Premises Real Capital Personal Drawings Personal Interest Nominal Mc Donald Personal Building Real Machinery Real Salaries Nominal Unitec Co. Personal Cash Real Rent and rates Nominal Abu Bakar Personal Advertising Nominal Motor repairs Nominal Fixtures and fittings Real Furniture Real
Account Debited Account Credited 1 Purchased goods from Lina Purchases Lina 2 Commission received in cash Cash Commission Rec 3 Rent paid in cash Rent Cash 4 Cash sales Cash Sales 5 Insurance paid in cash Insurance Cash 6 Cash purchase of a delivery van Motor Vehicles Cash 7 Payment of office equipment in cash Office equipment Cash 8 Goods returned by Ramadhan Sales Return Ramadhan 9 Goods drawn out by proprietor for own use Drawings Purchases 10 Credit purchases of machinery from Avis Ltd Machinery Avis Ltd 11 Bought fixtures on credit from Ayu Fixtures Ayu 12 Return goods to Naseer Naseer Purchases Return 13 Miscellaneous expenses paid in cash Miscellaneous Exps Cash 14 Cash brought in by owner as capital Cash Capital 15 Interest on loan, paid by cheque Interest on loan Bank 16 Discount allowed to buyer, Arthur Discount allowed Arthur 17 Carriage paid in cash Carriage Cash 18 Discount received from Aminatul Ltd Aminatul Ltd Discount Rec 19 Withdraw goods for personal use Drawings Purchases 20 Took out money from bank account for own use Drawings Bank Topic 1: Introduction to Accounting World PRINCIPLES OF ACCOUNTS Prepared by: Hajah Marhani & Hajah Harita Year 9 2
Exercise A Match with the correct answers:
1. A financial activity of a business is called a____________ ____
Business entity concept 2. The process of recording business transactions is called ___book-keeping_____ Prudence Concept 3. The process of recording, classifying, analyzing and interpreting business data is called _______accounting_____ Book-keeping 4. The concept which defines business and owner as separate entities is called ______business entity concept______ Accounting periods 5. The concept which assumes that a business will operate indefinitely is the _______Going concern concept_______ transaction 6. The concept which does not overstate profits and assets is the ___Prudence concept____ Consistency Concept 7. The concept which maintains the same methods and practices for all accounting periods is the ____Consistency Concept_____ Going concern concept 8. Final accounts are prepared at fixed intervals called ______Accounting periods____ accounting
Exercise B
1) c 2) b 3) a 4) b 5) d 6) a 7) d 8) d 9) a 10) d
MULTIPLE-CHOICE QUESTIONS
1. d 2. c 3. d 4. d
Topic 2: Accounting and Information Technology PRINCIPLES OF ACCOUNTS Prepared by: Hajah Marhani & Hajah Harita Year 9 3
Exercise A
Exercise B
ASSETS LIABILITIES OWNERS EQUITY 1. $30,000 $10,000 ? $20,000 2. $80,000 ? $45,000 $35,000 3. ? $78,000 $18,000 $60,000 4. $55,000 $16,000 ? $39,000 5. ? $100,000 $30,000 $70,000 6. $90,000 $34,550 ? $55,450 Exercise C What the business Owes What the business Owns Owners Investment Asset Liabilities Owners Equity Classification: Fixed Assets Current Assets Classification: Long-term Liabilities Current Liabilities Type: Cash Non-Cash Examples: Premises Cash Debtors Stock
Examples: Loans Creditors Bank Overdraft
Sources of Finance: Personal Savings Bank Loans Borrowings from friends
Accounting Equation:
A = L + OE Accounting Equation:
L = A - OE Accounting Equation:
OE = A - L Relationship with Expenses and Revenues Revenues increase assets Expenses decrease assets Expenses increase liabilities Revenues decrease liabilities Revenues increase Owners Equity Expenses decrease Owners Equity Topic 3: Accounting Equations PRINCIPLES OF ACCOUNTS Prepared by: Hajah Marhani & Hajah Harita Year 9 4 From the information given below, calculate the owners equity as at 31 December 2006: $ Cash in hand Debtors Creditors Bank Overdraft Stock Motor Vehicles Office Equipment Loan from bank Premises 1,500 5,600 6,800 1,800 20,000 30,000 10,000 15,000 50,000
Exercise D State whether the following is a/an
Current Asset Fixed Asset Current Liability Long-term Liability Expense Income
1. Land and building Fixed asset 11. Wages or salaries Expense 2. Creditor Current liability 12. Purchases Expense 3. Sales Income 13. Discount received Income 4. Stock Current Asset 14. Discount allowed Expense 5. Rent Payable Expense 15. Cash in hand Current Asset 6. Advertising Expense 16. Cash at bank Current Asset 7. Debtors Current Asset 17. Bank overdraft Current Liability 8. Loan Long-term Liability 18. Premises Fixed Asset 9. Electricity Expense 19. Rent received Income 10. Furniture Fixed Asset 20. Insurance Expense
Exercise E : Accounting period:
Length of accounting period Beginning of accounting period End of Accounting period One month 1 February 2006 ? 28 February 2006 Quarter of a year ? 1 March 2006 31 May 2006 Half a year 1 January 2006 ? 30 June 2006 One year 1 September 2006 ? 31 August 2007
Owners equity = _____$93 500_____ Working: OE = Assets Liabilities = (1500+5600+20000+30000+10000+ 50000) (6800+1800+15000) = $93500 PRINCIPLES OF ACCOUNTS Prepared by: Hajah Marhani & Hajah Harita Year 9 5 Exercise F: Effects of transactions on the Accounting Equation:
TRANSACTIONS EFFECTS ON Assets Liabilities Owners Equity + - + - + - 1. Bought goods $2,000 on credit. $2,000 $2,000 2. Repaid loan $8,000 by cheque. $8,000 $8,000 3. Paid insurance $500 by cheque $500 $500 4. Received cheques $250 for commission $250 $250 5. Bought machinery $1,000 by cash $1,000 $1,000 6. Paid creditor $2,000 by cheque $2,000 $2,000
Exercise G: Effects of transactions on the Accounting Equation:
TRANSACTIONS EFFECTS ON Assets Liabilities Owners Equity + - + - + - 1. Started business with $50,000 cash $50,000 $50,000 2. Paid cash $40,000 into the bank $40,000 $40,000 3. Bought furniture $5,000 on credit $5,000 $5,000 4. Purchased motor van for $12,000 paying by cheque $12,000 $12,000 5. Paid rent $500 by cheque $500
$500 6. Received cash $120 for commission $120 $120
Exercise H
PRINCIPLES OF ACCOUNTS Prepared by: Hajah Marhani & Hajah Harita Year 9 6 ASSETS LIABILITIES OWNERS EQUITY Cash Office Equipment Furniture Debtors Creditors Loan Capital a. +$50,000 +$50,000 b. +$4,000 +$4,000 c. +$2,000 -$2,000 d. -$1,000 -$1,000 e. -$800 -$800 f. +$1,500 +$1,500 g. -$1,800 -$1,800 h. +$1,450 -$1,450 i. -$300 -$300 j. +$10,000 +$10,000
Exercise I: Multiple-Choice Questions
1) B 2) A 3) C 4) C 5) B 6) D 7) C 8) B 9) D 10)D
Example Topic 4: Ledger and Double-Entry Recording Systems PRINCIPLES OF ACCOUNTS Prepared by: Hajah Marhani & Hajah Harita Year 9 7 Dr Cash Account Cr Date Particular Folio Amount $ Date Particular Folio Amount $ Jun 1 Balance b/d 500 Jun 2 Purchases 250 7 Sales 150 4 Transport 10 10 Ahmad 220 15 Stationery 15 25 Sales 200 20 Purchases 180 28 Wages 80 30 Intel. Co 350 30 Rates 25 30 Balance c/d 160 1,070 1,070 July 1 Balance b/d 160
Exercise:
Dr Cash Account Cr Date Particular Folio Amount $ Date Particular Folio Amount $ Aug 1 Balance b/d 390 Aug 2 Purchases 550 5 Sales 805 7 Rent 351 15 Sales 658 9 Telephone 158 27 Sales 597 18 Wages 570 25 Purchases 404 28 Water and light 35 31 Balance c/d 382 2,450 2,450 Sep 1 Balance b/d 382
EXERCISE A
a) The owner Danny introduced $30,000 cash into business.
Dr Cash Account Cr Date Particular Folio Amount $ Date Particular Folio Amount $ Capital 30,000
Dr Capital Account Cr Date Particular Folio Amount $ Date Particular Folio Amount $ Cash 30,000
b) Bought a second hand van for $18,000 cash. PRINCIPLES OF ACCOUNTS Prepared by: Hajah Marhani & Hajah Harita Year 9 8
Dr Motor Vehicles Account Cr Date Particular Folio Amount $ Date Particular Folio Amount $ Cash 18,000
Dr Cash Account Cr Date Particular Folio Amount $ Date Particular Folio Amount $ Motor Vehicles 18,000
c) Paid creditors Ekhwan $3,000 by cheque.
Dr Ekhwan Account Cr Date Particular Folio Amount $ Date Particular Folio Amount $ Bank 3,000
Dr Bank Account Cr Date Particular Folio Amount $ Date Particular Folio Amount $ Ekhwan 3,000
d) Bought a computer from Beseller Sdn Bhd $5,000 on credit.
Dr Office Equipment Account Cr Date Particular Folio Amount $ Date Particular Folio Amount $ Beseller Sdn Bhd 5,000
Dr Beseller Sdn Bhd Account Cr Date Particular Folio Amount $ Date Particular Folio Amount $ Office Equipment 5,000
e) The owner Saadatul withdrew $1,200 cash for own use.
Dr Drawings Account Cr Date Particular Folio Amount $ Date Particular Folio Amount $ Cash 1,200
PRINCIPLES OF ACCOUNTS Prepared by: Hajah Marhani & Hajah Harita Year 9 9 Dr Cash Account Cr Date Particular Folio Amount $ Date Particular Folio Amount $ Drawings 1,200
f) Bought goods $8,000 for cash.
Dr Purchases Account Cr Date Particular Folio Amount $ Date Particular Folio Amount $ Cash 8,000
Dr Cash Account Cr Date Particular Folio Amount $ Date Particular Folio Amount $ Purchases 8,000
g) Bought goods from Syakirah $1,500 on credit.
Dr Purchases Account Cr Date Particular Folio Amount $ Date Particular Folio Amount $ Syakirah 1,500
Dr Syakirah Account Cr Date Particular Folio Amount $ Date Particular Folio Amount $ Purchases 1,500
h) Returned goods to Syakirah $100.
Dr Syakirah Account Cr Date Particular Folio Amount $ Date Particular Folio Amount $ Purchases Return 100
Dr Purchases Return Account Cr Date Particular Folio Amount $ Date Particular Folio Amount $ Syakirah 100
PRINCIPLES OF ACCOUNTS Prepared by: Hajah Marhani & Hajah Harita Year 9 10 i) Sold goods $1,000 to Aqilah on credit.
Dr Aqilah Account Cr Date Particular Folio Amount $ Date Particular Folio Amount $ Sales 1,000
Dr Sales Account Cr Date Particular Folio Amount $ Date Particular Folio Amount $ Aqilah 1,000
EXERCISE B Complete the following table by stating the account to be debited or credited. TRANSACTIONS ACCOUNT DEBITED ACCOUNT CREDITED 1. Commenced business with cash
Cash Capital 2. The business bought Machinery paid by cheque Machinery Bank 3. The business bought furniture from Franmix Ltd Furniture Franmix Ltd 4. Received cash from debtor, Zaim
Cash Debtor: Zaim 5. Paid creditor, Rifah, by cheque
Creditor: Rifah Bank 6. The owner brought in cash as additional capital Cash Capital 7. The owner brought in his van for business use Motor vehicles Capital 8. Sold old office furniture to Zaki
Zaki Furniture 9. Transferred cash from the business to the bank Bank Cash 10. Withdrew cash from the bank for office use Cash Bank 11. Withdrew cash for personal use
Drawings Cash 12. Bank into the business account a loan obtained from Baiduri Bank. Bank Loan
MORE EXERCISES ON DOUBLE ENTRY DOUBLE ENTRY: EXERCISE 1 Item Transactions A/c Debited A/c Credited 1. Owner brought in additional cash as capital Cash Capital 2. Cash purchases Purchases Cash 3. Paid insurance by cheque Insurance Bank 4. Sold goods on credit to Razali Debtor: Razali Sales 5. Received cash from Lee, the debtor Cash Debtor: Lee PRINCIPLES OF ACCOUNTS Prepared by: Hajah Marhani & Hajah Harita Year 9 11 6. Bought delivery van for business by cheque Motor Vehicles Bank 7. Owner withdrew goods for personal use Drawings Purchases 8. Received cheque as commission Bank Commission
DOUBLE ENTRY: EXERCISE 2 Item Transactions A/c Debited A/c Credited 1. Rina started business with $2,000 cash. Cash Capital 2. Sold goods to customer on credit Debtor Sales 3. Paid rent by cheque Rent Bank 4. Sold motor van to Mira Mira Motor Vehicles 5. Azim paid cash for the amount he owed Cash Debtor: Azim 6. Bought furniture by cash Furniture Cash 7. Liza, the owner took cash for personal use Drawings Cash 8. Received salary by cheque Bank Salaries
DOUBLE ENTRY: EXERCISE 3 Item Transactions A/c Debited A/c Credited 1. Received cheque for capital Bank Capital 2. Cash sales Cash Sales 3. Purchase goods from Wiwi by cheque Purchases Bank 4. Sold equipment to Zaim Zaim Equipment 5. Azim paid cash after sales Cash Sales 6. Bought computer by cash for office use Office Equipment Cash 7. The owner took goods for personal use Drawings Purchases 8. Paid water bill by cheque Water Bills Bank DOUBLE ENTRY: EXERCISE 4 Item Transactions A/c Debited A/c Credited 1. Paid cash for goods bought Purchases Cash 2. Paid cash for purchase of machinery Machinery Cash 3. Paid electricity by cheque Electricity Bank 4. Bought motor van from Shasha Motor Vehicles Shasha 5. Paid cash for the amount he owed to creditor Creditor Cash 6. Sold goods and received a cheque Bank Sales 7. Sold goods to Aqilah on credit Aqilah Sales 8. Bought goods on credit Purchases Creditor DOUBLE ENTRY: EXERCISE 5 Item Transactions A/c Debited A/c Credited 1. Mawar brought in additional cash as capital Cash Capital 2. Transfer cash into bank Bank Cash 3. Paid rent by cheque Rent Bank 4. Sold goods on credit to Edward Debtor: Edward Sales 5. Received cash as commission Cash Commission 6. Bought premises for business by cheque Premises Bank 7. Owner withdrew goods for personal use Drawings Purchases 8. Cash purchases Purchases Cash DOUBLE ENTRY: EXERCISE 6 Item Transactions A/c Debited A/c Credited 1. Richard started business with $3,000 cash. Cash Capital 2. Sold goods to Mizal on credit Debtor: Mizal Sales 3. Paid salary by cheque Salary Bank 4. Sold furniture to Neeza Neeza Furniture 5. Leez paid cash for the amount she owed Cash Debtor: Leez PRINCIPLES OF ACCOUNTS Prepared by: Hajah Marhani & Hajah Harita Year 9 12 6. Bought furniture on credit from Fashion Co Furniture Fashion Co 7. The owner took cash for personal use Drawings Cash 8. Received commission by cheque Bank Commission
DOUBLE ENTRY: EXERCISE 7 Item Transactions A/c Debited A/c Credited 1. Bought computer for office use by cash Office equipment Cash 2. Purchased shop fittings by cheque Shop Fittings Bank 3. Purchase typewriter by cheque Office Equipment Bank 4. Sold office equipment to Ziqah Ziqah Office equipment 5. Returned goods after purchase Creditor Return Outwards 6. Received damaged goods returned by customer Returns Inwards Debtor 7. The owner took goods for personal use Drawings Purchases 8. Paid for stationery bought by cheque Stationery Bank
EXERCISE C
Dr Cash Account Cr Date Particular Folio Amount $ Date Particular Folio Amount $ Jan 1 Balance b/d 10,000 Jan 3 Purchases 3,245 8 Sales 2,400 4 Rent 800 21 Sales 1,250 24 General Expenses 400 31 Shahmi 200 28 Wages 1,200 31 Commission Received 550 30 Amir & Sons 1,000 31 Insurance 350 31 Balance c/d 7,405 14,400 14,400 Feb 1 Balance b/d 7,405
Dr Shahmi Account Cr Date Particular Folio Amount $ Date Particular Folio Amount $ Jan 12 Sales 450 Jan 16 Sales Returns 100 31 Cash 200 31 Balance c/d 150 450 450 Feb 1 Balance b/d 150
Dr Amir & Sons Account Cr Date Particular Folio Amount $ Date Particular Folio Amount $ Jan 19 Purchases Returns 150 Jan 13 Purchases 1,670 30 Cash 1,000 31 Balance c/d 520 1,670 1,670 Feb 1 Balance b/d 520
Dr Sales Account Cr PRINCIPLES OF ACCOUNTS Prepared by: Hajah Marhani & Hajah Harita Year 9 13 Date Particular Folio Amount $ Date Particular Folio Amount $ Jan 8 Cash 2,400 12 Shahmi 450 21 Cash 1,250
Dr Purchases Account Cr Date Particular Folio Amount $ Date Particular Folio Amount $ Jan 3 Cash 3,245 13 Amir & Sons 1,670
Dr Purchases Returns Account Cr Date Particular Folio Amount $ Date Particular Folio Amount $ Jan 19 Amir & Sons 150
Dr Sales Returns Account Cr Date Particular Folio Amount $ Date Particular Folio Amount $ Jan 16 Shahmi 100
Dr Rent Account Cr Date Particular Folio Amount $ Date Particular Folio Amount $ Jan 4 Cash 800
Dr General Expenses Account Cr Date Particular Folio Amount $ Date Particular Folio Amount $ Jan 24 Cash 400
Dr Wages Account Cr Date Particular Folio Amount $ Date Particular Folio Amount $ Jan 28 Cash 1,200
Dr Insurance Account Cr Date Particular Folio Amount $ Date Particular Folio Amount $ Jan 31 Cash 350
PRINCIPLES OF ACCOUNTS Prepared by: Hajah Marhani & Hajah Harita Year 9 14 Dr Commission Received Account Cr Date Particular Folio Amount $ Date Particular Folio Amount $ Jan 31 Cash 550
EXERCISE D
Dr Cash Account Cr Date Particular Folio Amount $ Date Particular Folio Amount $ Jan 1 Capital 50,000 Jan 3 Office equipment 5,000 25 Shadri 200 10 NBT Sdn Bhd 10,000 12 High-Tech Ltd 1,200 31 NBT Sdn Bhd 2,000 31 Drawings 300 31 Balance c/d 31,700 50,200 50,200 Feb 1 Balance b/d 31,700
Dr Capital Account Cr Date Particular Folio Amount $ Date Particular Folio Amount $ Jan 1 Cash 50,000
Dr Drawings Account Cr Date Particular Folio Amount $ Date Particular Folio Amount $ Jan 31 Cash 300
Dr Shadri Account Cr Date Particular Folio Amount $ Date Particular Folio Amount $ Jan 15 Office equipment 600 Jan 25 Cash 200 31 Balance c/d 400 600 600 Feb 1 Balance b/d 400
PRINCIPLES OF ACCOUNTS Prepared by: Hajah Marhani & Hajah Harita Year 9 15 Dr Office Equipment Account Cr Date Particular Folio Amount $ Date Particular Folio Amount $ Jan 3 Cash 5,000 Jan 15 Shadri 600 5 High-Tech Ltd 2,000 31 Balance c/d 8,400 20 High-Tech Ltd 2,000 9,000 9,000 Feb 1 Balance b/d 8,400
Dr Motor Vehicles Account Cr Date Particular Folio Amount $ Date Particular Folio Amount $ Jan 10 NBT Sdn Bhd 20,000 Jan 31 Balance c/d 20,000
20,000 20,000 Feb 1 Balance b/d 20,000
Dr High-Tech Ltd Account Cr Date Particular Folio Amount $ Date Particular Folio Amount $ Jan 12 Cash 1,200 Jan 5 Office Equipment 2,000 31 Balance c/d 2,800 20 Office Equipment 2,000 4,000 4,000 Feb 1 Balance b/d 2,800
Dr NBT Sdn Bhd Account Cr Date Particular Folio Amount $ Date Particular Folio Amount $ Jan 31 Cash 10,000 Jan 10 Motor Vehicles 20,000 Cash 2,000 31 Balance c/d 8,000 20,000 20,000 Feb 1 Balance b/d 8,000
EXERCISE E PRINCIPLES OF ACCOUNTS Prepared by: Hajah Marhani & Hajah Harita Year 9 16
TRANSACTION ACCOUNTS INVOLVED TYPE OF ACCOUNTS EFFECTS or LEDGER ENTRY Debit $ Credit $ 1. Bought goods for cash $3,000 Purchases, Cash
Expense Asset
3,000 3,000 2. Received cheques for cash sales $5,000 Bank, Sales
Asset Revenue
5,000 5,000 3. Paid wages by cheques $2,500 Wages, Bank
Expense Asset
2,500 2,500 4. Paid cash for general expenses $180 General Exp, Cash
Expense Asset
180 180 5. Received cheques $4,500 for commission Bank, Commission Received Asset Revenue
4,500 4,500 6. Bought goods for $2,000 from Izza Co. on credit Purchases, Creditor: Izza Co. Expense Liability
2,000 2,000 7. Returned goods worth $100 to Izza Co. because of wrong specification. Creditor: Izza Co., Purchases Return Liability
Expense
100
100 8. Sold goods for $3,600 to Afiq Brothers on credit Debtor: Afiq Brothers, Sales Assets
400 400 10. Paid interest on loans $600 by cheque. Interest on loan, Bank Expense
Asset
600
600
EXERCISE F: Multiple-choice Questions
1) a 2) c 3) d 4) c 5) b 6) c
PRINCIPLES OF ACCOUNTS Prepared by: Hajah Marhani & Hajah Harita Year 9 17
EXERCISE A: Trial Balance as at 31 December 2006
Debit $ Credit $ Purchases 36,150 Sales 67,000 Debtors 9,700 Creditors 10,700 Motor Vehicles 42,000 Loan 20,000 Fixtures and Fittings 14,000 Returns Inwards 350 Returns Outwards 550 Rent Paid 6,000 Commission Received 800 Carriage Inwards 700 Carriage Outwards 1,850 Insurance 950 Salaries 10,500 Discount Allowed 400 Discount Received 200 Cash in hand 1,200 Cash at bank 3,450 Stock 14,500 Capital 44,000 Drawings 1,500 143,250 143,250
EXERCISE B:
Trial Balance as at 31 December 2006 Debit $ Credit $ Capital 19,800 Sales 190,200 Purchases 130,000 Cash in hand 11,500 Bank Overdraft 1,200 Returns Inwards 420 Returns Outwards 300 Carriage Inwards 990 Carriage Outwards 560 Electricity 1,740 Insurance 600 Bank Charges 200 Discount allowed 640 Discount Received 550 Stock (01.01.2006) 6,300 Debtors 14,200 Creditors 15,500 Drawings 10,000 Commission Income 5,100 Salaries 25,000 Motor Vehicles 50,000 Loan from bank (due in 2010) 19,500 252,150 252,150
Topic 5: Trial Balance PRINCIPLES OF ACCOUNTS Prepared by: Hajah Marhani & Hajah Harita Year 9 18 EXERCISE C: Muiz Trial Balance as at 31 January 2007 Debit $ Credit $ Sales Purchases Sales Returns Purchases Returns Carriage Outwards Office Equipment Premises Wages Drawings Loan from BIBD Discount Received Stock (01.01.2007) Capital
14,000 1,000
880 15,300 17,000 7,000 2,000
3,850 28,500
800
9,400 330
22,000 61,030 61,030
EXERCISE D: Trial Balance as at 31 January 2005 Debit Credit $ $ Cash 14,400 Capital 20,000 Purchases 29900 Sales 24,200 Wendy 1,700 Carriage 600 Plaza Co 18,000 Chandran 14,200 Sundry expenses 1,000 Drawings 100 Returns Inwards 300 62,200 62,200
EXERCISE E: 1) c 2) a 3) b 4) c 5) d 6) d
EXERCISE F 1) Trial Balance 2) discount allowed.. discount received 3) overdraft 4) debtorcreditor 5) credit debit 6) opening beginning PRINCIPLES OF ACCOUNTS Prepared by: Hajah Marhani & Hajah Harita Year 9 19
6A: TRADING ACCOUNT
EXERCISE A Shadri Trading account for the year ended 31 December 2007 $ $ $ $ Opening Stock (1 Jan) 5,000 Sales 75,200 Purchases 43,000 Less returns inwards (1,200) Less: returns outwards (3,000) Net Sales 74,000 Net Purchases 40,000 Add: Carriage inwards 1,500 Customs Duty 4,300 Insurance on purchases 1,000 6,800 Cost of goods available for sale 51,800 Less Closing stock (31 Dec) (6,000) COST OF SALES 45,800 Gross Profit c/d 28,200 74,000 74,000 Gross Profit b/d 28,200
EXERCISE B
Trading account for the year ended 31 December 2007 $ $ $ $ Opening Stock (1 Jan) 10,000 Sales 62,500 Purchases 36,800 Less returns inwards (2,400) Less: returns outwards (1,800) Net Sales 60,100 Net Purchases 35,000 Add: Carriage inwards 2,350 Customs Duty 3,680 Insurance on purchases 1,150 7,180 Cost of goods available for sale 52,180 Less Closing stock (31 Dec) (13,500) COST OF SALES 38,680 Gross Profit c/d 21,420 60,100 60,100 Gross Profit b/d 21,420
Topic 6: Final Accounts of Sole-Proprietorships PRINCIPLES OF ACCOUNTS Prepared by: Hajah Marhani & Hajah Harita Year 9 20 EXERCISE C Trading account for the year ended 31 December 2006 $ $ $ $ Opening Stock (1 Jan) 11,500 Sales 52,500 Purchases 40,950 Less returns inwards (1,800) Less: returns outwards (1,240) Net Sales 50,700 Net Purchases 39,710 Gross Loss c/d 175 Add: Carriage inwards 1,885 Customs Duty 3,880 Packaging Expenses 4,150 9,915 Cost of goods available for sale 61,125 Less Closing stock (31 Dec) (10,250) COST OF SALES 50,875
50,875 50,875
Gross Loss b/d 175
6B: PROFIT AND LOSS ACCOUNT EXERCISE A
NO. ACCOUNT TRADING A/C PROFIT AND LOSS A/C Debit Credit Debit Credit 1. Advertising 2. Repairs 3. Commission Received 4. Purchases 5. Sales 6. General Expenses 7. Carriage Inwards 8. Carriage Outwards 9. Customs Duty 10. Postage Expenses 11. Stationery 12. Rent Received 13. Discount Received 14. Purchases Returns 15. Sales Returns 16. Interest Expense 17. Insurance on purchases 18. Salesman Commission
PRINCIPLES OF ACCOUNTS Prepared by: Hajah Marhani & Hajah Harita Year 9 21
EXERCISE B
Profit and Loss A/c of Pressage for the year ended 31 December 2006 $ $ Salaries 2,400 Gross Profit b/d 10,400 Rent and Rates 1,200 Commission earned 1,400 Advertising 580 Sundry expenses 1,160 Total Expenses 5,340 Net Profit 6,460 11,800 11,800
EXERCISE 6C
Dr Trading account for the year ended 31 December 2007 Cr $ $ $ $ Opening Stock (1 Jan) 8,000 Sales 63,800 Purchases 36,700 Less returns inwards (600) Less: returns outwards (700) Net Sales 63,200 Net Purchases 36,000 Add: Carriage inwards 1,700 Duty on purchases 4,000 5,700 Cost of goods available for sale 49,700 Less Closing stock (31 Dec) (6,600) COST OF SALES 43,100 Gross Profit c/d 20,100 63,200 63,200
Dr Profit and Loss Account for the year ended 31 st December 2007 Cr $ $ $ $ Carriage Outwards 1,500 Gross Profit b/d 20,100 Wages 5,000 Commission Received 3,400 Rent 3,600 Discount Received 200 23,700 Insurance 1,000 Total Expenses 11,100 NET PROFIT 12,600 23,700 23,700
PRINCIPLES OF ACCOUNTS Prepared by: Hajah Marhani & Hajah Harita Year 9 22 EXERCISE D
Trading account for the year ended 30 September 2006 $ $ $ $ Opening Stock (1 Oct) 16,000 Sales 83,800 Purchases 56,700 Less Sales returns (1,250) Less: Purchases returns (1,400) Net Sales 82,550 Net Purchases 55,300 Add: Carriage inwards 1,450 Duty on purchases 3,800 Packaging expenses 3,200 8,450 Cost of goods available for sale 79,750 Less Closing stock (30 Sept) (14,550) COST OF SALES 65,200 Gross Profit c/d 17,350 82,550 82,550
Dr Profit and Loss Account for the year ended 30 September 2006 Cr $ $ $ $ Carriage Outwards 2,460 Gross Profit b/d 17,350 Discount allowed 350 Commission Received 1,400 Rent 4,800 Discount Received 200 18,950 Repairs 1,120 Total Expenses 8,730 NET PROFIT 10,220 18,950 18,950
6C: BALANCE SHEET
EXERCISE A
Balance Sheet of Lily Company as at 31 December 2006 $ $ $ $ Fixed Assets Owner's Equity Machinery 35,000 Capital 84,329 Premises 50,000 Furniture 15,000 100,000 Long-term Liability Bank Loan 25,000 Current Assets Closing stock 22,220 Current Liabilities Trade Debtors 24,500 Trade Creditors 44,400 Cash at bank 3,600 Cash in hand 3,409 53,729 153,729 153,729
PRINCIPLES OF ACCOUNTS Prepared by: Hajah Marhani & Hajah Harita Year 9 23 EXERCISE B
Haziqah Trading, Profit and Loss Account for the year ended 31 December 2006 $ $ $ $ Opening Stock 6,700 Sales 58,000 Purchases 31,100 Less: Returns Inwards (700) Less: Returns Outwards (400) Net Sales 57,300 30,700 Add: Carriage inwards 600 Net Purchases 31,300 Cost of goods available for sale 38,000 Less Closing stock (8,000) Cost of Sales 30,000 Gross Profit c/d 27,300 57,300 57,300
Carriage Outwards 1,040 Gross Profit b/d 27,300 Rent 2,000 Commission Received 2,000 Wages and Salaries 4,000 Stationery 260 7,300 Net Profit 22,000 29,300 29,300
Balance Sheet of Haziqah as at 31 December 2006 $ $ $ $ Fixed Assets Owner's Equity Motor Vehicles 12,000 Capital 1.1.2006 20,000 Furniture 10,000 22,000 Add: Net Profit 22,000 42,000 Current Assets Less: Drawings (3,000) Bank 9,500 Capital 31.12.2006 39,000 Closing stock 8,000 Debtors 15,000 32,500 Long-term Liability Loan from BIBD 10,000
Current Liabilities Creditors 5,500 54,500 54,500
PRINCIPLES OF ACCOUNTS Prepared by: Hajah Marhani & Hajah Harita Year 9 24 EXERCISE C
Hadzrizul Trading, Profit and Loss Account for the year ended 31 December 2006 $ $ $ $ Opening Stock 21,100 Sales 86,650 Purchases 51,900 Less: Purchases Returns (530) 51,370 Add: Carriage inwards 1,600 Custom Duties 2,300 Net Purchases 55,270 Cost of goods available for sale 76,370 Less Closing stock (22,500) Cost of Sales 53,870 Gross Profit c/d 32,780 86,650 86,650
Carriage Outwards 450 Gross Profit b/d 32,780 General Expenses 2,800 Discount Received 270 Wages and Salaries 8,000 Insurance 950 Interest 1,500 Discount allowed 300 14,000 Net Profit 19,050 33,050 33,050
Balance Sheet of Hadzrizul as at 31 December 2006 $ $ $ $ Fixed Assets Owner's Equity Premises 80,000 Capital 1.1.2006 78,000 Furniture and Fittings 9,000 89,000 Add: Net Profit 19,050 97,050 Current Assets Less: Drawings (5,000) Closing stock 22,500 Capital 31.12.2006 92,050 Debtors 3,900 26,400 Long-term Liability Mortgage on premises 15,000
Current Liabilities Creditors 5,150 Bank Overdraft 3,200 8,350 115,400 115,400
PRINCIPLES OF ACCOUNTS Prepared by: Hajah Marhani & Hajah Harita Year 9 25 EXERCISE D Eliza Trading, Profit and Loss Account for the year ended 31 December 2007 $ $ $ $ Opening Stock 12,000 Sales 78,500 Purchases 40,300 Less: Returns Inwards (200) Less: Purchases Returns (300) Net Sales 78,300 40,000 Add: Carriage inwards 1,750 Custom Duties 650 Net Purchases 42,400 Cost of goods available for sale 54,400 Less Closing stock (10,000) Cost of Sales 44,400 Gross Profit c/d 33,900 78,300 78,300
Balance Sheet of Eliza as at 31 December 2007 $ $ $ $ Fixed Assets Owner's Equity Premises 45,000 Capital 1.1.2007 40,000 Motor Vehicles 25,000 Add: Net Profit 21,640 Fixtures and Fittings 5,000 75,000 61,640 Less: Drawings 700 Current Assets Capital 31.12.2007 60,940 Closing stock 10,000 Debtors 6,400 Long-term Liability Cash 840 17,240 Mortgage on premises 20,000
Current Liabilities Creditors 7,000 Bank Overdraft 4,300 11,300 92,240 92,240
EXERCISE E : MULTIPLE CHOICE QUESTIONS 1) b 2) d 3) c 4) b 5) c 6) d 7) c 8) a 9) d 10) b PRINCIPLES OF ACCOUNTS Prepared by: Hajah Marhani & Hajah Harita Year 9 26
EXERCISE A
No. TRANSACTION DOCUMENTS (a) The owner brought in furniture for office use Memo (b) Received from the supplier a summary of transactions that had taken place for the month. Statement of account (c) Cash purchases Cash bill / Receipts (d) Cash sales Cash Register slip issued (e) Returned goods to supplier Credit note received (f) Cash deposited in current account Bank deposit slip (g) Settlement of account Receipt / cheque butt (h) Notified by Ah Peng Service Centre for amount owing for repairs Invoice received (i) Notified debtor for overcharges Credit note issued (j) Notified debtor for undercharges Debit Note Issued
EXERCISE B
No. TRANSACTION BOOK OF PRIME ENTRY (a) Goods withdrawn for the purpose of giving as free samples in the promotion campaign. General Journal (b) An office equipment dealer bought photocopy machines on credit. Purchases Journal (c) An office equipment dealer took a photocopier for his office use. General Journal (d) Charged interest by creditor on overdue amount. General Journal (e) Received an invoice from Good Service for servicing office air-conditioners. General Journal (f) A furniture dealer sold settee on credit Sales Journal (g) Received a debit note from the supplier Purchases Journal (h) Goods of wrong specification returned to the supplier Purchases Returns Journal
EXERCISE C
1. c 2. d 3. b 4. c 5. b 6. c 7. a 8. d 9. c 10. a
Topic 7: Source Documents and Books of Prime Entry PRINCIPLES OF ACCOUNTS Prepared by: Hajah Marhani & Hajah Harita Year 9 27
PURCHASES JOURNAL EXERCISE A Purchases Journal Date Particular Invoice No. Invoice Details $ Total $ 2007 Jan 2 Ronald Enterprise AO 198 780 Less: Trade Discount 10% (78) 702
General Ledger Purchases A/c 2007 $ Jan 31 Sundry Creditors 2,438
Purchases Ledger Ronald Enterprise A/c 2007 $ Jan 2 Purchases 702
Western Co. A/c 2007 $ Jan 17 Purchases 816
Nathan Suppliers A/c 2007 $ Jan 25 Purchases 600
Orico Company A/c 2007 $ Jan 30 Purchases 320
EXERCISES: JOURNALS
PRINCIPLES OF ACCOUNTS Prepared by: Hajah Marhani & Hajah Harita Year 9 28 EXERCISE B Purchases Journal Date Particular Invoice No. Invoice Details $ Total $ 2007 Feb 1 Feezah 510
3 Amalina 400 Less: Trade Discount 15% (60) 340
8 Feezah 1,000 Less: Trade Discount 12% (120) 880
9 Alim 375
28 Purchases Account (Dr) 2,105
EXERCISE C Purchases Journal Date Particular Invoice No. Invoice Details $ Total $ 2007 Jan 5 Dash Co. Ltd. 300
7 Yati Company 400 Less: Trade Discount 20% (80) 320
General Ledger Returns Inwards A/c 2007 $ Mar 31 Sundry Debtors 1,285
PRINCIPLES OF ACCOUNTS Prepared by: Hajah Marhani & Hajah Harita Year 9 32
Sales Ledger Super Trio A/c 2007 $ Mar 12 Returns Inwards 480
Green Inc A/c 2007 $ Mar 25 Returns Inwards 350
Kedai Besar A/c 2007 $ Mar 31 Returns Inwards 455
EXERCISE B
EXERCISE C Sales Journal Date Particular Invoice No. Invoice Details $ Total $ Aug 3 Azim 2,200 Less: Trade Discount 10% (220) 1,980
15 Azim 330
31 Sales Account (Cr) 2,310 Returns Inwards Journal Date Particular Credit Note No. Credit Note Details $ Total $
Aug 5 Azim (2 X $50) 100 Less: Trade Discount 10% (10) 90
31 Returns Inwards Account (Dr) 90
Returns Inwards Journal Date Particular Credit Note No. Credit Note Details $ Total $ Jan 1 Dede 25
3 Ain 85
7 Syarikat Rasyidah (8 X $3) 24
9 Azrin 55 Less: Trade Discount 5% 2.75 52.25
31 Returns Inwards Account (Dr) 186.25 PRINCIPLES OF ACCOUNTS Prepared by: Hajah Marhani & Hajah Harita Year 9 33 GENERAL JOURNALS EXERCISE A General Journal Date Particulars Debit Credit $ $ 2007 July 1 Premises 80,000 Delivery Van 18,000 Office Equipment 5,000 Stock 50,000 Debtors: Saad 4,400 Wafiy 3,200 Cash 2,345 Mortgage on premises 30,000 Creditors: Redza 6,500 Muhiy 2,800 Bank 5,645 Capital 118,000 (being assets, liabilities and capital at this date) 162,945 162,945 EXERCISE B General Journal Date Particulars Debit Credit $ $ Premises 20,000 Fixtures 4,000 Stock 520 Cash 200 Debtors: Alvis 360 Levis 356 Bank Overdraft 2,000 Creditors: John 234 Johny 60 Capital 23,142 (being assets, liabilities and capital at this date) 25,436 25,436 Premises A/c Fixtures A/c $ $ Balance b/d 20,000 Balance b/d 4,000
EXERCISE C General Journal Date Particulars Debit Credit $ $ Jan 1 Office Equipment 500 Bank 500
3 Office Equipment 600 Syarikat Baiduri Bhd 600
5 Bank 3,000 Motor Vehicles 3,000
6 Motor Vehicles 7,500 Bank 7,500
15 Salwa 160 Furniture 160
EXERCISE D General Journal Date Particulars Debit Credit $ $ (a) Drawings 50 Office Equipment 50 (Being calculator taken by owner for own use)
(b) Office Equipment 7,000 Beseller Ltd 7,000 (Being purchase of two units of computer on credit)
(c) Beseller Ltd 3,500 Office Equipment 3,500 (Being return of one unit of computer)
(d) Motor Vehicles 1,000 Shahmi 1,000 (Being motorbike accepted as full payment of debt) PRINCIPLES OF ACCOUNTS Prepared by: Hajah Marhani & Hajah Harita Year 9 35 (e) Delivery expense 550 NBT Transport Ltd 550 (Being delivery expense incurred)
(f) Stationery Expense 100 Purchases 100 (Being stationery taken for office use)
EXERCISE E General Journal Date Particulars Debit Credit $ $ (a) Motor Vehicles 25,000 Capital 25,000 (Being private car brought in for business use)
(b) Drawings 5,000 Bank 5,000 (Being cash withdrawn for personal use)
(c) Drawings 200 Purchases 200 (Being goods withdrawn for personal use)
(d) Wages 500 Bank 500 (Being payment of wages by cheque)
(e) Yana 1,250 Bank 1,200 Discount Received 50 (Being payment of debt of $1250)
PRINCIPLES OF ACCOUNTS Prepared by: Hajah Marhani & Hajah Harita Year 9 36
Practice 1 Two Column Cash Book
Date Particular Cash Bank Date Particular Cash Bank 2006 $ $ 2006 $ $ Aug' 1 Balance b/d 500 3,411 Aug'4 W.Yong 485 6 Sales 200 8 Salaries 412 10 P.Allen 600 14 P.Allen (dishonoured) 600 29 T.Rahim 840 16 Bank charges 25 30 Sales 800 18 Tan Brothers 480 31 Cash 900 20 Rent 450 23 Electricity 122 25 Tan Traders 360 31 Bank 900 31 Balance c/d 400 3,017 1,300 5,951 1,300 5,951 Sept'1 Balance b/d 400 3017 Two column Cash Book
Practice 2 Three Column Cash Book
Three Column Cash Book Date Particular Discount Cash Bank Date Particular Discount Cash Bank 2008 2008 Jan 1 Bal b/d 2,000 4,000 Jan 3 Purchases 1,700 6 Sales 1,150 4 Stationery 180 20 Loan 3,000 9 Kayra Sis. 20 380 24 Zahra Ent 650 1,000 11 Drawings 700 28 Hali 100 1,900 13 Purchases 900 17 Advertising 90 23 Rent 1,800 25 Transport 1,100 30 Bal c/d 2,630 4,220 100 3,800 9,900 20 3,800 9,900 Feb 1 Bal b/d 2,630 4,220
Topic 9 : Cash Book PRINCIPLES OF ACCOUNTS Prepared by: Hajah Marhani & Hajah Harita Year 9 37
Discount Allowed 2008 $ $ Jan 31 Total 100
Discount Received 2008 $ Jan 31 Total 20
Exercise A. Cash Book 2008 Cash Bank 2008 Cash Bank Mar $ $ Mar $ $ 1 Balance b/d 238 3,166 3 Ah Lee 1,253 6 Sales 275 8 Wages 64 13 Mali 873 11 Electricity 89 20 Sales 497 19 Purchases 2,356 26 Cash c 450 22 Wages 74 26 Bank c 450 27 Motor expenses 39 Drawings 250 31 Balance c/d 383 541 1,010 4,489 1,010 4,489 April 1 Balance b/d 383 541
Exercise B. Cash Book 2008 Cash Bank 2008 Cash Bank April $ $ April $ $ 1 Balance b/d 550 2,550 4 Rent 350 10 Sales 135 7 Tansport 55 13 Adlina 800 9 Purchases 170 18 Bank c 350 16 Drawings 250 30 Cash c 250 18 Cash c 350 22 Sundry expenses 130 23 Ameera Supplier 1,250 30 Bank c 250 Balance c/d 430 1,400 1,035 3,600 1,035 3,600 May1 Balance b/d 430 1,400
PRINCIPLES OF ACCOUNTS Prepared by: Hajah Marhani & Hajah Harita Year 9 38
Exercise C Cash Book 2008 Cash Bank 2008 Cash Bank Sept $ $ Sept $ $ 1 Balance b/d 160 560 3 Cash c 190 3 Bank c 190 7 Purchases 210 13 Wazeef Wazeen 1,140 10 Transport 85 16 Sales 138 13 Office Furniture 180 19 Ahmad 200 26 Bank charges 70 30 Bank c 110 29 Uzma 150 30 Ratino 170 Cash c 110 Balance c/d 303 1,030 598 1,900 598 1,900 Oct1 Balance b/d 303 1,030
Exercise D Cash Book 2008 Dis Cash Bank 2008 Dis Cash Bank Jan $ $ $ Jan $ $ 1 Balance b/d 2,000 4,000 3 Purchases 1,700 6 Sales 1,150 4 Stationery 180 20 Loan 9,000 9 Harita Sisters 20 380 24 Saidatul Ent 650 1,000 11 Drawings 700 28 Frank 100 1,900 13 Purchases 900 17 Advertising 90 23 Rent 1,800 25 Transport exp 1,100 31 Balance c/d 2,630 10,220 100 3,800 15,900 20 3,800 15,900
Discount Allowed 2008 $ $ Jan 31 Total 100
Discount Received 2008 $ Jan 31 Total 20
PRINCIPLES OF ACCOUNTS Prepared by: Hajah Marhani & Hajah Harita Year 9 39
Exercise A.
Bank Cash Book 2008 $ 2008 $ Jan Jan 31 Balance b/d 7,522 31 Insurance 240 Bank charges 86 Kyra (Dishonoured) 132 Balance c/d 7,064 7,522 7,522
Bank Rconciliation Statement as at 31 January 2008 $ Balance as per cash book 7,064 Add : unpresented cheque 364 7,428 Less: Unpresented cheque 147 Balance as per bank statement 7,281
Exercise B.
Bank Cash Book 2008 $ 2008 $ Nov Nov 30 Balance b/d 1,677 31 Insurance 500 Din Din 1,350 Bank charges 12
Balance c/d 2,515 3,027 3,027
Bank Rconciliation Statement as at 30 November 2008
PRINCIPLES OF ACCOUNTS Prepared by: Hajah Marhani & Hajah Harita Year 9 44
Exercise A.
a) Straight line method b) Reducing Balance Method
Year 1 - $54,000 x 20% = $10,800 Year 1 $54,000 20% - $10,800 Year 2 - $54,000 x 20% = $10,800 Year 2 $ 43,200 20% - $ 8,640 Year 3 - $54,000 x 20% = $10,800 Year 3 $34,560 20% $ 6,912 $27,648
Exercise B -Straight Line Method Motor Van Account 2006 $ 2006 $ Jan 1 Bank 68,000 Dec 31 Depreciation 13,600 Balance c/d 54,400 68,000 68,000
2008 2008 Jan 1 Balance b/d 40,800 Dec 31 Depreciation 13,600 Balance c/d 27,200 40,800 40,800
2009 Jan 1 Balance b/d 27,200
Depreciation Account 2006 $ 2006 $ Dec 31 Motor Van 13,600 Dec 31 Profit and Loss 13,600 2007 2007 Dec 31 Motor Van 13,600 Dec 31 Profit and Loss 13,600 2008 2008 Dec 31 Motor Van 13,600 Dec 31 Profit and Loss 13,600
Topic 12 : Accounting of Fixed Assets PRINCIPLES OF ACCOUNTS Prepared by: Hajah Marhani & Hajah Harita Year 9 45 Reducing Balance Method Motor Van Account 2006 $ 2006 $ Jan 1 Bank 68,000 Dec 31 Depreciation 13,600 Balance c/d 54,400 68,000 68,000
2008 2008 Jan 1 Balance b/d 46,250 Dec 31 Depreciation 6,500 Balance c/d 39,750 46,250 46,250
2009 Jan 1 Balance b/d 39,750
PRINCIPLES OF ACCOUNTS Prepared by: Hajah Marhani & Hajah Harita Year 9 46 Depreciation Account 2006 $ 2006 $ Dec 31 Machinery 3,250 Dec 31 Profit and Loss 3,250
2007 2007 Dec 31 Machinery 6,500 Dec 31 Profit and Loss 6,500
2008 2008 $ Dec 31 Machinery 6,500 Dec 31 Profit and Loss 6,500
Exercise D
Motor Lorry Account 2006 $ 2006 $ Jan 1 Bank 120,000 Dec 31 Balance c/d 120,000
2007 2007 Jan 1 Balance b/d 120,000 Dec 31 Balance c/d 120,000
2008 Jan 1 Balance b/d 120,000
Provision for Depreciation 2006 $ 2006 $ Dec 31 Balance c/d 24,000 Dec 31 Depreciation 24,000
2007 2007 Dec 31 Balance c/d 43,200 Jan 1 Balance b/d 24,000 Dec 31 Depreciation 19,200 43,200 43,200 2008 Jan 1 Balance b/d 43,200
Depreciation Account 2006 $ 2006 $ Dec 31 Provision for Depreciation 24,000 Dec 31 Profit and Loss 24,000
2007 2007 Dec 31 Provision for Depreciation 19,200 Dec 31 Profit and Loss 19,200
Exercise E
Depreciation = Cost - Scrap Value = $ 24000 - $6000 = $3600 pa. No. of years 5 yrs
Motor Van Account 2008 $ 2008 $ July 1 Balance b/d 24,000 Dec 31 Disposal 24,000
PRINCIPLES OF ACCOUNTS Prepared by: Hajah Marhani & Hajah Harita Year 9 47 Provision for Depreciation Account 2008 $ 2008 $ Dec 31 Disposal 9,000 Jan 1 Balance b/d 5,400 Dec 31 Depreciation 3,600 9,000 9,000
Disposal of Motor Van Account 2008 $ 2006 $ Dec 31 Motor Van 24,000 Dec 31 Provision for Depreciation 9,000 Bank 14,000 Loss on Disposal 1,000 24,000 24,000
Exercise A General Journal 2008 DR CR $ $ June 30 Bad Debts 120 Lily 120 Being bad debts written off
Bad Debts Account 2008 $ $ June 30 Lily 120
Lilys Account 2008 $ 2008 $ Jan 1 Balance b/d 120 Jun 30 Bad Debts 120
Exercise B
Tashims Account 2008 $ 2008 $ Jan 1 Balance b/d 3,600 July 23 Bank 720 Sept 19 Bank 540 Bad Debts 2,340 3,600 3,600
Topic 13 : Bad Debts and Provision of Doubtful Debts PRINCIPLES OF ACCOUNTS Prepared by: Hajah Marhani & Hajah Harita Year 9 48 Exercise C Cash Account 2008 $ July 7 Bad Debts recovered 250
Bad Debts Recovered Account 2008 $ July 7 Cash 250
Exercise D General Journal 2008 DR CR $ $ Dec 31 Profit and Loss 170 Provision for Bad Debts 170 Being creation of provision for bad debts.
Provision for Bad Debts Account 2008 $ Dec 31 Profit and Loss Account 170
Profit and Loss Accounts for the year ended 31 December 2008
Provision for bad debts $ 170
Balance sheet as at 31 December 2008 Current Assets $ $ Debtors 8,500 Less: provision for Bad Debt 170 8,330
PRINCIPLES OF ACCOUNTS Prepared by: Hajah Marhani & Hajah Harita Year 9 49
EXERCISE A: Adjustments for Expense
Rent Paid Account 2009 $ 2009 $ Dec 31 Bank 9,630 Dec 31 Profit and Loss 10,480 Balance c/d 850 10,480 10,480 2010 Jan 1 Balance c/d 850
Profit and Loss Account for the year ended 31 December 2009 $ Rent 10,480
Balance Sheet as at 31 December 2009 $ Current Liabilities Accured Expenses 850
EXERCISE B: Adjustments for Expense
Salaries Account 2008 $ 2008 $ Dec 31 Bank 13,320 Jan 1 Balance b/d 2,430 Balance c/d 800 Dec 31 Profit and Loss 11,690 14,120 14,120 2008 Jan 1 Balance b/d 800
Profit and Loss Account for the year ended 31 December 2009 $ Salaries 11,690
Balance Sheet as at 31 December 2009 $ Current Liabilities Accured Expenses 800
Topic 14 : Balance Day Adjustment PRINCIPLES OF ACCOUNTS Prepared by: Hajah Marhani & Hajah Harita Year 9 50 Rent Account 2009 $ 2009 $ Jun 30 Bank 360 Jun 30 Profit and Loss 480 Balance c/d 120 480 480 July 1 Balance b/d 120
EXERCISE C: Adjustments for Expense
Sundry Expenses Account 2009 $ 2009 $ Dec 30 Bank 360 Jan 1 Balance b/d 50 Balance c/d 30 Dec 31 Profit and Loss 340 390 390 2010 Jan1 Balance b/d 30
Wages Account 2009 $ 2009 $ Dec 30 Bank 9750 Jan 1 Balance b/d 350 Balance c/d 370 Dec 31 Profit and Loss 9770 10120 10120 2010 Jan 1 Balance b/d 370
EXERCISE D: Adjustments for Expense
Insurance Account 2009 $ 2009 $ Dec 31 Bank 250 Dec 31 Profit and Loss 150 Balance c/d 100 250 250 2010 Jan 1 Balance b/d 100
Insurance Account 2008 $ 2008 $ Jan 1 Balance b./d 40 Dec 31 Profit and Loss 235 Dec 31 Bank 240 Balance c/d 45 280 280 2009 Jan 1 Balance b/d 45
PRINCIPLES OF ACCOUNTS Prepared by: Hajah Marhani & Hajah Harita Year 9 51 EXERCISE E: Adjustments for Expense a) Rates Account 2009 $ 2009 $ Jan 1 Balance b/d 126 Dec 31 Profit and Loss 522 May 31 Bank 264 Balance c/d 132 Nov 1 Bank 264 654 654 2010 Jan 1 Balance b/d 132
b) Rates Account 2009 $ 2009 $ Jan 1 Balance b/d 90 Dec 31 Profit and Loss 390 Dec 31 Bank 200 Balance c/d 100 390 390 2010 Jan 1 Balance b/d 100
EXERCISE F: Adjustments for Revenue
a) Rent Receivable Account 2009 $ 2009 $ Jan 1 Balance b/d 200 Dec 31 Bank 3,100 Dec 31 Profit and Loss 3,000 Balance c/d 100 3,200 3,200 Balance b/d 100
Profit and Loss Account for the year ended 31 December 2009 $ Rent Receivable 3,000
Balance Sheet as at 31 December 2009 $ Current Assets Accured rent receivable 100
PRINCIPLES OF ACCOUNTS Prepared by: Hajah Marhani & Hajah Harita Year 9 52 EXERCISE G: Adjustments for Revenue
a)
5 / 12 X $6000 = $2500
Rent Receivable Account 2009 $ 2009 $ Sept 30 Profit and Loss 2,500 May 1 Bank 1,500 Balance c/d 500 Aug 1 Bank 1,500 3,000 3,000 Oct 1 Balance b/d 500
b) Commission Receivable Account 2009 $ Dec 31 Bank 320
c) Commission Receivable Account 2009 $ 2009 $ Dec 31 Profit and Loss 380 Dec 31 Bank 320 Balance c/d 60 380 380 2010 Jan 1 Balance b/d 60
EXERCISE H: Adjustments for Revenue
a) Rent Receivable Account 2009 $ 2009 $ Dec 31 Profit and Loss 7,200 Mar 31 Bank 1,800 Jun 30 Bank 1,800 Sep 30 Bank 1,800 Dec 31 Balance c/d 1,800 7,200 7,200 2010 Jan 1 Balance b/d 1,800
b) Rent Receivable Account 2009 $ 2009 $ Dec 31 Profit and Loss 3,000 Jan 1 Balance b/d 200 Balance c/d 300 Dec 31 Bank 3,100 3,300 3,300 2010 Jan 1 Balance b/d 300
PRINCIPLES OF ACCOUNTS Prepared by: Hajah Marhani & Hajah Harita Year 9 53 EXERCISE I: Adjustments for Revenue
a) 5 / 12 X $6000 = $2500
Rent Receivable Account 2009 $ 2009 $ Sept 30 Profit and Loss 2,500 May 1 Bank 1,200 Aug 1 Bank 1,200 Sept 30 Balance c/d 100 2,500 2,500 Oct 1 Balance b/d 100
b) Rent Receivable Account 2009 $ 2009 $ Dec 31 Profit and Loss 7,200 Mar 31 Bank 3,000 Balance c/d 1,800 Jun 30 Bank 3,000 Sept 30 Bank 3,000 9,000 9,000 2010 Jan 1 Balance b/d 1,800
PRINCIPLES OF ACCOUNTS Prepared by: Hajah Marhani & Hajah Harita Year 9 54 EXERCISE A
Trading, Profit and Loss Account for the year ended 31 December 2006 $ $ $ $ Opening Stock 15,985 Sales 72,560 Purchases 43,455 Less: Sales Returns (680) 71,880 Add: Carriage inwards 2,345 45,800 Cost of goods available for sale 61,785 Less Closing stock (16,800) Cost of Sales 44,985 Gross Profit c/d 26,895 71,880 71,880
Salaries 6,000 Gross Profit b/d 26,895 Rent 3,200 Commission Received 1,885 Discount Allowed 115 Depreciation on Motor Vehicles 5,040 Bad debts 150 Provision for bad debts 50 Advertising 7,000 21,555 Net Profit 7,225 28,780 28,780
Hussien Balance Sheet as at 31 December 2006
Fixed Assets Owner's Equity Motor Vehicles 28,000 Capital on 1 Jan 35,000 Less: Provision for Depreciation (15,120) 12,880 Add: Net Profit 7,225 Office Equipment 5,000 17,880 42,225 Less: Drawings (1,800) Current Assets Capital on 31 Dec 40,425 Closing stock 16,800 Debtors 3,500 Current Liabilities Less: Provision for bad debts (180) 3,320 Creditors 3,990 Bank 6,765 Accrued Advertising 1,000 4,990 Prepaid Rent 400 Accrued Commission 250 27,535 45,415 45,415
Topic 15 : Final Account with Adjustments PRINCIPLES OF ACCOUNTS Prepared by: Hajah Marhani & Hajah Harita Year 9 55 EXERCISE B Farah Adeebah Trading, Profit and Loss Account for the year ended 30 June 2008 $ $ $ $ Opening Stock 17,200 Sales 156,000 Purchases 94,000 Less: Returns Inwards (2,000) 154,000 Add: Carriage inwards 1,400 95,400 Cost of goods available for sale 112,600 Less Closing stock (17,600) Cost of Sales 95,000 Gross Profit c/d 59,000 154,000 154,000
Carriage outwards 1,800 Gross Profit b/d 59,000 Wages and Salaries 9,500 Discount Received 3,400 Rent 9,800 Sundry Expenses 6,000 Bank Charges 100 Provision for Doubtful Debts 600 27,800 Net Profit 34,600 62,400 62,400
Farah Adeebah Balance Sheet as at 30 June 2008 $ $ $ $ Fixed Assets Owners Equity: Fixtures and Fitting 28,000 Opening Capital 54,900 Add: Net Profit 34,600 Current Assets 89,500 Stock 17,600 Less: Drawings 20,000 Cash at Bank 13,500 Closing Capital 69,500 Debtors 30,000 (-) Provision for Doubtful Debts (600) 60,500 Current Liabilities Creditors 18,800 Owing Expenses 200 19,000
88,500 88,500
PRINCIPLES OF ACCOUNTS Prepared by: Hajah Marhani & Hajah Harita Year 9 56 EXERCISE C Shahrifah Trading, Profit and Loss Account for the year ended 31 December 2006 $ $ $ $ Opening Stock 15,104 Sales 74,400 Purchases 46,224 Less: Sales Returns (1,760) 72,640 Less: Purchases Returns (1,420) 44,804 Add: Carriage inwards 936 45,740 Cost of goods available for sale 60,844 Less Closing stock (10,198) Cost of Sales 50,646 Gross Profit c/d 21,994 72,640 72,640
Interest on loan 500 Gross Profit b/d 21,994 Bad debts 350 Rent Received (owing) 3,000 Provision for doubtful debts 1,396 Net Loss 2,394 Transports 1,304 Salaries 10,658 Motor expenses 2,972 Insurance 3,400 Rent 2,000 Water & Light 2,500 Stationery 2,308 27,388 27,388 27,388
Balance Sheet of Shahrifah as at 31 December 2006 $ $ $ $ Fixed Assets Owner's Equity Office Equipment 9,600 Capital on 1 Jan 41,376 Furniture 2,400 12,000 Less: Net Loss (2,394) 38,982 Current Assets Less: Drawings (8,200) Closing stock 10,198 Capital on 31 Dec 30,782 Debtors 13,958 Less: Provision for bad debts 1,396 12,562 Long-term Liabilities Revenue Owing 3,000 Bank Loan 10,000 Bank 15,504 Cash 480 Current Liabilities Prepaid Expenses 904 42,648 Creditors 12,180 Expenses Owing 1,686 13,866 54,648 54,648
PRINCIPLES OF ACCOUNTS Prepared by: Hajah Marhani & Hajah Harita Year 9 57
EXERCISE D Rizqun Trading, Profit and Loss Account for the year ended 30 June 2007 $ $ $ $ Opening Stock 16,750 Sales 45,300 Purchases 21,050 Less: Sales Returns (300) 45,000 Less: Purchases Returns (1,050) 20,000 Add: Duty on Purchases 2,160 Carriage inwards 1,750 23,910 Cost of goods available for sale 40,660 Less Closing stock (18,000) Cost of Sales 22,660 Gross Profit c/d 22,340 45,000 45,000
Repairs and maintenance 680 Gross Profit b/d 22,340 Carriage outwards 540 Discount Received 280 Rent 4,200 Commission Received 1,400 Bad debts 300 Provision for Doubtful Debts 75 Depreciation of vehicles 4,200 9,920 Net Profit 14,175 24,095 24,095
Balance Sheet of Rizqun as at 30 June 2007 $ $ $ $ Fixed Assets Owner's Equity Motor Vehicles 30,000 Capital on 1 July 06 35,000 Less: Provision for Depreciation (13,200) 16,800 Add: Net Profit 14,175 Office Equipment 7,500 24,300 49,175 Less: Drawings (1,550) Current Assets Capital on 30 June 07 47,625 Stock 18,000 Debtors 4,500 Current Liabilities Less: Provision for bad debts (225) 4,275 Creditors 5,050 Deposit for rent 350 Accrued Carriage Inwards 600 Bank 6,750 29,375 Commission in advance 400 6,050
53,675 53,675
PRINCIPLES OF ACCOUNTS Prepared by: Hajah Marhani & Hajah Harita Year 9 58
EXERCISE E
Qaisara Income Statement for the year ended 31 August 2010 $ $ $ $ Opening Stock 9 650 Sales 121 300 Purchases 67 600 Add: Carriage on purchases 1 260 78 510 Less Closing stock (11 200) Cost of Sales 67 310 Gross Profit c/d 53 990 121 300 121 300
Wages and salaries 26 050 Gross Profit b/d 53 990 Rent and rates 7 200 Discount Received 460 Insurance 1 480 Rent Received 1 750 Sundry expenses 10 760 Provision for doubtful debts 450 Depreciation: Fixtures and equipment 2 000 Accountancy fees 1 500 49 440 Net Profit 6 760 56 200 56 200
Balance Sheet of Qaisara as at 31 August 2010 $ $ $ $ Fixed Assets Owner's Equity Fittings and equipment 10 000 Capital on 1 Sept 2009 29 000 Less: Provision for Depreciation (2 000) 8 000 Add: Net Profit 6 760 35 760 Current Assets Less: Drawings (18 220) Stock 11 200 Capital on 31 Aug 2010 17 540 Debtors 11 250 Less: Provision for bad debts (450) 10 800 Current Liabilities Prepaid rent and rates 150 22 150 Creditors 7 200 Bank overdraft 1 560 Wages and salaries Accrued 2 350 Accountancy fee accrued 1 500 12 610
30 150 30 150
PRINCIPLES OF ACCOUNTS Prepared by: Hajah Marhani & Hajah Harita Year 9 59
Exercise A
Manufacturing Account for the year ended 31 December 2008 Raw Materials: $ $ $ Stock 1 Jan 22,100 Production Cost 612,700 Purchases 234,500 Carriage on Purchases 67,900 324,500 Less: Closing Stock 23,400 Cost of raw material used 301,100 Direct wages 111,300 PRIME COST 412,400 Factory Overhead: Depreciation on Machinery 45,300 Factory Salaries 71,200 Electricity 66,100 Factory Insurance 12,000 Factory cleaning 5,700 200,300 612,700 612,700
Exercise B
Manufacturing Account for the year ended 31 December 2008 Raw Materials: $ $ $ Stock 1 Jan 31,500 Production Cost 145,795 Purchases 99,000 Duty on raw material 3,510 134,010 Less: Closing Stock 41,400 Cost of raw material used 92,610 Production wages 33,750 PRIME COST 126,360 Factory Overhead: Factory supervisors wages 8,000 Factory power 1,200 Factory rent 2,000 Other factory expenses 4,230 15,430 Work in progress: Opening WIP 17,100 Less: Closing WIP 13,095 4,005
145,795 145,795
Topic 16 : Manufacturing Accounts PRINCIPLES OF ACCOUNTS Prepared by: Hajah Marhani & Hajah Harita Year 9 60 Exercise C
Manufacturing Account for the year ended 31 December 2008 Raw Materials: $ $ $ Stock 1 Jan 1,108 Cost of Production 35,887 Purchases 14,209 Less: Returns (900) 13,309 Carriage inwards 3,982 18,309 Less: Stock 30 June 2008 (1,190) Cost of raw material used 17,119 Manufacturing wages 7,776 PRIME COST 24,895 Factory overheads: Salaries 4,725 Rent 1,260 Insurance 420 Electricity 900 Depreciation on Plant and Mac 3,662 10,967 Work in Progress Opening 458 Less: Closing (433) 25 35,887
Trading Account for the year ended 31 December 2008 Finished Goods $ $ Opening Stock 2,367 Sales 52,704 Cost of Production 35,887 38,254 Less: Closing stock (3,558) Cost of goods sold 34,696 Gross Profit 18,008 52,704 52,704
Profit and Loss Account for the year ended 31 December 2008 $ $ $ Office wages 2,592 Gross profit 18,008 Office salaries 1,312 Advertising 806 Depreciation on Motor Vans 1,120 Depreciation on Furniture 338 Office Rent 420 Total expenses 6,168 Net Profit 11,840 18,008 18,008
PRINCIPLES OF ACCOUNTS Prepared by: Hajah Marhani & Hajah Harita Year 9 61 Exercise D
Manufacturing Account for the year ended 31 December 2008 Raw Materials: $ $ $ Stock 1 Jan 1,108 Market value 50,000 Purchases 14,209 Less: Returns (900) 13,309 Carriage inwards 3,982 18,309 Less: Stock 30 June 2008 (1,190) Cost of raw material used 17,119 Manufacturing wages 7,776 PRIME COST 24,895 Factory overheads: Salaries 4,725 Rent 1,260 Insurance 420 Electricity 900 Depreciation on Plant and Mac 3,662 10,967 Work in Progress Opening 458 Less: Closing (433) 25 Cost of Production 35,887 Gross Profit on Manufactured goods 14,113 50,000 50,000
Trading Account for the year ended 31 December 2008 Finished Goods $ $ Opening Stock 2,367 Sales 52,704 Add: Market value 50,000 52,367 Less: Closing stock (3,558) Cost of goods sold 48,809 Gross Profit 3,895 52,704 52,704
Profit and Loss Account for the year ended 31 December 2008 $ $ $ Office wages 2,592 Gross profit: Office salaries 1,312 Manufactured goods 14,113 Advertising 806 Trading 3,895 Depreciation on Motor Vans 1,120 Depreciation on Furniture 338 Office Rent 420 Total expenses 6,168 Net Profit 11,840 18,008 18,008
PRINCIPLES OF ACCOUNTS Prepared by: Hajah Marhani & Hajah Harita Year 9 62 Exercise E
Manufacturing Account for the year ended 31 December 2008 Raw Materials $ $ $ Opening stock 3,900 Production Cost 88,680 Purchases 37,800 41,700 Closing Stock (4,500) Cost of raw material used 37,200 Direct expenses: Manufacturing wages 21,900 PRIME COST 59,100 Factory overhead Indirect expenses Depreciation on manufacturing Plant 5,430 Factory expenses 10,200 Factory Electricity 7,560 Factory Rent 6,480 29,580 88,680 88,680
Trading and Profit and Loss Account for the year ended 31 December 2008 Finished Goods $ $ $ Opening Stock 8,400 Sales 150,000 Production Cost 88,680 97,080 (-) Closing Stock (9,900) Cost of Sales 87,180 Gross Profit 62,820 150,000 150,000
Loan interest 1,200 Gross Profit on Trading 62,820 Depreciation on Delivery van 2,250 Office Rent 720 Office Electricity 840 Office salaries 8,400 General office expenses 3,300 Delivery van expenses 3,900 Wages of delivery van drivers 9,000 Advertising 6,900 Bad Debts 1,200 37,710 Net Profit 25,110 62,820 62,820
PRINCIPLES OF ACCOUNTS Prepared by: Hajah Marhani & Hajah Harita Year 9 63 Exercise F
Manufacturing Account for the year ended 31 October 2010 Raw Materials $ $ $ Opening stock 26 700 Production Cost 422 360 Purchases 213 200 239 900 Closing Stock (30 640) Cost of raw material used 209 260 Direct factory wages 157 400 PRIME COST 366 660 Factory overhead Factory managers salary 14 800 Indirect factory expenses 23 200 Depreciation of factory plant and machinery 18 000 56 000
Work in Progress: Opening 7 900 Less: Closing (8 200) (300) 422 360 422 360
Trading and Profit and Loss Account for the year ended 31 October 2010 Finished Goods $ $ $ Opening Stock 2 450 Sales 525 300 Production Cost 422 360 Purchases 15 800 Less: Purchases Returns (900) 14 900 439 710 (-) Closing Stock (2 150) Cost of Sales 437 560 Gross Profit c/d 87 740 525 300 525 300
Office salaries 36 200 Gross Profit b/d 87 740 Sundry office expenses 18 600 Discounts received 5 100 Distribution costs 21 540 Reduction in provision Depreciation of office equipment 3 456 79 796 for doubtful debts 11 Net Profit 13 055 92 851 92 851
PRINCIPLES OF ACCOUNTS Prepared by: Hajah Marhani & Hajah Harita Year 9 64
Balance Sheet of Hamada as at 31 October 2010 Cost Prov NBV $ $ Fixed Assets $ $ $ Owner's Equity Factory plant & machinery 80 000 54 000 26 000 Capital on 1 Sept 2009 80 740 Less: Provision for Depreciation 24 000 18 816 5 184 Add: Net Profit 13 055
104 000 72 816 31 184 93 795 Current Assets Less: Drawings (11 600) Stock: Capital on 31 Aug 2010 82 195 Raw materials 30 640 Work in progress 8 200 Current Liabilities Finished goods 2 150 40 990 Creditors 19 600 Debtors 39 450 Accrued direct factory wages 12 100 31 700 Less: Provision for Doubtful debts (789) 38 661 Cash at bank 1 200 Prepaid distribution costs 1 860 82 711
113 895 113 895
Overtime
Normal time 40 hrs x $10 = $ 400 Overtime at time and a half 4 hrs x 1 x $10 = $ 60 Overtime at double time 2 hrs x 2 x$10 = $ 40 Gross Pay = $ 500
Commission
Basic salary : $ 800 Commission (5% x $100,000) : $ 5,000 Total gross salary : $ 5,800
Topic 17 : Payroll Accounting PRINCIPLES OF ACCOUNTS Prepared by: Hajah Marhani & Hajah Harita Year 9 65 SALARY DEDUCTION Gross salary $4,000 Less: Deductions PAYE $1,000 Health surcharge $ 80 National Insurance $ 120 Union dues $ 50 Credit Union $ 500 ($ 1,750) Net Salary $2,250
PAYROLL REGISTER Payroll Register Employee Hours worked Pay rate per hour $ Overtime (hours)
Example A: Abu Bakars Cake House Cash Book $ 2009 $ July 14 Wages 1,900
Wages account 2009 $ $ July 14 Cash 1,900 Income tax 620 National Insurance 350 Pension contribution 100 Trade union subscription 230
Income Tax account $ 2009 $ July 14 Wages 620
National Insurance account $ 2009 $ July 14 Wages 350
PRINCIPLES OF ACCOUNTS Prepared by: Hajah Marhani & Hajah Harita Year 9 66
Pension Fund account $ 2009 $ July 14 Wages 100
Trade Union subscription account $ 2009 $ July 14 Wages 230
The Journal Entries of Abu Bakers Cake House: Abu Bakars Cake House Journal 2009 Debit Credit July $ $ 14 Wages 1,900 Cash 1,900
Wages 1,300 Income tax 620 National Insurance 350 Pension contribution 100 Trade union subscription 230 Deductions from gross wages Cash 1,900 Income tax 620 National Insurance 350 Pension contribution 100 Trade union subscription 230 Bank 3,200 Payments of statutory and voluntary deductions
Ledgers : PRINCIPLES OF ACCOUNTS Prepared by: Hajah Marhani & Hajah Harita Year 9 67
Cash Book $ 2009 $ July 14 Wages 14,180
Wages account 2009 $ $ July 14 Cash 14,180 Income tax 716 National Insurance 304
Income Tax account $ 2009 $ July 14 Wages 716
National Insurance account $ 2009 $ July 14 Wages 304
The Journal Entries: Ali Momins Journal 2009 Debit Credit July $ $ 14 Wages 14,180 Cash 14,180 Payments of Wages Wages 1,020 Income tax 716 National Insurance 304 Deductions from gross wages Income tax 716 National Insurance 304 Wages 14,180 Bank 15,200 Payments of statutory and voluntary deductions