Edexcel text book

Chapter 4 Balancing of accounts and preparation of a trial balance

Questions4.1 page 40
2010 Dr Cr £
1-May Bank A/C Capital A/C 2500

2-May Purchase A/C Dellis 540

Purchase A/C Cmendez 87
Purchase A/C K Gibson 76

4-May C Bailey sales 430

B Hughes sales 62
H Spencer sales 176

6-May Cash sales 500

8-May Rent cash 120
9-May Bank A/C C Bailey 250
10-May Bank A/C H 150

12-May K Gibson Bank 76

Dellis Bank 370

15-May Stationary cash 60

18-May Purchase A/C Dellis 145

Purchase A/C Cmendez 234
19-May Rent Cash 120

25-May C Bailey sales 90

B Hughes sales 110
H Spencer sales 128

31-May C Mendez bank 87

Capital A/C
date Details $ Date Details
1-May Bank A/C
31-May balance c/d 2500
2500
1-Jun balance b/d
Bank A/C

1-May Capital A/C 2500 12-May K Gibson A/C

9-May C Bailey A/C 250 12-May D Ellis A/C
10-May H Spencer A/C 150 31-May C Mendez A/C

31-May balance c/d

2900
 1-Jun balance b/d 2367

Purchase A/C
date Details $ Date Details
2-May D Ellis A/C 540
2-May C Mendez A/C 87
2-May K Gibson A/C 76
18-May D Ellis A/C 145
18-May C Mendez A/C 234
31-May balance c/d
1082
1-Jun balance b/d 1082

D EllisA/C
date Details $ Date Details
12-May Bank A/C 370 2-May Purchase A/C
18-May Purchase A/C
31-May balance c/d 315
685
1-Jun balance b/d

Cmendez A/C
date Details $ Date Details
31-May Bank A/C 87 2-May Purchase A/C
18-May Purchase A/C
31-May balance c/d 234
321
1-Jun balance b/d

Kgibson A/C
date Details $ Date Details
12-May Bank A/C 76 2-May Purchase A/C

76

Sales A/C
date Details $ Date Details
4-May C Bailey
4-May B Huges
4-May H Spencer
6-May Cash
25-May C Bailey
25-May B Huges
25-May H Spencer
31-May balance c/d 1496
 1496
1-Jun balance b/d
C Bailey
date Details $ Date Details
4-May Sales A/C 430 9-May Bank A/C
25-May Sales A/C 90
31-May balance c/d
520
1-Jun balance b/d 270

B Hughes
date Details $ Date Details
4-May Sales A/C 62
25-May Sales A/C 110
31-May balance c/d
172
1-Jun balance b/d 172

H Spencer
date Details $ Date Details
4-May Sale A/C 176 10-May Bank A/C
25-May Sales A/C 128
31-May balance c/d
304
1-Jun balance b/d 154

Cash A/C
date Details $ Date Details
6-May Sales A/C 500 8-May Rent A/C
15-May Stationary A/C
19-May Rent A/C
31-May balance c/d
500
1-Jun balance b/d 200
Stationary A/C
date Details $ Date Details
15-May Cash A/C 60

31-May balance c/d

60
1-Jun balance b/d 60

Rent A/C
date Details $ Date Details
9-May Cash A/C 120
19-May Cash A/C 120 31-May balance c/d
240
 1-Jun balance b/d 240

Trial balance as at 31 May 2010

No Details Dr (£) Cr (£)
1 Capital 2500
2 Bank 2367
3 Purchase 1082
4 D EllisA/C 315
5 C Mendz 234
6 Sales 1496
7 C Bailey 270
8 B Hughes 172
9 Hspencer 154
10 cash 200
11 Stationary 60
12 Rent A/C 240
4545 4545

Q4.2 X page 40 Transfer between cash and bank (Contra)

Dr Cr Cash took out from bank=> Cash -Dr and bank -C
1-Aug Bank Capital 22000 Cash deposit into the bank=> Bank -Dr and Cash
1-Aug Rent Bank 1800
7-Aug shop fittings and shelving Bank 3230
7-Aug Purchase Bank 5000
9-Aug Cash Bank 1000
9-Aug Stationary Cash 163
10-Aug Purchase Book supplies 4200
14-Aug Bank sales 980
16-Aug Sundry expense Cash 28
20-Aug Bank sales 1300
25-Aug Purchase Delta books 1500
28-Aug Bank sales 2000
30-Aug Salaries Bank 2100

Capital A/C
date Details $ Date Details
1-Aug Bank A/C
31-Aug balance c/d 22000
22000
1-Sep balance b/d

26280 Bank A/C

date Details $ Date Details
1-Aug Capital A/C 22000 1-Aug Rent A/C
14-Aug Sales A/C 980 7-Aug Shop fittings & Shelving A/C
20-Aug Sales A/C 1300 7-Aug Purchase A/C
 28-Aug Sales A/C 2000 9-Aug Cash A/C
30-Aug Salaries A/C
31-Aug balance c/d
26280
1-Sep balance b/d 13150

Rent A/C
date Details $ Date Details
1-Aug Bank A/C 1800
31-Aug balance c/d
1800
1-Sep balance b/d 1800
Shop fittings and shelving A/C
date Details $ Date Details
7-Aug Bank A/C 3230

31-Aug balance c/d

3230
1-Sep balance b/d 3230

Purchase A/C
date Details $ Date Details
7-Aug Bank A/C 5000
10-Aug Book supplies A/C 4200
25-Aug Delta Books A/C 1500

31-Aug balance c/d

10700
1-Sep balance b/d 10700

Cash A/C
date Details $ Date Details
9-Aug Bank A/C 1000 9-Aug Stationary A/C
16-Aug Sundry expense A/C

31-Aug balance c/d

1000
1-Sep balance b/d 809

Stationary A/C
date Details $ Date Details
9-Aug Cash A/C 163

31-Aug balance c/d

163
1-Sep balance b/d 163
 Book supplies A/C
date Details $ Date Details
10-Aug Purchase A/C

31-Aug balance c/d 4200

4200
1-Sep balance b/d

Sales A/C
date Details $ Date Details
14-Aug Bank A/C
20-Aug Bank A/C
31-Aug balance c/d 4280 28-Aug Sales
4280
1-Sep balance b/d

Sundry expenses A/C

date Details $ Date Details
16-Aug Cash A/C 28
31-Aug balance c/d
28
1-Sep balance b/d 28

Delta Book A/C

date Details $ Date Details
25-Aug Purchase A/C
31-Aug balance c/d 1500
1500
1-Sep balance b/d

Salaries A/C
date Details $ Date Details
30-Aug Bank A/C 2100
31-Aug balance c/d
2100
1-Sep balance b/d 2100

HW Trial balance as at 31 August 2010

No details Dr (£) Cr (£)
1 Capital A/C 22000
2 Bank A/C 13150
3 Rent A/C 1800
4 Shop fittings and shelving A/C 3230
5 Purchase A/C 10700
6 Cash A/C 809
7 Stationary 163
8 Book supplies 4200
 9 Sales 4280
10 Sundry expense 28
11 Delta book 1500
12 Salaries 2100
31980 31980

Q 4.4
Dr Cr
a) capital
b) sales
c) stationary
d) Cash
e) Tkhan
f) Machinery
g) rent
h) D Allen
i) Bank loan
j) Purchases

Q4.5 Dr Cr
Capital 20000
Drawings 7000
GE 500
Sales 38500
Purchases 29000
Debtors 6800
Creditors 9000
bank balance (Dr) 15100
Cash 200
P&E 5000
H&L 1500
Rent 2400
67500 67500
Q4.6 HW

Drawing => Owner withdraws cash/cheque or goods from the business for private use/personal use/own use
Double entry of drawing
Drawing cash /cheque
Drawing Dr
cash/bank Cr

Drawing goods
Drawing Dr
Purchases Cr
$
2500
c/d =carried down / closed down
2500 b/d = brought down
2500

76
370
87 533

2367 (2900-533)
2900
$

1082
1082

$
540
145

685
315

$
87
234

321
234

$
76

76

$
430
62
176
500
90
110
128
 1496
1496

$
250

270 (520-250)
520

172
172

$
150

154
304

$
120
60
120
200
500

60
60

240
240
 DEAD CLIC
Dr Cr
Assets Liabilities
Expense Income
Drawing Capital

cash and bank (Contra)

m bank=> Cash -Dr and bank -Cr
the bank=> Bank -Dr and Cash -Cr

$
22000

22000
22000 (Tri -Cr)

13130
$
1800
3230
5000
 1000
2100
13150
26280 Bank
Cr balance => bank overdraft ( CL)

1800
1800

3230
3230

10700
10700

$
163
28

809
1000

163
163
$
4200

4200
4200

$
980
1300
2000
4280
4280

28
28

$
1500

1500
1500

2100
2100
e/personal use/own use
Cambridge text book page 85
Unit 10 Books of prime entry :the cash book
Cash Book - Books of prime entry / Day Book
Money in Cash / Bank -Dr
Money out Cash /Bank -Cr

Examples : Cash sales , cash purchaes,receipts from credit customers, payment to credit suppliers,Bank charge

opening balance (balance b/d)

Cash column always => Dr
bank column Dr
Cr (overdraft)

Transfer between cash and bank (Contra)

Transfer of cash into the bank A/C
Bank -Dr
Cash -Cr

withdrawal of cash from the bank

Cash -Dr
Bank -Cr

illustration 1: page86/87
Two column Cash Book
Dr 2320 11850
Date details Cash Bank Date details
2012 $ $ 2012
1 Sep balance b/d 740 7280 Sep 5 G Lee
8 Sep Sales 1580 Sep 11 general expense
Sep 14 Cash 1400 Sep14 Bank
Sep 28 T Evans 3170 Sep 21 Bank charges
Sep 30 Balance c/d

2320 11850
Oct 1 Balance b/d 810 10250

Purchase ledger ( Trade payables ledger)

G Lee A/C
Date Details $ date details $
Sep 5 Bank A/C 1420

Sales ledger (Trade receivable ledger)

T Evan A/C
Date Details $ date details $
28-Sep Bank A/C 3170

General ledger
sales A/C
Date Details $ date details $
8-Sep cash A/C 1580

General expenses A/C

Date Details $ date details $
11-Sep Cash A/C 110

Bank charges
Date Details $ date details $
21-Sep Bank A/C 180

Unit 10 Practice questions page 92

Question 1 page92
Faizah Two column Cash Book for the month of March 2018
Dr
Date details Cash Bank Date details
2012 $ $ 2012
1 Mar balance b/d 1340 6270 Mar4 stationary
Mar11 Sales 3180 Mar7 Water rates
Mar15 Cash 3000 Mar15 Bank
Mar21 T Ram 2240 Mar23 DThomas
Mar27 Bank charges

31-Mar balance c/d

4520 11510
1-Apr balance b/d 1460 8740

Cash Discount /Prompt payment discount /settlement discount

1.Discount allowed Dr expense
2. Discount received Cr income

Total of discounts column on receipts side of cash book-Enter on debit side of Discount allowed
Total of discounts column on payments side of cash book-Enter on credit side of Discount receive

10.3 Three column Cash Book page 90 CIE text book

illustration 5 Three column cash book
Dr 14130
discount
date details allowed Cash bank date
$ $ $
2012 1 May balance b/d 1350 7480 3-May
5-May K Scott 32 1568 16-May
9-May Sales 4540 21-May
21-May Cash 4200
28-May D Pitts 18 882
31-May
50 5890 14130
1-Jun balance b/d 1690 7404
working
May3
2600 5% 130 discount received
2600 95% 2470 payments to credit supplier
(or)
2600 130 2470 (2600-130)

May5
1600 2% 32 discount allowed
1600 98% 1568 receipts from credit customer
(or)
1600 32 1568 (1600-32)

May16
4480 5% 224 discount received
4480 224 4256 payments to credit supplier

May28
900 2% 18 discount allowed
900 18 882 receipts from credit customer

general ledger (nominal ledger)

Dr discount allowed A/C Cr

May 31 cash book 50

Dr discount received A/C Cr

May 31 cash book 354

Question 18 (CIE work book) page 13

Dr Three column cash book for the month of April 2391
discount
Date Details allowed cash bank Date
$ $ $
April1 balance b/d 236 April1
April1 Sales 380 April 4
April2 R Mills ( 550 *2%=11) 11 539 April 6
 April 12 interest received 60 April 10
April 15 B Price (400*2%=8) 8 392 April 13
April 16 sales 810 April 20
Apr 25 sales 750 April 24
Apr 28 Cash 1400 Apr 26
Apr 28
Apr 30 balance c/d 500 Apr 30
19 2176 2891
May1 balance b/d 406 May1
CA

Deadline 10.6.24
HW Question 2 (CIE text book) Page 92 two column cash book
HW Question 7 (CIE text book) page 94 three column cash book

Notes
double entry discount allowed
discount allowed Dr expense
trade receivables Cr assets decrease

double entry of discount received

discount received Cr income

trade payables Dr liabilities decrease

rent paid Dr expense

cash / bank Cr Assets decrease

Cash /bank Dr Assets increase

rent received Cr income

Cash book
Example : Paid Sophia by cheque ,$475 , in full settlement of an invoice after taking 5% cash discount
100%
5% 25 discunt received Cr
95% 475 Bank Cr

Received a cheque from Chan in full settlement of an invoice for $880

Chan had taken a 5% cash discount.
100% 880
5% 44 discount allowed Dr
95% 836 Bank Dr

Paid by standing order to John $40 bank Cr 40

Paid insurance by direct debit $ 100 Bank Cr 100
dishonured cheque Bank Cr
credit suppliers,Bank charges, rent paid /rent received,drawing etc.

1510 1600
Cr
Cash Bank
$ $
1420
110
1400
180
810 10250

2320 11850
of March 2018 2770
Cr
Cash Bank
$ $
60
290
3000
2350
130

1460 8740
4520 11510

bit side of Discount allowed A/C

edit side of Discount received A/C

6726
Cr
discount
details received Cash bank
$ $ $
 Campbell traders 130 2470
LT Wright 224 4256
Bank 4200

balance c/d 1690 7404

354 5890 14130

Cr
Cr Money out

Dr
dit customer Dr Money in

Cr
Cr Money out

Dr
dit customer Dr Money in

1770 2891
Cr
discount
Details received cash bank
$ $ $
balance b/d 420 ovedraft
purchase 220
insurance 194
 B Bell (350*4%) 14 336
wages 150
V Slater (850*2%) 17 833
electricity 108
equipment 1000
Bank 1400
balance c/d 406
31 2176 2891
balance b/d 500 overdraft Cr
CL

ng 5% cash discount
11 Books of prime entry: the petty cash book (CIE text book) page 97 , 98 ,99
11.1 recording petty cash payments (page 98)
examples: train fare,bus fare,taxi fare, stationary, postage , cleaning ,miscellaneous expenses
step 1: receiving the float (fixed float /imprest amount)
Petty cash -Dr (petty cash book)
Cash / bank -Cr (Cash book)

step 2: recording each petty cash payments

Petty cash -Cr (payment column and analysis column)
What is analysis column ?
classifying each payment to provide totals to be posted to general ledger acconts
step 3: balancing the petty cash book

step 4: Totalling and posting the analysis columns

CIE text book

11.2 Preparing Petty cash book
illustaration 2 page 100 1-Jun The imprest was restored with th
Dr Petty cash book Cr
Receipts Date details Payments Stationary
$ $ $
150 1-May Bank
2-May Stationary 32.62 32.62
8-May Postage 26.29
11-May Travel 18.4
15-May Postage 11.83
20-May D Morris 20.7
23-May Stationary 11.37 11.37
27-May Travel 19.11
140.32 43.99
31-May balance c/d 9.68
150 150
9.68 1-Jun balance b/d
140.32 1-Jun Bank

Dr Cash Book
cash bank cash
May1 petty cash

General ledger
Dr Stationary A/C
31-May petty cash43.99

Dr Postage
 31-May petty cash 38.12

Dr Travel
31-May petty cash 37.51

Purchase Ledger
D Morris
Dr
20-May pettty cash book 20.7

Q2 page102 CIE text book (no of line -18)

Petty cash book for the month of February
Receipts Date Details Voucher no Payments
14.55 1-Feb balance b/d
205.45 1-Feb Bank
2-Feb Stationary 141 9.7
8-Feb Vehicle fuel 142 35.5
10-Feb Postage 143 11.1
13-Feb Casual labour 144 38.25
15-Feb Office expenses 145 8.42
18-Feb Ryan & Co 146 17.11
21-Feb Vehicle fuel 147 34.22
23-Feb BY Scott 148 9.28
25-Feb Postage 149 8.56
26-Feb Casual labour 150 21.8
193.94
28-Feb balance c/d 26.06
220 220
26.06 1-Mar balance b/d
193.94 1-Mar Bank

General ledger
Dr Postage A/C

28-Feb Petty cash 19.66

Dr Stationary A/C

28-Feb Petty cash 9.7

Dr Vehicle expense A/C

28-Feb Petty cash 69.72

Dr Casual labour A/C

28-Feb Petty cash 60.05

Dr Office expense A/C

28-Feb Petty cash 8.42

Purchase Ledger

Dr Ryan & Co

18-Feb Petty cash 17.11

Dr By Scott

23-Feb Petty cash 9.28

Petty cash book (Edexcel past paper)

May /June 2019
(a) Two main reasons
1.To record small transactions 3.To train junior employees
2.To monitor and control the expenses 4. To keep the main cash book free from small exp
Petty Cash Book
Receipts Date Details Voucher no: Payment
$ 2019 $
150 1-Jan balance b/d
2-Jan postage stamps 101 11.50
8-Jan Travel expenses 102 22.50
15-Jan John 103 35.00
22-Jan Coffee,tea and sugar 104 17.75
26-Jan Postage stamps 105 8.50
31-Jan cleaner's wages 106 15.00
110.25
110.25 31-Jan Bank
31-Jan balance c/d 150.00
260.25 260.25
150 1-Feb balance b/d
 deadline
Q1 HW page 102 CIE text book 16.6.2024

Question 3 page20 CIE text book

First account affected Second account affected
Transaction Account increase/decrease Account increase/decrease
Owner started business by
investing money in a business
bank account Bank increase Capital increase
Purchased a vehicle and paid by
cheque Vehicle increase Bank decrease
Purchased some equipment on
credit Equipment increase Trade payables increase
The owner withdrew a cheque
for private use Drawing increase Bank decrease
Paid the payables by cheque Trade payables decrease Bank decrease

Cash book
Example : Paid Sophia by cheque ,$475 , in full settlement of an invoice after taking 5% cash discount

5% 25 discunt received Cr
95% 475 Bank Cr

Received a cheque from Chan in full settlement of an invoice for $880

Chan had taken a 5% cash discount.
100% 880
5% 44 discount allowed Dr
95% 836 Bank Dr

Paid by standing order to John $40 bank Cr 40

Paid insurance by direct debit $ 100 Bank Cr 100
dishonured cheque Bank Cr
rest was restored with the receipt of a cheque.

Postage Travel Purchase ledger

$ $ $

26.29
18.4
11.83
20.7

19.11
38.12 37.51 20.7

Cr
bank
150

Cr

Cr
 Cr

Cr

onth of February
Postage Stationary Vehicle expenses Casual Labour Office expenses Purchase Leger

9.7
35.5
11.1
38.25
8.42
17.11
34.22
9.28
8.56
21.8
19.66 9.7 69.72 60.05 8.42 26.39

Cr

Cr
 Cr

Cr

Cr

Cr

Cr

book free from small expenses.

Cleaning Postage Refreshments Travel Ledger accounts

$ $ $ $ $

11.50
22.50
35.00
17.75
8.50
15.00
15.00 20.00 17.75 22.5 35
 DEAD CLIC

Debit Credit

Expense Liabilities

Assets income

Drawing Capital

taking 5% cash discount

475*5/95

t allowed Dr
Unit 8 and 9 CIE text book

financial transaction => financial documents (source documents)=> day books => ledger=> trial balance => financial statement

Credit purchase => purchase invoice => Purchase day book (Purchase journal)=> purchase ledger and general ledger
purchase return => credit note => Purchase return day book ( purchase return journal)=> purchase ledger and general ledger

illustration 3 Posting a purchase journal page 64

Purchase Journal
date Supplier (trade payable) Invoice number $
7-Apr Bell Ltd 2845 785
11 R Khan 3901 1450
22 Aldo Ltd 783 2440
29 L Sampson 442 635
30-Apr Total purchase(Transfer to purchase A/C) 5310

Purchase ledger
Bell Ltd
7-Apr Purchases 785

R Khan
13-Apr Purchases return 450 11-Apr Purchases 1450

Aldo Ltd
22-Apr Purchases 2440

L Sampson
30Apr Purchases return 35 29-Apr Purchases 635

Double entry of credit purchase ( Purchase goods for resale on credit)

Purchase A/C -Dr
Trade payables-Cr

Double entry of purchase return

Trade pyables -Dr
Purchase reurn -Cr

Summary
Day book Subsidiary ledger General ledger
Credit purchase Purchase day book Purchase ledger-Cr Purchase A/C -Dr ( total amount)
Purchase return Purchase return day book (return outwards) Purchase ledger -Dr Purchase return A/C -Cr (total am
 8.3 CIE text book page 66

financial transaction => financial documents (source documents)=> day books => ledger=> trial balance => financial statement

Credit sales =>sales invoice =>sales day book (sales journal)=> sales ledger and general ledger
sales return => credit note => sales return day book (sales return journal)=> sales ledger and general ledger

illustration4 Recording credit sales

Jamie owns a furniture store.During March 2012 he issued the following invoices to credit customers:
3-Mar invoice 377 Sales invoice sent to Batflo Ltd for $1080
14 invoice 378 Sales invoice sent to H Denman for $740
18 invoice379 Sales invoice sent to Jakex Ltd for $2320
22 invoice 380 Sales invoice sent to Quilfon Ltd for $1440

Sales Journal
date Customers (Trade receivables) Invoice number $
3-Mar Batflo Ltd 377 1080
14 H Denman 378 740
18 Jakex Ltd 379 2320
22 Quilfon Ltd 380 1440
31-Mar Total sales(Transfer to Sales A/C) 5580

Sales ledger
Dr Batflo Ltd Cr
3-Mar sales 1080 5-Mar Sales return 80

Dr H Denman Cr
14-Mar Sales 740

Dr Jakex Ltd Cr
18-Mar Sales 2320

Dr Quilfon Ltd Cr
22-Mar Sales 1440 23 Mar Sales return 40

Double entry of credit sales

Trade receivables-Dr (Assets increase)
Sales -Cr

Double entry of sales return

Sales return-Dr
Trade receivables-Cr(Assets decrease)

Summary
 Day book Subsidiary ledger General ledger
Credit sales Sales day book Sales ledger -Dr Sales A/C -Cr (total amount)
Sales return Sales return day book (return inwards) Sales ledger -Cr Sales return A/C -Dr (total amou
ial balance => financial statements

dger and general ledger

rchase ledger and general ledger

Purchase return Journal

date Supplier
13-Apr R Khan
30-Apr L Sampson

30-Apr Total purchase return(Transfer to purchase return A/C)

General ledger
Purchase A/C
Apr 30 Purchase journal 5310
(purchase day book)

Purchase return

General ledger
Purchase A/C -Dr ( total amount)
Purchase return A/C -Cr (total amount)
ial balance => financial statements

general ledger

page66

lo Ltd for $1080

enman for $740
ex Ltd for $2320
lfon Ltd for $1440

Sales return Journal

date Customers
5-Mar Batflo Ltd
23 Quilfon Ltd

31-Mar Toal sales return (Transfer to sales return A/C)

General ledger
Dr

Dr Sales return
Mar 31 Sales return journal 120
(sales return day book)
General ledger
Sales A/C -Cr (total amount)
Sales return A/C -Dr (total amount)
 credit note number $
347 450
348 35

n(Transfer to purchase return A/C) 485

Apr 30 Purchase return journal 485

(purchase return day book)
credit note $
400 80
401 40

120

Sales A/C Cr
Mar 31 sales journal 5580
(sales day book)

Cr
CIE text book
Trade discount (page 68)
Trade discount is not recorded in the accounting system.Only the net amount after deducting trade discount is shown in the b
Trade discount is recorded in invoice.

illustration 6 and 7 ( text book page 69 ပြောရန်)

Unit 8
Question 5 page 71 CIE text book
Purchase invoice
full price trade discount Net amount
12-Jan Polonix Ltd 600 60 540
19-Jan Quelta plc 4806 1602 3204

Sales invoice
full price trade discount Net amount
9-Jan Alto Cuisines 2240 336 1904
18-Jan Prozel Restaurants 2360 472 1888
27-Jan Alto Cuisines 2760 345 2415

Deadline 1.7.2024
HW list Q 1 and Q3 page 71 CIE text book

Q1 page 81
Purchase return journal

Date Supplier credit note $

11-Mar Scott 242 275
18 Taylor &Sons 375 328
29-Mar Scott 247 440 net =550*80%
31-Mar Total purchase return 1043

Purchase ledger
Dr Scott Ltd Cr
11-Mar Purchase return 275
29-Mar Purchase return 440

Dr Taylor & Sons Cr

18Mar Purchase return 328

Question 3 CIE text book page 81

Sales return Journal
Date Customers credit note $
11-Jun Parsed Garges Ltd 454 220
13-Jun Beretta Car Dealers 455 507
 24-Jun Parsed Garges Ltd 456 1000
30-Jun Total sales return 1727

Sales ledger
Parsed Garges Ltd
11 Jun Sales return 220
24 June Sales return 1000

Beretta Car dealers

13 June Sales return 507

Question 5 Simons page 81 CIE text book

Purchases journal
Date Supplier invoice number $
20-Aug TDH 8806 960
23-Aug Datrix Supplies 33902 1920 Net =2400*80%=1920
31-Aug Total purchases 2880

Sales Journal
Date Customers invoice number $
21-Aug Seaview Café T449 480

31-Aug Toal sales 480

Purchase return journal

Date Supplier credit note $
22-Aug TDH 2721 32
24-Aug Datrix supplies 884 336 420-84=336
31-Aug Total purchase return 368

Sales return journal

Date Customers credit note $
24-Aug Seaview Café 74 39

31-Aug Total sales return 39

Deadline 7.7.2024
Q2 HW page 81 CIE text book
Q4 HW page 81 CIE text book
Q6 HW page 82 CIE text book
scount is shown in the books of prime entry and ledger accounts.

working
no of electric kettles/dishwashers $ full price trade discount
24 25 600 600*10%
18 267 4806 4806*33 1/3%

working $ full price trade discount

16 140 2240 2240*15%

8 295 2360 2360*20%
24 115 2760 2760*12.5%

trade discount =550*20%=110

General ledger
Dr Purchase return
2012 31 Mar Purchase return Journal
1500*331/3% =500

General ledger

Sales return A/C

June 30 Sales return journal 1727

TD=2400*20% =480

TD =420*20%=84
Net
600-60
4806-1602

Net

2240-336
2360-472
2760-345

Cr
1043
Day books ( Books of prime entry)

1.Cash book (two column /three column)

2.Petty Cash Book
3.Sales Day Book
4.Sales return Day Book (Return inwards day book)
5.Purchase day Book
6.Purchase return day book(Return outwards day book)
7.General journal (for non-regular transaction)
(eg. Purchase and Sales of non-current assets on credit,opening entries,correction of errors,end of year transfer to income sta

Journal
Date Details /Account name Dr Cr
$ $

illustration 3 Rent A/C Bank

Dr Cr Dr
354-345 =9 x 354 9 9 x 354

illustration 4 CIE text book page 108

Dr Sales A/C Cr

193400
income statement 193400

date details/Account name Dr ($) Cr ($)

2012 31Dec Sales A/C 193400
income statement 193400

Wages A/C

32480 income statement 32480

date details/Account name Dr ($) Cr ($)

2012 31 Dec income statement 32480
Wages A/C 32480

illustration 5 capital = assets -liabilities

capital = (55000+43000) -20000=98000-20000=78000
deadline
HW list page 109/110 Q5 general journal 7.7.2024
ear transfer to income statment ,irrecoverable debts…..)
Question5 page109/110 CIE text book HW
General Jounal
Date 2012 Details Dr Cr
1-Jan Bank 3500
Vehicle 36000
Equipment 19000
Capital 58500
Entries to open books of account

15-Jan Equipment 880

Bridge Products 880
Purchase of equipment for business use on credt

19-Jan Bridge Products 90

Equipment 90
Return of equipment purchased on credit

cash book
Date Details discount Cash Bank Date
allowed
$ $ $
1-Jan balance b/d 3500 10-Jan
7 sales 1240 11
11 Cash 800 24
29 Geeta stores 24 911
31-Jan
24 1240 5211
1-Feb balance b/d 160 654
Purchase ledger

Purchase Journal
Date Details invoice no $ 14-Jan
4-Jan MJT Ltd 302 4800 24-Jan
31 Jan Total Purchases 4800 GL 24-Jan

Sales Journal
Date Details invoice no $ Sales Ledger
16-Jan Geeta Stores 1 1020
16-Jan
31-Jan Total Sales 1020 GL

Purchase return journal

Date Details credit note no $

14-Jan MJT Ltd 73 150

 31-Jan Total Purchases return 150 GL

Sales return journal

Date Details credit note $
22-Jan Geeta Stores No.001 85
31-Jan Total Sales return 85 GL

Summary
Goods Day book Subsidiary ledger General ledger
Credit sales Sales day book Sales ledger -Dr Sales A/C -Cr (total amount)
Sales return Sales return day book Sales ledger -Cr Sales return A/C -Dr (total amount)
(credit note issued)

Goods Day book Subsidiary ledger General ledger

Credit purchase Purchase day book Purchase ledger-Cr Purchase A/C -Dr ( total amount)
Purchase return Purchase return day book Purchase ledger -Dr Purchase return A/C -Cr (total amount)
(credit note received)

Double entry of credit sales

Trade receivables-Dr (Assets increase)
Sales -Cr

Double entry of sales return

Sales return-Dr
Trade receivables-Cr(Assets decrease)

Double entry of credit purchase ( Purchase goods for resale on credit)

Purchase A/C -Dr
Trade payables-Cr

Double entry of purchase return

Trade pyables -Dr
Purchase reurn -Cr
 Cash Discount /Prompt payment discount /settlement discount
1.Discount allowed Dr expense
2. Discount received Cr income

double entry of discount allowed

discount allowed Dr
trade receivable Cr

double entry of discount received

trade payable Dr
discount received Cr

Details discount Cash Bank

received
$ $ $
operating expenses 280
Bank 800
MJT Ltd 93 4557

balance c/d 1240 654

93 1240 5211

Purchase ledger
MJT Ltd (Trade payable) Working
$ $ credit purchase
Purchase return 150 Jan 4 Purchases 4800 6400
Bank 4557 purchase return
discount received 93 200
4800 4800
cash discount 2%
Sales Ledger
Geeta Stores (Trade receivable)
Sales 1020 Jan 22 Sales retuns 85 credit sales
Jan 29 Bank 911 1200
Jan 29 discount allowed 24 Sales return
1020 1020 100

cash discount
otal amount)
 1600

TD25% Net
1600 4800 (6400-1600)

50 150
4650 (4800-150)
93 4650*2% discount received
4557 (4650-93)

TD 15% Net
180 1020

15 85
935 (1020-85)
24 discount allowed
911 (935-24)
Edexcel text book
Chapter 6 Business documentation page51

financial transaction => financial documents=>Books of prime entry (day books)=> Ledger=>Trial Balance => Financial stateme
(source documents/business documents)

Flow of source documents

1 Purchase order (document prepared by the purchaser and containing details of go
Sent by buyer to order goods from supplier

2 Invoice (document prepared by the seller and sent to purchaser giving det
Sent by supplier to buyer when goods are delivered and advising of amount owed

3 Credit note (document sent to customer showing allowance given by supplier i

Sent by supplier to buyer to credit buyer for the return of goods

debit note
sent by buyer to supplier for the return of goods
Sometimes ,a supplier does not allow a customer to return the full amount of goods.
for example, a customer may return goods worth $30 accompanied by a debit note, but the supplier ma

4 Statement of account (document sent to purchasers at month end starting amount outst
Sent by supplier to buyer showing transacitons to month end and amount due
At the end of each month ,businesses sent out statement of account.

5 Remittance advice (document which accompanies payment by cheque or via BACS an

Accompanies payments by cheque or via BACS give details of the payment
( buyer to seller)

6 petty cash voucher (for small expenses transactions in petty cash book)

buyer/purchaser enquiry to seller

seller quotation to buyer

buyer purchase order to seller

seller delivery notes + goods to buyer

seller invoice to buyer

(sales invoice) (request for payments) (purchase invoice)

Source documents about cash book

CIE text book (page 111 to 113)
cash receipt
paid expenses by cash
withdrew cash for private use/personal use/own use (cash -Cr)

till roll
Cash sales (Cash -Dr)

Cheque counterfoil
paid expenses by cheque
withdrew a cheque for private use/personal use/own use (Money out from bank) Bank -Cr
purchase non current assets by cheque
Paid trade payables by cheque

paying in slip counterfoil

Transferred cash to bank
Cash sales banked (Money into Bank) Bank -Dr
Cheque received from trade receivables

Bank statement
Bank charges
funds canbe transferred directly from Customer A/C to business Bank A/C (Credit transfer)
Standing order(SO)
direct debit(DD)

source doc DB
business sell goods for $30 on credit sales invoice sales

business sell motor van $3000 on credit invoice general Journal

Mr Smith return goods $ 40 to business credit note Sales return

Creidt note => seller

crerdi note issued => seller

credit note received => buyer

debit note => buyer

statement of account => seller to buyer

remittance advice =>buyer to seller

HW list
CIE Workbook page 12 Q17

a.Cash book
b. Purchase ledger
P White
balance b/d 1200

Jack Black
balance b/d 880

Sales ledger
A Chang
balance b/d 250

Sally Wong
balance b/d 3100

c. general ledger
discount allowed
Aug 30 cash book ?

discount received
Aug 30 cash book ?

Source document s (exercise)

1.Which document from a supplier reduces the amount owed by a customer?
A credit note
B purchase order
C invoice
D statement

2.Hansi is a trader.She returns goods to her supplier.

Which document will Hansi send to her supplier?
A credit note
B debit note
C invoice
D statement

3. Paul had the following tansactions with David , a new customer.

Mar 4: goods invoiced to David $350
Mar 7:debit note received from David $25
Mar 8 : credit note issued to David $20
Mar 19:cheque received from David $300
Mar 28: goods invoiced to David $470
April 1 :cheque received from David $30
Paul sent a statement of account to David on 31 March.
What was shown as the balance due on that date? 350 DR
A. $470 20 CR
B.$475 300 CR
C.$500 500 470 DR
D.$52

4. Anakin sells goods on credit to Caleb.

Four documents were issued during July .
Using a tick (✓) to show who would issue each document.
ANAKIN CALEB
invoice ✓
Credit note ✓
Purchase order ✓
Statement of account ✓

CIE text book page 111 to 113

Q7 C
Q8 B
Q9 C
Q10 A
Q11 A
Q12 B
Q13 B
Q14 B
Q15 B PDB
Q16 B 2000 500 1500 150
TD
Q17 C
Q18 C

CIE text book

Q19 (a) page 111
(i)October 5 cheque counterfoil (paid expenses by cheque)
(ii) October 8 till roll (cash sales)
(iii) (iv) (v) HW

Q19(b) At 1 November ,the business 's cash book has cash in hand of $165 and bank overdraft of $ 140.

Q20 (a) HW page 113

Q21 HW page 113
Q22 (b) HW page 113
 rial Balance => Financial statements

aser and containing details of goods/services required)

and sent to purchaser giving details of goods/service supplied)

ing allowance given by supplier in respect of unsatisfactory goods)

ount of goods.
a debit note, but the supplier may only accept goods worth $25 and issue a credit note $25

month end starting amount outstanding)

yment by cheque or via BACS and gives details of the payment)

petty cash book)

1350
Edexcel text book
Chapter 18 page 158 Accounting System
Financial statements Financial transaction
1. Income statement(Trading and Profit and loss A/C ) Financial documents
2.Statment of finacial position(Balance Sheet) Day books (Books of prime entry)
Ledger ===> SL ,PL, GL
income statement Trial Balance
Net Sales = Sales -Sales return Financial statements
Cost of sales= opening inventory+Purchases -closing inventory

Cost of sales = opening inventory +Purhcases -Purhase return -Goods for own use+carriage inwards -closing inventory

Gross profit= Net sales -cost of sales

profit for the year = Gross profit +Other Income -Expenses

Trading A/C for the year ended…

$ $
Sales /Revenue xxx
(-)Sales return (x) xx

less:cost of sales
opening inventory xx
Add:Purchases xxx
Less:Purchase returns (x)
less:Goods for own use (x)
Carriage inwards x
Less:closing inventory (x) (x)
Gross profit x

Goods for own use =drawing goods

Drawing Dr
Purchase Cr

Statement of Financial Position (Balance Sheet) as at 31 Decemer 2022

$ $ $
Non Current Assets Cost Accumulated Carrying
 depeciation value
Building xxx (x) xx
Fixtures and fittings xxx (x) xx
xxx (x) xx
Current Assets
Inventory xx
Trade receivables xxx
(-)Provision for irrecoverable debts (x) x
Other receivables x
Cash at bank x
Cash in hand x x
Total Assets xxx

Equity and liabilities

Equity
Equity at opening date xxx
Profit for the year xxx
(-)Drawing (cash/cheque +goods) (x)
Total equity xxx
Non Current Liabilities
Long term loan xx

Current Liabilities
Trade Payables xx
Other Payables xx
Bank overdraft xx xxx
Total Equity and Liabilities xxx

Exhibit 18.4 page 161

B Swift
Trial Balance as at 31 December 2011
Dr Cr
Sales 67,000
Purchases 42600
Electricity ( Exp) 1900
Rent (Exp) 2400
Wages 5200
General expenses 700
Carriage outwards 1100
Buildings 20000
Fixtures and fittings 7500
Debtors 12000
Creditors 9000
Bank 1200
Cash 400
loan from J Marsh 10000
Drawings 9000
Capital 21000
Stock(at 31 December 2010) 3000
107000 107,000
Additional information: closing stock is $ 5500

Exhibit 18.6 page 163

Statement of financial position as at31 December 2011
Non Current Assets Cost Accumulated Carrying
depeciation value
Building 20000 20000
Fixtures and fittings 7500 7500
27500 27500
Current Assets (Dr)
Inventory 5500
Debtors(Trade receivables) 12000
Cash at bank 1200
Cash in hand 400 19100
Total Assets 46600

Equity and liabilities

Equity
opening Equity (opening capital) 21000
Profit for the year 15600
(-)Drawing -9000
Total equity 27600
Non Current Liabilities
Loan from J Marsh 10000

Current Liabilities
Trade Payables 9000
Total Equity and Liabilities 46600

deadline 21.7.24
CIE text book
Q19 (a) (iii)(iv)(v) page 111 HW

Q20 (a) HW page 113

Q21 HW page 113
Q22 (b) HW page 113

edexcel text book

Q 18.1 page166
of prime entry)

wards -closing inventory

Income statement for the year ended…

$ $
Sales /Revenue xxx
(-)Sales return (x) xx

less:cost of sales
opening inventory xx
Add:Purchases xxx
Less:Purchase returns (x)
less:Goods for own use (x)
Carriage inwards x
Less:closing inventory (x) (x)
Gross profit x

Other Income
discount received x
Rent received x
Commission received x xxx

Expenses
discount allowed xx
Rent and rates xx
Carriage outwards xx
Irrecoverable debts(bad debts) xx
Depreciation xx
Wages and salaries xx
General expenses xx
Advertising xx (xxx)
Profit /Loss for the year xx/(xx)

dep
 1-Jan-22 31-Dec-22 x
1-Jan-23 31-Dec-23 x
x
1-Apr-21 31-Mar-22

Exhibit 18.5 page 163

Income statement for the year ended 31 December2011
$ $
Sales 67000

less:cost of sales
opening inventory 3000
Add:Purchases 42600
45600
Less:closing inventory -5500 -40100
Gross profit 26900 (67000-40100)

Expenses
Electricity 1900
Rent 2400
Wages 5200
General expenses 700
Carriage outwards 1100 -11300
Profit for the year 15600 (26900-11300)

(27500+19100)

(27600+10000+9000)
Edexcel text book page 162
double entry of closing inventory(closing stock)
Inventory A/C Dr
Trading A/C (cost of sales) Cr

Q 18.3 page 166 edexcel text book

Income statement for the year ended 31 July 2010
£ £
Sales 110859
(-) Sales return -1029 109830 Net sales

Cost of sales
opening inventory 11949
Purchase 65100
(-)Purchase return -1176
Carriage inwards 3570
(-)closing inventory -8883 -70560
Gross profit 39270

Expenses
Salaries and wages 10521
Rent 3066
Motor expenses 6552
General expenses 882
Carriage outwards 1659 -22680
Profit for the year 16590

Q18.5 page 167

Income statement for the year ended 30 June 2010
$ $

sales 178560
(-)sales return -1968 176592

Cost of sales
opening stock 22733
Purchases 113990
(-) Purchase returns -3091
carriage inwards 2976
(-)closing stock -28320 -108288
gross profit 68304

expenses
Salaries and wages 37075
Rent and rates 2918
Insurance 749
Motor expenses 4250
Telephone and internet 4198
Electricity 1594
General expenses 3014
Carriage outwards 1920 -55718
Profit for the year 12586

Q18.4X HW page 167 Income statement

Q18.6X HW page 167 Income statement
Statement of financial position as at 30 June 2010
Assets $ $
Accumulated
Non Current Assets Cost depreciation
Building 80000
Motor vehicles 17280
Computer equipment 3360
100640
Current Assets
Inventory 28320
Trade receivables (debtors) 37402
Cash at bank 4627
Total Assets

Equity and liabilities(Capital and liabilities)

Equity
opening equity/opening capital 137305
Profit for the year 12586
(-)Drawing -11520
Total equity(closing capital)

Current liabilities
Trade payables(creditors)
Total equity and liabilities(Total capital & liabilities)
$

carrying value
80000
17280
3360
100640

70349
170989 (NCA + CA)
138371

32618
170989
Revision
income statement
Net sales = Sales revenue -Sales return ( If there is no sales return , net sales is equal to sales a
cost of sales = opening inventory +Purchases+carriage inwards -Purchase return -Goods for own used -closing inventory
Gross profit = Net sales - cost of sales (or )Sales - cost of sales
Profit for the year(net profit)= Gross profit + Other incomes -Expenses (If there is no other incomes , Profit for the year =Gross

Statement of financial position

Current Assets = Inventory(closing) + Trade receivables+other receivables +cash at bank+cash in hand
Total Assets= Non-Current Assets +Current Assets

Total equity (closing capital)= Opening capital(opening equity)+ additional capital+Profit for the year-drawing
If there is loss for the year(Net loss), deduct from the opening capital.
Current liabilities=Trade payables +Other payables + bankoverdraft

Carriage inwards is the cost of transporating goods,paid by business on its own purchases.This expense is added to purchases
Carriage outward is the cost of transporating goods,paid by business on its sales to customers.This expense is recorded in the

Trading A/C ( first section of an income statement)

CIE text book page 121

Question 7 Journal entry to record the goods taken for own use
Date Detail

2012 31 Oct Drawing A/C

Purchase A/C

The first part of the income statement for the year ended 31October 2012
$
Revenue 351 000
(-)Sales returns -2400

cost of sales
opening inventory 11300
Purchases 176000
(-)Purchases returns -1900
(-)Goods taken for own use -600
(-)closing inventory -13500
Gross profit

Question 8 HW

Adjustment in financial statements

closing inventory Goods taken for own use
SFP => Current Assets income statement => cost of sales => (-)
income statement => cost of sales (-) SFP => Capital (-)

Prepaid expense( paid in advance) Prepaid income (received in advance)

SFP => Current Assets=> other receivables SFP =>Current liabilities=>Other payables
income statement =>deduct from Expense Income statement =>deduct from income

Accrued expense ( owing /due / unpaid/outstanding / in arrear) Accrued income

SFP =>Current liabilities=>other payables SFP => Current Assets=> other receivables
income statement =>add to Expense income statement =>add to income

Depreciation
income statement => expense (Dr )
SFP => Accumulated depreciation (Cr) (-)

Straight line method(based on cost)

depreciation per year= cost *depreciation % (or) cost -scrap value /useful life
scrap value = residual value

reducing balance method

depreciation per year=carrying value * depreciation%

Revaluation method
depreciation per year = opening carrying value-closing carrying value

CIE Workbook
Q26 page22
Income statement for the year ended 30 September 2014
$

Revenue
Cost of sales
Opening inventory 9490
Purchases 49440
Carriage inwards 620
(-)Goods taken for own use -240
(-)Closing inventory -3980
Gross profit (revenue -cos)

Income
Rent received (2290 -280 )

Expenses
General expenses 780
insurance (1120 -110 ) 1010
Loan interest 730
Property taxes 650
Wages (31110 +1200 ) 32310
Depreciation of equipment 3000
Depreciation of premises 2806
Profit for the year

CIE text book Q9 page 144

Income statement for the year ended 31 December 2012
$
Gross profit
Expenses
Rent ( 13000 -1000) 12000
Other operating expenses (24 000 +3000) 27000
Depreciation of fixtures and fittings (41000-4000/4) 9250
Depreciation of vehicles (35000 *25%) 8750
Depreciation of office equipment (3000 -2400) 600

Profit for the year

CIE Work book

Question 27 page 23
Income statement for the year ended 31 December 2014

$
Gross profit
Othe incomes
Rent received (8430 +390-820 )

Expenses
Administration expenses(4410 +130 ) 4540
Insurance( 1680 -240 *** ) 1440
Depreciation of furniture and equipment(20000-7200)*20% 2560
Depreciation of premises (240 000*2%) 4800
Wages and salaries (34860 +730 ) 35590
Carriage outwards 820
Loss on disposal of motor vehicle 430
Profit for the year

SFP (CA) ==>Other receivables==> prepaid expenses and accrued incomes

SFP (CL)==>Other payables ===> Accrued expenses and prepaid incomes

Loss on disposal of non current assets => income statement (expense)

Profit on disposal of non current assets => income statement (income)

CIE text book page 145

Question 13 ( Kavita)
Income statement for the year ended 31 December 2012
$

Gross profit
income
Profit on disposal of fittings

Expenses
Rent (14190 -880) 13310
Selling expnese (3860 -190) 3670
Electricity (7840+330) 8170
Wages (53440 +2020) 55460
Depreciation of funiture and fittings (32000 *20%) 6400
Depreciation of vehicles ( 48000 -21000) *25% 6750
Depreciaton of office equipment ( 3780 -3100) 680
Profit for the year

Deadline => 4.8.2024

HW list
CIE Work book Q27 page 23 ( Answer is already filled in format.When your calcualtion is finished , check answer)
CIE text book page 144 Q 10 (Do it yourself)
CIE text book page 146 Q 14 (Do it your self)
 eturn , net sales is equal to sales and Gross profit = Sales - cost of sales)
own used -closing inventory

comes , Profit for the year =Gross profit -Expneses)

the year-drawing

his expense is added to purchases in the first section of the income statements.
rs.This expense is recorded in the second part of the income statements.

ord the goods taken for own use

debit credit
$ $
600
600
173500 is amended figure for purchases
The first part of the income statement for the year ended 31October 2012
$ $ $
Revenue 351 000
348600 (-)Sales returns -2400

cost of sales
opening inventory 11300
Purchases 176000
(-)Purchases returns -1900
(-)Goods taken for own use -600 173500
-171300 (-)closing inventory -13500
177300 Gross profit

page 121 deadline 28.7.24

> cost of sales => (-)

if drawing is in trial balance => tri + additional information

eived in advance)
ties=>Other payables
>deduct from income

ts=> other receivables

>add to income

/useful life

carrying value = cost -accumulated depreciation(provision for depreciation)

Statement of financial postion as at 30 September 2014

$ Assets $ $
Accumulated
162330 Non current Assets Cost depreciation
Premises (14030 +2806 ) 140300 -16836
Equipment(4000 +3000 ) 16000 -7000
156300 -23836
Current Assets
Inventory 3980
-55330 Trade receivables 4800
107000 Other receivables 110
Cash at bank 2330
Total Assets (NCA +CA)
2010
Capital and liabilities(Equity and liabilities)
opening capital/opening equity 77100
Profit for the year 67724
(-)Drawing (17580 +240) -17820
Closing capital(Total equity)
Non current liabilities
Bank loan (repayable 2018)

-41286 41286 Current liabiliites

 67724 Trade payables 7200
Other payables (280 +1200) 1480
Total capital and liabilities(Total equity and
liabilities

Statement of financial position as at 31 December Year 12

$ Assets $ $
100 000 Non current Assets cost Accumulated
depreciation
Furniture and fittings 41000 9250
Vehicles 35000 8750
Office equipment ****

-57600 Current assets

Inventory 12000
42400 Trade receivables 15000
Other receivables 1000
Cash at bank 6000
Total assets

Capital and liabilities

opening capital 68000
Profit for the year 42400
(-) Drawing -37000
closing capital

Current liabilities
Trade payables 18000
Other payables 3000
Total capital and liabilities

Statement of financial statement as at 31 December 2014

Assets $ $
Accumulated
$ Non current Assets Cost depreciation
84910 Premises (19200+4800) 240000 24000
Furniture and equipment (7200 +2560) 20000 9760
8000 260000 33760
Current Assets
Inventory 17450
Trade receivables 14450
Other receivables (240 +390) 630
Total Assets
 Capital and liabilities(Equity and liabilities)
opening capital/opening equity 223000
-50180 Profit for the year 42730
42730 (-)Drawing -21770
Closing capital(Total equity)

Current liabiliites
Trade payables 11420
Other payables (130 +820 +730) 1680
Bank overdraft 1710
Total capital and liabilities(Total equity and
liabilities

1 Oct 2014 insurance 480 ( 1 Oct 2014 to31 March 2015) ==> 6 months
Jan 2015 to 31 Mar 2015 ( prepaid expense ) = 480 *3/6=240

Statement of financial position as at 31 December 2012

$ Assets $ $
Accumulated
137230 Non current Assets Cost depreciation
Furniture and fittings (12800+6400) 32000 19200
840 Vehicles (21000 +6750) 48000 27750
Office equipment ***

Current Assets
Inventory 15600
Trade receivables 7470
Other receivables (880 +190) 1070
Cash at bank 11850
Total Assets
-94440
43630 Capital and liabilities(Equity and liabilities)
opening capital/opening equity 44850
Profit for the year 43630
(-)Drawing -29900
Closing capital(Total equity)

shed , check answer) Current liabiliites

Trade payables 11210
Other payables (330 +2020) 2350
Total capital and liabilities(Total equity and
liabilities
ure for purchases

348600

-171300
177300
$

Carrying vlaue
123464
9000
132464

11220
143684

127004

8000
 8680

143684

$
Carrying value

31750
26250
2400
60400

34000
94400

73400

21000
94400

Carrying vlaue
216000
10240
226240

32530
258770
 243960

14810

258770

Carrying vlaue
12800
20250
3100
36150

35990
72140

58580

13560

72140
Making adjutment to expenses
key Term
Prepaid expenses :the payment of an expense in advance of the accounting year to which it relates.
Accrued expenses:an amount owing for expenses at the end of the financial period.
(unpaid ,due ,outstanding,in arrrear)

Expenses A/C (Eg.Insurance )

1.balance b/d xx
(opening prepaid) 4.income statement ?
2.Bank xxx
3.balance c/d xx
(closing prepaid)

step 1: opening prepaid Dr

step 2: expense is paid , So expense Dr , bank Cr
step 3: closing prepaid Cr
step 4: Transferred to income statement ===>Expense A/C Cr , Income statement Dr

Expense A/C (eg.Electricity)

1.balance b/d
2.Bank (opening accrued)
4.income statement ?
3.balance c/d
(closing accrued)

step 1: opening accrued Cr

step 2: expense is paid , So expense Dr , bank Cr
step 3: closing accrued Dr
step 4: Transferred to income statement ===>Expense A/C Cr , Income statement Dr

Making adjutment to incomes

key Term
Prepaid incomes :the receipts of an income in advance of the accounting year to which it relates.
Accrued incomes:an amount owing for incomes at the end of the financial period.
(unpaid ,due ,outstanding,in arrear)

Income A/C (Eg.interest received )

1.balance b/d
(opening accrued) 2.Bank
4.income statement ?
3.balance c/d
(closing accrured)

step 1: opening accrued Dr

step 2: income is received , so Bank Dr , income A/C -Cr
step 3: closing accrued Cr
step 4: Transferred to income statement ===>Income A/C Dr , Income statement Cr

Income A/C (eg.rent received )

1.balance b/d
(opening prepaid)
4.income statement ? 2.Bank
3.balance c/d
(closing prepaid)

step 1: opening prepaid Cr

step 2: income is received , so Bank Dr , income A/C -Cr
step 3: closing prepaid Dr
step 4: Transferred to income statement ===>Income A/C Dr , Income statement Cr

Other receivables ===> prepaid expenses and accrued incomes

Other payables ====> Accrued expenses and prepaid incomes

Edexcel text book

Chapter 22 Accruals ,prepayments and other adjustments for financial statements
page 194 Adjustments needed for expenses owing or paid in advance
Not all business pay their rent exactly on time and ,indeed , some prefer to pay their rent in advan
If expenses are either owing or paid in advance at the end of a financial peirod.

Two businesses each pay rent of £1,200 per year for their premises.
1 Business A pays £1000 during the year and owes £200 rent at the end of the year.
Income statement 1200 (1000+200)
statement of financial postion 200 CL ( other payables )

2 Business B pays £1300 during the year;including £100 in advance for the following year.
Income statement 1200 (1300-100)
statement of financial postion 100 CA (other receivables)

page 195 Accrued expenses (i.e expenses owing)

Assume that rent of £1,000 per year is payable at the end of every three months but is not alway

Amount Rent due rent paid ( by cash)

£250 (Jan, Feb,Mar) 31-Mar-08 31-Mar-08
£250 (Apr, May,June) 30-Jun-08 2-Jul-08
£250 (July,Aug,Sep) 30-Sep-08 4-Oct-08
£250 (Oct,Nov,Dec 2008) 31-Dec-08 5-Jan-09

(a) Prepare rent A/C for the year ended 31 December 2008=>1 Jan 2008 to 31 December 2008
(b) Prepare income statement extract for the year ended 31 Decemer 2008 and statement of financial position extract as at 31
(a) Rent A/C
date details £ date
2008
31-Mar Cash A/C 250
2-Jul Cash A/C 250 2008 31 Dec
4-Oct Cash A/C 250
31-Dec balance c/d (clo accrued) 250
1000
2009 1 Jan

(b)
income statement extract for the year ended 31 December 2008
Expenses (Dr)
Rent 1000

Statement of financial postion extract as at 31 Decembr 2008

Current liabilities
other payables 250 (Accrued rent)

22.3 Prepaid expenses page 196

Insurance for a business is at the rate of £840 a year ,starting from 1 January 2008.
The business has agreed to pay this at the rate of £210 every three months.
However,payments were not made at the correct times.The details are as follows:

Amount Insurance due Insurance paid (by cheque)

£210 (Jan,Feb,Mar) 31-Mar-08 £210- 28 February 2008
£210 (Apr,May,June) 30-Jun-08 £420 -31 August 2008
£210 (July,Aug,Sep) 30-Sep-08
£210 (Oct,Nov,Dec 2008) 31-Dec-08 £420 -18November 2008 Oct ,Nov, Dec 2008 and Jan, Feb,Mar
6months
3months

(a) Prepare insurance A/C for the year ended 31 December 2008 => 1 Jan 2008 to 31 Dec 2008
(b) Prepare income statement extract for the year ended 31 Decemer 2008 and statement of financial position extract as at 31

Insurance A/C
date details £ date
2008
28-Feb Bank A/C 210
31-Aug Bank A/C 420 2008 31 Dec
18-Nov Bank A/C 420
2008 31 Dec
1050
2009 1 Jan balance b/d (op prepaid exp) 210
income statement extract for the year ended 31 December 2008
Expenses (Dr) £
Insurance 840

Statement of financial postion extract as at 31 Decembr 2008

Current Assets (Dr) £
other receivables 210 (prepaid insurance)

22.5 Revenue owing at the end of period page 197

Examples: A business 's warehouse is larger than needed ,therfore they rent part of it to another business for £800 per annum
Details for the year ended 31 December are as shown in the table below.

Amount (£) Rent due Rent received (by cheque)

200 31-Mar-08 4-Apr-08
200 30-Jun-08 6-Jul-08
200 30 Septmeber 2008 9-Oct-08
200 31-Dec-08 7-Jan-09

(a)Prepare rent received A/C for the year ended 31 December 2008=> 1 Jan 2008 to 31 December 2008
(b) Prepare income statement extract for the year ended 31 Decemer 2008 and statement of financial position extract as at 31

Rent received A/C

date details £ date
2008
4-Apr
31-Dec-08 income statement 800 6-Jul
9-Oct
31-Dec
800
2009 1 Jan balance b/d (op acc income) 200

income statement extract for the year ended 31 December 2008

Incomes (cr)
rent received 800

Statement of financial postion extract as at 31 Decembr 2008

Current Assets
other receivables 200
Prepaid expenses
1.deduct from expenses
2.recorded in Current Assets (Dr)
(SFP=>under Current assets =>other receivables)

Accrued expenses
1.add to expenses
2.recorded in Current liabilites(Cr)
(SFP=>under Current liabilities =>other payables)

Accrued income
1.Add to income
2.recorded in Current Assets (Dr)
(SFP=>under CA =>other receivables)
 Prepaid income
1.deduct from income
2.recorded in Current liabilites(Cr)
(SFP=>under CL =>other payables)

SFP -Current Assets

SFP -Currnet Liabilities

er to pay their rent in advance.

of the year.

e following year.

receivables)

ee months but is not always paid on time.Details are given in the table below.

cial position extract as at 31 December 2008.

 details £
balance b/d

income statement 1000

1000
balance b/d (op accrued) 250
Cr

nuary 2008.

as follows:

Dec 2008 and Jan, Feb,Mar 2009

420
210 (Jan,Feb,Mar 2009)

cial position extract as at 31 December 2008.

details £

income statement 840

balance c/d (420 *3/6) 210 (Jan,Feb, Mar 2009)

1050
usiness for £800 per annum.

cial position extract as at 31 December 2008.

details £

Bank 200
Bank 200
Bank 200
balance c/d (clo acc inc) 200
800
CIE text book
Unit 14 Practice questions page 131
Question 3 Recording expense accruals
for the year ended 30 June 2012===>1July 2011 to 30 June 2012
Electricity A/C (expense)
Date Details $ Date Details
2012 30June Bank A/C 7900
2012 30June income statement
2012 30June balance c/d (closing acc exp) 700
8600
2012 1 July balance b/d

General expense A/C

Date Details $ Date Details
2012 30June Bank A/C 11800
2012 30June income statement
2012 30 June balance c/d(closing acc exp) 300
12100
2012 1 July Balance b/d

Question 5 Recording expense prepayment

for the year ended 31 Aug 2012 ===> 1 Sep 2011 to 31 Aug 2012
Insurance A/C
Date Details $ Date Details
2012 31Aug Bank A/C 9100
2012 31Aug income statement
2012 31Aug balance c/d (clos pre exp)
9100
2012 1 Sep balance b/d 800
Rent A/C
Date Details $ Date Details
2012 31Aug Bank A/C 27600
2012 31 Aug income statement
2012 31Aug balance c/d (clos pre exp)
27600
2012 1 Sep balance b/d 1200

Question 7 Recording adjustments to income accounts page 132

for the year ended 30 Nov 2012 ==> 1 Dec 2011 to 30 Nov 2012
Rent received A/C
Date Details $ Date Details
2012 30Nov Bank A/C
2012 30 Nov income statement 21800
2012 30Nov balance c/d (clo pre inc) 600
22400
2012 1 Dec balance b/d
Loan interest received A/C
Date Details $ Date Details
2012 30Nov Bank A/C
2012 30Nov income statement 7500
2012 30Nov balance c/d (clo acc inc)
7500
2012 1 Dec balance b/d 200

Question 8 Recording adjustment page132 Q6

Prepare rent received A/C for the year ended 31 December 2012
Rent received A/C
Date Details $ Date Details
2012 31 Dec Bank A/C (Tenant 1)
2012 31 Dec income statement 34600 2012 31 Dec Bank A/C ( Tenant 2)

2012 31 Dec balance c/d (clo pre inc) 900 2012 31 Dec balance c/d (clo accru inc)
35500
2013 1 Jan balance b/d 1100 2013 1Jan balance b/d
Dr

deadline 11. 8. 2024

HW CIE text book
Q4 page 131
Q6 page 132

1year 4quarter
1quarter 3months

Example: Jan , Feb, Mar, Apr, May ,june, July, Aug, Sep , Oct ,Nov, Dec
first quarter Jan , Feb, Mar
second quarter Apr, May ,June
third quarter July, Aug, sep
last quarter Oct ,Nov, Dec
Q1

income statement (extract)

$ expense $
Electricity(7900+700) 8600
8600 General expense(11800+300) 12100

8600 Statement of financial postion (extract)

700 Current liabilities
Other payables(700+300) 1000

12100

12100
300

Q3

income statement (extract)

$ expense (Dr) $
insurance (9100 -800) 8300
8300 Rent (27600-1200) 26400
800
9100 Statement of financial postion (extract)
Current Assets (Dr)
Other receivables (800+1200) 2000
$

26400
1200
27600

Q5

income statement (extract)

$ Incomes $
22400 Rent received(22400-600) 21800
loan interest received(7300+200) 7500

22400 Statement of financial postion (extract)

600 Current Assets
Other receivables ( accrued loan interest received) 200
$
7300 Current liabilities
Other payables(prepaid rent received) 600
200
7500

income statement (extract)

$ rent received 34600
16200
18200 Statement of financial postion (extract)
Current Assets (Dr)
1100 Other receivables 1100
35500
900 Current liabilities (Cr)
Cr Other payables 900
Exam Practice
Ruth is a trader.
Her financial year ends on 31 March.She provides the following information.
1-Apr insurance prepaid for 3 months to 30 June 2016
1-Jul Paid insurance premium for 12 months to 30 June 2017 by cheque
Prepare insurance account for the year ended 31 March 2017.=> 1 Apr 2016 to 31 Mar 2017
Show clearly the amount transferred to the income statement.
Insurance A/C
date details $ date details
2016 1 Apr balance b/d 60
2016 1 July Bank A/C 264 2017 31Mar income statement
2017 31 Mar balance c/d(264*3/12)
324
2017 1 Apr balance b/d 66

A sole trader 's electricity account for the year ended 31 March 2017 showed the following.
1-Apr-16 balance brought down $ 3000 Cr

Apr 2016 to March 2017

Bank payment made during the year $18,000

On 31 March 2017
$4000 was owing by the trader for electricity

Calculate the amount charged for electricity in the trader's income statement for the year ended 31 March 2017.=>1 Apr 2016
Show your workings.

Electricity A/C
b/d 3000 (op accruerd exp)
bank 18000
income statetment 19000
c/d 4000
22000 22000

End of chapter questions (viber photos)

Q1 financial year end 30 Sep 2016=> 1 Oct 2015 to 30 Sep 2016
6 months 200 ( 1 July to 31 Dec)
3 months 200 *3/6 =100 ( Oct to Dec) (b) other receivable of $100
Q2
Rent payable ( Rent A/C) =>expense
balance b/d 400
bank 1700 income statement 1050 1050 (a)
balance c/d 250
400 Cr +250 Cr -1700 =1050

Q4 (a)
Electricity A/C
 b/d 2000
bank 15000 income statement 15500 15000
c/d 2500

Q5 expense is inversely proportional to the profit

Exp increase=> Profit decrease , expense decrease=> Profit increase
income is directly proportional to the profit
Income increase=> Profit increase, income decrease=> Profit decrease

insurance paid in advance =prepaid expense=> expense (-) Cr , SFP Current assets Dr
insurance outstanding = accrued expense=> expense (+)Dr , SFP Current liabilities Cr
Insurance A/C
x 3500 3500 Cr
Dr 3500 Cr

Q5 (d)
Q6 (d)

Q8 (d)
Q9 to Q 13 HW deadline today

Q9
Rent payable ( Rent A/C)
 $60
$264 ( 1 July 2016 to 30 June 2017)

258
66 (Apr to June 2017)
324

ded 31 March 2017.=>1 Apr 2016 to 31 Mar 2017

eivable of $100
Depreciation of Non-current assets
Depreciation is an estimate of the loss in value over the period of time when the assets is useful to the business.

Chapter 19:The concept of depreciation of fixed assets(non-current assets)

Causes of depreciation
1.Physical deterioration
(i) Wear and tear
(ii)Erosion,rust ,rot and decay.

2.Economic factors
(i)Obsolescence(out of date due to advanced technology or a change in processes.)
(ii)Inadequacy

3.The time factor

4.Depletion

Reasons why non-current assets depreciate

Wear and tear
Obsolescence
passage of time
Depletion

Method of depreciation
(i) Straight line method (equal instalment method)
First method
depreciation per annum = cost -scrap value / useful life
scrap value =residual value

page 170 edexcel text book

example : A business purchases a car for $22000.It decides to keep it for four years and then sell it fo
cost = $22000
scrap value= $2000
useful life= 4 years
depreciation per annum = $22000 -2000 / 4=$20000/4 = $5000 per annum
(or) If the car has no scrap value, depreciation per annum= $22000/4 =$5500 per annum

if scrap value exist,

depreciation
Year 1 $5,000
Year2 $5,000
Year3 $5,000
Year4 $5,000
(or)
if there is no scrap value,
depreciation
Year 1 $5,500
Year2 $5,500
Year3 $5,500
Year4 $5,500

In straight line method, depreciation remains at an equal amount of each year.

Second method
depreciation per annum = cost * depreciation %
If scrap value exist, depreciation per annum = (cost -scrap value) *depreciation%

example: Mic purchaseed a motor vehicle at a cost of $25000.He wants to use the straight line metho

depreciation per annum = 25000 * 20%=$5000 per annum

(ii) Reducing balance method (Dimishing balance method)

depreciation per annum =Carrying value * depreciation %

Carrying value = cost - provision for depreciation(depreciation charges to date)

*** depreciation is calculated based on cost in the first year.

page 171 edexcel text book

Example: If a machine is bought for $ 10,000 and depreciation is to be charged at 20%.

Year 1 cost
depreciation at the end of year1
Carrying value at the end of year 1
depreciation at the end of year2
Carrying value at the end of year 2
depreciation at the end of year3
Carrying value at the end of year 3

Comparison between straight line method and reducing balance method

page 171 Worked example
A joinery manufacturer has bought a machine for $16000 with an expected life of four years and a disposal value of $1000.
The owner asks for a comparison of the depreciation to be charged using both methods with a percentage of 50% to be used f

Straight line method ,

depreciation per annum = cost -scrap value / useful life
depreciation per annum =16000 -1000/ 4 =$3750 per annum

Look at your text book (edexcel text book page 172)

Straight line method

Cost 16000
dep Year1 3750
CV at the end of year 1 12250
depr Year2 3750
CV year 2 8500
dep Year3 3750
CV year 3 4750
dep Year 4 3750
C V Year 4 1000

At the end of Year 4 , carrying value is equal to the scrap value.

Using the straight line method , the depreciation charge remains the same each year
Using the reducing balance method ,the depreciation charges are much higher in the early year than in the later years.

Reducing balance method

In the early years , a higher charge for depreciation and lower charge for repair an upkeep
In the later years , a lower charge for depreciation and a higher charge for repair and upkeep

Revaluation method
is used for calculating depreciation on large quantities of low-cost assets such as tools.
(eg. Low cost tools and equipments such as saws ,drills ,spanners)
is used mainly by self employer people such as joiners ,electricians,plumbers etc.

depreciation per annum =opening carrying value - closing carrying value

example 1. At 1 January 2012 , office equipment is valued at $3780

At 31 December 2012 ,office equipment is revalued at $3100
Office equipment is depreciated using the revaluation method.
depreciation at 31 December 2012 = $3780- $3100=$680

example 2 Edexcel text bool

Value of tools and equipment at start of period
Add: cost of items purchased during the year

Less: value at close of the period

Depreciation for the year

Chapter 20 Double entry of depreciation and disposal of a fixed assets(non -current assets)

Recording purchase of non current assets

Non -current assets A/C -Dr
Cash or Bank A/C -Cr

Recording depreciation charges

Depreciation -Dr
Provision for depreciation -Cr
income statement -Dr
depreciation -Cr
Income statement ( profit and loss A/C) -Dr
Provision for depreciation A/C -Cr

Income statement (profit and loss A/C)

Expenses (Dr)
depreciation xx

exhibit 20.1 page 176 and 177

Example: A business purchase s machinery for use in their workshop for $2000 on 1 January 2001 paid by cheque.
The company uses the reducing balance method of depreciation and a rate of 20% per annum,their year end is 31 December.
The accounting records for the first three years are shown below.

date details
2001 1January Bank A/C

2002 1 January balance b/d

2003 1 January balance b/d

2004 1 January balance b/d

date details

2001 31 Dec balance c/d

2002 31 Dec balance c/d

2003 31 Dec balance c/d

Working
by using reducing balance method
depreciation per annum = carrying value * depreciation %
2001 31 Dec, 2000* 20%=$400
2002 31 Dec,(2000-400) *20% =1600 *20%=320
2003 31 Dec,(1600 -320)*20% =1280 *20%=256 (or) 2000 -(400+320) *20% =256
Income statement extract for the year ended 31 December

Expenses
2001 depreciation of machinery
2002 depreciation
2003 depreciation

Statement of financial postion extract as at 31 December

Cost (Dr)
$
2001 2000
2002 2000
2003 2000

Extra question HW
Example: A business purchase s machinery for use in their workshop for $2000 on 1 January 2001 paid by cheque.
The company uses the straight line method of depreciation and a rate of 20% per annum,their year end is 31 December.
Prepare following Accounts for the year ended 31 December 2001 ,2002 and 2003.
(i)machine A/C
(ii) Provision for depreciation A/C
(iii) income statement extract for the year ended 31 December 2001 ,2002 and 2003
(iv) Statement of fiancial position extract as at 31 December 2001 ,2002 and 2003

date details
2001 1January

2002 1 January

2003 1 January

2004 1 January

date details

2001 31 Dec
2002 31 Dec

2003 31 Dec

Working notes
by using straight line method ,
depreciation per annum =cost * depreciation % =$2000 *20% =400

Income statement extract for the year ended 31 December

Expenses
2001 depreciation of machinery
2002 depreciation
2003 depreciation

Statement of financial postion extract as at 31 December

Cost
$
2001 2000
2002 2000
2003 2000

Chapter 20
Edexcel text book
Example:
A business whose year end is 30 June.The buisness buys a motor car on 1 July 2001 for $8000.
They buy another car on 1 July 2002 for $11000.They expect each car to be in use for five years.
They expect the disposal value of the first car to be $500,and the second car to be $1000.
They use the straight line mehtod of depreciation.
Prepare Motor car A/C and provision for depreciation A/C for the year ended 30 June 2002 and 30 June 2003.
$8,000
1 July 2001…............................................................................................30 June 2002
$11,000
1 July 2002….............................................................................................30 June 2003

Working notes(WN)
Using staright line method ,
Depreciation per annum = cost -scrap value/ useful life

WN-1 , first motor car ,

depreciation per annum = 8000-500/5 =7500/5 =1500

30 June 2002= $1500

30 June 2003 =$1500

WN-2 ,second motor car,

depreciation per annum= 11000-1000/5 =10000/5 =2000
(30 June 2003)

Dr
Date Details
2001 July1 Bank A/C

2002 July1 balance b/d

2002 1 July Bank A/C

2003 1 July balance b/d

Dr
Date Details

2002 30June balance c/d

2003 30June balance c/d

Income statement extract for the year ended 30June

Expenes
2002 30 June depreciation of motor car
2003 30 June depreciation of motor car

Statement of financial position extract as at 30 June

Non Current Assets

2002 30June Motor cars

2003 30June Motor cars

(8000+11000)

provision for depreciation=accumulated depreciation=Total depreciation

deadline 25.8.24
HW extra question (straight line method)
HW Q20.1 (reducing balance method)
Working notes
by using reducing balance method ,
depreciation per annum = carrying value * depreciation %
2001
2002
2003
hen the assets is useful to the business.

page 168

.It decides to keep it for four years and then sell it for $2000.

500 per annum

ost of $25000.He wants to use the straight line method at 20%

(Carrying value is also called carrying amount/net book value )

arged at 20%.
$
10000
2000 (10000*20%)
8000 (10000-2000)
1600 (8000*20%)
6400
1280 (6400*20%)
5120

ed life of four years and a disposal value of $1000.

both methods with a percentage of 50% to be used for the reducing balance method.

reducing balance method

16000
16000*50% 8000
8000
8000*50% 4000
4000
4000*50% 2000
 2000
2000*50% 1000
1000

e each year
higher in the early year than in the later years.

repair an upkeep upkeep =maintenance

r repair and upkeep

such as tools.

page173
2500
500
3000
2000
1000

osal of a fixed assets(non -current assets)

Non -current assets A/C -Dr

Trade payables -Cr

Provision for depreciation A/C

 balance b/d xx
income statment xx
balance c/d xx

$2000 on 1 January 2001 paid by cheque.

te of 20% per annum,their year end is 31 December.

Machinery A/C (Non-current Assets )

$ date details
2000
2001 31 Dec balance c/d
2000
2000
2002 31 Dec balance c/d
2000
2000
2003 31 Dec balance c/d
2000
2000

Provision for depreciation A/C

$ date details
2001 1 Jan balance b/d
2001 31 Dec Income statement
400
400
2002 1 Jan balance b/d
2002 31 Dec income statement
720
720
2003 1 Jan balance b/d
2003 31 Dec income statement
976
976
2004 1 Jan balance b/d

$
cost 2000
(or) dep for 2001 -400
CV at the end of 2001 1600
dep for 2002 -320
Cv at the end of 2002 1280
dep for 2003 256
CV at the end of 2003 1024
 $

400
320
256

Working
*Provision for depreciation(cr) Carrying value (cost -provision for dep)
$ $
400 1600 2000 -400
720 1280 2000-720
976 1024 2000-976

$2000 on 1 January 2001 paid by cheque.

20% per annum,their year end is 31 December.

002 and 2003

Machinery A/C (Non-current Assets )

$ date details

2001 31 Dec

2002 31 Dec

2003 31 Dec

Provision for depreciation A/C

$ date details
2001 1 Jan
2001 31 Dec

2002 1 Jan
 2002 31 Dec

2003 1 Jan
2003 31 Dec

2004 1 Jan

Working
*Provision for depreciation Carrying value (cost -provision for dep)
$ $

page178 1. transaction (DE)

2. Method
1 July 2001 for $8000. 3.Policy
be in use for five years.
d car to be $1000.

nded 30 June 2002 and 30 June 2003.

0 June 2003

*** disposal value =scrap value =residual value

Motor Car A/C
$ Date Details
8000
2002 30June balance c/d
8000
8000
11000 2003 30June balance c/d
19000
19000

Provision for depreciation A/C

$ Date Details
2001 July1 balance b/d
1500 2002 30June income statement
1500
2002 July1 balance b/d
5000 2003 30June income statement(1500+2000)
5000
2003 1 July balance b/d

1500 (MC 1)
3500 (MC 1 + MC2)

cost (Dr) provision for depreciation(Cr) Carrying value(cost -provision for dep)
$ $ $
8000 1500 6500

19000 5000 14000

page 182 edexcel text book
10,000 -(2000+1600) 6400

10,000-(2000+1600+1280) 5120
page 176
$

2000
2000

2000
2000

2000
2000

400

400
400
320

720
720
256

976
976

2000*20%

1600*20%

1280 *20%
$

$
 Cr
$

8000
8000

19000
19000

Cr
$

1500
1500
1500
3500
5000
5000

ovision for dep)

CIE work book
Q14
page11
a purchase invoice (or ) invoice
b till roll
c sales invoice
d bank statement
e *** cheque counterfoil
f*** paying in slip counterfoil
g petty cash voucher
h credit note (received)
i credit note ( issued)
j invoice

CIE Past paper (February /March 2021 )

Question1 Shilpa
(a) Sales journal (Sales day book) working
Date Details $ $ list price
6-Jan Kabir , list price 200 200
(-) trade discount -40 160
20-Jan Pari 150
26-Jan Yash 62
31-Jan Transfer to Sales account 372 (Sales A/C - Cr)

(b) Cash Book

Date Details discount allowed Cash Bank

2021 $ $ $
1-Jan balance b/d 200 814
9-Jan disposal of office fittings 110
15-Jan SalesA/C 85
21-Jan Kabir ( 160*7.5%) 12 148
24-Jan Pari (150-141) 9 141

21 200 1298
1-Feb balance b/d 150 818

(c) Dilip A/C (Trade payable)

Date Details $ Date Details
2021 Jan10 Purchase return (20-5) 15 2021 Jan3 Purchase (120-3
11-Jan cash A/C 50
31-Jan balance c/d 25
90
1-Feb balance b/d

Purchase ledger
 trade payable A/C
Purchase return xx balance b/d xxx
Cash/Bank (from cash book) xxx Purchase xxx
discount received x
balance c/d xx

(d) credit note

Sales ledger
Trade receivable A/C
balance b/d Sales return
Sales Cash /bank
discount allowed
balance c/d

Revision
Accounting system
financial transactions(eg. Credit sales , sales return , purchase of stationary)
financial documents/source documents/busines documents (eg. Invoice ,credit note,petty cash voucher)
Books of orignal entry/ day books
Ledger ( SL ,PL, GL)
Trial balance
Financial statements( income statement and Statement of financial postion)

Day books ( Books of original entry /Books of prime entry)

1.Cash book (two column /three column)

2.Petty Cash Book (for small transaction of expenses)
3.Sales Day Book (credit sales of goods)
4.Sales return Day Book (Return inwards day book)
5.Purchase day Book (credit purchase of goods)
6.Purchase return day book(Return outwards day book)
7.General journal (for non-regular transaction)
(eg. Purchase and Sales of non-current assets on credit,opening entries,correction of errors,end of year transfer to income sta

Ledger
1. Sales ledger ( Trade Receivables ledger) individual trade receivables
2.Purchases ledger ( Trade payables ledger) individual trade payables
3.General ledger (eg. Sales A/C , Sales return A/C , Purchase , Purchase return, Cash A/C , Bank A/C …..)
(nominal ledger)

Cash Discount /Prompt payment discount /settlement discount

1.Discount allowed Dr expense
2. Discount received Cr income
double entry of discount allowed
discount allowed Dr
trade receivable Cr

double entry of discount received

trade payable Dr
discount received Cr

Trade discount is not recorded in the accounting system.Only the net amount after deducting trade discount is shown in the b
Trade discount is recorded in invoice.

Source documents about cash book

Practice =>CIE text book (page 111 to 113)
cash receipt
paid expenses by cash
withdrew cash for private use/personal use/own use (cash -Cr)

till roll
Cash sales (Cash -Dr)

Cheque counterfoil
paid expenses by cheque
withdrew a cheque for private use/personal use/own use (Money out from bank) Bank -Cr
purchase non current assets by cheque
Paid trade payables by cheque

paying in slip counterfoil

Transferred cash to bank
Cash sales banked (Money into Bank) Bank -Dr
Cheque received from trade receivables

Bank statement
Bank charges
funds canbe transferred directly from Customer A/C to business Bank A/C (Credit transfer)
Standing order(SO)
direct debit(DD)

CIE work book

Q13 (Day book) page10
a cash book
b Purchase day book
c General journal
d Cash book
e Sales return day book
f general journal
g petty cash book
h sales day book
i cash book
j Purchase return day book

Long answer question page9 Q11

balane the petty cash book at 31 March , and restore the imprest by cheque at 1 April
Petty cash book for March
Receipts Date details Payments Postage
$ $ $
200 1-Mar balance b/d
3-Mar stationary 7.9
5-Mar G Down 24.6
7-Mar Postage 11.5 11.5
10-Mar Office cleaning 15
12-Mar Stationary 32.3
16-Mar L Bennett 29.7
20-Mar Postage 5.2 5.2
24-Mar Offie expenses 8.4
28-Mar L Price 13
30-Mar Postage 1.4 1.4
149 18.1
31-Mar balance c/d 51
200 200
51 1-Apr balance b/d
149 1-Apr Bank

Viber photo ( invoice)

Qty unit cost Total cost
150 1.2 180
400 0.4 160
Sub total 340
Trade discount 20% 68
Total 272

Practice
CIE Work book
Q1 to 10 page( 7 to 9)

I/S and SFP

Q26 and Q27 page22 and 23
trade dis Net amount
40 160

Date Details discount received Cash Bank

2021 $ $ $
2-Jan Rent A/C 450
11-Jan Dilip A/C 50
17-Jan office expenses 30

31-Jan balance c/d 150 818

200 1298

Working Notes
$ list price 100% TD 25% Net 75%
90 Purchases 120 30 90
Purchases returns 20 5 15

90
25 Cr
 Kabir A/C

sales 160 Bank 148

discount allowed 12
160 160

ar transfer to income statement ,irrecoverable debts…..)

iscount is shown in the books of prime entry and ledger accounts.
stationary Office expenses Purchase ledger
$ $ $

7.9
24.6

15
32.3
29.7

8.4
13

40.2 23.4 67.3

Disposal of Non current Assets
Step 1: Transfer the cost price (original cost) of the assets sold to disposal A/C.
disposal A/C -Dr
Non current assets A/C -Cr

step 2: Transfer the provision for depreciation of the assets sold to disposal A/C.
Provison for deprecaition A/C -Dr
disposal A/C -Cr

step 3: :Record the sales proceed (amount received on disposal)

Cash book /bank-Dr
disposal A/C -Cr

Dr disposal A/C
1

income statement ?
(profit on disposal)

The amount to balance the disposal A/C to the income statement

profit on disposal ===> disposal A/C -Dr, income statement -Cr
Loss on disposal ===> disposal A/C -Cr , income statement -Dr

Dr Provision for depreciaiton A/C Cr

edexcel text book

Exhibit 20.3 page 180

A business purchases machinery for use in their workshop for $2000 on 1 January 2001.
The company uses the reducing balance method of depreciation at a rate of 20% per annum ,their year end is 31 December.
The machinery is sold for $ 1070 on 2 January 2004.The sale proceed were received by cash.
A full year's depreciation is charged in the year of purchase but none in the year of disposal.=> policy
Prepare machinery A/C ,Provision for depreciation A/C and disposal A/C for the year ended 31 December 2004.

1 Jan 2001…....................................................................31 December 2001

1 Jan 2002…....................................................................31 December 2002
1 Jan 2003…....................................................................31 December 2003
1 Jan 2004….....................................................................31 December 2004

Working notes
by using reducing balance method ,
depreciation per annum = carrying value * depreciation %
2001 2000* 20%=$400
2002 $2000- 400 =1600 *20% = 320
 2003 $1600 -320 =1280 *20% =256
total depreciation for year 2001 to 2003 is $ 976 ($400 +$320+$256)

date details
2004 1 Jan balance b/d

date details
2004 2 Jan disposal A/C (step 2)

date details
2004 2 Jan Machinery A/C (step 1)

2004 31 Dec income statement (profit on disposal)

Income statement extract for the year ended 31 December 2004

Gross profit
Add: incomes
profit on disposal of machinery

If the machiney is sold $ 950,

date details
2004 2 Jan Machinery A/C (step 1)

2004 31 Dec

Income statement extract for the year ended 31 December 2004

Gross profit
Less: expenses
loss on disposal of machinery

CIE text book Q7

Journal entries (The journal)
Date Details
2012 Aug 10 disposal A/C
 Furniture and fittings A/C
2012 Aug 10 Provision for depreciation of furniture and fittings
disposal A/C
2012 Aug 10 Bank A/C
disposal A/C
2012 31 Dec income statement (loss on disposal)
disposal A/C

Furniture and fittings A/C

Date Details
2012 1 Jan balance b/d

Provision for depreciation A/C

Date Details
2012 10Aug disposal A/C (step 2)

date details
2012 10Aug Furniture and fittings (step 1)

Recording depreciation charges depreciation A/C

Depreciation -Dr Pro for dep xx
Provision for depreciation -Cr
income statement -Dr
depreciation -Cr Provision for depeciation A/C

income stament
Expenses (Dr)
depreciaion

Q 20.3 Edexcel text book

On 1 January 2001 , the first day of his financial year.
T Young bought computer equipment for $ 9500.
The equipment is to be depreciated by the straight line method at the rate of 20% ,ignoring scrap value.
On 1 January 2004 ,the equipment was sold for $4250.
Show the following for the complete period of ownership.
a)The computer equipment A/C
b)The provision for depreciation -computer equipment account.
c)The computer equipment disposal A/C.
d)income statement extract for the year ended 31 December 2001 ,2002 and 2003.
e)Statement of financial position extract as at 31 December 2001, 2002 and 2003.
Computer equipment A/C
date details
2001 1January Bank A/C

2002 1 January balance b/d

2003 1 January balance b/d

2004 1 Jan balance b/d

date details

2001 31 Dec balance c/d

2002 31 Dec balance c/d

2003 31 Dec balance c/d

2004 1 Jan disposal A/C (step 2)

date details
2004 1 Jan computer equipment A/C (step 1)

2004 31 Dec income statement ( profit on disposal)

Working notes
by using straight line method ,
depreciation per annum =cost * depreciation % =$9500*20%=1900

Income statement extract for the year ended 31 December

Expenses
 2001 depreciation of computer equipment
2002 depreciation
2003 depreciation

Statement of financial postion extract as at 31 December

Cost
$
2001 9500
2002 9500
2003 9500

HW list
CIE text book page 143
 page 179 and 180 edexcel text book

Cheque received ==> Bank -Dr , cash received ===> Cash -Dr

Cr
2 Dr Non Current Assets A/C Cr
3 1
income statement ?
(loss on disposal)

e income statement
e statement -Cr income
statement -Dr expense

Dr cash book Cr

er annum ,their year end is 31 December.

isposal.=> policy
ended 31 December 2004. 1 Jan 2004 to 31 December 2004
dep Prov for dep
dep 400 400
dep 320 720
dep 256 976
no depreciation
(or) 2000 -720= 1280 *20% =256

Machinery A/C
$ date details $
2000 2004 2 Jan disposal A/C (step 1) 2000

2000 2000

Provision for depreciation A/C

$ date details $
976 2004 1 Jan balance b/d 976

976 976

disposal A/C
$ date details $
2000 2004 2 Jan Provision for depreciation (step2) 976
2004 2 Jan Cash A/C (step 3) 1070
46
2046 2046

$
xxx

46

disposal A/C
$ date details $
2000 2004 2 Jan Provision for depreciation (step2) 976
2004 2 Jan Cash A/C 950
2004 31 Dec income statement ( loss on disposal) 74
2000 2000

$
xxx

74

page 143

Debit ($) Credit ($)

21000
 21000
16400
16400
2500
2500
2100
2100

$ Date Details $
21000 2012 10Aug disposal A/C (step 1) 21000
21000 21000

$ Date Details $
16400 2012 1 Jan balance b/d 16400
16400 16400

Furniture and fittings disposal A/C

$ date details $
21000 2012 10Aug Provision for depreciation (step 2) 16400
2012 10Aug Bank A/C (step 3) 2500 18900
2012 31 Dec income statement (loss on disposal) 2100
21000 21000

income statement ?

depreciation xx

page 182

gnoring scrap value.

$ date details $
9500
2001 31 Dec balance c/d 9500
9500 9500
9500
2002 31 Dec balance c/d 9500
9500 9500
9500
2003 31 Dec balance c/d 9500
9500 9500
9500 1-Jan-04 disposal A/C (step 1) 9500
9500 9500

Provision for depreciation A/C

$ date details $
2001 1 Jan balance b/d
2001 31 Dec income statement 1900
1900
1900 1900
2002 1 Jan balance b/d 1900
2002 31 Dec income statement 1900
3800
3800 3800
2003 1 Jan balance b/d 3800
2003 31 Dec income statement 1900
5700
5700 5700
5700 2004 1 Jan balance b/d 5700
5700 5700

disposal A/C
$ date details $
9500 2004 1 Jan Provision for depreciation (step2) 5700
2004 1 Jan Bank A/C (step 3) 4250
450
9950 9950

$
 1900
1900
1900

*Provision for depreciation Carrying value

$ $
1900 7600
3800 5700
5700 3800

Q8 deadline 23.9.2024
Irrecoverable debts , Irrecoverable debts recovered and provision for irrecoverable debts

Irrecoverable debts (bad debts)

A debt owing to the business which is unlikely to be paid.
An irrecoverable debts occurs when a trade receivables is unable to pay the amount they owe.
This may happen if the trade receivables is suffering a loss in his or her business or if the owner has gone bankrupt .

Double entry of irrecoverable debts Credit sales

Irrecoverable debts A/C (bad debts)-Dr TR -Dr
Trade receivables A/C (debtors) -Cr Sales -Cr
Eg.
Irrecoverable debts A/C (expense)

Dr 1800 income statement ?

income statement for the year ended ….

Gross profit xx
less:Expenses
Irrecoveable debts 1800

Irrecoverable debts recovered CIE text book page149

A debt,previously written off, that is subsequently paid by the trade receivables.
eg.
Trade receivables A/C (eg. Oasis Ltd)

1.Dr 1800 2.Cr 1800

1800 1800

Step 1: Trade receivables -Dr and irrecoverable debts recovered A/C -Cr
step 2: Cash /Bank -Dr and Trade receivables A/C -Cr

Double entry of irrecoverable debts recovered

Cash /bank A/C -Dr
Irrecoverable debts recovered A/C -Cr

income statement for the year ended ….

Gross profit xx
Add:Incomes (Cr)
Irrecoveable debts recovered 1800

Provision for irrecoverable debts(provision for doubtful debts /allowance for doubtful debts)

increase provision for irrecoverable debts (expense)

income statement -Dr
provision for irrecoverable debts -Cr
Eg. Provision for irrecoverable debts A/C
balance b/d 100
income statement 50Cr
balance c/d 150
150 150
balance b/d 150

income statement
Gross profit xxx
less:Expenses (Dr)
Provision for irrecoverable debts 50

Provision for irrecoverable debts A/C

balance b/d
income statement 100
balance c/d 100
100 100
balance b/d 100

income statement
Gross profit xxx
less:Expenses (Dr)
Provision for irrecoverable debts 100

Notes:
If no opening Provision for irrecoverable debts (Create provision for irrecoverable debts)
If opening Provision for irrecoverable debts < closing Provision for irrecoverable debts ==
If opening Provision for irrecoverable debts > closing Provision for irrecoverable debts ==

closing provision for irrecoverable debts = Net trade receivables * Provision for irrecover

Chapter 21 (Edexcel text book page 187 to 189)

Exhibit 21.3 to 21.5 At the accounts of K Clark ,who started in business on 1 January 2007 and financial year e
At 31 December 2007 , the trade receivables' figure amounted to $ 10,000 after writing o
The provision for irrecoverable debts needed to be created .It is estimated that 2% of tra

At 31 December 2008 , the trade receivables' figure amounted to $ 12,000 after writing o
The provision for irrecoverable debts is estimated that 2% of trade receivables.

At 31 December 2009 , the trade receivables' figure amounted to $ 10,500 after writing o
The provision for irrecoverable debts is estimated that 2% of trade receivables.

Prepare irrecoverable debts A/C , provision for irrecoverable debts A/C , income statement extract for the year ended 31 De
statement of fiancial position extract as at 31 December 2007 , 2008 and 2009.
 Irrecoverabe debts A/C
date details $
2007 31 December Trade receivables A/C 422

422
2008 31 December Trade receivables A/C 884

884
2009 31 December Trade receivables A/C 616

616

Provision for irrecoverable debts A/C

date details $

2007 31 December balance c/d (10000*2%) 200

200

2008 31 December balance c/d (12000*2%) 240

240
income statement (decrease) 30
2009 31 December balance c/d (10500* 2%) 210
240

income statement extract for the year ended 31 December 2007,2008 and 2009
2007 2008
$ $
Gross profit xxx xxx
Add: incomes (Cr)
Provision for irrecoverable debts

Less :Expenses (Dr)

irrecoverable debts 422 884
Provision for irrecoverable debts 200 40

Statement of fiancial position extract as at 31 December 2007 ,2008 and 2009

2007
$
Current Assets
Trade receivables 10000
(-) Provision for irrecoverable debts -200
9800

Difference between an irrecoverable debts and a provision for irrecoverable debts

An irrecoverable debt is a specific amount owing to a buisness which will not be paid .
A provision for irrecoverable debts is an estimate amount which a business may lose due to irrecoverable debts.

Question 21.1 page 192 edexcel text book

Hart & Partners started in business on 1 January 2009.During its first year of trading the following debts were found to be bad
the buisness decided to write them off as bad.

2009 $
16-May S Bayley 550
31-Jul J Carter 223
9-Nov T Roche 467

On 31 December 2009 , the schedule of remaining debtors , amounting in total to $26,000 , is examined , and it is decided to m
You are required to show:
(a) the bad debts A/C and provision for doubtful debts A/C for the year ended 31 December 2009
(b) the charge to the profit or loss A/C
(c) the relevant extracts from the balance sheet as at 31 December 2009.

(a) Irrecoverabe debts A/C (bad debts A/C)

date details $
2009 16 May S Bayley A/C 550
2009 31 July J Carter A/C 223
2009 9 Nov T Roche A/C 467
1240

Provision for irrecoverable debts A/C (Provision for d

date details $

2009 31 December balance c/d (26,000*2%) 520

520

Income statement extract for the year ended 31 December 2009

$
Expenses
Irrecoverable debts 1240
Provision for irrecoverable debts 520

Statement of fiancial position extract as at 31 December 2009

$
Current Assets
Trade receivables 26000
(-) Provision for irrecoverable debts -520
25480

CIE text book Question 1 and 3 page 156

General ledger
 Irrecoverable debts A/C
date details $
2010 Aug 31 Bestservice 3850
2010 Aug 31 Q&A Ltd 840
4690

Irrecoverable debts recovered A/C

date details $

2012 31 Dec income statement 3850

3850
Sales ledger
Bestservice Ltd A/C (Trade receivables
date details $
2010 Mar 1 balance b/d 3850
3850
2012 3Sep Irrecoverable debts recovered 3850

3850

Q & A Ltd A/C

date details $
2010 Mar 1 balance b/d 840
840

Step 1: Trade receivables -Dr and irrecoverable debts recovered A/C -Cr
step 2: Cash /Bank -Dr and Trade receivables A/C -Cr

HW list deadline 30.9.2024

CIE text book Question 2 and 4 page 156
Viber photo

CIE text book Q5 page 156

Year Provision for doubtful debts Amount to be entered
in income statement

1 1840 1840
2 1960 120
3 1760 200

Working notes
closing Provision for DD opening
Year 1 36800 *5%=1840

Year 2 39200 *5%= 1960 1840

Year 3 35200*5%=1760 1960

increase provision for doubtful debts ===> income statement -Dr and provision for doubtful debts- Cr
decrease provision for doubtful debts ===> Provision for doubtful debts -Dr and income statement -Cr
gone bankrupt .

Trade receivables A/C (eg. Oasis Ltd)

b/d
Cr 1800
c/d

Irrecoverable debts recovered A/C (income)

income statement 1800 1.Cr 1800

1800 1800

Cash/Bank A/C

2.Dr 1800

decrease provision for irrecoverable debts (income)

Provision for irrecoverable debts -Dr
income statement -Cr
 Provision for irrecoverable debts A/C
balance b/d 100
income statement 10 Dr
balance c/d 90
100 100
balance b/d 90

income statement
Gross profit xxx
Add:Incomes (Cr)
Provision for irrecoverable debts 10

n for irrecoverable debts) ==> increase provision for irrecoverable debts

for irrecoverable debts ==> increase provision for irrecoverable debts
for irrecoverable debts ==>decrease provision for irrecoverable debts

es * Provision for irrecoverable debts%

Net trade receivables = Total receivables - irrecoverable debts to be written off

y 2007 and financial year end is 31 December.

to $ 10,000 after writing off irrecoverable debts of $422.
s estimated that 2% of trade receivables.

to $ 12,000 after writing off irrecoverable debts of $884.

ade receivables.

to $ 10,500 after writing off irrecoverable debts of $616.

ade receivables.

t for the year ended 31 December 2007 , 2008 , 2009 and

date details $

2007 31 December income statement 422

422

2008 31 December income statement 884

884

2009 31 December income statement 616

616

date details $
2007 1 Jan balance b/d
2007 31 Dec income statement (increase) 200
200
2008 1 Jan balance b/d 200
2008 31 Dec income statement (increase) 40
240
2009 1 Jan balance b/d 240

240
2010 1 Jan balance b/d 210

2009
$
xxx

30

616

2008 2009
$ $

12000 10500
-240 -210
11760 10290
rable debts.

ebts were found to be bad and

ned , and it is decided to make a provision for doubtful debts of 2%.

Profit or loss A/C = Income statement

balance sheet =statement of financial position

ad debts A/C)
date details $

2009 31 December income statement 1240

1240

debts A/C (Provision for doubtful debts A/C)

date details $
2009 1 Jan balance b/d
2009 31 Dec income statement (increase) 520
520
2010 1 Jan balance b/d 520
 4
date details $

2010 31 December income statement 4690

4690

4
date details $
2012 3 Sep Bestservice Ltd 3850

3850

6
date details $
2010 31 Aug Irrecoverable debts A/C 3850
3850
2012 3Sep Bank A/C 3850

3850

3
date details $
2010 31 Aug Irrecoverable debts A/C 840
840

Entry in the provision

for doubtful debts
A/C : enter debit or credit
Cr
Cr
Dr

income statement
1840 (increase)

120 (increase)
200 (decrease)
Revision of financial statements ( income statement and statement of financial position)
Gross profit = Sales -cost of sales (or) Net sales - cost of sales ( if sales return is given)
cost of sales = opening inventory +Purchases +carriage inwards - purchase return -goods for own used -closing inventory
Profit for the year = Gross profit + Incomes -expenses
Return Dr => sales return ,Cr => P
Tri ==> I/S ( or) SFP discount Dr => discount allowed , C
additonal info ==> I/S and SFP carriage inwards => cost of sales => P
Carriage outwards => recorded unde
CIE Work book Q28 page24
income statement for the year ended 31 August 2014
$ $
Revenue 106481
(-) Sales return -827 105654

Cost of sales
opening inventory 4847
Purchases 49371
Carriage inwards 272
(-) Purchase return -238
(-) closing inventory -3922 -50330
Gross profit 55324

Incomes
interest received (392 +120) 512
Bad debts recovered 120
discount received 448 1080

Expenses
Electricity charges (1873 +189) 2062
Water charges (994-116) 878
Depreciation of vehicles (21200*25%) 5300
Provision for doubtful debts ( 12400* 4%) 496
Irrecoverable debts 494
carriage outwards 119
discount allowed 327
Gneral expenses 1020
Rent 12392
Wages 12272 -35360
Profit for the year 21044

CIE Workbook Q29 page 25

income statement for the year ended 31 December 2014 ( 1 Jan 2014 to 31 December 2014)
$ $
Revenue 174360

Cost of sales
opening inventory 27650
Purchases 82980
(-) closing inventory -31350 -79280
Gross profit 95080

Incomes
discount received 370
Profit on disposal of furniture 240 610

Expenses
Depreciation of furniture and equipment 2670
(17800*15%)
Depreciation of motor vehicles 4608
(36000-12960 =23040*20%)
Provision for doubtful debts (728 -640) 88
Advertising (3400 -480) 2920
Bank loan interest 940
Insurance 2230
rent 11480
Wages(44100+1820) 45920 -70856
Profit for the year 24834

Statement of financial position as at 31 December 2014

Assets $ $
Non Current Assets Cost Accumulated
deprecaition
Furniture and equipment (8400+2670) 17800 11070
Motor vehicles (12960+4608) 36000 17568

Current Assets
Inventory 31350
Trade receivables 18200
(-) Provision for doubtful debts(18200*4%) or (640+88) -728 17472
Other receivable (prepaid Advertising) 480
cash at bank 7250
Total assets
Equity and liabilities
Equity
Opening equity (opening capital) 65000
Profit for the year 24834
(-) drawing -32410
Total equity (closing capital)

Non Currrent liabilities

Bank loan (repayable 2018)
Current liabilities
Trade payables 9970
Other payables (accrued wages) 1820
Total equity and liabilities

Viber photo HW (additional HW)

Irrecoverabe debts A/C
date details $
Year 4 31 December Trade receivables A/C 1600

1600
Year 5 31 December Trade receivables A/C 1900

1900

Provision for irrecoverable debts A/C

date details $

Year 4 31 December balance c/d (22400*5%) 1120

1120

Year 5 31 December balance c/d (27100*5%) 1355

1355
income statement (decrease) 205
Year6 31 December balance c/d (23000* 5%) 1150
1355

total - ID to be written off=Net receivables

24000 - 1600 =22400
29000- 1900 =27100

income statement extract and SFP extract (do yourself)

CIE text book page158 Question 12

Income statement for the year ended 31 May 2012
$ $
Revenue 502810

Cost of sales
opening inventory 34230
Purchases 375300
(-) closing inventory -36200
Gross profit
Incomes
Provision for doubtful debts ( 930- 720) 210
bad debts recovered 340
rent received 14800
Expenses
Administration expenses (8480 -340) 8140
Insurance (11820-770) 11050
Wages(75380+1190) 76570
Depreciation of premise (500000*3%) 15000
Deprediation of equipment and furniture(78750*25%) 19688
bad debts 960
carriage outwards 4470

Statement of financial position as at 31 May 2012

Assets $ $
Non Current Assets Cost Accumulated
deprecaition
Premises (45000+15000) 500000 60000
Equipment and furniture(61250+19688) 140000 80938

Current Assets
Inventory 36200
Trade receivables 14400
(-) Provision for doubtful debts (14400*5%) or 930-210 -720
Other receivable(340+770) 1110

Total assets
Equity and liabilities
Equity
Opening equity (opening capital) 567150
Profit for the year
(-) drawing -52390
Total equity (closing capital)

Current liabilities
Trade payables 16660
Other payables ( Accrured wages) 1190
bank overdraft 8490
Total equity and liabilities

Deadline 7.10.24
HW list CIE text book page157 Q9
CIE text book page 158 Q11
d -closing inventory

r => sales return ,Cr => Purchases return

r => discount allowed , Cr => discount received
ards => cost of sales => Purchase (+)
wards => recorded under expenses

50330

SFP extract as at 31 August 2018

Current Assets
Trade recivables 12400
(-) Provision for ID -496 11904
35360
21044
 79280

70856
24834

$
Carrying Value

6730
18432
25162

56552
81714

57424

12500
 11790
81714 81714

date details $

Year 4 31 December income statement 1600

1600

Year 5 31 December income statement 1900

1900

r irrecoverable debts A/C

date details $
Year 4 Jan balance b/d
Year 4 31 Dec income statement (increas 1120
1120
Year 5 1 Jan balance b/d 1120
Year 5 31 Dec income statement (increas FALSE
1355
Year 6 1 Jan balance b/d 1355

1355
Year 7 1 Jan balance b/d 1150
 19687.5

8952

$
Carrying Value

550052
Controls Account

Trade receivables ledger control account (Sales ledger control account) => Total trade receivables
An account that summarises all the credit customers accounts (trade receivables) in the receivables ledger.

Trade payables leger control account (Purchase ledger control account)=> Total trade payables
An account that summaries all the credit suppliers accounts(trade payables) in the payables ledger.

Ledger
1. Trade receivables ledger (Sales ledger)
2.Trade payables ledger (Purchase ledger)
3.General ledger (eg. Sales , purchase ,trade receivables ledger control , trade payables ledger control,cash , bank etc.)

financial transaction=> financial documents=> day book=>ledger=>trial balance =>financial statements

eg. Credit sales=> sales invoice=>

eg. Credit purchase=> purchase invoice=>

Dr Trade receivables leger control A/C

1.balance b/d 3.balance b/d ( minority /abnorm
5. sales 6.Sales return(return inwards)
dishonoured cheque 7.cash/bank ( receipts from credit
10.interest charges to customers 8.discount allowed
11.Customer overpayment refund irrecoverable debts
9.contra /set off
4.balance c/d (minority/abnormal) 2.balance c/d

double entry
1.Credit sales => Receivables -Dr , sales -Cr
2.Sales return => Sales return -Dr ,receivables -Cr
3.receipts from credit customers=> Cash /bank -Dr , receivables -Cr
4.discount allowed => discount allowed Dr , receivables -Cr
5.irrecoverable debts=> irrecoverable debts -Dr , receivables -Cr
6.contra/set off=> paybles -Dr , receivables -Cr
7.dishonoured cheque => receivables - Dr , bank-Cr
8.interest charged to customers => receivables -Dr , interest received-Cr (income)
9.Customer overpayment refund => receivables -Dr , cash book -Cr

Examples of contra
1.Business has sold goods to Mr A $ 800 , Mr B $ 500 on 1 May => Credit sales
2.Mr A has supplied the business with $ 500 on 12 May and Mr B has supplied the business with $300 on 13 May

Receivable ledger payables ledger

Mr A Mr A
1 May Sales 800 contra 500 contra 500
c/d 300
MrB Mr B
1 May Sales 500 contra300 contra 300
c/d 200

In general ledger=> trade receivables ledger control

500+300=800 CR

Edexcel text book page 136

Exhibit 15.4 Sales ledger control A/C (trade receivable ledger control A/C)
Dr balances on 1 July 2010
Total credit sales for the month
Cheques received from customers in the month
Cash received from customers in the month
Sales returns from customers during the month
Dr balances on 31 July as extracted from the sales ledger

Trade Receivables ledger control A/C

date details $ date
2010 1July balance b/d 11364 31-Jul
31-Jul Sales day book (sales) 61740 31-Jul
31-Jul
31-Jul
73104
2010 1 Aug balance b/d 20208
Dr
Trade payables ledger control A/C
3.balance b/d ( minority /abnormal)
6.Purchase return(return outwards)
7.Bank /Cash book( payments to credit supplier)
8.discount received
9.contra /set off
2.balance c/d

double entry
1.Credit purchases=> Purchases Dr and payables Cr
2.Purchase return=> payables Dr and purchase returnsCr
3.payments to credit suppliers=> payables Dr ,cash/bank Cr
4.discount received=> payables Dr , discount received Cr
5.contra /set off=>payables Dr , receivables Cr
6.interest charged from supplier=> interest charged -Dr , payables -Cr
7.refund from supplier=> Cash book Dr , payables Cr

edexcel text book page 141

Q15.3
2010 July 1 Purchase ledger balances
Total for July
Purchase day book
Purchase return day book
Cash and cheques paid to creditors
Discount received
31-Jul Purchase ledger balances

Trade Payables ledger control A/C 28275

date details $ date
31-Jul Purchase return day book ( purchases return) 1575 2010 1 July
31-Jul Cash book 26150 31-Jul
31-Jul Cash book (discount received) 550
31-Jul balance c/d 19375
47650
1-Aug

Advantages of control accounts (Benefits of control accounts)

Check on the arithmetical accuracy of the sales and purchases ledger
Helping to locate error
Prevention of fraud
Provide up to date information to management about total trade receivables and total trade payables
Helping to prepare financial statements

deadline 4.11.2024
HW list edexcel text book
Q 15.1 and Q15.2X page140
Q 15.4 X page 141
bles ledger.

ontrol,cash , bank etc.)

sales day book=> Trade receivables ledger

Trade receivables ledger control ( in general ledger)

purchases day book=>Trade payables ledger

trade payables ledger control

Cr
alance b/d ( minority /abnormal) date
ales return(return inwards) 1-Mar
ash/bank ( receipts from credit customers) 4-Mar
iscount allowed 31-Mar
ecoverable debts
ontra /set off
date
2-Mar
4-Mar
31-Mar

Cash book ( receipts side ) Dr

receipts from credit customers
total column of discount allowed

Cash book ( payment side)Cr

dishonoured cheque

irrecoverable debts <= journal / irrercov

h $300 on 13 May

yables ledger
12May Purchases 500

13 May Purchases 300

trade payables ledger control

500+300 =800 Dr

11364
61740
43704
7416
1776
20208

details $
Cash book (Bank) 43704
Cash book (cash) 7416
Sales return day book(sales return) 1776
balance c/d 20208
73104

Purchases day book

1.balance b/d date details
5.purchases (credit purchases) 1-Mar Mr C
10.interest charged from supplier 4-Mar Mr D
11.refund from supplier (overpayment) 31-Mar

4.balance c/d (minority/abnormal) Purchases return day book

date details
2-Mar Mr C
4-Mar Mr D
31-Mar

Cash book ( payment side ) Cr

Payments to suppliers
total column of discount received
 19450

28200 (credit purchases)

1575 (purchase return)
26150
550
?

details $
balance b/d 19450
Purchases day book ( purchases) 28200

47650
balance b/d 19375
n general ledger)

Sales day book

details invoice no $
Mr A inv 001 200
Mr B inv 002 100
Transfer to sales 300 TRLC -Dr and sales Cr

Sales return day book

details credit note no $
Mr A Credit note no 001 50
Mr B credit note no 002 20
Transfer to sales return 70 Sales return -Dr and TRLC -Cr

Cash book ( receipts side ) Dr

receipts from credit customers
total column of discount allowed

Cash book ( payment side)Cr

dishonoured cheque

irrecoverable debts <= journal / irrercoverable debts

 Purchases day book
invoice no $
inv 001 500
inv 002 200
Transfer to purchases 700 Purchases -Dr and TPLC- Cr

Purchases return day book

credit note no $
Credit note no 001 100
credit note no 002 50
Transfer to purchases return 150 TPLC-Dr and purchases return-Cr

ayment side ) Cr

of discount received
CIE text book page250/251
Q5
Sales ledger control A/C
Date Details $ Date
2012 1 Jan balance b/d 7400 2012 1 Jan
31-Jan Sales day book (credit sales) 27480 31-Jan
31-Jan Cash book 110 31-Jan
31-Jan Journal /interest charged 70 31-Jan
31-Jan cash book (bank) 190 31-Jan
31-Jan

31-Jan balance c/d 390 31-Jan

35640
2012 1 Feb balance b/d 11960 2012 1 Feb
Dr
Q6 page 251
Purchase ledger control
Date details $ Date
2012 1Oct balance b/d 830 2012 1Oct
31-Oct Purchases return day book 5370 31-Oct
31-Oct cash book 75060 31-Oct
31-Oct Cash book (discount received) 2240 31-Oct
31-Oct Journal /sales ledger control 270

31-Oct balance c/d 32060 31-Oct

115830
2012 1Nov balance b/d 990 2012 1Nov

PLC balance 32060

PL balance 31760
difference 300

the balance of purchase ledger control is $32060 and the total balances of purhcase ledger is $31760.
So, difference is $300 and so the balances is not the same.

Q7 B
Q8 8000 Dr
12500 Dr
700 Cr
9600 Cr
150 Dr
10350 B
Q9 B
Q10 C
Q11 D

deadline 4.11.2024
HW list edexcel text book
Q 15.1 and Q15.2page140
Q 15.4 X page 141

CIE text book page 251

Q12(b) Purchase ledger control A/C 48030
Date Detail $ Date
2012 1 Apr balance b/d 640 2012 1 Apr
30-Apr Purchases return day book(Purchases returns) 930 30-Apr
30-Apr Cash book ( Bank ) 45700
30-Apr Cash book ( discount received) 760

30-Apr balance c/d 23060 30-Apr

71090
2012 1 May balance b/d 210 2012 1 May

Sales ledger control

Date Detail $ Date
2012 1 Apr Balance b/d 14790 2012 1 Apr
30-Apr Sales day book ( credit sales) 51830 30-Apr
30-Apr
30-Apr

30-Apr balance c/d 480 30-Apr

67100
2012 1 May balance b/d 12490 2012 1May

HW Q13 (a) CIE text book ( page 252)

control ( SLCA and PLCA)
 Details $
balance b/d 230
Sales return day book 620
Cash book 21930
cash book (discount allowed) 330
Journal /irrecoverable debts 80
Journal/ Purchase ledger control 490

balance c/d 11960

35640
balance b/d 390
Cr

details $
balance b/d 31620
Purchases day book 82880
cash book 90
Journal /interest charged 250

balance c/d 990

115830
balance b/d 32060

case ledger is $31760.

Day book
source documents
Depreciation ( including disposal)
Ledger control
Bank reconcilation

Details $
balance b/d 22470
Purchases day book ( credit purchases) 48410

balance c/d 210

71090
balance b/d 23060

Details $
balance b/d 330
Sales return day book ( sales return) 1240
Cash book ( Bank) 52600
Cash book (discount allowed) 440

balance c/d 12490

67100
balance b/d 480
Bank reconcilation statements
A statement prepared to explain the differences between the cash book balance and the bank statement balance
It is prepared by businesses at regular intervals (monthly) to check that their bank records agree with those provided by the ba

Dr Cash book ( bank column) => by business Cr Dr

b/d (normal) b/d (overdraft) b/d (negative)
money in Dr money out Cr money out Dr

c/d (overdraft) c/d (normal) 1000 c/d (positive) 990

b/d 1000 By bank

Cr balance => positive balance=>
(normal balance)

Dr balance =>negative balance =

(overdraft)

Missing from the cash book

Dr (Money in) Cr (Money out)
Credit transfer(CT) Standing order(SO) Standing order ===> a payment of fixed amount initia
(BACS) Direct debit (DD) Direct debit ===> A payment of a variable amount initi
bank interest received bank interest charged
bank charges
dishonoured cheque dishonoured cheque ===>a cheque that the bank refu
BACS = Bankers' Automated Clearing Service (return cheque)

Timing difference
Missing from the bank statement
Dr (Money out) Cr (Money in)
Unpresented cheque Outstanding lodgements

Unpresented cheque ==>cheques issued by a business that has not been presented by the bank by the payee (person receivin
(cheques that have not been cleared by the bank)

Outstanding lodgements===> money paid into the bank by a business may not appear on the bank statement.
(Amount not yet credited/ has not yet appeared on the bank statement)

CIE text book page 237

Question 9Vecki Wholesale Flowers
(c ) Cash book (bank column) - updated
date details $ date details $
2012 1Novbalance b/d 1-Nov bank charges
Credit transfer 1-Nov Telephone (DD)
interest 1-Nov balance c/d
2012 1 Novbalance b/d
( SFP - Current Assets)

Bank reconcialtion statement at 1 November 2012

$ $
balance as per bank statement 1930 (Cr) positive balance
Less : unpresented cheque

Add: outstanding lodgement

Balance as per cash book

(or)
Bank reconcialtion statement at 1 November 2012
$ $
balance as per updated cash book 2000
Add : unpresented cheque
Electricity 490
L Thomas 810 1300

Less: outstanding lodgement -1370

Balance as per bank statement 1930

Q11 Mara Black page239

(c) Cash book (bank column) - updated
date details $ date details $
1-May balance b/ 400
1-May Electricity 800
1-May balance c/d 1700 1-May Bank charg 500
1700 1700
1-May balance b/ 1700
( SFP - Current liabilities)
Bank reconcilation statement at 1 May 2012
$ $
balance as per bank statement (Dr) negative balance
Less : unpresented cheque
800603 Drawings
800604 Rent

Add: outstanding lodgement

Balance as per cash book (updated balance)

(or)
Bank reconcilation statement at 1 May 2012
$ $
balance as per updated cash book -1700 overdraft
 Add : unpresented cheque
800603 Drawings 400
800604 Rent 700 1100

Less: outstanding lodgement -4200

Balance as per bank statement -4800

deadline
HW list Q10 page 238 CIE text book
Q12 (a) and (b) page240 CIE text book
ment balance
those provided by the bank.

bank statement => by bank Cr

b/d(postive)
money in Cr

c/d (negative)
b/d 990

nce => positive balance=> is a liability for the bank

owed by the bank to the customer

nce =>negative balance =>is an asset for the bank

owed by the customer to the bank

nt of fixed amount initiated by the payer.(eg. Rent )

of a variable amount initiated by the payee.(eg. Insurance premium , electricity bill ,telephone bill)
payee = receiver

heque that the bank refuses to honour (pay)

e payee (person receiving the cheque)

1890
2000

1700