Acc 291 Week 3
Transactions
Accounting Principles
General Journal
Cash Account
Purchases ledger
Sales ledger
General ledger
Trail Balance
Jan 1 Started business by borrowing a loan of $50 000 from the Centrex Commercial Bank which was invested into the business along with his personal savings of $50 000. The loan carries an interest rate of 12% per annum. The following transactions took place during the year.
1 Purchased the following assets and paid for them by cash: Furniture and Fittings $30 000 Equipment $ 45000
A motor van was purchased on account from Saunders Ltd for $40 000. 2 Purchased computer parts for $36 000 cash
3 Sold parts for $60 000 cash
4 Purchase goods on account from Android Enterprise $18 000; ABC Ltd $15 000 and Peter Smith …show more content…
$24 000. Goods purchased from Peter Smith was subjected to credit term 5/12:n/30
5 Sold goods on account to Monterry and Sons $52 000; Tainey Enterprises $41 000 and Smat Refined Goods $65 000. Offered Smat Refined Goods discount on the following terms 5/10; n/30
6 Returned defective goods to ABC Ltd $2 300 and Monterry and Sons returned parts costing $3 500 to the firm due to poor quality.
7 Paid the following expenses by cash Wages $30 000; Office supplies $8 000; Electricity $6 000; Telephone $7 000; Rent $15 000
8 Insurance was purchased at the beginning of the year for $12 000. The insurance was for the two years 2011 and 2012.
9 You withdrew $25 000 for his personal use during the year.
10 Received $45 900 from Monterry and Sons for goods sold during the year.
11 Paid Peter Smith and ABC the amount owing to them. The goods purchased from Peter Smith were paid for within the discount period.
12 Received the cash owing from Smat Refined Goods within the discount period.
13 Paid $36 000 to Saunders Ltd for the Motor van purchased during the year on credit.
14 Inventory on 31st December 2011 is $12 000 15 Depreciation Policy for the Non-current assets
a. Depreciate Fixtures and Fittings at $3 000 per annum
b. Motor Van is depreciated at 20% per annum on the reducing balance method (double declining balance method)
c. Equipment has a scrap value of $5 000 and an estimated useful life of eight (8) years.
Computec is a sole trader business that buys and resells computer parts. This business will adhere mainly to three concepts when preparing financial statements they are; the business entity concept, the accruals concept and the prudence concept.
The business entity concept treats the business or an organization and its owners as two separately identifiable parties this means that the personal transactions of owners are treated separately from those of the business for which data are recorded, analyzed, and reported.
The accruals concept means that the Business transactions are recorded when they occur and not when the related payments are received or made. This concept is called accrual basis of accounting and it is fundamental to the usefulness of financial accounting information.
The prudence concept makes sure that assets and income are not overstated and liabilities and expenses are not understated. You should not overestimate the amount of revenues that you record, nor underestimate the amount of expenses.
| Computec | | | | | General Journal | | | | Date | Particulars | Folio | Debit | Credit | January | | | $ | $ | 1 | Cash | | 100,000.00 | | | Centrex Commercial bank-Loan | | | 50,000.00 | | Capital | | | 50,000.00 | | (started business with $100,000) | | | | | | | | | 1 | Fixtures and fittings | | 30,000.00 | | | Equipment | | 45,000.00 | | | Cash | | | 75,000.00 | | (paid for assets by cash) | | | | | | | | | 1 | Motor Van | | 40,000.00 | | | Saunders Ltd. | | | 40,000.00 | | (bought motor van on credit) | | | | | | | | | 2 | Purchases | | 36,000.00 | | | Cash | | | 36,000.00 | | (bought computer parts by cash) | | | | | | | | | 3 | Cash | | 60,000.00 | | | Sales | | | 60,000.00 | | (sold parts for cash) | | | | | | | | | 4 | Purchases | | 18,000.00 | | | Android Enterprises | | | 18,000.00 | | (purchased goods on credit) | | | | | | | | | 4 | Purchases | | 15,000.00 | | | ABC Ltd. | | | 15,000.00 | | (purchased goods on credit) | | | | | | | | | 4 | Purchases | | 24,000.00 | | | Discount Received | | | 1200.00 | | Peter Smith | | | 22800.00 | | ( discount receivable 5/12/30 on credit) | | | | | | | | | 5 | Monterry & Sons | | 52,000.00 | | | Sales | | | 52,000.00 | | (sold goods on credit) | | | | | | | | | 5 | Tainy Enterprise | | 41,000.00 | | | Sales | | | 41,000.00 | | (sold goods on credit) | | | | | | | | | 5 | Smart Refined | | 61750.00 | | | Discount Allowed | | 3250.00 | | | Sales | | | 65,000.00 | | (sold goods on credit, discount terms 5/10/30) | | | | | | | | | 6 | ABC Ltd. | | 2,300.00 | | | Returns Outwards | | | 2,300.00 | | (Returned goods to ABD Ltd.) | | | | | | | | | 6 | Return Inwards | | 3,500.00 | | | Monterry & Sons | | | 3,500.00 | | (Goods returned to us by Monterry & Sons) | | | | | | | | | | | | | | 7 | Wages | | 30,000.00 | | | Office Supplies | | 8,000.00 | | | Electricity | | 6,000.00 | | | Telephone | | 7,000.00 | | | Rent | | 15,000.00 | | | Cash | | | 66,000.00 | | ( paid expenses by cash) | | | | | | | | | | | | | | | | | | | 8 | Insurance | | 6,000.00 | | | Prepayment | | 6,000.00 | | | Cash | | | 12,000.00 | | | | | | | | | | | 9 | Drawings | | 25,000.00 | | | Cash | | | 25,000.00 | | (withdraw cash for personal use) | | | | | | | | | 10 | Cash | | 45,000.00 | | | Monterry & Sons | | | 45,000.00 | | (received $45900 cash for goods sold) | | | | | | | | | 11 | Peter Smith | | 22,800.00 | | 11 | ABC Ltd | | 12700 | | | Cash | | | 35500 | | (paid outstanding balances) | | | | | | | | | 12 | Smart Refined | | 61,750.00 | | | Cash | | | 61,750.00 | | | | | | | ( paid amount within discount period) | | | | | | | | | | | | | | 13 | Saunders Ltd.
| | 36,000.00 | | | Motor Van | | | 36,000.00 | | (paid for motor van bought on credit) | | | | | | | | | 14 | Closing Inventory | | 12,000.00 | | | Purchases (cost of sales) | | | 12,000.00 | | (to record closing inventory) | | | | | | | | | 15 | Depreciation | | 15,375.00 |
| | Accumulated depreciation & Furniture & Fittings | | | 3,000.00 | | Accumulated depreciation Equipment | | | 8,000.00 | | Accumulated depreciation Motor Van | | | 4,375.00 | | (depreciation charges for 2011) | | | | | | | | | | | | 840,425.00 | 840,425.00 |
| | | Cash Account | | | | Date | Particulars | folio | Amount | | Date | Particulars | folio | Amount | January | | | $ | | January | | | $ | 1 | Capital | | 100000 | | 1 | fixtures and fittings | | 30000 | 3 | sales | | 60000 | | 1 | Equipment | | 45000 | 4 | Discount Received | | 1200 | | 2 | Purchases | | 36000 | 10 | Monterry & Sons | | 45000 | | 7 | Wages | | 30000 | 31 | Balance c/d | | | | 7 | Office Supplies | | 8000 | | | | | | 7 | Electricity | | 6000 | | | | | | 7 | Telephone | | 7000 | | | | | | 7 | Rent | | 15000 | | | | | | 8 | Insurance | | 6000 | | | | | | 8 | Prepayment(insurance) | | 6000 | | | | | | 9 | Drawings | | 25000 | | | | | | 11 | Peter Smith | | 22800 | | | | | | 11 | ABC Ltd | | 12700 | | | | | | 12 | Smat Refined | | 61750 | | | | | | | | | | | | | | | 1 February | Balance b/d | | | | | | | | | | | |
| | | Computec | | | | | | | | Purchases Ledger | | | | | | | Android Enterprise Account | | | Date | Particulars | folio | Amount | | Date | Particulars | folio | Amount | January | | | $ | | Janaury | | | $ | 31 | Balance c/d | | 18000 | | 4 | Purchases | | 18000 | | | | | | 1 Febuary | Balance b/d | | 18000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ABC Ltd. Account | | | | 31 | Balance c/d | | 15000 | | 4 | Purchases | | 15000 | | | | | | 1 Febuary | Balance b/d | | 15000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Peter Smith Account | | | | 31 | Balance c/d | | 24000 | | 4 | Purchases | | 24000 | | | | | | 1 Febuary | Balance b/d | | 24000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Computec | | | | | | | | Sales Ledger | | | | | | | Monterry & Sons Account | | | Date | Particulars | folio | Amount | | Date | Particulars | folio | Amount | January | | | $ | | Janaury | | | $ | 5 | Sales | | 52000 | | 31 | Balance c/d | | 52000 | 1 Febuary | Balance b/d | | 52000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Tainey Enterprise Account | | | 5 | Sales | | 41000 | | 31 | Balance c/d | | 41000 | 1 Febuary | Balance b/d | | 41000 | | | | | | | | | | | | | | | | | | | | | | | | | | | Smat Refined Account | | | | 5 | Sales | | 65000 | | 31 | Balance c/d | | 65000 | 1 Febuary | Balance b/d | | 65000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Accounting Principles
General Journal
Cash Account
Purchases ledger
Sales ledger
General ledger
Trail Balance
Jan 1 Started business by borrowing a loan of $50 000 from the Centrex Commercial Bank which was invested into the business along with his personal savings of $50 000. The loan carries an interest rate of 12% per annum. The following transactions took place during the year.
1 Purchased the following assets and paid for them by cash: Furniture and Fittings $30 000 Equipment $ 45000
A motor van was purchased on account from Saunders Ltd for $40 000. 2 Purchased computer parts for $36 000 cash
3 Sold parts for $60 000 cash
4 Purchase goods on account from Android Enterprise $18 000; ABC Ltd $15 000 and Peter Smith …show more content…
$24 000. Goods purchased from Peter Smith was subjected to credit term 5/12:n/30
5 Sold goods on account to Monterry and Sons $52 000; Tainey Enterprises $41 000 and Smat Refined Goods $65 000. Offered Smat Refined Goods discount on the following terms 5/10; n/30
6 Returned defective goods to ABC Ltd $2 300 and Monterry and Sons returned parts costing $3 500 to the firm due to poor quality.
7 Paid the following expenses by cash Wages $30 000; Office supplies $8 000; Electricity $6 000; Telephone $7 000; Rent $15 000
8 Insurance was purchased at the beginning of the year for $12 000. The insurance was for the two years 2011 and 2012.
9 You withdrew $25 000 for his personal use during the year.
10 Received $45 900 from Monterry and Sons for goods sold during the year.
11 Paid Peter Smith and ABC the amount owing to them. The goods purchased from Peter Smith were paid for within the discount period.
12 Received the cash owing from Smat Refined Goods within the discount period.
13 Paid $36 000 to Saunders Ltd for the Motor van purchased during the year on credit.
14 Inventory on 31st December 2011 is $12 000 15 Depreciation Policy for the Non-current assets
a. Depreciate Fixtures and Fittings at $3 000 per annum
b. Motor Van is depreciated at 20% per annum on the reducing balance method (double declining balance method)
c. Equipment has a scrap value of $5 000 and an estimated useful life of eight (8) years.
Computec is a sole trader business that buys and resells computer parts. This business will adhere mainly to three concepts when preparing financial statements they are; the business entity concept, the accruals concept and the prudence concept.
The business entity concept treats the business or an organization and its owners as two separately identifiable parties this means that the personal transactions of owners are treated separately from those of the business for which data are recorded, analyzed, and reported.
The accruals concept means that the Business transactions are recorded when they occur and not when the related payments are received or made. This concept is called accrual basis of accounting and it is fundamental to the usefulness of financial accounting information.
The prudence concept makes sure that assets and income are not overstated and liabilities and expenses are not understated. You should not overestimate the amount of revenues that you record, nor underestimate the amount of expenses.
| Computec | | | | | General Journal | | | | Date | Particulars | Folio | Debit | Credit | January | | | $ | $ | 1 | Cash | | 100,000.00 | | | Centrex Commercial bank-Loan | | | 50,000.00 | | Capital | | | 50,000.00 | | (started business with $100,000) | | | | | | | | | 1 | Fixtures and fittings | | 30,000.00 | | | Equipment | | 45,000.00 | | | Cash | | | 75,000.00 | | (paid for assets by cash) | | | | | | | | | 1 | Motor Van | | 40,000.00 | | | Saunders Ltd. | | | 40,000.00 | | (bought motor van on credit) | | | | | | | | | 2 | Purchases | | 36,000.00 | | | Cash | | | 36,000.00 | | (bought computer parts by cash) | | | | | | | | | 3 | Cash | | 60,000.00 | | | Sales | | | 60,000.00 | | (sold parts for cash) | | | | | | | | | 4 | Purchases | | 18,000.00 | | | Android Enterprises | | | 18,000.00 | | (purchased goods on credit) | | | | | | | | | 4 | Purchases | | 15,000.00 | | | ABC Ltd. | | | 15,000.00 | | (purchased goods on credit) | | | | | | | | | 4 | Purchases | | 24,000.00 | | | Discount Received | | | 1200.00 | | Peter Smith | | | 22800.00 | | ( discount receivable 5/12/30 on credit) | | | | | | | | | 5 | Monterry & Sons | | 52,000.00 | | | Sales | | | 52,000.00 | | (sold goods on credit) | | | | | | | | | 5 | Tainy Enterprise | | 41,000.00 | | | Sales | | | 41,000.00 | | (sold goods on credit) | | | | | | | | | 5 | Smart Refined | | 61750.00 | | | Discount Allowed | | 3250.00 | | | Sales | | | 65,000.00 | | (sold goods on credit, discount terms 5/10/30) | | | | | | | | | 6 | ABC Ltd. | | 2,300.00 | | | Returns Outwards | | | 2,300.00 | | (Returned goods to ABD Ltd.) | | | | | | | | | 6 | Return Inwards | | 3,500.00 | | | Monterry & Sons | | | 3,500.00 | | (Goods returned to us by Monterry & Sons) | | | | | | | | | | | | | | 7 | Wages | | 30,000.00 | | | Office Supplies | | 8,000.00 | | | Electricity | | 6,000.00 | | | Telephone | | 7,000.00 | | | Rent | | 15,000.00 | | | Cash | | | 66,000.00 | | ( paid expenses by cash) | | | | | | | | | | | | | | | | | | | 8 | Insurance | | 6,000.00 | | | Prepayment | | 6,000.00 | | | Cash | | | 12,000.00 | | | | | | | | | | | 9 | Drawings | | 25,000.00 | | | Cash | | | 25,000.00 | | (withdraw cash for personal use) | | | | | | | | | 10 | Cash | | 45,000.00 | | | Monterry & Sons | | | 45,000.00 | | (received $45900 cash for goods sold) | | | | | | | | | 11 | Peter Smith | | 22,800.00 | | 11 | ABC Ltd | | 12700 | | | Cash | | | 35500 | | (paid outstanding balances) | | | | | | | | | 12 | Smart Refined | | 61,750.00 | | | Cash | | | 61,750.00 | | | | | | | ( paid amount within discount period) | | | | | | | | | | | | | | 13 | Saunders Ltd.
| | 36,000.00 | | | Motor Van | | | 36,000.00 | | (paid for motor van bought on credit) | | | | | | | | | 14 | Closing Inventory | | 12,000.00 | | | Purchases (cost of sales) | | | 12,000.00 | | (to record closing inventory) | | | | | | | | | 15 | Depreciation | | 15,375.00 |
| | Accumulated depreciation & Furniture & Fittings | | | 3,000.00 | | Accumulated depreciation Equipment | | | 8,000.00 | | Accumulated depreciation Motor Van | | | 4,375.00 | | (depreciation charges for 2011) | | | | | | | | | | | | 840,425.00 | 840,425.00 |
| | | Cash Account | | | | Date | Particulars | folio | Amount | | Date | Particulars | folio | Amount | January | | | $ | | January | | | $ | 1 | Capital | | 100000 | | 1 | fixtures and fittings | | 30000 | 3 | sales | | 60000 | | 1 | Equipment | | 45000 | 4 | Discount Received | | 1200 | | 2 | Purchases | | 36000 | 10 | Monterry & Sons | | 45000 | | 7 | Wages | | 30000 | 31 | Balance c/d | | | | 7 | Office Supplies | | 8000 | | | | | | 7 | Electricity | | 6000 | | | | | | 7 | Telephone | | 7000 | | | | | | 7 | Rent | | 15000 | | | | | | 8 | Insurance | | 6000 | | | | | | 8 | Prepayment(insurance) | | 6000 | | | | | | 9 | Drawings | | 25000 | | | | | | 11 | Peter Smith | | 22800 | | | | | | 11 | ABC Ltd | | 12700 | | | | | | 12 | Smat Refined | | 61750 | | | | | | | | | | | | | | | 1 February | Balance b/d | | | | | | | | | | | |
| | | Computec | | | | | | | | Purchases Ledger | | | | | | | Android Enterprise Account | | | Date | Particulars | folio | Amount | | Date | Particulars | folio | Amount | January | | | $ | | Janaury | | | $ | 31 | Balance c/d | | 18000 | | 4 | Purchases | | 18000 | | | | | | 1 Febuary | Balance b/d | | 18000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ABC Ltd. Account | | | | 31 | Balance c/d | | 15000 | | 4 | Purchases | | 15000 | | | | | | 1 Febuary | Balance b/d | | 15000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Peter Smith Account | | | | 31 | Balance c/d | | 24000 | | 4 | Purchases | | 24000 | | | | | | 1 Febuary | Balance b/d | | 24000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Computec | | | | | | | | Sales Ledger | | | | | | | Monterry & Sons Account | | | Date | Particulars | folio | Amount | | Date | Particulars | folio | Amount | January | | | $ | | Janaury | | | $ | 5 | Sales | | 52000 | | 31 | Balance c/d | | 52000 | 1 Febuary | Balance b/d | | 52000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Tainey Enterprise Account | | | 5 | Sales | | 41000 | | 31 | Balance c/d | | 41000 | 1 Febuary | Balance b/d | | 41000 | | | | | | | | | | | | | | | | | | | | | | | | | | | Smat Refined Account | | | | 5 | Sales | | 65000 | | 31 | Balance c/d | | 65000 | 1 Febuary | Balance b/d | | 65000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |