Solutions to some practice questions PDF

Preview

Summary

Download Solutions to some practice questions PDF

Description

Preparing general ledger and trial balance

Carrying Your Load provides heavy freight services with large trucks. The following transactions were Carrying Your Load Pty Ltd. Ignore GST. July

1 2 4 5 9 10 12 12 13 14

Craig Dienhoff a director invested $620 000 into Carrying Your Load organised to provide trucking services to remote parts of Australia. Purchased a truck for $540 000 on credit from P. Strickland. Transferred the amount owing to P. Strickland using online banking facilities to make a direct bank transfer. Paid $1600 to R. Burton for two weeks rent to 14 July. Charged White Cattle Station $12 000 for trucking services. Dienhoff withdrew $4000 cash to meet personal expenses deemed wages. Paid $1200 for advertising on local radio. Received $6200 from Outback Oil for trucking services. Charged Star Company $9600 and received $9000 from Hardie Company for trucking services provided. Received a cheque for $12 000 from White Cattle Station and deposited it into the business bank account. Paid $8800 for fuel for the truck.

Required

1. Complete Journals 2. Post to t accounts 3. Prepare a trial balance

1

1/7

Cash at Bank

620 000

Directors Loan

620 000

Loan to company from director

2/7

Truck

540 000

Accounts Payable

540 000

Purchase of truck on credit

4/7

Accounts Payable

540 000

Cash at Bank

540 000

Payment of truck

5/7

Rent Expense

1 600

Cash at Bank

1 600

Rent paid

9/7

Accounts Receivable

12 000

Trucking Services Revenue

12 000

Charged White Cattle Station $12 000 for trucking services

10/7

Wages expense

4 000

Cash at Bank

4 000

Directors wages

12/7

Advertising Expense

1 200

Cash at Bank

1 200

Paid $1200 for advertising

2

12/7

Cash at Bank

6 200

Trucking Services Revenue

6 200

Received $6200 from Outback Oil for trucking services

13/7

Accounts Receivable

9 600

Trucking Services Revenue

9 600

Charged Star Company $9600

13/7

Cash at Bank

9 000

Accounts Receivable

9 000

Received $9000 from Hardie Company for trucking services provided.

14/7

Cash at Bank

12 000

Accounts Receivable

12 000

Received a cheque for $12 000 from White Cattle Station

15/7

Fuel Expense

8 800

Cash at Bank

8 800

Paid $8800 for fuel for the truck

3

CARRYING YOUR LOAD PTY LTD General Ledger

Cash at Bank 1/7 12/7

Directors Loan Revenue

13/7

Accounts Receivable Accounts Receivable

14/7

$620 000 4/7 6 200 5/7 9 000 10/7

Accounts Payable Rent Expense Wages Expense

4 000

Advertising Expense

1 200

14/7

Fuel Expense

8 800

14/7

Balance c/d

12 000 12/7

$647 200 14/7

Balance b/d

$540 000 1 600

91 600 647 200

91 600

Truck 2/7

Accounts Payable

$540 000

Accounts Receivable 9/7 13/7

Revenue Revenue

$12 000 14/7 9 600 14/7

Cash at Bank Balance c/d

21 600 14/7

Balance b/d

$12 000 9 600 21 600

9 600

Accounts Payable 4/7

Cash at Bank

$540 000 2/7

Truck

$540 000

Directors Loan 1/7

Cash at Bank

Trucking Services Revenue

4

$620 000

14/7 Balance c/d

9/7

Accounts Receivable

12/7

Cash at Bank

6 200

Accounts Receivable Cash at Bank

9 600 9 000

13/7 36 800 13/7 36 800

36 800 14/7

Balance b/d

Rent Expense 5/7

Cash at Bank

1 600

Advertising Expense 12/7

Cash at Bank

1 200

Fuel Expense 12/7

Cash at Bank

8 800

Wages Expense 10/7

Cash at Bank

$12 000

4 000

5

36 800

CARRYING YOUR LOAD PTY LTD Trial Balance as at 14 July Debit Cash at Bank

$91 600

Truck Accounts Receivable

540 000 9 600

Directors Loan

$620 000

Trucking Services Revenue Rent Expense

1 600

Advertising Expense

1 200

Fuel Expense Wages Expense

8 800 4 000

36 800

$656 800

Problem 3.2

Credit

Journal entries, posting to ledger and trial balance 6

$656 800

On 1 July 2015 Nicole Andreou opened a beauty parlour. The following transactions occurred during the first month of operations (ignore GST): Andreou invested $120 000 in the business by depositing cash into a business cheque account with the Eastpac Bank. Paid $1800 for the first month’s rent. 2 Purchased equipment by an online bank transfer for $32 000 and signing 3 a commercial loan agreement for $38 000. Purchased supplies for $8400. 4 Paid advertising expense of $890. 6 Recorded beauty services revenue for the first half of the month of $3250 16 in cash and $620 on credit. Paid insurance expense for July of $480 using an online bank transfer. 20 Received a $140 payment from customers who paid on credit in the first 23 half of the month. 28 Andreou withdrew $560 cash for personal living expenses. 31 Recorded revenue for the second half of the month of $3680 in cash and 31 $580 on credit. Paid telephone account of $330 by electronic transfer. Use the following account titles and numbers: Cash at Bank, 100; Accounts Receivable, 101; Supplies, 102; Equipment, 103; Loan Payable, 200; Nicole Andreou, Capital, 300; Nicole Andreou, Drawings, 301; Revenue, 400; Rent Expense, 500; Advertising Expense, 501; Insurance Expense, 502; Telephone Expense, 503. July

2

Required A. B. C.

Prepare the general journal entries to record the transactions. Post the entries from the general journal to the general ledger accounts (running balance format) and enter the posting references in the general journal. Prepare a trial balance as at 31 July 2015.

A.

General Journal July

2

Cash at Bank

100

Nicole Andreou, Capital

120 000

300

120 000

Cash invested by owner.

2

Rent Expense

500

Cash at Bank

100

7

1 800 1 800

Rent paid.

3

Equipment

103

70 000

Cash at Bank

100

32 000

Loan Payable

200

38 000

Equipment purchased for cash and loan payable.

4

Supplies

102

Cash at Bank

8 400

100

8 400

Supplies purchased.

6

Advertising Expense

501

Cash at Bank

100

890 890

Cash paid for advertising.

16

Cash at Bank

100

3 250

Accounts Receivable

101

620

Revenue

400

3 870

Revenue for first half of month

20

Insurance Expense

502

Cash at Bank

100

Cash paid for insurance

8

480 480

23

Cash at Bank

100

Accounts Receivable

140

101

140

Receipt of payment from customers

28

Nicole Andreou, Drawings

301

Cash at Bank

560

100

560

Drawings by owner

31

Cash at Bank

100

3 680

Accounts Receivable

101

580

Revenue

400

4 260

Revenue for second part of month

31

Telephone Expense

503

Cash at Bank

100

330 330

Telephone expenses paid

B. ACCOUNT: Cash at Bank Date Explanation

Post Ref

2015 2 7 Nicole Andreou, Capital 2 7 Rent Expense 3 7 Equipment

Debit

Account No. 100 Credit Balance

120 000 1 800 32 000

9

120 000 118 200 86 200

4 6 16 20 23 28 31 31

7 7 7 7 7 7 7 7

Supplies Advertising Expense Revenue Insurance Expense Accounts Receivable Nicole Andreou, Drawings Revenue Telephone Expense

ACCOUNT: Accounts Receivable Date Explanation

8 400 890 3 250 480 140 560 3 680 330

Post Ref

ACCOUNT: Supplies Date Explanation

620 140 580

Post Ref

2015 4 7 Cash at Bank

ACCOUNT: Equipment Date Explanation

Debit

Post Ref

Debit

8 400

Account No. 103 Credit Balance

70 000

Post Ref

Debit

2015 3 7 Equipment

70 000

Account No. 200 Credit Balance

38 000

ACCOUNT: Nicole Andreou, Capital Date Explanation Post Ref 2015

10

Debit

620 480 1 060

Account No. 102 Credit Balance

8 400

2015 3 7 Cash and Loan Payable

ACCOUNT: Loan Payable Date Explanation

Account No. 101 Credit Balance

Debit

2015 16 7 Revenue 23 7 Cash at Bank 31 7 Revenue

77 800 76 910 80 160 79 680 79 820 79 260 82 940 82 610

38 000

Account No. 300 Credit Balance

2

7 Cash at Bank

120 00 0

ACCOUNT: Nicole Andreou, Drawings Date Explanation Post Ref 2015 28 7 Cash at Bank

ACCOUNT: Revenue Date Explanation

Pos t Ref

Account No. 301 Credit Balance

Debit

560

Debit

2015 16 7 Cash and Accounts Receivable 31 7 Cash and Accounts Receivable

ACCOUNT: Rent Expense Date Explanation

560

Account No. 400 Credit Balance

3 870 4 260

Post Ref

2015 2 7 Cash at Bank

Debit

1 800

11

120 000

3 870 8 130

Account No. 500 Credit Balance

1 800

Account No. 501 ACCOUNT: Advertising Expense Date Explanation

Post Ref

Debit

2015 6 7 Cash at Bank

ACCOUNT: Insurance Expense Date Explanation

890

Post Ref

480

Post Ref

2015 31 7 Cash at Bank

890

480

Account No. 503 Credit Balance

Debit

330

12

Balance

Account No. 502 Credit Balance

Debit

2015 20 7 Cash at Bank

ACCOUNT: Telephone Expense Date Explanation

Credit

330

C. NICOLE ANDREOU BEAUTY SALON Trial Balance as at 31 July 2015 Account

Account No.

Debit

Cash at Bank

100

$82 610

Accounts Receivable Supplies

101 102

1 060 8 400

Equipment

103

70 000

Loan Payable Nicole Andreou, Capital

200 300

Nicole Andreou, Drawings

301

Revenue Rent Expense

400 500

1 800

Advertising Expense

501

890

Insurance Expense Telephone Expense

502 503

480 330

$38 000 120 000 560 8 130

$166 130

13

Credit

$166 130

Problem 3.7

Preparation of running balance ledger accounts and trial balance

On 1 March 2014, James Taylor decided to open Taylor’s Tailormade that makes suits, trousers and jackets and repairs and alters clothes. He contributed for this purpose sewing equipment $46 000 and a commercial van $48 000, and deposited $10 000 cash in a business bank account. Transactions during March were as follows (ignore GST): March

4 4 6

7 8 11 12 13 14 15 16 17 18 21 23 24 25 28 31

Took a 3-year lease on a shop and paid first month’s rent $1200. Purchased haberdashery supplies for $4200, and paid with an electronic transfer of $1200 and paid for the rest with credit. Cash received for minor clothing repairs, $120. Revenue earned for tailor making a two piece suit for Andrea Fraser on credit, $840. Purchased a sewing machine, $3800, paying $800 cash and taking out a loan for the balance. Cash revenue earned, $1260. Engaged a sewer at an agreed wage of $1100 per week. Paid petrol $120, postage $20, and electricity bill $760. Cash of $200 received for over-the-counter repairs. Revenue of $1500 earned from a customer on credit. Paid for haberdashery supplies purchased on credit on 4 March. Withdrew $600 for own use. Cash revenue received, $380. Haberdashery supplies purchased for $500 on credit. Paid wages to employee. Revenue earned for making clothes: cash $240; on account $1200. Andrea Fraser paid the bill for services rendered on 6 March. Petrol expenses paid $80. Paid weekly wages to employee. Revenue earned for clothes $2420, receiving $200 in cash and the remainder on credit. Haberdashery supplies used, $620.

Required A. B.

Prepare three-column running balance ledger accounts. Give each account a suitable account number. Prepare a trial balance as at 31 March 2016.

14

A. ACCOUNT: Cash at Bank Date Explanation 2016 1 3 4 3 4 3 6 3 7 3 8 3 12 3 13 3 14 3 15 3 16 3 18 3 21 3 23 3 24 3 25 3 28 3

Post Ref

James Taylor, Capital Rent Expense Haberdashery Supplies Tailoring Revenue Sewing Equipment Tailoring Revenue Petrol, postage & electricity Tailoring Revenue Accounts Payable James Taylor, Drawings Tailoring Revenue Wages Expense Tailoring Revenue Accounts Receivable Fuel Expense Wages Expense Tailoring Revenue

Account No. 100 Credit Balance

Debit

10 000 1 200 1 200 120 800 1 260 900 200 3 000 600 380 1 100 240 840 80 1 100 200

ACCOUNT: Haberdashery Supplies Date Explanation Post Ref 2016 4 3 Cash & Accounts Payable 17 3 Accounts Payable 31 3 Haberdashery Supplies Expense

15

Debit

10 000 8 800 7 600 7 720 6 920 8 180 7 280 7 480 4 480 3880 4 260 3 160 3 400 4 240 4 160 3 060 3 260

Account No. 101 Credit Balance

4 200 500 620

4 200 4 700 4 080

ACCOUNT: Accounts Receivable Date Explanation 2016 6 13 21 23 28

3 3 3 3 3

Post Ref

Tailoring Revenue Tailoring Revenue Tailoring Revenue Cash at Bank Tailoring Revenue

Debit

Account No. 110 Credit Balance

840 1 500 1 200 840 2 220

840 2 340 3 540 2 700 4 920

Account No. 112 ACCOUNT: Sewing Equipment Date Explanation 2016 1 7

3 James Taylor, Capital 3 Cash & Loan Payable

ACCOUNT: Commercial Vehicles Date Explanation 201 6 1

Debit

Credit

46 000 3 800

Post Ref

3 James Taylor, Capital

ACCOUNT: Accounts Payable Date Explanation 201 6 4 14 17

Post Ref

Debit

46 000 49 800

Account No. 113 Credit Balance

48 000

Post Ref

3 Haberdashery Supplies 3 Cash at Bank 3 Haberdashery Supplies

Debit

48 000

Account No. 201 Credit Balance

3 000 3 000 500

16

Balance

3 000 0 500

ACCOUNT: Loan Payable Date Explanation 201 6 7

3 000

Post Ref

Debit

104 000

ACCOUNT: Tailoring Revenue Date Explanation

600

Post Ref

Debit

104 000

Account No. 301 Credit Balance

Debit

3 Cash at Bank

3 000

Account No. 300 Credit Balance

3 Cash, Van and Equipment

ACCOUNT: James Taylor, Drawings Date Explanation Post Ref 201 6 15

Debit

3 Sewing Equipment

ACCOUNT: James Taylor, Capital Date Explanation 201 6 1

Post Ref

Account No. 202 Credit Balance

600

Account No. 340 Credit Balance

201 6 6 6 8 12

3 3 3 3

Cash at Bank Accounts Receivable Cash at Bank Cash at Bank

120 840 1 260 200

120 960 2 220 2420

13 16 21 28

3 3 3 3

Cash & Accounts Rec. Cash at Bank Cash & Accounts Rec. Cash & Bills Rec.

1500 380 1 440 2 420

3 920 4 300 5 740 8160

17

ACCOUNT: Rent Expense Date Explanation 201 6 4

3 Cash at Bank

ACCOUNT: Fuel Expense Date Explanation 201 6 12 24

Post Ref

1 200

Account No. 352 Credit Balance

Debit

120 80

Post Ref

120 200 Account No. 353 Credit Balance

Debit

760

Post Ref

760

Account No. 354 Credit Balance

Debit

3 Cash at Bank

ACCOUNT: Wages Expense Date Explanation 201 6 18 25

1 200

3 Cash at Bank

ACCOUNT: Postage Expense Date Explanation 201 6 12

Debit

3 Cash at Bank 3 Cash at Bank

ACCOUNT: Electricity Expense Date Explanation 201 6 12

Post Ref

Account No. 351 Credit Balance

20

Post Ref

3 Cash at Bank 3 Cash at Bank

Debit

20

Account No. 355 Credit Balance

1 100 1 100

ACCOUNT: Haberdashery Supplies Expense Date Explanation Post Ref 201 6

18

1 100 2 200

Account No. 356 Debit

Credit

Balance

31

3 Haberdashery Supplies

620

620

B. TAYLOR’S TAILORMADE Trial Balance as at 31 March 2016 Account

Account No.

Debit

Credit

Cash at bank

100

$3 260

Haberdashery supplies

101

4 080

Accounts receivable

110
<...