MAINTAIN A GENERAL LEDGER. and PROCESS JOURNAL ENTRIES STUDENT MANUAL

Transcription

1 MAINTAIN A GENERAL LEDGER and PROCESS JOURNAL ENTRIES STUDENT MANUAL NAME:

2 USING A TRANSACTION ANALYSIS CHART TO UNDERSTAND TRANSACTIONS Understanding transactions is fundamental to accounting. A transaction analysis chart is a tool to help you understand transactions. It is not a formal accounting record - just a tool. It will assist you to apply the debit and credit rules of accounting. This is what a (blank) transaction analysis chart looks like: Date Account Category Increase Amount Debit or Credit (PEARL) or Decrease $ DR $ CR $ We will use a chart like this with some practical exercises soon but first let's recap some very important accounting concepts An account is a detailed record for every item of value associated with a business. There are five categories of accounts. These are: Proprietorship (also known as Capital or Owner's Equity), Expenses, Assets, Revenue, Liabilities. A simple way to remember the categories of account is the acronym PEARL. Accounts are located in an orderly and logical manner according to their category and can be found summarised (or indexed) in a Chart of Accounts. Every business will have a Chart of Accounts which suits its needs. That means that no two businesses will have exactly the same Chart of Accounts. However, every Chart of Accounts will be similar in that it will have the five categories of accounts. Also, many accounts are commonly used eg Cash at Bank, wages & salaries, loan accounts, capital, sales and so on. The most basic accounting equation is Assets = Equities (ie internal and external liabilities). However, it is more practical to express the equation as: Assets = Liabilities + Proprietorship. A simple way to remember this is A = L + P. The Balance Sheet report of a business reflects this equation. If A = L + P then the following must also be true L = A- P and P = A - L HIT Newcastle V GJ and GL Exercises

3 The expanded accounting is Assets + Expenses = Proprietorship + Liabilities + Revenue. The Profit & Loss report of a business reflects the revenue and expenses part of this equation. The debit and credit rules of accounting are based on the above accounting equation. The following table may help you to remember the rules: Remember the following rules: Type of change Type of Account Type of entry an increase in an asset or expense ledger account is recorded as a debit entry whereas a decrease in an asset or expense ledger account is recorded as a credit entry an increase in a liability or proprietorship or revenue ledger account is recorded as a credit entry whereas a decrease in a liability or proprietorship or revenue ledger account is recorded as a debit entry THE OPENING ENTRY The Opening Entry lists balances for all Assets, Liabilities and Capital at the commencement of the business. The transaction is recorded in the General Journal and then posted to the General Ledger. All General Journal transactions are accompanied by a narration, which describes the transaction. Activity 1 has been completed for your reference. HIT Newcastle V GJ and GL Exercises

4 ANALYSE THE OPENING ENTRY (Hint: you need the rules and the accounting equation for these activities - so keep them handy) Activity 1 - Example Complete a transaction analysis chart to help you prepare the opening general journal entry for the commencement of the company Flip Flop Ltd on 1 November 200X when the owner contributed cash ($5000), stock ($2200), a motor vehicle ($11000), office furniture ($1650), and a loan from the XYZ Bank ($500). (You will need to calculate the amount for the (proprietors) capital account). Date of transaction Accounts being affected What Category is the Is it an increase or a What is the amount account (PEARL) decrease to the account affecting the account $ DR $ Nov 1 Bank Asset Increase Inventory Asset Increase MV at Cost Asset Increase Off Furn Asset Increase Will it be a Debit or a Credit entry to the account Bank Loans Liability Increase Now write up the general journal entry to record the opening entry. (The source of this information is an internal memo dated 1 Nov 200X from the owner). General Journal of Flip Flop Ltd Narration Date Particulars Fol DR CR Nov 1 Cash at Bank Indent Credits Hint - Look at the Chart of Accounts Think about it Hint - Look at the Rules Inventory MV at Cost Office Furniture at Cost GJI Bank Loans Capital Being assets, liabilities and capital at this date To calculate Capital: Add Dr and Cr columns and then deduct Cr from Dr; the difference is the Capital. Assets Liabilities = Capital CR $ HIT Newcastle V GJ and GL Exercises

5 Post the General Journal to the General Ledger; insert Folios for cross reference as you post, eg Journal # in the Ledger and Ledger Account No in the Journal. The particulars information is the opposite account in the transaction. In the opening entry all accounts are opposite to Capital, therefore, Capital is entered but in the Capital account, Sundries is entered. (See below) GENERAL LEDGER Cash at Bank 1.1 Nov 1 Capital GJ dr Inventory 1.4 Nov 1 Capital GJ dr Motor Vehicles at Cost 1.14 Nov 1 Capital GJ dr Office Furniture at Cost 1.16 Nov 1 Capital GJ dr Bank Loans 2.16 Nov 1 Capital GJ cr Capital 3.1 Nov 1 Sundries GJ cr Generate a Trial Balance for the month. Note the final balance in the General Ledger is entered in the Trial balance on the same side, eg Debit or Credit. Account No Trial Balance of Flip Flop As at 1 November 200X Account Name Debit Credit 1.1 Cash at Bank Inventory MV at Cost Off Furn at Cost Bank Loans Capital Total MUST BE EQUAL HIT Newcastle V GJ and GL Exercises

6 Activity 2 Complete a transaction analysis chart to help you prepare the opening general journal entry for the commencement of the company Wilson's Haberdashery on 15 April 200X when the owner contributed cash ($15,000), materials ($13,200), a motor vehicle ($17,600), office furniture ($3,300), and a loan from the BMI Credit Union ($5,500) and a sundry creditor Robertson ($2,200). (You will need to calculate the amount for the (proprietor s) capital account). Hint - Look at the Chart of Accounts Think about it Hint - Look at the Rules Date of transaction Accounts being affected What Category is the account (PEARL) Is it an increase or a decrease to the account What is the amount affecting the account $ Will it be a Debit or a Credit entry to the account DR $ CR $ Now write up a general journal entry to record the opening entry. The source of this information is an internal memo dated 15 April 200X from the Accountant General Journal of Wilson s Haberdashery GJ1 Date Particulars Fol DR CR April 15 HIT Newcastle V GJ and GL Exercises

7 GENERAL LEDGER Cash at Bank 1.1 Inventory 1.4 Motor Vehicles at Cost 1.14 Office Furniture at Cost 1.16 Bank Loans 2.16 Sundry Creditor - Robertson 2.6 Capital 3.1 Trial Balance of Wilson s Haberdashery As at 15 April 200X Account No Account Name Debit Credit HIT Newcastle V GJ and GL Exercises

8 Activity 3 Maintain a General Ledger and Process Journal Entries Complete a transaction analysis chart to help you prepare the opening general journal entry for the commencement of the company Dad & Dave's Bits & Pieces on 10 June 200X when the owner contributed cash ($10,000), stock (18,700), shop fittings ($3,300), a trade debtor Hills ($1,100), and a loan from Barry's Finance ($6,600), and a trade creditor Corrigans ($1,870). (You will need to calculate the amount for the (proprietors) capital account). Date of transaction Accounts being affected What Category is the account (PEARL) Is it an increase or a decrease to the account What is the amount affecting the account $ Will it be a Debit or a Credit entry to the account DR $ CR $ Now write up a general journal entry to record the opening entry. The source of this information is an internal memo dated 10 June 200X from the Financial Controller. General Journal of Dad and Dave s Bits and Pieces GJ1 Date Particulars Fol DR CR HIT Newcastle V GJ and GL Exercises

9 GENERAL LEDGER Cash at Bank 1.1 Accounts Receivable Control 1.3 Inventory 1.4 Motor Vehicles at Cost 1.14 Office Furniture at Cost 1.16 Accounts Payable Control 2.1 Bank Loans 2.16 Capital 3.1 Trial Balance of Dad and Dave s As at 10 June 200X Account No Account Name Debit Credit HIT Newcastle V GJ and GL Exercises

10 ACCOUNTS PAYABLE Maintain a General Ledger and Process Journal Entries GENERAL JOURNAL ENTRIES for Adjustments 1 Account Service Fee on Overdue Account Memo: Our creditors will charge us interest on any overdue accounts. For example, our creditor, Riley Mills has advised us they will charge 2% pa on our unpaid account. We adjust the ledger accounts by creating a general journal entry. Calculation: We owe $20,000 from August. 20,000 X 2% 12 = $ % GST = $36.66 General Ledger Accounts (a double entry): Account Service Fee is an expense (increase) and therefore a DEBIT. Accounts Payable is a liability (increase) and therefore a CREDIT. Accounts Payable Ledger (a single entry): Credit Riley Mills account to show we owe an additional $36.66 GENERAL JOURNAL DATE PARTICULARS (Account Name) FOLIO (Acc No) DEBIT Sep 30 Late Fees Paid Don t forget narration GST Paid Accounts Payable Riley Mills (Account Service fee charged on overdue account for one month $20,000 X 2% 12) 2.1 AP1 CREDIT Correction of Errors On rare occasions an error is made in posting! For example, a purchase of $1000 from BJ Lewis (invoice #1002) may have been incorrectly posted to J Lewis & Co from the Purchases Journal. This error has to be corrected by creating a General Journal entry. GENERAL JOURNAL DATE PARTICULARS (Account Name) FOLIO (Acc No) DEBIT Sep 30 Accounts Payable J Lewis & Co AP GJ2 CREDIT Don t Accounts Payable BJ Lewis AP forget to (Correction of posting error reversing indent invoice #1002 from BJ Lewis and Credits transferring to JB Lewis & Co) The initial posting from the Purchases Journal to J Lewis & Co would have been a credit entry. By debiting this account we have reversed the incorrect entry. HIT Newcastle V GJ and GL Exercises

11 ACCOUNTS RECEIVABLE 3 Charge Account Service Fee on Overdue Account Your business may charge an Account Service Fee on customer s accounts which are overdue. For example: Our customer, W Ross, has an overdue account and we are charging We adjust the ledger accounts by creating a general journal entry. Calculation: W Ross owes $10,000 from August. 10,000 X 5% 12 = $ % GST = $45.83 General Ledger Accounts (a double entry): Accounts Receivable is an asset (increase) and therefore a DEBIT. Interest Received is income (increase) and therefore a CREDIT. Accounts Receivable Ledger (a single entry): Debit W Ross account to show they owe an additional $45.83 GENERAL JOURNAL DATE PARTICULARS (Account Name) Sep 30 Accounts Receivable W Ross FOLIO (Acc No) DEBIT 1-3 AR CREDIT Late Fees Collected GST Collected (Account Service fee charged on overdue account for one month $10,000 X 5% 12) 4 Write Off Bad Debt Memo: We have been informed that one of our debtors has been declared bankrupt. In this case we would write the account off as a bad debt. For example: J Sparks owes us $ Calculation of GST: Total amount owed includes GST. GST = GST = 100 General Ledger Accounts (a double entry): Bad Debts Account is an expense (increase) and therefore a DEBIT. GST Collected must be reversed and is therefore a DEBIT. Accounts Receivable liability (decrease) and is therefore a CREDIT. Accounts Receivable Ledger (a single entry): Credit J Sparks account to show their balance is now Nil. HIT Newcastle V GJ and GL Exercises

12 GENERAL JOURNAL DATE PARTICULARS (Account Name) FOLIO (Acc No) DEBIT Sep 30 Bad Debts Expense GST Collected Accounts Receivable J Sparks 1-3 AR5 (Debtor bankrupt debt written off) 5 Provision for Doubtful Debts CREDIT Total Debits equals (=) Total Credits Many businesses provide for customers whose debts cannot be collected. No external adjustments, for taxation purposes, occur until a bad debt is written off. GENERAL JOURNAL DATE PARTICULARS (Account Name) FOLIO (Acc No) DEBIT Sep 30 Doubtful Debts CREDIT Don t forget to indent your credit entries Less Prov n Doubtful Debts Provision for Doubtful Debts Depreciation Fixed assets are depreciated by creating a General Journal entry each month. Depreciation is calculated on an annual basis and divided by 12 in order to show the true position of the company each month. Motor Vehicles valued at $ are to be depreciated at the rate of 15% per annum. DATE PARTICULARS (Account Name) FOLIO (Acc No) DEBIT Sep 30 Depreciation Expense CREDIT MV Accum Depreciation 1.14A September s Depreciation Expense $15,000 x 15% 12 HIT Newcastle V GJ and GL Exercises

13 The General Journal would look like this: GENERAL JOURNAL DATE PARTICULARS (Account Name) FOLIO (Acc No) DEBIT Sep 30 Late Fees Paid Sep 30 Accounts Payable Riley Mills (A/c service fee charged on overdue account for one month $20,000 X 2% 12) 2-1 AP1 Accounts Payable J Lewis & Co AP GJ2 CREDIT Accounts Payable BJ Lewis AP (Correction of posting error reversing invoice #1002 from BJ Lewis and transferring to JB Lewis & Co) Sep 30 Accounts Receivable W Ross 1-3 AR Late Fees Collected (IA/c Service fee charged on overdue account for one month $10,000 X 5% 12) Sep 30 Bad Debts Expense GST Collected Accounts Receivable Sparks 1-3 AR (Debtor bankrupt debt written off) Sep 30 Doubtful Debts Less Prov n Doubtful Debts Provision for Doubtful Debts Sep 30 Depreciation Expense MV Accum Depreciation 1.14A (September s Depreciation Expense) Sep 30 Wages and Salaries Other Employer Expenses Accrued Expense Wages Accrued but not yet paid Sep 30 Insurance Advertising Prepayments September s Prepaid Insurance and Advert HIT Newcastle V GJ and GL Exercises

14 Activity 4 Maintain a General Ledger and Process Journal Entries Analyse the following transactions using a transaction analysis chart for the business Toys Galore. The proprietor (owner) is W Smith: Jan 1 W Smith invested $ cash in the business (nil GST) 2 The business purchased a motor vehicle priced at $5500 for cash including $500 GST. 3 A cash register priced at $4400 including $400 GST was purchased on credit from Ace Shop Fitters. 4 The business borrowed $5500 from ABC Bank (nil GST). 5 The business purchased land and buildings priced at $55000 including $5000 GST, to be used as shop and office. A cash deposit of $5000 cash was paid to cover the GST component and a mortgage loan obtained for the remaining $ W Smith gave to the business his personal computer valued at $2000 (nil GST). 7 W Smith withdrew from the business $100 cash to pay for a gift (nil GST). 8 Cash of $5000 was taken by W Smith from his personal account and deposited into the business bank account (nil GST). 9 The business purchased trading stock priced at $4 400, including $400 GST, for cash. 10 Wages and salaries of $286 were paid to employees (nil GST). Date of transaction Accounts being affected What Category is the Is it an increase or a What is the amount account (PEARL) decrease to the account affecting the account $ DR $ Jan 1 Bank A Inc Will it be a Debit or a Credit entry to the account Capital P Inc MV at Cost A Inc GST Paid L Dec Bank A Dec CR $ HIT Newcastle V GJ and GL Exercises

15 General Journal of Toys Galore GJ 1 Date Particulars Fol DR CR Jan 1 HIT Newcastle V GJ and GL Exercises

16 Date Particulars Fol DR CR GENERAL LEDGER Cash at Bank 1.1 Premises 1.11 HIT Newcastle V GJ and GL Exercises

17 Motor Vehicles 1.14 Office Equipment 1.15 Inventory 1.4 Sundry Creditor Ace Shop Fitters 2.6 GST Paid 2.11 Mortgage 2.15 Bank Loans 2.16 Capital 3.1 HIT Newcastle V GJ and GL Exercises

18 Drawings 3.2 Wages and Salaries 6.17 TRIAL BALANCE of Toys Galore Acc No Acc Name Debit Credit 1.1 Bank 1.11 Premises 1.14 Motor Vehicles 1.15 Office Equipment 1.4 Inventory 2.11 GST Paid 2.15 Mortgage 2.16 Bank Loans 2.6 Sundry Creditor Ace 3.1 Capital 3.2 Drawings 6.17 Wages and Salaries TOTAL HIT Newcastle V GJ and GL Exercises

19 Activity 4.1 June 1 Date of transaction Maintain a General Ledger and Process Journal Entries Complete the following transactions for the business called Norman s Trading Shop Pty Ltd. The owner contributed $20,000 into the business bank account. 2 The business purchased a motor vehicle priced at $3,850, including GST of $350, for cash. 3 Purchased trading stock priced at $1,100, including $100 GST, for cash. 4 Paid the electricity account of $220, including $20 GST. 5 Purchased stock priced at $220, including $20 GST, for Cash. Accounts being affected What Category is the account (PEARL) Is it an increase or a decrease to the account What is the amount affecting the account $ Will it be a Debit or a Credit entry to the account DR $ CR $ HIT Newcastle V GJ and GL Exercises

20 General Journal of Norman s Trading Shop P/L GJ 1 Date Particulars Fol DR CR HIT Newcastle V GJ and GL Exercises

21 GENERAL LEDGER of Norman s Trading Bank 1.1 Jun Inventory 1.4 Jun Motor Vehicles at Cost 1.14 Jun GST Paid 2.11 Jun Capital 3.1 Jun 1 Electricity 6.7 HIT Newcastle V GJ and GL Exercises

22 Trial Balance of Normans Trading Shop As at 30 June 200X Account No Account Name Debit Credit TOTAL HIT Newcastle V GJ and GL Exercises

23 Activity 4.2 Maintain a General Ledger and Process Journal Entries Complete the following transactions for the business called Bill Barton s Coffee Shop. July 1 Proprietor Barton contributed cash of $10,000 to the business. 2 Cash purchase of trading stock priced at $3,300, including $300 GST. Proprietor Barton withdrew cash $50 to pay for a pair of shoes. 3 Credit purchases of stock $2,200, including $200 GST, for Cash. Paid wages of $1100 to employees. 6 Purchased office equipment priced at $2,530, including $230 GST on credit from Wilson s. General Journal of Bill Barton GJ 1 Date Particulars Fol DR CR HIT Newcastle V GJ and GL Exercises

24 Date Particulars Fol DR CR GENERAL LEDGER BARTON Bank 1.1 Jul Inventory 1.4 Jul Office Equipment at Cost 1.15 Jul GST Paid 2.11 Jul HIT Newcastle V GJ and GL Exercises

25 Capital 3.1 Drawings 3.2 Jul Wages and Salaries 6.17 Jul Trial Balance of Barton s as at 31 July 200X Account No Account Name Debit Credit TOTAL HIT Newcastle V GJ and GL Exercises

26 Activity 4.3 Maintain a General Ledger and Process Journal Entries Daggy Duggan s Supplies Pty Ltd commenced business on Aug 1. Record the Opening Entry Record the General Journal transactions Post the General Journal to the General Ledger Extract a Trial Balance Aug 1 At commencement the opening balances of a new business are: - Cash $ Motor Vehicle valued at $10,000 - Sundry Creditor Lockhart $500 - Inventory $ Capital (Calculate) 2 Purchased land and office building priced at $77 000, including $7 000 GST. A cash deposit of $ was paid with a mortgage established for the remainder. 3 Cash purchase of stock $1 320, including $120 GST. 7 Paid $220, including $20 GST, for office expenses. 10 Purchased carpet for the office priced at $1 650, including $150 GST, on credit from Carpet Co. 31 Sundry Creditor Lockhart advises that they are charging an Account Service Fee of 5% per annum for one month on our balance. Daggy Duggan s has decided to create a Provision for Doubtful Debts of $ D Duggan (Owner) took Inventory valued at $ incl GST for his personal use. General Journal of Daggy Duggan s GJ 1 Date Particulars Fol DR CR Aug 1 HIT Newcastle V GJ and GL Exercises

27 Date Particulars Fol DR CR HIT Newcastle V GJ and GL Exercises

28 GENERAL LEDGER Daggy Duggan s Bank 1.1 Aug Inventory 1.4 Aug Less Prov n for Doubtful Debts 1.7 Aug Motor Vehicles at Cost 1.14 Aug Furniture and Fittings 1.15 Aug Premises 1.11 Aug Sundry Creditor Lockhart 2.6 Aug Sundry Creditor Carpet Co 2.6A Aug HIT Newcastle V GJ and GL Exercises

29 GST Collected 2.10 Aug GST Paid 2.11 Aug Bank Loans 2.16 Aug 2 Capital 3.1 Aug Drawings 3.2 Aug Office Expenses 6.14 Aug Late Fees Paid 6.26 Aug Doubtful Debts 6.28 Aug HIT Newcastle V GJ and GL Exercises

30 Account No 1.1 Bank Maintain a General Ledger and Process Journal Entries 1.4 Inventory 1.7 Less Prov n Doubtful Debts 1.11 Premises 1.14 Motor Vehicles 1.15 Furniture and Fittings 2.6 Sundry Creditor Lockhart 2.6A Sundry Creditor Carpet Co 2.10 GST Collected 2.11 GST Paid 2.16 Bank Loans 3.1 Capital 3.2 Drawings 6.14 Office Expenses 6.26 Late Fees Paid 6.28 Doubtful Debts Trial Balance of Daggy Duggan s As at 31 August 200X Account Name Debit Credit TOTAL HIT Newcastle V GJ and GL Exercises

31 Exercise 1 As bookkeeper for Middle Park Distributors you are required to perform the following tasks: Middle Park commenced business on 1 March with the following Assets and Liabilities: Cash at Bank $5,000; Stock on hand $25,000 ; Prepayments $1,000; Premises $40,000; Fixtures & Fittings $4,400; Motor Vehicles $15,400; Office Equipment $3,000; Accounts Receivable Control $ (P Gibson & Sons $649.00; J Cunningham Ltd $990.00; D Smith Ltd $330.00; J Sarowski Pty Ltd $555.50; J Brown Ltd $ ); Mortgage on Premises $15000; Accounts Payable Control $2, (M Finch & Co $726.00; L McDonough Ltd $889.90; K Nelson Pty Ltd $891.00); GST Collected $329.50; GST Outlaid (Paid) $ (Calculate Capital.) Tasks: 1 Prepare the General Journal opening entry for May. 2 Prepare General Journal entries to record miscellaneous transactions to adjust/correct entries. 3 Post ALL journals (use the trade and cash journals from Process Accounts Payable and Receivable unit) to the General Ledger and extract a trial balance as at 31 March. Miscellaneous Transactions On 27 March sold an old fridge/freezer for $1100 (GST inclusive) on credit to Like-Nu Shop Fittings Pty Ltd (TIN AB321). On 30 March, Dale Carss purchased a lap-top computer on credit from Tri Computing for $4235, GST inclusive (TIN B1011). On 30 March, Dale Carss, the owner, took goods at cost price $770 for personal use. On 31 March, depreciate motor vehicles at the rate of 20% per annum for one month. On 31 March, transfer $100 from Prepayments to Advertising HIT Newcastle V GJ and GL Exercises

32 GENERAL JOURNAL OF: Middle Park Folio GJ1 DATE PARTICULARS FOLIO DEBIT CREDIT HIT Newcastle V GJ and GL Exercises

33 DATE PARTICULARS FOLIO DEBIT CREDIT Posting Special Journals to the General Ledger You are familiar with the General Journal, now it is time to post all other journals. These are posted at the end of the month. As with the General Journal the opposite account is entered in the particulars column of the Ledger, eg when posting to the Purchases Account - enter Accounts Payable and in the Accounts Payable account enter Purchases. There are examples on the next page for your reference. Do not post these figures; post from your own journals. HIT Newcastle V GJ and GL Exercises

34 PURCHASES JOURNAL OF Date 200X Tax Inv Particulars-Acc Payable Foiol Purchases Freight & Ins Paid GST Outlaid (Paid) Folio P1 Acc Payable Control (Creditors) 31/5 TOTAL Dr 6.1 Dr Dr Cr Debit the Purchases Account, - Freight Paid, GST Paid - Increase expense Credit the Accounts Payable (Creditor) Increase Liability - (Equal Dr and Cr) PURCHASES RETURNS AND ALLOWANCES JOURNAL OF Date 200X Adj Not e Particulars-Acc Pay Folio Purchases Returns Freight & Ins Paid GST (Paid) Folio PR1 Acc Pay Control (Creditors) 31/5 TOTAL Cr 6.2 Cr Cr Dr Cr Purchases Returns, Freight/Ins Paid, GST Paid Decrease expense Dr Accounts Payable Decreasing balance SALES JOURNAL OF Date 200X Tax Invoice Particulars-Accounts Receivable Folio Sales GST Collected Folio S1 Accounts Receivable Control (Debtors) 31/5 TOTAL Cr 4.1 Cr Dr Credit Sales Increase Income, GST Collected Increase Liability Dr Accounts Receivable (Debtor) Increase Asset (Equal Dr and Cr) SALES RETURNS AND ALLOWANCES JOURNAL OF Date 200X Adjust Note Particulars-Accounts Receivable Folio Sales Returns GST Collected Folio SR1 Accounts Receivable Control (Debtors) 31/5 TOTAL Dr Sales Returns decreasing Income, GST Collected Cr Accounts Receivable Decreasing balance Dr 4.2 Dr Cr HIT Newcastle V of 56 GJ and GL Exercises

35 EXTRACT CASH PAYMENTS JOURNAL OF Folio CP 1 Date 200X CH No Account Debited Folio Accounts Payable Debits Other Purchases Accounts GST Outlaid Cash at Bank MAY Petty Cash (Imprest) Electricity Credits Discount Received GST Outlaid 31 TOTAL Dr Dr Dr each Dr Cr 1.1 Cr Cr Account EXTRACT CASH RECEIPTS JOURNAL OF Folio CR 1 Date 200X Rec No Account Credited Folio Cash at Bank Debits Discount Allowed GST Collected Accounts Receivable MAY A Argent Ltd Sales Credits Other Accounts GST Collected 1146 Capital BS Interest on Account TOTAL Dr 1.1 Dr Dr Cr Cr Cr each Cr Account Post the Cash Payments and Cash Receipts Journals, according to the Debit, Credit at the top of the columns to the Account Names in the headings. All amounts in the Other Accounts column must be posted individually to the account shown in the Account Debited/Credited column and the account number entered in the Folio column of the Journal. Remember to write the Dr or Cr and Acc No at the bottom of the column. HIT Newcastle V GJ and GL Exercises

36 GENERAL LEDGER Middle Park Bank 1.1 Petty Cash 1.2 Accounts Receivable 1.3 Inventory 1.4 Sundry Debtor 1.5 Prepayments 1.6 HIT Newcastle V of 56 GL and GJ Exercises

37 Premises 1.11 Furniture and Fixtures at Cost 1.13 Motor Vehicles at Cost 1.14 Accumulated Depreciation MV 1.14A Office Equipment at Cost 1.15 Accounts Payable Control 2.1 Sundry Creditor 2.6 HIT Newcastle V of 56 GL and GJ Exercises

38 GST Collected 2.10 GST Paid 2.11 Mortgage 2.15 Capital 3.1 Drawings 3.2 Sales 4.1 HIT Newcastle V of 56 GL and GJ Exercises

39 Sales Returns and Allowances 4.2 Discount Received 4.3 Interest Received 4.4 Dividends 4.8 Purchases 6.1 Purchases Returns and Allowances 6.2 Discount Allowed 6.3 Advertising 6.4 Bank Charges 6.6 Electricity 6.7 HIT Newcastle V of 56 GL and GJ Exercises

40 Postage 6.11 Rent Expense 6.12 Office Supplies 6.14 Wages and Salaries 6.17 Freight and Insurance Paid 6.18 Depreciation Expense 6.20 Gas 6.25 Late Fees Paid 6.26 HIT Newcastle V of 56 GL and GJ Exercises

41 Account No 1.1 Bank 1.2 Petty Cash Imprest 1.3 Accounts Receivable 1.4 Inventory 1.5 Sundry Debtor 1.6 Prepayments 1.11 Premises 1.13 Furniture and Fixtures 1.14 Motor Vehicles at Cost 1.14A Accum Depreciation on MV 1.15 Office Equipment at Cost 2.1 Accounts Payable Control 2.6 Sundry Creditor 2.10 GST Collected 2.11 GST Paid 2.15 Mortgage 3.1 Capital 3.2 Drawings 4.1 Sales 4.2 Sales Returns and Allowances 4.3 Discount Received 4.4 Interest Income 4.8 Dividends Purchases 6.2 Purchases Returns and Allowances 6.3 Discount Allowed 6.4 Advertising 6.6 Bank Charges 6.7 Electricity 6.11 Postage 6.12 Rent Expense 6.14 Office Supplies 6.17 Wages and Salaries 6.18 Freight and Insurance Paid 6.20 Depreciation Expense 6.25 Gas Trial Balance of Middle Park As at 31 March 200X Account Name Debit Credit TOTAL HIT Newcastle V of 56 GL and GJ Exercises

42 Argent Hardware Supplies 1 Argent Hardware Supplies commenced business on 1 May with the following opening balances: Cash at Bank $9,510; Stock on hand $12,000; Prepayments $9,600 Premises $110,000; Office Furniture $4,650; Motor Vehicles $18,800; Office Equipment $8,000; Accounts Receivable Control $9, (James Brown Ltd $880; Michael Bevan Ltd $891; Jackson Industries $330; John Bauer Ltd $660; Frank Sinatra Ltd $7040); Mortgage on Premises $50,000; Accounts Payable Control $2, (Spencer Ltd $880; Nelson Eddy Pty Ltd $550; Dales Carss Ltd $360; Geoffrey Barrett Ltd $396.95); GST Collected $198.81; GST Outlaid (Paid) $391. (Calculate Capital.) 2 Tasks: Prepare the General Journal opening entry for 1 May. From the information below, prepare General Journal entries to record the transactions. Post ALL journals (use the trade and cash journals from Process Accounts Payable and Receivable unit) to the General Ledger and extract a trial balance as at 31 May. 1 May Depreciate Office Furniture, Office Equipment and Motor Vehicles at the rate of 12.5% for one month. Calculate to the nearest dollar. 5 May - Purchase of an Asset on Credit: A motor Vehicle was purchased on Credit from Argenton Motors for $33,000 incl GST 7 May - Sale of an Asset on Credit: Old office furniture was sold on credit to Like Nu for $1650 incl GST 15 May - Owner invested an additional $10,000 in the business 16 May - Obtained an loan from That Bank for $20, May - Purchased a large safe on credit from Tubb s Safes for $8,800 incl GST 23 May - Sold an old Motor Vehicle for $11,000 cash incl GST HIT Newcastle V of 56 GL and GJ Exercises

43 31 May - Prepayments: Transfer $1000 from prepayments to Insurance and $200 to Advertising 31 May - Accrued Expenses: Record accrued wages of $2600 and Other Employer Expenses of $ May Provision for Doubtful Debts for $ GENERAL JOURNAL OF: Argent Hardware Supplies Folio GJ1 DATE PARTICULARS FOLIO DEBIT CREDIT HIT Newcastle V of 56 GL and GJ Exercises

44 DATE PARTICULARS FOLIO DEBIT CREDIT HIT Newcastle V of 56 GL and GJ Exercises

45 GENERAL LEDGER Argent Bank 1.1 Petty Cash 1.2 Accounts Receivable 1.3 Inventory 1.4 Sundry Debtor 1.5 Prepayments 1.6 Less Prov n Doubtful Debts 1.7 HIT Newcastle V of 56 GL and GJ Exercises

46 Premises 1.11 May Furniture & Fixtures at Cost 1.13 May Furniture and Fixtures Accumulated Depreciation 1.13A May Motor Vehicles at Cost 1.14 May MV Accumulated Depreciation 1.14A Office Equipment at Cost 1.15 May Office Equipment Accumulated Depreciation 1.15A Accounts Payable Control 2.1 Sundry Creditor 2.6 May cr HIT Newcastle V of 56 GL and GJ Exercises

47 Accrued Expenses 2.7 May GST Collected 2.10 May GST Paid 2.11 May Bank Loans 2.16 May Mortgage 2.15 May Capital 3.1 May Drawings 3.2 May HIT Newcastle V of 56 GL and GJ Exercises

48 Sales 4.1 May Sales Returns and Allowances May Discount Received May Interest Received 4.4 May Dividends 4.8 May 31 Purchases 6.1 May Purchases Returns and Allowances Advertising 6.4 May Bad Debts 6.5 May Discount Allowed May HIT Newcastle V of 56 GL and GJ Exercises

49 Insurance 6.9 May 31 Interest Expense 6.10 May Wages and Salaries 6.17 Freight and Insurance Paid 6.18 May Bank Fees May Depreciation Expense 6.20 Other Employer Expenses 6.27 May Doubtful Debts 6.28 HIT Newcastle V of 56 GL and GJ Exercises

50 Account No Trial Balance of Argent Hardware Supplies As at 31 May Account Name Debit Credit 1.1 Bank 1.2 P/Cash 1.3 A/c Receivable 1.4 Inventory 1.5 Sundry Debtor Like Nu 1.6 Prepayments 1.7 Less Prov n for Doubtful Debts 1.11 Premises 1.13 Furniture and Fixtures at Cost 1.13A F&F Accumulated Depreciation 1.14 MV at Cost 1.14A MV Accumulated Depreciation 1.15 Equip at Cost 1.15A Equip Accumulated Depreciation 2.1 A/c Payable 2.6 Sundry Creditor Argenton Motors 2.9 Accrued Expenses 2.10 GST Collected 2.11 GST Paid 2.15 Mortgage 2.16 Bank Loans 3.1 Capital 4.1 Sales 4.2 S/Returns 4.8 Dividends 6.1 Purchases 6.2 P/Returns 6.4 Advertising 6.6 Bank Charges 6.7 Electricity 6.9 Insurance 6.13 Repairs and Maintenance 6.14 Stationery/Office Supplies 6.15 Telephone 6.17 Wages 6.18 Freight and Ins Paid 6.20 Depreciation 6.27 Other Employer Expenses 6.28 Doubtful Debts TOTAL 305, , HIT Newcastle V of 56 GL and GJ Exercises

51 MEDOWLEA NEWSAGENCY Margaret Smith (proprietor) purchases MEDOWLEA NEWSAGENCY (18A Main Road Medowlea, NSW 2318; ABN ) and commences a new set of books on 1 September with the following assets and liabilities: Cash at Bank $8, Motor Vehicles 12, Premises 18, Stock 22, Furniture and Fittings 1, Office Equipment 2, D Gray Sundry Debtor Accounts Receivable 1, K Batt $ M Pont Dancing School D Kerkin G Jones Accounts Payable P Fleck $33.00 T Booth A Lee D Queen M Carter Regis Motors Sundry Creditor GST Collected GST Outlaid (Paid) (Remember to calculate CAPITAL) Tasks: Prepare the General Journal opening entry as at 1 September. Prepare General Journal entries to record general transactions. Post ALL journals to the General Ledger and extract a trial balance as at 30 September General Journal transactions for September: SEP 02 Bought a motor vehicle (book value $ ) on credit from Regis Motors, $4, (GST inclusive). 08 Medowlea acquires a Bank Loan of $10,000 from That Bank. 25 Sold Furniture and Fittings on credit to D Gray, $ (GST inclusive) Invoice Motor Vehicles are depreciated at 17.5% per annum. Record September s depreciation. Record accrued Wages of $1500 and Other Employer Expenses $180 Mary Williams has decided to set up a Provision for Doubtful Debts of $200. HIT Newcastle V of 56 GL and GJ Exercises

52 GENERAL JOURNAL OF MEDOWLEA NEWSAGENCY GJ1 HIT Newcastle V of 56 GL and GJ Exercises

53 GENERAL JOURNAL OF MEDOWLEA NEWSAGENCY GJ2 HIT Newcastle V of 56 GL and GJ Exercises

54 GENERAL LEDGER OF MEDOWLEA NEWSAGENCY Bank 1.1 Accs Receivable 1.3 Inventory 1.4 Sundry Debtor Gray 1.5 Less Prov n Doubtful Debts 1.7 Premises 1.11 Furniture and Fixtures at Cost 1.13 Motor Vehicles at Cost 1.14 Motor Vehicles Accumulated Depreciation 1.14A HIT Newcastle V of 56 GL and GJ Exercises

55 Office Equipment at Cost 1.15 Accounts Payable 2.1 Sundry Creditor Regis 2.6 Accrued Expenses 2.7 GST collected 2.10 GST Paid 2.11 Bank Loans 2.16 Bank cr Capital 3.1 Sundries cr Wages 6.17 Depreciation Expense 6.20 HIT Newcastle V of 56 GL and GJ Exercises

56 Other Employer Expenses 6.27 Doubtful Debts 6.28 Trial Balance of Medowlea Newsagency As at 30 September 20XX NO ACCOUNT NAME DEBIT CREDIT A TOTAL HIT Newcastle V of 56 GL and GJ Exercises