Specialised journals In this chapter we cover specialised journals. In the first three chapters of this textwe have used the general journal to record al financial transactions. However, using the general journal to record all financial transactions is time consuming. We now introduce four additional journals: cash receipts journal, cash payments journal, sales journal and purchases journal. The general journal is then only used to record specific types of transactions, Ina manual system, the use of these additional Journals will speed up the recording process. You will also learn how to total the journals and post the totals to the general ledger. ‘After studying this chapter you should be able tor EEN cecord financial transactions in the salesjournal, purchases journal, cash receipts journal, cash payments journal, and general journal; REM total journals at the end of a period; (BEND record discounts in the appropriate journals; EMD post journals to the general ledger. Introduction SPECIALISED JOURNALS Ina m Inamanual accounting into the ge counting process iis to ime consuming to enter ever journal. To speed up the recording process, special we record receipts, payments, sels and punch sls journal purchases ramea, but the concepts behind the peeeeesing process, specials journals are introduced to spoed up the ac Process, Tha fo odin this textarethe the: may be ¢i neral journal, when we ate using specialised journals the fea ar n a louble-entry concept holds: that is, for every transaction the debits must equal the eo edits and the accounting equation musi say in balance, The sales journal SALES JOURNALis» The sales journal is used to record credit sales, Cash sales are recorded in the cash receipts journal. Remember, accounts ret an entity by its customers. When ‘edit terms, the account titled accounts receivable is debited, and income and GST lecied are credited. The income is recognised when the sale is made, th waiting until payment is r record credit sales, le is c current asset and is the amount owing to from the customer.Asales journal generally has six columns, The first column is the date. The second column we have headed as the details column. Itis sometimes called the particulars column. It gives the name of the debtor that the credit sale has been made to. The next column Is for the invoice number. The first monetary column is the accounts receivable column. It shows the total amount of the sale, including GST, which is the amount that the debtor owes to the business. It is a debit column. The second monetary column is the income column, It shows the GST-exclusive amount of the redit column. The d sT portion of the eale cmd is also a credit colurnn, At the end of the period, the columns should be totalled. The total of the accounts olumn should be equal to the total of the income column and the GST ‘olumn. That is, the debits should be equal to the credits, Underneath the totals we show the account number and whether the column is « debit or credit. Specialised journals 69 ios iz] asonne | aaa | Rossi - - 4,600.00 | 4,000.00 [ al 9,105.00 | 7,917.39 | | 52 10.00 6,930.00 6026.09 | 29,385.00 | 25,552. 18 1200 Dr The above example shows the sales journal for Alison she only made five credit sales. The total of each sale is recorded in column, the GST-exclusive amount is shown in the income columa ai shown in the GST column, 684.78 903.91 3,832.82 ok for January 2012. In that month the accounts receivable ind the GST collected is, ing the sales journal would streamline the recording process? don't have to include c narration, because each transaction is of the same type, and we post only the totals to the general ledger, rather than each individual tremsaction. 2 Activities 4.1 Graham Barrow made the following credit sales during July 2012. Graham is registered for GST on an invoice basis Jul3Invoiced Bright Sparks Ltd, $8,954, Inv. 5369, Jul 10 Invoiced ATEC Ltd $3,960, Inv. 5372. Jul 14 Invoiced Creative Caterers $2,809, Inv. 5374, Jul 20 Invoiced Cottage Curtains, $9,633, Inv. 5377. Jul 26 invoiced Esteem Nails, $6,055, Inv. 5378, Jul 31 Invoiced [D's Factory, $1,890, Inv. 5380. Required Record the above transactions in a sales journal. The total of each sale is recorded in the unts receivable column, the 6ST- exclusive amount is ‘ST column,70 Chapter 4 42° angela the followi Ton an credit sales during November 2012, Angele Is registered for Invoice basis. Nov2 Invoiced Clearwater, $2,222, Inv, 311 Nov 6 Involved Indigo Clothing $5,005, Inv. 313. Nov 1OInvoice Drurnmond, $3,714, Inv. 316. Nov I6Invoiced Jack Keall, $1,463, Inv. 318. Nov 22Invoiced Maryai sn Pratt, $990, Inv. 319, Nov 25 nvoiced Terry Robins, $2,449, Inv. 322, Nov 30 Invoice Required Daryl Currie, $2,035, lav, 324 Record the above transactions in a sales journal PURCHASES JOURNAL is 1 special journal used to cord credit purchases In this text, the purchases journal is used to record al purchases made on The last column can be a sundry column, whichis used to record expenses which are only infrequently peck The purchases journal The purchases journal is used to record credit py +hases, In this text, the purchases journal is not limited to purchases of inventory;itis used to record all purchases made n credit terms. For example, expenses such as y and telephone fo: a business receives « monthly invoice will be recorded in the purchases journal. Cash purchases, on the other hand, are recorded in the cash payments joun Note that some businesses may restrict the purchases journal to the purchas inventory only. Remember, accounts payable is act entity to its suppliers. When goods or services are re terms, the relevant expense account and the GST paid account are debited and the 1é account is credited. The expense is recognised when the invoice 8 of dis the mount owing by ived from a supplier on credit ‘accounts pa is received, rather than waiting until payment is made to the supplier ‘The number of columns in a purchases journal v expense abi sredit torms for. The first column is the colurnn we have headed as the details column, Itis sometimes called the particulars column, Itgives the name of the creditor that the credit purchase has been made from. ‘The next column is for the supplier's reference number. The first monetary column is. the accounts payable column. It shows the totall amount of the purchase, including GST if applicable, which is the amount that the business owes the supplier. It is a it column. The second monetary column is the GST paid column. It shows the n of the account payable, cmd is « debit column. The remaining columns are for the relevant expenses. The last column con be a sundry column, which is used to record expenses which are only infrequently purchased on credit terms. All the expense accounts are debit columns, Atthe end of the ps ill depend on how many typesof The second tolalled. The total of the accounts poy lumn should be equal to the total of the GST paid and expense columns. ‘That is, the credits should be equal to the debits, Underneath the totals we show the account number and whether the column is a debit or credit od the colurnns shouldSpecialised journals 71 eal Telephone | Jan 14_| Meridian Energy | Dec | 98.65, 287 | | e578 [Jen ts [TelstaClear | Dec| 19450 _ | toe3 fan 22_| M. Walk 287 | 3.65400 7.39 [ Jan 26 _| Ace Supplies | 921 | 6,033.00 | 5.24609 | Jan 29 _| Vodaphone Dec| 11125 | 1451 | 9674 | 1091.40 | 131627 | 803.43 | 3578 | 26587 | 2200~cr | 2330~pr| 5200-br| _6250-Dr| 6750-Dr| ‘The above example shows the pur In that month, telephon the GST shown in the relevant expense account column. Th es journal for Alison Cook for January 2012. 1¢ only made five credit purchases, for purchases, electei ne, The total of each amount is recorded in the accounts payable col P The total of each ‘amounts recorded in hamn, the accounts payable s shown in the GST paid column and the GSTexclusive amount is column, the OST paid total ofthe GST paid, purchases, is shown in the GST electricity, cmd telephone columnsis equal to the total of the accountspayablecolumn, Paid column and the ordin is of the usive amount chases joumal streamlines the is shawn in the relevent ave to include a narration, because each tremsacti post only the totals to the general Ieciger, rather than column. the case of the sales journal, use of th 1g process, We den same type, and each individual transaction a 44 Activities ‘Andrew Croziér purchased the following items on credit during April 2012. Apr Purchased goods for resale from Mike Christle, $3,907, Inv. 496, Apr7 Purchased goods for resale from Peter Bird, $4,065, Inv. 1236. Apr 10 Received invoice from D Ward, lawyer, $99 Inv. 20167, Apr 5 Received electricity invoice from Genesis, $114, Inv. 98768. ‘Apr23__ Purchased goods for resale from Mike Christie, $2,965, Inv. 598. Apr 27 Received invoice for $1,375 from Cannon Insurance Brokers, Inv. 3022, Apr 30 Received invoice from Telecom, $274, Inv. 35065, Required Record the above transactions in a purchases journal. Henry Vyver purchased the following items on credit uring August 2012 ‘Aug2 Purchased goods for resale from Fiona Gibson, $360, Inv, 45, Aug4 Received invoice for motor vehicle expenses from Highbury Mobil, $245, inv, 1782 Aug? Received invoice from Off Supplies Co. for stationery, $426, Inv. 3296.72, Chapter 4 Aug 10 Require Record CASH RECEIPTS. JOURNAL is the jour ‘used to record al receipts banked into the bank OST collected is not credited when peyments are received PAYments are received from debtors because the GST was recorded in the sales from debtors because ‘journal when the sale was made. the GST was recorded Atthe end of the period the columns should be totalled. The total ofthe bankeolumn inthe sales journal when the sale was R Purchased goods for resale from Ace Suppli Recel eived invoice from Premier Panelbeaters, $543, Inv. 166, ,006, Inv. 3216. ed electricity invoice from Meridian Energy, $126, inv. 30149. 1ased goods for resale from Richard Ellis, $7,065, Inv. 10147, Purct Received invoice from Telecom, $168, Inv, 45294 R elved invoice for $156 from Vodaphone, Inv, 31387, the above transactions in a purchases journal, The cash receipts journal ‘The cash receipts journal, as the name suggests, s used to record all cash receipts wt Cash receipts include receipts paid by cheque, cash, or EFT into the bank account. It is use sundry deposits into the bank account, cash receipts journal generally has at least eight the date. Thisisthe date the money was depo column is the detalls column. It is sometimes the datails of the transaction, such as cash sal debtor payment has been recelved from. The n. number, The first monetary column is the the receipt, andis A lumns. The firs ted into the bank account. sank column. It shows the total debit column. The next columnis the income: GST-exclusive amountof cash sales, anditis a credit. ny al record payments from debi a further column for sundry deposits. In all cases, the debit column is hank. When cash sales are recorded, céllected and income columns are credited. When payments from debt received, the acer edited to reflect the owed to the entity by its debtors has decreased. GST me. The GST collected column shows the GST portion of cash sal GSTinclusive deposits. The accounts ret oacredit column, Normally th ints receivable column is: should be equal to the total of the credit columns (income, GST collected, receivable and sundry). Thatis, the debits should be equal to the credits. Undernex the totals we she thing to record cash sales, receipts from 1e second led the particulars column. It gives Interest income, or the name of the -olumn is for the receipt or invoice tof .mn.Itshows the umn, because itis recording eivaible column is used to re would be he GST ct that the coun! lected is not credited when yunts the account number and whether the column isa debit or credit, oe) The following example shows the cash receipts journal for Alison Cook for January 2009 The bank column shows the total amount of each deposit. Receipts 365, 366, 368 and 369 are payments from debtors, so the full amount of the deposit is credited to the accounts receivable column, The deposits on 14 and 28 January show cash sales banked. Note that, ‘normally, cash sales would be banked more frequently. The GST cash sale Is credited to income and the GST portion of the cas collected column. There is no GST on interest income. -exclusive amount of the sales is shown in the GSTed journals 73 eee noo [ the Ross | | 268 | 2100000 | vaae087 | 27919 [160.00 Cash sales 10000 : soni Lo isosoan | 1esezes | naan? 6,040.00 522130 “pr| aion=cr | as10=er 10.00 -25,850.00| 160.00 1200~Cr| 4300—cr 48 ‘ord all the deposits into the bank onic bankings as well as manual deposits Activities Craig Christmas received the following amounts during the first week of july 2012. Craig is registered for GST on an Invoice basis, and does banking daily July 1 Received $2,987 from AB Equipment, in full settlement of their ‘account, Rec. 305, July 1 Cash sales of $3,908 were made July 2 Received $6,485 from Jane's Office Services, in full settlemer r account, Rec, 306 July 2. Cash sales of $2,906 were made, July 3 Cash sales of $3,097 were made. July 4 Interest income of was received July 4 Cash sales of $2,654 were made July 5 Received $560 from Dean Parkinson, in full settlement of his account, Rec. 307, July5 Cash sales of $1,432 were made Required: Record the above transactions in Craig Christmas’ cash receipts journal Bevan Gaskin received the following amounts October 2012. Bevan is, registered for GST on an Invoice basis, Oct 3. Cash sales, of $5,680, were banked, ct 6 Received a $5,000 part payment from a debtor, MBT Ltd, R Oct 10 Cash sales, of $6,025, were banked. 1. 54, The cash receipts into the bank account Ishould be used manual deposits,Oct 16 Re (Oct 17 cas (Oct 22 Dividend incame of (Oct 31 Cash sales, of $5,003 Record the above transactions in Bevan Gaskin’sc ‘CASH PAYMENTS. JOURNAL is the journal Used to record all. yments made throu Normally there would also be a sundry lumn, for less fro types. payment luna te the right ofthe sundry column te record ‘that should be dabited for items entered into the sundry column, (CASH BOOK. The cs receipts and the ca payments journals are sometimes callactivly raferred to asthe cash book. ch sales, of $5,398, were ban! ved a $2,978 payment from $650 payment from a debtor, ARM Ltd, R les, of 10, were banked. tor, Cameo Video Productions, Rec. 56. were banked. pts journal The cash payments journal ‘The cash payments journal is used to record all payments made fro ments, EFTPOS he bank ayments, leas nents journal generally he ns. The first Jate. This is the date the cheque was written out,o hecues, the date the cheque is 1c in the cash payments journal. The second column, imes called the particulars column. Itgives the det itor being paid, or the details of other nis, The next colu number, or other reference detail ‘The first monetary 3k column. It shows the total amount of the column. The GST paid column shows the GST parti automatic transaction may be much isthe details column, Itis som of the trams cs the name of th ofa ‘© payments. The accounts payable column is used t to creditors amd is « debit col Normally there would also be ‘ecord payments nn. The other colurnns mmonly used expense solumn, for less frequent payment fhen payments, le tocreditors, the eflect the fact that the amount owed by the T paid is not debited when pe 18e the GST was recorded in the purchases journal when the received. When payments are made, other than to creditors, GST paid pense concerned includes GST, and the GSTexclusive amount is, dobited to the relevant expense. Howaver, exper ich as bank fees, wages, and rest paid do net include GST. At the end of the period, the colurnns should be totalled, The total of the ban! column should be equal to the total of the debit columns (GST collected, accounts payable, purchases and other expense colurnns). Thatis, the credits shouldbe equal tothe debits. Underneath the totals, as in the case of the sales, purchases and cash receipts journals, we show the account number and whether the column is « debit editIn summary, the cash payments journal is used to record al the the bank account It should be used to record electronic payments as well a ised journals 75 Details Ref. Bark | Gstpaid | Aes payable | Waees PSS s $ s Et | 6956| 907 AP | 123600 1,236.00 Meridian 94.30 94.30 Jan 10 |Telstraclear | 470 | 17350 17350 Jan 11 Drawi 2,000 00 2,000.00 | 3200 Jan 15 |GStpayment | 472 | 986.35 986.35 | 2350 Tan 20 | PAYE 473 | 58065 580.65 | 2400 Jan 20 | Ace Supplies | 474 | 5.23600 Jan 22 ap | 1,158.00 1,158.00 Jan 23 365.00/ 47.61 317.39 | 6680 lan 26 | Vodaphone 115.60 115.60 jan 29_| Rent AP_| 1125.00] 146.74 978.26 | 6650 13,139.96 | 203.42 | 5,619.40 | 2,394.00, 60.49 | 4,862.65 l100—Cr| 2330-Dr| _2200-Dr_| 6800~ Dr | 6600 — Di The above example shows the cash payments journal for Alison Cook for January 2012. The date column shows the date the cheque was written, or the date of the electronic transaction, The reference column shows the cheque number, or the reference Eft which is short for EFTPOS, or A automatic payment. The bank column shows the total amount of each payment. Cheques 465 and 476 are payments to creditors, so the full amount of the payment is debited to the accounts pa ‘olumn. There is no GST paid on wages, drawings, GST payments to Inland Revenue or PAYE. There is ar extra column to the right of the sundry column which is used to record the account number that should be debited for items entered into the sundry column. It is nat possible to debit just the total of the sundry columns because the debits relate to a number of different accounts. There is GST on stationery jumbing \d commercial rent, which in this case have all been paid on receipt of the Invoice, and therefore are not recorded in the purchases journal which is shor ama ments made from ‘cheques, The cash payments journals used to record ‘llthe payments made 7 from the bank account. Activities 47 Sally Kvitney pad the following amounts during the st meek of August Peyets ewes 2012. Sally is registered for GST on an invoice basis. 7 Aug! Purchased goods for resale, $350, cheque 202 Aug1 Paid rent by automatic payment, $900, ‘Aug2 Took drawings, $500, by internet transfer. Bank fees of $15 were debited to the bank a78 Chapter 4 ‘Aug3 Paid creditor, Telecom, $96, cheque 203, Aug4 Wages of $765 Aug4 Purchased stationery, $35, by EFTPOS Required, Record the above transai 48 — JoLeaman paid the following amounts di Mars Pe Aug ald creditor, Colin Wright, $750 for 5 Paid ere paid by automatic payment. services, cheque 204, editor, Rs to FM, $1,500, for July advertising, cheque 205, ions in Sally Kwitney's cash payments journal. basis, ing March 2012. Jo is registered for GST on an invotes ditor, $3,100, Top Supplies, in full settlement of February statement, cheque 145, Maré Paid for petrol, $40, by EFTPOS, Mar Paid wages, $3,275, by automat Pald creditor, $88, Genesis Energy, in full settlement of February statement, ayment. Mar 17 Bank fees of $62 were debited to the bank account. Mar20 Paid February PAYE, $1,361, chi Mar 22 Paid Mar 24 Paid wages, $3,275, by autom Mar 2 Ma Record the above tran: GENERAL JOURNAL is the journal that is used to record transactions that do not it inte the other journals When using specialised only to record financial transactions that da not fitinto the sales journal, pure journal, cash receipts payments journal, Took cash di Paid for petrol, $40, by EFTPOS. editor, Action Suppl 00 in part settlement of February account, cheque 148. ayment, $2,000, cheque 149. tions in Jo Leaman's cash payments journal General journal entries You have already had considerable practice in preparing general journal entries in the activities in the first three chapters of this text, Previo\ used the general Jounal to record all financial transactions; however, when using specialised journals, we will use the general journal only to record financial tram do not fit into the sales journal, purchases journal, cash receipts journal or o ‘Tho general joumal is quite different in format from the other journals. E is shown sepa chentry nthe general journal, with a narration, More detail is required cause each general journal entry is a mote unus Each page of the general entries mu ransaction, journal has to be numbered. Each page of journa have headings. The date shows the data of the transection, rather than the date the journal entry is physically recorded. Account titles refer to the individual boing debited and credited. Itis accopted practice that the acount being debited is recorded first, and then the account that is being credited, It is also practice to indent the account that is being credited. The reference number (ef. no.)is the account's number. The ays to the left of ‘that you prepare, the debits must | Wor crediting more than one account accounts that are column heading is al it column. For each general journal ent the credits. Sometimesina general journal entry, but in every case the total of the debit entries must equal the total of the credit entries. The narration is shown in the account title column, Itis, am explanation, in words, of the transaction you are recording, Itnreeds tobe detailed. enough that anyone looking at the general journal entry will understand why the entry has been made, tion that are recorded in the general journal include goods ts introduced into the business, bad debis written off, credit purchase retums, credit sales returns, PAYE payable, and balance-dey adjustments ijustments will be covered in Chap utwe will no} examples of other financial transactions that are recorded in the get but haven't been spe look at some eral journal, ically covered in eli Bad debts Andy Castle, trading as A-Team Plumbing, decided on 1S March 2012 to write off a debt owed by a customer, Kelly Hall, because Kelly had moved from her address and the amount involved meant it was not worth chasing the debt any further This transaction does not fit into any general journal of the special journals, so is recorded in the General journal Page 1 Date ‘Account ttles| Refino Debit Credit 2012 s 8 15 Mar Bad debts expense 6070 5000 GST paid 2330 7.50 Accounts receivable contral Kelly Hall 1200 3750 Being entry required t bad debt written off ‘Kelly Hell Plumbing is registered for GST on an invoice basis so already returned the tial sale was made to Kelly Hall. Now that the debt is being written off, Bad debts expense and GST paid is debited, to record the expense and the fact that the GST can be claimed back from Inland Revenue. Accounts rect to show that the amount that wable is be paid by debtors has decreased, Bad and doubtful debts will be covered in more detail in Chapter & returns (credit) Plumbing Supplies had a credit customer, A-Team Plumbing, return plumbing supplies on 22 March 2012 that herd by Plumbing Supplies for $92. This tromsaction does not fit into any of the special journals, so is recorded in the ger journal. If the retum had been made by a cash customer, it would be recorded in the cash payments journal bect ryment would be involved suse a cash| Specialised journals 77 The types of transaction that are recorded inthe general journal include (on for own ts introduced bad debts written off, credit purchase roturns, credit sales returns, PAVE payabl and balance-day adjustments The narration needs be detailed enough that, anyone ooking at the general journal entry will understand why the entry has been made BAD DEBTis an open account balance er loan receivable that has proven tobe uncollectable and is writen of2c Note that there are alternative ways of recording credit sales ret bbe recorded in the sales journal as a.negat turns. They can ve sale, or q business mnay have a ales returns journal. In this textwe will always.use the ger General journal Date Account titles Ret. no Sales returns 415 cst paid 330 12.00 Accounts receivable contro AcTeam Plu rd goods returned by A-Team Plumbing 1200 92.00 Bi Sales retums and GST paid GST can be claimed back from Inland Revenue, show that re debited, to record the expense and the that the edited to .ccounts receivable i ‘amount that will be paid by debtors has decreased, Purck A-Team Plumbing retuned plumbing supplies on 22 March 2012 that had been purchased ambing Supplies for $92. This transaction is the same one as we looked at previously, but we are now looking at it from A-Team Plumbing’s point of view, rather than from Plumbing Supp! The purchase return does not fit into any of the special journals, so is recorded If the return had bes receipts journal becau in the general joun sn made for a cash refund it 18 c cash receipt would be invol recorded in the cash Note that there are altemative ways of recording credit purchase returns. They can be recorded in the purchases journal as negat x business may have a separate purchase returns journal. In this text we il always use the general jour the other methods are equally acceptable. purchase, or edit purchase returns, but General journal Date Ace Ref no. Debit 2012 s 22 Mar ‘Accounts payable! Plumbing Supplies 92.00 Purchase returns 80.00 sr collected 1200 Being entry required to record goods returned to Plumbing Su.ccounts payable is debited to reco decreased. Purchase in expenses and the incre lambing pe payment of wages journals, the pay while the PAYE payable has to be 1 does not fit into amy of the special journals. one general journal e ‘Note that there s an alternative way ofrecording PAYE payci in the cash payments journal, by debiting the gro crediting the ages to column with the general journal to record PAYE payal 2 — there is another accey utyo. and salarles 6200 PAYE payable 2400 ‘The wages and salaries expense is debited to recor the expense, and PAYE payable is credited to record the liability to Inlend Revenue. The $1,187 paid to the employee is recorded in the cash payments journal. The general ail entries we have prepared low the same format as the general ove all f journal entries you prepared in the first three chapters. The differei the general journal to record financial transactions other journals. The number that we will only use that do not fit into of general journal entries required will be limited, st transactions do fit into one of the other journal. We have now covered the five jour using in this text. The concept of double-entry wunting still applies: each journal must be in lance; that is, the debits must equal the er In the activities you have completed so far in this that we 4 the fact that the amount owed to creditors has ums and GST collected are credited to show the decrease in the amount owed to Inl gross wages of $1,462 on § March 2012. The amount paid to the employee was $1,157, and the remaining $305 was PAYE deducted, which has to bbe paid to Inland Revenue by 20 April 2012. In the earlier chapters we sh y. With the introduction oft .ent of the $1,187 will be shown in the cash payn .d in a general journal entry because itcan be shown wagestot he bank column, and crediting a PAYE payable ;ount of the PAYE deducted. In this text we will should be awa «ble method available. count title Re Specialised journals 78 journal, s column, TWo FoR YOU, ONE FoR INLAND REVENUE.80 Chapter4 chapter, you have been given only transactions that fit into one particular journal. We will now look at activities that co ransactions. Ae with the opics covered, the way to lear cialised journal entries credits toget lots of practice. Remember the , 43 You have looked at the information in this complete a totally dffetent activity Each journal must be in balance; that is the ebits must equalthe earlier to prepare ep vities below are for your benefit, and so attempt as many of them as possible, y in previous chapters, but we are now getting you to Linda Brown commenced business on | August 2012, trading as Frame Ups, a picture framing business. Linda provid ls of the transactions that took place in August 2012. Linda uses the period ventory sy Aug] Commenced business, with a motor vehicle ($19,000), computer ($4,000), invento ($2,000), bank ($1,000), and loan ($5,000) Aug4 Paid rent for manth of August, $1,000, Aug 5 cash sales of $200. Aug6 Made credit sales of $350 to Smalls Gallery. Aug7 Purchased $400 inventory on credit, from Art Supplies Ltd. Purchased stationery from Warehouse Stationery for $48, paid by EFTPOS. Equipment was purchased on credit for $2,200, from Equipment Supplies Made credit sales of $1,050 to Little Accotns Gallery. Linda intr wluced a further $2,000 cash into the business. Wages of $450 were due. §360 was pald cash and $9% Purchased $700 inven ory on credit, from Art Supplies Ltd, Returned $80 Inventory to Art Purchased $460 of inventary by cheque Aug 22 Recelved $350 from Smalls Gallery for August 6 credit sale. Aug 23. Banked cash sales of $3,245. dit sales of $1,900 to s nalls Gallery nda took inventory that cost $100 but had a retail value of $200, for her own use. Paid Art Supplies, for inven pF ment. Aug 29 Paid local garage $140 for ssed on August 7. A « discount was received for ompt p 4.10 You have looked at the information in this activity in previous chapters, but we ate now getting you to record the transactions in the appropriate speciall journals. Jason Stamper commenced business on I February 2012, trading as JS Flooring (The JS stands for Just Superb’ or ‘Jason Stamper’). Jason has previous experience in the floor sanding business, and is ic that the business will do well. Jason is registered for GST on an invoice basis, and uses thean alised journals 81 Feb1 Commenced business, with a van ($22,000), sanding equipment ($8,500), inventory ($1,800), cash at bank ($3,200) and loan ($12,000). He also arranged $3,000 business overdraft that could he used if required Feb2 Purchased mobile phone, by EFTPOS, $790, Feb 4 Received $1,950 from fitst customer Feb5 Paid $370 to have business cards designed and printed. Feb 9 Invoicedl customer, Jack Jones, $2,700, Payment due by 20 March Feb 12 Wages of $160 were due, $142 was pald cash and $18 PAYE was deducted. Wages are paid to Jason's 14-year-old daughter St tephanle, who works for him after school. Feb 13 ed sanding supplies (sealers, stains a lies olyurethane) on credit, for $1,595, from Feb 14 Jason took his wife out to dinner for Valentine's Day, and paid using the business EFTPOS cost $98. Retumed $95 of aler to Best Supplies as wrong colour stain provided, Paid local garage $70 for petrol ‘chased protective clothing for $160, Paid by cheque, Received $890 advertising account, which is not due for payment until 20 March, Banked $3,750 from tw. nding contracts with cash customers Received $2,700 payment in full settlement of February 9 invoice Paid by cheque $1,800 legal fees for costs involved in purchasing the business. iced a customer $1,750 for a completed sanding contract. She paid cash, Feb 26 Wages of $154 were due, $137 was paid cash and $17 PAYE was deducted Feb 27 Paid Best Supplies for inventory purchased on February 13, less the credit for returns. Feb 28 Jason took inventory that cost $95 but had a retail value of $150, for his own use. (His wife hhad made it clear that if he didn't polish the floor in their sunroom she was going to call in the opposition.) Required: Prepare journal entries to record each of the abo purchases journal, cash receipts journal, cash pa} ransactions. S Flooring uses a sales journal, ments journal, and general journal. Wayne Kent, a self-employed carpet cleaner, undertook the following transactions during November 2012, Wayne is registered for GST on the invoice basis Nov1 Purchased cleaning product, $1,965, on credit from Superclean Distributors. Nov2 _ Invoiced a cash customer, $255, Inv. 451 Nov3 _ Involced a credit customer, Broadway Legal, $550, Inv. 452. Nov4 Paid Telecom, an account payable for telephone, $187, cheque no. 765. Nov7 Received $1,235 from Kelly Enterprises in full settlement of their October account, Rec. 111 Nov8 — Involced a cash customer, $395, Inv. 453. Nov9 Purchased diesel for vehicle, $40, by EFTPOS. Nov 10 Invoiced a credit customer, The Lounge Bar, $1,950, Inv. 454, Nov Il Paid fortnightly wages. Wages of $502 were due. $456 was paid by automatic payment, and $46 PAYE was deducted,42 Nov 14 Invoiced a cash customer 9350, Inv. 454 Nov 15 Paid Unelco, an account payable far electricity, $194, cheque no, 766, Now 16 Paid Superciean Distributors, an account payable for purchases, $960, cheque no. 767. Nov 17 eived Telecom account, $211 Noy 18 Involced a credit customer, Diablos Restaurant, $1,400, Inv. 455, Nov21 Paid October PAYE, $| 38, cheque no. 768, Nov22 Re Nov23 Banke ed electricity account from Unelco, $120 $27.40 were debited to bank account. Nov 24 Invoiced a credit customer, Café Celtic, Nov25 _ Paid fortnigh il by automatic payment, and Nov25 Purchased diesel for motor vehicle, $40, by EFTPOS, Dv28 Received $2,650 from Harveys Real Rec. 112, Nov29 Inv te, in full settlement of thelr October account edl a cash customer, $345, Inv, 457. Nov30 ald rent by automatic payment, Nov30 Took drawings o Required: Prepare joumal entries to record each of the above transactions. Wayne Kent uses a sales journal, purchases journal, cash receipts journal, cash payments journal, and general journal ‘The following information has been provided to you by Anne Grace, a sole tra All the following transactions Include GST where relevant. Anne is register an invoice basis. During May 2012 the following transactions took May 2 Sold goods valued at $2,500 to J. Smith on credit, May 4 — Received $4,500 c ssh from Pearl Ltd, payment of accounts receivable 900 to Pearl Ltd on credit, 1 to Precious Ltd on credit. May 6 Sold goods valu May9 Sold goods valued at $1 May 12 Received $4,650 from R. Jones, payment of accounts receivable. May 14 Cash sales of $17,900 were banked. May 15 Interest income. May 16 Sold goods valued at $3,500 to R. Jone Ma on cred Received $10,960 from Precious Ltd, payment of. counts ¥ May 22 Sold goods valu May 23 Re May 26 Recelved notification that. Smart, a debtor, was declared bankrupt and wrote off his $1,50 balance as a bad debt. May 28 Cash sales of $17,980 were banked. at $10,620 to W. Woods on credit. ved $5,100 from J. Smith, payment of accounts receivable. Required Prepare the ger 1 journal entries, cash receipts journal and s jes journal for May 2012.Discounts Accounts receivab! We have seen that credit sales are recorded in the sales journal, and thatwhenthe debtors pay their ace ‘are recorded in the cash receipts journal. The majority cf businesses offer at least some of their customers credit sales. If they didn't they Jose sales because their competitors will be offering credit terms. The management o accounts receiveible is critical for the liquidity cnd success of the business, f cust take a long time to pay their debts, this can put a huge strain on the cash f business. One tool to encourage prompt payment isto olfer discounts for early repayment ‘When discounts are offered, the gross amount of the sale is recorded in the sales journal, and the recsipt and discount are shown in the cash receipts journa When a business is registered for GST on an invoice basis, it must return th on the gross amount of the sale when the sale is first made, When payment is received, the business can claim back the GST on enced up receiving only The ear tofully und is involved, is to look at an example, yun, the rec ould he discount, because ding of cash receipts where adiscount Lo. (On 6 August 2012, Simon Marsh made sales of $900 on credit Invoice no. 368. + On 17 August 12, Simon Marsh made sales of $2,300 on Of invoice no. 376. It ‘+ On 19 August, Simon Marsh banked cash sales of $4,100. The above transactions would be shown as follows in the sales and cash receipts journal of Simon Marsh Date | Details Invno, | Alcs Ree 2012 8 ‘Aug 6 900,00 782.61 Aug 17_| Webb Design 376_| 230000 | 2000.00 ie - 3.20000 | 2,782.6 male [| 1200-pr_ | 4100-cr Da) | Dass Rey ene) Deane | ree 2012 s. s Aug 19 _| Cash sale - 4,100.00, 3,565.22 ‘Aug28_| Ridgway Sake) 365| 45500 919 | Auga9_| Webb Desan 376 | 2.18500 | 10000 [ Heal 7,140.00 139.13. | 3,565.22 : cama Naina rms to Ridgway Blake, invoice no. 368. Rideway Blake paid Simon Marsh $855 on 28 August 2012, in full settlement of took advantage of the 5% prompt payment discount. dit terms to Webb Design, invoice no, 376. Webb Design paid Simon Marsh $2,185 on 29 August 2012, in full settlement 3% prompt payment discount. 2310~Cr Specialised journals. 83 accounts receivable is critical forth tiquiity and success of the business, When the discounted J, payment is ree the business can back the OST on the discount, because tended up receiving only he net amount. 1739 300.00 41739 2310-Cr Gsr | Ales Ree. $ 8 534.78 =587| 900.00 =15.00 | 2,300.00 513.91 | 3,200.00 r | 1200-Cr84 Chapier4 Credit the accounts receivable with the fll ntof the debt cause the amount OST has tobe leulated on the discount and ie shown as anegative amount in the OST co column, The bank and discount allowed calurmns in the cash receipts journat have debit balances ‘and their totals should equal the total ofthe credit colurnn bal When the discounted payment is made the business must return the GST on the iscount, because i ended up paying only the net amount Inthe cash receipts journal, when a r whom a iscount has been allowed, the amount received is debited to the bankaccount, and the total amount of the invoice(s) that is (are) being paid is credited to the accounts receivable column. It is necessary to credit the accounts receiv the full amount of the debt because the amount owed by the debtor has decr full amount, even though only the discounted amount has been paid. GST has to be calculated on the discount and is shown as a negative amount in the GST collected column. Alternatively, an additional debit column, GST paid, ean bbe added to the cash receipts journal. However, in this text we will show discounts as « negative amount in the GS' ‘mswers to activities, Th lebits recorded in the bank, discount, and GST columns add to the amount shown in the accounts receivable colum ‘The bank and discount allowed columns in the cash rece! and their totals should equal the total of the me, GST col receivable). In the above example, the bank d discount allowed columns total $7,27' do the income, GST cell ts receivable columns, lected and accounts Accounts payable Just as a busi s discounts to customers, it may also be offered discounts for prompt payment by some of its suppliers. Again, the reason for offering the discount 's that suppliers are keen to receive prompt payment. Whether or not a business ‘will take advantage of the prompt payment discount will depend on its cash flow position and the amount of the discount offered, Credit purchases are rec the pun .ade to supp payments journal. When di is recorded in the purcha: the cash payments journal When a business is registered for GST on an invoice basis, itcan claim GST. ‘gross amount ofthe purchase when the purchase is first made. When the discounted payments made, the s mustreturn the GSTon the discount, because itended up paying only the net amount. The easiest way to fully unde discount is involved, isto look at 8 are recorded in the cash are received, the grose amount of the purchase s journal, and the payment and discount are shown in nthe the recording oi example, ch payments where a 2, Simon Marsh made purchases of inventory of $500 on credit terms from Downtown Suppliers. Simon Marsh paid Downtown Suppliers $490 on 20 August 2012, in full set advantage of the 2% prompt pay nent of the $500 debt, cheque no, 490, Simon Marsh took rent discount. * On 14 August 2012, Simon Marsh received an electricity invoice for $139 from Uneleo Ld. Simon paid the invoice on 29 August, taking advantage of the 10% di ‘ount for prompt payment. The amount pald was $125.10, paid by direct debit, * On 17 August, Simon Marsh made a cash pure 489. ase of inventory, for $890, cheque ni ‘The above transactions would be shown as follows in the purchases and cash payments journals of Simon Marsheee Specialised journals 85 Date __ Details Ref, AlcsPay | GST | Purchases 2012 [os [os 8 Aug 4 _| Downtown Suppliers |__ 300.00 65.22 | 43478 ‘Augi4_| Uneleo [13900 [18.13 |_ 639.00 ectriity oe bale REE SNe BER | UT ARE 12 | i sls § ve 17 [osk 000 11609 Aug 20 | Downtown | 490.00 8.70 1.30 Supple | ug 29 [Uneleo oo} msi | a0 | ai [1,505.10 20.79 112.98 —Tro= cr | aato—or | 2590- Nes Pay Purchases 8 $ 77391 500.00 139.00 639.00 | 773.91 2200 Dr | 5200- Di In the cash payments journal, when a payment for which a discount has been. received is made to a creditor, the amount paid is credited to the bank account, and the total amount of the invoice(s) th re) being paid is debited to the accounts payable column. Itis necessary to debit accounts payable with the full amountof the debt because the ness has decreased by the full amount, even though only the discounted amount has been paid Inthe above example, we credited the discount received from Uneleo to the discount received account. Some businesees would credit this discount to the electricity expense ‘account, and use the discount received account only for discounts on payments to inventory suppliers. In this case, the discount received account would probably be shown in the cost of goods sold section of the chart of accounts. There is merit in both ‘qpproaches. The reasoning behind crediting all discounts to the discount received ‘account is that the decision to pay accounts payable early and claim the prompt payment discountis financing decision, and therefore all discounts should be coded to the sane aecount. On the other hand, it can also be argued that as the discount in this case relates to electricity, the electricity expense should be credited to show the ount paid on electricity. While both approaches aze valid, in this text we will show all discounts received in one account, regardless of the nature of the original purchase, with the exception of amy discounts recaived on payments for non-current cazseets. Discounts received on the payment for non-current assets will be credited to the cost of that particular asset, and will be covered in Chapier 9. GST has to be calculated on the discount and is shown as a negative amount in the GST paid column, Alternatively, an additional credit column, GST collected, can bbe added to the cash payments journal. However, in this text we will show GST on discounts recelved as a negative amount in the GST paid column in all examplesand ‘answers to activities. The credits recorded in the bank, discount, and GST colurans ‘dd to the amount shown in the accounts payable column. nount owed by the bus! When a payment fr been received is made toa creditor, the amount pad is credited nk account, he total amount invoices) that is lare being paidis debited tothe accounts payable column, ‘The reasoning behind crediting all discounts tothe discount received account is thatthe dacision to pay accounts payable early and claim the promot payment discount is 2 financing decision, and therefore all discounts shouldbe coded tothe88 Chapter 4 CT has tobe calculated onthe discount and is shown asanegativeamount in bank and discount receiv the GST paid column, ‘The bank and disco cash payment have credit balances nt allowed, as the above examples and explanatior ved columns inthe should be seen as logical and, as long at journal \e bank and discount received columns in the cash pe balances and their totals should equal the total of the paid, ae jebit column balan ‘ounts payable and purchases in the above exemple). In lumns total $1,52 do the payel purchases columns, The treatment of discounts received is Y similar to the treatment of discounts 5 show. The journals required u remember the concept of double entry discounts should not prove to be nd the impact of GST, accounting f. and their totals should equal te total ofthe debit colurnn balances, (aiex 4.13 Jessica Scott basis. Quick closed for the first two weeks of the month Jan 4 Jan 15. Jan 28 Jan 29 Required: Prepare journal entries to r purchases journal, cash rece! is self-employed, trading as Quick Clear Drains. Jessica is registered for G: January 2012 are detailed below. Qu Clear Drains was » landlord, Nicol Family Trust, $750, by automatic payment. Charged a cash customer, $350, Inv. 789 Received $3,675 from QDS In full settlement of theit December account, of $ Paid December PAYE, $543, cheque no. 901 Paldl December Vo iphone account, $345, cheque na. 902. Paid Plumbing Supplies December account. The account totalled $4,200, but only $4,095 was paid, as a 2.5% prompt payment discount was allowed. Cheque no, 903, Charged a credit customer, Tu discount will be given. lands, $4,065, Inv. 790. Ifthe acc unt is pald by 31 fan Paid December electticity account, Original account was $145, but a 10% discount was allowed, so only $130.50 was pald by direct debit. Charged a cash cus ner, $605, Inv, 791 ss wages of $1,460 were due. PAYE of $305.14 was deducted, and $1,154.86 was paid by internet transfer Made puirchases of $670 from Plumbing Sup; Received payment from Turflands in respect of Inv. 790, Full amount was pald after allowing for 5% discount, Rec. 556, ss on credit ‘ord each of the above transactions, Jessica Scott uses a sales journal 's Journal, cash payments journal, and general journal Posting to the general ledger ‘The general ledger was covered in Chapter 8. In that chapter we posted general journal entries tothe general ledger. Remember, posting ist transferring information from the journal to the ledger. We will now look at posting from nals to the general ledger. he other‘The overall pr journal journal just post the within a manual system. The exception to posting umn, sin¢ practice in posting from the sales, purchases, cash receipts and journal, to the g lg 414 2 are posting fi wery entry Activities Wayne Kent is 2 sel Nox at 31 October 6300 6350 6500 6600 6650 66 cess ofposting als to the general ledger. This co ember transactions ws he generall ledger: ‘The main difference is that every item in the sundry column has tobe px several accounts are at You should alrect smployed carpet cleaner, registered for G yosted to the specialised journal 2012 was as follows: Wayne Kent Trial Balance 1.3 October 2012 Bank Accounts receivable contral at cost Accum, deprec Motor vehicle at cost Motor vehicle Accum. deprec Accounts payable control GsT collected Gst paid SST payments/refunds PAYE payable Capital Drawings Income Purchases Advertising Bank fees Electricity and gas, General expenses Insurance Motor vehicle expenses Printing and stationery Rent Repairs and main ‘Telephone ‘Wages and salaries jotals only oo inthe ease of the gener osted, whereas, in the case of the other journals, we siderably speeds sting to the general ledger from the activities that you completed in Chapter 3. The nex! set of activities gives you some Dr 4,030.65, 4,690.00 3,964.00 7,365.00 20,600.00 2,065.01 2384.17 28,867.71 17.952.00 12,054.00 1,063.85 203.65 784.36 408.95 786.00 1031.50 235.40 2,488.92 410.55 1,339.03 5.26354 99,120.58 regardless of wh the processing 's with sundry 1d separately because ash Ton the invoice basis. Wayne's n Activity Specialised journals 87 GENERAL LEDGER isthe accounting records that show all the financial statemant accounts of business, item in tho sundry column has to be posted separately because several 1ents accounts are affected 4.11, Wayne's tral balance as 3,305.00 6,749.00 1,341.00 5,413.32 13800 43,306.5588 Chapter 4 Required: (a) Record the opening balances in the general ledger accounts (b) Postal journals, rom Activity 4.11, to the general ledger (c) Prepare a trial balance as at 30 November. 4.15 _lessica Scott is self-employed, trading as Quick Clear Drains, Jessica Is registered for GST on an Invoice basis. In Activity ies for Qulck Clear Drain's transactions for January 2012. Quick Clear Drain’s trial balance as at 31 December 201 | was as follows: Jessica Scott ‘Quick Clear Drains Trial Balance as at 31 December 2011 trading a Dr cr $ 3 1100 Bank 245 200 unts receivable control 0 13 Inventor 1,748.00 1510 Equipment at cost 8,836.00 1520 Equipment Accum, deprec. 4311.00 710 Motor vehicle at cost 26,200.00 1720 Motorvehicle Accum. 4.71600 2200 Accounts payabl 5.144.00 2310 GsTcalleced 12;400.00 2330 GST paid 927.25 2350 GST payments/refunds 6,668.67 2400 PAVE payable 543.00 3100 47,195.59 3200 51,060.00 4100 99,200,00 4600 Discount received 986.54 5200 Purchases 15,066.00 6050 Advertising 3,269.45 6220 iscount allowed 2,065.30, 6250 Electricity and gas 1,065.80 6300 General expenses 31169 6350 Insura 1,245.00 6500 Motor vehicle expenses 1635.00 6600 Printing and stationery 6650 Rent 6680 Repairs and maintenanc 702.69, 6150 Telephone 3,421.80 6800 Wages and salaries 26,280.00 174,496.13 Required (Re rd the opening balances in the general ledger accou ivity 4.13, t sat 31 January 2012. (b) Postal journals, From Ac the general ledger. (6) Prepare a trial balanceSpecialised journals 89 The accounting process in this chapter we have added to our understanding of the manual accounting process, by introducing the sales journal, purchases journal, cash receipts journal and cash payments journal. This has streamlined the accounting process, because we no longer need to enter each tremnsaction in the general journal with its own narration, ‘The posting to the general ledger is also speeded up because totals, other than sundry column totals, are entered in the general ledger, rather than each transaction being entered. This also speeds ups the totalling of the general ledger. The overall accounting process to trial balance remains the same, as shown in Figure 4, Financial Evidenced by transactions \ hey pee Bs | ston a | Tial balance ounts Figure 41 Thea unting process wunting package the entering of sales, purchases, payments, be called ‘using the sales journal, purchases Journal, cash Payments journal and cash receipts journal. Instead, you will be entering invoices, bills, chequss, electronic payments and receiving money or payments; or similar. However, the underlying concepts remain the same. ‘The material covered in this chapter has really just builton what has been covered in the first three chapters of the text. We hope you haven't found it difficult, The Temaining activities give you practice in following the accounting process through; thatis, starting with transactions, then entering them in the specialised journals and posting to the general ledger, and finally extracting the trial balance Qn 4.16 _ Rita Thomson is self-employed, trading as Masterton Computer Training. She is registered for GST ‘on an invoice basis, and has a 31 March balance date. Rita provides you with the following tral balance as at 31 March 2012, and details of her April transactions,90 Chapter 4 Rita Thomson trading as Masterton Computer Training "rial Balance as at 31 March 2012 co | Bank 5.26790 | ‘Accounts receivable control 430000 Office equipment at cost 7896.00 Office equipment Accum. deprec. 1,579.00 15,900.00 7,193.00 520.00 1134.25, 491.50 1035.00 16 394.15, 55a | 33,855.40 April transactions Note all information with respect to the April transactions is GST Inclusive Aprl Received cheque for $2,277 from Central Rentals in full settlement of their March 2012 account, discount of $23 was taken, Rec. 77. Apr2 Purchased computer supplies, $205, cheque no. 149, Apr5 — Invoiced credit customer, Little One's Childcare, $590, Inv. 89 Apré Paid ;phone March account payable, $73.20, cheque no. 150 Apr7 Purchased petrol, $30, by EFTPOS. Apr8 Took monthly drawings, $3,500, by automatic payment, Apr9 _ Invoiced credit customer, Red Sox Sports Club, $960, Inv. 90, 12 Received business insurance invoi pr rom AMI Insurance, §730. Payment due on 6 May 2009, Apr 13 Recelved Vodaphone account, $81.90. pr 14 Invoiced credit customer, Treescape Ltd, $780, Inv. 91 ‘Apr15 Purchased stationery from Office Products Depot, $86.85, paid by EFTPOS, Apr 16 Banked cash income of $1,575 Apr 19 Paid February-March electricity account, $242.10, Original account was $269 but a discount $26.90 was allowed for prompt payment, Cheque no. 151 Loan repayment of $100 made, $55 principal and $45 interest, by automatic payment. 90.40, cheque no. 152 00 from B & S Electrical in full settlement oft Received and paid ACC levies account, Received $1 March account, Rec, 78. Invoiced credit customer, Affordable Photography, $1,181.25, nv. 92 Had motor vehicle serviced and purchased petrol and oll, $364, cheque no, 153. Paid March Telecom account, $177.80, cheque no. 154,Required: Received Af Bank fees of $32.50 were debited to the bank account, il Telecom account, $210.43. Banked cash Income of $911.25. (a) Record the opening balances in the general ledger accounts, (b) __Enterthe information from the April transactions in the sales, purchases, cash receipts and cash payments journals (c) Post ll journals to the general ledger. (d)__ Prepare a trial balance as at 30 April 4.17 Joe Brown, trading as Blackball Consulting, Is registered for GST on a payments basis. He has jal transactions from April to February 2012, He provides y the following trial balance as at 28 February and the details of his March tra recorded and classified his fnan 1100 1510 1520 1610 1620 i710 In 2310 2330 2350 2500 3100 3200 4100 Joe Brown trading as Blackball Consulting Trial Balance as at 28 February 2012 Bank Office equipment at cost Office equipment Accum. deprec. Office furniture at cost Office furniture Accum. deprec. Motor vehicle at cost GST payments/refunds ‘Term loan Capital Drawings Consulting income Interest income Advertising Bank fees Electricity and gas, General expen: Insurance Interest Motor vehicle expenses Printing and stationery Rent Repairs and maintenance ‘Telephone Wages and salaries 21431259 Di cr 8 8 1,884.9 13,530.00 6610.00 3,890.00 1,695.00 45,500.00 5,270.00 14.762.11 5681.33 8,255.25, 19,555.00 130,892.52 71:96 2151.05, 2)398.45, 517567 12,100.00, 306.87 2078.90 34,500.00 actions.92 Chapter4 2Mar 2 Mar Ma 5 Ma 5 Mar © Mar 12a 17a 19 Ma 19 Max 19 Ma 19 Ma 19 Mar 21 Ma 21 Mat 31 Mar 31 Mat cc} ) Follow Note all information with resnect to the March transactions Mar 4.18 Mike Parata is a sole tra March transactions 32. Paid $122 for printing and stationery, cheque no. Paid $1,100 monthly rent on premises, by direct debit, Reosived $7,250 income, Inv. 39. Paid $326.50 repairs and maintenance, cheque no. 23: Electricity account of $167.45 paid by direct debit Telecom act unt of §294.67 paid, cheque no. 234 Purchased $40 postage stamps, cheque 1. 235. Code to general expenses ir Paid fortnightly wages of § by direct credit. Received $220 consulting Income, Inv. 4. Paid newspaper advertising account of $505.65, cheque no. Paid radio advertising of S 45, cheque no, Paid $28.86 for sugar, tea and coffee; general ex; "Paid $537.50 PAYE, cheque no. 239, ir Paid Blackball Garage, $225, cheque no. 240, Paid $40 for petrol, cheque no. 241 Paid $99 fora cordless phone, cheque no. 242, Received $6.950 consulting income, Inv. 41 26Mar Paid fortnightly wages of S616. 30 Mat Paid $78.56 for printing, cheque no. 2 31.Mat Received consulting income of $242.63, inv. 42 31 Mat ‘Took monthly drawings of $5,000, cheque no. 2 Made $550 term loan repayment by direct c debited to the bani dit, $171 interest and $379 principal Bank fees of $23.50 we account. Required: Ri rd the opening balances in the general ledger accounts. Enter the information from the March transactions in the cash receipts and cash payments journals. Blackball Consulting does not maintain a sales journal or purchases journal. P stall journals to the general ledger. Prepare a trial balance as at 31 March running a plumbing business, MP Plumbing ng is Mike's trial balance as at 31 July 2012, and details of his Aus ist transactions,yurnals 93 Mike Parata } trading as MP Plumbing I Trial Balance | - ___asat 31 july 2012 - | $ 8 | 1100 Bank 6,134.98 | 1200 Accounts rece 10,340.00 1300 Inventory 8845. | 1510 Equipment at cost 13,050.00 1520 Equipment Accum. deprec 49800 | 110 Vanat cost 15,980.00 1720, Van Accum, deprec 625800 | 2200 Accounts payabl 4457350 2310 GsTeollected 2.79420 2330 ostpaid 1083.60 2400 AYE payable 4300 | 2500 Kiwi Bank loan 10,060.00 3100 Capital 19,1039 Drawings 21/560°00 income 63,125.00 Discount received 240.00 Purchases Purchase returns 320.00 | Discount allowed | 6800 General expense 6350 Insurance 6400 In 6500 Motor vehicle expenses 1,085.90 6600 Printing and stationery 69850 6150 Telephone 1,085 60 6800 Wages and salaries, 9398.00 T3209 © 7133209 ‘The details ofthe accounts receivable as at 31 July 2012 were 8 AB Builders 2,965.00 John Sma 1,500.00 Speedy Construction 4015.00 Webb Design 2,060.09 10,540.00 ‘The details of the accounts payable as at 31 July 2012 were 8 Plumbing Supplies (purchases) 3020.60 Plumbing World (purchas 745. PowerTool Centre (equipment) 410.00 TelstraClear (telephone) 72.40 Vodaphone (telephone) 209.50 4457.50Chapter 4 Mike uses the periodic inventory system, and is registered for GST on an invoice basis. All figures are GST-inclusive where applicable. You can assume that valid GST invoices are held for all qualifying transactions, ails of transactions during August 2012 were as follows 1 Aug ed $2,039.40 from Webb Design in full settlement of account 4Aug Mike was paid $5,000 drawings, 4 Aug Received $980.00 from cash sales 8Aug Paid TelstraClear $72.40 In full settlement of account. Aug Paid net wages of $867, from which PAYE of $210 had been deducted (i.e. gross wages for petiod were $1,077) 1 Aug Paid $126 for motor vehicle expenses 12Aug Mike took plumbing supplies which cost $550 for use on his own home. 4 Aug Invoiced Speedy Construction $5,690. 15 Aug Paid KiwiBank $500, which consisted of $63 interest and $437 principal. I7Aug invoiced Concrete Creations Ltd $4,900. 13 Aug Received $88.50 invoice from TelstraClear Received $190 from cash sales. Paid July PAYE. Paid Plumbing Supplies for July account, and re Paid Notified by the bank that the $190 cheque deposit dishonoure ved a 2% discount for prompt payment. lumbing World $500 in partial nt of account on, 19 August (cash sales) was Received $2,965 from AB Bullders Recelved $190 cash from customer whose cheque was sincere apology jonoured, together with a very 22.Aug Paid net wages of $974, from which PAYE of $235 had been deducted (ie. gross wages for fod were $1,208), 25.Aug — Received $1,000 from John Smart 25 Aug Paid Vodaphone $209.50 in full settlement of account. 26 Aug Received a $5,908 invoice from Plumbing Supplies Ltd. 7 Aug Returned $150 of faulty goods to Plumbing Supplies. 27 Aug Paid $60 for motor vehicle expenses, 28 Aug —Invoiced AB Builders $3,056.00 29 Aug — Received a $219.60 invoice from Vodaphone. 29Aug Paid Inland Revenue, $1,740.60 GST payable | Required: (@) Prepare the appropriate journals to record the August transactions, You should use a sal journal, purchases journal, cash r not gi eipts journal, cash payments journal, and a general journal. should be done through the general journal. Invoice, receipt and cheque numbers are n in the question, so these columns are not required in the journals. >p a general ledger, recording the opening balances as at | August 201 Journals to the ledgers the tral balance as at 31 August 2012. P Journals are used to record financial transactions. They are the books of first entry in the accounting system, The sales journal is used to record credit sales. The purchases journal Is used to record all purchases made on credit terms, including, for example, purchases of inventory, electricity, telephone, and advertising, The cash receipts journal is used to record all bankings made into the bank account, including cash sales, receipts from debtors and sundry cash receipts. The cash payments journal is used to record all payments made from the bank account, ‘The general journals used to record all financial transactions that do not ft into ‘one of the other journals. Discounts allowed are recorded in the cash receipts Journal. An additional debit column for discounts has to be added to the cash receipts journal. GST has to be calculated on the discount and shown as a negative amount in the GST collected column. Discounts received are resorded in the cash payments journal. An additional credit column for discounts has to be added to the cash payments journal, GST has to be calculated on the discount and shown asa negative amount In the GST paid column, The journals are posted on arogular basis to the general ledger. Inthe case of the sales, purchases, cash receipts and cash payments journal tis only necessary to post the totals of columns ~ with the exception of sundry column figures, which ‘must be posted individually. ‘The accounting process starts with financial transactions, which are evidenced by source documents. The transactions are intially recorded in journals, The ‘common journals are the sales journal, purchasas journal, cash receipts journal, cash payments journal, and general journal. The journals are posted to the ledger, From the general tedger a trial balance can be extracted, sdjournale 95 and then post the