Mc Nails bookkeeping exercise -3 PDF

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AG111 McNails Bookkeeping Practice

Left-hand side of the equation Asset Right-hand side of the equation Liability Ownership interest

DEBIT ENTRIES IN A LEDGER ACCOUNT

CREDIT ENTRIES IN A LEDGER ACCOUNT

Increase

Decrease

Decrease Expense Capital withdrawn

Increase Revenue Capital contributed

Step 1: Recording journal entries October 2012 1st Freda McColgan sets up a nail salon in her living room. She calls the salon McNails. She pays £200 into the business bank account. 2nd

Louise loans the business £100.

5th

McNails buys supplies (polish, nails and other items) from Harry paying by cheque £80.

10th

McNails buys a small table and chairs from Bill on credit. £100

12th31st

Customers pay £340 in total for nail services.

31st

McNails pays electricity £40 by cash

31st

McNails pays rent £100 by cash (£50 for October and £50 for November)

31st

Pays Bill for purchase of furniture on 10 th

31st

Freda checks the supplies and sees that there are £60 worth in stock.

31st

Gas bill is estimated at £60 for October (the bill has not yet received)

Debit

Credit

Step 2: Posting journal entries to ledger accounts

DATE

PARTICULARS

DATE

PARTICULARS

DATE

PARTICULARS

DATE

DATE

DATE

DATE

DATE

PARTICULARS

PARTICULARS

PARTICULARS

PARTICULARS

PARTICULARS

Bank DEBIT £

CREDIT BALANCE £ £

Ownership interest DEBIT £

CREDIT BALANCE £ £

Loan DEBIT £

CREDIT BALANCE £ £

£

CREDIT BALANCE £ £

£

CREDIT BALANCE £ £

£

CREDIT BALANCE £ £

£

CREDIT BALANCE £ £

£

CREDIT BALANCE £ £

Inventory DEBIT

Furniture DEBIT

Revenue DEBIT

Electricity DEBIT

Rent DEBIT

DATE

DATE

DATE

DATE

DATE

Gas DEBIT

PARTICULARS

£

CREDIT BALANCE £ £

Trade payables - Bill DEBIT CREDIT BALANCE £ £ £

Prepayment DEBIT

PARTICULARS

PARTICULARS

CREDIT BALANCE £ £

Accruals DEBIT

PARTICULARS

PARTICULARS

£

£

CREDIT BALANCE £ £

Supplies expense DEBIT £

CREDIT BALANCE £ £

Step 3: Calculating trial balance Trial Balance Debit (£)

Credit (£)

Bank Ownership interest Loan Inventory Furniture Revenue Trade payables - Bill Electricity Rent Gas Accruals Prepayment Supplies expense Total

Step 4 Prepare the profit and loss account and the balance sheet...