BX2011 – Foundation of Accounting Principles Questions - Topic 1, 2021

Topic 1
Chapter 3 – Recording Transactions
Discussion Question – Chapter 3

Question 3:
One often hears the statement: ‘Debits are bad and credits are good for the business.’ Do you agree?
Why or why not?

Question 5:
Why are journals required as part of the recording process? Would not a set of ledger accounts be
sufficient?

Question 7:
Recently, a new student of accounting was overheard making the following remarks: “Why are we
learning how to use the double-entry system of recording in the accounting cycle? Surely there are
good computer packages available these days which can handle all of these details.” Provide a
suitable reply.

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BX2011 – Foundation of Accounting Principles Questions - Topic 1, 2021

Problem 3.19 – Journal entries, posting to ledger and trial balance

The 31 May 2023 trial balance of Jason Williams, Physiotherapist, is shown below. Ignore GST.

The following transactions were completed during June:

Jun-01 Purchased supplies on credit for $5800.

3 Received $24 400 from patients as payment on account.
6 Paid the electricity expense of $9500, previously recorded.
Performed services for $1500 that was recorded previously as unearned
10 revenue.
14 Recorded revenue of $163 900 in cash and $24 760 on credit.
Paid salaries of $32 710.
20 Purchased equipment for $22 500, paid by electronic transfer.
23 Withdrew $20 000 from the business for personal use.
24 Paid creditors $5000.
26 Purchased insurance policy for $36 000 to cover business assets.
27 Received $16 000 from patients as payment on account.
29 Recorded revenue of $98 300 in cash and $14 000 on credit.
30 Paid rent of $18 000.
Required
A. Prepare journal entries to record each transaction.
B. Open T accounts for the accounts shown in the trial balance.
i. Enter the 31 May balance in each account.
ii. Post the journal entries to the T accounts.
C. Prepare a trial balance as at 30 June 2023.