CE principles Of Accountancy-A Summary
Part 1-Introduction to double-entry; Ledger & Accounting Classification; Trial Balance;
© 2000 - 2002 All rights reserved. Reproduction with permission of copyright owner. Further reproduction is prohibited. Authors: Frank Woods, Student Helper of City U, Division of Commerce
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Illustration (1)
Balancing off the following accounts and exact a trial balance for C Chan as at 31 May 20X4.
|
Bank |
|||||
|
20X4 |
|
$ |
20X4 |
|
$ |
|
May 1 |
Capital |
1,000 |
May 4 |
Cash |
200 |
|
May 28 |
B Hung |
15 |
May 30 |
Motor van |
420 |
|
|
|
|
May 31 |
Unique Machines |
248 |
|
|
|
|
May 31 |
Electricity |
50 |
|
|
|
|
May 31 |
Postage |
20 |
|
|
|
|
May 31 |
Bal c/d |
77 |
|
|
|
1,015 |
|
|
1,015 |
|
20X4 |
|
|
|
|
|
|
June 1 |
Bal b/d |
77 |
|
|
|
|
Cash |
|||||
|
20X4 |
|
$ |
20X4 |
|
$ |
|
May 4 |
Bank |
200 |
May 7 |
Motor Van |
180 |
|
May 21 |
Sales |
150 |
May 12 |
Purchases |
100 |
|
May 30 |
D. Hung |
60 |
May 22 |
D. Ho |
53 |
|
May 31 |
Rent Received |
138 |
May 31 |
Bal c/d |
215 |
|
|
|
548 |
|
|
548 |
|
|
|
|
|
|
|
|
June 1 |
Bal b/d |
215 |
|
|
|
|
Capital |
|||||
|
20X4 |
|
$ |
20X4 |
|
$ |
|
June 1 |
Bal c/d |
1,000 |
May 1 |
Bank |
1,000 |
|
|
|
|
|
|
|
|
|
|
|
June 1 |
Bal b/d |
1,000 |
|
Machinery |
|||||
|
20X4 |
|
$ |
20X4 |
|
$ |
|
May 3 |
Unique Machines |
275 |
May 10 |
B. Hung |
15 |
|
|
|
|
May 21 |
Unique Machines |
27 |
|
|
|
|
May 31 |
Bal c/d |
233 |
|
|
|
275 |
|
|
275 |
|
|
|
|
|
|
|
|
June 1 |
Bal b/d |
233 |
|
|
|
|
Motor Van |
|||||
|
20X4 |
|
$ |
20X4 |
|
$ |
|
May 21 |
Cash |
180 |
May 31 |
Bal c/d |
600 |
|
May 30 |
Bank |
420 |
|
|
|
|
|
|
600 |
|
|
600 |
|
|
|
|
|
|
|
|
June 1 |
Bal b/d |
600 |
|
|
|
|
Unique Machines |
|||||
|
20X4 |
|
$ |
20X4 |
|
$ |
|
May 21 |
Machinery |
27 |
May 3 |
Machinery |
275 |
|
May 31 |
Bank |
248 |
|
|
|
|
|
|
275 |
|
|
275 |
|
B. Hung |
|||||
|
20X4 |
|
$ |
20X4 |
|
$ |
|
May 10 |
Machinery |
15 |
May 28 |
Bank |
15 |
|
|
|
15 |
|
|
15 |
|
Purchases |
|||||
|
20X5 |
|
$ |
20X5 |
|
$ |
|
May 1 |
D. Ho |
68 |
May 31 |
Bal c/d |
309 |
|
May 2 |
A. Lee & Son |
77 |
|
|
|
|
May 12 |
Cash |
100 |
|
|
|
|
May 31 |
A. Lee & Son |
64 309 |
|
|
|
|
|
|
|
|
|
|
|
June 1 |
Bal b/d |
309 |
|
|
|
|
Sales |
|||||
|
20X5 |
|
$ |
20X5 |
|
$ |
|
May 31 |
Bal c/d |
255 |
May 5 |
D. Hung |
60 |
|
|
|
|
May 6 |
M. Ma |
45 |
|
|
|
|
May 21 |
Cash |
150 |
|
|
|
255 |
|
|
255 |
|
|
|
|
|
|
|
|
|
|
|
June 1 |
Bal b/d |
255 |
|
Returns Outwards |
|||||
|
20X5 |
|
$ |
20X5 |
|
$ |
|
May 31 |
Bal c/d |
15 |
May 10 |
D. Ho |
15 |
|
|
|
15 |
|
|
15 |
|
|
|
|
|
|
|
|
|
|
|
June 1 |
Bal b/d |
15 |
|
Returns Inwards |
|||||
|
20X5 |
|
$ |
20X5 |
|
$ |
|
May 19 |
M. Ma |
16 |
May 31 |
Bal b/d |
16 |
|
|
|
|
|
|
|
|
June 1 |
Bal c/d |
16 |
|
|
|
|
D. Ho |
|||||
|
20X5 |
|
$ |
20X5 |
|
$ |
|
May 10 |
Returns outwards |
15 |
May 1 |
Purchases |
68 |
|
May 22 |
Cash |
53 |
|
|
|
|
|
|
68 |
|
|
68 |
|
A. Lee & Son |
|||||
|
20X5 |
|
$ |
20X5 |
|
$ |
|
May 31 |
Bal c/d |
141 |
May 2 |
Purchases |
77 |
|
|
|
|
May 31 |
Purchases |
64 |
|
|
|
141 |
|
|
141 |
|
|
|
|
|
|
|
|
|
|
|
June 1 |
Bal b/d |
141 |
|
D. Hung |
|||||
|
20X5 |
|
$ |
20X5 |
|
$ |
|
May 5 |
Sales |
60 |
May 30 |
Cash |
60 |
|
M. Ma |
|||||
|
20X5 |
|
$ |
20X5 |
|
$ |
|
May 6 |
Sales |
45 |
May 19 |
Returns inwards |
16 |
|
|
|
|
|
Bal c/d |
29 |
|
|
|
45 |
|
|
45 |
|
|
|
|
|
|
|
|
June 1 |
Bal b/d |
29 |
|
|
|
|
Electricity |
|||||
|
20X4 |
|
$ |
20X4 |
|
$ |
|
May 31 |
Bank |
50 |
May 31 |
Bal c/d |
50 |
|
|
|
|
|
|
|
|
June 1 |
Bal b/d |
50 |
|
|
|
|
Postages |
|||||
|
20X4 |
|
$ |
20X4 |
|
$ |
|
May 31 |
Bank |
20 |
May 31 |
Bal c/d |
20 |
|
|
|
|
|
|
|
|
June 1 |
Bal b/d |
20 |
|
|
|
|
Rent Received |
|||||
|
20X4 |
|
$ |
20X4 |
|
$ |
|
May 31 |
Bal c/d |
138 |
May 31 |
Cash |
138 |
|
|
|
|
|
|
|
|
|
|
|
June 1 |
Bal b/d |
138 |
C. Chan
Trial Balance as at 31 May 20X4
|
Dr Cr $ $ Sales 255 Purchases 309 Returns outwards 15 Returns inwards 16 Rent Received 138 Electricity 50 Postage 20 Debtors – M. Ma 29 Creditors – A. Lee & Son 141 Machinery 233 Motor Van 600 Bank 77 Cash 215 Capital
1,000 1,549 1,549 |
Illustration (2)
From the following trial balance of R Lam draw up a trading and profit and loss account for the year ended 30 September 20X6, and a balance sheet as at that date.
|
Dr Cr $ $ Stock 1 October 20X5 2,368 Carriage outwards 200 Carriage inwards 310 Returns inwards 205 Returns outwards 322 Purchases 11,874 Sales 18,600 Salaries and wages 3,862 Rent 304 Insurance 78 Motor expenses 664 Office expenses 216 Lighting and heating expenses 166 General expenses 314 Premises 5,000 Motor vehicles 1,800 Fixtures and fittings 350 Debtors 3,896 Creditors 1,731 Bank 482 Drawings 1,200 Capital 12,636 33,289 33,289 Stock at 30 September 20X6
was $2,946. |
(I)
Trading and Profit and Loss Account
In fact the trading and profit and loss account forms part of the double entry
system. Each account that represents an expense or income item is closed, by
means of closing entries in the general journals, by transferring the total account to either the trading account or the profit and loss account.
General
Journal
Date Particulars DR CR
|
20X6 |
|
|
|
|
Sept 30 |
Sales |
18,600 |
|
|
|
Returns Outwards |
322 |
|
|
|
Trading |
|
18,922 |
|
|
Transfer of balance to Trading Account |
|
|
|
|
Trading |
|
|
|
|
Purchases |
|
11,874 |
|
|
Opening Stock |
|
2,368 |
|
|
Carriage Inwards |
|
310 |
|
|
Returns Inwards |
|
205 |
|
|
Transfer of balance to Trading Account |
14,757 |
|
|
|
Closing Stock |
2,946 |
|
|
|
Trading |
|
|
|
|
Unsold goods valued at balancing date |
|
2,946 |
|
|
Trading |
7,111 |
|
|
|
Profit & Loss |
|
|
|
|
Transfer of Gross profit to P&L Account |
|
7,111 |
|
|
Profit and Loss Account |
5,804 |
|
|
|
Carriage Outwards |
|
200 |
|
|
Salaries & Wages |
|
3,862 |
|
|
Motor Expenses |
|
664 |
|
|
Rent |
|
304 |
|
|
Insurance |
|
78 |
|
|
Office Expenses |
|
216 |
|
|
Lighting and Heating Expenses |
|
166 |
|
|
General Expenses |
|
314 |
|
|
Transfer of balances to P&L Account |
|
|
R Lam
|
|
$ |
$ |
$ |
|
Sales |
|
18,600 |
|
|
Less: Returns inwards |
|
(205) |
18,395 |
|
|
|
|
|
|
Less: Cost of goods sold |
|
|
|
|
Opening stock |
|
2,368 |
|
|
Add: Purchases |
11,874 |
|
|
|
Less: Returns outwards |
(322) |
11,552 |
|
|
Add: Carriage inwards |
|
310 |
|
|
Less: Closing stock |
|
14,230 |
|
|
|
|
(2,946) |
(11,284) |
|
Gross profit |
|
|
7,111 |
|
|
|
|
|
|
Less: Expenses:- |
|
|
|
|
Carriage outwards |
|
200 |
|
|
Salaries and wages |
|
3,862 |
|
|
Motor expenses |
|
664 |
|
|
Rent |
|
304 |
|
|
Insurance |
|
78 |
|
|
Office expenses |
|
216 |
|
|
Lighting and heating expenses |
|
166 |
|
|
General expenses |
|
314 |
(5,804) |
|
Net Profit |
|
|
1,307 |
(II)
Balance Sheet
After the Trading and Profit and Loss Account has been prepared, the Profit and Loss Account is closed by transferring the net profit/loss to the capital account. The total balance, if any, in the drawings account is also closed by transferring to the capital account. Finally, Balance Sheet is prepared to show the balances of the assets, capital and liabilities. It should be noted that the Balance sheet does not form part of the double entry system.
General Journal (Continued)
Date Particulars DR CR
|
20X6 |
|
$ |
$ |
|
Sept 30 |
Profit and Loss |
1,307 |
|
|
|
Capital |
|
1,307 |
|
|
Transfer of net profit to capital account |
|
|
|
|
Capital |
1,200 |
|
|
|
Drawings |
|
1,200 |
|
|
Transfer of drawings to capital account |
|
|
R Lam
Balance Sheet as at 30 Sept 20X6
Fixed Assets $ $
Fixtures and fitting 350
Motor vehicles 1,800
Premises
5,000
7,150
Current
Assets
Stock 2,946
Debtors 3,896
Bank
482
7,324
Less:
Current Liabilities
Creditors (1,731)
5,593
12743
Financed
by:-
Capital
Balance as at 1.10.20X5 12,636
Add: Net profit for the year 1,307
Less: Drawings (1,200)
12,743