Business School

ACCT1501 Accounting and Financial Management 1A

Session 1 2016

TUTORIAL WEEK 5 Solutions to Preparation Questions

Preparation Questions:
DQ 4.2, 4.6, 4.14, P4.2, P4.10, Case 4A
DQ4.2
Journal entries are the first records of an accounting transaction in the accounting records.
DQ4.6
A trial balance is a standard bookkeeping procedure to check whether certain errors have
been made in posting the journal entries to the ledger. It is a test to see whether total debits
equal total credits.

DQ4.14
Transactions

Source Documents

A cash payment

Listings of cash payments; evidence such as creditors

statement, invoices and receipt or payroll statement

A cash receipt

Duplicate copy of receipt or cash register

A credit sale

Duplicate copy of invoice

Cost of goods sold

Duplicate copy of invoice or cash receipt or separate summary

A purchase of inventory

Invoice received from supplier, delivery docket and order

Receipt of inventory

Goods received advice and suppliers packing slip

P4.2
1 No- no service has yet been provided.
2 No- the exchange must have been between the entity being accounted for and someone else,
in this example it is a shareholder rather than the entity being account for that purchased the
shares.
3 Yes
4 Yes
5 Yes
6 No- the exchange must have been between the entity being accounted for and someone else,
in this example the entity being accounted for is not involved in this transaction.
7 No- the event must involve an exchange of goods or money which has not occurred at this
point. The accounting transaction would occur once the goods are delivered and/or invoiced.
8 Yes

P4.10
1. General journal
Ledger
folio

Dr
$

30
1

150,000

2 Delivery truck
Loan from Finance Co.

35
15

80,000

4 Inventories
Sundry creditors

32
10

200,000

7 Delivery truck expenses

Bank of NZ

45
30

4,800

10 Bank of NZ
Sales
Cost of goods sold
Inventories

30
20
40
32

50,000

15 Sundry debtors
Sales
Cost of goods sold
Inventories

31
20
40
32

120,000

25 Salary Shop assistant

Bank of NZ

43
30

8,000

27 Office expenses
Bank of NZ

47
30

26,000

29 Bank of NZ
Sundry debtors

30
31

90,000

29 Sundry creditors
Bank of NZ

10
30

100,000

Date

Particulars

2016
April 1 Bank of NZ
Share capital

Cr
$

150,000

80,000

200,000

4,800

50,000
30,000
30,000

120,000
70,000
70,000

8,000

26,000

90,000

100,000

29 Interest expense
Bank of NZ
2

49
30

800
800

Ledger of Carlson Ltd

1 Share capital
2016
April 1

Bank of NZ

150,000

Inventories

200,000

9 Profit and loss

10 Sundry creditors
2016
April 29

Bank of NZ

100,000

2016
April 4

15 Loan from Finance Co.

2016
April 2

Delivery truck

80,000

Bank of NZ
Sundry Debtors

50,000
120,000

20 Sales
2016
April 10
15
30 Bank of NZ
2016
April

1
10
29

2016
April 7

Share capital
Sales
Sundry debtors

150,000
50,000
90,000

25
27
29
29

Delivery truck
expenses
Salary Shop
assistant
Office expenses
Sundry creditors
Interest expense

4,800
8,000
26,000
100,000
800

31 Sundry debtors
2016
April 15

Sales

120,000

2016
April 29

Bank of NZ

90,000

32 Inventories
2016
April 4

Sundry creditors

200,000

2016
April 10

Cost of goods sold

30,000
4

15

Cost of goods sold

70,000

35 Delivery truck
2016
April 2

Loan from Finance

Co.

80,000
40 Cost of goods sold

2016
April
10
15

Inventories
Inventories

30,000
70,000
42 Salary Shop assistant

2016
April 25

Bank of NZ

8,000
45 Delivery truck expenses

2016

April 7

Bank of NZ

4,800
47 Office expenses

2016
April 27

Bank of NZ

26,000
49 Interest expense

2016
April 29

Bank of NZ

800

3
Trial Balance
Dr
1
9
10
15
20
30
31
32
35
40
42
45
47
49

Share capital
Profit and loss
Sundry creditors
Loan from Finance Co.
Sales
Bank of NZ
Sundry debtors
Inventories
Delivery truck
Cost of goods sold
Salary Shop assistant
Delivery truck expenses
Office expenses
Interest expense

Cr
150,000
100,000
80,000
170,000

150,400
30,000
100,000
80,000
100,000
8,000
4,800
26,000
800
500,000

500,000

Closing entries
General journal
Date

2016
April 30

Posting
ref.

Dr
$

Sales
Profit and loss summary

20
8

170,000

Profit and loss summary

Cost of goods sold
Salary Shop assistant
Delivery truck expenses
Office expenses
Interest expense

9
40
42
45
47
49

139,600

9
2

30,400

Particulars

Profit and loss summary

Retained profits

Cr
$

170,000

100,000
8,000
4,800
26,000
800

30,400

Ledger of Carlson Ltd

1 Share capital
2016
April 1

Bank of NZ

150,000

2 Retained profits
2016
April 30

Profit and loss

30,400

9 Profit and loss summary

2016
April 30

Cost of goods sold

Salary Shop
Assistant
Delivery truck
Expenses
Office expenses
Interest expense
Retained profits

2016
April 30

Sales

170,000

100,000
8,000
4,800
26,000
800
30,400
8

170,000

170,000

10 Sundry creditors
2016
April 29
30

Bank of NZ
Balance

100,000
100,000

2016
April 4

Inventories

200,000

200,000
200,000

April 30

Balance

100,000

15 Loan from Finance Co.

2016
April 2
20 Sales
2016
April 30

Profit and loss

170,000

2016
April 10
15

Delivery truck

Bank of NZ
Sundry Debtors

170 000
30 Bank of NZ
2016
April 1
10
29

2016
April 7

Share Capital
Sales
Sundry debtors

150,000
50,000

25

90,000

27
29
30

Balance

50,000
120,000
170,000

Delivery truck
Expenses
Salary Shop
assistant
Office expenses
Sundry creditors
Interest expenses
Balance

290,000
April 30

80,000

4,800
8,000
26,000
100,000
800
150,400
290,000

150,400
31 Sundry debtors

2016
April 15

2016
April

Sales
120,000

29
30

Bank of NZ

90,000

Balance

30,000

120,000
April 30

Balance

120,000

30,000
32 Inventories

2016
April 4

Sundry creditors

200,000

2016
April 10

Cost of goods sold

30,000
9

15
30

Cost of goods sold

Balance

200,000
April 30

Balance

70,000
100,000
200,000

100,000
35 Delivery truck

2016
April 2

Loan from Finance

Co.

80,000

40 Cost of goods sold

2016
April 10
15

2016
April 30

Inventories
Inventories

30,000
70,000

Profit and loss

summary

100,000
42 Salary Shop assistant
2016
April 25

Bank of NZ

8,000

2016
April 30

100,000

100,000

Profit and loss

summary

8,000

Profit and loss

summary

4,800

Profit and loss

summary

26,000

Profit and loss

summary

800

45 Delivery truck expenses

2016
April 7

Bank of NZ

4,800

2016
April 30

47 Office expenses
2016
April 27

Bank of NZ

26,000

2016
April 30

49 Interest expense
2016
April 29

Bank of NZ

800

2016
April 30

10

Carlson Ltd
Income Statement for month ended 30 April 2016
$
Sales
Less: Cost of goods sold
Gross margin
Less: Other expenses
Salary Shop assistant
Delivery truck expenses
Office expenses
Interest expense

$
170,000
(100,000)
70,000

8,000
4,800
26,000
800
(39,600)
30,400

Net profit

6
Post-closing trial balance as at 30 April 2016
$
1
2
10
15
30
31
32
35

Share capital
Retained profits
Sundry creditors
Loan from Finance Co.
Bank of NZ
Sundry debtors
Inventories
Delivery truck

150,400
30,000
100,000
80,000
360,400

$
150,000
30,400
100,000
80,000

_______
360,400

Carlson Ltd
Balance sheet as at 30 April 2016
Assets
Current assets
Bank of NZ
Sundry debtors
Inventories
Noncurrent assets
Delivery truck

$
150,400
30,000
100,000
280,400
80,000
11

360,400
Liabilities and shareholders equity
Current liabilities
Sundry creditors
Long-term liabilities
Loan

100,000
80,000
180,000

Shareholders equity
Share capital
Retained profits

150,000
30,400
180,400
360,400

Total liabilities and shareholders equity

CASE 4A
1 Likely source documents
a Sale (cash) cash register information.
b Purchase of goods for sale invoice from supplier.
c Payment to suppliers receipt issued by suppliers; bank statements.
d Payment of wages payroll analysis.
e Interest expense bank statement.
2 This is an example of a chart of accounts for Woolworths Limited.
Assets current
1
3
3A
4
4A
6
7
9
11

Cash
Trade debtors
Allowance for doubtful debts
Other debtors
Allowance for doubtful debts
Short-term deposits
Staff and other advances
Inventories
Prepayments

Assets noncurrent
21 Shares in controlled entities
23 Loans to controlled entities
24 Interest in partnerships and trusts
25 Semi-Government securities
31 Freehold land
32 Buildings
33 Other properties
33A Accumulated depreciation on buildings
34 Leasehold improvements buildings
35 Other leased properties
35A Accumulated amortisation on leasehold
41 Plant, equipment and shop fittings
41A Accumulated depreciation plant
42 Leased plant equipment and shop fittings
42A Accumulated amortisation plant
51 Goodwill
52 Liquor licences
52A Accumulated amortisation liquor licences
12

61
63
65
67

Other debtors
Borrowing costs
Advances to employees
Future income tax benefit

3
No.
a
b
c
d
e
f

Description
Cash
Sales
Inventory
Accounts payable
Wages expense
Cash
Shop fittings
Accounts payable
Accounts receivable
Management fees revenue
Cash
Accounts receivable

Debits
$
38

Credits
$
38

3,000
3,000
1,000,000
1,000,000
800,000
800,000
1,000,000
1,000,000
1,000,000
1,000,000

13