Assignment about What Do You Mean by Accounting System?

QUESTION 1
Simon Carlton began business on 1 July 2019, specializing in the purchase and supply of
packaging materials. An accounting system was designed and a chart of accounts was
established. The business uses the periodic inventory system and is registered for GST at the
rate of 10%.
A/c Code A/c Name A/c Code A/c Name
101 Cash at bank
113 Accounts Receivable Control 201 Accounts payable control
115 GST Paid 203 GST Collected
117 Prepaid insurance 204 Bank loan
118 Office supplies 251 Mortgage payable
151 Land 301 S. Carlton, Capital
154 Buildings 401 Sales
156 Store Furniture 403 Sales returns and allowances
405 Discount received 611 Electricity expenses
501 Purchases 621 Office expenses
503 Purchases returns and allowances 631 Discount allowed
601 Salaries expense
The following transactions occurred during July 2019 and are INCLUSIVE of GST where
appropr iate.
2019
July 1 S. Carlton invested $60,000 cash in the new business.
Purchased land and buildings of an existing retail store for $110,000 of which
$33,000 is considered land cost. Paid $33,000 by cheque no. 101 for the land and
buildings and signed a mortgage payable for the balance. (Hint: Remember GST)
2 Purchased store furniture on credit terms from Corma Ltd for $7,480, terms n/60.
5 Purchased inventory on credit terms from Tumult Ltd $4,400; invoice date 6 July,
terms 2/10, n/60.
6 Purchased a 3-year fire insurance policy for $792, cheque no. 102.
8 Purchased inventory for $5,500, cheque no. 103.
9 Returned unsatisfactory goods to Tumult Ltd and received a credit note for $880.
13 Sold inventory to M. Biller on account, $9,020; invoice no. 1, terms 1/10, n/30.
15 Paid Tumult Ltd cheque no. 104 for amount due.
Cash sales for period to 15 July were recorded today, $3,740.
16 Sold inventory to O. Mowen on account $5,170; invoice no. 2, terms 1/10, n/30.
Paid salaries for period to 15 July totaling $2,650, cheque no. 105.
20 Purchased inventory on credit terms from Lynwood Ltd, $5,390; invoice date 20 July,
terms 1/10, n/30.
22 Received account for $143 from M. Parson for items chargeable to Office expenses,
terms n/30.
23 Received inventory returned by O.Mowen and issued a credit note for $2,200.
Received a cheque from M. Biller for invoice no. 1.
26 Received a cheque from O. Mowen for balance due on invoice no. 2
29 Sold inventory worth $4,400 on credit to J. Rowls; invoice no. 3, terms 1/10, n/30.
Paid $220 for electricity expenses, cheque no. 106.
Paid Lynwood Ltd for the invoice dated 20 July, cheque no. 107.
31 Cash sales from 16 July to 31 July were $2,145.
Paid salaries for period 16-31 July totaling $2,850, cheque no. 108.
Purchased office supplies for $330, cheque no. 109.
1

Required
a) Record the transactions in the special journals in the following order: purchases
journal, sales journal, cash receipts, cash payments and general journal. Ignore
narrations in the general journal. The business uses sales and purchases journals for
inventory transactions on credit only. Returns are processed through the general
journal. [21 Marks]
b) Show the accounts receivable control account in the general ledger, total and balance
the account. [3 Marks]
QUESTION 1 ANSWER
Purchase
Journal
Date Particulars Amount
2.7.19 Corma Ltd 4400
20.7 Lynwood 5390
Sales Journal
Date Particulars Terms Amount
13.7.19 M. Biller 9020
16.7.19 O. Mowen 5170
29.7.19 J. Rowls 4400
Cash Receipts
Journal
Date Particulars Amount
15.7.19 Sales 3740
26.7.19 O. Mowen 2918.3
31.7.19 Cash Sales 2145
2

31.7.19 Salaries 2850
31.7.19 Office Supplies 330
Cash Payments
Journal
Date Particulars 0 Amount
1.7.19 Land and Building 33000
6.7.19 Fire Insurance
Policy
792
8.7.19 Inventory 5500
15.7.19 Tumult Ltd. 4364.8
16.7.19 Salaries 2650
29.7.19 Electricity
Expenses
220
29.7.19 Lynwood 5336.1
General Journal
Date Particulars Amount Amount
1.7.19 Cash 60000
Capital 60000
2.7.19 Purchases 7480
Furniture 7480
9.7.19 Tumult Ltd. 880
Purchase
Returnsq
880
22.7.19 Office Expenses 143
3

Accounts Payable 143
23.7.19 Sales Returns 2200
O. Mowen 2200
QUESTION 1 ANSWER
b)
Date Particulars
Amoun
t
Amoun
t
31.7 Balance
15671.
7
QUESTION 1 ANSWER
4