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.
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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.
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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.
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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.
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