Question

Assume that you have recently been given the firm, A. Sedeno, as a gift from 1^st January, 2020.

You are required to create a new retail merchandise company.

Use the information below to assist you in preparing a proper financial accounting report after the first month of operations.

1. Open all accounts in the appropriate Ledgers.

2. Balance all accounts and extract a Trial Balance.

R. Sedeno had the following assets and liabilities on 31^st December, 2019.

Items                                                  $                      Items                          $

Cash                                                    100                 Bank                            2,180

Stock                                                  5,900                Petty Cash                120

Furniture and Fittings                      6,800              Equipment                 3,200

Motor Vehicle                                    17,500             Premises                   40,000

Debtors:                                                                     Creditors:

            L. Robertson                          1,900                          T. Hosein        250

            H. Henry                                 520                             N. Akua           1,200

Transactions during the month of January 2020 were as follows:

1          Paid N. Akua’s account less 5% discount by cheque.

2          Bought $20 stamps and $40 in stationery from cash.

3          Withdrew $200 cash from bank for office use.

6          Cash sales $1,660 of which $1,600 was banked.

8          Paid wages $800 and advertising expense $300 by cheque.

14        Robertson paid his account in cash less 3% discount.

            He bought a further $400 worth of goods on credit.

16        Received a month’s rent for a sub-let office $1,500 by cheque.

18        Cash purchase of $1,800.

20        Sedeno drew a $1,250 cheque for private use and made a down-payment of $1,000 to Ocean View Resort for a family vacation in August.

22        Bought a computer $5,000 on credit from T. Hosein.

23        Bought $860 worth of goods from T. Hosein on credit.

            Paid for cleaning supplies $36 in cash.

24        Cash sales $960. Bought stationary $24 in cash.

25        Bought a computer desk $3,000 on credit from T. Hosein.

26        Paid wages $1,200 by cheque. Returned $160 of goods bought from T. Hosein on 23^rd January. Paid Hosein’s account at the beginning of the month in cash.

28        Sold good to H. Henry invoiced at $600 less 10% trade discount.

            Purchase goods $430 on credit from N. Akua.

30        Henry returned $40 of the goods bought the previous day and paid the balance in cash.

            Sedeno borrowed $2,000 from his sister C. Sedeno.

31        Petty Cashier is reimbursed.

            **********

Closing stock was counted and value at $4,800.

Answer 1

1. Opening of Appropriate Ledger

Cash Account
Particular	Dr.	Particular	Cr.
To Opening Balance	100	By Bank	1,600
To bank	200	By Stock (Purchase)	1,800
To Stock (Sales)	1,660	By Creditors (Hosein)	250
To Stock (Sales)	960	By Debtors (Henry)	500
To C. Sedeno	2,000
To Stock (Sales)	510	To Cloasing Balance	1,280
	5,430		5,430

Bank Account
Particular	Dr.	Particular	Cr.
To Opening Balance	2,180	By Creditors (N. Akua)	1,140
To Debtors (Robertson)	1,843	(1200x95%)
(1900x97%)		By Cash	200
To Rent Income	1,500	By Wages Expenses	800
		By Advertisement Exp	300
		By Drwaing	2,250
		(1250+1000)
		By Wages Expenses	1,200
To Bank Overdraft	367
	5,890		5,890

Stock Account
Particular	Dr.	Particular	Cr.
To Opening Balance	5,900	By Cash (Sales)	1,660
To Cash	1,800	By Debtors (Robertson)	400
To Creditos (T. Hosein)	860	By Cash (Sales)	960
To Creditos (N. Akua)	430	By Stock Return	160
To Stock Return	40	By Debtors (Henry)	540
		(600x90%)
		By Cash (BF)	510
		To Closing Balance	4,800
	9,030		9,030

Petty Cash
Particular	Dr.	Particular	Cr.
To Opening Balance	120	By Stamp Expenses	20
		By Stationary Expenses	40
		By Cleaning Staff Exp	36
		By Stationary Expenses	24
	120		120

Furniture and Fittings
Particular	Dr.	Particular	Cr.
To Opening Balance	6,800
		To Closing Balance	6,800
	6,800		6,800
Premises
Particular	Dr.	Particular	Cr.
To Opening Balance	40,000
		To Closing Balance	40,000
	40,000		40,000

Equipment
Particular	Dr.	Particular	Cr.
To Opening Balance	3,200
		To Closing Balance	3,200
	3,200		3,200
Computer Items
Particular	Dr.	Particular	Cr.
To Creditors (T. Hosien)	5,000
To Creditors (T. Hosien)	3,000
		To Closing Balance	8,000
	8,000		8,000

Motor Vehicle
Particular	Dr.	Particular	Cr.
To Opening Balance	17,500
		To Closing Balance	17,500
	17,500		17,500

Debtors Account
Particular	Dr.	Particular	Cr.
To Opening Balance		By Bank	1,843
L Robertson	1,900	By Discount To Debtor	57
H. Henry	520	By Stock return	40
To Stock (Sales)	400	By Cash	500
To Stock (Sales)	540
(600x90%)		By Closing Balance	920
	3,360		3,360

Loan From C. Sedeno
Particular	Dr.	Particular	Cr.
		By Cash	2,000
To Closing Balance	200

Creditors Account
Particular	Dr.	Particular	Cr.
To Bank	1,140	By Opening Balance
To Discount by Creditors	60	T. Hosein	250
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