CHAPTER 9

PRACTICAL EXAMPLE

CUPPA
GENERAL JOURNAL J1
FOL DR CR

R R
200X
Jan 1 Cost of sales 50 000
Inventory 50 000
Transfer opening inventory to cost of sales
31 Purchases 15 000
Bank 15 000
Cash purchases of inventory
31 Bank 50 000
Sales 50 000
Cash sales of inventory
Mar 31 Purchases 10 000
Bank 10 000
Cash purchases of inventory
May 31 Purchases 12 000
Bank 12 000
Cash purchases of inventory
Jun 30 Bank 40 000
Sales 40 000
Cash sales of inventory
Sep 30 Bank 55 000
Sales 55 000
Cash sales of inventory
Nov 30 Purchases 5 000
Bank 5 000
Cash purchases of inventory
Dec 31 Freight on purchases 7 000
Bank 7 000
Paid freight on purchases
31 Salaries and wages 40 000
Telephone 5 000
Advertising cost 5 000
Rent paid 60 000
Interest received 10 000
Bank 100 000
Income and expenses for the year

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 CUPPA
GENERAL JOURNAL J1
FOL DR CR

200X R R
31 Bank 70 000
Sales 70 000
Cash sales of inventory
31 Inventory 40 000
Cost of sales 40 000
Transfer closing inventory to inventory account
31 Cost of sales 42 000
Purchases 42 000
Transfer purchases to cost of sales
31 Cost of sales 7 000
Freight on purchases 7 000
Transfer freight on purchases to cost of sales

CUPPA
GENERAL LEDGER
DR INVENTORY CR
200X 200X
Jan 1 Balance b/f 50 000 Jan 1 Cost of sales J1 50 000
Dec 31 Cost of sales J1 40 000 Dec 31 Balance c/f 40 000
90 000 90 000
200Y
Jan 1 Balance b/f 40 000

27
DR BANK CR
200X 200X
Jan 31 Sales J1 50 000 Jan 31 Purchases J1 15 000
Jun 30 Sales J1 40 000 Mar 31 Purchases J1 10 000
Sep 30 Sales J1 55 000 May 31 Purchases J1 12 000
Dec 31 Interest received J1 10 000 Nov 30 Purchases J1 5 000
Sales J1 70 000 Dec 31 Freight costs J1 7 000
Advertising costs J1 5 000
Salaries and wages J1 40 000
Telephone J1 5 000
Rent paid J1 60 000
Balance c/f 66 000
225 000 225 000
200Y
Jan 1 Balance b/f 66 000

DR SALES CR
200X
Jan 31 Bank J1 50 000
Jun 30 Bank J1 40 000
Sep 30 Bank J1 55 000
Dec 31 Bank J1 70 000
215 000

DR PURCHASES CR
200X 200X
Jan 31 Bank J1 15 000 Dec 31 Cost of sales J1 42 000
Mar 31 Bank J1 10 000
May 31 Bank J1 12 000
Nov 30 Bank J1 5 000
42 000 42 000

DR FREIGHT ON PURCHASES CR
200X 200X
Dec 31 Bank J1 7 000 Dec 31 Cost of sales J1 7 000

DR SALARIES AND WAGES CR

200X
Dec 31 Bank J1 40 000

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DR TELEPHONE CR
200X
Dec 31 Bank J1 5 000

DR ADVERTISING COST CR
200X
Dec 31 Bank J1 5 000

DR RENT PAID CR
200X
Dec 31 Bank J1 60 000

DR INTEREST RECEIVED CR
200X
Dec Bank J1 10 000

DR COST OF SALES CR
200X 200X
Jan 1 Trading inventory J1 50 000 Dec 31 Trading inventory J1 40 000
Dec 31 Purchases J1 42 000 Balance c/f 59 000
Freight on
7 000
purchases
99 000 99 000
200Y
Jan 1 Balance b/f 59 000

CUPPA
ABBREVIATED TRIAL BALANCE
ON 31 DECEMBER 200X
FOL DR CR

R R
Inventory 40 000
Bank 66 000
Sales 215 000
Cost of sales 59 000
Salaries and wages 40 000
Telephone 5 000
Advertising costs 5 000
Rent paid 60 000
Interest received 10 000
xxxxx xxxxx

29
CUPPA
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDING 31 DECEMBER 200X
200X 200X
R R
Sales 215 000
Less: Cost of sales (59 000)
Opening inventory 50 000
Purchases 42 000
Freight on purchases 7 000
99 000
Closing inventory (40 000)
Gross profit 156 000
Other income NIL
156 000
Expenses (110 000)
Salaries and wages 40 000
Telephone 5 000
Advertising costs 5 000
Rent paid 60 000
Profit before interest 46 000
Interest received 10 000
Profit for the year 56 000

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