Cambridge IGCSE and O Level Accounting

Answers to Section 2 practice questions

1 A
2 B
3 B
4 A
5 D
6 a Purchase journal invoice received / purchases invoice
Sales journal invoice issued / sales invoice
Purchases returns journal credit note received
Sales returns journal credit note issued
Petty cash book petty cash voucher / receipt
Cash book cheque counterfoil / bank statement / paying-in book /
till receipt

b Invoice – Phayo
Debit note – Phupho
Credit note – Phayo
Statement of account – Phayo
Cheque – Phupho
to show full details of the goods supplied on credit and
the prices
to request a reduction in the invoice received for goods
bought, to request a credit note or to notify seller of
unacceptable goods or an overcharge in an invoice
to notify of a reduction in an invoice, to accept a request
for a reduction in an invoice or to accept a debit note
to summarise the transactions for the month, to notify
of the amount owing or to remind the customer of the
1
amount to be paid
to pay the supplier the amount owing at the start of the
month

c
Phayho
Sales ledger
Phupho account
Date Details Fo. $ Date Details Fo. $
20–7 20–7
May 1 Balance b/d 1 350 May 31 Sales returns 100
31 Sales 1 500 Bank 1 
350
Balance c/d 1 
400
2 
850 2 
850
20–7
Jun 1 Balance b/d 1 400

d Sales ledger

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7 a Invoice Mikhail
Debit note Aryan
Credit note Mikhail
Statement of account Mikhail
Cheque Aryan
Receipt Mikhail

b I nvoice document issued by the supplier of goods on credit

showing details, quantities and prices of goods supplied
Debit note document issued by a purchaser of goods on credit to
request a reduction in the invoice received
Credit note document issued by a seller of goods on credit to notify of a
reduction in an invoice previously issued
Statement of account document issued by the seller of goods on credit to
summarise the transactions for the month
Cheque written order to a bank to pay a stated sum of money to the
person or business named on the order
Receipt written acknowledgement of money received and acts as
proof of payment
c Aryan Mikhail
Invoice purchases journal sales journal
Debit note no entry no entry
Credit note purchases returns journal sales returns journal
2
Statement of account no entry no entry
Cheque cash book cash book
Receipt no entry* no entry*
* Possibly the receipt could be used to make an entry in the cash book instead of the cheque.
A debit note is simply a request to the supplier to reduce the total of the original invoice:
no entry can be made in the accounting records until the supplier agrees to this and issues
a credit note. A statement of account is simply a summary of the transactions which have
taken place in the month and which have already been recorded.

8 a
Nelson
Nominal ledger
Sales account
Date Details Fo. $ Date Details Fo. $
20–4
Oct 31 Credit sales for 794
  month

Sales returns account

Date Details Fo. $ Date Details Fo. $
20–4
Oct 31 Returns for month 253

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Sales ledger
Jamil account
Date Details Fo. $ Date Details Fo. $
20–4 20–4
Oct 1 Balance b/d 600 Oct 7 Bank 582
4 Sales 392 Discount 18
24 Sales 248 15 Sales returns 160
28 Bank 400
31 Balance c/d 80
1 
240 1 
240
20–4
Nov 1 Balance b/d 80

Nawaz account
Date Details Fo. $
20–4
Oct 1 Balance b/d 140
13 Sales 154
294
20–4
Nov 1 Balance b/d 111
Date Details Fo. $
20–4
Oct 15 Sales returns 93
21 Cash 90
31 Balance c/d 111
294
3

b Cash discount is a means of encouraging customers to pay their accounts in a given period
of time. The supplier receives less than the total of the invoice, but it is possibly received
more quickly so reducing the possibility of irrecoverable debts. It does not appear as a
deduction on an invoice, but is entered in the accounting records.
Trade discount is a reduction in the price of goods and is shown as a deduction on an
invoice. It often increases according to quantity purchased and so encourages bulk
purchasing. It is not entered in the accounting records (apart from possibly a note in sales,
purchases or returns journals).
c 98/490 × 100 = 20%
d 18/600 × 100 = 3%
9 a
Annie
Purchases journal
Date Name Folio Amount
$
20–6
Aug 6 Sue (1 960 – 490) 1 470
15 Amos 290
21 Jane (2 950 – 590) 2 360
31 Transfer to purchases account 4 120

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Cambridge IGCSE and O Level Accounting

Sales journal
Date Name Folio Amount
$
20–6
Aug 7 Andrew 2 100
18 Ben (3 150 – 630) 2 520
27 Andrew 1 820
31 Transfer to sales account 6 440

Purchases returns journal

Date Name Folio Amount
$
20–6
Aug 10 Sue (120 – 30) 90
26 Jane (2 950 – 590) 2 360
31 Transfer to purchases returns account 2 450

Sales returns journal

Date Name Folio Amount
$ 4
20–6
Aug 29 Andrew 910
31 Transfer to sales returns account 910

b
Annie
Purchases ledger
Sue account
Date Details Fo. $ Date Details Fo. $
20–6 20–6
Aug 10 Purchases returns 90 Aug 6 Purchases 1 470

Amos account
Date Details Fo. $ Date Details Fo. $
20–6
Aug 15 Purchases 290

Jane account
Date Details Fo. $ Date Details Fo. $
20–6 20–6
Aug 26 Purchases returns 2 360 Aug 21 Purchases 2 360

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Cambridge IGCSE and O Level Accounting

Sales ledger
Andrew account
Date Details Fo. $ Date Details Fo. $
20–6 20–6
Aug 7 Sales 2 100 Mar 29 Sales returns 910
27 Sales 1 820

Ben account
Date Details Fo. $ Date Details Fo. $
20–6
Aug 18 Sales 2 520

Nominal ledger
Purchases account
Date Details Fo. $ Date Details Fo. $
20–6
Aug 31 Credit purchases 4 120
  for month

Sales account
5
Date Details Fo. $ Date Details Fo. $
20–6
Aug 31 Credit sales for 6 440
  month

Purchases returns account

Date Details Fo. $ Date Details Fo. $
20–6
Aug 31 Returns for month 2 450

Sales returns account

Date Details Fo. $ Date Details Fo. $
20–6
Aug 31 Returns for month 910

c Two from:
• because of purchasing in bulk
• because he is in the same trade
• to allow him to make a profit when selling the goods.
d Debit note
e It summarises transactions for the month and acts as a reminder of the balance due. It also
enables the purchaser to check this against his records.
f Balance owing 1 380 − 3% cash discount = 1 380 − 41.40 = 1 338.60

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