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This is a Books of First Entry, Ledger and Trial Balance Question - Junior Cycle Business Studies - Question 1 - 2017
Question 1
This is a Books of First Entry, Ledger and Trial Balance Question. BAT Ltd, a kitchen appliances business, had both credit and cash transactions during the month of... show full transcript
Worked Solution & Example Answer:This is a Books of First Entry, Ledger and Trial Balance Question - Junior Cycle Business Studies - Question 1 - 2017
Step 1
Record the following credit transactions in the Sales and Purchases Books of BAT Ltd for the month of May 2017.
Answer
To record the credit transactions:
-
Sales Book Entries:
- Date: 01/05/2017
- Details: FOX Ltd, Invoice No. 2
- NET: €80,000
- VAT (23%): €18,400 (calculated as €80,000 * 0.23)
- TOTAL: €98,400
- Date: 09/05/2017
- Details: HARE Ltd, Invoice No. 3
- NET: €44,000
- VAT (23%): €10,120 (calculated as €44,000 * 0.23)
- TOTAL: €54,120
- Date: 01/05/2017
-
Purchases Book Entry:
- Date: 24/05/2017
- Details: HEN Ltd, Invoice No. 7
- NET: €36,000
- VAT (23%): €8,280 (calculated as €36,000 * 0.23)
- TOTAL: €44,280
- Date: 24/05/2017
Entries must be posted to the respective ledgers.
Step 2
Record the following transactions for the month of May 2017 in the Analysed Cash Book of BAT Ltd.
Answer
To record the transactions in the Analysed Cash Book:
-
Debit (Receipts) Side:
- Date: 07/05/2017
- Details: Shareholder, Receipt No. 3
- Bank: €120,000
- Date: 28/05/2017
- Details: HARE Ltd, Receipt No. 4
- Bank: €35,000
- Date: 31/05/2017
- Details: Sales
- Bank: €642,000
- VAT: €9,660
- Date: 07/05/2017
-
Credit (Payments) Side:
- Date: 12/05/2017
- Details: Purchases, Cheque No. 30
- Purchases: €26,000
- VAT: €5,980 (calculated as €26,000 * 0.23)
- Date: 17/05/2017
- Details: Insurance, Cheque No. 31
- Insurance: €13,400
- Date: 12/05/2017
The total should be balanced to ensure accuracy.
Step 3
Balance the accounts on 31 May 2017 and extract a trial balance at this date.
Answer
To balance the accounts and extract a trial balance:
-
Balancing Accounts:
- Each ledger account must be balanced, ensuring debits equal credits.
-
Trial Balance as at 31/05/2017:
- Debit Side:
- Bank: €161,280
- Shareholder: €120,000
- Sales: €642,000
- Purchases: €62,000
- VAT: €9,660
- Insurance: €13,400
- Credit Side:
- Total on Credit Side must equal Total on Debit Side, showing that the accounts are balanced.
- Debit Side:
-
Final Trial Balance Summary:
- Total Debits = €354,200
- Total Credits = €354,200