Accounting Q2 a&b - Lecture notes 3 -4 PDF

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ABFA1153 FINANCIAL ACCOUNTING I

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Tutorial 2 – Double Entry Bookkeeping Section 1: Multiple choice questions 1. Given are sequences to the accounting process in no particular order: i. ii. iii. iv. v. vi.

4. “Collect and use accounting information to reveal economic trend” “Need accounting information of businesses to assess the tax payable”

Year-end adjustments and closing of accounts Trial balance Ledger accounting Collecting source document Journalising Preparation of financial statements

The accounting process is correctly illustrated by: A. iv → i → iii → vi → v → ii B. iv → v → iii → ii → i → vi C. iv → iii → v → ii → vi → i D. iii → v → ii → iv → vi → i

The sentences above best describe which user of accounting information? A. The public B. Business owners C. Managers D. Governments 5. “Buys in bulk from manufacturers or importers and resells to retailers in smaller quantities” The sentence above describes which type of business activities? A. Retailing B. Wholesaling C. Manufacturing D. Service industry

2. Which of the following is NOT a business transaction? A. B. C. D.

Purchases of goods for re-sale Payment of electricity bill to local authority Purchasing a new van to deliver goods to customers Owner acquiring personal life insurance

3. The MAIN AIM of accounting is to: A. B. C. D.

Calculate the profit or loss of the business Report the financial position of the business Provide financial information to users of such information Keep proper records of transactions in the business

6. Assets Increase RM4,000

Effect on Liabilities Increase RM4,000

Owner’s Equity No effect

Which ONE of the following transactions corresponds to the above effect? A. Purchase office equipment costing RM4,000 by cheque B. Make payment of RM4,000 to trade payables C. Receive payment from trade receivables RM4,000 D. Borrow RM4,000 from the bank on short term basis for office use

ABFA1153 FINANCIAL ACCOUNTING I

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2. Identify the debit and credit items from the following list:

Section 2: Fill in the blanks 1. Identify the modes of business ownership and the type of business activities of each of these organisations:

Item Rental paid

Business name

Mode of business ownership

Type of business activity

Motor vehicles

Sam Air-Con Service

Premises

Klinik Dr. Zain dan Rakan

Office equipment

Min & Lin Cakehouse

Salaries paid

Prudential Assurance Berhad

Sales

Food Distributor Sdn Bhd

Commission received

Eng Soon Mini Market

Capital

Top Glove Berhad

Payables

PriceWaterhouseCoopers

Receivables Bank Cash Inventories Purchases Carriage inwards Carriage outwards Profit Loss Insurance paid Commission paid Discount received Drawings

Dr/ Cr

Assets/ Liabilities/ Equity/ Revenue/ Expenses

ABFA1153 FINANCIAL ACCOUNTING I

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3. Show the double entry effect of each transaction below: Double entry effect of transaction: Assets/ Liabilities/ Equity/ Revenue/ Expenses Owner brought in his own savings of RM50,000 for business use Bought a motor vehicle by cheque RM28,000 Acquired inventories of RM34,000 on credit Obtained a bank loan from CIMB Bank for RM88,000 Purchased an equipment costing RM15,000, paying a deposit of RM750 by cash, with the remainder to be settled within 2 months

Dr Cr Dr Cr Dr Cr Dr Cr Dr Cr Cr

Owner withdrew cash totalling RM2,300 for his own expenses Sales to a customer who paid by cheque RM5,000 Sales to another customer RM6,000 on credit 30 days Paid staff salaries by cheque RM2,800

Dr Cr Dr Cr Dr Cr Dr Cr

Collected a cheque RM6,000 from customer above, to whom inventories were sold on credit term

Dr

Issued a cheque of RM6,000 to the supplier of equipment bought above

Dr

Cr Cr

Increase / Decrease

Amount (RM)

Title of ledger account

ABFA1153 FINANCIAL ACCOUNTING I

Section 3: Question 1 The following transactions are extracted from the book of Idris Trading for the month of April: 1 Started the business with cash RM20,000 as capital. 4 Acquired tables and chairs RM2,400 for office use on credit term. 8 Purchased goods RM4,000 by cash. 11 Cash sales RM1,600. 12 Purchased goods from Baba Enterprise RM7,000 on credit term. 16 Credit sales of goods RM2,700. 18 Bought a van RM20,000 for business use. Cash RM10,000 paid and the remaining to be settled within two months. 23 A customer paid cash RM1,300 to settle his debts. 28 Cash RM2,200 paid to supplier. 29 Idris withdrew cash RM400 for personal usage. Required: Prepare the journal entries to show the double entries of all the transactions above.

4

ABFA1153 FINANCIAL ACCOUNTING I

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Section 4: Extra exercise questions (for students’ own practice) Question 2

Question 3

Fatimah extracted the following transaction for the month of May:

Prepare the journal entries to show the double entries of the following transactions of Gaya Trading in the month of March:

1 Started the business with cash RM1,000 and bank account of RM19,000 as capital. 3 Bought computer RM3,600 from Syarikat Cerah Sdn. Bhd. on credit term. 7 Purchased goods RM6,000 from Daya & Co on credit term. 9 Received cheque RM2,600 from sales on cash term. 12 Issued a cheque RM3,000 for purchases of goods on cash term. 16 Issued a cheque RM5,700 to Daya & Co., as settlement of purchases above, after deducting a discount received of RM300. 17 Sales of goods RM4,000 to Era Enterprise on credit term. 21 Fatimah withdrew cash RM200 for family use. 24 Issued a cheque RM2,000 to Syarikat Cerah Sdn. Bhd. as partial settlement of amount owing. 27 Received cheque RM3,800 from Era Enterprise, as settlement of sales above, after deducting discount allowed of RM200. 28 Miscellaneous expense RM280 paid by cash. Required: Prepare the journal entries to show the double entries of all the transactions above.

1 2 3 4 5 7 8 10 14 17 20 21 23 25 31

Started business with RM59,000 in the bank and RM1,000 cash. Bought stationery by cheque RM750. Bought goods on credit from Smart Warehouse RM10,100. Sold goods for cash RM3,400. Paid insurance by cash RM290. Bought a computer on credit from Tech Trader RM4,000. Paid miscellaneous expenses by cash RM50. Sold goods on credit RM6,300 to Bina Construction. Paid wages by cash RM350. Paid rent by cheque RM2,250. Received cheque RM4,000 from Bina Construction. Paid Tech Trader by cheque RM4,000. Bought goods on credit from Savemart RM2,500. Sold goods on credit to Flora Trader RM6,450. Paid Savemart by cheque RM1,250.

ABFA1153 FINANCIAL ACCOUNTING I

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2.

Tutorial 2: Suggested solutions

Item

Section 1: Multiple choice questions 1.

B

2.

D

3.

C

4.

D

5.

B

6.

D

Rental paid

Sam Air-Con Service Klinik Dr. Zain dan Rakan Min & Lin Cakehouse

Partnership Partnership

Motor vehicles

Dr

Assets

Premises

Dr

Assets

Office equipment

Dr

Assets

Salaries paid

Dr

Expenses

Sales

Cr

Revenue

Commission received

Cr

Revenue

Capital

Cr

Equity

Payables

Cr

Liabilities

Dr

Assets

Bank

Dr

Assets

Cash

Dr

Assets

Inventories

Dr

Assets

Purchases

Dr

Expenses

Carriage inwards

Dr

Expenses

Service industry

Carriage outwards

Dr

Expenses

Retail

Profit

Cr

Equity

1. Mode of business ownership Sole proprietorship

Assets/ Liabilities/ Equity/ Revenue/ Expenses Expenses

Receivables Section 2: Fill in the blanks

Business name

Dr/ Cr Dr

Type of business activity Service industry

Prudential Assurance Berhad

Company

Service industry

Loss

Dr

Equity

Food Distributor Sdn Bhd

Company

Wholesale

Insurance paid

Dr

Expenses

Eng Soon Mini Market

Sole proprietorship

Retail

Commission paid

Dr

Expenses

Manufacturing

Discount received

Cr

Revenue

Service industry

Drawings

Dr

Equity

Top Glove Berhad PriceWaterhouseCoopers

Company Partnership

ABFA1153 FINANCIAL ACCOUNTING I

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Show the double entry effect of each transaction below: Double entry effect of transaction: Assets/ Liabilities/ Equity/ Revenue/ Expenses Owner brought in his own savings of RM50,000 for business use Bought a motor vehicle by cheque RM28,000 Acquired inventories of RM34,000 on credit Obtained a bank loan from CIMB Bank for RM88,000 Purchased an equipment costing RM15,000, paying a deposit of RM750 by cash, with the remainder to be settled within 2 months Owner withdrew cash totalling RM2,300 for his own expenses Sales to a customer who paid by cheque RM5,000 Sales to another customer RM6,000 on credit 30 days Paid staff salaries by cheque RM2,800

Increase / Decrease

Amount (RM)

Title of ledger account

Dr

Assets

Increase

50,000

Bank

Cr

Equity

Increase

50,000

Capital

Dr

Assets

Increase

28,000

Motor vehicle

Cr

Assets

Decrease

28,000

Bank

Dr

Expenses

Increase

34,000

Purchases

Cr

Liabilities

Increase

34,000

Payables

Dr

Assets

Increase

88,000

Bank

Cr

Liabilities

Increase

88,000

Loan

Dr

Assets

Increase

15,000

Cr

Assets

Decrease

750

Equipment

Cr

Liabilities

Increase

14,250

Dr

Equity

Decrease

2,300

Drawings

Cr

Assets

Decrease

2,300

Cash

Dr

Assets

Increase

5,000

Bank

Cr

Revenue

Increase

5,000

Sales

Dr

Assets

Increase

6,000

Receivables

Cr

Revenue

Increase

6,000

Sales

Dr

Expenses

Increase

2,800

Salaries Bank

Cash Payables

Cr

Assets

Decrease

2,800

Collected a cheque RM6,000 from customer above, to whom inventories were sold on credit term

Dr

Assets

Increase

6,000

Bank

Cr

Assets

Decrease

6,000

Receivables

Issued a cheque of RM6,000 to the supplier of equipment bought above

Dr

Liabilities

Decrease

6,000

Payables

Cr

Assets

Decrease

6,000

Bank

ABFA1153 FINANCIAL ACCOUNTING I

Section 3: Question 1 Journal entries Apr 1 Dr Cash Cr Capital Capital injection to start business

8

Dr (RM) 20,000

20,000

4 Dr Furniture and fittings Cr Payables Acquired tables and chairs on credit term

2,400

8 Dr Purchases Cr Cash Purchased goods on cash term

4,000

2,400

4,000

11 Dr Cash Cr Sales Cash sales

1,600

12 Dr Purchases Cr Payables Purchased goods on credit term

7,000

16 Dr Receivables Cr Sales Sales on credit term

2,700

18 Dr Motor vehicles Cr Cash Cr Payables Bought a van partly by cash and credit

1,600

7,000

2,700 20,000 10,000 10,000

23 Dr Cash Cr Receivables Customer settled his debts

1,300

28 Dr Payables Cr Cash Settled debts to supplier

2,200

29 Dr Drawings Cr Cash Idris withdrew cash for personal use

Cr (RM)

1,300

2,200 400 400

Section 4: Question 2 Journal entries May 1 Dr Cash Dr Bank Cr Capital Capital injection to start business

Dr (RM) 1,000 19,000

20,000

3 Dr Office equipment Cr Payables Bought computer on credit term

3,600

7 Dr Purchases Cr Payables Purchased goods on credit term

6,000

9 Dr Bank Cr Sales Cash sales

2,600

3,600

6,000

2,600

12 Dr Purchases Cr Bank Purchased goods on cash term

3,000

16 Dr Payables Cr Discount received Cr Bank Early settlement of debts to supplier, after deducting discount received

6,000

17 Dr Receivables Cr Sales Sales on credit term

4,000

21 Dr Drawings Cr Cash Withdrawal of cash for family use 24 Dr Payables Cr Bank Partial settlement of debt to supplier

Cr (RM)

3,000

300 5,700

4,000 200 200 2,000 2,000

ABFA1153 FINANCIAL ACCOUNTING I

Journal entries 27 Dr Bank Dr Discount allowed Cr Receivables Customer settled debts, after deducting discount allowed 28 Dr Miscellaneous expenses Cr Cash Miscellaneous expenses paid by cash Question 3 Journal entries Mar 1 Dr Bank Dr Cash Cr Capital Capital injection to start business 2 Dr Stationery Cr Bank Bought stationery 3 Dr Purchases Cr Payables Purchased goods on credit term 4 Dr Cash Cr Sales Cash sales 5 Dr Insurance Cr Cash Paid insurance 7 Dr Office equipment Cr Payables Bought computer on credit term

9

Dr (RM) 3,800 200

Cr (RM)

4,000

10 Dr Receivables Cr Sales Sales on credit term

280 280

Dr (RM) 59,000 1,000

Journal entries 8 Dr Miscellaneous expenses Cr Cash Paid miscellaneous expenses

Cr (RM)

60,000 750 750 10,100 10,100 3,400 3,400 290 290 4,000 4,000

Dr (RM) 50

Cr (RM) 50

6,300 6,300

14 Dr Wages Cr Cash Paid wages

350

17 Dr Rent Cr Bank Paid rent

2,250

20 Dr Bank Cr Receivables Settlement of debts by customer

4,000

21 Dr Payables Cr Bank Settlement of debts to supplier

4,000

23 Dr Purchases Cr Payables Purchased goods on credit term

2,500

25 Dr Receivables Cr Sales Sales on credit term

6,450

31 Dr Payables Cr Bank Settlement of debts to supplier

1,250

350

2,250

4,000

4,000

2,500

6,450

1,250...