Topic 3 : Double Entry- Trading Businesses

Tutorial Exercises 2
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Part 1
1. Following transactions relate to a retail store.

1. Introduced capital in cash

2. Purchased equipment for cash
3. Purchased furniture on credit
4. Purchased goods for cash
5. Paid office expenses
6. Sold goods for cash
7. Purchased goods on credit
8. Sold goods on credit
9. Purchases returns
10. Sales returns
You are required to complete the following worksheet:

Transaction Item/Account Element Effect+/ Action

No. - Dr/Cr

2. Following transactions have been extracted from Gabi’s business.

Date Transaction
July, 2008
1 Capital introduced by owner in cash K 25 000
2 Bought motor vehicle from Toyota Motors for K 7 000 and paid an advance of K 3
000
3 Purchased stock for cash K 800
4 Purchased stock on credit from Ela Ltd. K 200
5 Sold stock in hand for cash K 2 000
6 Paid wages K 200
7 Paid power bill K 150
8 Cash withdrawn from the business K 100
9 Owner brought his computer worth K 2 000 to the business
10 Purchased office furniture for cash K1 200
Required:
(a) Prepare Transaction Analysis Chart.
(b) Prepare ledger accounts in T format.
(c) Prepare a Trial Balance as at 10 July 2008.

3*. The financial position of Miti's business as at 31 December 2007 is given below:
Assets K
Cash at bank 11 700
Office furniture 5 000
Computer 2 800
Truck 12 000
Liabilities
Trade creditor – Chan Traders 5 000
Capital – Miti 26 500

Following transactions took place during the 1st week of January 2008.
Date Transaction
January,2008
1 Additional capital introduced by owner K 5 000
2 Purchase of goods for cash K 500
3 Purchase of goods on credit from Chan Traders K 1 200
4 Sold stock in hand for cash K 1 800
5 Payments to Chan Traders in partial settlement of debt K 600
6 Paid wages K 150

Required:
(a) Prepare Transaction Analysis Chart.
(b) Prepare ledger accounts in columnar format.
(c) Prepare a Trial Balance as at 6th January 2008.

4*. The following transactions occurred during the first 10 days of Kanage’s business.
Date Transaction
2008 June
1 Kanage introduced K 35 000 in cash and K 3 500 worth of office furniture as capital
2 Purchased office equipment for cash K 4 500
3 Purchased office equipment from Bomana Trading Ltd for K 3 200
4 Purchased goods for cash K 5 600
5 Paid K 1 800 to Bomana Trading Ltd
6 Purchased goods on credit for K 2 400 from Nestle Ltd
7 Sold goods for cash K 7 500
8 Sold goods on credit for K 3 300 to Jonson
9 Paid power bill K 200
10 Purchased goods for cash K 4 000
Required:
i. Prepare Transaction Analysis Chart.
ii. Prepare columnar format ledger accounts.
iii. Prepare a Trial Balance as at 10 June 2008.

Part 2
1. Design a Chart of Account for a service organisation indicating at least 3 accounts under each of the
following categories.
Assets, liabilities, revenue, expense

2*. Awasa is an owner of a retail business. His business transactions for the month of January 2008 are given
below.
Date Transactions
2008 January
1 Awasa commenced business depositing K 10 000 into the business bank account
2 Purchased stock K 1500 for cash
3 Purchased delivery truck K 3 000 for cash
4 Sold goods for cash K 800
5 Sold goods on credit to David K 1200
6 Paid rent K 100
7 Purchased stock K 2000 for cash
8 Purchased stock on 30 day terms K 1500 from Philip
12 Returned faulty goods to Philip K 300
13 Returns inwards from David K 250
15 Cash received from David K 750
22 Paid K 1000 to Philip
27 Paid staff wages K 500
28 Cash sales K 2200
29 Paid electricity bill K 200
30 Cash withdrawn by Awasa for personal use K 150
Chart of Accounts
Cash at bank 001
Capital 401
Purchases 201
Delivery van 010
Sales 030
Electricity 212
Trade debtor – David 006
Rent expense 214
Trade creditor – Philip 102
Returns outwards 202
Returns inwards 302
Wages 213
Drawings 402

You are required to prepare:

a) Transaction Analysis Chart.
b) Ledger accounts on "T" format including account numbers.
c) A Trial Balance as at 31 Jan. 2008.

3*. Following transactions have been extracted from Lama’s business.

Date Transaction
2008 June
1 Capital introduced by owner in cash K 50 000
2 Bought vehicle from Nisan Motors for K 10 000 and made a payment of
3 K 3 000 immediately
4 Purchased stock for cash K 1 000
5 Purchased stock on credit from Kundu Ltd K 4500
6 Sold stock in hand for cash K 4 000
7 Paid wages K 400
8 Sale of goods to Henry K 2 000
9 Cash drawings K 1 000
10 Owner brought his computer worth K 3 500 to the business
11 Purchased office furniture for cash K 2 500
11 Purchases returns to Kundu Ltd K 300
12 Sales returns to Henry K 250
Chart of Accounts
Cash at bank 001
Capital - Lama 401
Purchases 201
Purchases returns 310
Motor vehicles 013
Sales 301
Sales returns 204
Electricity 218
Rent 214
Sundry creditor – Nisan Motors 102
Trade creditor – Kundu Ltd 115
Trade debtor – Henry 018
Wages 213
Drawings 402
Office furniture 014
Computers 015

Required:
i Prepare Transaction Analysis Chart.
ii. Prepare columnar form ledger accounts using account numbers.
iii. Prepare a Trial Balance.
4. The following transactions relate to Gunbi’s business
Date Transaction
2008 January
1 Introduced K40 000 in cash and brought his K 4 000 worth personal computer to
commence business
` 2 Bought motor vehicle from Badili Motors for K 4 500 on credit
3 Cash paid to Badili Motors K 3 750
4 Purchase stock for cash K 4 000
5 Wages paid K 600
6 Sold stock purchased on 4 January for cash K 6 000
7 Purchased stock for cash K 3 000
8 Sold stock in hand for K 4 500 on credit to Nathan
9 Additional capital introduced by owner K 8 000
10 Cash drawings K 1 500

Required:
a) Prepare columnar form ledger accounts. Use the Chart of Accounts given below.
b) Prepare a Trial Balance as at 10 Jan. 2008.
Chart of Accounts (Extract)
Assets
Cash at bank 001
Purchases 201
Computers 113
Motor vehicles 114
Trade debtor – Nathan 115
Equity
Capital 401
Drawings 402
Revenue
Sales 301
Expenses
Electricity 218
Rent expense 214
Wages 213
Liabilities
Sundry creditor – Badili Motors 102