Transaction
$ $
1. Transfers $1,200 of his savings into a business bank account
Dr Cash at bank 1.200
Cr Capital 1.200
2. Borrows $4,800 from LLoydwest Bank, repayable in three years’ time
Dr Cash at bank 4.800
Cr Loans 4.800
3. Buys goods on credit $320 from [Link]
Dr Purchases 320
Cr Acc Payable 320
4. Buys goods for resale, paying cash $88
Dr Purchases 88
Cr Cash in hand 88
5. Goods returned by us to [Link], $28,8
Dr Acc Payable 28,8
Cr Return outwards 28,8
6. Sale goods $630, customer paying by cheque $600
Dr Cash at bank 600
Dr Acc Receivable 30
Cr Sales 630
7. Sale goods on time, $172,8 to [Link]
Dr Acc Receivable 172,8
Cr Sales 172,8
8. Goods returned to us by [Link] $32
Dr Return inwards 32
Cr Acc Receivable 32
9. Pays staff wages by cash at bank for June, $816
Dr Salaries expenses 816
Cr Cash at bank 816
10. Purchases goods from [Link] $800, less 10% trade discount, pays by cash
Dr Purchases 720
Cr Cash in hand 720
11. Insurance is still unexpired of $4,000
Dr Prepaid 2.240
Cr Insurance expense 2.240
Inventory on 31 October 20X9 is 12,000
Trial Balance
Opening Trial Balance Closing Trial Balance
No Account Dr Cr Dr Cr
1
Sales 128.480 129.282,8 PL
2
Purchases 80.320 81.448 PL
3 Expenses
Salaries expense 7.200 8.016 PL
Rent and business rates 4.000 4.000 PL
Insurance expense 6.240 2.240 PL
Motor expenses 34.976 34.976 PL
4
Fixtures 10.224 10.224
5
Motor van 48.000 48.000
6 Cash in hand 8.160 7.352
7
Cash at bank 31.200 36.984
8
Loans 8.800 13.600
9 Drawings 3.840 3.840
10
Capital 99.200 100.400
11 Profit 4.000 4.000
12
Account Receivable 37.520 37.690,8
13
Account Payable 31.200 31.491,2
14 Prepaid 4.000
15 Return inwards - 32 PL
16 Return outwards - 28,8 PL
Total 271.680 271.680 278.803 278.803
Statement of Profit and Loss/Income statement
Revenue:
Gross Sales 129.282,8
Sales Returns and Allowances
(inwards) (32)
Net Sales (1) 129.250,8
Cost of Goods Sold:
Beginning Inventory -
Purchases 81.448
Return outwards (28,8)
Ending Inventory (12.000)
Cost of Goods Sold (2) 69.419,2
Gross Profit (Loss) (3)=(1) - (2) 59.831,6
Expenses:
Advertising -
Depreciation -
Salaries 8.016
Rent and business rates 4.000
Insurances Expenses 2.240
Motor Expenses 34.976
Total Expenses 49.232
Net Income (Profit/Loss) (5)=(3) - (4) 10.599,6
Statement of Financial Position/Balance sheet
Assets Liabilities & Equity
Liabilities
Current Assets Current Liabilites
Cash at bank 36.984 Account Payable 31.491,2
Account Receivable 37.690,8
Cash in hand 7.352
Inventory 12.000
Prepaid 4.000
Total Current Assets 98.027 Total Current Liabilities 31.491
Non-Current Assets Non-Current Liabilities
Fixtures 10.224 Long-term Loan 13.600
Motor van 48.000
Total Non- Current Total Non - current
Assets 58.224 Liabilities 13.600
Total Liabilities 45.091
Equity
Capital 100.400
Drawings (3.840)
Profit 14.599,6
Total Equity 111.160
Total Assets 156.250,8 Total Liabilities & Equity 156.250,8
1. Smith Paid Rent Premises at 31 March 2023 £3,600 for the period till 30 September 2024.
The financial year of Smith ended on 30 November 2023.
Required:
(1) Canculate the Smith's Rent Premises expense for the year 2023.
(2) Show the T account for Rent Premises expense (2023).
3.600
Premises expense for the year 2023 =
18
×8= 1.600
Premises expense 1/3/2023 Dr Premises expense 3.600
Cas
h 3.600 31 Dec 2023 Prepaid 2.000 Cr Bank 3.600
31 Dec 2023 Profit and Loss 1.600 31/12/2023 Dr Prepaid 2.000
Cr Premises
expense 2.000
Dr P/L 1.600
Cr Premises
expense 1.600
2. Gorger has accounting period ending on December 31, 2023. Here is some information
about the Insurance expense:
1st July 2023, transfer £1,500 for Insurance expense for the period of lease from 1st July
2023 to 31 December 2024.
Required:
(1) Canculate the company's Insurance expense for the year 2023.
(2) Show the T account for Insurance expense (2023).
1.500
Insurance expense for the year 2023 =
18
×6= 500
Insurance expense 1/7/2023 Dr Insurance expense 1.500
Cash 1.500 31 Dec 2023 Prepaid 1.000 Cr Bank 1.500
31 Dec 2023 Profit and Loss 500 31/12/2023 Dr Prepaid 1.000
Cr Insurance
expense 1.000
Dr P/L 500
Cr Insurance 500
expense
