Photo AI

This is a books of first entry, ledger and trial balance question - Junior Cycle Business Studies - Question 1 - 2018

Question icon

Question 1

This-is-a-books-of-first-entry,-ledger-and-trial-balance-question-Junior Cycle Business Studies-Question 1-2018.png

This is a books of first entry, ledger and trial balance question. Answer all parts of this question: FACT Ltd, a stationery business, had both credit and cash tra... 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 - 2018

Step 1

Record the following credit transactions in the purchases and sales books of FACT Ltd for the month of May 2018.

96%

114 rated

Answer

To record the credit transactions, we need to enter the purchases and sales into the relevant journals. For the purchases:

  1. Purchases Book:
    • Date: 01/05/2018

    • Details: BIRO Ltd

    • Invoice: 9

    • Net Amount: €45,000

    • VAT (23%): €10,350

    • Total: €55,350

    • Date: 22/05/2018

    • Details: RULER Ltd

    • Invoice: 27

    • Net Amount: €18,000

    • VAT (23%): €4,140

    • Total: €22,140

Total for Purchases Book: €63,500 with VAT.

  1. Sales Book:
    • Date: 11/05/2018
    • Details: SPEC Ltd
    • Invoice: 39
    • Net Amount: €52,000
    • VAT (23%): €11,960
    • Total: €63,960

Step 2

Record the following transactions for the month of May 2018 in the analysed cash book of FACT Ltd.

99%

104 rated

Answer

To record the bank transactions, we will enter them in the analysed cash book:

Debit Side (Receipts):

  • 05/05/2018: €145,000 from Shareholder. (Receipt No. 15)
  • 11/05/2018: €76,260 from Sales lodged.
  • 18/05/2018: €40,000 from SPEC Ltd (Receipt No. 16).

Credit Side (Payments):

  • 24/05/2018: €24,000 paid for wages (Cheque No. 41).
  • 31/05/2018: €27,000 for purchases for resale (Cheque No. 42 + VAT 23%).

Step 3

Balance the accounts on 31 May 2018 and extract a trial balance as at that date.

96%

101 rated

Answer

To balance the accounts:

  • Bank: Total Receipts - Total Payments = €204,050 (Balance)
  • Sales: €114,000
  • Purchases: €90,000
  • VAT: €5,520
  • Share Capital: €145,000
  • Wages: €24,000
  • SPEC Ltd Debtors: €63,960
  • BIRO Ltd Creditors: €55,350
  • RULER Ltd Creditors: €22,140

This gives a trial balance of:

DrCr
Bank €204,050Sales €114,000
Purchases €90,000Share Capital €145,000
VAT €5,520Wages €24,000
SPEC Ltd €63,960BIRO Ltd €55,350
RULER Ltd €22,140

Total: €342,010 on both sides.

Join the Junior Cycle students using SimpleStudy...

97% of Students

Report Improved Results

98% of Students

Recommend to friends

100,000+

Students Supported

1 Million+

Questions answered

;