bookkeeping transactions -...

aat

AQ2016

Bookkeeping Transactions

ADDITIONAL QUESTION BANK QUESTIONS

P.2 KAPLAN PUBLISHING

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© Kaplan Financial Limited, 2016

KAPLAN PUBLISHING P.3

INTRODUCTION This tutor question bank is designed for use by Kaplan colleges and external colleges who have adopted Kaplan Publishing’s study material for this assessment.

We respectfully draw your attention to the copyright page of this publication and would remind you that you should take every reasonable care to observe the restrictions placed on you and your students’ use of this material.

This bank contains additional activities graded into two types:

• some are designed to help students struggling with a topic (support questions), and

• others are designed to challenge the more able student (advanced questions).

The contents page lists the topics which this question bank covers.

These topics broadly correspond with the order of the topics in the text book.

INDEX TO QUESTIONS AND ANSWERS Support Advanced

Question page

Answer page

Question page

Answer page

Chapter 1 Business documents 2 138 – –

Chapter 2 Books of prime entry 14 148 90 218

Chapter 3 Double entry bookkeeping – introduction

19 153 92 220

Chapter 4 Ledger accounting 25 159 94 222

Chapter 5 Accounting for credit sales, VAT and discounts

30 165 98 225

Chapter 6 Accounting for credit purchases, VAT and discounts

40 174 105 228

Chapter 7 Control accounts and subsidiary ledgers

45 179 109 230

Chapter 8 Payments and receipts 64 196 113 234

P.4 KAPLAN PUBLISHING

SUPPORT QUESTIONS

AAT BTRN : BOOKKEEPING TRANSACTIONS

2 KAPLAN PUBLISHING

CHAPTER 1

BUSINESS DOCUMENTS

1 LITTLE MISS MUFFINS CAKE SHOP

A supply of cake boxes has been delivered to the Little Miss Muffins Cake Shop by Avril’s Catering Supplies. The purchase order sent from the Little Miss Muffin Cake Shop and the invoice from Avril’s Catering Supplies are shown below:

Little Miss Muffin Cake Shop

1 Baker Street

London

WC1 8QT

Purchase Order no. 1067

To: Avril’s Catering Supplies

Date: 7 June 2012

Please supply 50 cake boxes product code 195223.

Purchase Price: £70 per 50 plus VAT

QUESTIONS

KAPLAN PUBLISHING 3

Avril’s Catering Supplies

Unit 4 James Industrial Estate

Lanford Road

Middlesex

TW1 7PS

Invoice Number 3324

50 cake boxes product code 195232

VAT

Gross

25 June 2012

£70.00

£21.00

––––––

£91.00

Terms: 30 days net

Check the invoice against the purchase order and note the errors/omissions below.


4 KAPLAN PUBLISHING

2 BALOTELLI

Balotelli Supplies have sent a purchase order to Ferguson Training. You are required to prepare the invoice from Ferguson Training to Balotelli Supplies based on the information provided on the purchase order.

Balotelli Supplies

11 Main Road

Manchester

M1 2PW

Purchase Order no. 40

To: Ferguson Training

Date: 30 June 2012

Please supply 1,000 footballs product code MC2012.

Purchase Price: £1 each plus VAT

QUESTIONS

KAPLAN PUBLISHING 5

Ferguson Training

Unit 1 Old Trafford Road

Champion Park

Manchester

M11 3HU

VAT reg no: 618 2201 63

To: Balotelli Supplies

11 Main Road

Manchester

M1 2PW

Invoice Number 123

footballs product code

VAT

Gross

10 July 2012

Terms: 30 days net

Workings:


6 KAPLAN PUBLISHING

3 MULTI CHOICE

Which of the following documents is not associated with the sales records of a company?

A Delivery note

B Quotation

C Petty cash claim

D Invoice

Which of the following are used in a coding system for accounting transactions?

A Department code

B Nominal ledger code

C Product code

D All of the above

Which of the following information is not likely to be included on a sales invoice?

A Customer name

B Description of goods

C Date

D Receivables ledger control account number

QUESTIONS

KAPLAN PUBLISHING 7

4 DOCUMENTS

What are the names of the following documents?

(a) A document from the seller to the customer confirming that the customer’s order has been accepted and that the goods will be supplied in due course.

(b) A document sent from the seller to the customer detailing the price at which the required goods can be supplied, if the customer wishes to proceed.

(c) An internal document produced by the seller of goods to record the details of goods returned from a customer.


8 KAPLAN PUBLISHING

5 MEANING OF TERMS

What is the meaning of the following terms that might be seen on invoices or other accounting documents?

(a) E & OE

(b) Ex works

(c) COD

QUESTIONS

KAPLAN PUBLISHING 9

6 PHIL INN

Fill in the missing word(s):

A code is used to identify the account in which the purchases of goods are recorded

A code is used to identify the organisation in which the goods were purchased from

A is used to identify the types of products purchased


10 KAPLAN PUBLISHING

7 DOCUMENT FILES

What is an appropriate way to file the following documents?

Bank statements –

Insurance documents –

Sales Invoices –

QUESTIONS

KAPLAN PUBLISHING 11

8 PURCHASE INVOICES

In many purchases systems, all purchase invoices are stamped with a grid stamp on receipt. What are the typical details entered on such a grid stamp?



9 PURCHASE TRANSACTION

In a purchase transaction, which party sends the following documents to which party?

(a) Purchase order

(b) Delivery note

(c) Credit note

QUESTIONS


10 DELIVERY NOTE

A delivery note typically has three copies. What is the role of each of these copies?



CHAPTER 2

BOOKS OF PRIME ENTRY

11 MEANINGS

Explain briefly the meaning of the following terms:

(a) Book of prime entry

(b) Sales day book

(c) Sales returns day book

QUESTIONS


12 ANALYSED SALES DAY BOOK

What is the advantage of maintaining an analysed sales day book?



13 SALES DAY BOOK

What are the column headings in a typical (non-analysed) sales day book?

QUESTIONS


14 PURCHASES DAY BOOK

What are the typical column headings in a (non-analysed) purchases day book?



15 TWO COLUMN CASH BOOK

What are the typical column headings for a two-column analysed cash receipts book of a business that is registered for VAT?

QUESTIONS


CHAPTER 3

DOUBLE ENTRY BOOKKEEPING – INTRODUCTION

16 ACCOUNTING EQUATION

State the ‘accounting equation’ and explain the meaning of each of the terms used in the equation.



17 CAPITAL AND REVENUE EXPENDITURE

State whether each of the following qualify as capital expenditure or revenue expenditure:

• Annual rental on a machine used in the factory.

• Purchase of new car for a sales representative.

• Purchase of goods for resale.

• Cost of new factory.

• Finance director’s salary.

QUESTIONS


18 ACCOUNTING ENTRY

Which of the following changes could not occur as a result of an entry in the bookkeeping records?

A Increase asset and increase liability

B Increase asset and increase capital

C Increase capital and increase liability

D Increase capital and decrease liability



19 KAPIL DEV

State which of the following items are shown under the wrong classification for Kapil Dev's business.

Assets Liabilities

Loan from A Lamb Receivables

Motor vehicles Money owing to bank

Premises Inventories

Goodwill Loan from Riffle

Machinery Money owing to A Little

Cash in hand Fixtures

Capital Payables

Cash at bank Buildings

QUESTIONS


20 MISSING FIGURES

Identify the missing figures for each of the following examples.

Assets Liabilities Capital

£ £ £

(i) 50,000 7,200 ?

(ii) 112,000 19,600 ?

(iii) 67,200 ? 50,000

(iv) 96,400 ? 65,800

(v) ? 25,200 76,800

(vi) ? 50,600 159,000

Fill in the blanks (?) in the table above.



21 CLASSIFICATION

Classify the following into Assets and Liabilities.

(i) Bank balance (in funds) (vii) Premises

(ii) We owe for goods (viii) Trade payable

(iii) Motor vehicle (ix) Loan from D Randle

(iv) Fixture and fittings (x) Cash in hand

(v) Loan from Pringle (xi) Owing to bank

(vi) Office machinery (xii) Receivables

QUESTIONS


CHAPTER 4

LEDGER ACCOUNTING

22 CHANGES

Tick the correct boxes for the following: Debit Credit (i) Increase in assets

(ii) Increase in capital

(iii) Decrease in capital

(iv) Increase in liabilities

(v) Decrease in assets

(vi) Decrease in liabilities

(vii) Increase in expenses

(viii) Decrease in revenue

(ix) Decrease in expenses

(x) Increase in revenue



23 ABIGAIL

Abigail started a new business on 1 January 20X2. During January the following transactions occurred:

1 Introduced £5,000 cash as opening capital.

2 Purchased a machine for £1,500 cash.

3 Purchased goods on credit for £500.

4 Sold half these goods for £600 cash.

5 Withdrew £200 cash for her own personal expenses.

6 Paid electricity bill for £30 in cash.

7 Sold the remaining goods on credit for £800.

8 Paid the £500 due to the payable.

Required:

Write up the ledger accounts necessary to record the transactions for the month. You are not required to balance the accounts at the end of the month.

QUESTIONS


24 BASHIR

Bashir started a new business on 1 November 20X6. During the first two weeks the following transactions occurred:

1 Introduced £2,000 cash as opening capital.

2 Purchased a van for £400 cash.

3 Purchased goods for £700 cash.

4 Sold half these goods for £500 on credit.

5 Paid rent of £80 in cash.

6 Withdrew £100 in cash to settle a personal debt.

7 Sold the remaining goods for £400 cash.

8 Received in cash half the debt due from the receivables.

Required:

Record the above transactions in the books of Bashir by means of ledger accounts. You are required to balance each account at the end of the two week period showing clearly the balances carried down at the end of the period.



25 SAMUELS

The following are the balances on the accounts of Samuels at 31 December 20X2. £ Sales 47,140 Purchases 26,500 Receivables 7,640 Payables 4,320 General expenses 9,430 Loan from father 5,000 Plant and machinery 10,500 Motor van 4,600 Drawings 7,500 Rent and rates 6,450 Insurance 1,560 Bank overdraft 2,570 Capital 15,150 You are required to draw up a trial balance as at 31 December 20X2.

QUESTIONS


26 DEFINITION

What is the definition of a trial balance?



CHAPTER 5

ACCOUNTING FOR CREDIT SALES, VAT AND DISCOUNTS

27 AB LTD

AB Ltd sells goods that are standard-rated for VAT at 20%. How much VAT will be charged on the following transactions?

(a) Sale of goods for £2,000 (before VAT).

(b) Sale of goods for £480 (before VAT).

(c) Sale of goods for £4,800 (inclusive of VAT).

(d) Sale of goods for £1,000 (before VAT) on which a 3% prompt payment discount is offered.

QUESTIONS


28 RECORD

Record the following sale.

Mr B sells goods for £960 inclusive of VAT (20%) to Mr C on credit.

Receivables

Date Detail £ Date Detail £

Sales


VAT




29 SALES

You are selling 100 items at £35 each excluding VAT.

A 5% trade discount is applied and a 3% discount is offered for settlement within 5 days.

(a) Calculate the net, VAT and gross amounts to appear on an invoice.

(b) Calculate the amount payable if paid within 5 days.

QUESTIONS


30 MORE SALES

A sale of goods worth £240 (net of VAT at 20%) was made and a 5% discount was offered for settlement within 20 days. What would the amounts be:

(a) On the invoice

(b) If the customer paid within 20 days

Record the following transactions in the ledger accounts below:

1 The sales invoice

2 The payment received from the customer on day 15.

3 The prompt payment discount allowed to the customer.

Receivables

Sales

VAT

Bank

Discounts allowed



31 MINICORP

You work as the accounts assistant at Minicorp Ltd, a supplier of general goods, all of which are standard rated for VAT at 20%. Given below are the details of three sales which are to be delivered today (28 July 20X3). Customer Items sold Unit selling price (before VAT and discounts) Ahmed Trading 10 Alphas £200 Bertie Ltd 6 Betas £120 Charlie Ltd 2 Alphas, 4 Betas As above You extract the following details from the customer master file:

Customer Address Trade discount PPD Ahmed Trading 4 The High Street 10% – Stevenage, Herts Bertie Ltd 31 The Mall 10% 5% if paid Cheltenham, Glos within 21 days Charlie Ltd 7 The Esplanade 20% 5% if paid Clacton, Essex within 21 days

For those customers who are offered a prompt payment discount (PPD) you should advise them of this offer at the bottom of their invoice and also state the amount payable if they pay within the required time to qualify for the PPD.

The last invoice sent out was number 1744. Normal credit terms are 30 days.

Required:

Prepare invoices to send to the three customers above, using the blank invoices supplied.

QUESTIONS


INVOICE

Minicorp Ltd 22 The Square Wolverhampton WV2 4DD

Tel: 01902 44556

Invoice no:

Tax point:

VAT reg no: 234 1116 92

Description Quantity VAT rate Unit price Amount ex VAT % £ £

Trade discount –––––––––– VAT at 20% –––––––––– Total amount payable ––––––––––

To:



INVOICE


Tel: 01902 44556

Invoice no:

Tax point:

VAT reg no: 234 1116 92


Trade discount ––––––––––

VAT at 20% –––––––––– Total amount payable ––––––––––

To:

QUESTIONS


INVOICE


Tel: 01902 44556

Invoice no:

Tax point:

VAT reg no: 234 1116 92


Trade discount –––––––––– VAT at 20% –––––––––– Total amount payable ––––––––––

To:



32 MINICORP II

You work as the accounts assistant at Minicorp Ltd, a supplier of general goods, all of which are standard rated for VAT at 20%. Given below are the details of two returns of goods to the company which have been received today (29 July 20X3). Each return has been checked and authorised and you are now to prepare the credit notes. Customer Items returned Unit selling price (before VAT and discounts) Ahmed Trading 3 Gammas £100 Bertie Ltd 4 Deltas £160

You extract the following details from the customer master file: Customer Address Trade discount Ahmed Trading 4 The High Street 10% Stevenage, Herts Bertie Ltd 31 The Mall 10% Cheltenham, Glos The last credit note to have been issued was number CN143.

Required:

Prepare credit notes to send to the two customers above, using the blank credit notes supplied.

CREDIT NOTE


Tel: 01902 44556

Credit note no:

Tax point:

VAT reg no: 234 1116 92



VAT at 20% –––––––––– Total amount

––––––––––

To:

QUESTIONS


CREDIT NOTE


Tel: 01902 44556

Credit note no:

Tax point:

VAT reg no: 234 1116 92



VAT at 20% –––––––––– Total amount ––––––––––

To:



CHAPTER 6

ACCOUNTING FOR CREDIT PURCHASES, VAT AND DISCOUNTS

33 PURCHASER

A purchaser buys a machine with a list price of £1,000 exclusive of VAT. The purchaser is granted a trade discount of 5% and is offered a prompt payment discount of 3% if the debt is paid within 21 days. VAT is charged at a standard 20%.

a) How much should the purchase invoice total be for this machine?

b) What would be the amount paid if paid after 21 days?

c) What would be the amount paid if paid within 21 days?

QUESTIONS


34 THREE REASONS

State three reasons why goods received from a supplier might be returned to the supplier.



35 PROMPT PAYMENT DISCOUNTS

It is your company’s policy to take all prompt payment discounts that are offered. A purchase invoice is received for £2,000 plus VAT at 20% from a company that offers a 2% discount if the invoice is paid within two weeks. How much should be paid to this payable to settle the bill?

QUESTIONS


36 MR P

Mr P purchases goods for £550 net of VAT (20%) and the supplier offers a prompt payment discount of 4% if it is paid in 30 days.

Required:

1 Calculate the invoice amount and record the transaction in the accounts when goods are purchased

2 Record the transactions on the basis that the discount is taken (amount paid and discount received)

Workings

Payables

Purchases

VAT



Bank

Discounts received

QUESTIONS


CHAPTER 7

CONTROL ACCOUNTS AND SUBSIDIARY LEDGERS

37 MISSING CELLS

Complete the missing cells from the sales day book. There is no settlement discount offered to customers. VAT is at 20%.

Post the sales day book to the general and subsidiary ledgers, indicating whether the entries should be debits or credits.

Sales day book

Date Invoice No. Customer name Total £

VAT £

Net £

1/4/12 Henderson & Sons Building

550.00

1/4/12 Armstrong Carpentry 360.00 60.00

1/4/12 Mullen’s Roofing 216.00

1/4/12 Keady’s Ceilings 1,680.00

Total

Postings to the general ledger

Account Amount Dr or Cr

Postings to sales ledger




38 WILLIAMS WHOLESALE

The following transactions all took place on 31 July 2012 and have been entered into the sales day book of Williams Wholesale as shown below. No entries have yet been made into the ledger system.

Date 2012

Details Invoice number

Total £

VAT £

Net £

31 July

31 July

31 July

31 July

Brown’s

Raith & Son

Drogba

Bertrand

800

801

802

803

2,040

10,500

14,376

3,168

340

1,750

2,396

528

1,700

8,750

11,980

2,640

Totals 30,084 5,014 25,070

What will be the entries in the sales ledger?

Account name Amount £

Debit

Credit

Picklist: Bertrand, Brown’s, Drogba, Purchases, Raith & Son, Sales ledger control, Purchases returns, Sales, Purchases ledger control, Sales returns, VAT

What will be the entries in the general ledger?


Debit

Credit

Picklist: Bertrand, Brown’s, Drogba, Purchases, Raith & Son, Sales ledger control, Purchases returns, Sales, Purchases ledger control, Sales returns, VAT

QUESTIONS


39 CREDIT TRANSACTIONS

The following credit transactions all took place on 31 July 2012 and have been entered into the sales returns day-book AVB as shown below. No entries have yet been made in the ledgers.

Date 2012 Details Credit note number

Total £

VAT £

Net £

31 July Friedel CN378 5,280 880 4,400

31 July Naughton CN379 10,680 1,780 8,900

Totals 15,960 2,660 13,300

What will be the entries in the sales ledger?

Sales ledger


Debit

Credit

Picklist: Friedel, Naughton, Net, Purchases, Purchases ledger control, Purchases returns, Sales, Sales ledger control, Sales returns, Total, VAT


General ledger


Debit

Credit

Picklist: Friedel, Naughton, Net, Purchases, Purchases ledger control, Purchases returns, Sales, Sales ledger control, Sales returns, Total, VAT



40 FELIX & FALL

• Felix & Fall have both trade and retail sales

• Trade sales have a credit term of 14 days

• Felix & Fall offer a 3% prompt payment discount to all customers for settlement within 5 working days

• You are employed by the business as a bookkeeper

• The business uses a manual accounting system

• Double entry takes place in the general ledger. Individual accounts for receivables are kept in a subsidiary ledger as memorandum accounts.

• The following transactions have taken place today, 15 October 2012 with trade customers, and require recording in the sales day book

Invoice No Net £

Space Creators 245 190.00

Moon Motors 246 102.00

Hot Rod’s 247 345.00

King of Cool 248 620.00

Sales day book

Date Invoice No. Customer name Total £

VAT £

Net £

Show how the sales day book will be posted to the general and subsidiary sales ledger.



QUESTIONS


Posting to sales ledger




41 EMMA

The following transactions all took place on 30 June and have been entered into the purchases day book of Emma as shown below. No entries have yet been made into the ledger system.

Date 2012

Details Invoice number

Total £

VAT £

Net £

30 June

30 June

30 June

30 June

Benny’s

Tots Tumbles

Susy Snoop

Freddie Frog

158

2981

1094

101

2,520

1,320

3,894

1,680

420

220

649

280

2,100

1,100

3,245

1,400

Totals 9,414 1,569 7,845

What will be the entries in the purchases ledger?


Debit

Credit

Picklist: Benny’s, Freddie Frog, Purchases, Sales ledger control, Purchases returns, Sales, Purchases ledger control, Sales returns, Susy Snoop, Tots Tumbles, VAT



Debit

Credit

Picklist: Benny’s, Freddie Frog, Purchases, Sales ledger control, Purchases returns, Sales, Purchases ledger control, Sales returns, Susy Snoop, Tots Tumbles, VAT

QUESTIONS


42 JACOB

The following credit transactions all took place on 31 July 2012 and have been entered into the purchases returns day-book of Jacob as shown below. No entries have yet been made in the ledgers.

Date 2012 Details Credit note number

Total £

VAT £

Net £

31 July Delta CN101 360 60 300

31 July Romeo CN102 120 20 100

Totals 480 80 400

What will be the entries in the purchases ledger?

Purchases ledger


Debit

Credit

Picklist: Delta, Net, Purchases, Purchases ledger control, Purchases returns, Romeo, Sales, Sales ledger control, Sales returns, VAT, Total.


General ledger


Debit

Credit

Picklist: Delta, Net, Purchases, Purchases ledger control, Purchases returns, Romeo, Sales, Sales ledger control, Sales returns, VAT, Total.



43 GERRARD

• Gerrard makes purchases by cash and on credit.

• Gerrard’s credit suppliers offer him a 3% discount for payment within 14 days.

• You are employed by the business as a bookkeeper.

• The business uses a manual accounting system.

• Double entry takes place in the general ledger. Individual accounts for payables are kept in a subsidiary ledger as memorandum accounts.

• The following transactions have taken place today, 31 December 2012, and require recording in the purchases day book.

Net £

Ferguson Florals 100.00

Ollie & Co 200.00

Suarez 150.00

Manchester MOTs 230.00

Purchases day book

Date Invoice No. Supplier name Total £

VAT £

Net £

Show how the transactions will be recorded in the general and the subsidiary purchases ledger.



QUESTIONS


Posting to purchases ledger




44 SLCA AND SALES LEDGER

Explain the difference between the sales ledger control account in the general ledger and the subsidiary (sales) ledger.

QUESTIONS


45 STATEMENTS

Consider the following statements:

(i) The sales day book and the receivables ledger are where the double entries for credit sales are made.

(ii) In double entry bookkeeping total debit entries must always equal total credit entries.

Are the statements true or false?

Statement (i) Statement (ii)

A True True

B True False

C False True

D False False



46 SALES DAY BOOK

The totals of the columns in the sales day book for a month are: £ Total sales 12,000 VAT 2,000 Net sales 10,000 What are the required accounting entries in the general ledger?

QUESTIONS


47 SALES RETURNS

The totals of the columns in the sales returns day book for a month are:

£ Total sales returns 1,200 VAT 200 Net sales returns 1,000 What are the required accounting entries in the general ledger?



48 SALES REVENUE

The sales revenue account is:

A credited with the total of sales made, including VAT

B credited with the total of sales made, excluding VAT

C debited with the total of sales made, including VAT

D debited with the total of sales made, excluding VAT

QUESTIONS


49 DESCRIPTION

Which of the following best describes the entries that are made using the sales day book totals at the end of each month?

A Debit sales revenue with total net sales, credit receivables ledger control with total gross sales and credit VAT with total VAT

B Debit sales revenue with total gross sales, credit receivables ledger control with total net sales and credit VAT with total VAT

C Debit receivables ledger control with total net sales, debit VAT with total VAT and credit sales revenue with total gross sales

D Debit receivables ledger control with total gross sales, credit sales revenue with total net sales and credit VAT with total VAT



50 TOM

Tom’s account is shown below:

Tom £ £ 1 January Bal b/d 500 17 January Returns out 100 12 January Sales 2,000 28 January Bank 1,600 23 January Sales 1,000 ––––– ––––– ––––– –––––

What is the balance on Tom’s account as at 31 January?

A Debit £500

B Debit £3,500

C Debit £1,800

D Credit £1,800

QUESTIONS


51 DOUBLE ENTRY

What is the double entry in the general ledger for a business that makes a purchase on credit for £1,000 plus £200 VAT?



52 DOUBLE ENTRY II

What is the double entry in the general ledger for the return of goods to the supplier that were previously purchased on credit for £200 plus £40 VAT, and which have not yet been paid for?

QUESTIONS


53 PQ LTD

PQ Ltd operates an accounting system using a purchases day book to record purchases made on credit, a subsidiary purchases ledger to record the amount due to each credit supplier, and a purchases ledger control account in the general ledger. The purchases day book is totalled and posted at the end of each day.

On 6 March 20X5 two purchases on credit were made and the purchase invoices received, as follows:

Supplier Purchases ledger Total of invoice VAT Purchases code £ £ £ X Ltd PL23 480 80 400 Y Ltd PL27 240 40 200

Describe the postings that will be made to the accounting records at the end of the day.



CHAPTER 8

PAYMENTS AND RECEIPTS

54 NYAH’S FLORIST

The account shown below is in the sales ledger of Nyah’s Florists. A cheque for £1,927 has been received from the customer on 30 June 2012 without a remittance advice.

Date Details Amount (£)

Date Details Amount (£)

1/5/12 Balance b/d 3,525 2/6/12 Bank 3,525

20/5/12 Invoice 355 1,180 26/6/12 CN 110 1,128

30/6/12 Invoice 413 3,055

Which item has not been included in the payment?

QUESTIONS


55 NYAH CONTINUED

• Nyah maintains a cash receipts book that does not form part of the double entry bookkeeping system.

• Nyah agrees and banks the cheques she receives every two weeks.

• Cash is banked as and when required.

• Nyah has received, and banked, the following on 15 June 2012.

• VAT on cash sales is at 20%.

CASH RECEIPTS BOOK

Date Narrative Total £

VAT £

SLCA £

Cash sales

£

15/6/2012 Cooper’s Corporation

77.15 77.15

15/6/2012 Kingdon Building 63.00 63.00

15/6/2012 Ryan’sCoffee Express

94.00 94.00

15/6/2012 Smith’s Salon 160.85 160.85

15/6/2012 Cash sale 72.00 12.00 60.00

TOTAL 467.00 12.00 395.00 60.00



Posting to subsidiary ledger




56 VICTOR

• Victor maintains a cash payments book that does not form part of the double entry bookkeeping system.

• Victor pays his payables at the end of every week.

• Victor paid the following on 15 June 2012.

• VAT on cash purchases is at 20%.

CASH PAYMENTS BOOK


VAT £

PLCA £

Cash purchases

£

15/6/12 Will’s Exhausts 692.07 692.07

15/6/12 Bumble Tyres 167.43 167.43

15/6/12 Paddy's Parts 41.58 41.58

15/6/12 Mosshill Motors

312.55 312.55

15/6/12 Cash 51.32 8.55 42.77

Total 1,264.95 8.55 1,213.63 42.77



Postings to purchases ledger


QUESTIONS


57 PETTY CASH

The petty cash imprest is restored to £100 at the end of each week. The following amounts are paid out of petty cash during week 23:

Stationery £14.10

Travelling costs £25.50

Office refreshments £12.90

Sundry payables £28.20

The amount required to restore the imprest to £100 is:

A £19.30

B £25.60

C £74.40

D £80.70



58 DODD LTD

You work in the accounts department of Dodd Ltd and the business has received the following cheques in the week ended 20 September 20X4. Today is 20 September 20X4.

Required:

(a) Review each cheque carefully to assess whether it is valid and make a note of any problems that you find.

(b) Write a brief note to Danny Hanso, your assistant, summarising the matters that you should check on cheques received.

Twelve pounds and 35p only ___________________

PURPLE BANK PLC 41 High Street Hitchin SG5 2BB

20 - 12 - 41

Date 12 September 20X4

Dodd Ltd Pay Only

_________________________________________________

£ 12.45

A B SANCHEZ

A B Sanchez 104012 20 - 12 - 41 10162254

Acc

ount

Pay

ee

Fifty pounds only _____________________________

ORANGE BANK PLC 2 Upper Road Ealing W5 1HT

19 - 14 - 72


Dodd Ltd Pay Only

_________________________________________________

£ 50.00

R RODRIGUEZ

R Rodriguez 101147 19 - 14 - 72 31415927

Acc

ount

Pay

ee

QUESTIONS


NOTE

To:

From:

Date:

Subject:

Fifty one pounds and sixty three pence only

AUBURN BANK PLC 9 Ford Road Taunton Somerset

41 - 17 - 60


Dodd Ltd Pay Only

_________________________________________________

£ 51.63

J E SMITH

J E Smith 213144 41 - 17 - 60 2171828

Acc

ount

Pay

ee

One thousand and four pounds only ___________

RED BANK PLC 16 Mill View Bow E3 2AT

64 - 70 - 25

Date 10 August 20X4

Dodd Ltd Pay Only

_________________________________________________

£ 1,004.00

P MENDES

141302 64 - 70 - 25 30451026

Acc

ount

Pay

ee



59 WRIGHTY

Wrighty maintains a petty cash book as a book of prime entry. It is not part of the double entry accounting system.

Receipts


Date Narrative VoucherNo

Total £

Postage £

Staff welfare

£

Travel£

VAT£

11/3/12 Bal B/d 100.00 14/3/12 Post 0123 12.85 12.85

11/3/12 Bank 50.00 14/3/12 Welfare 0124 12.00 12.00

14/3/12 Taxi 0125 26.40 22.00 4.40

14/3/12 Welfare 0126 10.00 10.00

14/3/12 Postage 0127 19.81 19.81

14/3/12 Rail fare 0128 5.40 5.40

14/3/12 Taxi 0129 18.00 15.00 3.00

14/3/12 Bal c/d 45.54

150.00 150.00 32.66 22.00 42.40 7.40

15/3/12 Bal b/d 45.54

What will be the postings to the general ledger?


QUESTIONS


60 THE RIVERBANK

The Riverbank maintains a petty cash book as a book of prime entry and it forms part of the double entry accounting system.

Receipts



Total £

Postage £

Tea and Coffee

£

Travel£

VAT£

18/6/12 Bal b/d 55.00 19/6/12 Post 03987 1.54 1.54

18/6/12 Bank 45.00 19/6/12 Tea 03988 12.21 12.21

20/6/12 Petrol 03989 38.40 32.00 6.40

21/6/12 Coffee 03990 2.86 2.86

21/6/12 Postage 03991 9.12 9.12

21/6/12 Rail fare 03992 5.55 5.55

23/6/12 Petrol 03993 15.85 13.21 2.64

24/6/12 Bal c/d 14.47

100.00 100.00 10.66 15.07 50.76 9.04

25/6/12 Bal b/d 14.47





61 JEFFERSON

Jefferson’s maintains a petty cash book as a book of prime entry and forms part of the double entry accounting system.

Receipts



Total £

Postage £

Tea and Coffee

£

Travel£

VAT£

25/6/12 Bal b/d 140.00 25/6/12 Tea 01044 15.06 15.06

25/6/12 Bank 10.00 26/6/12 Coffee 01045 12.11 12.11

26/6/12 Petrol 01046 17.04 14.20 2.84

26/6/12 Petrol 01047 25.92 21.60 4.32

28/6/12 Postage 01048 1.87 1.87

29/6/12 Coffee 01049 12.12 12.12

30/6/12 Petrol 01050 25.20 21.00 4.20

01/7/12 Bal c/d 40.68

150.00 150.00 1.87 39.29 56.80 11.36

02/7/12 Bal b/d 40.68



QUESTIONS


62 VAT REGISTERED

A business which is registered for VAT has two receipts on 2 June 20X6:

• Receipt of £12,000 in respect of a credit sale made some days previously.

• Receipt of £1,200 in respect of a cash sale made that day.

Explain how these two receipts will be shown in the cash receipts book.



63 CASH RECEIPTS

The totals of the columns in the cash receipts book for a week are: £ Rent received 500 Received from receivables 2,000 Cash sales 1,000 VAT 200 ––––– Total receipts 3,700 –––––

Assuming that the cash receipts book is not part of the general ledger, state the entries in the general ledger that are required at the end of the week.

QUESTIONS


64 DOCUMENTS

What is the purpose of the following documents?

(a) Receivables’ statement

(b) Aged debt analysis

(c) Sales invoice



65 BB LTD

BB Ltd prepares an aged debt analysis as at 31 March 20X5. About which receivable should the company be most concerned?

Customer Total due £

< 30 days £

30 – 60 days£

> 60 days £

A Smith 1,000 900 100 –

B Jones 2,000 1,200 800 –

C White 1,500 – 1,100 400

QUESTIONS


66 PROBLEM RECEIVABLE

What action would you recommend to deal with any problem receivable that you identify after drawing up an aged debt analysis?



67 ENTERPRISE

You are the accounts assistant at Enterprise Ltd. Reproduced below are the subsidiary sales ledger accounts for two credit customers for the month of March 20X8.

Archer Ltd

£ £ 1/3 Bal b/d 149.07 4/3 CN027 24.623/3 Inv 147 231.44 19/3 CRB 355.896/3 Inv 152 416.75 12/3 Inv 164 802.24 22/3 Inv 181 373.11

Forest Ltd

£ £ 1/3 Bal b/d 206.75 16/3 CRB 304.157/3 Inv 154 331.02 16/3 DAB (discount allowed) 26.8712/3 Inv 163 917.00 24/3 Inv 190 442.35

Required:

(a) Prepare statements using the blank proformas below to send to each of these customers at the end of March.

(b) Write a brief note identifying any problems there appear to be in respect of collections from these receivables.

STATEMENT OF ACCOUNT

To: ENTERPRISE LTD 21 Kirk Lane Leeds LS1 4AB

Statement date: Tel: 0113 201407

Date Transaction Debit Credit Balance £ £ £

QUESTIONS



To: ENTERPRISE LTD 21 Kirk Lane Leeds LS1 4AB

Statement date: Tel: 0113 201407




68 BIGGS

You are a trainee accounting technician employed at Biggs Ltd. Shown below is the subsidiary sales ledger account for Brazil Ltd, one of the company’s major credit customers.

Brazil Ltd

£ £ 2/2 Inv 2430 206.92 30/3 CRB 301.0013/3 Inv 2461 308.44 30/3 Discounts allowed (DAB) 7.4420/3 Inv 2472 179.16 7/4 Inv 2499 448.74 10/5 Inv 2516 91.22 22/5 Inv 2529 307.14 6/6 Inv 2544 269.87 17/6 Inv 2558 406.10

Your computer accounting system has generated the following aged debt analysis for this account at 30 June 20X5:

Customer Total due £

< 30 days £

30 – 60 days£

> 60 days £

Brazil Ltd 1,909.15 675.97 398.36 834.82

The company’s normal credit terms are 60 days.

Required:

(a) Prepare a statement to send to Brazil Ltd at 30 June 20X5, using the blank statement below.

(b) Write a memorandum to Zebedee Zidane, your supervisor, expressing any concerns you may have concerning this account.

QUESTIONS



To: BIGGS LTD 18 Green Lane Livingston EH54 6BT Statement date: Tel: 0144 716029




69 HEADINGS

State the typical column headings of a (non-analysed) cash payments book.

QUESTIONS


70 DISCOUNTS RECEIVED

How are discounts received recorded?



71 PARIS

Payment is made to Paris Ltd of £1,950 after having deducted a prompt payment discount available of £50. This clears the debt due to Paris Ltd. Show the opening balance and entries to be made in Paris Ltd’s ledger account in the subsidiary purchases ledger after payment is made.

Paris Ltd £ £ ––––– ––––– ––––– –––––

QUESTIONS


72 PETTY CASH

Which system imposes better control over petty cash: an imprest system or a non-imprest system?



73 PETTY CASH COUNT

Internal audit is carrying out a surprise petty cash count which is supposed to operate on an imprest system with a float of £200. Inside the box is:

• notes totalling £65.

• coins totalling £14.

• paid vouchers totalling £111.

What should the auditor deduce?

QUESTIONS


74 PETTY CASH FLOAT

An imprest system of petty cash has a float of £100. At the end of week 21 there are paid vouchers totalling £56 and £44 of cash in the box. How much cash should be requisitioned to restore the petty cash to its imprest level?

ADVANCED QUESTIONS



CHAPTER 2

BOOKS OF PRIME ENTRY

75 JUNIORS

Juniors Ltd is a successful toy shop. Its purchases are analysed into pre-school toys, board games and other toys. A separate purchases returns day book is not kept, so any credit notes received are recorded as negative amounts in the purchases day book.

Today’s date is 8 May 20X4 and the purchase invoices and credit notes listed below have just been received.

The company’s policy is to assign a unique number to each purchase invoice and credit note as they are received. The last numbers used were 00147 for invoices and CN0076 for credit notes.

Purchase invoices Description of toys received Amount net VAT received of VAT amount £ £ Supplier Renfree Ltd Babies’ rattles 146.20 29.24 Goldspink Ltd Computer games 403.17 80.63 Evans Ltd Monopoly board games 84.60 16.92 Sandford Ltd Teenagers’ golf clubs 213.44 42.68 Richings Ltd Teenagers’ tennis racquets 309.62 61.92 Asforis Ltd Babies’ teddy bears 216.85 43.37 Wiseman Ltd Cluedo board games 61.87 12.37 McClean Ltd Scrabble board games 70.60 14.12

Credit notes Description of toys returned Amount net VAT of VAT amount £ £ Supplier Aaron Ltd Damaged board games 42.00 8.40 Calvin Ltd Surplus computer games 73.16 14.63 You are required to:

(a) Set up the columns for the analysed purchases day book.

(b) Enter each of the above invoices and credit notes into the purchases day book.

(c) Total each of the columns in the purchases day book.

QUESTIONS


76 STEVENS LTD

Stevens Ltd operates an analysed purchases day book, analysing purchases by the geographical area from which the purchases are being made. The areas concerned are:

Zone 1 London region

Zone 2 Scotland region

Zone 3 Other UK

The company is registered for VAT.

Today’s date is 14 September 20X2. The company has received the following invoices in the post today:

Supplier Region Amount net VAT of VAT £ £ Bradley Ltd London 210.00 42.00 Hannah Ltd Wales 470.20 94.04 Spearritt Ltd London 402.00 80.40 Lee Ltd Scotland 1,076.00 215.20 O’Meara Ltd Northern Ireland 317.60 63.52 Cattermole Ltd Scotland 62.44 12.48 Barrett Ltd London 107.80 21.56 You are required to:

(a) Set up the columns for the purchases day book.

(b) Enter each of the above invoices into the purchases day book.

(c) Total each of the columns in the purchases day book.



CHAPTER 3

DOUBLE ENTRY BOOKKEEPING – INTRODUCTION

77 BUSINESS EXPENDITURE

Given below are a number of typical examples of business expenditure.

(a) Rent of a warehouse

(b) Purchase of premises for a factory

(c) Fitting out of the factory for production purposes

(d) Legal fees incurred in purchasing the factory

(e) Legal fees incurred in drawing up a rental contract for the warehouse

(f) Wages of the owner’s son

(g) Purchase of cars in order to resell them

(h) Purchase of a car for the use of the sales manager

(i) Business rates on the warehouse

(j) Business rates on the factory

Note: Rates are a local government tax.

Required:

Classify each of these items as either capital expenditure or revenue expenditure. (5 marks)

QUESTIONS


78 MARK WAUGH

Mark Waugh starts in business. Before any sales, he has purchased fixtures £12,000, motor vehicle £30,000 and inventories £21,000. Although he has paid in full for the fixtures and motor vehicle, he still owes £8,400 for some of the inventory. His brother Steve has lent him £18,000. Mark, after the above, has £16,800 in the business bank account and £600 cash in hand. Calculate Mark's capital?



CHAPTER 4

LEDGER ACCOUNTING

79 HASTINGS PLC

You are the assistant accountant at Hastings plc, a small business that is registered for VAT.

Detailed below is a list of balances on the accounts in the general ledger on 30 June 20X1 for the company. You are required to prepare an initial trial balance and to total the columns of the trial balance. Please use the form provided overleaf to set out your answer.

£ Administration overheads 5,743.90 Irrecoverable debt 575.33 Bank account (in funds) 9,116.61 Capital 48,281.35 Non-current assets 62,432.00 PAYE/NIC liability 5,222.38 Petty cash control 156.96 Purchases 165,819.41 Purchases ledger control 28,233.49 Purchases returns 7,242.96 Sales 372,238.56 Sales ledger control 70,098.61 Sales returns 10,387.54 Selling and distribution overheads 7,806.45 Inventory 39,012.25 Sundry expenses 1,898.43 VAT control (credit balance) 16,713.76 Wages/salaries expense 104,885.01

QUESTIONS


Account name Debit £

Credit £



80 ROBERT DEMPSTER

Robert Dempster runs a wholesale business supplying small medical items to chemists’ shops, sports clubs and local businesses. All his transactions are on credit. His transactions in the first month of trading are listed below.

(a) Opened a bank account in the name of Surgical Supplies and deposited £10,000.

(b) Bought a delivery van for £4,000 from Vans Galore on credit.

(c) Bought bandages, sticking plasters and lint from Surgiplast for £150 on credit.

(d) Sold bandages and one box of antiseptic cream to Woodside Rugby Club for £65 on credit.

(e) Paid Vans Galore £2,000 and Surgiplast Ltd £150.

(f) Received a cheque for £65 from Woodside Rugby Club.

(g) Paid Robert Dempster’s private electricity bill of £130.

Required:

(i) Complete the following bank account. Cash at bank account

£ £ (a) Capital 10,000 Vans Galore ........Woodside Rugby Club 65 Surgiplast Ltd ........ (g) ................. 130 Balance c/d ........ –––––– –––––– 10,065 10,065 –––––– –––––– Balance b/d ........

(ii) Fill in the gaps in the following sentences to explain the principles behind the treatment of (g) above.

The ………………………concept is the principle underlying the treatment of the owner's private expenses paid by the business. This concept requires the transactions of a ……………….to be recorded separately from those of the …………….of a business. Consequently, this payment could not be analysed as 'electricity' as it is not the electricity expense of the business. It may be thought of as a withdrawal of cash from the business by the owner.

QUESTIONS


81 TRIAL BALANCE

State THREE reasons why a trial balance may not balance?



CHAPTER 5

ACCOUNTING FOR CREDIT SALES, VAT AND DISCOUNTS

82 CHUNG TRADING

You work as an accounts assistant for Chung Trading, a supplier of building materials. Today (14 March 20X1) your business has issued three invoices, reproduced below. Your task is to write up these invoices in the blank sales day book provided.

Sales are analysed into three categories: wood products, plumbing products and roofing products. Product codes start with W, P or R respectively depending on their category.

Required:

Write up the analysed sales day book and total each of the columns.

INVOICE

Chung Trading Moor Park Estate Leeds LS18 2BN

Tel: 0113 255 3604

Invoice no: 14243

Date/tax point: 14 March 20X1

VAT reg no: 461 1047 22

Product code Description Quantity VAT rate Unit price Total ex VAT % £ £ P257 Brass taps 8 20 42.00 336.00 P604 Shower head 2 20 36.00 72.00 R048 Red tiles 200 20 0.60 120.00 R119 Lead flashing 3 20 15.20 45.60 W206 Fence post 8 20 12.00 96.00

669.60 Trade discount (10%) (66.96) ––––––– 602.64 VAT at 20% 120.52 ––––––– Total payable 723.16 –––––––

Terms: 30 days

Invoice to:

Abacus Ltd 3 Dingle Dell Leeds LS7 1FG

QUESTIONS


INVOICE


Tel: 0113 255 3604

Invoice no: 14244


VAT reg no: 461 1047 22

Product code Description Quantity VAT rate Unit price Total ex VAT % £ £ R049 Black tiles 250 20 0.50 125.00 W171 Plywood sheet 12 20 15.00 180.00

305.00 Trade discount – –––––– 305.00 VAT at 20% 61.00 –––––– Total payable 366.00 ––––––

Terms: 3% discount offered if paid within 14 days.

Invoice to: Baltic Ltd 72 East Side Leeds LS4 2FE



INVOICE


Tel: 0113 255 3604

Invoice no: 14245


VAT reg no: 461 1047 22

Product code Description Quantity VAT rate Unit price Total ex VAT % £ £ W244 Teak door 1 20 195.00 195.00 R280 Chimney pot 2 20 85.00 170.00 P257 Brass taps 2 20 42.00 84.00 R048 Red tiles 100 20 0.60 60.00

509.00 Trade discount (5%) (25.45) –––––– 483.55 VAT at 20% 96.71 –––––– Total payable 580.26 ––––––

Terms: 30 days

SALES DAY BOOK

Date Invoice no

Customer name Total £

VAT £

Wood £

Plumbing £

Roofing £

Invoice to: Chittenden Ltd 12 Upper Lane Milton Keynes MK10 4BA

QUESTIONS


83 BONIFACE LTD

You work in the sales department of Boniface Ltd, a supplier of general goods. Today (4 November 20X7) your business has issued three credit notes, reproduced below.

Sales and sales returns are analysed into four categories (01, 02, 03, 04) depending on the salesman who initiated the sale.

Required:

(a) Write up the analysed sales returns day book and total each of the columns.

(b) Write a short memo to Abi Kanobe, your new assistant, explaining the role of credit notes in a sales system.

CREDIT NOTE

Boniface Ltd 7 The Cutting Knebworth Herts AL6 8AE

Tel: 01438 212910

Credit note no: CN812

Date/tax point: 4 November 20X7

VAT reg no: 710 2106 64

Salesman code Description Quantity VAT rate Unit price Amount before VAT % £ £ 02 Computer case 2 20 48.00 96.00

96.00 VAT at 20% 19.20 –––––– Total amount 115.20 ––––––

Reason for credit: Goods returned since damaged.

Credit note to:

Agate Ltd 41 Royal Crescent, Esher Surrey KT10 8AA



CREDIT NOTE


Tel: 01438 212910



VAT reg no: 710 2106 64

Salesman code Description Quantity VAT rate Unit price Amount before VAT % £ £ 04 Battery 3 20 21.50 64.50


Reason for credit: Goods not ordered.

CREDIT NOTE


Tel: 01438 212910



VAT reg no: 710 2106 64

Salesman code Description Quantity VAT rate Unit price Amount before VAT % £ £ 01 MP3 player 1 20 10.00 10.00


Reason for credit: Adjustment to price.

Credit note to:

Borax Ltd 2 Upper Lane South, Twickenham Middlesex TW2 6AA

Credit note to: Carfax Ltd 14 College Lane Oxford OX1 3FF

QUESTIONS


SALES RETURNS DAY BOOK

Date Credit note no


VAT £

01 £

02 £

03 £

04 £



84 CREDIT CONTROL

Which of the following pieces of information is useful for the purposes of credit control?

i Credit facilities

ii Credit taken against a set credit limit

iii Aged receivables analysis

iv Credit card number

A i, ii and iii only

B ii and iii only

C ii and iv only

D All of the above

QUESTIONS


CHAPTER 6

ACCOUNTING FOR CREDIT PURCHASES, VAT AND DISCOUNTS

85 ALEX STUDENT

You are Alex Student, an accounting technician at the head office of Ward & Ward, a retail company. You have today (27 July 20X1) received an invoice from Dickens & Co but have noticed an error in the calculation of VAT.

The invoice details are listed below:

Invoice date: 19 July 20X1

Invoice number: 117761

Order number: 9890

Invoice value:

Net £1,600.00

VAT £400.00

Gross £2,000.00

Address: Dickens & Co

154 Upton Street

London

EC1N 8AB

Required:

You are required to write a letter to Miss James in the sales department of Dickens & Co highlighting the error and the action required.

Please set out your letter on the blank notepaper provided below.



Ward & Ward 15 Tyne

Oakland Retail Park Moortown NM18 9AA

QUESTIONS


86 HAUSER LTD

You work as an accounts assistant at Hauser Ltd. You have been given the purchase order, delivery note and purchase invoice in respect of a recent purchase of goods from PC Traders Ltd.

Required:

(a) Check each document carefully and note any discrepancies.

(b) Write a memo to Rosemary Smith, your supervisor, summarising your findings and recommending any required action to be taken.

PURCHASE ORDER

HAUSER LTD To: PC Traders Ltd Denzil House 4 Dockside Road Longford Road Liverpool L3 4FF Liverpool L2 1BE

Tel: 0151 243864

Date: 26 July 20X7

Purchase order no: 2177

Code Quantity Description Unit price (exclusive of VAT) £ ATI346 15 Graphics cards 40.00 GIG144 8 Motherboards 85.00 AMD712 6 Processors 62.00

DELIVERY NOTE

PC Traders Ltd 4 Dockside Road Liverpool L3 4FF

Tel: 0151 310998

Delivery note no: 2144

Date: 2 August 20X7

Code Description Quantity

ATI348 ATI R9000 graphics card 15

GIG144 Gigabyte 4XP motherboard 8

AMD712 AMD 2000+ processor 5

Goods received in good condition: Print name ................................................................

Signature ....................................................................

Date ...........................................................................



INVOICE

PC TRADERS LTD 4 Dockside Road Liverpool L3 4FF

Tel: 0151 310998

Invoice no: 8106

Date/tax point: 4 August 20X7

VAT reg no: 234 1116 92

Purchase order no: 2177

Code Description Quantity VAT rate Unit price Amt ex VAT % £ £ ATI348 ATI R9000 15 20 48.00 720.00 graphics card GIG144 Gigabyte 4XP 8 20 85.00 680.00 motherboard AMD712 AMD 2000+ 6 20 62.00 372.00 Processor

1,772.00 VAT at 20% 354.40 ––––––– Total payable 2,126.40 –––––––

Invoice to:

Hauser Ltd Denzil House, Longford Road Liverpool L2 1BE

QUESTIONS


CHAPTER 7

CONTROL ACCOUNTS AND SUBSIDIARY LEDGERS

87 SALES RETURNS DAY BOOK

Given below is a completed sales returns day book for the week ending 11 November 20X4. At the start of the week Haig Ltd owed £400 to your company.

Required:

(a) Total the columns of the sales returns day book.

(b) Post the totals of the sales returns day book to the relevant general ledger accounts.

(c) Post each individual credit note in the sales returns day book to the relevant account in the subsidiary (sales) ledger.

SALES RETURNS DAY BOOK

Date Credit note no


VAT £

Net £

5.11.X4 CN255 Roberts Ltd 283.20 47.20 236.00

6.11.X4 CN256 Kitchener Ltd 85.80 14.30 71.50

8.11.X4 CN257 Haig Ltd 96.00 16.00 80.00

8.11.X4 CN258 Jellicoe Ltd 185.76 30.96 154.80

9.11.X4 CN259 Kitchener Ltd 367.20 61.20 306.00

11.11.X4 CN260 Anglesey Ltd 112.80 18.80 94.00

11.11.X4 CN261 Roberts Ltd 27.12 4.52 22.60

General ledger accounts

Sales returns account

£

£

VAT account

£

£

Sales ledger control account

£

£



Subsidiary (sales) ledger accounts

Roberts Ltd

£

£

Kitchener Ltd

£

£

Haig Ltd

£

£

Jellicoe Ltd

£

£

Anglesey Ltd

£

£

QUESTIONS


88 GENERATIONS LTD

Shown below are the purchases day book and purchases returns day book for Generations Ltd for the week ending 24 August 20X5.

PURCHASES DAY BOOK

Date Invoiceno

PL code

Supplier Total £

VAT £

Net £

19.8.X5 4062 PL22 Stewart Ltd 124.80 20.80 104.00 4063 PL07 Frakes Ltd 31.44 5.24 26.20 21.8.X5 4064 PL20 Spiner Ltd 54.92 9.15 45.77 22.8.X5 4065 PL13 Meaney Ltd 25.30 4.21 21.09 4066 PL12 McFadden Ltd 52.23 8.70 43.53 24.8.X5 4067 PL03 Burton Ltd 85.94

–––––– 14.32

–––––– 71.62

––––––– 374.63

–––––– 62.42

–––––– 312.21

–––––––

PURCHASES RETURNS DAY BOOK

Date Credit note no

PL code

Supplier Total £

VAT £

Net £

22.8.X5 CN124 PL19 Sirtis Ltd 14.40 2.40 12.00 24.8.X5 CN125 PL22 Stewart Ltd 19.80

–––––– 3.30

–––––– 16.50

–––––– 34.20

–––––– 5.70

–––––– 28.50

––––––

Extracts from the company’s general ledger and subsidiary purchases ledger are also provided below.

General ledger

Purchases

£ £

18.8.X5 Bal b/d 4,562.12

Purchases returns

£ £

18.8.X5 Bal b/d 904.77

VAT

£ £

18.8.X5 Bal b/d 1,170.22



Purchases ledger control account

£ £

18.8.X5 Bal b/d 1,412.90

Subsidiary ledger

Burton Ltd PL03

£ £

18.8.X5 Bal b/d 24.72

Frakes Ltd PL07

£ £

18.8.X5 Bal b/d –

McFadden Ltd PL12

£ £

18.8.X5 Bal b/d 87.92

Meaney Ltd PL13

£ £

18.8.X5 Bal b/d 106.07

Sirtis Ltd PL19

£ £

18.8.X5 Bal b/d 14.10

Spiner Ltd PL20

£ £

18.8.X5 Bal b/d 54.16

Stewart Ltd PL22

£ £

18.8.X5 Bal b/d 41.02

You are required to post the entries for the week from the purchases day book and purchases returns day book to the general ledger and to the subsidiary ledger.

QUESTIONS


CHAPTER 8

PAYMENTS AND RECEIPTS

89 VASE LTD

Vase Ltd operates an imprest system for petty cash. At 1 September there was a float of £150, but it was decided to increase this to £200 from 1 October onwards. During September, the petty cashier received £25 from staff for using the photocopier and a cheque for £90 was cashed for an employee. In September, cheques were drawn for £500 for petty cash.

How much cash was paid out as cash expenses by the petty cashier in September?

A £385

B £435

C £515

D £615



90 GLOBAL LTD

You work as the cashier’s assistant at Global Ltd, a small company not registered for VAT. You have received the following monthly statement from Lewis Ltd, one of your company’s suppliers.

Lewis Ltd 12 High Street Bigtown BG1 2DE Date: 31 May 20X2

To: Global Ltd 4 The Rise Bigtown BG2 1FG

S T A T E M E N T

Date Transaction Total £ 02.2.X2 Invoice 2161 20.31 04.3.X2 CN1402 (8.08) 11.3.X2 Invoice 2182 41.30 12.4.X2 Invoice 2200 102.97 15.4.X2 Invoice 2314 67.05 20.4.X2 CN1419 (50.00) 02.5.X2 Invoice 2377 27.11 07.5.X2 Invoice 2389 44.56 19.5.X2 Invoice 2410 92.30 21.5.X2 Invoice 2450 57.06 28.5.X2 Invoice 2506 41.35 –––––– 31.5.X2 Balance payable 435.93 ––––––

Our credit terms are 60 days, with a 2% discount for payments made within one week.

Lewis Ltd’s account in the subsidiary purchases ledger appears as follows at 31 May 20X2:

QUESTIONS


Lewis Ltd

£ £ 20 Apr CN1419 50.00 02 Feb Inv 2161 20.31 11 Mar Inv 2182 41.30 12 Apr Inv 2200 120.97 15 Apr Inv 2314 67.05 02 May Inv 2377 27.11 07 May Inv 2389 44.56 19 May Inv 2410 92.30 21 May Inv 2450 77.06 28 May Inv 2506 41.35

Invoice 2161 is unpaid since goods costing £8.08 were unsatisfactory. Invoice 2182 is the subject of a dispute which is not yet resolved. All other invoices are agreed as payable in due course.

Global Ltd currently pays bank overdraft interest at 10% pa.

You are required to:

(a) Compare the statement to the ledger account and identify any discrepancies. You can assume that the statement is accurate, so any amendments should be made to the ledger account.

(b) Recommend whether the discount offered should be taken up on eligible invoices.

(c) Calculate the total that you recommend should be paid to Lewis Ltd in the next cheque run.



91 LEWIS LTD

Attached to the monthly statements that it sends out, Lewis Ltd (the company in the previous question) prints a remittance advice that can be returned with payment. The remittance advice sent to Global Ltd on 31 May 20X2 appears as follows.

R E M I T T A N C E A D V I C E

Company name:

Address:

Date:

Date Our ref Amount Discount taken Paid £ £ £ 02.2.X2 Inv 2161 20.31 04.3.X2 CN 1402 (8.08) 11.3.X2 Inv 2182 41.30 12.4.X2 Inv 2200 102.97 15.4.X2 Inv 2314 67.05 20.4.X2 CN 1419 (50.00) 02.5.X2 Inv 2377 27.11 07.5.X2 Inv 2389 44.56 19.5.X2 Inv 2410 92.30 21.5.X2 Inv 2450 57.06 28.5.X2 Inv 2506 41.35 Total paid

You are required to complete this remittance advice following your answer to the previous question. The next cheque run is scheduled for 3 June 20X2 with the cheques being posted out that afternoon.

To:

£

QUESTIONS


92 ARCHER LTD

You are acting as the petty cashier of Archer Ltd while the usual petty cashier is on holiday. Listed below are the details of the petty cash vouchers that you have paid during the week ending 20 August 20X8. At the end of each week a cheque is drawn for cash to bring the petty cash box back to its imprest amount of £200. Date Voucher no Amount Details £ 15 Aug 2417 20.00 Window cleaner to clean office windows. 2418 12.00 Computer printer cartridge (including £2 VAT). 17 Aug 2419 6.55 Special delivery postage. 2420 2.40 Milk, coffee, biscuits (including £0.40 VAT). 2421 18.74 Train fare for sales rep. 18 Aug 2422 1.08 Newspapers. 2423 3.50 Headache pills for first aid kit. 20 Aug 2424 18.00 Taxi fare (including £3 VAT). 2425 4.80 Stationery (including £0.80 VAT). You are required to:

(a) Write up the vouchers for the week in the petty cash book provided below.

(b) State the amount of the cheque required to be drawn to return the petty cash at the end of the week to its imprest level.

(c) Total the columns in the petty cash book.

(d) Post the petty cash book totals to the general ledger accounts provided.



PETTY CASH BOOK

Receipts Payments

Date Details Total £

Date Details Voucher no

Total£

VAT £

Postage £

Office Expense

£

Travel£

General ledger accounts

VAT account

£ £

14 Aug Bal b/d 4,760.24

Postage account

£ £

14 Aug Bal b/d 602.41

QUESTIONS


Office expenses account

£ £

14 Aug Bal b/d 890.74

Travel expenses account

£ £

14 Aug Bal b/d 752.49



93 JOHN FIELD LTD

You are acting as the petty cashier for John Field Ltd, a small company that is not registered for VAT.

The following is a summary of the petty cash transactions for May 20X2.

01 May Receive from cashier £300 as petty cash float £ 02 May Postage 18 03 May Travelling 12 04 May Cleaning 15 07 May Petrol for delivery van 22 08 May Travelling 25 09 May Stationery 17 11 May Cleaning 18 14 May Postage 5 15 May Travelling 8 18 May Stationery 9 Cleaning 23 20 May Postage 13 24 May Delivery van 5,000 mile service 43 26 May Petrol 18 27 May Cleaning 21 29 May Postage 5 30 May Petrol 14 You are required to:

(a) Rule up a suitable petty cash book with analysis columns for expenditure on cleaning, motor expenses, postage, stationery, travelling.

(b) Enter the month’s transactions.

(c) Enter the receipt of the amount necessary to restore the imprest and carry down the balance on the first day of the following month.

(d) Assuming that the petty cash book is not part of the general ledger, state in journal form how the double entry for the expenditure for the month is completed.

QUESTIONS


94 SQUAD LTD

You are the cashier’s assistant at Squad Ltd. The company makes sales on both credit terms and cash terms. Receivables pay their amounts due by cheque after 30 days; all sales are standard rated for VAT at 20%.

Today’s date is 4 September 20X5. Cash sales today were £120 (inclusive of VAT). The following cheques have been received today from receivables:

£ A Strider 247.25 M Kenzie 104.62 D Mello 349.20 (after taking £10.80 gross PPD) B Thomas 427.26 B Rock 126.10 (after taking £3.90 gross PPD) M Frick 307.14 Required:

(a) Write up the cash receipts book and discounts allowed book given below. Total each of the columns and demonstrate that the totals cross-cast where appropriate.

(b) Assuming that the cash book is part of the general ledger, state the further accounting entries required to the general ledger for both day books.

CASH RECEIPTS BOOK


VAT £

Receivables£

Cash sales £



DISCOUNTS ALLOWED BOOK


VAT £

Net £

QUESTIONS


95 SOLID LTD

You are the junior cashier at Solid Ltd. Below is the cheque listing for the company showing all the cheques received from receivables in the week ending 14 February 20X8.

Customer Cheque amount Gross prompt payment discount taken £ £ D Asher 74.62 L Maffiah 174.60 5.40 G Mann 107.64 A Burrell 422.91 M Morgan 176.40 3.60 D Skatt 150.00 During the week there were cash sales totalling £480 including the standard rated VAT which is charged at 20% on all sales.

Required:

(a) Write up the cash receipts book and discounts allowed book provided below for the week, and total all the columns.

(b) Post the totals from the cash receipts book and discounts allowed book to the relevant general ledger accounts. You are not required to include dates in the ledger entries.

(c) Post the individual receipts from the cash receipts book and discounts allowed from the discounts allowed book to the subsidiary ledger accounts in the sales ledger. Again, you are not required to include dates in the ledger entries.

CASH RECEIPTS BOOK


VAT £

Receivables£

Cash sales £



DISCOUNTS ALLOWED BOOK


VAT £

Net £

QUESTIONS


96 BROWN LTD

You are the accounts assistant at Brown Ltd, a small company which is not registered for VAT.

Listed below are payments to be made to credit suppliers on 31 May 20X2. You are required to:

(a) Enter the payments into the cash payments book for the week ending 31 May.

(b) Post from the cash book and the discounts received for the week ending 31 May to the appropriate general ledger accounts.

(c) Post from the cash book and the discounts received for the week ending 31 May to the appropriate subsidiary (purchases) ledger accounts.

Payments to be processed on 31 May Supplier Payment PPD received B Able £723.78 £6.15 Mann Ltd £556.98 Sykes & Sons £689.00 £5.86 Dickens Ltd £879.95 £11.23 Barber & Co £364.84 Ward & Ward £287.66 The last cheque used in the previous week was number 122176.

CASH PAYMENTS BOOK

Date Details Cheque no

Total £

Purchasesledger

£

Other £



DISCOUNTS RECEIVED BOOK


VAT £

Net £

General ledger

Account : Purchases ledger control

Debit Credit

Date Details Amount £


25 May Balance b/d 52,225.25

Account : Purchases

Debit Credit




Account : Discount received

Debit Credit



25 May Balance b/d 257.90

QUESTIONS


Purchases ledger

Account : B Able

Debit Credit




Account : Barber & Co

Debit Credit




Account : Dickens Ltd

Debit Credit




Account : Mann Ltd

Debit Credit






Account : Sykes & Sons

Debit Credit




Account : Ward & Ward

Debit Credit




QUESTIONS


97 RUNNERS LTD

Shown below is the cheque listing for Runners Ltd for the week ended 31 August 20X7.

Cheque listing Supplier Purchase ledger Cheque no Cheque amount Gross PPD received code £ £ Jackson Ltd PL17 12042 123.06 Radcliffe Ltd PL31 12043 310.40 9.60 Merry Ltd PL24 12044 425.62 Francis Ltd PL12 12045 979.20 40.80 Wells Ltd PL36 12046 506.50 Lewis Ltd PL21 12047 227.48 Cash purchases 360.00

The figure for cash purchases is inclusive of VAT at 20%.

You are required to:

(a) Enter the above figures in the cash payments book and discounts received book provided and total the columns at the end of the week.

(b) Post the totals to the general ledger accounts provided.

(c) Post the individual entries to the subsidiary purchases ledger accounts provided.

CASH PAYMENTS BOOK

Date Details Cheque no

PL code

Total£

VAT£

Purchases ledger

£

Cash purchases and other

£



DISCOUNTS RECEIVED BOOK


VAT £

Net £

General ledger

Purchases ledger control account

£ £

25 Aug Bal b/d 8,264.70

VAT account

£ £

25 Aug Bal b/d 1,916.54

Purchases account

£ £

25 Aug Bal b/d 17,042.19

Discounts received account

£ £

25 Aug Bal b/d 2,166.95

QUESTIONS


Subsidiary ledger

Francis Ltd PL12

£ £

25 Aug Bal b/d 1,701.24

Jackson Ltd PL17

£ £

25 Aug Bal b/d 502.93

Lewis Ltd PL21

£ £

25 Aug Bal b/d 694.40

Merry Ltd PL24

£ £

25 Aug Bal b/d 474.02

Radcliffe Ltd PL31

£ £

25 Aug Bal b/d 1,024.67

Wells Ltd PL36

£ £

25 Aug Bal b/d 654.00



98 ALPHA

Alpha received a statement of account from a supplier Beta, showing a balance to be paid of £8,950. Alpha’s purchases ledger account for Beta shows a balance due to Beta of £4,140.

Investigation reveals the following:

1 Cash paid to Beta £4,080 has not been allowed for by Beta.

2 Alpha’s ledger account has not been adjusted for £40 of prompt payment discount disallowed by Beta.

3 Goods returned by Alpha £380 have not been recorded by Beta.

What discrepancy remains between Alpha’s and Beta’s records after allowing for these items?

A £9,310

B £390

C £310

D £1,070

QUESTIONS


99 SUPPLIER STATEMENT

A supplier sends you a statement showing a balance outstanding of £14,350. Your own records show a balance outstanding of £14,500.

The reason for this difference could be that:

A the supplier sent an invoice for £150 which you have not yet received

B the supplier has allowed you £150 cash discount which you had omitted to enter in your ledgers

C you have paid the supplier £150 which he has not yet accounted for

D you have returned goods worth £150 which the supplier has not yet accounted for

bookkeeping transactions -...

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