Photo AI
This is a books of first entry, ledger and trial balance question - Junior Cycle Business Studies - Question 1 - 2018
Question 1
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.
Answer
To record the credit transactions, we need to enter the purchases and sales into the relevant journals. For the purchases:
- 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.
- 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.
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.
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:
| Dr | Cr |
|---|---|
| Bank €204,050 | Sales €114,000 |
| Purchases €90,000 | Share Capital €145,000 |
| VAT €5,520 | Wages €24,000 |
| SPEC Ltd €63,960 | BIRO Ltd €55,350 |
| RULER Ltd €22,140 |
Total: €342,010 on both sides.