Question

On 1 October 20X9, the owner of the USS Enterprise, Mr Kirk, decided that he will boldly go and keep his records on a double entry system. His assets and liabilities at that date were:

£

Fixtures and equipment                                            20,000

Stock including weapons                                          15,000

Balance at Universe Bank                                        17,500

Cash                                                                           375

Creditors – Spock                                                     3,175

– Scott                                                                         200

– McCoy                                                                     500

Kirk’s transactions during October were as follows:

1.      Sold faculty phasers, original cost £500, to Klingon Corp, for cash £5,000

2.      Bought Photon Torpedoes (weapons), on credit from Central Council £2,500

3.       Sold Stocks to Aardvarks, original cost £250, on credit, £1,500

4.       Bought Cloaking Device (Fixture and Fittings) from Klingon Corp £3,500

5.       Paid the balance owed to Spock at 1 October less a 5% cash discount

6.       Paid Central Council full amount due by cheque

7.       Received full amount due from Aardvarks by cheque ‘

8.       Paid Klingon Corp by cheque after deducting 20% trade discount

9.       Paid, by bankers order, £10,000 for repairs to Enterprise following disagreement over amount owing to Klingon Corp and faculty phasers.

Required:

Open Enterprise’s ledger accounts at 1 October, record all transactions for the month, balance the ledger accounts, and prepare a trial balance as at 31 October.

Answer 1

Dr	Cash	Cr
Particulars	Amount	Particulars	Amount
To Balance b/d	£        375.00	By Spock	£    3,016.25
To Sales	£    5,000.00	By Balance c/d	£    2,358.75
	£    5,375.00		£    5,375.00
To Balance b/d	£    2,358.75
Dr	Sales	Cr
Particulars	Amount	Particulars	Amount
		By Cash	£    5,000.00
		By Aardvarks	£    1,500.00
To Balance c/d	£ 16,500.00	By Universe Bank	£ 10,000.00
	£ 16,500.00		£ 16,500.00
		By Balance b/d	£ 16,500.00
Dr	Stock	Cr
Particulars	Amount	Particulars	Amount
To Balance b/d	£ 15,000.00	By Cost of Goods Sold	£        500.00
To Central Council	£    2,500.00	By Cost of Goods Sold	£        250.00
		By Balance c/d	£ 16,750.00
	£ 17,500.00		£ 17,500.00
To Balance b/d	£ 16,750.00
Dr	Spock	Cr
Particulars	Amount	Particulars	Amount
To Cash	£    3,016.25	By Balance b/d	£    3,175.00
To Discount	£        158.75
	£    3,175.00		£    3,175.00
Dr	Cost of Goods Sold	Cr
Particulars	Amount	Particulars	Amount
To Stock	£        500.00
To Stock	£        250.00	By Balance c/d	£        750.00
	£        750.00		£        750.00
To Balance b/d	£        750.00
Dr	Central Council	Cr
Particulars	Amount	Particulars	Amount
To Universe Bank	£    2,500.00	By Stock	£    2,500.00
	£    2,500.00		£    2,500.00
Dr	Aardvarks	Cr
Particulars	Amount	Particulars	Amount
To Sales	£    1,500.00	By Universe Bank	£    1,500.00
	£    1,500.00		£    1,500.00
Dr	Universe Bank	Cr
Particulars	Amount	Particulars	Amount
To Balance b/d	£ 17,500.00	By Central Council	£    2,500.00
To Aardvarks	£    1,500.00	By Klingon Corp	£    2,800.00
To Sales	£ 10,000.00
		By Balance c/d	£ 23,700.00
	£ 29,000.00		£ 29,000.00
To Balance b/d	£ 23,700.00
Dr	Fixtures & Equipment	Cr
Particulars	Amount	Particulars	Amount
To Balance b/d	£ 20,000.00
To Klingon Corp	£    3,500.00	By Balance c/d	£ 23,500.00
	£ 23,500.00		£ 23,500.00
To Balance b/d	£ 23,500.00
Dr	Klingon Corp	Cr
Particulars	Amount	Particulars	Amount
To Universe Bank	£    2,800.00	By Fixtures & Equipment	£    2,800.00
		(3500*(1-20%))
	£    2,800.00		£    2,800.00
Dr	Discount	Cr
Particulars	Amount	Particulars	Amount
		By Spock	£        158.75
To Balance c/d	£        158.75
	£        158.75		£        158.75
		By Balance b/d	£        158.75
Trial Balance as on 31st October 20X9
Particulars	Debit	Particulars	Credit
Cash	£    2,358.75	Sales	£ 16,500.00
Stock Incl. Weapons	£ 16,750.00	Discount	£        158.75
Cost of Goods Sold	£        750.00	Creditors -
Universe bank	£ 23,700.00	Spock	£                 -
Fixtures & Equipment	£ 23,500.00	Scott	£        200.00
		Mc Coy	£        500.00
		Capital (bal.Fig.)	£ 49,700.00
	£ 67,058.75		£ 67,058.75
Note:
*Generally, No Ledger will be created for Trase Discount
** Bankers order to pay to Enterprise