CHAPTER 10

PRACTICAL EXAMPLE 1 - SUGGESTED SOLUTION

ARCHER DEALERS
GENERAL JOURNAL J1
FOL DR CR

200X R R
Jan 1 Cost of sales 14 000
Inventory 14 000
Transfer opening inventory to cost of sales
Dec 31 Inventory 12 000
Cost of sales 12 000
Closing inventory adjustment
31 Depreciation 2 500
Accumulated depreciation: Furniture
1 000
(10 000 x 10%)
Accumulated depreciation: Vehicles
1 500
(12 500 x 12%)
Depreciation written off
31 Rent received/income 300
Rent received in advance (3 900 ÷ 13) 300
Rent received for January 200Y
31 Salaries and wages 500
Salaries and wages accrued 500
Salaries and wages outstanding
31 Water and electricity paid in advance 50
Water and electricity 50
Water and electricity overpaid
31 Commission receivable (45 x 12 = 540 – 500) 40
Commission received 40
Commission income outstanding
31 Allowance: Credit losses 100
Debtors control 100
Credit losses written off
31 Credit losses 40
Allowance: Credit losses 40
Allow. should be: 2900–100=2800x5%=140
Allow. Is: 200–100=100
Allowance adjusted to 5% of debtors
 CHAPTER 10

PRACTICAL EXAMPLE 2 - SUGGESTED SOLUTION

ARCHER DEALERS
POST-ADJUSTMENT TRIAL BALANCE
ON 31 DECEMBER 200X
FOL DR CR

Capital 41 800
Drawings 6 000
Land and buildings 12 000
Furniture at cost 10 000
Accumulated depreciation: Furniture (7 000 + 1 000) 8 000
Vehicles at cost 12 500
Accumulated depreciation: Vehicles (5 000 + 1 500) 6 500
Inventory 12 000
Cost of sales 2 000
Purchases 34 000
Purchases returns 2 000
Sales 46 000
Sales returns 3 000
Freight on purchases 1 500
Rent income (3 900 – 300) 3 600
Salaries and wages (5 500 + 500) 6 000
Commission received (500 + 40) 540
Water and electricity (500 – 50) 450
Depreciation (1 000 + 1 500) 2 500
Credit losses 40
Bank 6 400
Debtors control (2 900 – 100) 2 800
Allowance: Credit losses (2 800 x 5%) + (200 – 100 + 40) 140
Creditors control 1 900
Rent received in advance 300
Salaries and wages accrued 500
Water and electricity paid in advance 50
Commission receivable 40
111 280 111 280
 CHAPTER 10

PRACTICAL EXAMPLE 3 - SUGGESTED SOLUTION

ARCHER DEALERS
GENERAL JOURNAL J1
FOL DR CR
200X R R
Dec 31 Cost of sales 35 500
Purchases 34 000
Freight on purchases 1 500
Closing transfer
31 Purchases returns 2 000
Cost of sales 2 000
Closing transfer
31 Trading account 35 500
Cost of sales 35 500
Closing transfer (2 000 + 35 500 – 2 000)
31 Sales 46 000
Trading account 46 000
Closing transfer
31 Trading account 3 000
Sales returns 3 000
Closing transfer
31 Trading account 7 500
Profit or loss account 7 500
Transfer gross profit to profit and loss
(46 000 – 35 500 – 3 000)
31 Profit or loss account 8 990
Salaries and wages 6 000
Water and electricity 450
Depreciation 2 500
Credit losses 40
Closing transfer
31 Rent income 3 600
Commission received 540
Profit or loss account 4 140
Closing transfer
31 Profit or loss account 2 650
Capital 2 650
Transfer net profit to capital
(7 500 + 4 140 – 8 990)
31 Capital 6 000
Drawings 6 000
Transfer drawings to capital account
 CHAPTER 10

PRACTICAL EXAMPLE 4 - SUGGESTED SOLUTION

ARCHER DEALERS
POST-CLOSING TRIAL BALANCE
ON 31 DECEMBER 200X
FOL DR CR

Capital (41 800 + 2 650 – 6 000) 38 450

Land and buildings 12 000
Furniture at cost 10 000
Accumulated depreciation: Furniture 8 000
Vehicles at cost 12 500
Accumulated depreciation: Vehicles 6 500
Inventory 12 000
Bank 6 400
Debtors control 2 800
Allowance: Credit losses 140
Creditors control 1 900
Rent received in advance 300
Salaries and wages accrued 500
Water and electricity paid in advance 50
Commission receivable 40
55 790 55 790