LEVEL 2 (2019) Practical Bookkeeping Activity Answers

A1 & A2 Activity Answers
LEVEL 2 (2019)
PRACTICAL BOOKKEEPING
ACTIVITY ANSWERS
Accredited Training Provider 7339
Level 2 – A1 & A2
Activity Answers
(V1.0 2019)
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Unit B
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Answers to Activities: A1 Chapter 1
Answer to Activity 1.1

From the following items – tick which heading you think they should come under:
Item Fixed Asset Current Asset

Motor Van ✓
Cash in Bank ✓
Stock ✓
Building ✓
Office Equipment ✓
Debtors ✓
Tools ✓

From the following items – tick which heading you think they should come under:
Item Current Liability Long Term Liability

Bank Loan ✓
Overdraft ✓
Creditors ✓
Mortgage ✓
Tax Liability ✓


Which account should you debit and credit?
The first two are completed for you – try the others for yourself:
Item Account to Debit Account to Credit

Purchase Car Motor Vehicles Bank
Receive Loan Bank Loan
Owners Capital (money) Bank Capital
Buy Machinery Machinery Bank
Buy some stock to sell Purchases Bank
(Purchases)
Pay back part of your loan Loan Account Bank
Buy a Van Van Bank

Once again enter which account is to be debited and credited
Account to debit Account to credit

Started business with £15,000 in bank Bank Capital
Bought motor van by cheque Motor Van Bank
Paid for purchases by cheque Purchases Bank
Received cheque for sales Bank Sales
Bought Office Equipment by cheque Office Equipment Bank
Bought Stationery paid direct from bank Stationery Bank
Paid insurance by cheque Insurance Bank

Answers to Activity 1.5
J M Hampshire
Cash Book
DR CR
Date Details Cash Bank Date Details Cash Bank
03-Jan Sales 4500.00 02-Jan Equipment 2500.00
15-Jan Bank Loan 10000.00 02-Jan Rent Paid 400.00
23-Jan Rent Received 3000.00 03-Jan Purchases 500.00
04-Jan Purchases 2500.00
28-Jan Wages 2500.00
DR Office Equipment CR
Date Details £ Date Details £
02-Jan Bank 2500.00
DR Rent CR
02-Jan Bank 400.00
DR Purchases CR
03-Jan Cash 500.00
04-Jan Bank 2500.00
DR Sales CR
03-Jan Cash 4500.00
DR Bank Loan CR

15-Jan Bank 10000.00
DR Rent Received CR
23-Jan Bank 3000.00
DR Wages CR
28-Jan Cash 2500.00

After completing the transactions for the cash book for J M Hampshire in activity 1.5, now
balance off the cash book bringing down the balances for the next weeks transactions.
J M Hampshire
Cash Book
DR CR
03-Jan Sales 4500.00 02-Jan Equipment 2500.00
15-Jan Bank Loan 10000.00 02-Jan Rent Paid 400.00
23-Jan Rent Received 3000.00 03-Jan Purchases 500.00
04-Jan Purchases 2500.00
31-Jan Bal c/d 1500.00 7600.00
4500.00 13000.00 4500.00 13000.00

31-Jan Bal b/d 1500.00 7600.00

CASH BOOK
6 Jan Sales 5500.00 5 Jan Balance b/d 500.00
10 Jan Capital 10000.00 5 Jan Purchases 1200.00
12 Jan Rent Received 600.00 7 Jan Stationery 120.00
12 Jan Transfer Cash 3265.00 9 Jan Wages 600.00
9 Jan Van Tax 150.00
11 Jan Insurance 1500.00
11 Jan Window Clean 15.00
12 Jan Transfer Bank 3265.00
12 Jan Balance c/d 12015.00
5500.00 13865.00 5500.00 13865.00
12 Jan Balance b/d 12015.00
Date Details £ Date Details £ Purch M-Exp Utilities Wages

5 Jan Bal b/d 1500 5 Jan Purchases 900 900.00
6 Jan Sales 3200 7 Jan Petrol 52 52.00
10 Jan Capital 10000 9 Jan Wages 750 750.00
12 Jan Rent 450 9 Jan Motor Exp 90 90.00
11 Jan Electricity 150 150.00
11 Jan Cleaner 25 25.00
12 Jan Bal c/d 13183
15150 15150 900.00 142.00 150.00 775.00
12 Jan Bal b/d 13183

Net Cost VAT @20% Gross Value

100.00 20.00 120.00
350.00 70.00 420.00
5500.00 1100.00 6600.00
415.00 83.00 498.00
375.50 75.10 450.60
Net Cost VAT @5% Gross Value

100.00 5.00 105.00
350.00 17.50 367.50
5500.00 275.00 5775.00
415.00 20.75 435.75
375.00 18.75 393.75


Your task is to complete the cashbook and post the transactions to the ledgers.
T Middleton
Cash Book
DR CR
9/1X Capital 50000.00 9/1X Showroom 25000.00
9/1X Loan 20000.00 9/1X Delivery Vehicle 14400.00
9/1X Office Equipment 3000.00
9/1X Heat and Light 1200.00
9/1X Purchases 1200.00
9/1X Advertising 600.00
General Ledger
DR Premises CR
9/1X Bank 25000.00
DR Capital CR
9/1X Bank 50000.00
DR Bank Loan CR
9/1X Bank 20000.00

DR Vehicle CR
9/1X Bank 12000.00
9/1X Bank 2500.00
DR Heat & Light CR

9/1X Bank 1000.00
DR Purchases CR
9/1X Bank 1000.00
DR Advertising CR
9/1X Bank 500.00
DR VAT Account CR
9/1X Vehicle 2400.00
9/1X Equipment 500.00
9/1X Heat & Light 200.00
9/1X Purchases 200.00
9/1X Advertising 100.00


Enter the following transactions into the books of JM Hampshire for January 201X.
JM Hampshire
Cash Book
DR CR
01-Jan Loan 10000.00 01-Jan Equipment 3000.00
04-Jan Sales 2160.00 02-Jan Rent 700.00
12-Jan Sales 5640.00 06-Jan Purchases 720.00
23-Jan Sales 1440.00 10-Jan Purchases 3000.00
31-Jan Cash Trans 4820.00 15-Jan Equipment 1200.00
31-Jan Bank Trans 4820.00
31-Jan Balance c/d 8120.00
9240.00 14820.00 9240.00 14820.00

31-Jan Balance b/d 8120.00
General Ledger
01-Jan Bank 2500.00 31-Jan Balance c/d 3500.00
15-Jan Cash 1000.00
3500.00 3500.00
DR Rent CR
02-Jan Bank 700.00

DR Purchases CR
06-Jan Cash 600.00 31-Jan Balance c/d 3100.00
10-Jan Bank 2500.00
3100.00 3100.00
DR Sales CR
31-Jan Balance c/d 7700.00 04-Jan Cash 1800.00
12-Jan Cash 4700.00
23-Jan Cash 1200.00
7700.00 7700.00
DR Bank Loan CR
01-Jan Bank 10000.00
DR Wages CR
28-Jan Cash 2500.00
DR VAT Account CR
01-Jan Equipment 500.00 04-Jan Sales 360.00
06-Jan Purchases 120.00 12-Jan Sales 940.00
10-Jan Purchases 500.00 23-Jan Sales 240.00
15-Jan Equipment 200.00
31-Jan Balance c/d 220.00
1540.00 1540.00

Answers to Activities: Chapter 2

Your task is to create a Purchase Order from the information provided.
TO: Matthews Farm,

Direct Office Suppliers Deeside Way
27 Main Street Merseyside
Wigtown L12 4NK
WP23 8TZ
Tel : 0151 454 2300
Date: 10th June 2011

Purchase Order No.
1094837E
Price
Qty £
Products each
Correction Fluid 8.45 2 Packs 16.90
Printing Calculator 27.50 1 27.50
High Back Leather
99.00 2 198.00
Chair
TOTAL 242.40


Using the Purchase Order that you completed in the previous exercise for Matthews
Organics – your task is to create the delivery note from Direct Office Suppliers for the goods.
Delivery Note
TO: 42 Back High Street
Matthews Organics Elgin
Matthews Farm IV30 3GH
Deeside Way Tel : 01343 454 2300
Merseyside
L12 4NK
Date: 10th June 2011

Your Purchase Order No. 1094837E
Sign for Receipt:……………………………….
Price
Qty
Products each
Correction Fluid 8.45 2 Packs
Printing Calculator 27.50 1
High Back Leather
99.00 2
Chair

Your task is to use the blank delivery notes to create delivery goods to be sent out with the
goods.
Delivery Note Direct Office Suppliers Delivery Note Direct Office Suppliers
42 Back High Street 42 Back High Street
To: Elgin To: Elgin
SLCC IV30 3GH Mr T Hampshire IV30 3GH
243 High Street Tel: 01343 454 2300 436 West Road Tel: 01343 454 2300
Wigton Huntly
Merseyside Date: 10/02/201X Moray Date: 14/02/201X
L23 6KL Order No: 1094 MW34 2TS Order No: 2356
Signed: ………………. Signed: ……………..
Products Price Each Quantity Products Price Each Quantity

Pack of 5 Pens £1.45 1 Pack of 5 Pens £1.45 2
Photocopier Paper £1.99 6 Printing Calculator £27.50 1
Oak Desk £245.00 1 A4 Ring Binders £0.99 1
Oak Drawers £125.00 1 Laser Printing paper £13.99 4
Filing Cabinet £75.00 2 Stapler and Staples £2.49 2


At the end of each month Leisure Wear Limited sends out a statement of account to its
customers. Your task is to use the information to complete the blank statement to send
out to Mr David Brown. Enter all the details and calculate the balance due.
Leisure Wear Ltd

7 Smithton Lane, Worcs
WA45 9US
STATEMENT OF ACCOUNT - 31st January 201X

To:
David Brown
213 Hightown Road
Leeds
LD23 5JU
201X Details Debit Credit Balance

£ p £ p £ p
01/01/1X Balance b/d £345.67
03/01/1X Invoice No 382 - Cycle Parts 317.92 663.59
09/01/1X Invoice No 492 – Tyres 821.85 1485.44
17/01/1X Credit No 127 54.60 1430.84

20/01/1X Cheque received 345.67 1085.17
Amount Due £1085.17


You are the book-keeper for T Simpson Coal Merchant.
Your task is to use the price list given and draw up an invoice for each customer using the
blank invoices provided.
INVOICE T Simpson
Coal Merchant
To: 27 Brick Lane Centre

Mr T Jones, High Street
32 Whiston Drive, Moreton
Manchester TH4 2FG
VAT No. 123 4567 88

Invoice Date: 1/01/1X
Invoice No.: TS001
Your Order No.: 216
Products Supplied Price each Qty £

10 x Grade 2 4.50 10 45.00
20 x Logs 9.90 20 198.00
5 x Kindlers 4.00 5 20.00
Sub Total 263.00
Trade discount @ 5% 13.15

Net Value 249.85
Vat @ 20% 49.97
Invoice Total 299.82

INVOICE T Simpson
Coal Merchant
To: 27 Brick Lane Centre

Mrs F Wilson High Street
272 Fifie Lane, Moreton
TH4 2FG
Weston
VAT No. 123 4567 88

Invoice No.: TS002
Your Order No.: 217

15 x Grade 1 6.50 15 97.50
5 x Grade 2 4.50 5 22.50
2 x Dross 6.25 2 12.50
Sub Total 132.50

Trade discount @ 5% 0.00
Net Value 132.50
Vat @ 20% 26.50


You are the book-keeper for D Brown. Your task is to check the following invoice and
decide whether to approve it for payment:
INVOICE Simply Shopping
To: St Mary’s Centre

D. Brown High Street
Moreton
TH4 2FG
VAT No. 101 3476 48

Invoice No.: SS04002
Your Order No.:DB0245

Chicken 2.25 30 67.50
Beef 7.50 45 337.50
Pork 4.90 45 220.00
Sub Total 625.00

Trade discount @ 5% on 31.25
orders over £500
Vat @ 20% 118.75
Pass for payment Yes / No
Reason and Action:
Advise Supplier of error in calculation of the cost of Pork and

subsequent errors in discount and vat.


Using the following table – calculate the missing figures
Net Figure £ Vat @ 20% £ Gross Figure

100.00 20.00 120.00
313.34 62.66 376.00
940.00 188.00 1128.00
32.50 6.50 39.00
477.10 95.42 572.52
678.25 135.65 813.90


Post the invoices to the General and Sales Ledger. Balance off all of the accounts with more
than one entry for the end of January.
General Ledger
DR Sales Account CR
Date 1X Details £ Date 1X Details £
31 Jan Balance c/d 3048.52 31 Jan J Blogs 543 640.00

31 Jan J Brown 544 600.00
31 Jan K Smith 545 85.11
31 Jan Cabling Ltd 546 1000.00
31 Jan DIY Ltd 547 723.41
3048.52 3048.52
DR VAT Account CR
31 Jan Balance c/d 609.70 31 Jan Sales 543 128.00

31 Jan Sales 544 120.00
31 Jan Sales 545 17.02
31 Jan Sales 546 200.00
31 Jan Sales 547 144.68
609.70 609.70

Sales Ledger (Customer Accounts)

DR J Blogs CR
31 Jan Sales Inv 543 768.00
DR J Brown CR
DR K Smith CR
DR Cabling Ltd CR
31 Jan Sales Inv 546 1200.00
DR DIY Ltd CR


You are the supplier of office furniture to various establishments in your area. The invoices
have been drawn up. Your task is to post the details to the required ledgers.
General Ledger
DR Sales CR
20/1/1X T Hampshire Inv 456 175.00
20/1/1X J Blogs Inv 457 395.00
20/1/1X Smiths Sup Inv 458 260.00
20/1/1X Luxury Motors Inv 459 590.00
DR VAT Account CR
20/1/1X Sales Inv 456 35.00
20/1/1X Sales Inv 457 79.00
20/1/1X Sales Inv 458 52.00
20/1/1X Sales Inv 459 118.00
DR T Hampshire CR
20/01/1 Sales Inv 456 210.00
X
DR J Blogs CR
20/01/1 Sales Inv 457 474.00
X

DR Smiths Supplies CR
20/01/1X Sales Inv 458 312.00
DR Luxury Motors CR
20/01/1 Sales Inv 459 708.00
X

You have today (27 Jan 1X) issued credit note number CN450 to Smiths Supplies for the
return of a damaged bookcase.
The credit note was for £54.00 including VAT.
You should post this transaction to the various ledgers.
General Ledger
DR Sales Returns CR
27/1/1X CN450 Smiths Supplies 45.00
DR VAT Account CR
27/1/1X CN450 Smith Supplies 9.00 20/1/1X Sales Inv 456 35.00
20/1/1X Sales Inv 457 79.00
20/1/1X Sales Inv 458 52.00
20/1/1X Sales Inv 459 118.00

Sales Ledger
DR Smith Supplies Account CR

20/01/1 Sales Inv 458 312.00 27/01/1 Sales Return CN450 54.00
X X

.All invoices are dated 25/01/1X. Balance off the accounts at the end of the month.
General ledger
DR Purchases Account CR
Date1X Details £ Date1X Details £
25 Jan Tyneside Ltd Inv TD680 298.12 31 Jan Balance c/d 1768.12
25 Jan Rhinestones Inv RS54 100.00
25 Jan Nano Yates Inv NY987 870.00
25 Jan Rebuilding Ltd Inv 095R 500.00
1768.12 1768.12

DR VAT Account CR
25 Jan Purchases Inv TD680 59.62 31 Jan Balance c/d 353.62
25 Jan Purchases Inv RS54 20.00
25 Jan Purchases Inv NY987 174.00
25 Jan Purchases Inv 095R 100.00
353.62 353.62
Purchase Ledger
DR Tyneside Limited CR
25 Jan Purchase Inv TD680 357.74
DR Rhinestones CR
25 Jan Purchase Inv RS54 120.00
DR Nano Yates CR
25 Jan Purchase Inv NY987 1044.00

DR Re-building Limited CR
25 Jan Purchase Inv 095R 600.00

You are the owner of Brickie Housebuilders and you have made the following information
available to your book-keeper to enable him to update your books for January 201X. You
will no longer be using a cash book but posting entries straight to the T accounts.
Brickie Housebuilders
General Ledger
DR Bank Account CR
12/1/1X Bank Loan 10000.00 16/1/1X Telephone 000235 120.00
20/1/1X T Jones 750.00 21/1/1X Fantastic Fires 469.34

000236
22/1/1X Drawings 000237 600.00
DR Cash Account CR
10/1/1X Sales 276.00 24/1/1X Window Cleaner 12.00
13/1/1X Sales 936.00
20/1/1X Sales 1116.00
27/1/1X Sales 876.00

DR VAT Account CR
10/1/1X Colby Heaters Inv CH65 50.00 9/1/1X Sales Inv 4906 520.00
15/1/1X Fantastic Fires Inv 432F 78.22 10/1/1X Cash Sales 46.00
16/1/1X Telephone 20.00 13/1/1X Cash Sales 156.00
16/1/1X T Jones CN4906 100.00 20/1/1X Cash Sales 186.00
24/1/1X Window Cleaner 2.00 27/1/1X Cash Sales 146.00
DR Telephone Account CR
16/1/1X Bank 100.00
DR Sales Account CR
9/1/1X T Jones Inv 4906 2600.00
10/1/1X Cash Sales 230.00
10/1/1X Colby Heaters Inv CH65 250.00
15/1/1X
07 Fantastic Fires Inv 432F 391.12

DR Bank Loan Account CR

12/1/1X Bank 10000.00
DR Drawings Account CR
22/1/1X Bank 600.00
DR Window Cleaning Account CR
24/1/1X Cash 10.00
DR Sales Returns Account CR
16/1/1X T Jones CN4906 500.00
Purchase Ledgers
DR Colby Heaters CR
10/1/1X Purchase Inv CH65 300.00
DR Fantastic Fires CR
21/1/1X Bank 469.34 15/1/1X Purchase Inv 432F 469.34

Sales Ledger
DR T Jones CR
9/1/1X Sales Inv 4906 3120.00 16/1/1X Sales Return 600.00

CN4906
20/1/1X Bank 750.00

Sparky Electricians
General Ledger
DR Bank CR
01/1/1X Balance b/d 15654.00 13/1/1X Motor Expenses 150.00
12/1/1X Cash 560.00 14/1/1X Motor Van 5000.00
13/1/1X Rent Received 480.00 15/1/1X Topper Inv T543 987.40
15/1/1X Cash 480.50 31/1/1X Balance c/d 11037.10
17174.50 17174.50
31/1/1X Balance b/d 11037.10

DR Cash CR
01/1/1X Balance b/d 965.00 12/1/1X Postage Stamps 12.50
14/1/1X Cash Sales 408.00 12/1/1X Bank 560.00
15/1/1X Wages 120.00
15/1/1X Bank 480.50
31/1/1X Balance c/d 200.00
1373.00 1373.00
31/1/1X Balance b/d 200.00
DR VAT Account CR
03/1/1X Toppers Inv T543 164.56 13/1/1X Sales Inv 321 50.00
14/1/1X Motor Van 833.33 14/1/1X Cash Sales 68.00
31/1/1X Balance c/d 879.89
997.89 997.89
31/1/1X Balance b/d 879.89
DR Postage and Stationery CR
12/1/1X Cash 12.50

DR Sales CR
31/1/1X Balance c/d 590.00 13/1/1X Max Sporran Inv 321 250.00
590.00 590.00
31/1/1X Balance b/d 590.00
DR Purchases CR
3/1/1X Toppers Inv T543 822.84
DR Rent Received CR
13/1/1X Bank 480.00
DR Motor Expenses CR
13/1/1X Bank 150.00
DR Wages CR
15/1/1X Cash 120.00
DR Motor Vehicles CR
14/1/1X Bank 4166.67

Purchase Ledger
DR Toppers CR
15/1/1X Bank 987.40 3/1/1X Purchase Inv T543 987.40
Sales Ledger
DR M Sporran CR
13/1/1X Sales Inv 321 300.00

Please state which account is to be debited and credited.
Account to be Account to be
debited credited
Started business with £15,000 in bank Bank Capital
Bought motor van for cash Motor Van Cash
Paid creditor J Rowling by cheque J Rowling Bank
Received chq from debtor L Smith Bank L Smith
Bought Office Equipment by cash Office Equipment Cash
Bought Stationery paid by cash Stationery Cash
Returned faulty stationery, cash refunded Cash Stationery
Took money out of bank for personal use Drawings Bank
Paid for purchases by cheque Purchases Bank



Your task is to balance off each of the ledger accounts and complete a trial balance using the
template provided.
DR Bank CR
1/12/1X Capital 10,000 1/12/1X Motor Vehicles 7,000
1/12/1X Bank Loan 20,000 5/12/1X Office & Computing 1,500
29/12/1X Loan Repayment 1,400
31/12/1X Balance c/d 20,100
30,000 30,000
31/12/1X Balance b/d 20,100
DR Capital CR
31/12/1X Balance c/d 10,000 1/12/1X Bank 10,000
10,000 10,000
31/12/1X Balance b/d 10,000
DR Loan Account CR
29/12/1X Bank 1,400 1/12/1X Bank 20,000
31/12/1X Balance c/d 18,600
20,000 20,000
31/12/1X Balance b/d 18,600
DR Motor Vehicles
Date
CR Details £ Date Details £
1/12/1X Bank 7,000 31/12/1X Balance c/d 7,000
7,000 7,000
31/12/1X Balance b/d 7,000
DR Office and Computing CR

Date Details £ Date
Equipment Details £
1,500 1,500
31/12/1X Balance b/d 1,500

Sparky Electricians
Trial balance as at 31st December 201X
DR CR
Bank 20,100.00
Capital 10,000.00
Loan Account 18,600.00
Motor Vehicles 7,000.00
Office and computing 1,500.00
TOTAL 28,600.00 28,600.00

The books have been balanced off for the year ending 31 st December 201X for W Walters
Ltd. Please prepare the trial balance as of that date using the template.
W Walters Ltd
DR CR
Sales 320.00
Purchases 100.00
Rent Paid 50.00
Telephone 75.00
Wages 120.00
Debtors 220.00
Creditors 80.00
Bank 75.00
Capital 90.00
TOTAL 565.00 565.00


Your task is to make the journal entry to correct the mistake and adjust the trial balance to
reflect the changes.
Journal
Date Details DR CR
31/12/1X Rent Account 25.00

31/12/1X Telephone Account 25.00
Error in posting to incorrect accounts
W Walters Ltd
DR CR
Sales 320.00
Purchases 100.00
Rent 50 + 25 75.00
Telephone 75 - 25 50.00
Wages 120.00
Debtors 220.00
Creditors 80.00
Bank 75.00
Capital 90.00
TOTAL 565.00 565.00

DR Bank CR
1/06/1X Capital 10,000 1/06/1X Office Equipment 7,000
21/06/1X Sales 20,000 5/06/1X Stationery 500
30/06/1X Balance c/d 500 22,500
30,000 30,000
30/06/1X Balance b/d 22,500
DR Capital CR
10,000 10,000
Equipment
30/06/1X Balance b/d 10,000
DR Sales Account CR
20,000 20,000
30/06/1X Balance b/d 20,000
7,000 7,000
30/06/1X Balance b/d 7,000

T Simpson
Trial balance as at 30th June 201X
DR CR
Bank 22,500
Capital 10,000
Sales 20,000
Office equipment 7,000
TOTAL 29,500 30,000
Are the ledgers correct yes / no
If not give the reason below:
Entry to stationery account has been omitted on 5th June 201X - Amount £500



On the 7th February 201X, the owner of the Tip Top Shop counted up the contents of the
cash register for the previous day’s takings.
Tip Top Shop
Bank Giro Credit

My Bank Bungle Bank Limited £50
My Town 232 Bungle Place £20 80.00
My City BB2 3YH £10 90.00
Account Name: Tip Top Shop £5 120.00
Paid in By: whoever £1 / £2 coins 47.00
No of 50p 7.00
cheques
3 Sort Code Account number 20p 0.60
01- 01-02 321654987
10p 0.70
5p 0.25
Date 7th Bronze 0.12
February
201X
Total Cash 345.67
Total Cheques 3131.93
Total Banked 3477.60
Cheques: (reverse of paying in slip)
T Simpson 658.25
Simple Bakers 325.45
Plumb - it 2148.23
Total Carried Over 3131.93


Your task is to check the invoices for accuracy and if found to be correct complete the blank
cheques to make payment.
Bungle Bank Bungle Bank Limited

232 Bungle Place Date: 31st January 201X
BB2 3YH
Pay Account Payee
P. Jackson £ 606.00
Six Hundred and Six pounds only
Cheque No Sort Code Account Number

000101 03-03-03 128745693
Signed Your name
Bungle Bank Bungle Bank Limited

232 Bungle Place Date: 31st January 201X
BB2 3YH
Pay
Account Payee
Oak Direct Ltd £ 648.00

Six Hundred and Forty Eight Pounds only
Cheque No Sort Code Account Number

000102 03-03-03 128745693
Signed Your name
On the reverse of the cheque you should have quoted the invoice number.
On your cheque stub you would have noted who the cheque was made payable to, the
amount and the invoice number.


True or False – tick the box if you think it is true or false!
Question True False
You can specify the amount you want to pay with a direct debit √
You can increase a standing order at any time √
Using BACS is a more efficient way of making payments than using
a cheque
√
A cheque will clear quicker than a BACS payment √

A debit card payment will come out of the bank account on the
same day it is used.
√
You cannot take payment using a credit card over the telephone √
There is a fee for using the BACS service √

The petty cash book shows a balance b/d of £21.78, the original imprest balance was
£150.00 but it has been decided to increase it to £200.00. Work out what the original
imprest transfer from the current account would have been and then the new amount
based on the increase in amount.
Balance b/d £21.78
Restore to original imprest amount £128.22
Restore to new imprest amount £178.22


Enter the petty cash vouchers into the petty cash book taking note of any VAT. Do not
balance off the books at this time. A petty cash template has been provided for you. The
petty cash balance is £150.00
Petty Cash Book
Analysis Columns
Receipt Date Details V-No Total £
VAT Travel Stationery Postage Sundries

150.00 1/1/1X Balance b/d
2/1/1X Stationery 34 14.52 2.42 12.10
3/1/1X Stamps 35 6.54 6.54
4/1/1X Taxi 36 12.50 2.08 10.42
4/1/1X Tea/coffee 37 5.87 5.87
5/1/1X Petrol 38 17.62 2.93 14.69
6/1/1X Donation 39 10.00 10.00

Window
7/1/1X 40 10.00 10.00
Cleaner
7/1/1X Odd Jobs 41 23.50 3.91 19.59


The petty cash transactions are now complete for the week so you can now balance off the
books and restore the imprest balance to £150.
Petty Cash Book
Analysis Columns

2/1/1X Stationery 34 14.52 2.42 12.10
3/1/1X Stamps 35 6.54 6.54
4/1/1X Taxi 36 12.50 2.08 10.42
4/1/1X Tea/coffee 37 5.87 5.87
5/1/1X Petrol 38 17.62 2.93 14.69
6/1/1X Donation 39 10.00 10.00

Window
7/1/1X 40 10.00 10.00
Cleaner
7/1/1X Odd Jobs 41 23.50 3.91 19.59
100.55 11.34 25.11 12.10 6.54 45.46
7/1/1X Balance c/d 49.45
150.00 150.00
100.55 7/1/1X Bank
150.00 7/1/1X Imprest b/d


The petty cash assistant has found two petty cash vouchers that have been missed for the
weeks transactions. She has asked that the petty cash book be done again and it has been
decided to restore the imprest balance to £175 instead of £150. A blank petty cash
template has been provided and also the two missing vouchers.
Petty Cash Account
Analysis Columns

2/1/1X Stationery 34 14.52 2.42 12.10
3/1/1X Stamps 35 6.54 6.54
4/1/1X Taxi 36 12.50 2.08 10.42
4/1/1X Tea/coffee 37 5.87 5.87
5/1/1X Petrol 38 17.62 2.93 14.69
6/1/1X Donation 39 10.00 10.00

Window
7/1/1X 40 10.00 10.00
Cleaner
7/1/1X Odd Jobs 41 23.50 3.91 19.59
7/1/1X Stationery 42 9.53 1.58 7.95
7/1/1X Stamps 43 10.40 10.40
120.48 12.92 25.11 20.05 16.94 45.46
7/1/1X Balance c/d 29.52
150.00 150.00
145.48 7/1/1X Bank
175.00 7/1/1X Imprest b/d


Using the petty cash book in activity 5.7, post the column totals to the relevant accounts in
the general ledger.
DR VAT Account CR
7 Jan Petty Cash 12.92
DR Travel Account CR
DR Stationery Account CR
DR Postage Account CR
DR Sundries Account CR
DR Bank Account CR

JOURNAL
Date Details DR CR
28/2/1X Gross Wages 6000.00
28/2/1X Employers NIC 170.00
28/2/1X Employer Pension Cont 150.00

Amount due to
28/2/1X 4500.00
employees
28/2/1X Amount due to HMRC 1510.00
Amount due to
28/2/1X 310.00
pensions
6320.00 6320.00
Amount due to employees: £6000.00 - £950.00 - £390.00 - £160 = £4500.00

Amount due to HMRC: £170.00 + 390.00 + £950.00 = 1510.00
Amount due to pension provider: £160 + £150 = £310.00
DR Wages Expense Account CR

28/2/1X Feb Gross Wages 6000.00
28/2/1X Feb Employer NIC 170.00
28/2/1X Feb pension cont 150.00
DR Net Wages Due CR

28/2/1X Employee wage 4500.00
DR HMRC CR
28/2/1X Tax & NIC 1510.00
DR Pension CR
28/2/1X Pension due 310.00

Answers to Activities: A2 Chapter 6

Use the templates to enter the details into the Sales Day book, the customer accounts in the
Sales Ledger, the Sales Account in the General Ledger and the Vat account in the General
Ledger.
SALES DAY BOOK
Date Customer Invoice Gross Net VAT
25 Jan 1X J Blogs 543 768.00 640.00 128.00
25 Jan 1X J Brown 544 720.00 600.00 120.00
25 Jan 1X K Smith 545 102.13 85.11 17.02
25 Jan 1X Cabling Ltd 546 1200.00 1000.00 200.00
25 Jan 1X DIY Ltd 547 868.09 723.41 144.68
Totals 3658.22 3048.52 609.70

DR J Blogs CR
25 Jan SDB Inv 543 768.00
DR J Brown CR
Date Details £ Date 1X Details £
1X
25 Jan SDB Inv 544 720.00

DR K Smith CR
1X
25 Jan SDB Inv 545 102.13
DR Cabling Ltd CR
1X
25 Jan SDB Inv 546 1200.00
DR DIY Ltd CR
1X
25 Jan SDB Inv 547 868.09
General Ledger
DR Sales Account CR
25 Jan Sales Day Book 3048.52
DR VAT Account CR
25 Jan Sales Day Book 609.70


Using the same customer details from activity 6.1 now post the sales returns listed in the
day to the ledgers.
General Ledger
DR Sales Returns CR
1/2/1X SRDB 299.29
DR VAT Account CR
1/2/1X SRDB 59.85 25/1/1X Sales Day Book 609.70
Sales ledger
DR J Brown CR
25/1/1X SDB Inv 544 720.00 1/2/1X SRDB SC124 113.00
DR DIY Ltd CR
25/1/1X SDB Inv 547 868.09 1/2/1X SRDB SC125 246.14


You have now received payment from J Brown dated 20/2/1X to cover the outstanding
balance in his account. Work out what this amount will be taking the credit note into
account and post the payment to the relevant accounts.
DR J Brown CR
25/1/1X SDB Inv 544 720.00 1/2/1X SRDB SC124 113.00
20/2/1X Bank 607.00
720.00 720.00
DR Bank Account CR
20/2/1X J Brown 607.00

SALES DAY BOOK
Date Customer Invoice No Gross Net VAT
6/2/1X J Blooms 12/478 123.12 102.60 20.52
6/2/1X W Withers 12/479 358.35 298.63 59.72
6/2/1X L Simpsons Ltd 12/480 35.24 29.37 5.87
6/2/1X Crescents Ltd 12/481 289.50 241.25 48.25
6/2/1X Greens Flowers 12/482 505.47 421.23 84.24
Totals 1311.68 1093.08 218.60

SALES RETURNS DAY BOOK

Date Customer CrN No Gross Net VAT
8/2/1X W Withers 12/479/SC 14.25 11.88 2.37
11/2/1X Crescents Ltd 12/481/SC 52.50 43.75 8.75
Totals 66.75 55.63 11.12
General Ledger
DR Sales Account CR
6/2/1X SDB 1093.08
DR VAT Account CR
11/2/1X SRDB 11.12 6/2/1X SDB 218.60
DR Sales Returns CR
11/2/1X SRDB 55.63
DR Bank Account CR
25/2/1X W Withers 344.10
28/2/1X Greens Flowers 505.47
28/2/1X J Blooms 100.00

DR J Blooms CR
6/2/1X SBD Inv 12/478 123.12 28/2/1X Bank 100.00

DR W Withers CR
6/2/1X SDB Inv 12/479 358.35 8/2/1X SRDB 12/479/SC 14.25
25/2/1X Bank 344.10
DR L Simpsons Ltd CR
6/2/1X SDB Inv 12/480 35.24
DR Crescents Ltd CR
6/2/1X SDB Inv 12/481 289.50 11/2/1X SRDB 12/481/SC 52.50
DR Greens Flowers CR
6/2/1X SDB Inv 12/482 505.47 28/2/1X Bank 505.47


All invoices are dated 25/01/1X. Complete the Day Book totals and post to the accounts
then balance off the accounts at the end of the month.
Supplier Invoice Gross Net VAT

TL Jones Ltd TLJ-219 245.36 204.47 40.89
Harrows Builders 78-54HB 753.00 627.50 125.50
Merchants Supplies MS7654 1200.00 1000.00 200.00
Results Ltd 908-1-2 887.00 739.17 147.83
Totals 3085.36 2571.14 514.22

Postings from the Purchase Returns Day book below now need to be posted to the relevant
accounts created in Activity 6.5.
PURCHASE RETURNS DAY BOOKS (supplier returns)
Date Name Credit note Gross Net VAT
2/2/1X Merchants Supplies MSC7654 189.15 157.63 31.52
Total 189.15 157.63 31.52


The following payments have now been made to the suppliers listed below. Post the
payments to the relevant accounts created in Activity 6.5 & 6.6
Date Name Total
6/2/1X TL Jones Ltd 245.36
8/2/1X Merchant Supplies 1010.85
Ledgers for activity 6.5, 6.6 & 6.7

General Ledger
25/1/1X PDB 2571.14
DR VAT Account CR
25/1/1X PDB 514.22 2/2/1X PRDB 31.52
DR Purchase Returns Account CR

2/2/1X PRDB 157.63
DR Bank Account CR
6/2/1X TL Jones Ltd 245.36
8/2/1X Merchant Supplies 1010.85

Purchase Ledger
DR TL Jones Ltd CR
6/2/1X Bank 245.36 25/1/1X PDB Inv TLJ-219 245.36
DR Harrows Builders CR
25/1/1X PDB Inv 78-54HB 753.00
DR Merchants Supplies CR
2/2/1X PRDB MSC7654 189.15 25/1/1X PDB Inv MS7654 1200.00
8/2/1X Bank 1010.85
DR Results Ltd CR
25/1/1X PDB Inv 908-1-2 887.00


Purchases Day Book
Supplier Invoice Gross Net VAT
T Washer TW1/256 141.13 117.61 23.52
J Spoons 2541 874.15 728.46 145.69
Pools Ltd 98/741 468.57 390.48 78.09
Basin Warehouse WB657 32.58 27.15 5.43
Taps Industrial 57-897 1458.76 1215.64 243.12
Totals 2975.19 2479.34 495.85
Purchase Returns Day Book

Date Supplier CrN No Gross Net VAT
16/3/1X Taps Industrial 57-897SC 324.14 270.12 54.02
17/3/1X J Spoons CN2541 36.00 30.00 6.00
Totals 360.14 300.12 60.02
General Ledger
12/03/1X PDB 2479.34
DR VAT Account CR
12/03/1X PDB 495.85 17/03/1X PRDB 60.02
31/03/1X Balance c/d 435.83
495.85 495.85
31/03/1X Balance b/d 435.83
DR Purchase Returns Account CR

17/03/1X PRDB 300.12

DR Bank Account CR
31/03/1X Balance c/d 968.57 30/03/1X J Spoons 500.00
30/03/1X Pools Ltd 468.57
968.57 968.57
31/03/1X Balance b/d 968.57
Purchase Ledgers
DR T Washer CR
12/03/1X PDB TW1/256 141.13
DR J Spoons CR
17/03/1X PRDB CN2541 36.00 12/03/1X PDB 2541 874.15
30/03/1X Bank 500.00
31/03/1X Balance c/d 338.15
874.15 874.15
31/03/1X Balance b/d 338.15
DR Pools Ltd CR
30/03/1X Bank 468.57 12/03/1X PDB 98/741 468.57
DR Basin Warehouse CR
12/03/1X PDB WB657 32.58
DR Taps Industrial CR
16/03/1X PRDB 57-897SC 324.14 12/03/1X PDB 57-897 1458.76
31/03/1X Balance c/d 1134.62
1458.76 1458.76
31/03/1X Balance b/d 1134.62


DR Sales Ledger Control Account CR
25/03/1X SDB 2413.39 31/03/1X SRDB 345.45
31/03/1X Bank 802.04
31/03/1X Balance c/d 1265.90
2413.39 2413.39
31/03/1X Balance b/d 1265.90
DR Sales Account CR
25/03/1X SDB 2011.18
DR VAT Account CR
31/03/1X SRDB 57.57 25/03/1X SDB 402.21
31/03/1X Balance c/d 344.64
402.21 402.21
31/03/1X Balance b/d 344.64
DR Sales Returns Account CR

31/03/1X SRDB 287.88
DR Bank Account CR
31/03/1X Coopers TW126 31.26 31/03/1X Balance c/d 802.04
31/03/1X Howes TW124 654.78
31/03/1X Clays Ltd TW123 116.00
802.04 802.04
31/03/1X Balance b/d 802.04


DR Clays Ltd CR
15/03/1X SDB TW123 140.00 23/03/1X SRDB TWC123 24.00
31/03/1X Bank 116.00
140.00 140.00
DR Howes CR
18/03/1X SDB TW124 654.78 31/03/1X Bank 654.78
DR Mains Ltd CR
18/03/1X SDB TW125 658.12 31/03/1X SRDB TWC125 321.45
31/03/1X Balance c/d 336.67
658.12 658.12
31/03/1X Balance b/d 336.67
DR Coopers CR
22/03/1X SDB TW126 31.26 31/03/1X Bank 31.26
DR Mackays CR
23/03/1X SDB TW127 5.48
DR Browns Ltd CR
25/03/1X SDB TW128 48.57
DR Smiths & Co CR
25/03/1X SDB TW129 875.18
Sales Ledger Balance £1,265.90

Sales Ledger Control Account £1,265.90


DR Purchase Ledger Control Account CR
31/1/1X PRDB 197.18 31/1/1X PDB 2162.05
31/1/1X Bank 727.71
31/1/1X Balance c/d 1237.16
2162.05 2162.05
31/1/1X Balance b/d 1237.16
General Ledger
DR Purchases CR
31/1/1X PDB 1801.73
DR Purchase Returns CR
31/1/1X PRDB 164.32
DR VAT CR
31/1/1X PDB 360.32 31/1/1X PRDB 32.86
31/1/1X Balance c/d 327.46
360.32 360.32
31/1/1X Balance b/d 327.46
DR Bank Account CR
31/1/1X Balance c/d 727.71 12/1/1X Fans R Us 89/14 17.62
29/1/1X Howie’s H459 604.99
30/1/1X Bikers PLC 54-01 105.10
727.71 727.71
31/1/1X Balance b/d 727.71


DR RW Queens CR
15/1/1X PRDB RQC36 120.00 10/1/1X PDB RQ36 428.54
31/1/1X Balance c/d 308.54
428.54 428.54
31/1/1X Balance b/d 308.54
DR Fans R Us CR
12/1/1X Bank 17.62 12/1/1X PDB 89/14 17.62
DR Bikers PLC CR
30/1/1X Bank 105.10 12/1/1X PDB 54-01 105.10
DR Howie's CR
26/1/1X PRDB HC459 77.18 19/1/1X PDB H459 682.17
29/1/1X Bank 604.99
682.17 682.17
DR Smiths Bros CR
26/1/1X PDB SB43 144.00
DR McLeans Ltd CR
27/1/1X PDB 98/14 784.62
Purchase Ledger Balances £1,237.16

Purchase Ledger Control Account £1,237.16



Your task is to prepare the journal entry and the postings to the General Ledger for the
purchase using the template below.
JOURNAL
Date Details of Account DR CR
4 Jan Office Equipment 1000.00
4 Jan VAT 200.00
4 Jan Bank 1200.00
Purchase of office equipment
General ledger
4 Jan Bank 1000.00
DR VAT CR
DR Bank CR


Your task is to write this off as a bad debt using the journal and post the entries to the T
accounts.
JOURNAL
Date Details of Account DR CR
10 Oct Bad Debt 125.00
10 Oct VAT 25.00
10 Oct S Parkinson 150.00
Bad Debt written off
General Ledger
DR Bad Debt Account CR
DR VAT Account CR
DR S Parkinson CR
1/04/1X Sales 150.00 10 Oct Bad Debt 150.00


Journal
Date Ref Details Debit Credit
31st Mar JNL 1 Purchases Account 100.00
VAT Account 20.00
Cash Account 120.00
Purchase omitted - now corrected

31st Mar JNL 2 Bank Account 12.00
Stationery Account 10.00
VAT Account 2.00
Original error entry - now corrected

31st Mar JNL 3 Bank Account 720.00
W. Tinsel Account 720.00
Error of reversal - now corrected


Journal
Date Ref Details Debit Credit
Motor Expenses Account 70.00
31st July JNL 1 Motor Vehicle Account 70.00
Error of principle, now corrected

Cash Account 54.00
31st July JNL 2 Sales Account 45.00
VAT Account 9.00
Transposition error, now corrected

Sales Account 25.00
31st July JNL 3 Purchases Account 25.00
Compensating error, now corrected

Mr Pole Account 195.00
31st July JNL 4 Mrs Poke Account 195.00
Error of commission, now corrected


DR CASH BOOK CR
Disc Disc
Allow Rec
20/4/1X Rough Joiners 105.60
20/4/1X T Simpson 4.80 235.20
General Ledger
DR VAT Account CR
12/04/1X T Simpson 40.00
12/04/1X T Simpson 200.00
Purchase Ledger
DR Rough Joiners Account CR
20/04/1X Bank 105.60 08/04/1X Purchases 105.60
DR T Simpson Account CR
Discount Rec 4.80
240.00 240.00


General Ledger
DR CASH BOOK CR
Discount Discount
Allowed Received
01/05/1X Balance b/d 3750.00 06/05/1X Y. Gap 36.00 324.00
12/05/1X Mary Rose 36.00 684.00 06/05/1X Makers Ltd 132.00 1188.00
13/05/1X Fixers Ltd 72.00 1368.00 06/05/1X B. Hawes 86.40 777.60
27/05/1X Kings Head 540.00 31/05/1X Bal c/d 4052.40
108.00 6342.00 254.40 6342.00
31/05/1X Balance b/d 4052.40
General Ledgers
01/05/1X Y. Gap 300.00 31/05/1X Balance c/d 2120.00
01/05/1X Makers Ltd 1100.00
01/05/1X B. Hawes 720.00
2120.00 2120.00
31/05/1X Balance b/d 2120.00
DR Sales Account CR
31/05/1X Balance c/d 2250.00 02/05/1X Mary Rose 600.00
02/05/1X Kings Head 450.00
02/05/1X Fixers Ltd 1200.00
2250.00 2250.00
31/05/1X Balance b/d 2250.00

DR VAT Account CR
01/05/1X Y. Gap 60.00 02/05/1X Mary Rose 120.00
01/05/1X Makers Ltd 220.00 02/05/1X Kings Head 90.00
01/05/1X B. Hawes 144.00 02/05/1X Fixers Ltd 240.00
31/05/1X Disc Allowed adj 6.00 31/05/1X Disc Rec’d adj 6.00
31/05/1X Disc Allowed adj 12.00 31/05/1X Disc Rec’d adj 22.00
31/05/1X Balance c/d 50.40 31/05/1X Disc Rec’d adj 14.40
492.40 492.40
31/05/1X Balance b/d 50.40
DR Discounts Received Account CR

31/05/1X Cash Book 212.00
DR Discounts Allowed Account CR

31/05/1X Cash Book 90.00
Sales Ledger
DR Mary Rose CR
02/05/1X Sales 720.00 12/05/1X Bank 684.00
Disc Allowed 36.00
720.00 720.00
DR Kings Head CR
02/05/1X Sales 540.00 27/05/1X Bank 540.00
DR Fixers Ltd CR
02/05/1X Sales 1440.00 13/05/1X Bank 1368.00
Disc Allowed 72.00
1440.00 1440.00

Purchase Ledger
DR Y. Gap CR
Disc Received 36.00
360.00 360.00
DR Makers Ltd CR
Disc Received 132.00
1320.00 1320.00
DR B. Hawes CR
Disc Received 86.40
864.00 864.00
DR SLCA CR
31/05/1X SDB 2700.00 31/05/1X Cash Book 2592.00
Disc Allowed 108.00
2700.00 2700.00
DR PLCA CR
31/05/1X Cash Book 2289.60 31/05/1X PDB 2544.00
Disc Received 254.40
2544.00 2544.00


Spanners & Sons
Sales Ledger Control Account

1st Mar Balance b/d 12,478.00 31st Mar SRDB 987.00
31st SDB 15,478.00 31st Bank Receipts 10,231.00
31st Dishonoured cheques 145.00 31st Disc allowed 984.00
31st Bad debts 380.00
31st Balance c/d 15,519.00
28,101.00 28,101.00
31st Mar Balance b/d 15,519.00
Purchase Ledger Control Account

31st Mar PRDB 1,423.00 1st Mar Balance b/d 8,654.00
31st Bank Payments 6,254.00 31st Mar PDB 7,987.00
31st Disc received 655.00
31st Balance c/d 8,309.00
16,641.00 16,641.00
31st Mar Balance b/d 8,309.00


Supplier Reconciliation Statement
Details £
Balance as per purchase ledger account 226.00
Deduct: incorrect invoice as per ledger (137) (74.00)
152.00
Add: invoice (137) as per statement 47.00
199.00
Add: payment in ledger but not on statement 458.00
Balance as per supplier statement 657.00

Sarah Matthews
Cash Book/ Bank Account

31-Jan Balance c/d 418.70 31-Jan Balance b/d 407.70
15-Jan Bank Charges 4.00
30-Jan Bank Charges 7.00
418.70 418.70
Bank Reconciliation Statement as at 31-01-201X
£ £
Balance as per Bank Statement 1,097.00
Less: cheques not presented
K Williams 1,155.50
R Floyd 800.20 (1,955.70)
(858.70)
Add: outstanding lodgements
B Drake 440.00
Balance as per Cash Book (418.70)


28-Feb Balance b/d 227.55 28-Feb Bank Charges 5.00
Balance c/d 222.55
227.55 227.55
28-Feb Balance b/d 222.55
£ £
Balance as per Cash Book 222.55
Add: cheques not presented 1,990.00
2,212.55
Less: Outstanding Lodgements 395.45
Balance as per Bank Statement 1,817.10

31-Mar Balance c/d 938.03 31-Mar Balance b/d 931.03
Bank Charges 7.00
938.03 938.03
31-Mar Balance b/d 938.03
£ £
Balance as per Bank Statement 741.97
Less: cheques not presented 1,680.00
Balance as per Cash Book (938.03)



Chris Smith’s Books
DR Sales Account (Labour) CR
30 Jun Grants Ltd 640.00
DR Sales Account (Materials) CR
DR Sales Account (Travel) CR
DR VAT Output Account CR

DR Grants Ltd Account CR
30 Jun Labour, Materials, 1200.00

Travel & VAT
b)
The tax deducted by Grants Ltd will be 20% of the labour and travel.
Labour & Travel = £680.00
Tax deducted at 20 %= £136.00
Amount received from Grants Ltd will be £1200.00 - £136.00 = £1064
This will be posted to Chris Smith’s accounts as follows:
DR Bank Account (Extract) CR
30 Jul Grants Ltd 1064.00
DR Grants Ltd Account CR
Labour, Materials,
30 Jun 1200.00 30 Jul Bank 1064.00
Travel & VAT
30Jul CIS tax deducted 136.00
1200.00 1200.00

DR CIS Tax Deducted Account CR
30 Jul Grants Ltd 136.00
c)
Chris Smith will recover his tax as part of his self-assessment tax return at the end of the
financial year. It will be deducted from any tax he owes from other income.
If he operated as a limited company he could offset his tax paid at source against any
PAYE/NIC due from any employees he may have.

Grants Ltd Books
DR Purchases Account (Labour) CR
31 July Bruce Brown 1320.00
DR Purchases Account (Materials) CR
DR VAT Input Account CR

DR Bruce Brown Account CR
20 Aug Bank 4188.00 31 July Labour & materials 4584.00
HMRC 396.00
4584.00 4584.00
20 Aug Bruce Brown 4188.00
DR HMRC Account CR
20 Aug Bruce Brown 396.00
The tax deducted by Grants Ltd will be 30% of the labour as Bruce had not been verified.
Labour = £1320.00
Tax deducted at 30% = £396.00
Amount received by Bruce from Grants Ltd will be £4584.00 - £396.00 = £4188.00


1) Selling goods from the UK to USA (leaving the EU within 3 months), will be
subject to which VAT rate?
a) 20%
b) VAT rate charge in America
c) VAT at 0%
d) VAT exempt
Selling of goods to USA (outside the EU) are classed as exports and invoices are
zero rated.
2) Goods bought in from France (within the EU), where both supplier and
purchaser are registered for VAT in subject to which VAT rate?
a) VAT charged at the current rate in France
b) VAT at 0%
c) VAT at 20%
d) VAT exempt
Purchasing goods from France (within the EU) are zero rated if both the
supplier and customer are VAT registered.

3) The sale of goods to Spain (within the EU) is subject to what VAT rate if the
customer is not VAT registered?
a) VAT at 0%
b) VAT at 20%
c) VAT at the current rate in Spain
d) VAT exempt
The sale of goods to Spain (within the EU) is subject to UK VAT if customers in
Spain are not VAT registered.
4) How are sales invoices from counties within the EU treated on a VAT return?
a) They are all included on the VAT return
b) They are only included if there is VAT charged on them
c) They are not included on the VAT return
d) They are only included if UK VAT rate is charged on them.
They are all included on the VAT return for sales figures, whether or not they
show any VAT.

DR Diane – Capital Account CR

1 June Bank 6000.00
DR Amy – Capital Account CR

1 June Bank 6000.00

1 June Capital – Diane 6000.00 30 June Drawings - Diane 1200.00
Capital – Amy 6000.00 Drawings - Amy 900.00
28 July Drawings - Diane 600.00
Drawings - Amy 950.00
DR Diane Drawings Account CR

30 June Bank 1200.00
28 July Bank 600.00
DR Amy Drawings Account CR

30 Jun Bank 900.00
28 July Bank 950.00


DR Share Capital Account CR
31 Aug Balance c/d 6000.00 1 Aug Bank (Greg) 3000.00
Bank (Sam) 3000.00
6000.00 6000.00
31 Aug Balance b/d 6000.00
DR Directors Loan Acc - Greg CR

Date Details GGGreg
£ Date Details £
14 Aug Bank 1000.00 1 Aug Office Equip. 2000.00
31 Aug Balance c/d 1600.00 31 Aug Net Salary 600.00
2600.00 2600.00
DR Directors Loan Acc - Sam CR

14 Aug Bank 1000.00 31 Aug Net Salary 600.00
31 Aug Balance c/d 400.00
1000.00 1000.00
Greg’s loan account has a credit balance of £1600.00, which means the company owes him
that amount.
Sam’s loan account has a debit balance of £400.00, which means Sam owes this amount
back to the company.

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Published by Training Link

© Training Link 2019

All rights reserved. No part of this publication may be reproduced, sorted in a

The content of this pack is frequently updated but on occasion, changes to

Printed under licence by Training Link 2019

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Answers to Activities: A1 Chapter 1

Answer to Activity 1.1

Item Fixed Asset Current Asset

Answer to Activity 1.2

Item Current Liability Long Term Liability

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Answer to Activity 1.3

Item Account to Debit Account to Credit

Answer to Activity 1.4

Account to debit Account to credit

Bought motor van by cheque Motor Van Bank

Paid for purchases by cheque Purchases Bank

Received cheque for sales Bank Sales

Bought Office Equipment by cheque Office Equipment Bank

Bought Stationery paid direct from bank Stationery Bank

Paid insurance by cheque Insurance Bank

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Answers to Activity 1.5

Date Details £ Date Details £

Answer to Activity 1.6

4500.00 13000.00 4500.00 13000.00

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Answer to Activity 1.7

Answer to Activity 1.8

Date Details £ Date Details £ Purch M-Exp Utilities Wages

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Answer to Activity 1.9

Net Cost VAT @20% Gross Value

Answer to Activity 1.10

Net Cost VAT @5% Gross Value

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Answer to Activity 1.11

Date Details Cash Bank Date Details Cash Bank

9/1X Capital 50000.00 9/1X Showroom 25000.00

9/1X Loan 20000.00 9/1X Delivery Vehicle 14400.00

9/1X Office Equipment 3000.00

9/1X Heat and Light 1200.00

9/1X Purchases 1200.00

9/1X Advertising 600.00

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DR Heat & Light CR

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Answer to Activity 1.12

9240.00 14820.00 9240.00 14820.00

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Answers to Activities: Chapter 2

Answer to Activity 2.1

TO: Matthews Farm,

Tel : 0151 454 2300