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This is a Book of First Entry, Ledger and Trial Balance Question - Junior Cycle Business Studies - Question 1 - 2015
Question 1
This is a Book of First Entry, Ledger and Trial Balance Question. Answer all parts of this question: BRIGHT Ltd, an electrical business, had both credit and cash t... show full transcript
Worked Solution & Example Answer:This is a Book of First Entry, Ledger and Trial Balance Question - Junior Cycle Business Studies - Question 1 - 2015
Step 1
Record the following credit transactions in the Sales and Purchases Books of BRIGHT Ltd for the month of May 2015.
Answer
To record the transactions in the Sales and Purchases books for Bright Ltd, we must calculate the total amounts including VAT for each transaction:
-
Sales Book Entry for WATT Ltd:
- Date: 1/5/2015
- Invoice No: 20
- Amount: €44,000
- VAT (23%): €10,120
- Total: €54,120
-
Purchases Book Entry from DIM Ltd:
- Date: 10/5/2015
- Invoice No: 91
- Amount: €26,000
- VAT (23%): €5,980
- Total: €31,980
-
Sales Book Entry for WATT Ltd:
- Date: 19/5/2015
- Invoice No: 21
- Amount: €37,000
- VAT (23%): €8,510
- Total: €45,510
After recording these entries, the summary for the Sales and Purchases books will be:
- Total Sales: €99,630
- Total Purchases: €31,980.
Step 2
Record the following Transactions for the month of May 2015 in the Analysed Cash Book of BRIGHT Ltd.
Answer
For the Analysed Cash Book of BRIGHT Ltd, we will categorize the transactions into Debit and Credit sides:
Debit Side:
-
Shareholder Investment:
- Date: 7/5/2015
- Receipt No: 6
- Amount: €105,000
-
Sales Income:
- Date: 31/5/2015
- Amount: €25,830
Credit Side:
-
Purchases for Resale:
- Date: 12/5/2015
- Cheque No: 30
- Amount: €25,000 + VAT €5,750
- Total: €30,750
-
Wages Paid:
- Date: 17/5/2015
- Cheque No: 31
- Amount: €27,000
-
Payment to WATT Ltd:
- Date: 28/5/2015
- Receipt No: 7
- Amount: €75,000
The total for the Analysed Cash Book entries will be derived cumulatively during the balancing process.
Step 3
Balance the accounts on 31 May 2015 and extract a Trial Balance as at that date.
Answer
To balance the accounts and extract the Trial Balance as at 31 May 2015, we need to summarize all debits and credits:
-
Total Debits:
- Bank: €148,080
- Purchases: €51,000
- Sales: €102,000
- WATT Ltd: €24,630
- VAT: €23,460
- Share Capital: €105,000
-
Total Credits:
- Bank: €148,080
- Purchases: €51,000
- Sales: €102,000
- WATT Ltd: €24,630
- VAT: €23,460
- DIM Ltd: €31,980
Trial Balance as at 31/05/2015:
| DR € | CR € |
|---|---|
| 148,080 | 148,080 |
| 51,000 | 51,000 |
| 102,000 | 102,000 |
| 24,630 | 24,630 |
| 105,000 | 105,000 |
| 23,460 | 23,460 |
| 31,980 | 31,980 |
| ------------ | ------------ |
| The debits and credits should equal, confirming the accounts are balanced. |