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.
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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.
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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.
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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
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The debits and credits should equal, confirming the accounts are balanced.
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