Question

Jo Question: Dealing with credit transactions

On Monday, Jo goes out and buys 20 trees for $120 each from Georgie the tree seller and pays $1200 with a debit card, and the seller agrees that Jo can pay another $1200 later on. Jo also thinks that trees are getting expensive and looks around for another seller. The sales are not very good and Jo only sells 2 trees for $250 each, so he decides to start selling trees on the Internet on Q-bay. By the end of the week Jo has sold 2 trees to Da for $250 each and 3 to Fa for $300 each, Da and Fa both promise to pay by Waypal. Jo has also had to buy packaging for $300 and has opened up an account with Pack and Go who say they will send a bill for the goods. In the shop Jo has sold 10 more trees for a total of $3000. Jo pays $2000 into the bank and sends Georgie an electronic transfer for $1000.The following week Jo finds a new supplier of trees called Dando and buys another 25 trees for $2500, which he pays with a debit card. Jo receives a waypal payment for $500 from Da, but nothing from Fa. Jo sells 5 trees on Q-bay for $1200 to Jay, who promises to pay by waypal.

What is the closing Trial Balance for Jo ?

Answer 1

In order to arrive at Trial transactions will have to be Journalised as hereunder

Trial Balance

Note Cash has a credit balance hence it is safe to assume that all the Accounts Receivables had been received or there was cash loan taken to the extent of deficit.Accordingly additional entry will be.We assume former :

Addition Journal

Accordingly the Trial will appear as hereunder (note AR and Cash have no balance) :