Question

Question 1

Use the following information to record the following accounts using perpetual inventory system:

Trading inventory on 1 March 2018 $20 000

Transactions for the year ended 28 February 2019:

Goods purchased for cash $ 60 000

sales of goods for cash ( at cost plus mark-up of 50%) $75 000

(i) Trading inventory account

(ii) Sales account

(iii) Cost of sales account

(iv) Trading account

(v) Profit and loss account

Question 2

Complete the following table assuming the business uses perpetual inventory system. indicate the account to debit and the account to credit and show the effect on the accounting equation. The first is done for you as an example.

Transaction	Account debit	Account credit	Asset	Owners equity	Liability
Credit purchase of goods	Trading inventory	Creditors control	+	0	+
Cash purchase of goods.
Cash sale of goods
Credit sale of goods
Goods returned to creditors
Goods returned to debtors
Goods donated by the business

Answer 1

1.

Date	Account Titles	Debit	Credit
1 Mar 2018	Trading account	20,000
	Trading inventory		20,000
	[ Transfer opening inventory ]
28 Feb 2019	Trading account	60,000
	Trading inventory		60,000
28 Feb 2019	Sales account	75000
	Trading account		75000
28 Feb 2019	Cost of sales account	50,000
	Trading inventory		50,000
	[75000 * 100/150]
28 Feb 2019	Trading account	5000
	Profit and loss account		5000
	[20,000+60,000-75000]

2.

Transaction	Account debit	Account credit	Asset	Owners equity	Liability
Credit purchase of goods	Trading inventory	Creditors control	+	0	+
Cash purchase of goods.	Trading inventory	Cash account	0	0	0
Cash sale of goods	Cash account	Sales account	+	+	0
Credit sale of goods	Debtors control	Sales account	+	+	0
Goods returned to creditors	Creditors control	Trading inventory	-	0	-
Goods returned to debtors	Trading inventory	Debtors control	0	0	0
Goods donated by the business	Donation expense account	Trading inventory	-	-	0