Elizade University, Ilara-Mokin, Nigeria

ACC 101 Lecture Notes

Lecture 1: NATURE AND PURPOSE OF ACCOUNTING 1.1 Introduction Accounting has gone a long way from the 18th Century, during its early developmental days in the hands of Luca Pacioli to a fully developed, well structured and regulated set of rules and procedures for keeping records of personal and business dealings. Accounting has become common-place and indispensable in our modern society. It impacts on every aspect of our economic life in one form or the other and it is one of the requirements for the success of any form of business, regardless of size and type. The importance attached to accounting in recent times makes it imperative for most people to seek knowledge in respect of the subject, yet not so much is known about it, because a lot of misconceptions had been planted in the minds of people who do not have the opportunity of hearing directly from the accountants. At this juncture it is important to explain the various terms which are often confused when making reference to accounting. These are Accounting, Accountancy, and Accountant. i. ii. iii. Accountancy is the profession whose members practise accounting. An Accountant is a member of the profession which practises accounting, e.g. a member of the Institute of Chartered Accountants of Nigeria (ICAN) Accounting is an activity within an organistion that deals in the: Classification and recording of business transactions in books of accounts; Presentation and interpretation of the financial transactions contained in the books of account; and Use of historic and forecast data in making projections for the appraisal of alternative courses of action facing management.

Knowledge of the relationship between the above sub-divisions of accounting is essential for a thorough understanding of the course. In fact all topics contained in any accounting syllabus have direct or indirect link with one or more of the accounting sub-divisions above. We shall consider this in greater details later. Accounting can be practised in a number of ways, such as: the provision of accounting services to an organisation by accountants employed as staff of the organisation; or the provision of accounting and related services such as auditing and tax consultancy by an accountant in professional accounting practice as external auditors or business consultants. In both ways, it should be understood that accounting involves providing services for others who use such services as part of management information required for decision making in the running of the affairs of their organisation. To this extent, accounting can be regarded as a means to an end, and not an end in itself. Consequently, the accounts department of an organisation can be regarded as a sub-system within the management information system. In this regard, the organisation as a whole is a system and each of the component parts of the organisation (departments) is a sub-system. All sub-systems must contribute towards the achievement of the overall goals of the organisation.
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ACC 101 Lecture Notes

ABC COMPANY

ADMIN DEPT

FINANCE & ACCOUNTS

PRODUCTION DEPT.

MARKETING DEPT

DEPT.

Figure 1:1

The Organisational Management information system.

1.2 The Need for Accounting Many have ignorantly considered accounting in business as an unnecessary paper work and set of stringent procedures that stifles the ease of cash flow. The need for accounting can be seen from the following perspectives: i. Stewardship Reporting In all businesses where ownership and management are not vested in the same persons, it becomes necessary for the managers to report to the owners of the business on their activities during the period under review. Such report will include among others, the following:a. How the money (capital) of the business was invested during the period. b. The profit earned or loss sustained during the period. c. The financial position or state of affairs of the company as at the last day of the period under review. Where the scale of business is very high, it will require specialised methods, techniques and procedures to report accurately and meaningfully on the requirements in (a) to (c) above and this is where the accounting function comes in. ii. Performance Review It is natural of human beings to seek improvement or enhancement in their knowledge, trade, and other areas of human endeavours. It will be dangerous to perceive an improvement when in actual fact none exists. How can this happen in business? Consider the case of a trader who has the following data: CAPITAL N50,000 N75,000 PROFIT N10,000 N12,000

Year 1 Year 2

This businessman might be led ignorantly to think that his business has improved in year 2 than in year 1, with the justification that there is increase in profits of N2,000. Here again, accounting helps to make correct analysis to facilitate meaningful comparison of the results of the of one period with another for the same company or between companies. For example, in accounting, profitability is measured relatively, when comparisons between periods or companies are involved.
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Elizade University, Ilara-Mokin, Nigeria

ACC 101 Lecture Notes

The above illustration can be approached thus:

YEAR CAPITAL PROFIT RETURN ON CAPITAL

1 2

N 50,000 75,000

N 10,000 12,000

% 20 16

Conclusion There is a decline in relative profit in year 2. Businesses that collapse would have been experiencing gradual decline unnoticed. The accounting function therefore helps to identify problems before they get out of hand.

iii. Business Decision Making The success or otherwise of a business depends on the soundness of management decisions. Decisions facing management include method of financing, production plan, manpower planning. Many might have ignored accounting and have succeeded in business (e.g. illiterate millionaires whose staff strength is himself and sales clerks) but they are not likely to have operated optimally, i.e. more returns could be obtained on their resources than are presently obtained. Accounting helps in analysing complex business decision problems using specialised mathematical and/or Quantitative techniques adopted to suit the business environment. iv. Statutory Compliance In some cases, it is a requirement of the law that accounts be kept in a specified manner e.g. The Companies Decree 1968 as amended by the Companies and Allied Matters Decree 1990 requires all limited liability companies to keep accounts of their financial transactions. v. Requirement for Lending For banks and other forms of lending, it is usual to demand for the financial statements of the person or organisation applying to borrow money. vi. Tax Purposes Government relies on audited financial statements for determining the taxes payable on the profits and/or other incomes of an individual or company. 1.3 Users of Accounting Information The users of accounting information therefore include: Owners of business e.g. sole traders, partners, and shareholders; Trade creditors and Loan providers Government, through its regulatory authorities e.g. Federal Board of Inland Revenue, Corporate Affairs Commission, Nigerian Stock Exchange etc.

Lecturer: Alexander Akinduko, BSc (Unilag), MRes. (Manchester), MBA (Ogun), FCA, FCTI, MNIM.

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Elizade University, Ilara-Mokin, Nigeria

ACC 101 Lecture Notes

Practice Questions 1. Accounting has been misconceived by many people as a set of stringent procedures that stifles the ease of cash outflow. Correct this impression. 2. Accounting has been described as a means to and end and not an end in itself. Take a position with reasons. Outline the purposes served by the accounting information system. Who are the users of accounting information, and what are their interest areas? Explain the various work environments in which professional accountants can be engaged. Accounting information is a series of statements about a particular organization. The justification of accounting is its usefulness in attaining certain objectives. These objectives can be understood by understanding the functions of accounting. List and discuss briefly five of the main objectives of accounting in an organization. (ATS 1 March 1992 Q. 7a) Enumerate briefly the uses of accounting to a business organization. (ICAN Foundation Nov. 1994 Q. 2a)

3. 4. 5.

6.

7.

Lecturer: Alexander Akinduko, BSc (Unilag), MRes. (Manchester), MBA (Ogun), FCA, FCTI, MNIM.

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Elizade University, Ilara-Mokin, Nigeria

ACC 101 Lecture Notes

Lecture 2: BOOK-KEEPING 2.1 The Meaning of Book-Keeping Bookkeeping is the classification and recording of business transactions in books of accounts. The processes involved in this definition are as follows:i. ii. iii. iv. The classification of business transactions, using source documents; Recording of classified transactions in appropriate subsidiary books (also called books of prime entry or books of original entry); Posting of entries from subsidiary books to the ledger; and Extraction of Trial Balance.

For a proper understanding of the above, certain aspects of the definition require explanation: 2.2 Business Transactions Business transaction is the exchange of goods and services for cash, for a promise to pay in future, or for goods and services. This in accounting can be stated as: Cash transaction; Credit transaction, and Contra transaction. It follows from this definition that a business transaction takes place if money is exchanged for goods sold or bought, or such goods are sold or bought on credit or such goods are exchanged for a supply of goods by the other party. The classification of business transactions is done by determining whether a business transaction is cash, credit or contra transaction. The classification is important because it determines the book of account in which the transactions are to be recorded. 2.3 Books of Accounts Books of accounts is a term that includes both the subsidiary Books and the Ledger. Books of accounts form the medium to which entries relating to business transactions are made and from which a trial balance is extracted for the preparation of financial statements. Books of accounts are made up of the subsidiary books and the ledger. The subsidiary books are the books of accounts where entries are first recorded before being posted to the ledger. 2.4 Source Documents Source documents are business documents evidencing business transactions and forming the basis of entries in the subsidiary books. There are several forms of business documents in use, but we shall concern ourselves with the underlisted for now: Receipts Invoices Debit notes
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ACC 101 Lecture Notes

Credit notes Pay-In-Slips Cheques

Receipt A receipt is a document showing that money has been received or paid for goods and/or services sold or bought. A receipt therefore evidences cash transactions, which is the receipt and payment of cash. Receipts are recorded in the Cash book. Invoice An invoice is a document that establishes indebtedness to the effect that money has not been paid or received for goods and/or services bought or sold. An invoice therefore evidences credit transactions which consist of credit sales and credit purchases. Invoices are recorded in the Sales Day Book or in the purchases Day Book. Debit Note A debit note is a document establishing costs against the recipient. It serves as a from of supplementary invoice to increase the indebtedness of the recipient. It is used to correct an undercharge on invoices due to omissions or arithmetic errors. Debit notes support adjusting entries made in the journal proper. Credit Note A credit note is a document accruing some claims or refund in favour of the recipient. They are issued in the following instances: To grant refund on goods returned To correct an overcharge on the invoice Credit notes are recorded in any of Return Inwards book, Return Outwards book or Journal proper, depending on the purpose for which the credit note has been issued. Pay-In-Slips and Cheques These are banking documents used in the operation of accounts with the bank. For a current account, Pay-In-Slips or Tellers are used to lodge money into the account, while cheques are used to withdraw money from the bank. The documents are used to support entries in the bank account column of the Cash Book maintained by the account holder. It is important to note that entries are not supposed to be made in the subsidiary books, except backed up with relevant source documents. The link between the business transactions and subsidiary books is as given below: Cash transactions Credit transactions Contra transactions Sales returns Purchases return Cash Book Sales Journal and Purchases Journal Journal proper Return Inwards book Return Outwards book

Lecturer: Alexander Akinduko, BSc (Unilag), MRes. (Manchester), MBA (Ogun), FCA, FCTI, MNIM.

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Elizade University, Ilara-Mokin, Nigeria

ACC 101 Lecture Notes

Source Document 1. Receipt 2. Invoice

Type of Transaction Supported Cash Transaction Credit Transaction

Description

3.Credit Note

Returns

4. Debit Note 5. Journal or Adjustment Vouchers Fig. 2.1

Credit transaction Contra

i. Cash receipts ii. Cash payments i. Credit Sales ii. Credit Purchases iii. Purchase or Sale of a fixed asset on credit. Sales Returns Return Inwards Book Purchases Returns Return outwards Book Supplementary Sales Invoice Journal Journal entries Journal proper

Related Subsidiary Books Cash Book Cash Book Sale Journal Purchases Journal Journal proper

Relationship between source documents, Business transactions and subsidiary books.

Practice Questions 1. What is Book-keeping? How does it differ from Accounting?

2.a What are business transactions? b. What does it mean to classify business transactions? c. Give the three classification of business transactions in accounting? 3. 4. What are source documents? Give four examples. Prepare a table to link the various source documents with their related business transactions and subsidiary books. What are Books of Accounts? Give the two basic components.

5.

6. a. Distinguish between the terms Book-keeping and Accounting. b. Write short notes on the following: (i) Transaction. (ii) Asset (iii) Balance Sheet. (WASSCE Nov. 1999A Q. 1)

Lecturer: Alexander Akinduko, BSc (Unilag), MRes. (Manchester), MBA (Ogun), FCA, FCTI, MNIM.

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ACC 101 Lecture Notes

Lecture 3: SUBSIDIARY BOOKS THE CASH BOOK

3.1 Introduction The cash book is a subsidiary book where cash transactions are recorded. Cash transactions consist of receipts of cash and/or payments of cash. Whether the cash book is single column, double column or three column is determined by the number of columns into which the amount column is divided. A single column cash book is either for cash account or bank account. A double column cash book contains both cash and bank account, while a three column cash book has discount column in addition to cash and bank columns. A petty cash book is maintained on the same basis as other cash books, the only difference being that the petty cash book is used for petty expenses only. Single Column Cash Book The single column Cash book, which can either be the Cash Account or the Bank Account is ruled below:

CASH ACCOUNT Date Particulars L/F Amount Date Particular L/F Amount

From the above, it can be seen that: the Cash book is divided into two equal halves the left side is the Debit side (DR) while the right side is the credit side (CR) The debit side contains all of some of the followings: Capital Sales Debtors collections Cash lodgement (as contra entry) Loan received The credit side contains all or some of the followings: Purchases of items of stock Purchase of fixed assets Payment to creditors for trading goods Loan repayment Drawings Payment for operational expenses like Rent, salaries, Telephone etc. Cash withdrawn from bank for office use (as contra entry)

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ACC 101 Lecture Notes

The use to which the various columns in the cash book is put is explained below: Date: For recording the date of the transaction. Particulars: This contains a description of the transaction. Names of corresponding accounts are used in the Particulars column of each of the affected accounts. For example, for the purchase of goods in cash, the affected accounts are Cash account and Purchases account. In the Cash account the transaction is described as Purchases. In the Purchases account it is described as Cash. Under no circumstance should the name of an account be used to describe transaction entries under the same account. Ledger Folio This column is used for cross-referencing accounts. It contains the page number of the ledger in which the corresponding entry can be found. In the example of Purchases and Cash Accounts given above, if the entry in the Cash account is on page 5 of the Cash Book, the reference may be CB5. If the second entry is the Purchases Account is on page 9 of the Nominal ledger, the reference may be NL9. For cross-referencing, in the cash account the reference NL9 is put in the ledger folio column with the description Purchases. In the purchases Account the description is cash and the reference in the ledger folio will be CB4. The ledger folio column is not used in examinations. It is however used in practice. Amount: This column contains the monetary value of the transaction. Balancing of the Cash Book At the end of an accounting period of say one month, the cash book will be balanced to determine the balance of cash in hand as at the balancing date. Balancing is achieved by summing the values in each of the debit and credit sides and subtracting the lower figure from the higher one to obtain a balancing figure which is entered in the column with the lower figure to equate the two sides to each other. The totals on the two sides which are now equal to each other should be stated on the same horizontal line.

Illustration 3.1 Enter the following transactions in the Cash Account of Seyi Sodamola for the month of January 1999. January 1. Started business with Capital in cash 2. Paid Rent for a shop 5. Bought goods for resale 10. Bought office furniture 12. Cash Sales 15 Bought goods for resale 18 Cash Sales 21 Bought stationeries 23 Withdrew Cash for personal use 26 Cash Sales 28 Office expenses paid N 10,000.00 1,000.00 6,000.00 1,000.00 8,000.00 7,000.00 5,000.00 300.00 1,500.00 4,000.00 500.00
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Lecturer: Alexander Akinduko, BSc (Unilag), MRes. (Manchester), MBA (Ogun), FCA, FCTI, MNIM.

Elizade University, Ilara-Mokin, Nigeria

ACC 101 Lecture Notes

31 Staff salaries

1,000.00

Double Column Cash Book As earlier explained, the double column cash book is the combination of the cash and bank accounts in columnar form. The format of the two-column cash book is given below:

Two Column Cash Book

Date Particulars L/F Cash Bank Date Particular L/F Cash Bank

All the contents, principles, and procedures relating to the single column cash book are also applicable to the double column cash book. The main point of attention in a two column cash book is the determination of which of cash or bank column to make an entry. Both cash and cheque, receipts and payments are valid cash transactions. Receipts and payments of physical cash are entered in the cash columns, while receipts and payments by cheque are recorded in the bank columns. Contra Entry When related to the cash book, Contra entry refers either to the lodgment of business cash into the business bank account or the withdrawal of cash from the business bank account for office use. When contra entries arise in the two column cash book, the letter C is put against each entry to identify it as a contra entry. The entries in respect of contra transactions of cash are complete in the cash book, as both debit and credit entries are made in the cash book, and none in the ledger.

Illustration 3.2 On 1 January 1978, Kojo commenced business as a sole trader selling provisions. He provided, out of his savings, 5,000 with which to start the business. The following transactions took place during the month of January 1978. Jan. 1 Opened a Bank Account for the business and paid in cash 5,000 5 Rented premises and paid for 1 month by Cheque 100 10 Bought furniture and fittings by cheque 200 12 Purchased goods for resale by cheque 600
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ACC 101 Lecture Notes

17 18 20 25 26 27 28 31

Cash sales to date Paid cash into bank Purchased goods for resale from Asani & Sons Cash sales Paid cash into bank Sold goods to Smiths Paid Asani & sons on account by cheque Paid salaries by cheque Paid electricity bill for Kojos house by cheque Paid sundry expenses by cheque

800 600 1,000 750 750 180 500 77 90 40

From the above transactions you are required to prepare a two column cash book. (WASC June 1979, Q. 1 Adapted)

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Elizade University, Ilara-Mokin, Nigeria

ACC 101 Lecture Notes

Three-Columns Cash Book The three-column cash book consists of the bank, cash and discount columns. The discount column is the only distinguishing feature from the two-column cash book. The discount on the debit side is Discount allowed to debtors while the one on the credit side is Discount Received from creditors There are three different types of discount, of which only one is accommodated or recognised in accounting records. They are: Trade discount, Quantity discount; and Cash discount. Trade Discount Trade discount is the allowance given off the catalogue price of goods. A catalogue is a list and prices of available goods in a company. For example a catalogue price can be quoted as N10,000.00 less 10% trade discount. In this case, and allowance of N1,000.00 is deducted from N10,000.00 to bring the price to N9,000.00 regardless of the quantity purchased and the timing of payment. In accounting records, goods are recorded net of trade discount. In the above case, the transaction will be recorded at N9,000.00 wherever it appears in the books of accounts. No record will be made of the discount of N1,000.00. Quantity Discount This is an allowance given off the price of goods for purchase of large quantity of such goods. The treatment of quantity discount in accounting in similar to that of trade discount i.e. transactions are recorded net of quantity discount. Cash Discount This is the only form of discount that in recognized and accommodated in accounting records. Cash discount is an inducement or an allowance given to customers for prompt settlement of debts before the expiration of the credit period. If for example the period of credit sale of goods to Ade is three months, with the condition that payments made within two months will attract 10% discount, and the value of goods sold to Ade is N50,000.00, the following entries will be made: i. For the credit sale of goods to Ade: the transactions will be recorded in the sales journal at N50,000.00 postings will be made to Ades account in the debtors ledger and to Sales account in the nominal ledger at N50,000.00.

It can be seen here that the entries are made gross of discount and not net of discount, as in the two previous cases. ii. If Ade does not pay until after three months, no discount will be enjoyed. However if he pays within two months, a cash discount of 10% or N5,000.00 will be enjoyed, and the following steps will be taken:

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Elizade University, Ilara-Mokin, Nigeria

ACC 101 Lecture Notes

record the receipt of N45,000.00 from Ade as Debtors collection in the Cash Book either in the bank column or cash column of the debit side, depending on whether Ade paid by cheque or in cash. Record the discount of N5,000.00 allowed to Ade in the discount column of the threecolumn cash book on the same horizontal line on which the entry for the related collection is made. Post the discount allowed of N5,000.00 to the debit side of Discount allowed account in the Nominal ledger and N5,000.00 corresponding credit entry to Ades account in the Debtors ledger.

The same rules are observed in the case of discount received from creditors, which are dealt with on the credit side of the three-column Cash Book. Memorandum Entry The entries made in the discount columns are memorandum entries. They are entries which do not form part of double entries. Hence the discount columns are merely totalled and not balanced against each other. All entries made in subsidiary books other than in Cash and Bank accounts are memorandum entries. The format for three-column Cash book is given below:

Three Column Cash Book

Date Particular L/F Disc Alld Cash Bank Date Particular L/F Disc Cash Bank Recd

Illustration 3.3 Yakubu started a business with N80,000 on 2/1/93 and paid it into the bank on 4/1/93. His transactions for the rest of the month were as follows: 5/1/93 Purchases by cheque N27,300 6/1/93 Credit purchases N25,200; Electricity paid by cheque N500, Rent N700; by cheque 7/1/93 Drew cash for office use N1,200 Sales: By cheque N42,520 By cash N480 By credit N50,000 8/1/93 Paid creditors by cheque N15,100 and received discount of N320 9/1/93 Cash Sales N17,115; Cash wages paid N500
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Elizade University, Ilara-Mokin, Nigeria

ACC 101 Lecture Notes

10/1/93 Paid into bank the sales made on 9/1/93; stationery bought by cash N50 12/1/93 Received from customers cheques for N39,200 and allowed discount of N800 15/1/93 Drew cash for office use N200 16/1/93 Servicing and repairs by cash N120 Purchases: Cash N20,000 Credit N45,000 Cheques N5,000 20/1/93 Sales: Cash N37,500 cheques N17,000 22/1/93 Paid creditors N27,900 by cheque and received discount of N100. Cash sales N2,000 and immediately lodged it into bank. 24/1/93 Payments by cheque: Rent N1,500 Wages N2,000 28/1/93 Salaries by cheque N3,600 31/1/93 Cash lodged in bank N10,000 Drew cheque for petty cash N200 You are requested to prepare a three-column cash book for Yakubu for the month of January, 1993. (GCE NOV. 1995 Q 5) The Petty Cash Book The Petty cash book is used for recording expenses of a smaller magnitude than those recorded in the other cash book. The Petty Cash Book is usually operated on the imprest system in which a cash float is maintained and kept constant by periodical reimbursement of amount spent. The only source of cash inflow to the Petty cash is the imprest, while the expenses are spread on various items which are separately analysed. At the end of the month, or a defined period of time, the payment analysis columns are totaled and posted to the ledger accounts, while reimbursement is also made to restore the cash float to its original value. The format for Petty Cash Book is given below PETTY CASH BOOK
Amount Date Recd Particulars PCV No Total Payment Payment Analysis postage stationery others

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ACC 101 Lecture Notes

Illustration 3.4 Obike Enterprises maintain an imprest system of N8,000.00 per month. The transactions for the month of September are as follows: Sept. 4, - 5, - 6, - 9, -16, Petty cash in hand N25, received cash to make up the imprest. Bought stamps - N85. Paid transport fare N125, telegrams N145, bought shorthand note books for office - N550. Paid cleaner N65. Paid carriage on small parcels - N270, transport fare N150, repair of typewriter N355.60. Courier service N880, entertainment for the office N145, repairs of lighting in the factory N245.40. Towing of vehicle from Idiroko to Lagos - N257, water purchased for the canteen 1,000 gallons @ N0.08 per gallon. Paid office cleaner N65, telephone bill paid N254.70. Purchase of bulb N217.30, envelopes for the office N289.10 paid for erazer, biro and pencils N289.45, electricity bill N145.30. Water purchases 5,000 gallons @ N0.07, welding of maingate N173.50. Despatch riders medical bill N125, cleaners wages N65. Entertainment for the M.D. N186.30. Paid new drivers licence for M.D. N60. Tea and biscuits for the boards meeting N135.70 Repairs of security light - N65.30, medical bill paid N147.95. Courier service - N880, traffic offence fine paid - N120. Casual wages - N385, NEPA bill paid - N145.10. Carriage inwards N50. Physical cash count N400.30

- 18, - 19, - 20, - 21, - 22, - 26, - 28, - 29, - 30, Required: (1) (2)

What is imprest system? Prepare a petty cash book with five analysis column for postages and stationeries, travelling expenses, repairs and maintenance, medical, general expenses. (ICAN ATS I, March 1992, Q. 5)

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ACC 101 Lecture Notes

Practice Questions

1.

What is the purpose of preparing the cash book, whether single, double, three column, or Petty Cash book? What type of transactions are recorded in the cash book, and what are its components? Explain the meaning and use of contra entry in the cash book. In what ways are the following types of discounts treated in books of account. i. Trade discount ii. Quantity discount; and iii. Cash discount

2. 3. 4.

5a. What is a Memorandum entry? b. Which entries in the cash book are memorandum entries, and why? 6. Distinguish between the four types of Cash book. i.e. single, double, three column, and petty cash book. Bolanle started small business with N80,000 on 2/1/88,and paid it into the bank on 4/1/88. His transactions for the month were as follows: 5/1/88 Purchases by cheque N27,300 6/1/88 Credit purchases N25,200; Electricity paid by cheque N500; Rent N700 by cheque 7/1/88 Drew cash for office use N1,200; Sales: By cheque N42,520; Cash N480; Credit N50,000 8/1/88 Paid creditors by cheque N15,100 and received discount of N320 9/1/88 Cash sales N17,115; cash wages paid N500 10/1/88 Paid into bank the sales made on 9/1/88. Stationery bought by cash N50 12/1/88 Received from customers cheques for N39,200 and allowed discount of N800 15/1/88 Drew cash for office use N200 16/1/88 Servicing and repairs by cash N120 Purchases: Cash N20,000 Credit N45,000 Cheque N5,000 20/1/88 Sales:Cash N37,500 Cheque N17,000 22/1/88 Paid creditors N27,900 by cheque and received discount of N100. Cash sales N2,000 and immediately lodged it into the bank 24/1/88 Payments by cheque: Rent N1,200 Rates N300 Wages N2,000 28/1/88 Salaries by cheque N3,600; 31/1/88 Cash lodged into bank N10,000 Drew cheque for petty cash N200

7.

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ACC 101 Lecture Notes

Required: THREE - COLUMN CASH BOOK OF Bolanle, for the month of January, 1988 (ICAN ATS 1, Sept. 1991 Q. 5)

8.

Joana Bonnah operates an impest system with analysed petty cash book. There are columns for Stationery, Transport, Postage and Medical Expenses. A float of N200,000 is maintained by the petty cashier who is re-imbursed as and when necessary. The following transactions were recorded in the month of September, 1998. N Sept. 2 Balance on hand 200,000 6 Bought postage stamps 28,000 7 Paid medical expenses 48,000 12 Bought stationery 28,500 16 Paid transport expenses 68,000 20 Paid medical expenses 40,800 22 Paid for postage stamps 6,200 Paid transport expenses 18,800 24 Bought stationery 6,800 Paid transport expenses 32,600 28 bought postage stamps 8,500 30 paid medical expenses 26,500 You are required to enter the details above in a columnar petty cash book (WASSCE June 1999 Q. 8) 9. The cash transactions of Mr. James Iloh, a trader, is given below. Jan 1 Cash at Inland Bank N465.03 Cash in hand N28.00 3 Drew cheque for petty cash N70.00 5 Received from Ade, cheque in settlement of his account N652 less 5% discount 5 Paid Solas account N518, less 2% discount. Sold for cash, Goods worth N206 8 Transferred to Current Account from Deposit Account N1,000 Paid account of R.Davis N1,482 less discount 2 % 10 Drew cheque for general expenses N80 11 Paid cheque for petrol and motor repairs N179.50 17 Drew cheque for stationery N77 20 Sold for cash 30 boxes of matches at N5 a box 23 Cash sales N400 24 Paid into bank N756 26 Drew cheque, personal drawings N100 You are required to prepare a three column cash book (SSCE Nov. 1999b Q. 5) 10. The following information has been extracted from the books of C. Bintu: January 1 January 1 January 1 January 3 Balance at Bank N683. Drew and cashed cheque for N500. Bought for cash 14 model coats for N282. B. Aluko paid by cheque N100 on account.

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Elizade University, Ilara-Mokin, Nigeria

ACC 101 Lecture Notes

January 5 January 5 January 9 January 10 January 12 January 14 January 18 January 18 January 18 January 18 January 21 January 22

Paid cheque into bank. Sold for cash two costumes at N36 and N33 respectively. Paid in cash, wages N72 and office expenses N10. Paid by cheque, H. Abba Account N258 less 5% discount. Cash sales to date, N76. Paid by cheque M. Harrison Account N300. Paid in cash carriage N33. Paid by cheque B. Banjo Account N82. Gave H. Abba a cheque on account N100. Cash sales for the week N190. B. Daodu paid N250 by cheque. Paid cheque into bank. Purchased for cash 7 packets office pins at N1.17 per packet. Paid cash into bank N100.

You are required to prepare a three column Cash Book to record the above transactions. (WASSCE June, 2000 Q.8) 11. X. Limited operates a petty cash book on the imprest system with a cash float of N300. The following transactions took place in July 1990. 1990 July 2 Envelopes 2 Petrol 4 Postage stamps 5 Petrol 7 Office cleaning 9 Stationery 10 Alice Chucks Ledger account 12 Petrol 13 Adio Ledger account 14 Office cleaning 14 Travelling expenses 16 Postage stamps 17 Hamzat Ledger account 17 Postage stamps 18 Stationery 19 Petrol 21 Office cleaning 23 Reimbursed the account 24 Travelling expenses 26 Petrol 28 Office cleaning N 4 16 7 18 20 21 19 10 15 20 18 12 15 3 46 12 20 10 12 20

You are required to enter the transactions into the petty cash book; under the following headings: Stationery, Postage, Transport and Travelling, Office Cleaning and Ledger. (SSCE Nov. 1992 Q.3)
Lecturer: Alexander Akinduko, BSc (Unilag), MRes. (Manchester), MBA (Ogun), FCA, FCTI, MNIM. Page 18