 230
20 C. Goodwin 327 PL21 475
20 D. Exon 109 PL42 760
20 W. Carrie 281 PL54 653
31 Purchases A/c GL32 3 942

Returns Outwards Journal (p. 15)

Date Details Note No Folio Amount

$
Oct. 13 V. Miley 12 PL30 34
13 D. Exon 13 PL42 18
31 C. Goodwin 14 PL21 50
31 W. Carrie 15 PL54 191
31 D. Exon 16 PL42 20
31 Returns Outwards A/c GL48 313

b)  Purchases Ledger

C. Goodwin (p. 21)
$ $
Oct. 31 Returns outwards ROJ 15 50 Oct. 1 Purchases PJ 10 809
20 Purchases PJ 10 475

21
Answers Section 3

V. Miley (p. 30)

$ $
Oct. 13 Returns outwards ROJ 15 34 Oct. 1 Purchases PJ 10 620

D. Exon (p. 42)

$ $
Oct. 13 Returns outwards ROJ 15 18 Oct. 5 Purchases PJ 10 395
31 Returns outwards ROJ 15 20 20 Purchases PJ 10 760

W. Carrie (p. 54)

$ $
Oct. 31 Returns outwards ROJ 15 191 Oct. 5 Purchases PJ 10 230
20 Purchases PJ 10 653

c) General Ledger

Purchases Account (p. 32)
$
Oct. 31 Total credit PJ 10 3 942
purchases

Returns Outwards Account (p. 48)

$
Oct. 31 Total returns for ROJ 15 313
the month

16 a) Sales Journal

Date Details Invoice No Folio Amount

2024 $
Dec. 1 P. Zenith 650
1 Q. Dorris 580
1 Z. Chisel 375
13 P. Zenith 515
13 Z. Chisel 410
31 Sales A/c 2 530

22
 Answers Chapter 3

Purchases Journal

Date Details Invoice No Folio Amount

2024 $
Dec. 6 V. Winner 730
6 K. Jasmine 640
18 K. Jasmine 335
18 D. Levitt 900
31 Purchases A/c 2 605

Returns Inwards Journal

Date Details Note No Folio Amount

2024 $
Dec. 8 Q. Dorris 20
8 Z. Chisel 18
21 P. Zenith 50
21 Q. Dorris 12
31 Returns Inwards A/c 100

Returns Outwards Journal

Date Details Invoice No Folio Amount

2024 $
Dec. 11 V. Winner 15
25 K. Jasmine 24
25 D. Levitt 10
31 Returns Outwards A/c 49

b)  Sales Ledger

P. Zenith
2024 $ 2024 $
Dec. 1 Sales 650 Dec. 21 Returns inwards 50
21 Sales 515

23
Answers Section 3

Q. Dorris
2024 $ 2024 $
Dec. 1 Sales 580 Dec. 8 Returns inwards 20
21 Returns inwards 12

Z. Chisel
2024 $ 2024 $
Dec. 1 Sales 375 Dec. 8 Returns inwards 18
13 Sales 410

 Purchases Ledger
V. Winner
2024 $ 2024 $
Dec. 11 Returns outwards 15 Dec. 6 Purchases 730

K. Jasmine
2024 $ 2024 $
Dec. 25 Returns outwards 24 Dec. 6 Purchases 640
18 Purchases 335

D. Levitt
2024 $ 2024 $
Dec. 25 Returns outwards 10 Dec. 18 Purchases 900

c) General Ledger

Purchases Account
2024 $
Dec. 31 Total credit purchases 2 605

Sales Account
2024 $
Dec. 31 Total credit sales 2 530

Returns Inwards
2024 $
Dec. 31 Total returns for the month 100

24
 Answers Chapter 4

Returns Outwards
2024 $
Dec. 31 Total returns for the month 49

17 Transaction Source document Book of Original Ledger

entry
a) Goods sold on credit Invoice Sales Journal Sales Ledger (Debtor’s
Account)
b) Goods bought on Invoice Purchases journal Purchases Ledger
credit (Creditor’s Account)
c) Cash sales Receipt Cash Book Cash Book
d) Cash purchases Receipt Cash Book Cash Book
e) Return of goods by Credit note sent Sales Returns Journal Sales ledger (Debtor’s
customer (Returns Inwards Account)
Journal)
f) Return of goods to Credit note received Purchases Returns Purchases Ledger
supplier Journal (Returns (Creditor’s Account)
Outwards Journal)

4 The General Journal

6 a) J. Nashon
General Journal

Date Details Debit Credit

2022 $ $
Jan. 1 Cash in hand 4 200
Cash at bank 5 300
Inventory 3 250
Motor vans 8 700
Machinery 7 640
Buildings 14 000
Debtors: D. Roman 950
K. Bill 1 500
Creditors: L. Ronald 2 130
V. Miner 1 000
Loan: P. Susan 16 300
Capital 26 110
(To record: assets and liabilities at this date, entered to open the 45 540 45 540
books)

25
Answers Section 3

b) Capital Account

2022 $
Jan. 1 Balance b/d 26 110

Cash

2022 $
Jan. 1 Balance b/d 4 200

Bank

2022 $
Jan. 1 Balance b/d 5 300

Inventory

2022 $
Jan. 1 Balance b/d 3 250

Motor Vans

2022 $
Jan. 1 Balance b/d 8 700

Machinery

2022 $
Jan. 1 Balance b/d 7 640

Buildings

2022 $
Jan. 1 Balance b/d 14 000

L. Ronald

2022 $
Jan. 1 Balance b/d 2 130

26
 Answers Chapter 4

V. Miner

2022 $
Jan. 1 Balance b/d 1 000

D. Roman

2022 $
Jan. 1 Balance b/d 950

K. Bill

2022 $
Jan. 1 Balance b/d 1 500

Loan: P. Susan

2022 $
Jan. 1 Balance b/d 16 300

7 General Journal

Date Details Debit Credit

2023 $ $
Mar. 1 Motor van 5 600
Steel Motors Ltd 5 600
(To record: purchase of motor van on credit)
Mar. 7 Bad Debts 130
D. Orion 130
(To record: debt written off as bad)
Mar. 12 Drawings 1 200
Purchases 1 200
(To record: drawings of stock by owner without payment)
Mar. 18 R. Bill 10 400
Machinery 10 400
(To record: sale of machinery on credit)
Mar. 23 Tech Guys Ltd 1 500
Computer 1 500
(To record: return of faulty computer to supplier)

56

27
Answers Section 3

8 General Journal

Date Details Debit Credit

2022 $ $
Aug. 1 Equipment 3 210
Bender and Son 3 210
(To record: purchase of equipment on credit)
Aug. 5 Office furniture 900
Y. Abraham 900
(To record: acceptance of office furniture in full settlement of debt)
Aug. 10 Z. Falon 7 300
Motor van 7 300
(To record: Sale of motor van on credit)
Aug. 16 Computer 5 700
Capital 5 700
(To record: owner brings in a new computer for business use)
Aug. 25 Office Masters 1 000
Office Equipment 1 000
(To record: return of excess office equipment to supplier)
Aug. 28 Delivery Van 5 400
Bad debts 3 300
K. Micah 8 700
(To record: acceptance of delivery van in part settlement of debt with
the remainder of debt being written off as bad)

28
 Answers Chapter 4

9 General Journal

Date Details Debit Credit

2025 $ $
Jul. 1 Computers 36 000
Ali’s Technology 36 000
(To record: purchase of computers on credit)

Jul. 6 B. Anderson 15 300

Furniture 15 300
(To record: sale of furniture on credit)

Jul. 13 Drawings 645

Purchases 645
(To record: withdrawal of stock by owner)

Jul. 15 D. McIntosh 1 300

J. Nuby 1 300
(To record: transfer of indebtedness)

Jul. 22 Purchases 45
Drawings 45
(To record: return of stock previously taken by owner)

Jul. 27 Bank 360

Printer 360
M. Jonah 720
(To record: acceptance of cheque and printer to settle debt)

29
Answers Section 3

10 Journal

Date Details Debit Credit

2026 $ $
Dec. 31 Sales 50 200
Trading Account 50 200
(Transfer of sales to Trading A/c)

Trading Account 30 300

Purchases 30 300
(Transfer of purchases to Trading A/c)

Trading Account 2 700

Stock (1 Jan. 2026) 2 700
(Transfer of opening stock to Trading A/c)

Stock (31 Jan. 2026) 1 500

Trading Account 1 500
(Transfer of closing stock to Trading A/c)

Trading Account 1 920

Returns inwards 1 200
Carriage inwards 720
(Closing accounts to the Trading A/c)

Returns outwards 800

Trading Account 800
(Transfer of returns outwards to Trading A/c)

Profit and Loss Account 1 900

Discounts Allowed 450
Wages 890
Carriage out 560
(Transfer of expenses to Profit and Loss A/c)

Rent Revenue 1 340

Discounts Received 600
Profit and Loss Account 1 940
(Transfer of revenues to Profit and Loss A/c)

30
 Answers Chapter 4

11 a) i) Date Details Debit Credit

2016 $ $
Jan. 1 Cash 3 690
Bank loan 1 500
Capital 2 190
3 690 3 690

ii) Date Details Debit Credit

2021 $ $
Jan. 1 Cash 200
Inventory 400
Debtor 330
Capital 930
930 930

iii) Date Details Debit Credit

2018 $ $
Jan. 1 Cash 2 500
Bank 5 000
Loan 2 500
Creditor 300
Capital 4 700
7 500 7 500

 ) Inter office memo; invoice; beginning Balance Sheet

b
c) A brief explanation of the transaction recorded in the journal.
12 a) Jan. 1 Owner invested cash into the business.
Jan. 4  urniture was bought from Courts Ltd on credit.
F
Jan. 10 Bought stock on credit from Renwick and Company.
Jan. 11 Sold goods on credit to B. Bonnet.
Jan. 15 Owner took stock for her personal use.
Jan. 20 Wrote off the debt owed by George Smith as a bad debt.
b) J an. 10 P
 urchases Journal
Jan. 11 Sales Journal

31
Answers Section 3

13 a) i) D. Veronica
General Journal

Date Details Debit Credit

2017 $ $
Jan. 1 Debtors: M Timmy 240
K. Mahase 175
Cash 2 700
Bank 4 200
Building 10 000
Motor vans 6 500
Inventory 1 800
Creditors: V. Lalla 320
S. Deena 460
Capital 24 835
(To record: opening entries for the period) 25 615 25 615
Jan. 5 B. McIntosh 2 300
Motor van 2 300
(To record: sale of motor van on credit)

Jan. 15 Motor van 4 200

Cash 1 000
Samson Motors 3 200
(To record: purchase of motor van with part payment only)

ii) Sales Journal

Date Details Folio Amt

2017 $
Jan. 3 A. Johnson SL 520
31 Sales A/c GL 520

iii) Purchases Journal

Date Details Folio Amt

2017 $
Jan. 1 L. Raja PL 700
10 V. Lalla PL 170
31 Purchases A/c GL 870

32
 Answers Chapter 4

iv) Returns Outward Journal

Date Details Folio Amt

2017 $
Jan. 11 L. Raja 160
31 Returns Outwards A/c 160

v) Cash Book

Date Details Cash Bank Date Details Cash Bank

2017 $ $ 2017 $ $
Jan. 1 Balance b/d 2 700 4 200 Jan. 15 Motor van 1 000
8 Sales 375 – 18 S. Deena 460
31 Balance c/d 2 075 3 740
3 075 4 200 3 075 4 200

b) S ales Ledger

A. Johnson

2017 $
Jan. 3 Sales 520

M. Timmy

2017 $
Jan. 1 Balance b/d 240

K. Mahase

2017 $
Jan. 1 Balance b/d 175

33
Answers Section 3

 Purchases Ledger

L. Raja

2017 $ 2017 $
Jan. 11 Returns Outwards 160 Jan. 1 Purchases 700

V. Lalla

2017 $ 2017 $
Jan. 1 Balance b/d 320 Jan. 10 Purchases 170

S. Deena

2017 $ 2017 $
Jan. 18 Bank 460 Jan. 1 Balance b/d 460

General Ledger

Buildings

2017 $
Jan. 1 Balance b/d 10 000

Motor Vans

2017 $
Jan. 1 Balance b/d 6 500
15 Cash 1 000
15 Samson Motors 3 200

Inventory

2017 $
Jan. 1 Balance b/d 1 800

Capital

2017 $
Jan. 1 Balance b/d 24 835

34
 Answers Chapter 4

B. McIntosh

2017 $
Jan. 5 Motor vans 2 300

Samson Motors

2017 $
Jan. 15 Motor vans 3 200

Sales

2017 $
Jan. 31 Sales Journal 520

Purchases

2017 $
Jan. 31 Purchases Journal 870

Returns Outwards

2017 $
Jan. 31 Returns Outwards Journal 160

14 Source Document Books of prime entry Accounts affected Ledgers affected

a) Sales invoice Sales Journal Sales/debtors Sales Ledger/General
Ledger
b) Purchases invoice Purchases Journal Purchases/creditors Purchases Ledger/
General Ledger
c) Credit note Returns Outwards Returns inwards/ Sales/Purchases
and Returns Inwards returns outwards/ Ledgers/General
Journals debtors/creditors Ledger
d) Cash receipt Cash Book Cash/bank Cash Book/General
Ledger
e) Cheque counterfoil Cash Book Bank Cash Book/General
Ledger

35
Answers Section 3

5 The Cash Book

8 Cash Book
F Cash Bank F Cash Bank
2015 $ $ 2015 $ $
Aug. 1 Balances b/d 250 1 580 Aug. 3 Rent 100
2 Sales 130 4 Wages 70
7 C. Nalim 210 10 Computer 500
11 Bank c 60 11 Cash c 60
16 Sales 390 13 Stationery 30
expense
15 Y. Grant 140
19 Purchases 220
31 Drawings 40
31 Balances c/d 120 1 340
440 2 180 440 2 180
Sep. 1 Balances b/d 120 1 340

9 Cash Book
F Cash Bank F Cash Bank
2016 $ $ 2016 $ $
Jan. 1 Capital 3 000 2 000 Jan. 2 Purchases 265
5 Sales 850 3 Motor van 842
7 P. Kyle (loan) 1 000 10 Bank c 1 500
10 Cash c 1 500 15 Office equipment 568
12 Sales (230 × ​ _12​) 115 18 E. Nicolas 318
20 Sales 356 22 T. Goldstone 80
23 Rent received 600 24 Electricity 185
27 F. Benson 415 25 Drawings 220
31 Bank c 700 31 Cash c 700
31 Balances c/d 3 503 2 355
6 321 4 215 6 321 4 215
Feb. 1 Balances b/d 3 503 2 355

36
 Answers Chapter 5

10 Cash Book
F Cash Bank F Cash Bank
2021 $ $ 2021 $ $
Feb. 1 Balance b/d 400 Feb. 1 Balance b/d 250
2 Sales 800 8 Sundry expenses 220
3 A. Fritz 500 1 000 10 Purchases 130
12 Bank c 250 12 Cash c 250
17 B. Alexander 300 18 Bank 1 630
18 Cash c 1 630 20 Furniture 1 460
23 T. Samuel 500 26 Drawings 200
27 T. Samuel (loan) 500
28 B. Alexander 300
(dishonoured
cheque)
28 Balances c/d 400 940
2 450 3 830 2 450 3 830
Mar. 1 Balances b/d 400 940

11 a) i) S. Dubay – $50 (750 − 700)

ii) T. Kerron – $40 (600 − 560)
iii) M. Joyce – $10 (200 × 0.05)
iv) K. Shaw – $55.20 (460 × 0.12)

b) General Ledger
Discounts Allowed Account
$
S. Dubay 50.00
T. Kerron 40.00
M. Joyce 10.00
K. Shaw 55.20
12 a) i) L. Rickford – $25 (475 = 95%; 1% = 475/95 = $5; 5% = 5 × $5 = $25)
ii) R. Persad – $40.50 (900 × 0.045)
iii) D. Sam – $78 (702 = 90%; 1% = 702/90 = $7.80; 10% = $7.80 × 10 = $78)
iv) Lyle Brothers – $120 (1 500 × 0.08)

37
Answers Section 3

b) General Ledger
Discounts Received Account
$
L. Rickford 25.00
R. Persad 40.50
D. Sam 78.00
Lyle Brothers 120.00
13 a) and b)
Cash Book
F Disc. Cash Bank F Disc. Cash Bank
2020 $ $ $ 2020 $ $ $
Oct. 1 Balances b/f 190 3 760.50 Oct. 2 Cash c 1 500.50
2 Bank c 1 500 3 Purchases 340.50
5 Sales 852 8 Wages 600
9 V. Ramroop 40 300.50 10 V. Lambert 20.50 580.50
13 L. Rattin 400 15 Rent 600.50
18 A Belamy 70 730.50 20 J. Bhagan 22.50 427.50
23 Sales 635 31 Balances c/d 3 057 1 342.50
31 N. Phillip 10 80
120 3 657 4 790.50 42.50 3 657 4 790.50
Sep. 1 Balances b/d 3 057 1 342.50

c) General Ledger
Discounts Allowed Account
2020 $
Oct. 31 Total for the month 120

Discounts Received Account

2020 $
Oct. 31 Total for the month 42.50

38
 Answers Chapter 5

14 Cash Book
F Disc. Cash Bank F Disc. Cash Bank
2018 $ $ $ 2018 $ $ $
Dec. 1 Balance b/f 82 Dec. 1 Balance b/f 3 400.50
4 Sales 1 200.50 2 D. Khanhai 22.50 427.50
8 T. Solanzo 90 110.50 2 N. Burgess 18.50 342.50
10 Bank c 2 100 5 Insurance 458.50
15 Commission 350 10 Cash c 2 100.50
received
18 J. Launders 20 780.50 12 Drawings 32 84.50
21 E. Mary 900.50 22 Purchases 890
26 Sales 720.50 23 Motor van 1 000.50
28 P. Suban (loan) 500 24 E. Mary 900.50
31 N. Carol 30 570 (dishonoured
cheque)
31 Balance c/d 5 001.50 31 Balance c/d 2 770

50 3 692 8 711.50 40.50 3 692 8 711.50

2019 2019
Jan. 1 Balance b/d 2 770 Jan. 1 Balance b/d 5 001.50

General Ledger
Discounts Allowed Account
2018 $
Dec. 31 Total for the month 50

Discounts Received Account

2018 $
Dec. 31 Total for the month 40.50

39
Answers Section 3

15 Cash Book
F Disc. Cash Bank F Disc. Cash Bank
2022 $ $ $ 2022 $ $ $
Nov. 1 Capital 8 000 Nov. 2 Equipment 2 500
7 Bank c 1 500 3 Purchases 1 800
9 Z. Randall 17 323 7 Cash c 1 500
13 Rent received 780 11 Fixtures 13 000
14 C. Norris 125 1 125 17 Z. Randall 323
16 Sales 1 325 18 Drawings 175
22 Sales 2 300 1 900 19 Wages 890
30 Balance c/d 8 261 20 Purchases 1 000
30 J an’s Paper 54 486
Solutions
30 Balance c/d 3 840
142 5 905 19 609 54 5 905 19 609
Dec. 1 Balance b/d 3 840 Dec. 1 Balance b/d 8 261

General Ledger
Discounts Allowed Account
2022 $ 2022 $
Nov. 30 Total for the month 142 Nov. 30 Z. Randall 17

Discounts Received Account

2022 $
Nov. 30 Total for the month 54

40
 Answers Chapter 5

16 a) M. N. Petal
Cash Book
F Disc. Cash Bank F Disc. Cash Bank
2015 $ $ $ 2015 $ $ $
Jan. 1 Capital 4 000 Jan. 2 Equipment 1 300
1 B. Jimmy (loan) 2 000 3 Purchases 1 250
9 Cash c 1 500 5 Rent 500
12 Sales 1 680 9 Bank c 1 500
25 K. Lim 170 1 530 16 Drawings 200
31 Cash c 1 080 18 General 400
expenses
20 Delivery van 1 000
20 Petrol 250
23 Flowers 200 1 200
Forever
31 B. Jimmy 500
(loan)
31 Bank c 1 080
31 Balance c/d 2 610
170 5 680 6 110 200 5 680 6 110
Feb. 1 Balance b/d 2 610

b) Sales = 1 680 (12th) + 1 700 (13th) = $3 380

Purchases = 1 250 (3rd) + 1 400 (11th) = $2 650

M. N. Petal
Income Statement for the month ended 31 January 2015
$ $
Sales 3 380
Less: Cost of goods sold
Purchases 2 650
Less: Closing inventory (1 650) (1 000)
Gross profit 2 380
Add: Discount received (23rd) 200
2 580
Less: Expenses
Rent (5th) 500
General expenses (18th) 400
Petrol (20th) 250
Discount allowed (25th) 170 (1 320)
Net profit 1 260

41
Answers Section 3

17 a) J. Gibson
Cash Book
F Disc. Cash Bank F Disc. Cash Bank
2016 $ $ $ 2016 $ $ $
Apr. 1 Balance b/f 2 600 Apr. 2 Bank c 2 000*
2 Cash c 2 000* 3 V. Motilal 1 290
5 Sales 1 300 11 M. Ramdass 495*
8 Sales 1 530* 13 Motor repairs 700
14 Cash c 1 305* 14 Bank c 1 305*
15 Sales 765 17 Drawings 520
22 J. King 235 18 M. Ramsingh 40 360
30 Cash c 700* 20 Electricity 400*
25 Purchases 275
27 Computer 1 000
30 Bank c 700*
30 Balance c/d 1 390
0 4 900 5 535* 40 4 900* 5 535
May 1 Balance b/d 1 390*

*(2 600 + 1 300) – (2 495 + 100) = 1 305

b) i) Total sales = $1 300 (5th) + $1 530 (8th) + $765 (15th) = $3 595
ii) Total expenses = $700 (13th) + $400 (20th) = $1 100

42
 Answers Chapter 6

6 The Petty Cash Book

6 a) and (b)
Petty Cash Book
Receipts Folio Date Details Total Motor Stationery Staff
Expenses Travelling
Expenses
$ $ $ $ $
2016
300 CB Jan. 1 Cash
2 Petrol 25 25
3 Stamps 15 15
5 T. Lorry: travelling allowance 28 28
7 Car wash 20 20
10 C. Lucas: travelling allowance 30 30
12 Envelopes 18 18
15 Petrol 25 25
23 Printing paper 26 26
30 I. Jimmy: travelling 19 19
allowance
31 Pens 22 22
228 70 81 77
31 Balance c/d 72
300 300
72 Feb. 1 Balance b/d

43
Answers Section 3

7 (a)–(c)
Petty Cash Book
Receipts Folio Date Details Total Cleaning Motor Office
Expenses Expenses
$ $ $ $ $
2017
280 Mar. 1 Cash
3 Stationery 32 32
4 Petrol 20 20
6 Disinfectant 12 12
8 Envelopes 15 15
10 Cleaner’s wages 40 40
13 Motor repairs 28 28
17 Paper 21 21
21 Truck tow services 34 34
26 Petrol 25 25
28 Stationery 18 18
30 Broom 20 20
265 72 107 86
31 Balance c/d 15
280 280
15 Apr. 1 Balance b/d
265 1 Cash

44
 Answers Chapter 6

8 (a)–(c)
Petty Cash Book
Receipts Folio Date Details Total Postage Travelling Cleaning
Expense Expense Expense
$ $ $ $ $
500 CB Jul. 1 Cash
2 Stamps 19 19
5 Bus fares 54 54
6 Mop 22 22
9 Mail delivery 39 39
services
11 Staff travelling 36 36
15 Disinfectant 18 18
18 Envelopes 34 34
23 Staff travelling 45 45
25 Stamps 23 23
28 Cleaner’s wages 67 67
30 Bus fares 56 56
413 115 191 107
31 Balance c/d 87
500 500
87 Aug. 1 Balance b/d
413 CB 1 Cash

d) General Ledger

Postage Expense Account

2018 $
Jul. 31 Petty Cash 115

Travelling Expenses Account

2018 $
Jul. 31 Petty Cash 191

45
Answers Section 3

Cleaning Expense Account

2018 $
Jul. 31 Petty Cash 107

9 (a)–(c)
Petty Cash Book
Receipts Folio Date Details Total Postage Motor Sundry Ledger Ledger
and Office Expenses Expenses Folio Accounts
Expenses
$ $ $ $ $ $
2019
50 Oct. 1 Balance b/f
350 CB 1 Cash
2 Postage 18 18
4 Stationery 20 20
6 Petrol 25 25
7 Cleaning 19 19
materials
11 Pens 14 14
15 Courier 32 32
services
19 Motor 26 26
repairs
20 Night 30 30
guards
stipend
23 K. Blue 55 PL4 55
25 Stamps 15 15
28 Petrol 28 28
31 Cleaning 25 25
materials
307 99 79 74 55
307 31 Cash
31 Balance c/d 400
707 707
400 Nov. 1 Balance b/d

46
 Answers Chapter 6

10 (a)–(c)
Petty Cash Book
Receipts Folio Date Details Total Janitor’s Repairman’s Truck Ledger Ledger
Expenses Expenses Expenses Folio Accounts
$ $ $ $ $ $
2020
26 Jul. 1 Balance b/f
274 CB5 1 Cash Book
2 Janitor’s 25 25
wages
3 Truck: petrol 23 23
5 Hammer 15 15
8 Cleaning 18 18
supplies
10 M. Sally 30 PL12 30
12 Nails 12 12
15 Brakes fluid 17 17
20 Janitor’s 25 25
wages
21 Bathroom 28 28
pipes
25 Petrol 23 23
27 Disinfectant 9 9
28 Glue 12 12
31 Z. Quash 35 SL21 35
(refund)
272 77 67 63 65
31 Balance c/d 28
300 300
28 Aug. 1 Balance b/d
322 CB10 1 Cash

Note: i) Float is $300 (balance b/f [$26] + reimbursement by cashier [$274])

ii) The increase in the float is $50 (new float [$350] − original Float [$300])
iii) Reimbursement on 1 August is $322 (amount spent [$272] + increase in float [$50])

47
Answers Section 3

11 (a)–(c)
Petty Cash Book
Receipts Folio Date Details Total Cleaning Motor Travelling
Expenses Expenses
$ $ $ $ $
2024
200.00 CB Feb. 1 Cash
2 Petrol 21.00 21.00
5 Staff travelling: D. Nigel 14.40 14.40
8 Janitor’s wages 20.00 20.00
11 Delivery van repairs 15.00 15.00
15 Staff travelling: J. Mahabir 22.00 22.00
18 Brooms 18.50 18.50
22 Petrol 16.10 16.10
26 Oil for truck 6.75 6.75
28 Staff travelling: L. Diego 19.25 19.25
29 Cleaning overalls 27.00 27.00
180.00 65.50 58.85 55.65
240.00 CB 29 Cash
29 Balance c/d 260.00
440.00 440.00
260.00 Mar. 1 Balance b/d

Note: i) The amount reimbursed on 29 February is $240 = $180 spent + $60 increase in the float.
ii) The balance b/d of $260 reflects the new float.

48
 Answers Chapter 6

12 (a)–(c)
B. Ramroop
Petty Cash Book
Receipts F Date Details Total Motor Stationery
Expenses Expenses
$ 2018 $ $ $
350.90 CB Sept. 1 Cash
5 Stamps 26.00 26.00
10 Petrol 33.50 33.50
12 Envelopes 22.40 22.40
20 Mechanic 46.50 46.50
22 Printer paper 51.20 51.20
27 Engine oil 36.00 36.00
28 Pens and paper clips 25.30 25.30
240.90 116.00 124.90
240.90 30 Cash
30 Balance c/d 350.90
590.90 590.90
350.90 Oct. 1 Balance b/d

B. Ramroop
Cash Book
F Disc. Cash Bank F Disc. Cash Bank
$ $ $ $ $ $
2018 2018
Sept. 1 Balances b/f 725.90 3 600 Sept. 1 Petty Cash 350.90
Book
7 V. Kerron 400 1 800 4 Caterer’s bill 2 200
14 Bank c 1 500.90 14 Cash c 1 500
30 Sales 1 000 18 Electricity 1 300.90
24 G. Sooklal 35 1 365
29 Drawings 300.90
30 Petty Cash 240.90
Book
30 Balances c/d 34.10 1 335
400 2 225.90 6 400 35 2 225.90 6 400
Oct. 1 Balances b/d 34.10 1 335

49
Answers Section 3

d) General Ledger

Motor Expenses
2018 $
Sept. 30 Petty Cash 116

Stationery Expenses
2018 $
Sept. 30 Petty Cash 124.90

13 H. Boxhill
Cash Book
F Disc. Cash Bank F Disc. Cash Bank
$ $ $ $ $ $
2020 2020
Jan. 1 Balances b/f 860 5 720 Jan. 1 Petty Cash Book 235
9 Sales 1 700 2 Rent 800
10 D. Floyd 90 1 710 25 D. Floyd
13 K. Percival 36 1 164 (dishonoured
19 Commissions cheque) 1 710
received 1 750 31 Kitchen 3 140
equipment
31 Balances c/d 3 489 3 530
126 3 724 9 180 0 3 724 9 180
Feb. 1 Balances b/d 3 489 3 530 Feb. 1 Petty Cash Book 246

50
 Answers Chapter 6

H. Boxhill
Petty Cash Book
Receipts F Date Details Total Cleaning Staff Travelling Miscellaneous
Expenses Allowances Expenses
$ $ $ $ $
2020
65 Jan. 1 Balance b/f
235 CB 1 Cash
300
5 Mop 15 15
5 Disinfectant 8 8
11 Travelling: M. Howard 25 25
11 Travelling: K. Deen 18 18
16 A.C. Repairs 50 50
16 Cleaning Supplies 32 32
22 Travelling: F. Shelly 22 22
24 Dishwashing liquid 20 20
24 Freezer rental 56 56
246 75 65 106
31 Balance c/d 54
300 300
54 Feb. 1 Balance b/d
246 1 Cash

14 a) P. Champion
Cash Book
F Disc. Cash Bank F Disc. Cash Bank
$ $ $ $ $ $
2020 2020
Apr. 1 Balances b/f 850 3 429 Apr. 2 Petty Cash Book 171
11 Loan: R. Julie 1 500 6 L. Shirley 90 810
13 V. Nadia 35 200 6 Z. Jacobs 76 684
13 Z. Jacobs 435 7 Wages 638
25 Rent 750
30 Balances c/d 1 314 2 047
35 1 485 4 929 166 1 485 4 929

May 1 Balances b/d 1 314 2 047 May 1 Petty Cash Book 161

51
Answers Section 3

b) P. Champion
Petty Cash Book
Receipts F Date Details Total Photocopying Motor Sundry Ledger
Expenses Expenses Expenses Accounts
$ $ $ $ $ $
2020
29 Apr. 1 Balance b/f
171 2 Cash
200 3 Paper 22 22
5 Car wash 18 18
10 Service fee: copier 30 30
15 Janitor’s badge 12 12
18 A. Hodge 28 28
20 Fuel: truck 26 26
30 Paint 25 25
161 52 44 37 28
30 Balance c/d 39
200 200
39 May 1 Balance b/d
161 1 Cash

52
4 Ledgers and the Trial Balance
7 The double-entry system for assets, liabilities and capital
6 Transaction Accounts affected Type of account Increase/Decrease Debit/Credit
a) Cash Asset Increase Debit
Capital Capital Increase Credit
b) Cash Asset Decrease Credit
Bank Asset Increase Debit
c) Capital Capital Increase Credit
Bank Asset Increase Debit
d) Capital Capital Decrease Debit
Cash Asset Decrease Credit
e) Bank Asset Decrease Credit
Cash Asset Increase Debit
f) Capital Capital Decrease Debit
Bank Asset Decrease Credit

7 Transaction Accounts affected Type of account Increase/Decrease Debit/Credit

a) A. Motilal (Loan) Liability Increase Credit
Cash Asset Increase Debit
b) A. Motilal (Loan) Liability Decrease Debit
Bank Asset Decrease Credit
c) Equipment Asset Increase Debit
Cash Asset Decrease Credit
d) Furniture Asset Increase Debit
K. Noel Liability Increase Credit
e) Furniture Asset Decrease Credit
K. Noel Liability Decrease Debit
f) K. Noel Liability Decrease Debit
Bank Asset Decrease Credit
g) Motor van Asset Increase Debit
Bank Asset Decrease Credit

53
Answers Section 4

8 Transaction Accounts affected Type of account Increase/Decrease Debit/Credit

a) Capital Capital Increase Credit
Bank Asset Increase Debit
b) Buildings Asset Increase Debit
C. Ramdass Liability Increase Credit
c) Bank Asset Decrease Credit
Cash Asset Increase Debit
d) J. Ganpat (Loan) Liability Increase Credit
Bank Asset Increase Debit
e) L. North Asset Decrease Credit
Cash Asset Increase Debit
f) F. Mahase Liability Decrease Debit
Bank Asset Decrease Credit
g) Equipment Asset Decrease Credit
Cash Asset Increase Debit
h) C. Ramdass Liability Decrease Debit
Bank Asset Decrease Credit

9 Transaction Accounts affected Type of account Increase/Decrease Debit/Credit

a) J. Peru Asset Decrease Credit
Bank Asset Increase Debit
b) S. Ramoutar (Loan) Liability Decrease Debit
Cash Asset Decrease Credit
c) Z. Rogers Asset Decrease Credit
Cash Asset Increase Debit
d) Capital Capital Decrease Debit
Cash Asset Decrease Credit
e) Furniture Asset Increase Debit
C. Parks Ltd Liability Increase Credit
f) V. Lillac Liability Decrease Debit
Cash Asset Decrease Credit
g) M. Kelly Liability Decrease Debit
Bank Asset Decrease Credit
h) C. Parks Ltd Liability Decrease Debit
Bank Asset Decrease Credit
i) Capital Capital Increase Credit
Cash Asset Increase Debit
j) Land Asset Decrease Credit
Bank Asset Increase Debit

54
 Answers Chapter 7

10 Date Debit Credit $

2018
Mar. 1 Cash Capital 8 000
5 Bank Cash 5 000
8 Motor van Bank 1 800
15 Capital Cash 600
20 Cash Motor van 1 540
31 Bank Capital 2 100

Capital Account
2018 $ 2018 $
Mar. 15 Cash 600 Mar. 1 Cash 8 000
31 Bank 2 100

Cash Account
2018 $ 2018 $
Mar. 1 Capital 8 000 Mar. 5 Bank 5 000
20 Motor van 1 540 15 Capital 600

Bank Account
2018 $ 2018 $
Mar. 5 Cash 5 000 Mar. 8 Motor van 1 800
31 Capital 2 100

Motor Van Account

2018 $ 2018 $
Mar. 8 Bank 1 800 Mar. 20 Cash 1 540

11 Date Debit Credit $

2019
Jun. 1 Bank Capital 10 000
4 Machinery Bank 2 500
9 Cash P. Singh (Loan) 6 000
12 Fixtures Fit It Up Ltd 3 400
18 Bank Machinery 1 680
22 P. Singh (Loan) Cash 3 000
30 Fix It Up Ltd Bank 1 200

55
Answers Section 4

Bank Account
2019 $ 2019 $
Jun. 1 Capital 10 000 Jun. 4 Machinery 2 500
18 Machinery 1 680 30 Fix It Up Ltd 1 200

Capital Account
2019 $
 Jun. 1. Bank 10 000

Machinery Account
2019 $ 2019 $
Jun. 4 Bank 2 500 Jun. 18 Bank 1 680

Cash Account
2019 $ 2019 $
Jun. 4 P. Singh (Loan) 6 000 Jun. 22 P. Singh (Loan) 3 000

P. Singh (Loan) Account

2019 $ 2019 $
Jun. 22 Cash 3 000 Jun. 9 Cash 6 000

Fixtures Account
2019 $
 Jun. 12 Fix It Up Ltd 3 400

Fix It Up Ltd Account

2019 $ 2019 $
Jun. 30 Bank 1 200 Jun. 12 Fixtures 3 400

12 a) Date Debit Credit $

2016
Jan. 1 Cash Capital 17 645
2 Bank Cash 12 600
8 Furniture Bank 3 450
10 Equipment M. Devon 2 300
16 Capital Bank 1 300
19 Cash Furniture 1 700
20 M. Devon Equipment 600
30 M. Devon Cash 1 700

56
 Answers Chapter 7

b) On 30 September, the business owns $1 750 worth of furniture. (Amount bought $3 450 – Amount sold
$1 700)
c) J. Sampath’s capital is $16 345 on 30 September. (Amount invested $17 645 – Amount withdrawn
$1 300)

13 a) Date Debit Credit $

2015
Sep. 1 Cash Capital 8 500
2 Equipment Cash 6 340
3 Office furniture G. Lomy 2 500
5 Bank Agricultural Development Bank 15 000
9 Equipment Bank 3 700
11 Cash Bank 4 000
13 N. James Equipment 3 700
17 G. Lomy Cash 1 150
21 Agricultural Development Bank Bank 3 000
23 Bank N. James 1 700
25 Agricultural Development Bank Cash 1 000
28 G. Lomy Office furniture 340

Cash Account
2015 $ 2015 $
Sep. 1 Capital 8 500 Sep. 2 Equipment 6 340
11 Bank 4 000 17 G. Lomy 1 150
25 Agricultural Development 1 000
Bank

Capital Account
2015 $
 Sep. 1 Cash 8 500

Equipment Account
2015 $ 2015 $
Sep. 2 Cash 6 340 Sep. 13 N. James 3 700
9 Bank 3 700

Office Furniture Account

2015 $ 2015 $
Sep. 3 G. Lomy 2 500 Sep. 28 G. Lomy 340

57
Answers Section 4

G. Lomy Account
2015 $ 2015 $
Sep. 17 Cash 1 150 Sep. 3 Office furniture 2 500
28 Office furniture 340

Bank Account
2015 $ 2015 $
Sep. 5 Agricultural 15 000 Sep. 9 Equipment 3 700
Development Bank 11 Cash 4 000
23 N. James 1 700 21 Agricultural Development 3 000
 Bank

 Agricultural Development Bank Account

2015 $ 2015 $
Sep. 21 Bank 3 000 Sep. 5 Bank 15 000
25 Cash 1 000

 N. James Account
2015 $ 2015 $
Sep. 13 Equipment 3 700 Sep. 23 Bank 1 700

b) The value of the tractors owned at month’s end is $6 340. (Tractors bought $10 040 – Tractors sold
$3 700)

14 a) Date Debit Credit $

2020
Nov. 1 Bank Capital 10 000
1 Cash Capital 3 500
3 Motor vans Bank 6 000
5 Computers K. Stella Ltd 2 400
7 Bank V. Macneil (loan) 5 000
9 K. Stella Ltd Computers 1 200
12 Cash Bank 1 760
22 Cash Motor vans 2 000
23 Capital Cash 265
25 V. Macneil (Loan) Cash 2 400
31 Motor vans Bank 955

58
 Answers Chapter 7

Bank Account
2020 $ 2020 $
Nov. 1 Capital 10 000 Nov. 3 Motor vans 6 000
7 V. Macneil (loan) 5 000 12 Cash 1 760
31 Motor vans 955

Cash Account
2020 $ 2020 $
Nov. 1 Capital 3 500 Nov. 23 Capital 265
12 Bank 1 760 25 V. Macneil (loan) 2 400
22 Motor vans 2 000

Capital Account
2020 $ 2020 $
Nov. 23 Cash 265 Nov. 1 Bank 10 000
1 Cash 3 500

Motor Vans Account

2020 $ 2020 $
Nov. 3 Bank 6 000 Nov. 22 Cash 2 000
31 Bank 955

Computers Account
2020 $ 2020 $
Nov. 5 K. Stella Ltd 2 400 Nov. 9 K. Stella Ltd 1 200

K. Stella Ltd Account

2020 $ 2020 $
 Nov. 9 Computers 1 200 Nov. 5 Computers 2 400

V. Macneil (Loan) Account

2020 $ 2020 $
Nov. 25 Cash 2 400 Nov. 7 Bank 5 000

b) V. Macneil is still owed $2 600 on 26 November (Loan taken $5 000 – Amount of loan repaid $2 400).

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Answers Section 4

8 The double-entry system for the asset of stock

8 Debit Credit
a) Purchases Cash
b) Purchases L. Long
c) Cash Sales
d) V. Ramesh Sales
e) Equipment Cash

9 Debit Credit
a) Purchases Q. Dolly
b) K. Nissa Returns outwards
c) F. Bitno Sales
d) Machinery Y. Masters Ltd
e) Returns inwards D. Chin

10 Debit Credit
a) Cash Furniture
b) K. Holmes Sales
c) Purchases Bank
d) Motor van Z. Motors
e) P. Howard Returns outwards
f) Cash Sales
g) Returns inwards P. Orville
h) Machine Mix Ltd Machinery
i) F. Nunu Cash
j) Purchases F. Bradshaw
k) Bank T. Ali
l) Drawings Purchases

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 Answers Chapter 8

11 Date Debit Credit

May 1 Purchases P. Ninah
4 Purchases Cash
7 P. Ninah Returns outwards
15 J. Cook Sales
20 Cash Sales
31 Returns inwards J. Cook

J. Cook Account
2014 $ 2014 $
May 15 Sales 340 May 31 Returns inwards 340

Sales Account
2014 $
May 15 J. Cook 340
20 Cash 650

Cash Account
2014 $ 2014 $
May 20 Sales 650 May 4 Purchases 760

Returns Inwards Account

2014 $
May 31 J. Cook 340

Purchases Account
2014 $
May 1 P. Ninah 500
4 Cash 760

P. Ninah Account
2014 $ 2014 $
 May 7 Returns outwards 100 May 1 Purchases 500

Returns Outwards Account

2014 $
 May 7 P. Ninah 100

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Answers Section 4

12 a) Date Debit Credit

Jan. 1 Bank Capital
5 Purchases N. Victor
8 Cash Sales
12 Purchases Cash
16 N. Victor Returns outwards
18 Equipment Bank
21 L. Xavier Sales
23 A. Chotai Sales
25 Returns inwards L. Xavier
28 Purchases A. Banks
31 Bank A. Chotai

Bank Account
2015 $ 2015 $
Jan. 1 Capital 2 500 Jan. 18 Equipment 1 000
31 A. Chotai 960

Capital Account
2015 $
Jan. 1 Bank 2 500

Purchases Account
2015 $
Jan. 5 N. Victor 600
12 Cash 550
28 A. Banks 1 200

N. Victor Account
2015 $ 2015 $
Jan. 16 Returns outwards 140 Jan. 5 Purchases 600

Cash Account
2015 $ 2015 $
Jan. 8 Sales 1 600 Jan. 12 Purchases 550

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 Answers Chapter 8

Sales Account
2015 $
Jan. 8 Cash 1 600
21 L. Xavier 870
23 A. Chotai 960

Returns Outwards Account
2015 $
Jan. 16 N. Victor 140

Equipment Account
2015 $
Jan. 18 Bank 1 000

L. Xavier Account
2015 $ 2015 $
Jan. 21 Sales 870 Jan. 25 Returns inwards 120

A. Chotai Account
2015 $ 2015 $
Jan. 23 Sales 960 Jan. 31 Bank 960

Returns Inwards Account

2015 $
Jan. 25 L. Xavier 120

A. Banks Account
2015 $
Jan. 28 Purchases 1 200

b) N. Victor is still owed $460. (Stock bought from N. Victor $600 – returns outwards $140)

63
Answers Section 4

13 a) Date Debit Credit

Apr. 1 Bank Capital
2 Cash Bank
3 Machinery S. Miller
5 Purchases Bank
7 Purchases D. Every
9 G. Michaels Sales
10 Cash Sales
11 S. Miller Machinery
13 Purchases D. Every
15 K. Gardens Sales
17 Cash Sales
18 D. Every Returns outwards
21 Returns inwards G. Michaels
23 Drawings Purchases
27 Purchases Cash
30 D. Every Cash

Bank Account
2016 $ 2016 $
Apr. 1 Capital 3 000 Apr. 2 Cash 500
5 Purchases 850

Capital Account
2016 $
 Apr. 1 Bank 3 000

Cash Account
2016 $ 2016 $
Apr. 2 Bank 500 Apr. 27 Purchases 230
10 Sales 1 400 30 D. Every 1 050
17 Sales 940

Machinery Account
2016 $ 2016 $
Apr. 3 S. Miller 5 000 Apr. 11 S. Miller 1 500

S. Miller Account
2016 $ 2016 $
Apr. 11 Machinery 1 500 Apr. 3 Machinery 5 000

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 Answers Chapter 8

Purchases Account
2016 $ 2016 $
Apr. 5 Bank 850 Apr. 23 Drawings 70
7 D. Every 1 250
13 D. Every 200
27 Cash 230

D. Every Account
2016 $ 2016 $
Apr. 18 Returns outwards 400 Apr. 7 Purchases 1 250
30 Cash 1 050 13 Purchases 200

G. Michaels Account
2016 $ 2016 $
Apr. 9 Sales 1 100 Apr. 21 Returns inwards 100

Sales Account
2016 $
Apr. 9 G. Michaels 1 100
10 Cash 1 400
15 K. Gardens 280
 17 Cash 940

K. Gardens Account
2016 $
Apr. 15 Sales 280

Returns Outwards Account

2016 $
Apr. 18 D. Every 400

Returns Inwards Account

2016 $
Apr. 21 G. Michaels 100

Drawings Account
2016 $
Apr. 23 Purchases 70

b) i ) G. Michaels owes $1 000 (total sales to G. Michaels minus returns inwards)
ii) There is $1 650 left in the bank account (total receipts [debit side] $3 000 minus total payments
[credit side] $1 350)

65
Answers Section 4

14 Bank Account
2016 $ 2016 $
Jul. 1 Capital 4 000 Jul. 2 Purchases 1 920
15 Sales 1 070 24 F. Taino 1 700
 22 J. Hall 800

Cash Account
2016 $
Jul. 1 Capital 800
7 Sales 1 240
14 F. Taino (loan) 1 700

Capital Account
2016 $
Jul. 1 Bank 4 000
1 Cash 800

Purchases Account
2016 $ 2016 $
Jul. 2 Bank 1 920 Jul. 27 Drawings 100
4 K. Suresh 400
10 H. Frank 700
 10 S. John 680

K. Suresh Account
2016 $ 2016 $
 Jul. 19 Returns outwards 60 Jul. 4 Purchases 400

Sales Account
2016 $
Jul. 7 Cash 1 240
13 J. Hall 1 550
15 Bank 1 070
 23 P. Viren 1 850

Furniture Account

2016 $
 Jul. 8 Furniture Forever 2 200

Furniture Forever Account

2016 $
 Jul. 8 Furniture 2 200

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 Answers Chapter 8

H. Frank Account
2016 $ 2016 $
 Jul. 19 Returns outwards 80 Jul. 10 Purchases 700

S. John Account
2016 $
 Jul. 10 Purchases 680

J. Hall Account
2016 $ 2016 $
 Jul. 13 Sales 1 550 Jul. 22 Bank 800

F. Taino (Loan) Account

2016 $ 2016 $
 Jul. 24 Bank 1 700 Jul. 14 Cash 1 700

Returns Outwards Account

2016 $
Jul. 19 K. Suresh 60
19 H. Frank 80

P. Viren Account
2016 $ 2016 $
 Jul. 23 Sales 1 850 Jul. 26 Returns inwards 250

Returns Inwards Account

2016 $
 Jul. 26 P. Viren 250

Drawings Account
2016 $
 Jul. 27 Purchases 100

15 Cash Account
2018 $ 2018 $
Nov. 1 Capital 1 500 Nov. 2 Purchases 1 700
3 Sales 1 820 14 Purchases 610
18 Sales 770 23 Motor van 1 200
30 Drawings 200


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Answers Section 4

Bank Account
2018 $ 2018 $
Nov. 1 Capital 2 800 Nov. 20 Factory Suppliers Ltd 860
9 Sales 400

Capital Account
2018 $
Nov. 1 Cash 1 500
1 Bank 2 800

Purchases Account
2018 $ 2018 $
Nov. 2 M. Ali Ltd 1 700 Nov. 30 Purchases 150
2 Cash 1 700
6 L. Norman 1 500
 14 Cash 610

M. Ali Ltd Account

2018 $ 2018 $
 Nov. 13 Returns outwards 200 Nov. 2 Purchases 1 700

Sales Account
2018 $
Nov. 3 Cash 1 820
5 C. Queen 740
9 Bank 400
18 Cash 770
 21 J. Oliver 930

C. Queen Account

2018 $ 2018 $
 Nov. 5 Sales 740 Nov. 15 Returns inwards 40

Equipment Account
2018 $ 2018 $
 Nov. 12 Factory Suppliers Ltd 1 160 Nov. 16 Factory Suppliers Ltd 300

Factory Suppliers Ltd Account

2018 $ 2018 $
Nov. 16 Equipment 300 Nov. 12 Equipment 1 160
20 Bank 860


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 Answers Chapter 8

L. Norman Account
2018 $
 Nov. 6 Purchases 1 500

Returns Outwards Account

2018 $
 Nov. 13 M. Ali Ltd 200

Returns Inwards Account

2018 $
Nov. 15 C. Queen 40
27 J. Oliver 30

J. Oliver Account
2018 $ 2018 $
 Nov. 21 Sales 930 Nov. 27 Returns inwards 30

Motor Van Account

2018 $
 Nov. 23 Cash 1 200

Drawings Account
2018 $
Nov. 30 Purchases 150
30 Cash 200


16 a) Capital Account
2018 $
Sep. 1 Cash 4 500

Cash Account
2018 $ 2018 $
Sep. 1 Capital 4 500 Sep. 2 Bank 2 000
10 Sales 1 260 12 Purchases 560
 20 T. Perry 1 200

Bank Account
2018 $ 2018 $
Sep. 2 Cash 2 000 Sep. 6 Motor van 1 000
9 Sales 3 300 17 Office Suppliers Ltd 1 630

69
Answers Section 4

Purchases Account
2018 $
Sep. 4 Office Suppliers Ltd 1 400
7 Office Suppliers Ltd 1 540
12 Cash 560

Motor Van Account

2018 $
Sep. 6 Bank 1 000

Office Suppliers Ltd Account

2018 $ 2018 $
Sep. 15 Returns outwards 750 Sep. 4 Purchases 1 400
17 Bank 1 630 7 Purchases 1 540

Sales Account
2018 $
Sep. 9 Bank 3 300
10 Cash 1 260
16 T. Perry 1 500
Office Furniture Account
2018 $
Sep. 13 Komal and Sons 3 000

Komal and Sons Account

2018 $
 Sep. 13 Office furniture 3 000

Returns Outwards Account

2018 $
Sep. 15 Office Suppliers Ltd 750

T. Perry Account
2018 $ 2018 $
Sep. 16 Sales 1 500 Sep. 19 Returns inwards 300
20 Cash 1 200

Returns Inwards Account

2018 $
Sep. 19 T. Perry 300

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 Answers Chapter 8

b) Office Suppliers Ltd is still owed $560 at the end of the month. (Total stock purchased minus stock
returned and paid for.)
c) Total purchases of stock for the month is $3 500. (Total of the debit side of the purchases account.)

17 Debit Credit
a) Cash Sales
b) Bank Sales
c) Debtor Sales
d) Cash Debtor
e) Bank Debtor
f) Purchases Cash
g) Purchases Bank
h) Purchases Creditor
i) Creditor Cash
j) Creditor Bank
k) Returns Inwards Debtor
l) Creditor Returns Outwards
m) Drawings Purchases

9 The double-entry system for expenses and revenue

7 Transaction Account to be debited Account to be credited
a) Wages Cash
b) Motor expenses Bank
c) Cash Commissions received
d) Telephone expenses Cash
e) Bank Rent received
f) Commissions payable Bank

8 Transaction Account to be debited Account to be credited

a) Insurance Bank
b) Cash Rent received
c) Motor expenses Bank
d) Cash Sales
e) Bank Telephone expenses
f) Equipment Cash
g) Cash Interest received
h) Wages Bank
i) Purchases Cash
j) Rent received Bank

71
Answers Section 4

9 Transaction Account to be debited Account to be credited

a) Printing expense Cash
b) Advertising expense Bank
c) Equipment Bank
d) Maintenance expense Bank
e) Cash Rent received
f) Stationery expenses Cash
g) Bank Commission received
h) Purchases Bank
i) Cash Insurance expense
j) Postage expenses Bank

10 Transaction Account to be debited Account to be credited

a) Bank Interest received
b) Motor van Bank
c) Motor expenses Cash
d) Wages expense Cash
e) Bank Sales
f) Bank Printing expenses
g) Cash Rent received
h) Sundry expenses Cash
i) Commission payable Bank
j) Commissions received Cash
k) Cash Sales

11 Check your double entries first.

Date Debit Credit Amount

$
2016
Feb. 1 Bank Capital 15 000
2 Purchases Bank 2 500
4 Rent Bank 840
6 Cash Sales 1 500
10 Equipment Bank 3 060
15 Wages Cash 720
18 D. Leroy Sales 400
22 Cash Interest received 280
26 Advertising expenses Bank 1 750
28 Bank Commissions received 530

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 Answers Chapter 9

Bank Account
2016 $ 2016 $
Feb. 1 Capital 15 000 Feb. 2 Purchases 2 500
28 Commissions received 530 4 Rent 840
10 Equipment 3 060
26 Advertising expenses 1 750

Capital Account
2016 $
Feb. 1 Bank 15 000

Purchases Account
2016 $
Feb. 2 Bank 2 500

Rent Account
2016 $
Feb. 4 Bank 840

Cash Account
2016 $ 2016 $
Feb. 6 Sales 1 500 Feb. 15 Wages 720
 22 Interest received 280

Sales Account
2016 $
Feb. 6 Cash 1 500
18 D. Leroy 400
Equipment Account
2016 $
Feb. 10 Bank 3 060

Wages Expense Account

2016 $
 Feb. 15 Cash 720

D. Leroy Account
2016 $
Feb. 18 Sales 400

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Answers Section 4

Interest Received Account

2016 $
Feb. 22 Cash 280

Advertising Expenses Account

2016 $
Feb. 26 Bank 1 750

Commissions Received Account

2016 $
Feb. 28 Bank 530

12 a) Check your double entries first.

Date Debit Credit Amount $

2018
Oct. 1 Bank Capital 4 000
1 Cash Capital 2 500
2 Motor van Bank 2 000
3 Insurance expense Cash 1 800
6 Purchases V. Burgess 1 460
9 Cash Sales 520
11 Wages expense Cash 700
13 Q. Thunder Sales 635
15 V. Burgess Bank 730
16 Bank Rent received 1 365
17 Cash Q. Thunder 400
20 Purchases Bank 900
22 V. Burgess Returns outwards 210
25 Drawings Purchases 330
31 Bank Insurance expenses 200

Bank Account
2018 $ 2018 $
Oct. 1 Capital 4 000 Oct. 2 Motor van 2 000
16 Rent received 1 365 15 V. Burgess 730
 31 Insurance expenses 200 20 Purchases 900

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 Answers Chapter 9

Cash Account
2018 $ 2018 $
Oct. 1 Capital 2 500 Oct. 3 Insurance expense 1 800
9 Sales 520 11 Wages expense 700
17 Q. Thunder 400

Capital Account
2018 $
Oct. 1 Bank 4 000
1 Cash 2 500

Motor Van Account

2018 $
Oct. 2 Bank 2 000

Insurance Expenses Account

2018 $ 2018 $
 Oct. 3 Cash 1 800 Oct. 31 Bank 200

Purchases Account
2018 $ 2018 $
Oct. 6 V. Burgess 1 460 Oct. 25 Drawings 330
20 Bank 900

V. Burgess Account
2018 $ 2018 $
Oct. 15 Bank 730 Oct. 6 Purchases 1 460
22 Returns outwards 210

Sales Account
2018 $
Oct. 9 Cash 520
13 Q. Thunder 635

Wages Expense Account
2018 $
Oct. 11 Cash 700

Q. Thunder Account
2018 $ 2018 $
Oct. 13 Sales 635 Oct. 17 Cash 400

75
Answers Section 4

Rent Received Account

2018 $
Oct. 16 Bank 1 365

Returns Outwards Account

2018 $
Oct. 22 V. Burgess 210

Drawings Account
2018 $
Oct. 25 Purchases 330

 ) i) Total sales for the month = $1 155 ($520 + $635)

b
N.B. Total of the credit side of the sales account.
ii) Amount owed by Q. Thunder at the end of the month
= $635 (Sales to Q. Thunder) – $400 (Cash paid by Q. Thunder)
 = $235
iii) Amount owed to V. Burgess at the end of the month
= $1 460 (Purchases from V. Burgess) – [$730 (Amount paid to V. Burgess)
+ $210 (Amount returned to V. Burgess)]
 = $520
13 a) Check your double entries first.

Date Debit Credit Amount

2023 $
Dec. 1 Cash Capital 4 280
2 Bank B. Sampath (Loan) 3 500
3 Purchases Cash 2 000
3 Purchases Camacho Ltd 2 000
6 Motor van Bank 1 800
7 Rent expense Cash 520
9 D. Bernard Sales 1 360
12 B. Sampath (Loan) Cash 625
15 Wages expense Bank 780
19 Camacho Ltd Returns outwards 150
21 Bank D. Bernard 1 300
21 Returns inwards D. Bernard 60
23 Electricity expense Cash 300
23 Postage expense Cash 78
24 Bank Rent received 1 600
26 Bank Sales 1 425
28 Camacho Ltd Bank 1 140
30 Wages expense Cash 250
31 Bank Cash 507

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 Answers Chapter 9

Cash Account
2023 $ 2023 $
Dec. 1 Capital 4 280 Dec. 3 Purchases 2 000
7 Rent expense 520
12 B. Sampath (loan) 625
23 Electricity expense 300
23 Postage expense 78
30 Wages expense 250
 31 Bank 507

Capital Account
2023 $
Dec. 1 Cash 4 280

Bank Account
2023 2023 $
Dec. 2 B. Sampath (loan) 3 500 Dec. 6 Motor van 1 800
21 D. Bernard 1 300 15 Wages expense 780
24 Rent received 1 600 28 Camacho Ltd 1 140
26 Sales 1 425
31 Cash 507

B. Sampath (Loan) Account

2023 $ 2023 $
Dec. 12 Cash 625 Dec. 2 Bank 3 500

Purchases Account
2023 $
Dec. 3 Cash 2 000
3 Camacho Ltd 2 000

Camacho Ltd Account
2023 $ 2023 $
Dec. 19 Returns outwards 150 Dec. 3 Purchases 2 000
28 Bank 1 140

Motor Van Account

2023 $
Dec. 6 Bank 1 800

Rent Expense Account

2023 $
Dec. 7 Cash 520


77
Answers Section 4

D. Bernard Account
2023 $ 2023 $
Dec. 9 Sales 1 360 Dec. 21 Bank 1 300
21 Returns inwards 60

Sales Account
2023 $
Dec. 9 D. Bernard 1 360
26 Bank 1 425

Wages Expense Account

2023 $
Dec. 15 Bank 780
30 Cash 250

Returns Outwards Account

2023 $
Dec. 19 Camacho Ltd 150

Returns Inwards Account

2023 $
Dec. 21 D. Bernard 60

Electricity Expense Account

2023 $
 Dec. 23 Cash 300

Postage Expense Account

2023 $
Dec. 23 Cash 78

Rent Received Account

2023 $
Dec. 24 Bank 1 600

 ) i) The amount still owed on the loan is $2 875.

b
(The value of the loan $3 500 – the amount paid on the loan $625)
ii) The amount left in the bank account is $4 612.
(Total receipts $8 332 – total payments $3 720)
iii) Total sales for the month are $2 785.
($1 360 + $1 425)

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 Answers Chapter 9

iv) Total amount earned by the business employees is $1 030.

(Total of the wages expense account $780 + $250)
v) No more money is owed by D. Bernard.
14 a) Check your double entries first.

Date Debit Credit Amount

2026 $
Aug. 1 Bank Capital 7 000
1 Cash Bank 2 000
2 Equipment K. Lawrence 3 450
3 Insurance expense Cash 400
5 Purchases Cash 980
7 Cash Sales 754
10 Rent expense Bank 1 360
10 Motor expenses Cash 400
12 Cash Commissions received 950
15 Drawings Cash 100
15 Drawings Purchases 350
18 K. Lawrence Bank 700
20 Purchases S. Aking 1 480
21 Bank Sales 1 520
23 Commissions received Bank 150
25 Rent expense Cash 360
25 Wages expense Cash 400
27 S. Aking Returns outwards 335
29 Cash Rent revenue 750

Bank Account
2026 $ 2026 $
Aug. 1 Capital 7 000 Aug. 1 Cash 2 000
21 Sales 1 520 10 Rent expense 1 360
18 K. Lawrence 700
 23 Commissions received 150

Capital Account
2026 $
Aug. 1 Bank 7 000

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Answers Section 4

Cash Account
2026 $ 2026 $
Aug. 1 Bank 2 000 Aug. 3 Insurance expense 400
7 Sales 754 5 Purchases 980
12 Commission received 950 10 Motor expenses 400
29 Rent revenue 750 15 Drawings 100
25 Rent expense 360
25 Wages expense 400

Equipment Account
2026 $
Aug. 2 K. Lawrence 3 450

K. Lawrence Account
2026 $ 2026 $
 Aug. 18 Bank 700 Aug. 2 Equipment 3 450

Insurance Expense Account

2026 $
Aug. 3 Cash 400
Purchases Account
2026 $ 2026 $
Aug. 5 Cash 980 Aug.15 Drawings 350
20 S. Aking 1 480

Sales Account
2026 $
Aug. 7 Cash 754
21 Bank 1 520

Rent Expense Account
2026 $
Aug. 10 Bank 1 360
25 Cash 360

Commissions Received Account

2026 $ 2026 $
Aug. 23 Bank 150 Aug. 12 Cash 950

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 Answers Chapter 9

Drawings Account
2026 $
Dec.15 Cash 100
15 Purchases 350

S. Aking Account
2026 $ 2026 $
Aug. 27 Returns outwards 335 Aug. 20 Purchases 1 480

Returns Outwards Account

2026 $
Aug. 27 S. Aking 335

Rent Revenue Account

2026 $
 Aug. 29 Cash 750

 ) Cost of equipment obtained $3 450 – payment to K. Lawrence $ 700 = $2 750

b
c) $754 + 1 520 = $2 274 (Total of the credit side of the sales account.)
15 Check your double entries first.

Date Debit Credit Amount

2027 $
Feb. 1 Bank Capital 25 000
1 Cash Bank 10 000
2 Fixtures Bank 5 000
3 Purchases Bank 2 500
4 Purchases Cash 1 400
6 Cash Sales 1 520
9 Purchases Khans Ltd 1 370
10 Electricity expense Cash 1 000
12 Cash Sales 650
13 Purchases Bank 1 200
13 Insurance expense Bank 820
14 Wages expense Cash 675
16 Bank Advertising revenue 1 700
18 Khans Ltd Returns outwards 800
20 Cash Sales 1 890
21 Little Learners Sales 2 500
23 Electricity expense Bank 500
23 Maintenance expense Bank 462
25 Cash Advertising revenue 1 240
27 Bank Little Learners 1 000
28 Wages expense Bank 612.50

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Answers Section 4

Note: i)
1 4 February, wages expense = Kriss’s wages + Jade’s wages
= (15hrs × $10/hr) + [(20hrs × $15/hr) + (10hrs × $15/hr × 1.5)]
= $150 + $525 = $675
ii) 28 February, wages expense = Kriss’ wages + Jade’s wages
= (20hrs × $10/hr) + [(20hrs × $15/hr) + (5hrs × $15/hr × 1.5)]
= $200 + $412.50 = $612.50

Bank Account
2027 $ 2027 $
Feb. 1 Capital 25 000 Feb. 1 Cash 10 000.50
16 Advertising revenue 1 700 2 Fixtures 5 000.50
27 Little Learners 1 000 3 Purchases 2 500.50
13 Purchases 1 200.50
13 Insurance expense 820.50
23 Electricity expense 500.50
23 Maintenance expense 462.50
 28 Wages expense 612.50

Capital Account
2027 $
 Feb. 1 Bank 25 000

Cash Account
2027 $ 2027 $
Feb. 1 Bank 10 000 Feb. 4 Purchases 1 400
6 Sales 1 520 10 Electricity expense 1 000
12 Sales 650 14 Wages expense 675
20 Sales 1 890
 25 Advertising revenue 1 240

Fixtures Account
2027 $
 Feb. 2 Bank 5 000

Purchases Account
2027 $
Feb. 3 Bank 2 500
4 Cash 1 400
9 Khans Ltd 1 370
 13 Bank 1 200

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 Answers Chapter 9

Sales Account

2027 $
Feb. 6 Cash 1 520
12 Cash 650
20 Cash 1 890
 21 Little Learners 2 500

Khans Ltd Account

2027 $ 2027 $
 Feb. 18 Returns outwards 800 Feb. 9 Purchases 1 370

Electricity Expense Account

2027 $
Feb. 10 Cash 1 000
23 Bank 500

Insurance Expense Account
2027 $
 Feb. 13 Bank 820

Wages Expense Account

2027 $
Feb. 14 Cash 675.50
28 Bank 612.50

Advertising Revenue Account
2027 $
Feb. 16 Bank 1 700
25 Cash 1 240

Returns Outwards Account
2027 $
 Feb. 18 Khans Ltd 800

Little Learners Account

2027 $ 2027 $
 Feb. 21 Sales 2 500 Feb. 27 Bank 1 000

Maintenance Expense Account

2027 $
 Feb. 23 Bank 462

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Answers Section 4

16 Check your double entries first.

Date Debit Credit Amount

2025 $
Jan. 1 Bank Capital 45 000
1 Cash Capital 5 000
2 Equipment Bank 18 000
3 Equipment Bank 4 750
4 Printing expenses Cash 2 125
8 Cash Sales 200 (20 × 2hrs × $5)
10 Z. Hong Sales 800 (200 × $4)
12 Electricity expense Bank 2 450
15 Printing expenses Cash 495
17 Bank Sales 435 (145 × $3)
17 Bank Sales 600 (150 × $4)
18 Cash Sales 100 (20hrs × $5)
19 Bank Z. Hong 420
20 Cash Sales 360 (72 × $5)
21 Wages expense Cash 1 300
22 Printing expenses Cash 186
23 Cash Sales 632 (158 × $4)
25 Computer repairs Bank 640
27 Equipment Narine Tech Ltd 1 500
28 Cash Equipment 1 380
31 Wages expense Cash 800


Printing Expenses
2025 $
Jan. 4 Cash 2 125
15 Cash 495
22 Cash 186

Sales Account
2025 $
Jan. 8 Cash 200
10 Z. Hong 800
17 Bank 435
17 Bank 600
18 Cash 100
20 Cash 360
 23 Cash 632

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 Answers Chapter 9

Z. Hong Account
2025 $ 2025 $
 Jan. 10 Sales 800 Jan. 19 Bank 420

Electricity Expense Account

2025 $
 Jan. 12 Bank 2 450

Wages Expense Account

2025 $
Jan. 21 Cash 1 300
 31 Cash 800

Bank Account

2025 $ 2025 $
Jan. 1 Capital 45 000 Jan. 2 Equipment 18 000
17 Sales 435 3 Equipment 4 750
17 Sales 600 12 Electricity Expense 2 450
 19 Z. Hong 420 25 Computer Repairs 640

Capital Account
2025 $
Jan. 1 Bank 45 000
1 Cash 5 000

Cash Account
2025 $ 2025 $
Jan. 1 Capital 5 000 Jan. 4 Printing Expenses 2 125
8 Sales 200 15 Printing Expenses 495
18 Sales 100 21 Wages Expense 1 300
20 Sales 360 22 Printing Expenses 186
23 Sales 632 31 Wages Expense 800
 28 Equipment 1 380

Equipment Account
2025 $ 2025 $
Jan. 2 Bank 18 000 Jan. 28 Cash 1 380
3 Bank 4 750
 27 Narine Tech Ltd 1 500

Computer Repairs Account

2025 $
 Jan. 25 Bank 640

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Answers Section 4

Narine Tech Ltd Account

2025 $
 Jan. 27 Equipment 1 500

10 Balancing accounts and the Trial Balance

8 a) Capital Account
2019 $ 2019 $
Jan. 31 Balance c/d 5 000 Jan. 1 Cash 5 000
Feb. 1 Balance b/d 5 000

Bank Account
2019 $ 2019 $
Jan. 1 Capital 5 000 Jan. 3 Motor van 2 500
5 Sales 3 400 9 Cash 1 000
7 Loan: P. Tank 2 000 18 Rent 800
31 Balance c/d 6 100
10 400 10 400
Feb. 1 Balance b/d 6 100

Cash Account
2019 $ 2019 $
Jan. 9 Bank 1 000 Jan. 10 Rent 400
12 Sales 700 13 Purchases 1 360
20 Sales 1 490 31 Balance c/d 1 430
3 190 3 190
Feb. 1 Balance b/d 1 430

Rent Account
2019 $ 2019 $
Jan. 10 Cash 400 Jan. 31 Balance c/d 1 200
18 Bank 800
1 200 1 200
Feb. 1 Balance b/d 1 200


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 Answers Chapter 10

Sales Account
2019 $ 2019 $
Jan. 31 Balance c/d 5 590 Jan. 5 Bank 3 400
12 Cash 700
20 Cash 1 490
5 590 5 590
Feb. 1 Balance b/d 5 590

Purchases Account
2019 $ 2019 $
Jan. 13 Cash 1 360 Jan. 31 Balance c/d 1 360
Feb. 1 Balance b/d 1 360

Motor Van
2019 $ 2019 $
Jan. 3 Bank 2 500 Jan. 31 Balance c/d 2 500
Feb. 1 Balance b/d 2 500

P. Tank
2019 $ 2019 $
Jan. 13 Balance c/d 2 000 Jan. 31 Bank 2 000
Feb. 1 Balance b/d 2 000
b) On 1 February
i) Capital Account – The owner has invested $5 000 worth of assets into the business up to this date.
ii) Bank Account – The business has $6 100 in its bank account.
iii) Cash Account – The business has $1 430 cash in hand.
iv) Rent Account – The business has paid $1 200 in rent up to this date.
v) Sales Account – The business has made $5 590 in sales revenue up to this date.
vi) Purchases Account – $36 00 in stock has been purchased up to this date.
c)
Account Date Transaction
i) Capital 11 January The owner started the business with $5 000 cash
ii) Bank 13 January Motor van bought by cheque
17 January Received loan from P. Tank
iii) Cash 13 January Purchases of stock paid for by cash
iv) Rent 10 January Rent expense paid for by cash
v) Sales 15 January A cheque was received for the sale of stock

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Answers Section 4

d) Trial Balance as at 31 January 2019

Debit Credit
$ $
Capital 5 000
Bank 6 100
Cash 1 430
Rent 1 200
Sales 5 590
Purchases 1 360
Loan: P. Tank 2 000
Motor van 2 500
12 590 12 590

9 a) K. Emmanuel
2020 $ 2020 $
Feb. 1 Sales 800 Jan. 10 Bank 640
15 Sales 200 25 Cash 360
1 000 1 000

J. Amaze
2020 $ 2020 $
Mar. 4 Sales 1 350 Mar. 12 Returns inwards 260
18 Bank 1 090
1 350 1 350

Z. Ventour
2020 $ 2020 $
May 13 Cash 518 May 10 Purchases 518

F. Sampath
2020 $ 2020 $
Jul. 14 Returns outwards 220 Jul. 3 Purchases 1 500
22 Bank 800 8 Purchases 350
25 Bank 830
1 850 1 850

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 Answers Chapter 10

b) i) K. Emmanuel – Debtor’s account

ii) J. Amaze – Debtor’s account
iii) Z. Ventour – Creditor’s account
iv) F. Sampath – Creditor’s account
c) These accounts are ‘closed’ because the amounts owed by debtors and amounts owed to creditors have
been paid off.
d)
Account Date Transaction
i) K. Emmanuel Feb. 1 Credit sales of $800 made to K. Emmanuel
Feb. 25 $360 cash paid by K. Emmanuel
ii) J. Amaze Mar. 12 J. Amaze returned $260 goods to the business
Mar. 18 J. Amaze paid $1 090 by cheque
iii) Z. Venour May 10 Bought $518 stock on credit from Z. Ventour
May 13 Paid $518 cash to Z. Ventour
iv) F. Sampath Jul. 14 Returned $220 goods to F. Sampath
Jul. 25 Paid F. Sampath $830 by cheque

10 a) Capital Account
2024 $ 2024 $
Nov. 30 Balance c/d 8 800 Nov. 1 Bank 5 600
20 Cash 3 200
8 800 8 800
Dec. 1 Balance b/d 8 800

Bank Account
2024 $ 2024 $
Nov. 1 Capital 5 600 Nov. 2 Purchases 2 500
5 Sales 1 090 12 Wages 1 260
18 N. Caroline 450 20 J. Toppin 1 300
31 Balance c/d 2 080
7 140 7 140
Dec. 1 Balance b/d 2 080

Cash Account
2024 $ 2024 $
Nov. 3 Sales 1 530 Nov. 4 Purchases 635
20 Capital 3 200 25 Wages 1 400
30 Balance c/d 2 695
4 730 4 730
Dec. 1 Balance b/d 2 695

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Answers Section 4

Purchases Account
2024 $ 2024 $
Nov. 2 Bank 2 500 Nov. 30 Balance c/d 4 735
4 Cash 635
15 J. Toppin 1 600
4 735 4 735
Dec. 1 Balance b/d 4 735

Sales Account
2024 $ 2024 $
Nov. 30 Balance c/d 3 070 Nov. 3 Cash 1 530
5 Bank 1 090
8 N. Caroline 450
3 070 3 070
Dec. 1 Balance b/d 3 070

Wages Account
2024 $ 2024 $
Nov. 12 Bank 1 260 Nov. 30 Balance c/d 2 660
25 Cash 1 400
2 660 2 660
Dec. 1 Balance b/d 2 660

N. Caroline Account
2024 $ 2024 $
Nov. 8 Sales 450 Nov. 18 Bank 450

J. Toppin Account
2024 $ 2024 $
Nov. 20 Bank 1 300 Nov. 15 Purchases 1 600
30 Balance c/d 300
1 600 1 600
Dec. 1 Balance b/d 300

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 Answers Chapter 10

b)
Account Interpretation of balance
Capital The owner has invested $8 800 into the business up to this date.
Bank The business has $2 080 in its bank account at this date.
Cash There is $2 695 cash in hand at this date.
Purchases Up to this date, $4 735 in stock has been bought.
Sales $3 070 in sales revenue has been generated up to this date.
Wages The business has paid $2 660 in wages up to this date.
J. Toppin J. Toppin is a creditor and is still owed $300 on 1 December.

c) Trial Balance as at 30 November 2024

Debit Credit
$ $
 apital
C 8 800
Bank 2 080
Cash 2 695
Purchases 4 735
Sales 3 070
Wages 2 660
J. Toppin 300
12 170 12 170

11 a) Cash
2018 $ 2018 $
Jan. 1 Capital 6 000 Jan. 1 Bank 3 500
5 Sales 1 000 11 Electricity 125
22 M. Blyton 600
26 Electricity 125
28 H. Seegobin 80
31 Balance c/d 2 570
7 000 7 000
Feb. 1 Balance b/d 2 570

91
Answers Section 4

Bank
2018 $ 2018 $
Jan. 1 Cash 3 500 Jan. 8 Machinery 1 500
15 F. Jenny 250 12 H. Seegobin 500
15 K. Vijay 430 31 Balance c/d 2 935
31 F. Jenny 340
31 K. Vijay 415
4 935 4 935
Feb. 1 Balance b/d 2 935

M. Blyton
2018 $ 2018 $
Jan. 22 Cash 600 Jan. 2 Purchases 600
31 Balance c/d 594 19 Purchases 594
1 194 1 194
Feb. 1 Balance b/d 594

Sales
2018 $ 2018 $
Jan. 31 Balance c/d 2 875 Jan. 5 Cash 1 000
6 F. Jenny 450
6 K. Vijay 865
23 F. Jenny 200
23 K. Vijay 360
2 875 2 875
Feb. 1 Balance b/d 2 875

Capital
2018 $ 2018 $
Jan. 31 Balance c/d 6 000 Jan. 1 Cash 6 000
Feb. 1 Balance b/d 6 000

Purchases
2018 $ 2018 $
Jan. 2 H. Seegobin 760 Jan. 31 Balance c/d 1 954
2 M. Blyton 600
19 M. Blyton 594
1 954 1 954
Feb. 1 Balance b/d 1 954

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 Answers Chapter 10

H. Seegobin
2018 $ 2018 $
Jan. 12 Bank 500 Jan. 2 Purchases 760
28 Cash 80
31 Balance b/d 180
760 760
Feb. 1 Balance b/d 180

F. Jenny
2018 $ 2018 $
Jan. 6 Sales 450 Jan. 15 Bank 250
23 Sales 200 31 Bank 340
31 Balance c/d 60
650 650
Feb. 1 Balance b/d 60

K. Vijay
2018 $ 2018 $
Jan. 6 Sales 865 Jan. 15 Bank 430
23 Sales 360 31 Bank 415
31 Balance c/d 380
1 225 1 225
Feb. 1 Balance b/d 380

Electricity
2018 $ 2018 $
Jan. 11 Cash 125 Jan. 31 Balance c/d 250
26 Cash 125
250 250
Feb. 1 Balance b/d 250

Machinery
2018 $ 2018 $
Jan. 8 Bank 1 500 Jan. 31 Balance c/d 1 500
Feb. 1 Balance b/d 1 500

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Answers Section 4

b) Trial Balance as at 31 January 2018

Debit Credit
$ $
Electricity 250
Machinery 1 500
K. Vijay 380
Cash 2 570
Capital 6 000
Purchases 1 954
Sales 2 875
Bank 2 935
M. Blyton 594
H. Sheegobin 180
F. Jenny 60
9 649 9 649

12 Capital
2019 $ 2019 $
Apr. 30 Balance c/d 6 500 Apr. 1 Bank 5 000
1 Cash 1 500
6 500 6 500
May 1 Balance b/d 6 500

Cash
2019 $ 2019 $
Apr. 1 Capital 1 500 Apr. 10 Rent 600
4 Sales 620 30 Balance c/d 3 545
23 Bank 1 000
27 T. Mandy 300
29 Sales 725
4 145 4 145
May 1 Balance b/d 3 545

M. Kline
2019 $ 2019 $
Apr. 13 Bank 560 Apr. 2 Purchases 1 800
30 Balance c/d 1 240
1 800 1 800
May 1 Balance b/d 1 240

94
 Answers Chapter 10

Premier Motors
2019 $ 2019 $
Apr. 30 Bank 1 200 Apr. 6 Motor van 4 800
30 Balance c/d 3 600
4 800 4 800
May 1 Balance b/d 3 600

Bank
2019 $ 2019 $
Apr. 1 Capital 5 000 Apr. 13 M. Kline 560
21 N. Tendor 250 20 Drawings 200
22 Salaries 740
22 Rent 600
23 Cash 1 000
30 Premier Motors 1 200
30 Balance c/d 950
5 250 5 250
May 1 Balance b/d 950

Purchases
2019 $ 2019 $
Apr. 2 M. Kline 1 800 Apr. 25 Drawings 50
17 D. Long 1 100 Apr. 30 Balance c/d 2 850
2 900 2 900
May 1 Balance b/d 2 850

Sales
2019 $ 2019 $
Apr. 30 Balance c/d 2 240 Apr. 4 Cash 620
7 T. Mandy 395
7 N. Tendor 500
29 Cash 725
2 240 2 240
May 1 Balance b/d 2 240

Motor Van
2019 $ 2019 $
Apr. 6 Premier Motors 4 800 Apr. 30 Balance c/d 4 800
May 1 Balance b/d 4 800

95
Answers Section 4

T. Mandy
2019 $ 2019 $
Apr. 7 T. Mandy 395 Apr. 15 Returns inwards 95
27 Cash 300
395 395

Rent
2019 $ 2019 $
Apr. 10 Cash 600 Apr. 30 Balance c/d 1 200
22 Bank 600
1 200 1 200
May 1 Balance b/d 1 200

D. Long
2019 $ 2019 $
Apr. 24 Returns outwards 220 Apr. 17 Purchases 1 100
30 Balance c/d 880
1 100 1 100
May 1 Balance b/d 880

Salaries
2019 $ 2019 $
Apr. 22 Bank 740 Apr. 30 Balance c/d 740
May 1 Balance b/d 740

N. Tendor
2019 $ 2019 $
Apr. 7 Sales 500 Apr. 21 Bank 250
30 Balance c/d 250
500 500
May 1 Balance b/d 250

Returns Inwards
2019 $ 2019 $
Apr. 15 T. Mandy 95 Apr. 30 Balance c/d 95
May 1 Balance b/d 95

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 Answers Chapter 10

Drawings
2019 $ 2019 $
Apr. 20 Bank 200 Apr. 30 Balance c/d 250
50 Purchases 50
250 250
May 1 Balance b/d 250

Returns Outwards
2019 $ 2019 $
Apr. 30 Balance c/d 220 Apr. 24 D. Long 220
May 1 Balance b/d 220

Trial Balance as at 30 April 2019

Debit Credit
$ $
Cash 3 545
Bank 950
Capital 6 500
Returns inwards 95
Returns outwards 220
Sales 2 240
Purchases 2 850
Rent 1 200
N. Tendor 250
D. Long 880
Drawings 250
Salaries 740
M. Kline 1 240
Motor van 4 800
Premier Motors 3 600
14 680 14 680

13 Capital
2022 $ 2022 $
Dec. 31 Balance c/d 5 800 Dec.1 Balance b/d 5 700
20 Telephone 100
5 800 5 800
2023
Jan. 1 Balance b/d 5 800

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Answers Section 4

Cash
2022 $ 2022 $
Dec. 1 Balance b/d 1 800 Dec. 3 Purchases 800
14 Sales 825 9 Salaries 480
21 E. Hart 270 25 C.J. Kind 250
21 J. Gosine 300 31 Purchases 325
30 Sales 710 31 Balance c/d 2 050
3 905 3 905
2023
Jan. 1 Balance b/d 2 050

Bank
2022 $ 2022 $
Dec. 1 Balance b/d 3 900 Dec. 12 Fixtures 1 000
7 A. Maloney (loan) 1 200 18 Wages 480
18 Telephone 360
23 A. Maloney (loan) 600
31 Balance c/d 2 660
5 100 5 100
2023
Jan. 1 Balance b/d 2 660

Sales
2022 $ 2022 $
Dec. 31 Balance c/d 2 415 Dec. 10 E. Hart 270
10 D. Mohan 110
10 J. Gosine 500
14 Cash 825
30 Cash 710
2 415 2 415
2023
Jan. 1 Balance b/d 2 415

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 Answers Chapter 10

J. Gosine
2022 $ 2022 $
Dec. 10 Sales 500 Dec. 21 Cash 300
30 Balance c/d 200
500 500
2023
Jan. 1 Balance b/d 200

Purchases
2022 $ 2022 $
Dec. 3 Cash 800 Dec. 31 Balance c/d 3 195
5 C.J. Kind 1 500
27 B. Forest 570
31 Cash 325
3 195 3 195
2023
Jan. 1 Balance b/d 3 195

C.J. Kind
2022 $ 2022 $
Dec. 25 Cash 250 Dec. 5 Purchases 1 500
30 Balance c/d 1 250
1 500 1 500
2023
Jan. 1 Balance b/d 1 250

Loan: A. Maloney
2022 $ 2022 $
Dec. 23 Bank 600 Dec. 7 Bank 1 200
31 Balance c/d 600
1 200 1 200
2023
Jan. 1 Balance b/d 600

E. Hart
2022 $ 2022 $
Dec. 10 Sales 270 Dec. 21 Cash 270

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Answers Section 4

D. Mohan
2022 $ 2022 $
Dec. 10 Sales 110 Dec. 31 Balance c/d 110
2023
Jan. 1 Balance b/d 110

Fixtures
2022 $ 2022 $
Dec. 12 Bank 1 000 Dec. 31 Balance c/d 1 000
2023
Jan. 1 Balance b/d 1 000

Telephone
2022 $ 2022 $
Dec. 18 Bank 360 Dec. 31 Balance c/d 460
20 Capital 100
460 460
2023
Jan. 1 Balance b/d 460

Wages
2022 $ 2022 $
Dec. 9 Cash 480 Dec. 31 Balance c/d 960
Dec. 18 Bank 480
960 960
2023
Jan. 1 Balance b/d 960

B. Forest
2022 $ 2022 $
Dec. 31 Balance c/d 570 Dec. 27 Purchases 570
570 570
2023
Jan. 1 Balance b/d 570

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 Answers Chapter 10

Trial Balance as at 31 December 2022

Debit Credit
$ $
Capital 5 800
Cash 2 050
Bank 2 660
Sales 2 415
J. Gosine 200
Purchases 3 195
C.J. Kind 1 250
Loan: A. Maloney 600
D.Mohan 110
Fixtures 1 000
Telephone 460
Wages 960
B. Forest
570
10 635 10 635

14 Capital
2016 $ 2016 $
Oct. 31 Balance c/d 7 800 Oct. 1 Bank 7 800
Nov. 1 Balance b/d 7 800

Motor Van
2016 $ 2016 $
Oct. 2 Bank 3 400 Oct. 31 Balance c/d 3 400
Nov. 1 Balance b/d 3 400

Cash
2016 $ 2016 $
Oct. 4 Bank 1 200 Oct. 13 Motor Expenses 120
5 C. Dubar 700 18 Purchases 495
9 Sales 790 27 Motor Expenses 200
22 Rent Received 400 27 Rates 240
23 L. Pearl 210 31 Balance c/d 2 645
30 Rent Received 400
3 700 3 700
Nov. 1 Balance b/d 2 645

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Answers Section 4

V. Roger
2016 $ 2016 $
Oct. 16 Returns outwards 30 Oct. 8 Purchases 620
21 Bank 200
31 Balance c/d 390
620 620
Nov. 1 Balance b/d 390

Sales
2016 $ 2016 $
Oct. 31 Balance c/d 2 210 Oct. 9 Cash 790
11 L. Pearl 520
11 P. Gregory 900
2 210 2 210
Nov. 1 Balance b/d 2 210

Motor Expenses
2016 $ 2016 $
Oct.13 Cash 120 Oct. 31 Balance c/d 320
27 Cash 200
320 320
Nov. 1 Balance b/d 320

Bank
2016 $ 2016 $
Oct. 1 Capital 7 800 Oct. 2 Motor van 3 400
28 P. Gregory 850 3 Purchases 1 000
29 Rates 55 4 Cash 1 200
14 C. Dubar 350
20 Rates 240
21 V. Roger 200
21 J. Powder 320
31 Balance c/d 1 995
8 705 8 705
Nov. 1 Balance b/d 1 995

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 Answers Chapter 10

Purchases
2016 $ 2016 $
Oct. 3 Bank 1 000 Oct. 31 Balance c/d 2 525
8 J. Powder 410
8 V. Roger 620
18 Cash 495
2 525 2 525
Nov. 1 Balance b/d 2 525

C. Dubar
2016 $ 2016 $
Oct.14 Bank 350 Oct. 5 Cash 700
31 Balance c/d 350
700 700
Nov. 1 Balance b/d 350

J. Powder
2016 $ 2016 $
Oct.16 Returns outwards 20 Oct. 8 Purchases 410
21 Bank 320
31 Balance c/d 70
410 410

Nov. 1 Balance b/d 70

L. Pearl
2016 $ 2016 $
Oct. 11 Sales 520 Oct. 23 Cash 210
24 Returns inwards 40
31 Balance c/d 270
520 520
Nov. 1 Balance b/d 270

P. Gregory
2016 $ 2016 $
Oct. 11 Sales 900 Oct. 24 Returns inwards 50
28 Bank 850
900 900

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Answers Section 4

Returns Outwards
2016 $ 2016 $
Oct. 31 Balance c/d 50 Oct. 16 V. Roger 30
16 J. Powder 20
50 50
Nov. 1 Balance b/d 50

Rent Received
2016 $ 2016 $
Oct. 31 Balance c/d 800 Oct. 22 Cash 400
30 Cash 400
800 800
Nov. 1 Balance b/d 800

Office Equipment
2016 $ 2016 $
Oct. 31 Thorne Ltd 2 000 Oct. 31 Balance c/d 2 000
Nov. 1 Balance b/d 2 000

Rates
2016 $ 2016 $
Oct. 20 Bank 240 Oct. 24 Bank 55
27 Cash 240 31 Balance c/d 425
480 480
Nov. 1 Balance b/d 425

Returns Inwards
2016 $ 2016 $
Oct. 24 L. Pearl 40 Oct. 31 Balance c/d 90
24 P. Gregory 50
90 90
Nov. 1 Balance b/d 90

Thorne Ltd
2016 $ 2016 $
Oct. 31 Balance c/d 2 000 Oct. 31 Office equipment 2 000
Nov. 1 Balance b/d 2 000

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 Answers Chapter 10

Trial Balance as at 31 October 2016

Debit Credit
$ $
Office equipment 2 000
Thorne Ltd 2 000
Returns inwards 90
Rent Received 800
Returns outwards 50
Rates 425
Motor Expenses 320
Sales 2 210
L. Pearl 270
V. Roger 390
J. Powder 70
Cash 2 645
C. Dubar 350
Motor van 3 400
Purchases 2 525
Bank 1 995
Capital 7 800
13 670 13 670

15 Account Debit or Interpretation

Credit balance
a) Cash Debit Business has cash in hand in the register
b) Bank Debit Business has cash in the bank
c) Bank overdraft Credit Business owes the bank/their account is overdrawn
d) Rent expense Debit Amount of rent paid/incurred
e) Sales Credit Value of stock sold
f) Purchases Debit Cost of stock purchased
g) Commissions received Credit Revenue received from commissions
h) Motor vans Debit Cost of motor van purchased
i) Debtors Debit Amount owed by customers who took goods on credit
j) Creditors Credit Amount owed by the business to suppliers for goods
taken on credit
k) Equipment Debit Cost of equipment purchased
l) Wages expense Debit Amount paid for wages/wages incurred
m) Rent revenue received Credit Amount of revenue received as rent
n) Capital Credit Amount invested by owner
o) Drawings Debit Amount withdrawn by owner for private use
p) Returns inwards Debit Cost of goods returned by customer
q) Returns outwards Credit Cost of goods returned to suppliers
r) Loan Credit Monies borrowed for the business

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Answers Section 4

16 Z. Nancy
Trial Balance as at 31 June 2015
Debit Credit
$ $
Cash 3 500
Bank (Debit) 7 800
Commissions received 1 400
Telephone expense 500
Rent received 1 600
Capital 27 200
Wages expense 800
Debtor: S. Manz 1 400
Creditor: Q. Simone 2 300
Sales 26 000
Purchases 16 500
Motor van 16 000
Office furniture 12 000
58 500 58 500

17 K. Jupiter
Trial Balance as at 31 March 2018
Debit Credit
$ $
Bank overdraft 8 400
Electricity expense 1 700
Debtor: B. Holly 900
Purchases 18 000
Sales 24 500
Land 30 000
Bank interest receivable 2 000
Creditor: N. Oscar 1 100
Rent expense 600
Cash 4 300
Fixtures 7 000
Loan 12 000
Drawings 1 500
Returns inwards 700
Returns outwards 500
Capital 16 200
64 700 64 700

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 Answers Chapter 10

18 A. James
Trial Balance as at 31 May 2020
Debit Credit
$ $
Capital 52 830
Fixtures and fittings 10 000
Premises 22 000
Cash in hand 12 400
Sales 28 300
Purchases 19 000
Cash at bank 15 000
Insurance expense 1 500
Creditors 3 000
Motor vans 13 000
Commissions received 2 900
Debtors 1 650
Advertising expense 800
Drawings 360
Returns inwards 500
Returns outwards 1 180
Loan 8 000
96 210 96 210

11 Classification of accounts and capital and revenue expenditure

6 Account Classification
a) Equipment Real
b) Wages expense Nominal
c) Stock Real
d) P. Andy (debtor) Personal
e) Capital Personal
f) Motor vans Real
g) K. John (creditor) Personal
h) Rent expense Nominal
i) Sales Nominal
j) Commissions received Nominal
k) Cash at bank Real

107
Answers Section 4

7 Account Classification
a) Stock: raw materials Real
b) Land Real
c) Electricity expense Nominal
d) Debtors Personal
e) Purchases Nominal
f) Discounts received Nominal
g) Creditors Personal
h) Rent Nominal
i) F. Smart (Owner’s A/c) Personal
j) Cash in hand Real
k) Drawings Personal

8 a) Total Value of Real Accounts

= (Furniture) $1 200 + (Stock) $8 50 + (Cash) $1 360 = $3 410
b) Total Value of Nominal Accounts
= (Interest charges) $330 + (Depreciation) $525 + (sales) $2 100 = $2 955
c) Total Value of Personal Accounts
= (S. Donasian) $740 + (J. Price) $600 + (V. Towen) $200 + (Capital) $3 400 + (D. Mohammed)
$425 = $5 365
9 Transaction Accounts affected Classification of accounts
b) Equipment Real
Cash Real
c) Purchases Nominal
Mex Ltd Personal
d) Wages Nominal
Cash Real
e) N. Victory Personal
Bank Real
f) Commissions received Nominal
Bank Real
g) Sales Nominal
R. Jack Personal
h) Motor van Real
Cash Real
i) Drawings Personal
Cash Real
j) Rent Nominal
Bank Real
k) Cash Real
Sales Nominal
108
 Answers Chapter 11

10 Transaction Capital/Revenue expenditure

a) Capital
b) Revenue
c) Revenue
d) Capital
e) Revenue
f) Capital
g) Revenue
h) Revenue
i) Revenue
j) Capital
k) Revenue
l) Revenue

11 Transaction Capital/Revenue expenditure

a) Capital
b) Capital
c) Revenue
d) Capital
e) Revenue
f) Capital
g) Revenue
h) Capital
i) Revenue

12 Treatment Reason(s)
a) Capital This involves the cost of buying a new fixed asset.
b) Capital This is a cost of getting the asset, ready for use.
c) Revenue This is a maintenance expense and does not increase the value of the fixed asset.
d) Revenue Loan interest is the cost of financing the purchase of the fixed asset and not a cost of
acquiring the asset.
e) Revenue Insurance is an expense incurred in the day-to-day running of the business.

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Answers Section 4

13 Treatment Reason(s)
a) Capital These are delivery charges on a new asset and thus increase the value of the asset.
b) Revenue Wages are expenses incurred in the day-to-day running of the business.
c) Revenue Petrol is an expense involved in the daily operation of the business.
d) Capital This constitutes an addition to an existing fixed asset, which increases the asset’s value.
e) Revenue This is a cost incurred in the use of the asset and does not increase the value of the
office furniture.

14 Effect on
Type of error Gross profit Expenses Net profit Fixed assets
i) Revenue expenditure treated as
understated overstated overstated
capital expenditure
ii) Capital expenditure treated as
understated understated understated
revenue expenditure
iii) Capital expenditure treated as
overstated understated understated
revenue expenditure
iv) Revenue expenditure treated as
overstated overstated overstated
capital expenditure
v) Capital expenditure treated as
overstated understated understated
revenue expenditure

110
 Answers Chapter 11
5 The preparation and analysis of financial
statements of the sole trader
12 Stock valuation
6 a) FIFO
Date Purchases Sales Balance
2018
January 10 units @ 40 10 @ 40 = 400

March 15 units @ 30 10 @ 40 = 400

15 @ 30 = 450
850
June 5 units: 5 @ 40 = 200
5 @ 35 15 @ 30 = 450
650
September 20 units @ 28 5 @ 40 = 200
15 @ 30 = 450
20 @ 28 = 560
1 210
December 25 units: 15 @ 28 = 420
25 @ 46

{ 5 @ 40 = 200
     
​      
  
​ @ 30 = 450​  ​
15
5 @ 28 = 140
}
b) LIFO
Date Purchases Sales Balance
2018
January 10 units @ 40 10 @ 40 = 400
March 15 units @ 30 10 @ 40 = 400
15 @ 30 = 450
850
June 5 units: 10 @ 40 = 400
5 @ 35 10 @ 30 = 300
700
September 20 units @ 28 10 @ 40 = 400
10 @ 30 = 300
20 @ 28 = 560
1 260
December 25 units: 10 @ 40 = 400
25 @ 46 5 @ 30 = 300

{ 20 @ 28 = 560
}
​                           
​    ​  ​
5 @ 30 = 150
550

111
Answers Section 5

c) AVCO

Date Purchases Sales Balance

2018
January 10 units @ 40 10 @ 40 = 400

March 15 units @ 30 10 @ 40 = 400

15 @ 30 = 450
25 @ 34 = 850
June 5 units: 20 @ 34 = 680
5 @ 35
​{ 5 @ 34 = 170 }​
September 20 units @ 28 20 @ 34 = 680
20 @ 28 = 560
40 @ 31 = 1 240
December 25 units: 15 @ 31 = 465
25 @ 46
​{ 25 @ 31 = 775 }​

7 a) FIFO

Date Purchases Sales Balance

2023
January 10 units @ 20 10 @ 20 = 200

February 30 units @ 10 10 @ 20 = 200

30 @ 10 = 300
500
July 20 units: 20 @ 10 = 200
20 @ 26
{ 10 @ 20 = 200
}
                         
​ ​    ​  ​
10 @ 10 = 100
October 22 units @ 15 20 @ 10 = 200
22 @ 15 = 330
530
November 28 units: 14 @ 15 = 210
20 @ 10 = 200
8 @ 15 = 120

112
 Answers Chapter 12

b) LIFO

Date Purchases Sales Balance

2023
January 10 units @ 20 10 @ 20 = 200

February 30 units @ 10 10 @ 20 = 200

30 @ 10 = 300
500
July 20 units: 10 @ 20 = 200
20 @ 26 10 @ 10 = 100
​{ 20 @ 10 = 200 }​ 300

October 22 units @ 15 10 @ 20 = 200

10 @ 10 = 100
22 @ 15 = 330
630
November 28 units: 10 @ 20 = 200
28 @ 25 = 200 4 @ 10 = 40

{ 22 @ 15 = 330
}
​ ​                           
   ​  ​
6 @ 10 = 60
240

c) AVCO

Date Purchases Sales Balance

2023
January 10 units @ 20 10 @ 20 = 200.20

February 30 units @ 10 10 @ 20 = 200.20

30 @ 10 = 300.20
500.20
July 20 units: 20 @ 12.50 = 250.20
20 @ 26
{ 10 @ 20 = 200
​                          
​    ​  ​
10 @ 10 = 100 }
October 22 units @ 15 20 @ 12.50 = 250.20
22 @ 15 = 330.20
42 @ 13.80 = 580.20
November 28 units: 14 @ 13.80 = 193.20
28 @ 13.80 = 386.40

113
Answers Section 5

8 a) FIFO
Date Purchases Sales Balance
2020
January 80 @ 25 80 @ 25 = 2 000.20

February 65 @ 30 = 1950.20
65 @ 25 = 1625.20 15 @ 25 = 375.20
April 100 @ 18.50 15 @ 25 = 375.20
100 @ 18.50 = 1 850.20
2 225.20
August 130 @ 50 15 @ 25
375.20 =
100 @ 18.50 =
1 850.20
130 @ 50
6 500.20 =

8 725.20
September 80 @ 52 = 4 160.50 35 @ 18.50 = 647.50
15 @ 25 = 375.50 130 @ 50 = 6 500.50
65 @ 18.50 = 1 202.50 7 147.50

December 150 @ 65 = 9 750.50

35 @ 18.50 = 647.50 15 @ 50 = 750.20
115 @ 50 = 5 750.50
b) LIFO
Date Purchases Sales Balance
2020
January 80 @ 25 80 @ 25 = 2 000

February 65 @ 30 = 1 950
65 @ 25 = 1 625 15 @ 25 = 375
April 100 @ 18.50 15 @ 25 = 375
100 @ 18.50 = 1 850
2 225
August 130 @ 50 15 @ 25
375 =
100 @ 18.50 =
1 850
130 @ 50
6 500 =
8 725
September 80 @ 52 = 4 160 15 @ 25
375 =
80 @ 50 = 4 000 100 @ 18.50 =
1 850
50 @ 50
2 500 =
4 725
December 150 @ 65 = 9 750 15 @ 25 = 375
50 @ 50 = 2 500
100 @ 18.50 = 1 850
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 Answers Chapter 12

c) AVCO

Date Purchases Sales Balance

2020
January 80 @ 25 80 @ 25 = 2 000.65

February 65 @ 30 = 1 950
65 @ 25 = 1 625 15 @ 25 = 375.65
April 100 @ 18.50 15 @ 25 = 375.65
100 @ 18.50 = 1 850.65
115 @ 19.35 = 2 225.65
August 130 @ 50 115 @ 19.35 = 2 225.65
130 @ 50 = 6 500.65
245 @ 35.61 = 8 725.65
September 80 @ 52 = 4 160 165 @ 35.61 = 5 875.65
80 @ 35.61 = 2 848.80
December 150 @ 65 = 9 750
150 @ 35.61 = 5 341.50 15 @ 35.61 = 534.15

d) FIFO
 Trading Account for year ended 31 December 2020

FIFO LIFO AVCO

Sales 15 860 Sales 15 860 Sales 15 860.65
Less: cost of Less: cost of Less: cost of
goods sold: goods sold: goods sold:
Purchases 10 350 Purchases 10 350 Purchases 10 350.65
Less: Less: Less:
closing stock 750 9 600 closing stock 375 9 975 closing stock 534.15 9 815.85
Gross profit 6 260 Gross profit 5 885 Gross profit 6 044.15

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Answers Section 5

9 a) FIFO

Date Purchases Sales Balance

May 1 500 @ 35 = 17 500

May 9 1 200 @ 42 500 @ 35 = 17 500

1 200 @ 42 = 50 400
67 900
May14 1460 @ 50
500 @ 35 = 17 500
960 @ 42 = 40 320 240 @ 42 = 10 080
May 20 890 @ 24 240 @ 42 = 10 080
890 @ 24 = 21 360
31 440
May 26 640 @ 48 490 @ 24 = 11 760
240 @ 42 = 10 080
400 @ 24 = 9 600
May 31 300 @ 60
300 @ 24 = 7 200 190 @ 24 = 4 560

LIFO

Date Purchases Sales Balance

May 1 500 @ 35 = 17 500

May 9 1 200 @ 42 500 @ 35 = 17 500

1 200 @ 42 = 50 400
67 900
May14 1 460 @ 50
1 200 @ 42 = 50 400
260 @ 35 = 9 100 240 @ 35 = 8 400

May 20 890 @ 24 240 @ 35 = 8 400

890 @ 24 = 21 360
29 760
May 26 640 @ 48 240 @ 35 = 8 400
640 @ 24 250 @ 24 = 6 000
14 400
May 31 300 @ 60
250 @ 24 = 6 000
50 @ 35 = 1 750 190 @ 35 = 6 650

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 Answers Chapter 12

b) Trading Account for year ended 31 May 2018

FIFO LIFO

Sales 121 720 Sales 121 720

Less: Cost of goods sold: Less: Cost of goods sold:
Opening stock 17 500 Opening stock 17 500
Purchases 71 760 Purchases 71 760
Goods available 89 260 Goods available 89 260
Less: Closing stock 4 560 84 700 Less: Closing stock 6 650 79 610
Gross profit 37 020 Gross profit 42 110

10 a) AVCO

Date Purchases Sales Balance

July 1 12 @ 150 = 1 800.72

July 3 10 @ 260 12 @ 150 = 1 800.72

10 @ 260 = 2 600.72
22 @ 200 = 4 400.72
July 10 18 @ 340
18 @ 200 = 3600 4 @ 200 = 800.72
July 19 16 @ 180 4 @ 200 = 800.72
16 @ 180 = 2 880.72
20 @ 184 = 3 680.72
July 22 15 @ 310
15 @ 184 5 @ 184 = 920.72
July 26 21 @ 220 5 @ 184 = 920.72
21 @ 220 = 4 620.72
26 @ 213.08 = 5 540.72
July 3 17 @ 280
17 @ 213.08 = 3 622.36 9 @ 213.08 = 1 917.72

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Answers Section 5

b) D. Mary

Trading Account for year ended 31 July 2025

AVCO

Sales 15 530.00
Less: Cost of goods sold:
Opening stock 1 800.00
Purchases 10 100.00
11 900.00
Less: Closing stock 1 917.72 9 982.28
Gross profit 5 547.72

11 a) Beginning inventory 50

Purchases 135
185
Less Sales 160
Closing stock  25 trees
b) FIFO

Date Purchases Sales Balance

Dec. 1 50 @ 250 = 12 500

Dec. 135 @ 320 50 @ 250 = 12 500

135 @ 320 = 43 200
55 700
Dec. 160 @ 500 = 80 000
50 @ 250 = 12 500
110 @ 320 = 35 200 25 @ 320 = 8 000

LIFO

Date Purchases Sales Balance

Dec. 1 50 @ 250 = 12 500

Dec. 135 @ 320 50 @ 250 = 12 500

135 @ 320 = 43 200
55 700
Dec. 160 @ 500 = 80 000
135 @ 320 = 43 200
25 @ 250 = 6 250 25 @ 250 = 6 250

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 Answers Chapter 12

AVCO

Date Purchases Sales Balance

Dec. 1 50 @ 250 = 12 500

Dec. 135 @ 320 50 @ 250 = 12 500

135 @ 320 = 43 200
185 @ 301.08 = 55 700
Dec. 160 @ 500 = 80 000.80
160 @ 301.08 = 48 172.80 25 @ 301.08 = 7 527

c) In the LIFO method the last set of goods bought are the ones assumed to be sold first whereas in the
FIFO method the first set of goods bought are the ones assumed to be sold first.
d) Using the difference between gross profit:
Gross profit (LIFO) = $80 000 – ($12 500 + $43 200 – $6 250) = $30 550
Gross profit (AVCO) = $80 000 – ($12 500 + $43 200 – $7 527) = $31 827
Difference: $ 31 827 – $ 30 550 = $1 277

Using the difference between the closing inventory:

Gross profit LIFO method $6 250
Gross profit AVCO method $7 527
Difference: a decrease in gross profit of $1 277.
12 L IFO

Date Purchases Sales Balance

Jan. 45 @ $6.50 45 @ $6.50 = 292.50

Feb. 16 @ $7.25 45 @ $6.50 = 292.50

16 @ $7.25 = 116
408.50
Mar. 52 @ 10
16 @ 7.25 = 116 9 @ 6.50 = 58.50
36 @ 6.50 = 234

13 a) No. of units bought: 42 + 38 + 26 = 106 No. of unit sold: 35 + 48 = 83

Units left: 106 – 83 = 23 units
b) Total value of:
i) Purchases = $882
ii) Sales = $1 413
c) i) Sales (35 × 15) $525
Purchases (35 × 7) $245
Profit 280
ii) FIFO

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Answers Section 5

d) $7.66

Date Purchases Sales Balance

September 3 42 @ 7 42 @ 7 = 294

September 10 38 @ 12.60 42 @ 7 = 294

38 @ 12.60 = 478.80
80 @ 9.66 = 772.80
September 12 35 @ 15 45 @ 9.66 = 434.70
35 @ 9.66
September 24 26 @ 4.20 45 @ 9.66 = 434.70
26 @ 4.20 = 109.20
71 @ 7.66 = 543.90

e) LIFO

13 The Trading and Profit and Loss Account

6 Gross profit = Sales – Cost of goods sold
= Sales $400 – (Opening inventory $40 + Purchases $200– Closing inventory $30)
= $400 – $210 = $190
7 Gross profit = Sales – Cost of goods sold
= Sales – (Beginning inventory + Net purchases – Ending inventory)
= Sales $1 000 – [Beginning inventory $100 + (Purchases $600 – Returns outwards $50) – Ending
inventory $80)
= $1 000 – $570 = $430
8 Net sales = Sales – Returns inwards
= $5 200 – $1 200 = $4 000
9 Gross profit = Net Sales – Cost of goods sold
= (Sales $950 – Returns inwards $100) – (Opening stock $220 + Purchases $460 – Closing Stock $30)
= $850 – $650 = $200
10 Gross profit = Sales – Cost of goods sold
= Sales – (Opening stock + Net purchases – Closing stock)
= Sales $6 340 – (Opening Stock $450 + [Purchases $2 500 – Returns outwards $250] – Closing stock $330)
= $6 340 – $2 370 = $3 970
11 Gross profit = Net Sales – Cost of goods sold
= (Sales – Returns inwards) – (Opening stock + Net purchases – Closing stock)
= (Sales $19 200 – Returns inwards $1 300) – (Opening stock $850 + [Purchases $10 500 + Carriage
inwards $530 – Purchases returns $1 000] – Closing stock $670)
= $17 900 – $10 210 = $7 690

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 Answers Chapter 13

12 P. Nickle
Trading Account for year ended 31 December 2017

$ $
Sales 750
Less: Returns inwards 40 710
Less: Cost of goods sold
Opening stock 50
Add: Purchases 400
Goods available 450
Less: Closing stock 30 420
Gross profit 290

P. Nickle
Trading Account for year ended 31 December 2017

$ $
Opening stock 50 Sales 750
Purchases 400 Less: Returns inwards 40
450 Net sales 710
Less: Closing stock 30
Cost of goods sold 420
Gross profit c/d 290
710 710
Gross profit b/d 290

13 C. Debbie
Trading Account for year ended 31 December 2016
$ $ $
Sales 6 720
Less: Returns inwards 700
Net Sales 6 020
Less: Cost of goods sold
Opening stock 340
Purchases 2 300
Less: Returns outwards (400) 1 900
Cost of goods available for sale 2 240
Less: Closing stock (260) (1 980)
Gross profit 4 040

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Answers Section 5

C. Debbie
Trading Account for year ended 31 December 2016

$ $ $
Opening stock 340 Sales 6 720
Purchases 2 300 Less: Returns inwards (700)
Less: Returns outwards (400) 1 900 Net sales 6 020
Cost of goods available for sale 2 240
Less: Closing stock (260)
Cost of goods sold 1 980
Gross profit c/d 4 040
6 020 6 020
Gross profit b/d 4 040

14 Trading Account for year ended 30 September 2015

$ $
Sales 7 000
Less: Sales returns 500
Net Sales 6 500
Less: Cost of goods sold
Opening stock 590
Add: Purchases 4 600
5 190
Add: Carriage inwards 130
5 320
Less: Purchases returns 240
5 080
Less: Closing stock 300 4 780
Gross profit 1 720

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 Answers Chapter 13

Trading Account for year ended 30 September 2015

$ $ $ $
Opening stock 590 Sales 7 000
Purchases 4 600 Less: Sales returns 500 6 500
Add: Carriage inwards 130
4 730
Less: Purchases returns 240 4 490
5 080
Stock available 300
Less: closing stock 4 780
Cost of goods sold 1 720
Gross profit c/d 6 500 6 500

15 a) GP – expenses = NP

800 – 500 = $300 net profit
b) Net profit:
Gross profit 1 000
Add: Additional revenue
Rent received 300
Commissions received 200
Total revenue 1 500
Less: Expenses
Electricity 300
Wages 430 730
Net profit
770

16 T. Singh
Profit and Loss Account for year ended 31 August 2018

$ $
Gross profit 3 150
Add: Rental revenue 510
Total Revenue 3 660
Less: Expenses
Lighting 100
Salaries 300
Telephone 240 640
Net profit 3 020

123
Answers Section 5

Gross profit:
Net sales 6 000
Less: Cost of goods sold
Opening inventory 220
Add: Purchases 3 100
3 320
Less: Closing inventory 470
2 850
Gross profit 3 150

T. Singh
Profit and Loss Account for year ended 31 August 2018

$ $ $ $

Expenses: Gross profit b/d 3 150

Lighting 100 Add: Rental revenue 510 3 660
Salaries 300
Telephone 240 640
Net profit 3 020
3 660 3 660

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 Answers Chapter 13

17 T. Alfonso
Trading and Profit and Loss Account for year ended 31 May 2017
$ $ $
Sales 12 600
Less: Returns inwards 400
Net sales 12 200
Less: Cost of goods sold
Opening inventory 730
Add: Net purchases
Purchases 6 300
Add: Carriage inwards 110
6 410
Less: Returns outwards 850 5 560
Goods available 6 290
Less: Closing stock 260
Cost of goods sold 6 030
Gross profit 6 170
Add: Revenue: Commissions revenue 1 000
7 170
Less: Expenses
Insurance 200
Carriage outwards 80
Motor expenses 140
Pay 770
Lighting expenses 300 1 490
Net profit 5 680

125
Answers Section 5

T. Alfonso
Trading and Profit and Loss Account for year ended 31 May 2017

$ $ $ $

Opening inventory: 730 Sales 12 600

Add: Net purchases Less: Returns inwards 400
Purchases 6 300 Net sales 12 200
Add: Carriage inwards 110
6 410
Less: returns outwards 850 5 560
Goods available for sale 6 290 Gross profit b/d
Less: Closing stock 260 Add: Commissions revenue
Cost of goods sold 6 030 Total revenue
Gross profit c/d 6 170
12 200 12 200
Less expenses: 6 170
Insurance 200 1 000
Carriage outwards 80 7 170
Motor expenses 140
Pay 770
Lighting expenses 300 1 490
Net profit 5 680
7 170 7 170

14 The Balance Sheet

8 Fixed Assets: (a), (c), (d), (g), (i), (j)
 urrent Assets: (b), (e), (f), (h)
C
9 Long-term Liabilities: (a), (c), (e)
Current Liabilities: (b), (d), (f), (g), (h)
10 a) i) Land, buildings, fittings, equipment, motor vans, stock, debtors, bank, cash in hand.
ii) Land, fixtures, machinery, motor vans, inventory (stock), accounts receivable (debtors), bank, cash.
b) i) Cash in hand, cash at bank, accounts receivable (debtors), inventory, motor vans, equipment,
fixtures, buildings, land.
ii) Cash, bank, accounts receivable, inventory, premises, fittings, machinery, motor vehicles.

126
 Answers Chapter 14

11  Balance Sheet as at 31 January 2015

$ $
 ssets
A
Land  5 000
Buildings  4 000
Fixtures and fittings  2 000
Equipment and machinery  2 500
Motor vans  3 000
Inventory 500
Accounts receivable 650
Cash at bank 900
Cash in hand 700
19 250
Less: L  iabilities
 Accounts payable 540
 Expenses owing 200
 Loan (2 years)  1 300 (2 040)
Capital 17 210
 17 210

12  Balance Sheet as at 31 January 2018

$ $ $
 ixed Assets
F
Land  6 000
Fixtures and fittings  4 500
Motor vans  3 400
13 900
 urrent Assets
C
Inventory  1 000
Accounts receivable 850
Bank  2 000
Cash  1 700  5 550
Less: Current Liabilities
 Accounts payable 620
 Expenses owing 400 (1 020)
Working Capital  4 530
18 430
Less: Long-term Liabilities
 Loan (4 years) (2 000)
Net Assets  16 430

 inanced by:
F
Capital  16 430

127
Answers Section 5

13  J. Hammer
Balance Sheet as at 30 September 2016

$ $ $
 ixed Assets
F
Land  14 000
Buildings  12 000
Fixtures and fittings  8 400
Machinery and equipment  14 200
Motor vans  9 800
58 400
 urrent Assets
C
Inventory  3 000
Accounts receivable  2 500
Bank  15 600
Cash  6 480  27 580
Less: Current Liabilities
 Accounts payable  13 450
 Expenses owing  1 320 (14 770)
Working Capital  12 810
71 210
Less: Long-term Liabilities
 Loan (3 years) (24 700)
Net Assets  46 510
Financed by:
Capital  46 510

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 Answers Chapter 14

14  B. Mollin
Balance Sheet as at 31 July 2017

$ $

Fixed Assets
Buildings  15 000
Fixtures and Fittings  5 300
Equipment  8 390
Motor vehicles  7 600
36 290
 urrent Assets
C
Inventory  4 800
Accounts receivable  3 500
Bank  8 600
Cash  6 275
 23 175
Less: Current Liabilities
Accounts payable (2 740)
Working Capital  20 435
56 725
Financed by:
Capital  56 725

15 a) Items affected Increase/Decrease Value after transaction

ii) Cash + 200 1 700 (1 500 + 200)

Accounts receivable – 200 2 300 (2 500 – 200)
iii) Cash – 700 1 000 (1 700 – 700)
Capital – 700 14 900 (15 600 – 700)
iv) Accounts payable – 400 2 000 (2 400 – 400)
Bank – 400 1 100 (1 500 – 400)

129
Answers Section 5

b)  L. Sahades
Balance Sheet as at 29 February 2016

$ $
Assets
Land  7 000
Machinery  7 000
Inventory  3 000
Accounts receivable  2 300
Bank  1 100
Cash  1 000
 20 900
Less: Liabilities
Loan  4 000
Accounts payable  2 000 (6 000)
 14 900
Capital  14 900

16 a) Date Items affected Increase/Decrease Value after transaction

Feb. 2 Loan – 800 2 200 (3 000 – 800)
Bank – 800 1 300 (2 100 – 800)
Feb. 10 Stock + 500 2 000 (1 500 + 500)
Accounts payable + 500 1 420       (920 + 500)
Feb. 16 Capital + 650 9 680 (9 030 + 650)
Cash + 650 2 350 (1 700 + 650)
Feb. 23 Accounts receivable – 220 630 (850 – 220)
Bank + 220 1 520 (1 300 + 220)

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 Answers Chapter 14

b)  N. Debbie
Balance Sheet as at 23 February 2018

$ $
Fixed Assets
Equipment  4 200
Motor vans  2 600
 6 800
Current Assets
Stock  2 000
Accounts receivable 630
Bank  1 520
Cash  2 350
 6 500

Current Liabilities
Less: 
Accounts payable (1 420)
Working capital (5 080)
 11 880
Long-term Liabilities
Less: 
Loan  (2 200)
 9 680
Financed by:
Capital  9 680

17 Items affected Increase/Decrease Value after transaction

a) Debtors – 250 450 (700 – 250)

Cash + 250 1 200 (950 + 250)
b) Creditors – 400 865 (1 265 – 400)
Bank – 400 2 330 (2 730 – 400)
c) Loan + 1 000 1 000
Bank + 1 000 3 330 (2 330 + 1 000)
d) Delivery vans + 2 400 7 400 (5 000 + 2 400)
Capital + 2 400 18 135 (15 735 + 2 400)

131
Answers Section 5

 M. Levi
Balance Sheet as at 31 May 2019

$ $
Fixed Assets
Premises  6 000
Delivery van  7 400
 13 400
Current Assets
Inventory  1 620
Debtors 450
Bank  3 330
Cash  1 200
 6 600

Current Liabilities
Less: 
Creditors (865)
Working capital 5 735
 19 135
Long-term Liabilities
Less: 
Loan (1 000)  (1 000)
 18 135
Financed by:
Capital  18 135

15 Accounting ratios
6 a) True b) False c) False d) False e) True
f ) False g) True h) True i) True j) False
7 Liquidity ratios: current ratio; acid test/working capital.
Profitability ratios: gross profit percent; net profit percent; return on capital.
Efficiency: stock turnover; return on assets.
8 a) BB has more liquid assets than AA and can therefor meet its obligations and still have working capital.
b) Although AA has a higher gross profit percent their operational expenses must be higher than BB as
they have a lower net profit percent.
9 a) Net sales: $61 500 f) Net profit percent: 16.76%
b) Cost of goods sold: $ 44 000 g) Average stock: $3 125
c) Purchases: $41 550 h) Rate of stock turnover: 14%
d) Gross profit as a percent of cost: 39.77% i) Markup: 39.77%
e) Gross profit percent: 28.46%

132
 Answers Chapter 15

10 a) Gross profit: $ 17 340 e ) Average stock: $5 450

b) Net profit: $7 340 f) Rate of stock turnover: 14.8
c) Gross profit percent: 17.69% g) Current ratio: 1: 1.61
d) Net profit percent: 7.49% h) Acid test ratio: 1: 1.01
11 a) Average stock: $6 225 f) Working capital: $8 105
b) Gross profit percent: 36.62% g) Acid test: 1: 1.75
c) Net profit percent: 13.04% h) Capital invested: $31 605
d) Rate of return on fixed assets: 58.27% i) Rate of stock turnover: 10
e) Current ratio: 1: 2.44 j) Change in net profit if closing stock was $1 200:
It would decrease by $2 250.

133
6 End of period adjustments
16 Accruals and prepayments
6 Expenses paid Accrued Prepaid Income Balance Sheet
expenses expenses Statement asset/liability

a) 4 000 $250 $4 250 Liability: $250

b) 3 000 $400 $2 600 Asset: $400

c) 6 500 $500 $7 000 Liability: $500

d) 2 000 $300 $1 700 Asset: $300

e) 3 200 $300 $3 500 Liability: 300

7 Revenues Accrued Revenue in Income Balance Sheet

received revenue advance Statement asset/liability

a) 2 340 $320 $2 020 Liability: $320

b) 3 450 $650 $4 100 Asset: $650

c) 2 899 $213 $3 112 Asset: $213

d) 9 870 $564 $9 306 Liability: $564

e) 1 020 $1 020 $0 Liability: $1 020

8 a) Wages
$ $
Bank 2 000 Balance b/d 560
Profit and Loss A/c 1 440
2 000 2 000

Utilities
$ $
Bank 740 Balance b/d 320
Profit and Loss A/c 420
740 740

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 Answers Chapter 16

Rent
$ $
Bank 3 600 Balance b/d 600
Profit and Loss A/c 3 000
3 600 3 600

b) (Extract)
Income Statement for the year ended 31 December 2013
Expenses:
  Wages 1 440
  Rent 3 000
  Utilities 420
9 a) Journal

Date Details Folio Debit Credit

Dec. 31 Rent 220
Rent owing 220

Commissions receivable 300

Commissions received 300

Prepaid telephone 50
Telephone 50

b) Rent
$ $
Balance b/d 450 Profit and Loss A/c 670
Rent accrued c/d 220
670 670

Commissions Received
$ $
Profit and Loss A/c 900 Balance b/d 600
Accrued commission c/d 300
900 900

Telephone
$ $
Balance b/d 300 Profit and Loss A/c 250
Prepaid c/d 50
300 300

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Answers Section 6

c)  Balance Sheet as at 31 December 2013

Current Assets:
Commissions receivable 300
Prepaid telephone 50

Current Liabilities:
Rent owing 220

10  R. Moss Income Statement for year ended 31 July 2013

$ $ $
Sales 45 000
Less: Returns inwards 2 200
Net Sales 43 800
Less: Cost of goods sold:
Opening stock 8 000
Purchases 25 000
Add: Carriage inwards 450
Gross purchases 25 450
Less: Returns outwards 980 24 470
Goods available for sale 32 470
Less: Closing stock 2 153
Cost of goods sold 30 317
Gross profit 13 483
Add: Commissions received 2 300
 Discount received 220 2 520
Total revenue 16 003
Less expenses:
Rent (3 500 – 500) 3 000
Carriage outwards 300
Bad debts 315
Discount allowed 99
Insurance (4 500 – 500) 4 000
General expenses (212 + 70) 282 7 996
Net profit 8 007

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 Answers Chapter 16

11 a)  Arcade Computers Income Statement for year ended 31 March 2013

$ $ $
Sales 82 000
Less: Cost of goods sold:
Opening stock 10 000
Purchases 79 200
Add: Carriage inwards 230
Net purchases 79 430
Goods available for sale 89 430
Less: Closing stock 7 000
Cost of goods sold 82 430
Gross loss (430)
Add: Discount received 3 400
Commissions received 300 3 700
Total revenue 3 270
Less expenses:
Salaries 16 000
Rent (8 000 + 1 800) 9 800
Loan interest 2 600
Utilities (5 500 – 1 500) 4 000
Discount allowed 3 800 36 200
Net loss (32 930)

137
Answers Section 6

b)  Arcade Computers Balance Sheet as at 31 March 2013

$ $ $
Non-current Assets:
Machinery 18 000
Fixtures 12 170 30 170

Current Assets:
Stock 7 000
Debtors 49 000
Prepaid utilities 1 500
Commissions receivable 300
Bank 14 000
Cash 2 900 74 700

Less: Current Liabilities

Creditors 39 000
Rent owing 1 800 40 800 33 900
64 070
Financed by:
Capital 68 000
Less: Net loss 32 930
35 070
Less: Drawings 1 900 33 170
Non-current Liabilities:
Long term loan 30 900
64 070

17 Bad debts and the provision for bad/doubtful debts

6 General Journal

Date Details Debit Credit

$ $
2016 $ $
Apr. 1 Bad debts 250
F. Nandlal 250
(To record: debt written off as bad)

138
 Answers Chapter 17

General Ledger
Bad debts Account
2016 $
Apr. 1 F. Nandlal 250

Sales Ledger
F. Nandlal Account
2016 $ 2016 $
Mar. 1 Sales 250 Apr. 1 Bad debts 250

7 a) General Journal
Date Details Debit Credit
2018 $ $
Oct. 5 Bad debts 400
D. Mustapha 400
(To record: debt written off as bad)

12 Bank 100
Bad debts 30
E. Ramlogan 130
(To record: part payment of debt by cheque with the
remainder being written off as bad)

18 Computer 200
Bad debts 65
N. Mangray 265
(To record: acceptance of computer in full settlement of debt.
Remainder of debt written off as bad)

b) S ales Ledger

D. Mustapha Account
2018 $ 2018 $
Oct. 1 Balance b/f 400 Oct. 5 Bad debts 400

139
Answers Section 6

E. Ramlogan Account
2018 $ 2018 $
Oct. 1 Balance b/f 130 Oct. 12 Bank 100
12 Bad debts 30
130 130

N. Mangray Account
2018 $ 2018 $
Oct. 1 Balance b/f 265 Oct. 18 Computer 200
18 Bad debts 65
265 265


General Ledger
Computer Account
2018 $
Oct. 18 N. Mangray 200

Bad debts Account

2018 $
Oct. 5 D. Mustapha 400
12 E. Ramlogan 30
18 N. Mangray 65

Cash Book

Date Details Cash Bank

2018 $ $
Oct. 12 E. Ramlogan 100

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 Answers Chapter 17

8 a) General Journal
Date Details Debit Credit
2019 $ $
Dec. 31 Bad debts 75
P. Brown 75
(To record: debt written off as bad)

31 Profit and Loss 400

Provision for doubtful debts 400
(To record: creation of the provision for doubtful debts)

b) i) Bad debts Account

2019 $ 2019 $
Dec. 31 P. Brown 75 Dec. 31 Profit and Loss 75

ii) P. Brown Account

2019 $ 2019 $
Dec. 31 Balance b/f 75 Dec. 31 Bad debts 75

iii) Provision for Doubtful Debts Account

2019 $ 2019 $
Dec. 31 Balance b/f 400 Dec. 31 Profit and Loss 400
2020
Jan. 1 Balance b/d 400

iv) A. Chantal
The Profit and Loss Account (extract) for the year ended 31 December 2019

$ $
Gross profit x
Less: Expenses
Bad debts 75
Provision for doubtful debts 400 (475)

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Answers Section 6

v) A. Chantal
Balance Sheet (extracts) as at 31 December 2019

$ $
Current Assets
Debtors 8 000
Less: Provision for doubtful debts (400) 7 600

9 Year Total Provision Increase/ Debit/Credit the Provision figure

debtors calculated at 5% Decrease between Profit and Loss for the Balance
of debtors years Account Sheet
$ $ $   $
2021 3 000 150 150 ↑ Debit 150
2022 5 000 250 100 ↑ Debit 250
2023 4 000 200 50 ↓ Credit 200
2024 6 000 300 100 ↑ Debit 300

10
Year Total Provision Increase/ Debit/Credit the Provision figure
debtors calculated at the Decrease between Profit and Loss for the Balance
given % of debtors years Account Sheet
$ $ $ $
2015 3 300 1% – 33 33 ↑ Debit 33
2016 4 000 2.5% – 100 67 ↑ Debit 100
2017 2 500 3% – 75 25 ↓ Credit 75
2018 3 800 2.5% – 95 20 ↑ Debit 95

11 a) Bad debts Account

2018 $ 2018 $
Dec. 31 Balance 325 Dec. 31 Profit and Loss 325
2019 2019
Dec. 31 Balance 240 Dec. 31 Profit and Loss 240
2020 2020
Dec. 31 Balance 226 Dec. 31 Profit and Loss 226
2021 2021
Dec. 31 Balance 315 Dec. 31 Profit and Loss 315

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 Answers Chapter 17

b) Provision for Doubtful Debts Account

$ $
2018 2018
Dec. 31 Balance c/d 120 Dec. 31 Profit and Loss 120
2019 2019
Dec. 31 Balance c/d 150 Jan. 1 Balance b/d 120
31 Profit and Loss 30
150 150
2020 2020
Dec. 31 Profit and Loss 15 Jan. 1 Balance b/d 150
31 Balance c/d 135
150 150
2021 2021
Dec. 31 Balance c/d 148 Jan. 1 Balance b/d 135
Dec. 31 Profit and Loss 13
148 148
2022
Jan. 1 Balance b/d 148

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Answers Section 6

c) The Profit and Loss Account (extracts) for the year ended 31 December
$ $
(2018)
Gross profit x
Less: Expenses
Bad debts 325
Provision for doubtful debts 120 (445)

(2019)
Gross profit x
Less: Expenses
Bad debts 240
Provision for doubtful debts (increase) 30 (270)

(2020)
Gross profit x
Add: Provision for doubtful debts (decrease) 15
x
Less: Expenses (226)
Bad debts

(2021)
Gross profit x
Less: Expenses
Bad debts 315
Provision for doubtful debts (increase) 13 (328)

d) Balance Sheet (extracts) as at 31 December

$ $
Current Assets
(2018)
Debtors 8 000
Less: Provision for doubtful debts (120) 7 880

(2019)
Debtors 9 500
Less: Provision for doubtful debts (150) 9 350

(2020)
Debtors 7 000
Less: Provision for doubtful debts (135) 6 865

(2021)
Debtors 8 300
Less: Provision for doubtful debts (148) 8 155
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 Answers Chapter 17

12 a) Provision for Doubtful Debts Account

$ $
2015 2015
Dec. 31 Balance c/d 1 116 Dec. 31 Profit and Loss 1 116
2016 2016
Dec. 31 Balance c/d 1 224 Jan. 1 Balance b/d 1 116
Dec. 31 Profit and Loss 108
1 224 1 224
2017 2017
Dec. 31 Profit and Loss 72 Jan. 1 Balance b/d 1 224
31 Balance c/d 1 152
1 224 1 224
2018
Jan. 1 Balance b/d 1 152

b) G. Daniel
The Profit and Loss Account (extracts) for the years ended
$ $
(2015)
Gross profit x
Less: Expenses
Provision for doubtful debts (increase) 1 116

(2016)
Gross profit x
Less: Expenses
Provision for doubtful debts (increase) (108)

(2017)
Gross profit x
Add: Reduction on provision for doubtful debts 72

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Answers Section 6

c) G. Daniel
Balance Sheet (extracts) as at 31 December

$ $
Current Assets
(2015)
Debtors 18 600 x
Less: Provision for doubtful debts (1 116) 17 484

(2016)
Debtors 20 400
Less: Provision for doubtful debts (1 224) 19 176

(2017)
Debtors 19 200
Less: Provision for doubtful debts (1 152) 18 048

13 Provision Calculations

Date Debtors Provision Increase/ Decrease

$ $ $
1 Aug. 2018 – 4 400 (Balance b/f)
31 Jul. 2019 162 000 4 050 350 ↓
31 Jul. 2020 175 000 4 375 325 ↑
31 Jul. 2021 184 000 4 600 225 ↑

a) Provision for Bad Debts

$ $
2019 2018
Jul. 31 Profit and Loss 350 Aug. 1 Balance b/f 4 400
31 Balance c/d 4 050
4 400 4 400
2020 2019
Jul. 31 Balance c/d 4 375 Aug. 1 Balance b/d 4 050
2020
Jul. 31 Profit and Loss 325
4 375 4 375
2021 Aug. 1 Balance b/d 4 375
Jul. 31 2021
Balance b/d 4 600 Jul. 31 Profit and Loss 225
4 600 4 600
Aug. 1 Balance b/d 4 600


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 Answers Chapter 17

b) P. Darry
Balance Sheet (extract) as at 31 July 2020

$ $
Current Assets
Debtors 175 000
Less: Provision for doubtful debts (4 375) 170 625

c) P. Darry
The Profit and Loss Account (extract) for the year ended 31 July 2019

$ $
Gross profit x
Add: Reduction on provision for doubtful debts 350

14 Calculating the provision

Date Debtors Provision Increase/Decrease

$ $ $
1 Jan. 2024 – 490 (Balance b/f)
31 Dec. 2024 15 000 450 40 ↓
31 Dec. 2025 14 200 426 24 ↓
31 Dec. 2026 16 300 489 63 ↑

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Answers Section 6

a) Provision for Doubtful Debts Account

$ $
2024 2024
Dec. 31 Profit and Loss 40 Jan. 1 Balance b/f 490
31 Balance c/d 450
490 490
2025 2025
Dec. 31 Profit and Loss 24 Jan. 1 Balance b/d 450
31 Balance c/d 426
450 450
2026
2026 Jan. 1 Balance b/d 426
Dec. 31 Balance c/d 489 Dec. 31 Profit and Loss 63
489 489
2027
Jan. 1 Balance b/d 489


b) Z. Johnson
The Profit and Loss Account (extract) for the year ended 31 December 2026

$ $
Gross profit x
Less: Expenses
Provision for doubtful debts (increase) (63)

c) Z. Johnson
Balance Sheet (extract) as at 31 December 2025

$ $
Current Assets
Debtors 14 200
Less: Provision for doubtful debts (426) 13 774

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 Answers Chapter 17

15 Item Account to be debited Account to be credited

a) Profit and Loss Provision for doubtful debts
b) Profit and Loss (with the increase) Provision for doubtful debts (with the
increase)
c) Provision for doubtful debts(with the Profit and Loss (with the decrease)
decrease)
d) Bad debts Debtor’s Account
e) Profit and Loss Bad debts

18 Depreciation
6 a) Depreciation is the reduction in the value of a fixed asset which occurs during its useful life.
b) Causes of depreciation will include:
i) Wear and tear: over the period of use, an asset will wear out, break down and even require
maintenance work.
ii) Obsolescence: An asset becomes obsolete or out-of-date due to reasons such as technical
innovation or progress.
iii) Inadequacy: An asset becomes insufficient for the business’ purposes as the business grows.
c) Accounting for depreciation is based on the matching principle which states that revenues must be
‘matched’ or paired with the expenses/costs incurred to generate such revenues. As such, an asset’s cost
is allocated in (the form of depreciation expense) over its period of use when it would have contributed
to the earning of income. If the cost is not distributed to all the years the asset is used, then profit will
be higher than it should be. When the total cost of the asset is written off in the last year of use, profit
will be less than was actually earned.
7 a) Annual depreciation (Straight Line Method)
= (Original cost – Disposal value) ÷ Useful life
= ($10 000 – $1 000) ÷ 3 years = $3 000
Depreciation will be $3 000 each year using the SLM.
b) Reducing balance method
$
Original cost 10 000
Depreciation year 1 (10% of 10 000) (1 000)
 9 000
Depreciation year 2 (10% of 9 000) (900)
 8 100
Depreciation year 3 (10% of 8 100) (810)
7 290

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Answers Section 6

8 a) Annual depreciation (SLM)

= (Original Cost – Disposal Value) ÷ Useful life
= ($25 000 – $4 500) ÷ 5 years
= $4 100
Depreciation will be $4 100 each year using the SLM.
b) Reducing balance method
 $
Original cost 25 000
Depreciation year 1 (20% of 25 000) (5 000)
 20 000
Depreciation year 2 (20% of 20 000) (4 000)
 16 000
Depreciation year 3 (20% of 16 000) (3 200)
 12 800
Depreciation year 4 (20% of 12 800) (2 560)
 10 240
Depreciation year 5 (20% of 10 240) (2 048)
 8 192
9 Annual depreciation (SLM)
= (Original Cost – Scrap Value) ÷ Useful life
= ($15 000 – $3 000) ÷ 3 years
= $4 000

a) Machine Account
$ $

2017 2017
Jan. 1 Bank 15 000 Dec. 31 Balance c/d 15 000
2018 2018
Jan. 1 Balance b/d 15 000 Dec. 31 Balance c/d 15 000
2019 2019
Jan. 1 Balance b/d 15 000 Dec. 31 Balance c/d 15 000
2020
Jan. 1 Balance b/d 15 000

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 Answers Chapter 18

b) Provision for Depreciation Account (Machine)

$ $

2017 2017
Dec. 31 Balance c/d 4 000 Dec. 31 Profit and Loss 4 000
2018 2018
Dec. 31 Balance c/d 8 000 Jan. 1 Balance b/d 4 000
Dec. 31 Profit and Loss 4 000
8 000 8 000

2019 2019
Dec. 31 Balance c/d 12 000 Jan. 1 Balance b/d 8 000
Dec. 31 Profit and Loss 4 000

12 000 12 000
2020
Jan. 1 Balance b/d 12 000

c)  P. Nancy
The Profit and Loss Account (extracts) for the years ended 31 December
Less: Expenses $
Depreciation (2017)  4 000
Depreciation (2018)  4 000
Depreciation (2019) 4 000
d) P Nancy
Balance Sheet (extracts) as at 31 December

Cost Accumulated Net book value

depreciation
Fixed Assets $ $ $
Machines (2017) 15 000 4 000 11 000
Machines (2018) 15 000 8 000 7 000
Machines (2019) 15 000 12 000 3 000

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Answers Section 6

10 a) Sewing Machine Account

$ $

2018 2018
Jan. 1 Cash 12 500 Dec. 31 Balance c/d 12 500
2019 2019
Jan. 1 Balance b/d 12 500 Dec. 31 Balance c/d 12 500
2020 2020
Jan. 1 Balance b/d 12 500 Dec. 31 Balance c/d 12 500
2021
Jan. 1 Balance b/d 12 500

b) Calculating depreciation

$
Original cost 12 500
Depreciation 2018 (10% of 12 500) (1 250)
11 250
Depreciation 2019 (10% of 11 250) (1 125)
10 125
Depreciation 2020 (10% of 10 125) (1 012.50)
9 112.50

 Provision for Depreciation Account (Sewing Machine)

$ $

2018 2018
Dec. 31 Balance c/d 1 250.50 Dec. 31 Profit and Loss 1 250.50
2019 2019
Dec. 31 Balance c/d 2 375.50 Jan. 1 Balance b/d 1 250.50
.5 Dec. 31 Profit and loss 1 125.50
2 375.50 2 375.50

5
2020 2020
Dec. 31 Balance c/d 3 387.50 Jan. 1 Balance b/d 2 375.50
Dec. 31 Profit and loss 1 012.50

3 387.50 3 387.50
2021
Jan. 1 Balance b/d 3 387.50

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 Answers Chapter 18

c)  P. Hinds
The Profit and Loss Account (extracts) for the years ended 31 December
Less: Expenses $
Depreciation (2018)  1 250.50
Depreciation (2019)  1 125.50
Depreciation (2020)  1 012.50

d)  P. Hinds
Balance Sheet (extracts) as at 31 December
Fixed assets Cost Accumulated depreciation Net book value
$ $ $
Sewing machine (2018) 12 500 1 250 .5 11 250. 5
Sewing machine (2019) 12 500 2 375 .5 10 125 .5
Sewing machine (2020) 12 500 3 387.50 9 112.50


11 a) Machine Account (Tractors)

$ $

2015 2015
Jan. 1 Bank 30 000 Dec. 31 Balance c/d 130 000
Jul. 1 Bank 100 000
130 000 130 000

2016 2016
Jan. 1 Balance b/d 130 000 Dec. 31 Balance c/d 175 000
May 1 Bank 45 000
175 000 175 000

2017 2017
Jan. 1 Balance b/d 175 000 Dec. 31 Balance c/d 175 000

2018
Jan. 1 Balance b/d 175 000

b) Calculating depreciation

Annual depreciation = 15% of original cost
Tractor A = 15% of $30 000 = $4 500 (For 2015, 2016, 2017)
Tractor B and C

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Answers Section 6

6
2015: (15% of $100 000) × __ ​ 12 ​ = $7 500
2016: 15% of $100 000 = $15 000
2017: $15 000
Tractor D
8
2016: (15% of $45 000) × __
​ 12 ​= $4 500
2017: 15% of $45 000 = $6 750

Depreciation charge for:

2 015: $4 500 + $7 500 = $12 000
2016: $ 4 500 + $15 000 + $4 500 = $24 000
2017: $ 4 500 + $15 000 + $6 750 = $26 250

Provision for Depreciation Account (Machines: Tractors)

$ $

2015 2015
Dec. 31 Balance c/d 12 000 Dec. 31 Profit and Loss 12 000
2016 2016
Dec. 31 Balance c/d 36 000 Jan. 1 Balance b/d 12 000
Dec. 31 Profit and Loss 24 000
36 000 36 000
2017
2017
Dec. 31 Balance c/d 62 250 Jan. 1 Balance b/d 36 000
Dec. 31 Profit and Loss 26 250

62 250 62 250
2018
Jan. 1 Balance b/d 62 250

c)  K. Hart
The Profit and Loss Account (extracts) for the years ended 31 December
Less: Expenses $
Depreciation (2015) 12 000
Depreciation (2016) 24 000
Depreciation (2017) 26 250

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 Answers Chapter 18

d)  K. Hart
Balance Sheet (extracts) as at 31 December
Fixed assets Cost Accumulated depreciation Net book value
$ $ $
Machines: tractor (2015) 130 000 12 000 118 000
Machines: tractor (2016) 175 000 36 000 139 000
Machines: tractor (2017) 175 000 62 250 112 750

12 The financial years will run from:

• 1 July 2020 to 30 June 2021 ( Nissan and Toyota bought in this period)
• 1 July 2021 to 30 June 2022 (Gonow bought in this period)
• 1 July 2022 to 30 June 2023

a) Delivery Vans Account

$ $

2020 2021
Oct. 1 Cash 25 600 Jun. 30 Balance c/d 58 000

2021
Jun. 30 Cash 32 400
58 000 58 000
Jul. 1 Balance b/d 58 000

2022 2022
May 1 Cash 50 000 Jun. 30 Balance c/d 108 000
108 000 108 000
2023
Jul. 1 Balance b/d 108 000 Jun. 30 Balance c/d 108 000
108 000 108 000

2023
Jul. 1 Balance b/d 108 000

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Answers Section 6

b) Provision for Depreciation Account (Delivery Vans)

$ $

2021 2021
Jun. 30 Balance c/d 2 304 Jun. 30 Profit and Loss 2 304
Jul. 1 Balance b/d 2 304
2022 2022
Jun. 30 Balance c/d 9 488 Jun. 30 Profit and Loss 7 184
9 488 9 488
Jul. 1 Balance b/d 9 488

2023 2023
Jun. 30 Balance c/d 21 309 Jun. 30 Profit and Loss 11 821
21 309 21 309
Jul. 1 Balance b/d 21 309

c)  Jenkins Distributors

The Profit and Loss Account (extracts) for the years ended 30 June
Less: Expenses $
Depreciation (2021) 2 304
Depreciation (2022) 7 184
Depreciation (2023) 11 821

d)  Jenkins Distributors

Balance Sheet (extracts) as at 30 June
Fixed assets Cost Accumulated depreciation Net book value
$ $ $
Delivery vans (2021)   58 000 2 304 55 696
Delivery vans (2022) 108 000 9 488 98 512
Delivery vans (2023) 108 000 21 309 86 691

13 The financial years run from:

• 1 September 2015 to 31 August 2015 (“H” bought in this period)
• 1 September 2016 to 31 August 2017 (“I” bought in this period)
• 1 September 2017 to 31 August 2018 (“J and K” bought in this period)


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 Answers Chapter 18

a) Computers

$ $

2015 2016
Sept. 1 Bank 20 000 Aug. 31 Balance c/d 20 000

2016 2017
Sept. 1 Balance b/d 20 000 Aug. 31 Balance c/d 50 000
Oct. 31 Bank 30 000
50 000 50 000

2017 2018
Sept. 1 Balance b/d 50 000 Aug. 31 Balance c/d 100 000
1 Bank 40 000

2018
Jan. 1 Bank 10 000
100 000 100 000
Sept. 1 Balance b/d 100 000

b) Calculating depreciation

Computer H $
Original cost 20 000
Depreciation 2016 (10% of 20 000) (2 000)
18 000
Depreciation 2017 (10% of 18 000) (1 800)
16 200
Depreciation 2018 (10% of 16 200) (1 620)
14 580

Computer I $
Original cost 30 000
10
Depreciation 2017 (10% of 30 000 × __
​ 12 ​) (2 500)
27 500
Depreciation 2018 (10% of 27 500) (2 750)
24 750

Computer J $
Original cost 40 000
Depreciation 2018 (10% of 40 000) (4 000)
36 000

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Answers Section 6

Computer K $
Original cost 10 000
8
Depreciation 2018 (10% of 10 000 × __
​ 12 ​) (667)
9 333
Depreciation charge for:
2016: $2 000
2017: $1 800 + $2 500 = $4 300
2018: $1 620 + $2 750 + $4 000 + $667 = $9 037

b) Provision for Depreciation Account (Computers)

$ $

2016 2016
Aug. 31 Balance c/d 2 000 Aug. 31 Profit and Loss 2 000
Sept. 1 Balance b/d 2 000
2017 2017
Aug. 31 Balance c/d 6 300 Aug. 31 Profit and Loss 4 300
6 300 6 300
Sept. 1 Balance b/d 6 300

2018 2018
Aug. 31 Balance c/d 15 337 Aug. 31 Profit and Loss 9 037
15 337 15 337
Sept. 1 Balance b/d 15 337

c) P. Arnold
The Profit and Loss Account (extracts) for the years ended 31 August
Less: Expenses $
Depreciation: computers (2016) 2 000
Depreciation: computer (2017) 4 300
Depreciation: computers (2018) 9 037

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 Answers Chapter 18

d)  P. Arnold
Balance Sheet (extracts) as at 31 August
Fixed assets Cost Accumulated depreciation Net book value
$ $ $
Computers (2016)   20 000 2 000 18 000
Computers (2017) 50 000 6 300 43 700
Computers (2018) 100 000 15 337 84 663

14 a) Annual depreciation = (Cost – Scrap Value) ÷ Estimated useful life.

= ($30 000 – $4 000) ÷ 5 years
= $5 200
b) Year 4 depreciation for profit and loss account = $5 200.
c) Accumulated depreciation at end of year 5 = $5 200 × 5 years = $26 000.
d) Net book value at end of year 3 = $30 000 – ($5 200 × 3 years) = $14 400.
e) Depreciation figure for the balance sheet (accumulated depreciation) at the end of
year 2 = $5 200 × 2 years = $10 400.
15  Calculating depreciation
$
Original cost 50 000
Depreciation year 1 (10% of 50 000) (5 000)
Net book value year 1 45 000
Depreciation year 2 (10% of 45 000) (4 500)
Net book value year 2 40 500
Depreciation year 3 (10% of 40 500) (4 050)
Net book value year 3 36 450
Depreciation year 4 (10% of 36 450) (3 645)
Net book value year 4 32 805

a) i) Annual depreciation in year 1 = $5 000

ii) Annual depreciation in year 3 = $4 050
b) Accumulated depreciation at the end of year 4 = $5 000 + $4 500 + 4 050 + $3 645= $17 195
c) Net book value (NBV) = Cost – Accumulated depreciation
i) NBV at end of year 2 = $50 000 – ($5 000 + $4 500) = $40 500
ii) NBV at end of year 4 = $50 000 – $17 195 = $32 805
 NB: You can also get the answer from the calculations.
d) The depreciation figure to be taken to the balance sheet at the end of year 3
(i.e. accumulated depreciation at end of year 3)
= $5 000 + $4 500 + $4 050 = $13 550

159
7 Control systems
19 Errors affecting and not affecting Trial Balance agreement
6 a) Item Type of error
i Error of commission
ii Error of principle
iii Error of omission
iv Error of principle
v Reversal of entry

b) Journal

Date Details folio Debit Credit

$ $
i H. Mose 405
H. Moise 405
ii Furniture 1 500
Purchases 1 500
iii Bank 600
J. Kash 600
iv Drawings 324
Insurance 324
v Cash 400
Don Daniel 400

7 Journal
Date Details folio Debit Credit
$ $
a) M. Moin 550
M. Mein 550
b) Sales 420
Commissions received 420
c) Computer 2 399
Furniture 2 399
d) John Smith 230
Returns outwards 230
e) Fransworth & Co. 45
Sales 45

160
 Answers Chapter 19

8 a) Journal
Date Details folio Debit Credit
$ $
January 3 Computer 2 000
Purchases 2 000
February 10 Utilities expense 120
Utilities owing 120
March 1 Bill Yates 500
Bill Tates 500
March 31 Bank 9
B. Smith 9

 ) All of the errors do not affect the trial balance.

b
c) January 3 – purchases decrease thereby there is an increase in gross profit and net profit by $2 000.
February 10 – decreases profit by $120 as it is an expense.

9 Item Would cause debit side to Would cause credit side to No effect on trial balance
be greater be greater

a)
*
b)
*
c)
*
d)
*
e)
*
10 a)  alculation of corrected net profit:
C
Net profit 8  770
Less: Depreciation  1 000
 7 770
Add: Purchases 150
Closing stock 220 370
Corrected net profit  8 140

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Answers Section 7

b) K. Joseph
Balance Sheet as at 31 December 2013

$ $ $
Non-Current Assets
Office Equipment 10 000
Less: Provision for depreciation 1 000 9 000
Motor Vehicle 14 050
Computer 2 450 25 500

Current Assets
Stock 1 420
Debtors 800
Bank 665
Cash 230 3 115

Less: Current Liabilities

Trade creditors 1 450 1 665
Net current assets 27 165

Capital: 20 000
Add: Net profit 8 140
28 140
Less drawings 975 27 165

11 a) Journal
Date Details folio Debit Credit
$ $
December 31 Drawings 1 620
Suspense A/c 1 620
S. Alex 245
Suspense A/c 245
Purchases 324
Suspense A/c 324
Suspense A/c 400
Commissions received 400

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 Answers Chapter 19

b) Suspense Account
$ $
Balance b/d 1 789 Drawings 1 620
Commissions received 400 S. Alex 245
Purchases 324
2 189 2 189

c) Dunne
Trial Balance as at 31 December 2013

Debit Credit
$ $
Debtors 8 000
Creditors 7 355
Purchases 12 824
Sales 25 000
Bank 2 340
Premises 23 000
Stock 2 000
Computer 4 890
Drawings 5 020
Commissions received 400
Capital 25 319
58 024 58 024

20 Control accounts
6 Sales Ledger Control Account

2016 $ 2016 $
Nov. 1 Balances b/d 3 500 Nov. 30 Bank 5 600
30 Sales 8 940 30 Cash 4 510
30 Returns inwards 420
30 Discounts allowed 250
30 Bad debts 300
30 Balances c/d 1 360
12 440 12 440
Dec. 1 Balances b/d 1 360


163
Answers Section 7

7 a) Debtors’ Ledger Control Account

2021 $ 2021 $
Jul. 1 Balances b/d 1 260 Jul. 1 Balances b/f 400
31 Sales 7 900 31 Returns inwards 135
31 Dishonoured cheques 230 31 Cash and cheques 7 820
31 Cash (refunds) 400 30 Bad debts 160
31 Balances c/d 1 275
9 790 9 790
Aug. 1 Balances b/d 1 275

b) i) Yes, the two figures are different.
ii) The control account checks the accuracy of entries in the ledger. When the control account
balances and the total of the debtors’ balances differ, this implies that errors have occurred in the
ledger.
c) The debit balance on the control account shows the total amount owed by debtors at 1 July. The credit
balances however, shows the amount owed to debtors by the business, for example, for overpayments
by debtors.
8 a)  Johnson and Sons Ltd
Sales Ledger Control Account
2019 $ 2019 $
Aug. 1 Balances b/d 2 870 Aug. 1 Balances b/d 1 660
31 Sales 56 200 31 Cash and cheques 52 300
31 Bank (refunds) 700 31 Set off: Purchases Ledger 1 420
31 Dishonoured cheques 630 31 Returns inwards 980
31 Interest (overdue debtors) 940 31 Bank (interest) 635
31 Balance c/d 500 31 Balance c/d 4 845
61 840 61 840
Sept. 1 Balances b/d 4 845 Sept. 1 Balances b/d 500


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 Answers Chapter 20

b) Johnson and Sons Ltd

Statement showing closing debtors at 31 August 2019

$ $
Opening debtors (01/08/19)  2 870
Add: Sales  56 200
Refunds to debtors 700
Dishonoured cheques 630
Interest on overdue debtors 940
Amounts owed to debtors (31/08/19) 500  61 840
Less: Amounts owed to debtors (01/08/19)  1 660
Cash and cheques received  52 300
Set off: Purchases ledger  1 420
Returns inwards 980
Cheque received for interest 635 (56 995)
Closing debtors (31/08/19) 4 845

9 Purchases Ledger Control Account

2020 $ 2020 $
May 31 Bank 3 890 May 1 Balances b/d 1 360
31 Cash 1 700 31 Purchases 6 500
31 Discounts received 250
31 Returns outwards 620
31 Balances c/d 1 400
7 860 7 860
Jun. 1 Balances b/d 1 400

10 a) K. Manual
Creditors’ Ledger Control Account
2022 $ 2022 $
Feb. 1 Balances b/d 1 150 Feb. 1 Balances b/d 3 762
28 Discounts received 870 28 Purchases 12 400
28 Cash and cheques 13 065 28 Bank (refund) 1 490
28 Returns outwards 1 000 28 Bank (dishonoured cheque) 813
28 Balance c/d 2 380
18 465 18 465
Mar. 1 Balances b/d 2 380

b) i) No, the two figures are the same.
ii) This implies that there are no errors in the ledger entries.

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Answers Section 7

c) The credit balance on the control account shows the total amount owed to suppliers at 1 February. The
debit balance, however, shows the amounts which suppliers owe the business, e.g. for overpayments by
the business.
11 a) Purchases Ledger Control Account
2024 $ 2024 $
Sept. 1 Balances b/f 925 Sept. 1 Balances b/f 4 100
30 Cash and cheques 39 000 30 Purchases 37 340
30 Set off: Sales Ledger 610 30 Bank (refunds) 140
30 Returns outwards 840 30 Bank (dishonoured cheques) 720
30 Discounts Received 1 300 30 Interest (overdue amounts) 350
30 Cash (interest) 160 30 Balances c/d 450
30 Balances c/d 265
43 100 43 100
Oct. 1 Balances b/d 450 Oct. 1 Balances b/d 265


b) Statement showing closing creditors at 30 September 2019

$ $
Opening creditors (01/10/19) 4 100
Add: Purchases 37 340
Refunds from creditors 140
Cheques returned by creditors 720
Interest on overdue amounts to creditors 350
450 43 100

Less: Amounts owed by creditors (01/10/19) 925

Payments to creditors 39 000
Set off: Sales Ledger 610
Returns outwards 840
Discounts received 1 300
Interest paid by cash 160 42 835
Closing creditors (31/10/19) 265

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 Answers Chapter 20

12 a) J. Lion
Sales Ledger Control Account
2016 $ 2016 $
Apr. 1 Balances b/d 2 500 Apr. 1 Balances b/d 1 300
30 Sales 68 200 30 Discounts allowed 3 000
30 Balance c/d 1 450 30 Cash and cheques 62 900
30 Bad debts 1 500
30 Returns inwards 832
30 Set off: Purchases Ledger 1 100
30 Balance c/d 1 518
72 150 72 150


b)  J. Lion
 Purchases Ledger Control Account
2016 $ 2016 $
Apr. 1 Balances b/d 580 Apr. 1 Balances b/d 4 600
30 Bank 19 380 30 Purchases 22 400
30 Discounts received 2 000 30 Balance c/d 220
30 Purchases returns 750
30 Set off: Sales Ledger 1 100
30 Balance c/d 3 410
27 220 27 220
May 1 Balances b/d 220 May 1 Balances b/d 3 410

c) Four reasons why control accounts are used:
i) To identify errors in the ledger entries such as incorrect postings and incomplete entries.
ii) To provide quick access to information such as total debtors or creditors at a particular date.
iii) To prevent fraudulent practices such as false reporting.
13 a)  L. Chan
 Sales Ledger Control Account
2026 $ 2026 $
Jan. 1 Balances b/d 8 700 Jan. 31 Discounts allowed 1 420
31 Sales (Sales Journal) 50 300 31 Bank 52 000
31 Cash refunds 200 31 Set off: Purchases Ledger 1 000
31 Bad debts 250
31 Balance c/d 4 530
59 200 59 200
Feb. 1 Balances b/d 4 530
(Note: Bad debts = ​ _12​× $500)


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Answers Section 7

b)  L. Chan
 Purchases Ledger Control Account
2026 $ 2026 $
Jan. 31 Discounts received 965 Jan. 1 Balances b/d 3 600
31 Bank 24 600 31 Purchases 28 650
31 Cash 5 000
31 Set off: Sales Ledger 1 000
31 Returns outwards 230
31 Balance c/d 455
32 250 32 250
(Note: Credit purchases = ​ _34​× $38 200) Feb. 1 Balances b/d 455

c) Items omitted Reason

1) Sales as per cash book These are cash sales which cannot be entered in the sales
ledger control account. (The SLC concerns only credit
sales.)
2) Trade discounts to customers These simply reduce the selling price and are not recorded
in the accounting records.
3) Cash purchases The purchases ledger control (PLC) accounts concerns
credit purchases.
4) Cheques issued for expenses These do not apply to the SLC and PLC.
5) Cheques received for rent revenue Rent revenue is not entered in the SLC or PLC.
6) Cash paid for purchases Cash purchases are not entered in the PLC which only
concerns credit purchases.

14 Sales Ledger Control Account

Information required Source
a) Sales Ledger
b) Sales Journal
c) Returns Inwards Journal
d) Cash Book
e) Discounts allowed column: Cash Book
f) General Journal
g) Cash Book
h) Cash Book
i) General Journal
j) Sales Ledger

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 Answers Chapter 20

15 Purchases Ledger Control Account

Information required Source
a) Purchases Ledger
b) Purchases Journal
c) Returns Outwards Journal
d) Cash Book
e) Discounts received column: Cash Book
f) Cash Book
g) Cash Book
h) General Journal
i) Purchases Ledger

21 Bank reconciliation statements

6 Item Increase Decrease No Effect

a) Standing order paid by the bank. *
b) Dividends received by the bank for the business. *
c) Charges for a cheque book. *
d) Debit transfer to a supplier. *
e) A debtor paying monies directly into the bank account. *
f) Interest charged for an overdraft. *
g) An unpresented cheque. *
h) A dishonoured cheque previously banked. *
i) A cheque paid for $87 was written in the cash book as $78. *
j) A credit transfer. *

7 a) Revised cash book balance: $21 260

b) M. Morgan Bank Reconciliation as at 1 January 2013

$
Balance as per cash book 21 260
Add: Unpresented cheques
(400 + 320) 720
21 980
Less: Unrecorded deposits 450
Balance as per Bank Statement 22 430

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Answers Section 7

8 a) Updated cash book balance: $2 524

b) Bank Reconciliation as at 31 December 2013

$
Balance as per cash book 2 524
Add: Unpresented cheques 234
2 758
Less: Unrecorded deposits
(153 + 350) 503
Balance as per Bank Statement 2 255

9 a) Updated cashbook balance: $1 434 Cr.

b) Gidharry Bank Reconciliation as at 28 February 2013

$
Balance as per cash book (1 434)
Add: Unpresented cheques 500
(934)
Less: Unrecorded deposits 4 000
Balance as per Bank Statement (4 934)

10 a) Revised cash book balance: $5 247

b) Bank Reconciliation as at 31 January 2013

$
Balance as per cash book 5 247
Add: Unpresented cheques
(450 + 87) 537
5 784
Less: Unrecorded deposits 123
Balance as per Bank Statement 5 661

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 Answers Chapter 21

11 a) Updated cash book balance: $25 459

b) China City Ltd. Bank Reconciliation as at 31 August 2013

$
Balance as per Bank Statement (1 841)
Add: Unrecorded deposits 27 800
25 959
Less: Unpresented cheques 500
Balance as per Cash Book 25 459

171
8 Incomplete records

22 Single entry and incomplete records

6 To convert from single entry to double entry the accountant must employ various steps:
a ) prepare a Statement of Affairs (Balance Sheet) to determine the business assets, liabilities and capital.
b) open ledger accounts for each item in the Statement of Affairs.
c) open subsidiary books: prepare cash and bank summary.
d) reconstruct debtors and creditors and expense and revenue accounts.
e) make adjustments for any drawings of stock.
f ) prepare the Income Statement and Balance Sheet.

7 a) Joe’s Car Wash Statement of Affairs as at 31 August 2013

$ $ $
Non-current Assets:
Equipment 15 000

Current Assets
Cleaning supplies 600
Debtors 430
Bank 2 300
Cash 500 3 830

Less: Current Liabilities

Rent owing 650
Working capital 3 180
Net Assets 18 180

Financed by:
Capital 18 180

b) Disadvantages of single entry:

• owner has no idea of his net worth
• they are insufficient to prepare complete final accounts
• Insufficient information makes it difficult to monitor amounts borrowed.

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 Answers Chapter 22

8 a) Joe’s Car Wash Statement of Affairs as at 31 August 2013

$ $ $
Non-current Assets:
Equipment 15 000

Current Assets
Cleaning supplies 400
Debtors 1 230
Bank 2 500
Cash 450 4 580

Less: Current Liabilities

Utilities owing 1 365
Working capital
Net Assets 3 215
18 215
Financed by:
Capital 18 215

b) Joe’s Car Wash Statement of Profit

$
Capital at end 18 215
Less: Capital at start 18 180
35
Add drawings 500
Profit 535

9 $
Sales
Debtors at end 2 450
Add: Cash received 23 300
25 750
Less: Debtors at start 5 440
Credit sales 31 190
Cash sales 15 050
Total sales 46 240

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Answers Section 8

$
Purchases
Creditors at end 750
Add: Cash paid 21 200
21 950
Less: Creditors at start 1 500
Credit purchases 20 450
Cash purchases 3 700
Total purchases 24 150

10 $
Creditors at end 6 000
Add: Cash paid 10 000
16 000
Less: Creditors at beginning 4 000
Credit purchases 12 000
Add: Cash purchases 31 000
43 000
Add Discount received 1 560
44 560
Add: Carriage inwards 950
45 510
Less: Returns outwards 1 010
Net purchases 44 500

11 a) $
Sales
Debtors at end 5 060
Add: Cash received 32 450
37 510
Less: Debtors at start 3 450
34 060

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 Answers Chapter 22

$
Purchases
Creditors at end 2 310
Add: Cash paid 21 230
23 540
Less: Creditors at start 2 090
21 450

b) N. Marvin Trading Account for year ended 31 December 2013

$ $
Sales 34 060
Less: Cost of goods sold
Opening stock 1 400
Add: Purchases 21 450
22 850
Less: Closing stock 4 750
Cost of goods sold 18 100
Gross profit 15 960

12 a) Debtors Control Account

$ $
Balance b/d 1 340 Cash 4 200
Revenues 6 540 Balance c/d 3 860
7 880 7 880

Creditors Control Account

$ $
Cash 460 Balance b/d 500
Discount received 145 Purchases 1 230
Balance c/d 1 125
1 730 1 730

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Answers Section 8

b) Juliette Rodriguez Statement of Affairs as at 1 July 2012

$ $
Non-current Assets:
Office Furniture 5 000

Current Assets:
Inventory 450
Debtors 1 350
Bank 3 000
Cash 200 5 000
Less: Current Liabilities
Creditors 500 4 500
Working capital 9 500
Net Assets
Capital 9 500

Juliette Rodriguez Statement of Affairs as at 30 June 2013

$ $
Non-current Assets:
Office Furniture 5 400

Current Assets:
Inventory 1 220
Debtors 3 860
Bank 2 300
Cash 150 7 530
Less: Current Liabilities
Creditors 1 125 6 405
Working capital 11 805
Net Assets
Capital 11 805

c) Statement of Profit for year ended 30 June 2013

$
Capital at end 11 805
Less: Capital at the start 9 500
2 305
Add: Drawings 459
Net profit 2 764

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 Answers Chapter 22

13 a) Arnold Montroop Statement of Affairs as at 1 Jan. 2014

$ $ $
Non-current Assets:
Equipment 4 500

Current Assets:
Inventory 4 050
Debtors 3 450
Bank 680
Cash 150 8 330

Less: Current Liabilities

Creditors 7 890 440
Capital 4 940

b) Cash and Bank Summary

Details Cash Bank Details Cash Bank

$ $ $ $
Balance b/d 150 680 Cash withdrawn 3 400
Receipts from debtors 19 600 Cash paid to creditors 7 500
Bank loan 4 000 Rent 2 470
Cash sales 2 300 Insurance 1 600
Drawings 600 2 680
Wages 540 2 400
General expenses 1 320
Balance c/d 1 310 2 910
2 450 24 280 2 450 24 280

c) $
Sales
Debtors at end 4 560
Add: Cash received 9 600
14 160
Less: Debtors at start 3 450
Credit sales 10 710
Cash sales 2 300
Total sales 13 010

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Answers Section 8

$
Purchases
Creditors at end 9 525
Add: Cash paid 7 500
17 025
Less: Creditors at start 7 890
Credit purchases 9 135

Montroop Income Statement for year ended 31 December 2014

$ $
Sales 13 010
Less: Cost of goods sold
Opening stock 4 050
Add: Purchases 9 135
Goods available for sale 13 185
Less: Closing stock 5 620
Cost of goods sold 7 565
Gross profit 5 445
Less: Expenses
Rent (2 470 + 260) 2 730
Insurance (1 600 – 680) 920
General expenses 1 320
Wages (2 400 + 540) 2 940
Depreciation expense 200 8 110
Net loss 2 665

178
9 Accounting for partnerships

23 Partnerships
6 Cook and John
Appropriation Account for the year ended 31 May 2017

$ $ $
Net income 40 400
Less: Interest on capital
Cook 2 200
John 2 000 4 200
Salaries
Cook 1 500
John 2 000 3 500 7 700
Residual profit 32 700
Share of profit
Cook 16 350
John 16 350
32 700

7 Stetson and Farley

Appropriation Account for the year ended 31 August 2015

$ $ $
Net profit 60 300.73
Add: Interest on drawings
Stetson 350
Farley 480 830.73
61 130.73
Less salaries: Stetson 2 000
Interest on capital
Stetson 1 250
Farley 1 500 2 750 4 750.73
Remainder of profits 56 380.73
Share of profits
Stetson (5/11) 25 627.27
Farley (6/11) 30 752.73
56 380.00

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Answers Section 9

8 a) Capital: Peter
2018 $ 2018 $
Dec. 31 Balance c/d 30 000 Dec. 31 Balance b/d 30 000

Capital: Smith

2018 $ 2018 $
Dec. 31 Balance c/d 45 000 Dec. 31 Balance b/d 45 000

Current A/c: Peter
2018 $ 2018 $
Dec. 31 Drawings 1 200 Dec. 31 Salaries 7 200
Interest on drawings 150 Interest on capital 3 000
Balance c/d 11 950 Share of profit 3 100
13 300 13 300

Current A/c: Smith
2018 $ 2018 $
Dec. 31 Drawings 1 850 Dec. 31 Salaries 6 300
Interest on drawings 230 Interest on capital 4 500
Balance c/d 11 120 Share of profit 2 400
13 200 13 200

b) Capital: Peter
2018 $ 2018 $
Dec. 31 Drawings 1 200 Dec. 31 Balance b/d 30 000
Interest on drawings 150 Salaries 7 200
Balance c/d 41 950 Interest on capital 3 000
Share of profit 3 100
43 330 43 300


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 Answers Chapter 23

Capital: Smith
2018 $ 2018 $
Dec. 31 Drawings 1 850 Dec. 31 Balance b/d 45 000
Interest on drawings 230 Salaries 6 300
Balance c/d 11 120 Interest on capital 4 500
Share of profit 2 400
58 200 58 200



9 a) Date Details Lolly Pipper Date Details Lolly Pipper

2017 $ $ 2017 $ $
Feb. 28 Balance c/d 40 000 55 000 Feb. 28 Balance b/d 40 000 55 000
Mar. 1 Balance b/d 40 000 55 000

Current Accounts

Date Details Lolly Pipper Date Details Lolly Pipper

2017 $ $ 2017 $ $
Feb. 28 Drawings 5 000 7 000 Feb. 28 Balance b/d 13 750 12 690
Interest on drawings 500 700 Salaries 2 000 1 800
Balance c/d 20 950 34 190 Interest on capital — 6 000
Share of profit 10 700 21 400

26 450 41 890 26 450 41 890

Balance b/d 20 950 34 190

 ) Ratio of profit shared between parties is 1 : 2 or _​ 13​: _​ 23 ​.

b
c) Rate of interest on drawings is 10%.

181
Answers Section 9

10 a) Singh and Carl

Balance Sheet as at 31 January 2016 (Capital section)

Singh Carl
$ $ $
Capital Account 32 000 40 000 72 000
Current Account
Opening balances 3 340 4 060
Salaries 1 500 1 800
Interest on capital 2 000 3 000
Share of profit 3 600 4 000
10 440 12 860

Less: Drawings (2 070) (1 500)

Interest on drawings (260) (130)
8 110 11 230 19 340

b) Fixed Capital Account.

11 a) Timothy and Joyce
Appropriation of Profit Account for year ended 31 December 2018

$ $ $
Net Income 25 296.73
Add: Interest on drawings
( ​ 10
Timothy ​ 5 000 × 12% × __
12
​  ​ ) 500

(
Joyce ​ 3 200 × 12% × __ 6
​ 12 )
​  ​ 192 692.73
25 988.73
Less: Salary – Joyce 4 000
Interest on Capital
Timothy 1 800
Joyce: 2 288 4 088 8 088.73
Residual Profit 34 076.73
Share of Residual Profit
Timothy (44%) 14 993.44
Joyce (56%) 19 082.56
34 076.73

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 Answers Chapter 23

b) Timothy and Joyce

Balance Sheet as at 31 December 2018

$ $ $
Capital Account Timothy 22 500.56
Joyce 28 600.56 51 100

Timothy Joyce
Current Accounts
Opening balances (6 560).56 5 980.56
Salary 4 000.56
Interest on capital 1 800.56 2 288.56
Share of profit 14 993.44 19 082.56
10 233.44 31 350.56
Less: Drawings (5 000).56 (3 200).56
(500).56 (192).56
Interest on drawings 4 733.44 27 958.56 32 692

c) The significance of both ending balances on the current accounts is that the balances on the current
accounts represent the amounts they could have withdrawn from the business without reducing the
capital each of them has invested. As they both have credit balances in the current accounts this also
shows by how much their investment has grown.

12 a) General Journal
Date Details Debit Credit
2019 $ $
Jul. 1 Cash 1 000
Capital: Chang 7 000
Capital: Storm 3 000
(To record: capital contributed by Chang and Storm)

b) Journal
Date Details Debit Credit
2020 $ $
Dec. 1 Cash 3 400
Bank 8 600
Property 15 500
Equipment 5 000
Capital: Moore 18 900
Capital: Miller 13 600
(To record: capital contributed by Moore and Miller)

183
Answers Section 9

c) Journal
Date Details Debit Credit
2019 $ $
Aug. 1 Cash 7 500
Property 15 700
Equipment 6 800
Accounts receivable 2 400
Inventory 18 000
Accounts payable 3 000
Loan 3 900
Capital: Caitlyn 31 200
Capital: Aaron 14 300
(To record: motion of a partnership)

13 a) Journal
Date Details Debit Credit
2021 $ $
Aug. 1 Cash 50 000
Inventory 22 000
Capital: Sam 72 000
(To record: admission of Sam to the partnership)

b) Raj, Tony and Sam

Profit and Loss Appropriation for year ended 31 December 2021

$ $ $ $
Net profit 120 000
Add: Interest on drawings
Raj 160
Tony 144 304 120 304.66
Less: Salary – Tony
Interest on Capital 2 000
Raj 3 750
Tony 3 000
Sam 1 500 8 250 10 250.66
Residual Profit 110 054.66
Share of Profits
()
Raj ​ _​ 13​  ​ 36 684.66

Tony ​( _​ 13​  )​ 36 684.66

Sam ​( _​  13​  )​ 36 684.66
110 054.66

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 Answers Chapter 23

c) Current Account
Date Details Raj Tony Sam Date Details Raj Tony Sam
2021 $ $ 2021 $ $
Dec. 31 Drawings 2 000.66 1 800.66 Dec. 31 Balance b/d 20 000.66 16 000.66
Interest on Salaries
drawings 160.66 144.66
Balance c/d 59 274.66 53 740.66 38 184.66 Interest on capital 3 750.66 3 000.66 1 500.66
Share of profit 36 684.66 36 684.66 36 684.66
Loan interest
owing 1 000.66
61 434.66 55 684.66 38 184.66 61 434.66 55 684.66 38 184.66

14 a) Journal
Date Details Debit Credit
2016 $ $
Jan. 1 Cash 60 000
Equipment 20 000
Capital: Dawn 50 000
(To record: admission of Dawn to the partnership)

b) Kim, Teal and Dawn

Profit and Loss Appropriation Account for year ended 30 June 2016

$ $ $ $
Net Profit 250 000
Add: Interest on drawings
Kim 360
Teal 480 840 250 840
Less: Salary – Kim 12 500
Interest on capital
Kim 8 000
Teal 7 000
Dawn 5 000 20 000 32 500
Residual Profit 218 340
Share of Profit
( )
Kim ​ __8
​ 20 ​  ​ 87 336

Teal ​( __ 7
​  20 ​  )​ 76 419
Dawn ​( __ ​ 20 5
​  )​ 54 585
218 340

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Answers Section 9

c) Current Account: Kim

2016 $ 2015 $
Jun. 30 Drawings 4 500 Jul. 1 Balance b/d 2 540
2016
Interest on drawings 360 Jun. 30 Salary 12 500
Balance c/d 105 516 Interest on capital 8 000
Share of profit 87 336
110 376 110 376
2017
Jul. 1 Balance b/d 105 516

Current Account: Teal
2015 $ 2016 $
Jul. 1 Balance b/d 1 065 Jun. 30 Interest on capital 7 000
2016
Jun. 30 Drawings 6 000 Share of profit 76 419
Interest on drawings 480
Balance c/d 75 874
83 419 83 419
2017
Jul. 1 Balance b/d 75 874

Current Account: Dawn
2016 $ 2016 $
Jun. 30 Balance c/d 59 585 Jun. 30 Interest on capital 5 000
Share of profit 54 585
59 585 59 585
2017
Jul. 1 Balance b/d 59 585


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 Answers Chapter 23

15 a) Star and Roger

Profit and Loss Appropriation Account for year ended 31 October 2022

$ $ $
Net Profit 280 000
Add: Interest on Drawings
(
Star 8 ​ 000 × 10% × __ 9
​ 12)​  ​ 600
Roger ​( 6 000 × 10% × ​ 12​  )​
11
__ 550 1 150
Less: Salaries 281 150
Star 40 000
Roger 50 000 90 000
Interest on Capital
Star 2 880
Roger 1 800 4 680 94 680
Residual profit 186 470
Share of profit
()
Star ​ _​ 25​  ​ 74 588
Roger ​( _​ 35​  )​ 111 882
186 470

b) Current Account
Date Details Star Roger Date Details Star Roger
2021 $ 2021 $
Nov. 1 Balance b/d .66 1 600 Nov. 1 Balance b/d 1 700
2022 Drawings 8 000 6 000 2022 Salaries 40 000 50 000
Oct. 31 Interest on 600 550 Oct. 31 Interest on capital 2 880 1 800
drawings
Balance c/d 110 568 155 532 Share of profit 74 588 111 882
119 168 163 682 119 168 163 682
2022 Balance b/d 110 568 155 532
Nov. 1

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Answers Section 9

c) Star and Roger

Balance Sheet as at 31 October 2022

$ $ $ $
Non-current Assets:
Equipment 65 000
Less: Accumulated depreciation 25 440 39 560
Motor van 120 000
Less: Accumulated depreciation 36 000 84 000 123 560
Current Assets:
Inventory 42 000
Accounts receivable 27 540
Bank 133 000
Cash 47 000 249 540
Less: Current Liabilities
Accounts payable 14 000
Accrued expenses 5 000 19 000 230 540
Working capital 354 100

Less: Long-term Liabilities

10% loan 10 000
Net assets 344 100

Financed by: Star Roger

Capital Accounts 48 000 30 000 78 000
Current Accounts 110 568 155 532 266 100
344 100

188
10 Accounting for corporations

24 Limited liability companies

6 a) Share: A unit of ownership in a company which has monetary value. A company’s capital is raised
through the sale of shares. There are different types of shares.
b) Par value or nominal value: The face value of a share or the value attached to each share on a company’s
formation.
c) Share premium: This occurs when shares are issued at a price above their par value. A share premium
account is opened to record the premium.
d) Dividends: The share of net profits given to shareholders.
e) Authorised capital: The value of the maximum number of shares that a company has been given the
power to sell or issue at its par value. This is decided upon on the formation of the company and is
noted in the company’s Memorandum of Association.
f ) Issued capital: The value of the number of shares actually sold or issued.
g) Retained earnings or undistributed profits: This represents the profits earned by the company that are
not distributed to shareholders or put in reserves.
h) Ordinary share: The type of shares that get paid after preference shareholders are paid their fixed
dividend due to them. However, they have the right to vote at one vote per share and in years where
the company is very profitable may actually receive higher dividends than preference shareholders.
i) Preference share: These are shares to which a fixed rate of dividend is paid before ordinary
shareholders are paid. They, however, do not get to vote on company matters.
j) Debenture: This is cash loaned to the company for a length of time. Debenture holders are the
company’s long term creditors and are not owners of the company. Interest on these loans is paid
yearly, whether the company makes a profit or not.

7 a)  Navidad Ltd
General Journal

Date Details Debit Credit

2017 $ $
Aug. 1 Cash 112 000
Ordinary share capital 6 000
4% Preference share capital 6 000
8% Debentures 100 000
(To record: issue of ordinary shares, preference shares and
debentures)

b)  Cash Account

2017 $
Aug. 1 Ordinary share capital 6 000
1 4% Preference share capital 6 000
1 8% Debentures 100 000


189
Answers Section 10

 Ordinary Share Capital Account

2017 $
Aug. 1 Cash 6 000

4% Preference Share Capital Account
2017 $
Aug. 1 Cash 6 000

8% Debentures Account
2017 $
Aug. 1 Cash 100 000

c) i) The ‘4%’ represents the rate of dividend to be paid on the preference shares.
ii) The ‘8%’ represents the rate of interest to be paid on the dentures.

8 a)  Damian Foods Ltd

General Journal

Date Details Debit Credit

2025 $ $
Feb. 3 Bank 31 000
Ordinary share capital 16 000
2% Preference share capital 15 000
(To record: issue of ordinary shares and preference shares)

Working:
Ordinary share capital = 8 000 shares × $2/share = $16 000
Preference share capital = 5 000 shares × $3/share = $15 000

b)  Bank Account

2025 $
Feb. 3 Ordinary share capital 16 000
3 2% Preference share capital 15 000

 Ordinary Share Capital Account

2025 $
Feb. 3 Bank 16 000


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 Answers Chapter 24

2% Preference Share Capital Account

2025 $
Feb. 3 Bank 15 000

c) Preference share dividend:

= 2% of the value of the preference shares issued
= 2% of $15 000 = $300
d) The term ‘fully subscribed’ means that all the shares issued were purchased.
9 a)  Damascus Company Ltd
General Journal

Date Details Debit Credit

2022 $ $
Apr. 1 Bank 404 000
Ordinary share capital 250 000
6% Preference share capital 36 000
Share premium 118 000
(To record: issue of ordinary shares and preference shares
above par value)

Working:
Total funds received:
(Ordinary share capital + Preference share capital)
= (50 000 shares × $7/share) + (18 000 shares × $3/share)
= $350 000 + $54 000 = $404 000

Share Premium:
= Ordinary share premium + Preference share premium
= (50 000 shares × $2/share) + (18 000 shares × $1/share)
= $100 000 + $18 000 = $118 000

Par Value of Shares:

= (Par value ordinary shares) + (Par value preference shares)
= (5 000 shares × $5/share) + (18 000 shares × $2/share)
= $250 000 + $36 000 = $286 000
b)  Bank Account

2022 $
Apr.1 Ordinary share capital 250 000
1 6% Preference share capital 36 000
1 Share premium 118 000


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Answers Section 10

 Ordinary Share Capital Account

2022 $
Apr. 1 Bank 250 000

 6% Preference Share Capital Account
2022 $
Apr. 1 Bank 36 000

 Share Premium Account
2022 $
Apr. 1 Bank 118 000

c) i) Value of authorised share capital:

= (50 000 ordinary shares × $5/share) + (30 000 6% preference shares × $2 each)
= $250 000 + $60 000 = $310 000
ii) Value of issued share capital:
= Value at par = $286 000
10 a) Total value of authorised share capital:
= (value of ordinary shares + value of preference shares)
= (40 000 shares × $2/share) + (20 000 shares × $1/share)
= $80 000 + $20 000 = $100 000
b) i) Ordinary share capital:
= 30 000 ordinary shares × par value/shares
= 30 000 shares × $2/share = $60 000
ii) Share premium (on ordinary shares):
= $30 000 ordinary shares × $2/share = $60 000
(Note: Share premium per share = issue price – par value = $4 – $2 = $2)
iii) Preference share capital:
= 20 000 preference shares × $1/share
 = $20 000
iv) Debenture financing:
= 50 debentures × $500/debenture
 = $25 000
c) i) Annual preference share dividend:
= 5% of value of preference shares sold
= 5% of $20 000 = $1 000
ii) Annual debenture interest:
= 10% of value of debentures sold
= 10% of $25 000 = $2 500

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 Answers Chapter 24

iii) Ordinary share dividend at:

• $0.40 per share
= 0.40 × number of ordinary shares sold
= 0.40 × 30 000 shares
 = $12 000
• 15% of ordinary shares
= 15% of par value of ordinary shares sold
= 15% of $60 000
 = $9 000
11 a) Ordinary share dividend:
= 8% of value of ordinary shares
= 8% of (80 000 shares × $3/share)
= 8% of $240 000
= $19 200
Preference share dividend:
= 5% of value of preference shares
= 5% of (30 000 shares × $2/share)
= 5% of $60 000
= $3 000

b)  The Hungry Lion Company Ltd

Profit and Loss Appropriation Account for the year ended 31 July 2023

$ $
Net income after tax  64 000
Add: Retained profits brought forward from last year  15 000
 79 000
Less: Appropriations
Transfer to general reserve  22 400
Transfer to asset replacement reserve  8 000
Proposed dividends:
Ordinary shares  19 200
Preference shares  3 000 (52 600)
Retained profits carried forward to next year  26 400

193
Answers Section 10

12  MORI Company Ltd

 Balance Sheet as at 31 May 2021

Cost Accumulated  Net Book

Depreciation Value
 ixed Assets
F $ $ $
Land  50 000 –  50 000
Buildings  30 000  8 000  22 000
Machinery  16 000  4 200  11 800
Delivery vans  22 000  7 650  14 350
 118 000  19 850  98 150
 urrent Assets:
C
Stock  4 200
Debtors  3 640
Prepaid expenses  1 200
Bank  7 300
Cash  5 450  21 790
Less: Current Liabilities
Creditors  4 160
Proposed dividends  3 800
Debenture interest owing 160 (8 120)
Net Current Assets  13 670
 111 820
Less: Long-term Liabilities
15 year mortgage  12 000
4% Debentures  4 000 (16 000)
95 820
 inanced by:
F
Share Capital Authorised Issued
Ordinary shares @ $1 each  40 000  30 000
5% Preference shares @ $1 each  20 000  16 000
60 000  46 000
Reserves:
Share premium  15 000
General reserve  16 090
Retained profits  18 730  49 820
95 820

194
 Answers Chapter 24

13 a)  ART Company Ltd

Trading and Profit and Loss Account for the year ended 28 February 2018

$ $
Sales  75 200
Less: Cost of goods sold
Opening stock  4 700
Purchases  32 900
Cost of goods available for sale  37 600
Less: Closing stock (5 100) (32 500)
Gross Profit  42 700
Less: Expenses
Debenture interest 350
Depreciation: Equipment  4 000
Motor vans  3 800
General expenses  4 420
Wages  5 320
Director’s remuneration  9 500 (27 390)
Net profit  15 310
Add: Retained earnings brought forward  8 940
 24 250
Less: Appropriations
Transfer to general reserve  2 000
Proposed dividends:
Preference shares (5% of 10 000) 500
Ordinary shares [(60 000÷ 2) × 0.50]  15 000 (17 500)
Retained earnings carried forward to next year  6 750

195
Answers Section 10

b)  ART Company Ltd

Balance Sheet as at 28 February 2018

Cost Accumulated  Net Book

Depreciation Value
 ixed Assets
F $ $ $
Equipment  40 000  8 000  32 000
Motor vans  38 000  9 200  28 800
78 000  17 200  60 800
Current Assets
Stock  5 100
Debtors  13 700
Bank  20 300
Cash  15 900  55 000
Less: Current Liabilities
Creditors  7 200
Proposed dividends:
Preference shares 500
Ordinary shares  15 000 (22 700)
Net Current Assets  32 300
 93 100
Less: Long-term Liabilities
7% Debentures (5 000)
 88 100
 inanced by:
F
Share Capital
Authorised Capital:
 80 000 Ordinary shares @ $2 each  160 000
20 000 5% Preference shares @ $1 each  20 000
 180 000
Issued Capital
30 000 Ordinary shares @ $2 each  60 000
10 000 5% Preference shares @ $1 each  10 000  70 000
Reserves:
General reserve (9 350 + 2 000)  11 350
Retained earnings  6 750  18 100
 88 100

196
 Answers Chapter 24

14 a)  Smart Box Ltd

Appropriation Account for the year ended 31 January 2025

$ $
Net Profit  9 350
Add: Retained (unappropriated) profits brought
forward from last year  8 490
 17 840
Less: Appropriations
Transfer to general reserve  1 240
Interim ordinary share dividend 900
Proposed Dividends:
Preference shares (10% of 8 450) 845
Ordinary shares (4.5% of 20 000) 900 (3 885)
Retained profits carried forward to next year 13 955

197
Answers Section 10

b)  Smart Box Ltd

Balance Sheet as at 31 January 2025

Cost Accumulated  Net Book

Depreciation Value
Fixed Assets (Net Book Value) $ $ $
Machinery  32 000
Motor Vehicles  27 000
 59 000
Current Assets
Inventory  3 150
Accounts receivable  2 210
Less: P
 rovision for bad debts (570)  1 640
Cash  7 500
 12 290
Current Liabilities
Less: 
Accounts payable  2 695
Bank overdraft  2 600
Proposed dividends:
Preference 845
Ordinary 900  (7 040)
Net Current Assets  5 250
 64 250
Less: Long-term Liabilities
10% Debentures  (15 000)
 49 250
 inanced by:
F
Share Capital
Authorised and issued:
Ordinary shares @ $1 each  20 000
10% Preference shares @ $1 each  8 450  28 450
Reserves:
General reserve (5 605 + 1 240)  6 845
Retained profits  13 955  20 800
 49 250

198
 Answers Chapter 24

15 a)  The Amazing Shop Limited

The Trading and Profit and Loss Account for the period ended 30 September 2024

$ $
Sales  67 100
Less: Cost of goods sold
Opening inventory  2 800
Purchases  30 500
Carriage inwards  1 100
Cost of goods available for sale  34 400
Less: Closing inventory (1 800) (32 600)
Gross Profit  34 500
Add: Commissions received  3 174
 37 674
Less: Expenses
Depreciation: Equipment 665
Fixtures 648
Debenture interest (12% of 10 000)  1 200
Director’s remuneration  8 000
Carriage outwards 804
Interest on loan  1 750
Wages (3 450 + 220)  3 670
Rent (2 300 – 300)  2 000 (18 737)
Net profit  18 937
Add: Retained profits brought forward from last year  5 860
 24 797
Less: Appropriations
Transfer to general reserve  1 500
Proposed dividends:
Preference 150
Ordinary  2 000 (3 650)
Retained profits carried forward to next year  21 147

199
Answers Section 10

b)  The Amazing Shop Limited

Balance Sheet as at 30 September 2024

Cost Accumulated  Net Book

Depreciation Value
Fixed Assets $ $ $
Fixtures  8 000  2 168  5 832
Equipment  14 000  1 365  12 635
 22 000  3 533  18 467
Current Assets
Inventory  1 800
Accounts receivable  12 600
Prepaid expenses 300
Bank  38 400
Cash  24 000  77 100

Current Liabilities
Less: 
Accounts payable  15 350
Accrued expenses (1 200 + 220)  1 420
Proposed dividends:
Preference 150
Ordinary  2 000  (18 920)
Net Current Assets  58 180
 76 647
Less: Long-term Liabilities
12% Debentures  10 000
8 Year loan  13 000 (23 000)
 53 647
 inanced by:
F
Share Capital
Authorised and Issued:
10 000 $2 Ordinary shares  20 000
5 000 3% $1 Preference shares  5 000  25 000
Reserves:
Share premium  4 000
General reserve (2 000 + 1 500)  3 500
Retained profits  21 147  28 647
 53 647

200
 Answers Chapter 24

16  Donald Jack Company Limited

 Balance Sheet (extract) as at 31 March 2024

$ $
 urrent Liabilities
C
Debenture interest owing (9% of $45 000)  4 050
Proposed dividends:
Preference (12% of 6 000) 720
 rdinary (8% of 38 000)
O  3 040  7 810
Long-term Liabilities
9% Debentures  45 000
 inanced by:
F
Share Capital
Authorised:
25 000 $2 0rdinary shares  100 000
6 000 12% Preference shares @ $1.50 each  9 000
 109 000
Issued:
19 000 $2 Ordinary shares  38 000
4 000 12% Preference shares @ $1.50 each  6 000  44 000
Reserves:
Capital reserve (10 500 + 1 700)  12 200
Retained profits  37 040  49 240
 93 240

Workings:
Retained profits
= (Unappropriated net profit + Retained profits b/f) – Appropriations
= ($15 300 + $27 200) – (Proposed dividends + Transfer to Capital reserve)
= $42 500 – ($720 + $3 040 + $1 700)
= $37 040

201
11 Accounting for co-operative societies

25 Co-operatives
6 a) Service; consumer; agriculture; production/industrial; financial.
b) D  emocratic control; continuous education; open membership; patronage refund; co-operation among
co-operatives.
c) Both of them must prepare an appropriation account to outline the distribution of profits.
Owners of both entities can enjoy limited liability.
d)  Journal
Date Details Folio Debit Credit
2013 $ $
Mar. 1 Bank 30 000
Share capital 30 000

7 a)  Journal

Date Details Folio Debit Credit

2014 $ $
Jan. 1 Bank 9 300
Registration fees 300
Share capital 9 000

b) Benefits of being in a cooperative:

• easier access to financial assistance
• opportunity to work on cooperative committees to broaden work experience.
c) i) Honoraria: a small amount paid to committee members for the services they perform.
ii) Patronage refund: this is a reward given to members for utilising the services of the co-operative to
encourage them to continue.
8  Elki Co-operative
 Appropriation Account for year ended 31 December 2013

$ $
Surplus for the year (Net Profit) 228 000
Add: Undistributed surplus 30 200 258 200

Less: Appropriations
Transfer to Education fund 3 400
Transfer to Special fund 1 500
Proposed dividends: 110 000
Donation to Blind Welfare 2 500 117 400
Undistributed surplus 140 800

202
 Answers Chapter 25

9  Teachers Credit Co-operative

 Appropriation Account for year ended 30 June 2013

$ $
Surplus for the year (net profit) 230 000
Add: Undistributed surplus 102 400 332 400

Less: Appropriations
Transfer to Education Fund 46 000
Honoraria 40 000
Proposed dividends 30 000 116 000
Undistributed surplus 216 400

10 a)  Castries Fishermen’s Cooperation

 Balance Sheet as at 31 December 2013

$ $ $
Non-current Assets:
Premises 126 000
Furniture 35 000
Office Equipment 17 500 178 500

Current Assets:
Prepaid insurance 3 240
Bank 4 680 7 920 186 420

Financed by:
Share capital 100 000
Reserves:
Statutory Reserve 25 800
Education Fund reserve 15 430 41 230

Current Liabilities
Wages owing 1 060
Trade payables 2 789
Proposed dividends 17 441 21 290 162 520
23 900
Undistributed Profits 186 420

203
Answers Section 11

b) Purpose of the Education reserve: monies set aside for the express purpose of educating members and
the general public about the co-operatives’ principles, regulations and services.
11 a)  Georgetown Credit Cooperative
Income and Expenditure and Appropriation Account for year ended 31 July 2013

$ $
Sales 69 120.80
Less: Cost of goods sold
Opening Stock 11 345.80
Add: Purchases 35 789.80
Goods available for sale 47 134.80
Less: Closing stock 7 803.80
Cost of goods sold 39 331.80
Gross profit 29 789.80
Discount received 4 560.80
Total revenues 34 349.80
Less: Expenditures
General expenses 6 450.80
Rent (8 500 + 500) 9 000.80
Depreciation:
Equipment 1 550.80
Furniture 1 250.80 18 250.80
Surplus (net profit) 16 099.80
Add: Undistributed profits 23 900.80
39 999.80
Less: Appropriations
Education fund 3 219.80
Proposed dividends: 2 000.80 5 219.80
Undistributed surplus 34 779.20

204
 Answers Chapter 25

b)  Georgetown Credit Cooperative

 Balance Sheet as at 31 July 2013

$ $ $
Non-current Assets:
Furniture 25 000.80
Less: Provision for depreciation 1 250.80 23 750.80
Office equipment 15 500.80
Less: Provision for depreciation 1 550.80 13 450.80 37 200.80

Current Assets:
Inventory 7 803.80
Debtors 17 500.80
Bank 3 452.80 28 755.80

Less: Current Liabilities:

Rent owing 500.80
Proposed dividends 2 000.80
Creditor 4 056.80 6 556.80 22 199.80
Net Assets 59 899.80

Financed by:
Share capital 10 000.80
Reserves:
Education Fund reserve (900 + 3 219.80) 4 119.80
Special Fund reserve 1 000.80 5 119.80

Non-current Liability:
Loan from National Bank 10 000.80 25 119.80
34 779.20
Accumulated fund 59 899.00

205
12 Accounting for non-trading organisations

26 Accounting for non-trading organisations

6 Transaction Capital Revenue

Expenditure Expenditure
a) Payment made for rent of facilities ✓
b) Payment of coach fees ✓
c) Purchase of a club computer ✓
d) Payment for decorative flowers ✓
e) Purchase of sports equipment ✓
f) Printing of raffle tickets ✓
g) Purchase of stationery ✓
h) Payment of utilities ✓
i) Payment of secretary salary ✓
j) Payment for office furniture ✓

7  Subscriptions Account

$ $
Jan. 1 Balance b/d 400 Cash 1 000
Dec. 31 Income and expenditure 500
31 Balance c/d 100
1 000 1 000
Jan. 1 Balance b/d 100

8  Jones Boys Club

Receipts and Payments Account

$ $
Balance b/d 1 500 Rent 300
Subscriptions 4 000 Purchase of uniforms 250
Sale of refreshments 400 Purchase of computer tables 1 500
Donation 2 000 Wages for coach 200
Award monies 500 Utilities 300
Balance c/d 5 850
8 400 8 400

206
 Answers Chapter26

9 a)  St. Joseph’s Girl Volley Ball Association

Balance Sheet as at 15 January 2013

$ $
Assets:
Sports equipment 5 000
Subscriptions owing 1 200
Bank 2 000 8 200

Liabilities:
Accounts payable 1 500
Accumulated fund 6 700 8 200

b)  St. Joseph’s Girl Volley Ball Association

Receipts and Payment Account

$ $
Balance b/d 2 000 Printing of raffle tickets 300
Sale of raffle ticket 2 000 Purchase of sports equipment 1 400
Donation 1 000 Coach’s wages 4 000
Subscription 22 800 Rent 550
Utilities 150
Balance c/d 21 400
27 800 27 800


c)  Subscriptions Account

$ $
Jan. 1 Balance b/d 1 200 Cash 22 800
Dec. 31 Income and expenditure 21 440 Balance c/d 200
31 Balance c/d 360
23 000 23 000
Jan. 1 Balance b/d 200 Jan. 1 Balance b/d 360

207
Answers Section 12

d)  St. Joseph’s Girl Volley Ball Association

 Income and Expenditure Account for year ended 31 December 2013

$ $
Income:
Sale of raffle tickets 2 000
Donation 1 000
Subscriptions 21 440 24 440

Less: Expenditures
Printing of raffle tickets 300
Coach wages 4 000
Rent (550 + 150) 700
Utilities 150
Depreciation 140 5 290
Surplus of income over expenditure 19 150


10 a)  Subscriptions Account
$ $
Balance b/d 1 000 Cash 19 000
Income and expenditure 17 700
Balance c/d 300
19 000 19 000
Balance b/d 300

b)  Happy Vale Youth Club

 Trading Account for year ended 31 August 2012

$ $
Catering Sales 5 000
Catering Supplies 2 000
Less: closing stock of catering supplies 500
Cost of goods sold 1 500
Gross profit 3 500

208
 Answers Chapter26

c)  Happy Vale Youth Club

 Income and Expenditure Account for year ended 31 August 2012

$ $
Income
Subscriptions 17 700
Donations 700
Gross profit from catering 3 500 21 900

Less: Expenditures
Wages of servers 600
Cleaning lady’s wages 400
Rent 300
Stationery 150
Printing advertising poster 200
Depreciation: Exercise bike 1 400
Counselor’s fee 800 3 850
Surplus of income over expenditure 18 050

209
13 Manufacturing accounts

27 Manufacturing accounts

6 a) Directs costs Indirect costs

Raw material Depreciation of equipment
Carriage inwards on raw materials Factory rent
Factory wages Factory supervisor salary
Royalties Electricity

b) Administrative expenses Selling and distribution Finance charges

expenses
Stationary supplies Advertising expenses Interest on loan
Legal fees Carriage outwards Bank charges
Depreciation on office equipment Salesmen commission
Secretary’s wages Depreciation of delivery vans
Office manager’s salary Marketing manager’s salary

7 a) $
Opening inventory 70
Add: Purchases 300
370
Less: Closing inventory 50
Cost of raw materials used 320

b) $ $
Opening inventory 600
Purchases  5 500
Add: Carriage inwards 100
5 600
Less: Returns outwards 500  5 100
5 700
Less: Closing inventory 700
Cost of raw materials used  5 000

210
 Answers Chapter 27

8 $ $
Opening inventory 240
Purchases  3 400
Add: Carriage inwards 240
3 640
Less: Purchases returns 300  3 340
3 580
 ess: Closing inventory
L 600
Cost of raw materials used  2 980
Add: Direct labour  1 350
4 330
 dd: Direct expenses
A 500
Prime cost  4 830

9 a)  Strong Windows
Manufacturing Account for year ended February 2018

$ $
Opening inventory  2 530
Purchases  41 700
Add: Transportation 500
 42 200
Less: Returns outwards 100  42 100
Raw materials available  44 630
Less: Closing inventory  2 500
Cost of raw materials used  42 130
Add: Factory wages  17 800
Prime cost  59 930

b) Prime cost per unit: $59 930 ÷ 100 = $599.30 per unit.

211
Answers Section 13

10 a)  C. Chambers
Manufacturing Account for year ended 30 June 2020

$ $
Raw Materials:
Opening stock  1 740
Purchases  15 630
Add: Transportation 625  16 255
Cost of raw materials available  17 995
Less: Closing inventory 840
Cost of raw materials used  17 155
Add: Wages (stitchers; cutters)  1 875
Prime cost  19 030
Add: Factory overheads
Factory manager’s salary  1 200
Factory rent and power 760
Other indirect expenses 950
Maintenance of factory machines 430  3 840
Cost of goods manufactured  22 870
Add: Beginning work in progress 310
 23 180
Less: Ending work in progress 250
Cost of production  22 930

b) Production cost per unit = Cost of production ÷ Number of units produced
= $22 930 ÷ 100 units = $229.30

212
 Answers Chapter 27

11 a)  Trading and Profit and Loss Account for year ended 31 August 2024

$ $ $
Sales 85 760
Less: Cost of goods sold 3 960
Add: Cost of goods completed 45 200 49 160
Add: Net purchases
Purchases 4 000
Add: Carriage inwards 872
4 872
Less: Returns outwards 620 4 252
Cost of goods available 53 412
Less: Closing stock 2 435 50 977
Gross profit 34 783
Less: Operating expenses
Interest on loan 1 500
Secretary’s wages 3 600
Depreciation:
Computer 1 420
Furniture 800
Insurance on delivery van 3 150
Carriage outwards 1 300
Commissions paid 2 200
Bank service fees: 730 14 700
Net profit 20 083

b) i) Average cost of production:

$45 200 ÷ 200 = $226
ii) Gross profit per unit sold:
$34 783(GP) ÷ 180 = $193.24
iii) Average cost of each unit sold:
$50 977 ÷ 180= $283.21

213
Answers Section 13

12 a)  V. Solange
Manufacturing Account for year ended 31 August 2021
$ $
Opening stock:  2 500
Purchases  62 000
Add: Carriage inwards  2 900  64 900
Cost of raw materials available  67 400
Less: Closing inventory  2 000
Cost of raw materials used  65 400
Add: Factory wages  27 000
Direct expenses  18 540
Prime cost  110 940
Add: Factory overheads
Rent  9 000
Electricity  4 320
Depreciation:
Productive machinery  2 660  15 980
Cost of goods manufactured  126 920
Add: Begin work in progress  3 000
 129 920
Less: Ending work in progress  1 500
Cost of production  128 420

214
 Answers Chapter 27

b)  V. Solange
Trading and Profit and Loss Account for year ended 31 August 2024

$ $ $
Sales  208 000
Less: Cost of goods sold
Opening stock  4 800
Add: Cost of production  128 420
Purchases  1 760
Cost of goods available for sale  134 980
Less: Closing stock  3 600  131 380
Gross profit  76 620
Less: Operating expenses:
Administrative expenses
Rent  6 000
Electricity  1 080
Office manager’s salary  7 300
Insurance on office computer  2 000
Depreciation:
Office computer  1 890  18 270
Selling and distribution expenses
Carriage outwards  1 620
Commissions on sales  3 900  5 520
Finance charges
Interest on loan  1 400  25 190
Net profit  51 430

215
Answers Section 13

13  Daughters Ltd
Manufacturing and Trading and Profit and Loss account for year ended 30 September 2025
$ $ $
Raw materials
Opening stock 1 050
Purchases 23 500
Add: Transportation in 2 100 25 600
Cost of raw materials available 26 650
Less: Closing inventory 820
Cost of raw materials used 25 830
Add: Manufacturing wages 15 700
Direct expenses 7 950
Prime cost 49 480
Add: Factory overheads
Indirect wages 5 400
Indirect expenses 5 700
Rent 4 530
Power 5 055
Factory manager’s salary 5 200
Depreciation:
Plant and machinery 5 400 31 285
Cost of goods manufactured 80 765
Add: Begin work in progress 635
81 400
Less: Ending work in progress 740
Cost of Production 80 660

Sales 125 600

Less: Cost of goods sold:
Opening stock 2 030
Add: Cost of production 80 660
Cost of goods available 82 690
Less: Closing stock 1 250 81 440
Gross profit 44 160
Less: Operating expenses
Administrative expenses
Rent 1 510
Power 1 685
Office manager’s salary 4 000
Office cleaner’s wages 1 640
Depreciation:
Office Equipment 2 400 11 235
Selling and distribution expenses
Carriage outwards 860
Marketing manager’s salary 3 500 4 360
Finance charges
Interest on loan 900 16 495
Net profit 27 665

216
 Answers Chapter 27

14 a) i) $
 ost of wood used:
C
Opening inventory  8 200
Add: Purchases  48 000
Wood available  56 200
Less: Closing inventory  6 000
 ost of wood used
C  50 200

ii) $ $
 ost of fabric used:
C
Opening inventory  1 500
Add: Net Purchases
Purchases  6 700
Less: Returns outwards 620  6 080
Fabric available  7 580
 ess: Closing inventory
L  3 540
Cost of fabric used  4 040

iii) $
Cost of wood used  $50 200
 ost of fabric used
C  4 040
Cost of raw materials used  $54 240

b)  D. Jingle
Manufacturing Account for period ending 31 December 2016

$ $
Cost of raw materials consumed  54 240
Add: Production wages  58 000
Manufacturing costs (1 700 and 1 620)  3 320
Prime costs  115 560
Add: Indirect expenses
Factory cleaner’s wages  5 400
Factory manager’s salary  18 000
Depreciation factory equipment  3 400
Power  24 500
Rent  21 120  72 420
Cost of goods manufactured  187 980

217
Answers Section 13

c)  D. Jingle
Trading and Profit and Loss Account for period ending 31 December 2016

$ $
Sales  358 200
Less: Returns inwards  7 300
Net Sales  350 900
Less: cost of goods sold
Cost of goods manufactured  187 980
Gross profit  162 920
Less: Operating expenses
Power  10 500
Rent  5 280
Depreciation:
Office equipment  3 400  17 280
Net profit  145 640

 ) i) Cost of each unit produced:

d
$187 980 ÷ 200 = $939.90
ii) Cost of each unit sold:
 $939.90

15 a) i) Purchases of raw materials:

Flour 1 200 × $5.50 = $6 600
Eggs 1 000 × $1.50 =  $1 500
Sugar 600 × $8.00 =  $4 800
Other  $8 450 $21 350
 irect Labour:
D
Bakers 600 × $50.00 = $30 000
Decorators 500 × $150 = $75 000 $105 000
Secretary’s wages: $500 × 6 = $3 000

218
 Answers Chapter 27

ii) $ $
 ost of raw materials consumed:
C
Inventory 1 January  10 480
Add: Net Purchases
Purchases  21 350
Add: Carriage  1 620
 22 970
 ess: Returns outwards
L 800  22 170
Raw material available  32 650
Less: Inventory June  2 745
Cost of Raw material consumed  29 905

b)  The Cake Specialist

Manufacturing Account for period ended 30 June 2017
$ $
Cost of raw materials consumed:  29 905
Add: Direct Labour  105 000
Prime cost  134 905
Add: Indirect expenses
Kitchen manager’s salary  24 000
Electricity  12 000
Rent  17 800
Depreciation: Kitchen equipment  4 700
Maintenance of staff wages  8 200  66 700
Cost of manufacturing goods 201 605

c)  The Cake Specialist

Income Statement for period ended 30 June 2017
$ $
Sales  250 000
Less: Cost of goods sold
Cost of manufactured goods  201 605
Gross profit  48 395
Less: Operating expenses
Depreciation: Computer  1 200
Secretary’s wages  3 000  4 200
Net profit  44 195

219
14 Payroll accounting

28 Payroll
6 G ross wages: $475
7 a) Total deductions: $540
 ) Net pay: $1 460
b
8 Net pay: $302.81

9  Pay Sheet

Name Basic Overtime Gross Income Pension Total Net pay

wage wages tax deductions
J. Archer 400 – 400.50 40.50 100 140.50 260.50
S. Bale 480 75.50 555.50 55.50 100 155.50 399.50
H. Brown 400 100.50 500.50 50.50 100 150.50 350.50
S. Riley 600 187.50 787.50 78.75 100 178.75 608.75

10 Name: Roger Smith Employee No:1002

Week ended: 17 February 2014

No. of hours Regular pay: Overtime pay: Gross earnings:

worked: 50 $300 $150 $450
Deductions

Income tax: Social security: Savings: Total deductions:

$45 $22.50 $50 $117.50
Net pay: $332.50

11 a) Name Basic Overtime Gross pay Income National Total Net pay
pay pay tax insurance deductions
K. Pusk 320 120 440 87 22 109 331
K. Pull 320 240 560 123 28 151 409
740

220
 Answers Chapter 28

b) Wages
$
Bank 740


 Bank
$
Wages 740



221