Unit # 9 Books of Accounts

Unit 9
Accounting
Books of Account
Cash Book
The Book of Original Entry

General Journal
Unit 9
Roadmap
Return Outward Book
Return Inward Book
Subdivision of Journal
Sales Day Book
Purchase Day Book
I have enough money to last me the rest of my life, unless I buy something Jackie Mason
Work Book Foundation Level
203
Books of Account
Unit 9
Accounting
BOOKS OF ACCOUNT
There are two main books of account, Journal and Ledger
Journal used to record the economic transaction chronologically
Ledger used to classifying economic activities according to nature
Books of Account
Ledger
Journal
Accounts
Purchase Day
Book
Sales Day
Book
Return Inward
Book
Return Outward
Book
General
Ledger
Cash
Book
General
Journal
Cash
Book
Personal
Ledger
Private
Ledger
9.1 Subdivision of Journal

In large business it is found inconvenient to journalize every transaction in one journal
Therefore, the journal is sub-divided into different journals known as the subsidiary books
The journal is divided in such a way that a separate book is used for each class of transactions
The important subsidiary books used in modern business world are the following
9.1.1 Purchases Day Book
Purchases book or purchases day book is a book of original entry maintained to record credit purchases
You must note that cash purchases will not be entered in purchases day book because entries in respect of cash
purchases must have been entered in the cash book
At the end of each month, the purchases book is totaled. The total shows the total amount of goods purchased on credit
Purchases book is written up daily from the invoices received
The invoices are consecutively numbered
The invoice of each number is noted in the purchases book
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Accounting
Purchase Journal (Format)

Date
Account Credited
Invoice #
Ref
Amount
Total
Example # 9.1: From the following transactions of a trader prepare the Purchases day book
(3 Minutes)
2011
January 5
Purchased goods from Qurat Ul Ain & Co
Rs. 2,400
"
15
Purchased goods from Saba Sajjad
6,000
"
25
Purchased goods from Omer Nawaz & Co
1,500
"
30
Purchased goods from Maqbool & Co
3,000
Purchase Journal
Date
Account Credited
Invoice #
Ref
Amount
2011
Januar
y
Account Payable_ Qurat Ul Ain & Co
2,400
15
Account Payable_ Saba Sajjad
6,000
25
Account Payable_ Omer Nawaz & Co
1,500
30
Account Payable_ Maqbool & Co
3,000
Total
Rs. 12,900
9.1.2 Sales Day Book
A sales book is also known as sales day book in which are recorded the details of credit sales made by a businessman
Total of sales book shows the total credit sales of goods during the period concerned
Usually the sales book is totaled every month. The sales day book is written up daily from the copies of invoices sent out
Sales Journal (Format)
Date
Account Debited
Invoice #
Ref
Amount
Total
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Accounting
Example # 9.2: From the following transactions of a trader prepare the sales day book of M. Amin
(3 Minutes)
2011
March
Sold goods to Ideal College
Rs. 200
"
10
Sold goods to Ahmad & Co
100
"
20
Credit sales to Ayesha Bibi
400
"
31
Sold goods to Gulbaz Khan
100
Sales Journal
Date
2011
March
5
10
20
31
Account Debited
Invoice #
Ref
Account Receivable _ Ideal College

Account Receivable _ Ahmad & Co
Account Receivable _ Ayesha Bibi
Account Receivable _ Gulbaz Khan
Total
Amount
200
100
400
100
Rs. 800
9.1.3 Return Inward Book
Sales returns book is also called returns inwards book. It is used for recording goods returned by credit customers
Customers who return goods should be sent a credit note. It is a statement sent by a business to customer showing the
amount credited to the account
Return Inward Journal (Format)

Date
Account Credited
Credit Note #
Ref
Amount
Total
Example # 9.3: From the following transactions of a trader prepare the sales returns book
(2 Minutes)
2011
June 8
Goods returned by Sana Khalid & Co
"
Goods returned by Ideal Traders
20
Rs. 40
52
Return Inward Journal

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Accounting
Date
2011
June
8
20
Account Credited
Credit Note #
Ref
Account Receivable _ Sana Khalid & Co

Account Receivable _ Ideal Traders
Total
Amount
40
52
Rs. 92
9.1.4 Return Outward Book

Purchases returns book is a book in which the goods returned to credit suppliers are recorded. It is also called returns
outward book or purchases returns day book
Goods may be returned because they are of the wrong kind or not up to sample or because they are damaged etc.
When the goods are returned to the suppliers, intimation is sent to them through what is known as a debit note
These debit notes serve as vouchers for these entries. A debit note is a statement sent by a businessman to vendor,
showing the amount debited to the account
Return Outward Journal (Format)

Date
Account Debited
Debit Note #
Ref
Amount
Total
Example # 9.4: From the following transactions of a trader prepare the purchases returns day book
(3 Minutes)
2011
July 14
Karim & Sons
"
27
Maria Waheed & Co
"
31
Saeed Bros
Rs. 135
150
25
Return Outward Journal

Date
Account Debited
Debit Note #
207
Ref
Amount
Books of Account
Unit 9
Accounting
2011
July
14
Account Payable _ Karim & Sons
135
27
Account Payable_ Maria Waheed & Co
150
31
Account Payable_ Saeed Bros
25
Total
Columnar Journal: This Journal is used when a business deals with more than
one line of goods. The journal is prepared with a column for each line of goods in
which the business deals. The journal could be any of the ones mentioned above.
Illustration Two
Baba Yargo & Sons, a wholesaler, divides his business into 3 departments:
Clothing, Hardware and Sundries.
Rule up a suitable columnar Purchases Book to record the following transactions
for the month of September 2008.
Sept. 1. Bought from K. Nwosu & Sons:
240 Shirts @ N600 for twelve
60 Singlets @ N350 for twelve
48 Buckets @ N200 each.
Sept. 7. Bought from Namu and Co. Ltd:
22 Buckets @ N200 each
1 carton ,Nescafe Coffee @ N1,800 a carton
Sept. 16. Bought from Oodua Trading Company:
40 tablets of Premier Soap @ N85 a tablets
Less 5% trade discounts.
Sept. 24. Bought from Igwe Brothers:
400 yards of Shaddah @ N250 a yard
3 cartons, Nescafe Coffee @ N1,480 a carton.
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Unit 9
Accounting
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Unit 9
Accounting
9.1.5 Proper/ General Journal
Journal proper is book of original entry (simple journal) in which miscellaneous credit transactions which do not fit in
any other books. It is also called miscellaneous journal or General Journal
For example purchase assets on credit, Correcting Entries, Adjusting Entries and Closing Entries etc.
The Journal is meant for recording such transactions, which do not occur
frequently in the business and, therefore, do not warrant setting-up of special
journals. The journal has columns for Date, Particulars and Amounts columns,
divided into Debit (DR.) and Credit (CR.).
In General Journal, each entry is appended with an explanation of the
transaction
or narration. The explanation or narration enables one to ascertain the origin
of,
and reason(s) for, the treatment given. The narration should, therefore,
contain
full information as to the nature of the transactions and their dates of
occurrence.
Self-Assessment Exercises
1. Explain Date, Particulars and Amount Columns in Journal.
2. What is narration in journal?
3.6 Uses of General Journal
Instances where a general journal could be used include:
1) Opening Entries: When a new set of books is started, the old accounts
have to be
brought forward in the beginning of the year from last years books. The
general
journal is meant for recording these transactions.
2) Closing Entries: At the end of the accounting year, the nominal
accounts are
closed by transferring them to trading account or profit and loss account.
The
entries passed for this purpose are termed as Closing Entries.
3) Adjustment Entries: At the end of the accounting year, adjustment
entries are to
be passed for outstanding/ prepaid expenses, accrued/ outstanding income,
etc.
Entries for all these adjustments are passed in the General Journal.
4) Rectification Entries: Rectification entries are passed for rectifying the
errors,
which might have been committed in the books of accounts.
5) Transfer Entries: Transfer entries are required for transferring one
account to the
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Books of Account
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Accounting
other. Entries for such transfers are passed in the General Journal.
6) Purchase of Fixed Assets: The entries for the purchase of fixed assets
such as
Plant, Machinery, and Furniture etc. on credit are also passed in this Journal.
9.1.6 Single column cash book (cash column)
Single column cash book records only cash receipts and payments
It has only one money column on each of the debit and credit sides of the cash book
All the cash receipts are entered on the debit side and the cash payments on the credit side
Name of Company
Cash Book
For the month ended
Receipts
Date
Description
Payments
Ref
Amount
Date
Description
Ref
Example # 9.5: Write the following transactions in the simple cash book of AAA Company?
Amount
(7 Minutes)
2011
July
"
"
"
"
"
"
"
1
6
16
18
20
25
30
31
Cash in hand
Purchased goods for cash
Received from Akbar
Paid to Babar
Cash sales
Paid for stationary
Paid for salaries
Purchased office furniture
15,000
2,000
3,000
1,000
4,000
100
500
5,000
AAA Company
Cash Book
For the month ended July, 2011
Receipts
Date
2011
July
1
16
20
Description
Balance b/d
A/R_ Akbar
Sales
Payments
Ref
Amount
15,000
3,000
4,000
211
Date
2011
July
6
18
25
30
31
Description
Purchases
A/P_ Babar
Stationery
Salaries
Furniture
Ref
Amount
2,000
1,000
100
500
5,000
Books of Account
Unit 9
Accounting
Balance c/d
13,400
Rs. 22,000
Aug
Balance b/d
Rs. 22,000
13,400
Example # 9.6: Record the following transactions in the appropriate journal?
(20 Minutes)
2011
March
Purchased goods from Ali & Co for Rs. 4,500
Sold merchandise to Naeem & Sons worth of Rs. 6,000
12
Purchase merchandise from B & Brothers Rs. 3,000
14
Credit sales of goods to Z & Co for Rs. 2,500
15
Naeem & Sons returned goods Rs. 1,000
18
Return merchandise to Ali & Co Rs. 500
22
Purchase Furniture from Mr. Saeed of Rs. 3,200
24
Returned goods to B & Brothers of Rs. 200
27
Purchase Machinery on account from MMM Machines Rs. 7,000
29
Z & Co returned merchandise of Rs. 300

Purchase Journal
Date
Account Credited
Invoice #
Ref
Amount
2011
March
Account Payable_ Ali & Co
4,500
12
Account Payable_ B & Brothers
3,000
Total
Rs. 7,500
Sales Journal
Date
Account Debited
Invoice #
Ref
Amount
2011
March
Account Receivable_ Naeem & Sons
6,000
14
Account Receivable_ Z & Co
2,500
Total
Rs. 8,500

Date
Account Credited
Credit Note #
Ref
Amount
2011
March
15
Account Receivable_ Naeem & Sons
29
Account Receivable_ Z & Co
1,000
300
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Accounting
Total
Rs. 1,300

Date
Account Debited
Debit Note #
Ref
Amount
2011
March
18
Account Payable_ Ali & Co
500
24
Account Payable_ B & Brothers
200
Total
Rs. 700
General Journal
Amount (Rs)
Date
Account Titles and Explanation
Ref
Debit
Credit
2011
March
22
Furniture
3,200
Account Payable_ Mr. Saeed
3,200
(Being furniture purchased on credit)

27
Machinery
7,000
Account Payable_ MMM Machines
7,000
(Being furniture purchased on credit)

Total
Rs. 10,200
213
Rs. 10,200
Books of Account
Unit 9
Accounting
214
Books of Account
Unit 9
Accounting
END-OF-UNIT ASSIGNMENT
TRUE-FALSE STATEMENTS
1.
A subsidiary ledger is a listing of all journal entries related to a given general ledger account?
(a) True
2.
(45Seconds Each)
(b) False
In the sales subsystem, the sales invoice is the source document used to record the journal entry for the sale in the sales
journal?
(a) True
3.
(b) False
In the sales subsystem, a sales order is an internal document that a customers credit has been approved and that other
appropriate approvals have been given?
(a) True
4.
In the sales subsystem, once goods are shipped a shipping document, also known as a bill of lading is prepared?
(a) True
5.
(b) False
In the sales subsystem, the source document used to record the sales in the sales journal is the bill of lading?
(a) True
6.
(b) False
(b) False
In the sales returns and allowances subsystem, when a customers request for a sales return or allowance is approved, a
debit memo is issued?
(a) True
7.
In the purchases subsystem, the source document used to enter the purchase journal is the vendor invoice?
(a) True
8.
(b) False
In the purchases subsystem, a company orders goods or services by sending a purchase requisition to the supplier?
(a) True
9.
(b) False
(b) False
A customer is offered a sales discount of 3/5, net 20. In this case, the customer is expected to pay within 20 days.
However, a three percent discount will be given if the customer pays within 5 days?
(a) True
(b) False
10. In the purchase subsystem, if an internal department or function within a company wishes to purchase goods or services,
a purchase requisition is prepared?
(a) True
(b) False
11. In the cash disbursements subsystem, the journal entry to record payment is prepared from the check or electronic funds
transfer sent to the vendor?
(a) True
(b) False
A subsidiary ledger is a group of control accounts which provides information to the

managers for controlling the operation of the company.
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Books of Account
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Accounting
Answer: F, SO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: Reflective Thinking, AICPA-BB: Industry/Sector Perspective, AICPA-FN: Measurement,
AICPA-PC: Project Management, IMA: Business Applications, Sector: General, IFRS: No
2.
An accounts receivable subsidiary ledger has all the detailed information about the
cash sales to individual customers.
3.
The accounts payable subsidiary ledger provides detailed information about

amounts owed to creditors.
Answer: T, SO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: Reflective Thinking, AICPA-BB: Industry/Sector Perspective, AICPA-FN: Measurement,
4.
The total of the individual account balances in the accounts receivable subsidiary
ledger should agree with the total of the individual account balances in the accounts
payable subsidiary ledger.
Answer: F, SO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: Reflective Thinking, AICPA-BB: Industry/Sector Perspective, AICPA-FN:
Measurement, AICPA-PC: Project Management, IMA: Business Applications, Sector: General, IFRS: No
5.
Control accounts are always located in the general ledger.
6.
A control account and subsidiary ledger can be established for inventory.
Answer: T, SO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: Reflective Thinking, AICPA-BB: Industry/Sector Perspective, AICPA-FN: Decision
Modeling, AICPA-PC: Project Management, IMA: Business Applications, Sector: General, IFRS: No
7.
A subsidiary ledger provides up-to-date information on specific account balances.
Answer: T, SO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: Reflective Thinking, AICPA-BB: Industry/Sector Perspective, AICPA-FN: Reporting,
AICPA-PC: Problem Solving/Decision Making, IMA: Reporting, Sector: General, IFRS: No
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8.
An advantage of using a subsidiary ledger is that one employee must post to both
the subsidiary ledger and the general ledger.
Answer: F, SO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: Reflective Thinking, AICPA-BB: Industry/Sector Perspective, AICPA-FN: Risk Analysis,
AICPA-PC: Project Management, IMA: Internal Controls, Sector: General, IFRS: No
9.
Special journals are used to record unique transactions which do not occur very
often.
Answer: F, SO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: Reflective Thinking, AICPA-BB: Industry/Sector Perspective, AICPA-FN: Decision
Modeling, AICPA-PC: Project Management, IMA: Business Applications, Sector: General, IFRS: No
10.
A cash receipts journal can be used to record all transactions involving cash coming
into the business, regardless of the source.
11.
The cash payments journal only has one column because all entries recorded in this
journal require a credit to the Cash account.
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Books of Account
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Accounting
12.
A cash payments journal should not be used to record transactions which require
payment by check.
13.
If a transaction cannot be recorded in a special journal, it indicates that the

company should adopt an electronic accounting system.
Answer: F, SO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: Analytic, AICPA-BB: Industry/Sector Perspective, AICPA-FN: Decision Modeling,
14.
A debit column for Sales Returns and Allowances may be found in the cash
payments journal.
15.
A single-column purchases journal is used to record purchases of merchandise on

account.
16.
Using special journals can save time in posting because column totals are often
posted rather than individual entries.
17.
The reference column in a sales journal is used to indicate the general ledger
account number when the entry is posted.
Answer: F, SO: 3, Bloom: K, Difficulty: Medium, Min: 1, AACSB: Reflective Thinking, AICPA-BB: Industry/Sector Perspective, AICPA-FN:
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Books of Account
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Accounting
18.
Postings are generally made more frequently to the general ledger control accounts
than to the individual accounts in the subsidiary ledgers.
Answer: F, SO: 3, Bloom: C, Difficulty: Easy, Min: 1, AACSB: Reflective Thinking, AICPA-BB: Industry/Sector Perspective, AICPA-FN:
19.
The amounts appearing in the Merchandise Inventory column of the cash payments
journal are posted individually to the accounts in the accounts payable subsidiary
ledger.
AICPA-PC: Project Management, IMA: FSA, Sector: General, IFRS: No
20.
Transaction amounts recorded in the general journal are never posted to accounts in
the subsidiary ledger.
EXERCISES
Exercise # 9.1: State in which journal the following items will be recorded:
Transactions
Amount
(5 Minutes)
Respective Journal
(a) Cash purchase of goods
Rs. 25,000
Cash Payment Journal
(b) Cash purchase of furniture
Rs. 30,000
Cash Payment Journal
(c) Credit sale of goods
Rs. 56,000
Sales Day Book
(d) Credit sale of furniture
Rs. 27,000
General Journal
(e) Interest accrued on investment
Rs. 5,000
General Journal
(f) Bill accepted by a customer
Rs. 7,500
General Journal
(g) Goods returned by a customer
Rs. 3,500
Sales Return Book
(h) Cheque dishonored by bank
Rs. 2,000
Cash Book
Exercise # 9.2: From the transactions given below prepare the Sales Book of Rahim for July 2011
(8 Minutes)
2011
July 5: Sold on credit to S.S. Traders
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Books of Account
Unit 9
Accounting
10 Chairs @ Rs. 250 Less 10%

10 Tables @ Rs. 850 Discount 10%
July 8: Sold to Raja for cash
15 Chairs @ Rs. 250
July 20: Sold to Mohsin & Co.
5 Almirah @ Rs. 2,200
10 Tables @ Rs. 850
July 23: Sold on credit to Ahmed & Co. old computer for Rs. 5,000
July 28: Sold to Kamaran for cash
15 Chairs @ Rs. 250
Sales Journal
Date
2011
Account Debited
July
5
20
Invoice #
Ref
Account Receivable _ S. S. Traders*

Account Receivable _ Mohsin & Co**
Total
Amount
9,900
19,500
Rs. 29,400
* (10 x 250) + (10 x 850) (10% discount) = 9,900

** (5x 2200) + (10 x 850) = 19.500
Exercise # 9.3: Enter the following transactions in the purchases return book of Mr. Hamid
(5 Minutes)
2012
Jan 5:
Returned goods to Ahmed 5 chairs @ Rs.200 each, not in accordance with order
Jan 14: Returned goods to Ali 4 chairs @ Rs. 200 each and 10 tables @ Rs. 350 each, due to inferior quality
Jan 24: Return goods to Naeem and sons of Rs. 900
Date
Account Debited
Debit Note #
Ref
Amount
2012
January
18
Account Payable_ Ahmed
1,000
14
Account Payable_ Ali
4,300
24
Account Payable_ Naeem and sons
Total
900
Rs. 6,200
Exercise # 9.4: Enter the following transactions in Returns Inward Book
(5 Minutes)
2012
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Books of Account
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Accounting
April 6: Returned by Sakandar 30 shirts each costing Rs. 550, due to inferior quality
April 8: Amar Tailors returned 10 ladies suits, each costing Rs. 1,900, on account of being not in accordance with
their order
April 21: T.N. Stores returned 12 male suits sets each costing Rs. 2,500, being not in accordance with order
Date
Account Credited
Credit Note #
Ref
Amount
2012
April
Account Receivable_ Sakandar
16,500
Account Receivable_ Amar Tailors
19,000
21
Account Receivable_ T.N. Stores
30,000
Total
Rs. 65,500
Exercise # 9.5: Write up a Sharjeel Siraj Khans single column cash book for the month of April 2011, from the following?
(15 Minutes)
Rs.
1 Cash in hand ...1,650
Rs.
17 Paid cash for repairing 360
2 Cash sales ...16,000
19 Sales by cash ... 11,400
3 Paid check to creditors... 4,000
21 Paid office expense . 180
4 Wages paid in cash . 2,250
25 Paid rent and rates ... 3,600
4 Cash sales ...18,000
26 Credit sales .. 19,200
9 Paid cash to TCP against Note Payable.. 420
27 Paid electricity bill .......900
11 Paid salaries by cash .... 2,850
28 Cash collected from debtor. 4,500
12 Credit Sales 1,000
29 Goods Purchase ... 2,000
14 Note Receivable Realized ..3,000
30 Retire bank loan 3,000
Requirement: Rull-off and balance the cash book at April 30, 2011.
Sharjeel Siraj Khan
Cash Book (Single Column)
For the month ended April, 2011
Receipts
Date
Description
Payments
Ref
Amount
221
Date
Description
Ref
Amount
Books of Account
Unit 9
Accounting
2011
April
May
2011
1
Balance b/d
1,650
Sales
Wages
16,000
Note Payable_ TCP
Sales
18,000
11
Salaries
14
Note Receivable
3,000
17
Repairing
360
19
Sales
11,400
21
Office Expenses
180
28
Debtor
4,500
25
Rent and Rates
3,600
27
Electricity Bill
900
29
Purchases
2,000
30
Bank Loan
3,000
Balance c/d
38,990
Total
Balance b/d
54,550
38,990
222
April
Total
2,250
420
2,850
54,550
Books of Account
Unit 9
Accounting
Exercise # 9.6: Enter the following transactions in the single column cash book of Mr. Mobbushar Khan
2011
Jan. 1
Jan. 3
Jan. 7
Jan. 10
Jan. 11
Jan. 12
Jan. 13
Jan. 14
Jan. 15
Jan. 16
Jan. 18
Jan. 22
Jan. 23
Jan. 24
Jan. 25
Jan. 26
Jan. 31
Transactions
Mr. Mobbushar Khan stared business with cash
Bought goods for cash
Sold goods for cash
Paid for trade expenses
Sold goods for cash
Credit sales
Received commission
Received cash from Essa Khan
Paid cash to Mr. Arifullah Khan
Expenses incurred but not paid
Withdrew cash for personal use
Bought machinery for cash
Sold old furniture for cash
Purchase on account
Revenue earned but not received
Paid for electricity bill
Paid rent
(15 Minutes)
Rs.
10,000
7,000
4,000
1,000
1,600
400
300
5,000
700
1,800
3,000
2,000
4,000
8,000
1,900
900
1,500
Mobbushar Khan
Cash Book (Single Column)
For the month ended January, 2011
Receipts
Payments
Re
Date
2011
Jan
Feb
Description
Re
Amount
1
7
11
13
14
23
Capital b/d
Sales
Sales
Commission
A/R_ Essa Khan
Furniture
10,000
4,000
1,600
300
5,000
4,000
Total
Balance
24,900
8,800
Date
2011
Jan
Description
3
10
15
18
22
26
31
Purchases
Trade expenses
A/P_ Arifullah Khan
Drawing
Machinery
Electricity bill
Rent
Balance
Total
Exercise # 9.7: Enter the following transactions in a single column cash book of Mr. Adeel Nawaz
Amount
7,000
1,000
700
3,000
2,000
900
1,500
8,800
24,900
(20 Minutes)
2011
November 1. Started business with cash Rs. 70,000 and Land Rs. 30,000
3. Purchased merchandising for cash Rs. 5,000
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Books of Account
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Accounting
4. Sold goods Rs. 1,700 on cash and Rs. 1,300 on account

5. Cash received from Manzoor Alam Rs. 200
12. Paid to Naima Kayani Rs. 150
14. Bought furniture worth of Rs. 200
15. Purchased goods from Muhammad Abid Tariq on credit Rs. 2,000
16. Purchase machinery of worth Rs. 20,000 cash down payment was 5,000 and remaining note payable
18. Company paid Rs. 2,400 for a one-year insurance policy
19. Received advance payment from customers Rs. 5,200, services will be provided in December
20. Paid electric charges Rs. 225
24. Paid salaries Rs. 250
25. Bought goods from Maria Muhammad Rs. 4,000 and by cash from Seemab Akhter Co. Rs 2,000
28. Received commission Rs. 750
28. Owner draws out Rs. 700 from the business for his own use
29. Accrued expenses Rs. 1,500
30. Sale of marketable securities that cost Rs. 6,000 for Rs. 7,500
Adeel Nawaz
Cash Book
For the month ended November, 2011
Receipts
Date
Description
Payments
Ref
Amount
2011
Nov
Date
Description
Ref
2011
1
Balance b/d
70,000
Sales
A/R_ Manzoor Alam
19
Unearned Services
28
Commission
30
Marketable securities
Nov
Purchases
5,000
1,700
12
A/P_ Naima Kayani
150
200
14
Furniture
200
5,200
16
Machinery
5,000
750
18
Prepaid insurance
2,400
7,500
20
Electric charges
225
24
Salaries
250
25
Purchases
2,000
28
Drawing
700
Balance c/d
69,425
85,350
Dec
Amount
Balance c/d
85,350
69,425
Exercises
Ex. 66
After Artie Company had completed all posting for the month of December, the sum of the balances in the following
accounts payable subsidiary ledger did not agree with the balance of the control account in the general ledger.
224
Books of Account
Unit 9
Accounting
Name
Aston's
Address 286 Buck Avenue
Date
Item
Post. Ref.
Debit
Credit
Balance
Dec.
Name
P25
2,400
2,400
Carson Company
Address 818 Western Avenue
Date
Item
Post. Ref.
Debit
Credit
Balance
Dec.
Balance
7,600
10
CP23
20
P32
29
J15
Name
7,600
3,300
200
3,300
3,500
Diana Fenn Company
Address 90210 Baker Boulevard
Date
Item
Post. Ref.
Debit
Credit
Balance
Dec.
Balance
9,900
18
CP28
29
P34
Name
9,900
13,600 3,700
Maria Lopez
Address 2720 Sommers Avenue
Date
Item
Post. Ref.
Debit
Credit
Balance
Dec.
P27
6,000
6,000
27
P33
8,000
14,000
225
Books of Account
Unit 9
Accounting
Ex. 66 (cont.)
Name
Oster Supplies
Address 1560 Puckett Street
Date
Item
Post. Ref.
Debit
Credit
Balance
Dec.
Balance
8,200
P26
12
J11
20
CP29
5,600
420
12,800
12,380
5,000
17,380
The balance in the Accounts Payable control account of $41,480 has been verified as correct. Also assume that the journals
references in the Post Ref. columns of the accounts payable subsidiary ledger have been verified as correct.
Instructions
Determine the errors in the preceding accounts payable subsidiary accounts and prepare a corrected schedule of accounts
payable.
Answer: N/A, SO: 1, Bloom: AN, Difficulty: Hard, Min: 10, AACSB: Analytic, AICPA-BB: Industry/Sector Perspective,
AICPA-FN: Measurement, AICPA-PC: Problem Solving/Decision Making, IMA: Business Applications, Sector: General,
IFRS: No
Solution 66
(10 min.)
IDENTIFICATION OF ERRORS:
Carson Company
The $200 represents merchandise returned and should be subtracted from the balance owed. Correct balance is $3,100.
Diana Fenn Company
The $13,600 represents new purchases on account and should be added to the previous balance of zero. The correct balance is
$13,600.
Oster Supplies
There is an addition error. Adding $5,600 to the beginning balance of $8,200 yields a balance of $13,800. Subtracting
merchandise returned of $420 leaves a balance of $13,380. The $5,000 is a payment on account, not an increase. The correct
balance is $8,380.
226
Books of Account
Unit 9
Accounting
ACCOUNTS PAYABLE SUBSIDIARY LEDGER ACCOUNT BALANCES

Aston's $ 2,400
Carson Company 3,100
Diana Fenn Company
Maria Lopez
Oster Supplies
Total
13,600
14,000
8,380
$41,480
227
Books of Account
Unit 9
Accounting
Ex. 67
On December 1, the accounts receivable control account balance in the general ledger of Mitus Company was $9,000. The
accounts receivable subsidiary ledger contained the following detailed customer balances: Acme $1,500, Baker $2,100, Fare
$2,600, and Grote $2,800. The following information is available from the company's special journals for the month of
December:
Cash Receipts Journal: Cash received from Farr $1,900, from Acme $1,600, from Santos $1,700, and from Baker $1,800.
Sales Journal: Sales to Santos $2,300, to Fare $1,700, to Acme $2,300, and to Grote $2,400.
Additionally, Fare returned defective merchandise for credit for $900. Acme returned defective merchandise for $600 which
he had purchased for cash.
Instructions
(a)
Using T-accounts for Accounts Receivable Control and the detail customer accounts, post the activity for the month
of December.
(b)
Reconcile the accounts receivable control account with the subsidiary ledger by preparing a detail list of customer
balances at December 31.

Answer: N/A, SO: 1, Bloom: AP, Difficulty: Medium, Min: 10, AACSB: Analytic, AICPA-BB: Industry/Sector Perspective,
IFRS: No
Solution 67
(a)
(10 min.)
Control Account: Accounts Receivable

9,000
(CR)
(SJ)
8,700
(G)
Bal.
9,800
7,000
900
Subsidiary Accounts:
Acme
Baker
1,500
(S)
2,300
Bal.
2,200
Fare
Grote
2,600
(CR)
1,600
2,100
Bal.
(CR)
1,900
(CR)
1,800
300
2,800
228
Books of Account
Unit 9
Accounting
(S)
1,700
Bal.
1,500
(G)
900
(S)
2,400
Bal.
5,200
Santos
(S)
2,300
Bal.
600
(CR)
1,700
229
Books of Account
Unit 9
Accounting
Solution 67
(b)
(cont.)
Listing of accounts receivable at end of the month:

Acme
$2,200
Baker
300
Fare
1,500
Grote
5,200
Santos
Total
600
$9,800 Accounts receivable balance
Ex. 68
Gates Company maintains four special journals and a general journal to record its transactions. Using the code below,
indicate in the space provided the appropriate journal for recording the transactions listed.
Code
Journals
Sales journal
CR
Cash receipts journal
CP
Cash payments journal
Single-column purchases journal
General journal
1.
Shareholders invested cash in the business in exchange for ordinary shares.
2.
Purchased store supplies on account.
3.
Sold merchandise to customer on account.
4.
Purchased a 2-year fire insurance policy for cash.
5.
Received a check from a customer as payment on account.
6.
Paid for store supplies purchased in transaction 2.
7.
Purchased merchandise on account.
8.
Issued a credit memorandum to a customer who returned defective merchandise previously sold
9.
Purchased office equipment for cash.
10.
Made an adjusting entry for store supplies used during the period.
on account.
Answer: N/A, SO: 2, Bloom: C, Difficulty: Medium, Min: 5, AACSB: Analytic, AICPA-BB: Industry/Sector Perspective,
IFRS: No
230
Books of Account
Unit 9
Accounting
Solution 68
(5 min.)
1.
CR
6.
CP
2.
7.
3.
8.
4.
CP
9.
CP
5.
CR
10.
231
Books of Account
Unit 9
Accounting
Ex. 69
Sasser Company uses a sales journal, a cash receipts journal, and a general journal to record transactions with its customers.
Record the following transactions in the appropriate journals. The cost of all merchandise sold was 70% of the sales price.
July
Sold merchandise for $18,000 to B. Stine on account. Credit terms 2/10, n/30. Sales invoice No. 100.
July
Received a check for $800 from R. Hyatt in payment of his account.
July
Sold merchandise to F. Wendel for $700 cash.
July
10
Received a check in payment of Sales invoice No. 100 from B. Stine minus the 2% discount.
July
15
Sold merchandise for $9,000 to J. Nott on account. Credit terms 2/10, n/30. Sales invoice No. 101.
July
18
Borrowed $25,000 cash from United Bank signing a 6-month, 10% note.
July
20
Sold merchandise for $15,000 to C. Karn on account. Credit terms 2/10, n/30. Sales invoice No. 102.
July
25
Issued a credit memorandum for $600 to C. Karn as an allowance for damaged merchandise previously
sold on account.
July
31
Received a check from J. Nott for $5,000 as payment on account.
SASSER COMPANY
Sales Journal
S1
Invoice
Date
Acct. Rec. Dr.
Account Debited No.
Ref.
COGS Dr.
Sales Cr.Mer. Inv. Cr.
SASSER COMPANY
General Journal
G1
Date
Explanations
Ref.
Debit
Credit
232
Books of Account
Unit 9
Accounting
Ex. 69 (cont.)
SASSER COMPANY
Cash Receipts Journal
CR1
Date
Sales
Accounts
Other
COGS Dr.
Accounts
Cash
Discounts
Rec.
Sales
Credited Ref.
Dr.
Dr.
Cr.
Cr.
Cr.
Accounts
Mer. Inv. Cr.
Answer: N/A, SO: 2, Bloom: AP, Difficulty: Medium, Min: 15, AACSB: Analytic, AICPA-BB: Industry/Sector Perspective,
IFRS: No
Solution 69
(15 min.)
SASSER COMPANY
Sales Journal
S1
Date
Invoice Acct. Rec. Dr.
COGS Dr.
Account Debited No.
Ref.
Sales Cr.
Mer. Inv. Cr.
July
B. Stine 100
18,000 12,600
July
15
J. Nott 101
9,000
6,300
July
20
C. Karn 102
15,000 10,500
SASSER COMPANY
General Journal
233
Books of Account
Unit 9
Accounting
G1
Date
Explanation
Ref.
Debit
Credit
July
25
Sales Returns and Allowances
600
Accounts ReceivableC. Karn
600
234
Books of Account
Unit 9
Accounting
Solution 69
(cont.)
SASSER COMPANY
CR1
Sales
Accounts
Date
Credited Ref.
Dr.
Accounts
Other
Cash
Discounts
Rec.
Sales
Dr.
Cr.
Cr.
Mer. Inv. Cr.
Cr.
Accounts
COGS Dr.
July
R. Hyatt 800
800
July
Sales
700
700
490
July
10
B. Stine 17,640 360
18,000
July
18
Notes Pay.
25,000
25,000
July
31
J. Nott 5,000
5,000
Ex. 70
Ward Company uses a single-column purchases journal, a cash payments journal, and a general journal to record transactions
with its suppliers and others. Record the following transactions in the appropriate journals.
Transactions
Oct.
Purchased merchandise on account for $10,000 from Groton Company. Terms: 2/10, n/30; FOB shipping
Oct.
Paid $7,200 to Federated Insurance Company for a two-year fire insurance policy.
Oct.
Purchased store supplies on account for $700 from Flynn Supply Company. Terms: 2/10, n/30.
Oct.
11
Purchased merchandise on account for $14,000 from Buehler Corporation. Terms: 2/10, n/30; FOB
point.
shipping point.
Oct.
13
Issued a debit memorandum for $5,000 to Buehler Corporation for merchandise purchased on October 11
and returned because of damage.

Oct.
15
Paid Groton Company for merchandise purchased on October 5, less discount.
Oct.
16
Purchased merchandise for $8,000 cash from Clifford Company.
Oct.
21
Paid Buehler Corporation for merchandise purchased on October 11, less merchandise returned on October
13, less discount.
235
Books of Account
Unit 9
Accounting
Oct.
25
Purchased merchandise on account for $22,000 from Dooley Company. Terms: 2/10, n/30; FOB shipping
31
Purchased office equipment for $30,000 cash from Paten Office Supply Company.
point.
Oct.
236
Books of Account
Unit 9
Accounting
Ex. 70 (cont.)
WARD COMPANY
Purchases Journal
P1
Merchandise Inv. Dr.

Date
Account Credited Ref.
Accounts PayableCr.
WARD COMPANY
General Journal
G1
Date
Explanation
Ref.
Debit
Credit
WARD COMPANY
Cash Payments Journal
CP1
Other
Accounts
Date
Debited Ref.
Dr.
Accounts
Merchandise
Accounts
Payable Inventory
Dr.
Cr.
Cr.
Cash
237
Books of Account
Unit 9
Accounting
238
Books of Account
Unit 9
Accounting
Answer: N/A, SO: 2, Bloom: AP, Difficulty: Hard, Min: 15, AACSB: Analytic, AICPA-BB: Industry/Sector Perspective,
IFRS: No
Solution 70
(15 min.)
WARD COMPANY
Purchases Journal
P1
Merchandise Inv. Dr.

Date
Account Credited Ref.
Accounts Payable
Cr.
Oct.
Groton Company 10,000
Oct.
11
Buehler Corporation
14,000
Oct.
25
Dooley Company 22,000
WARD COMPANY
General Journal
G1
Date
Explanation
Ref.
Debit
Credit
Oct.
Store Supplies
700
Accounts PayableFlynn Supply Company
700
Oct.
13
Accounts PayableBuehler Corp. 5,000
Merchandise Inventory
5,000
WARD COMPANY
CP1
239
Books of Account
Unit 9
Accounting
Other
Accounts
Date
Debited Ref.
Dr.
Accounts
Merchandise
Accounts
Payable Inventory
Dr.
Cr.
Cr.
Cash
Oct.
Prepaid Insurance7,200
7,200
Oct.
15
Groton Company 10,000 200
9,800
Oct.
16
Merchandise Inventory
8,000
8,000
Oct.
21
Buehler Corp.
9,000
180
8,820
Oct.
31
Office Equipment30,000
30,000
240
Books of Account
Unit 9
Accounting
Ex. 71
Sandy Company uses both special journals and a general journal. The company accountant made the following errors during
July.
1.
Incorrectly added the credit entries in a customer's account in the accounts receivable subsidiary ledger.
The total was listed as $2,690; it should have been $2,790.

2.
A remittance of $400 from Tom Short was correctly recorded in the cash receipts journal, but the amount
was posted incorrectly to the account of customer Will Short in the subsidiary ledger.
3.
A purchase of merchandise on account from Easton Company for $1,000 was incorrectly entered in the
purchases journal at $10,000.

4.
In the sales journal, the entries were incorrectly added for the month. The monthly total was listed as
$24,820; it should have been $24,280.

Instructions
Indicate how each of the above errors might be discovered.
IFRS: No
Solution 71
1.
(10 min.)
The subsidiary ledger will not agree with the general ledger control account. Refooting the subsidiary ledger should
locate the error.

2.
The error will be discovered when the customer receives his statement. Mr. Tom Short's statement will indicate a
balance of $400 more than he owes.

3.
The error may not be discovered until the payment is sent to the supplier. Then, hopefully Easton will send back the
excess payment. Additionally, analysis of gross profit may indicate it is inordinately out of line with prior periods.
4.
When the accounts receivable control account is reconciled with the accounts receivable subsidiary ledger, it will be
$540 higher than the subsidiary ledger. Refooting the sales journal should then locate the error.
241
Books of Account
Unit 9
Accounting
Ex. 72
Below are some typical transactions incurred by Harley Company.
1.
Purchase of merchandise on account.
2.
Collection on account from customers.
3.
Payment of employee's wages.
4.
Sales of merchandise for cash.
5.
Close Income Summary to Retained Earnings.
6.
Adjusting entry for depreciation on machinery.
7.
Payment of creditors on account.
8.
Purchase of office equipment on credit.
9.
Sales discount taken on goods sold on credit.
10.
Sales of merchandise on account.
11.
Purchase of a delivery truck for cash.
12.
Return of merchandise purchased on credit.
13.
Payment of rent in advance.
14.
Adjusting entry for accrued interest expense.
15.
Purchase of office supplies for cash.
For each transaction, indicate by the code letter the appropriate journal where the transaction would be journalized.
CR
CP
Sales Journal
Single-Column Purchases Journal
General Journal
IFRS: No
Solution 72
(10 min.)
1.
6.
11.
CP
2.
CR
7.
CP
12.
3.
CP
8.
13.
CP
4.
CR
9.
CR
14.
5.
10.
15.
CP
242
Books of Account
Unit 9
Accounting
Ex. 73
Circle the correct answer to each situation.
(a)
(b)
A sales journal will be used for:

Credit Sales
Cash Sales
Sales Discounts
Yes
Yes
Yes
No
No
No
A single-column purchases journal will be used for:

Purchase Returns
(c)
Cash Purchases Purchases on Account
and Allowances
Yes
No
No
Yes
No
Yes
A multiple-column purchases journal will be used for:

Supplies Purchased
(d)
Cash Purchases on Account
on Account
Yes
Yes
No
Yes
No
No
A cash payments journal will be used for:

Payments to
Purchases
Creditors
Yes
(e)
Equipment Purchases
No
Payment of
Discounts
Yes
No
Yes
Dividends
No
A cash receipts journal will be used for:

Sale of Shares
Purchases Discounts
Cash Sales
Yes
Yes
No
No
No
Yes
IFRS: No
Solution 73
(5 min.)
(a)
Yes, No, No
(d)
Yes, Yes, Yes
(b)
No, Yes, No
(e)
Yes, No, Yes
(c)
No, Yes, Yes
243
Books of Account
Unit 9
Accounting
Ex. 74
Listed below are various column headings that may appear in special journals. Using the following code letters, identify for
each column heading (1) the special journal where the column heading would appear, and (2) whether the amounts entered
under the column heading would be posted in total, individually, or both in total and individually. (Note: column headings
may appear in more than one special journal)
Code:
Special Journals Code:
Posting
Sales journal
Single-column purchases journal
CR
Cash receipts journal
Both individual and total posting
CP
Cash payments journal
Heading Special Journal
Individual posting
Total posting
Posting
1.
Accounts PayableCr.
2.
SalesCr.
3.
Sales DiscountsDr.
4.
Merchandise InventoryDr.
5.
CashCr.
6.
Accounts ReceivableDr.
7.
Other AccountsCr.
8.
Merchandise InventoryCr.
9.
Accounts ReceivableCr.
10.
Accounts PayableDr.
IFRS: No
244
Books of Account
Unit 9
Accounting
Solution 74
(8 min.)
Heading Special Journal
Posting
1.
Accounts PayableCr.
2.
SalesCr.
3.
Sales DiscountsDr.
4.
Merchandise InventoryDr.
5.
CashCr.
6.
Accounts ReceivableDr.
7.
Other AccountsCr.
CR
InventoryCr.
S, CR
T
CR
T
P, CP
CP
T
T
CP, CR, S
Merchandise
9.
Accounts ReceivableCr.
CR
10.
Accounts PayableDr.
CP
8.
245
Books of Account
Unit 9
Accounting
Ex. 75
Horton Company uses four special journals, (cash receipts, cash payments, sales, and purchases journal) in addition to a
general journal. On November 1, 2011, the control accounts in the general ledger had the following balances: Cash $12,000,
Accounts Receivable $200,000 and Accounts Payable $42,000. Selected information on the final line of the special journals
for the month of November is presented below:
Cash Receipts Journal:
Sales
Cash
Accounts
Discount
Dr.
Other Accounts
Receivable
Dr.
$600
Sales
Cr.
Cr.
C. of G. S. Dr.
Cr.
$6,400 $29,000 (X)
Acct. Ref.
Amount Mer. Inv. Cr.
$1,000 $17,400
Cash Payments Journal:

Other Accounts Accounts
Dr.
Acct. Ref.
(X)
Office
Store
Payable Supplies Supplies Inventory

Amount
$1,600 ?
Dr.
Merchandise
Cash
Dr.
$1,300 $1,100 $700
$18,600
Merchandise
Store
Dr.
Cr.
Cr.
Purchases Journal:
Accounts
Payable Inventory
Cr.
?
Office
Other Accounts
Supplies Supplies Dr.

Dr.
$36,000 $800
Dr.
$650
(X)
Dr.
Acct. Ref.
Amount
$3,300
Additional Data:
The Sales Journal total was $45,000. A customer returned merchandise for credit for $360 and Norton Company returned
store supplies to a supplier for credit for $400.
Instructions
(a)
Determine the missing amounts in the special journals.
(b)
Determine the balances in the general ledger accounts (Cash, Accounts Receivable, and Accounts Payable) at the
end of November.
IFRS: No
246
Books of Account
Unit 9
Accounting
247
Books of Account
Unit 9
Accounting
Solution 75
(a)
(15 min.)
The missing amounts can be determined by crossfooting the journals.

Cash Receipts
Credits ($6,400 + $29,000 + $1,000)
Debits
$36,400
600
Cash debit
$35,800
Cash Payments
Credits ($700 + $18,600) $19,300
Debits ($1,600 + $1,300 + $1,100)
Accounts payable debit
4,000
$15,300
Purchases
Debits ($36,000 + $800 + $650 + $3,300)
Credits
-0-
Accounts payable credit

(b)
Cash
$40,750
$40,750
Accounts Receivable
12,000 (CP)
18,600
200,000 (CR)
6,400
360
(CR)
35,800
(S)
45,000 (G)
Bal.
29,200
Bal.
238,240
Accounts Payable
(CP)
15,300
(G)
400
42,000
(P)
40,750
Bal.
67,050
Ex. 76
Easton Company began business on October 1. The sales journal, as it appeared at the end of the month, follows:
SALES JOURNAL
Page 1
Invoice Post.
Date
Account Debited Number Ref.
Amount
Oct.
Donna Miner
10001
275
11
Mike Barr
10002
335
16
Donna Miner
10003
818
248
Books of Account
Unit 9
Accounting
19
Laura Cher
10004
147
26
Myron Silas
10005
1,184
2,759
1.
Open general ledger T-accounts for Accounts Receivable (No. 112) and Sales (No. 401) and an accounts receivable
subsidiary T-account ledger with an account for each customer. Make the appropriate postings from the sales journal. Fill in
the appropriate posting references in the sales journal above.
2.
Prove the accounts receivable subsidiary ledger by preparing a schedule of accounts receivable.
249
Books of Account
Unit 9
Accounting
Answer: N/A, SO: 3, Bloom: AP, Difficulty: Hard, Min: 15, AACSB: Analytic, AICPA-BB: Industry/Sector Perspective,
IFRS: No
Solution 76
1.
(15 min.)
SALES JOURNAL
Page 1
Invoice Post
Date
Account Debited Number Ref.
Amount
Oct.
Donna Miner
10001
275
11
Mike Barr
10002
335
16
Donna Miner
10003
818
19
Laura Cher
10004
147
26
Myron Silas
10005
1,184
2,759
(112)/(401)
GENERAL LEDGER
SUBSIDIARY LEDGER
Accounts Receivable
112
10/31 (S1)
2,759
Sales
Cher, Laura
401
10/31 (S1)
Barr, Mike
2,759
10/11 (S1)
335
10/19 (S1)
147
Miner, Donna
10/5
(S1)
275
10/16 (S1)
818
1,093
Silas, Myron
10/26 (S1)
2.
1,184
SCHEDULE OF ACCOUNTS RECEIVABLE
250
Books of Account
Unit 9
Accounting
Mike Barr
$ 335
Laura Cher
147
Donna Miner
1,093
Myron Silas
1,184
Total Accounts Receivable $2,759
251
Books of Account
Unit 9
Accounting
Ex. 77
CASH PAYMENTS JOURNAL
Page 45
Other
Date
Accounts
Merchandise
Ck.
Account Post.
Accounts
Payable Inventory
No.
Debited Ref.
Dr.
Cr.
Dr.
Cash
Cr.
2011
Jan.
659
M. Tate (a)
11
660
Prepaid Rent
(b)
1,000
1,000
13
661
Merch. Inv.
(c)
565
565
14
662
Cash Dividends (d)
2,000
2,000
18
663
Welch
1,300
20
664
Merch. Inv.
(f)
450
29
665
Equipment
(g)
3,400
7,415
5,300
(h)
(i)
(j)
4,000
(e)
40
3,960
1,300
450
3,400
40
12,675
(k)
Using the cash payments journal above, identify each of the posting references indicated by a letter, as representing:
(1)
a posting to a general ledger account.
(2)
a posting to a subsidiary ledger account.
(3)
that no posting is required.
IFRS: No
Solution 77
(10 min.)
a.
g.
b.
h.
c.
i.
d.
j.
e.
k.
f.
252
Books of Account
Unit 9
Accounting
Ex. 78
Shown below is a page from a special journal.
1.
What is the name of this journal?
2.
Give an explanation for each of the transactions in this journal.
3.
Explain the following:

(a)
the numbers under the bottom lines.
(b)
the checks entered into the Post. Ref. column.
(c)
the numbers 113 and 416 in the Post. Ref. column.
(d)
the (x) below the Other Accounts column.
Date
Sales
Accounts
Other
Accounts
Post
Cash
Discounts
Receivable
Credited Ref.
Dr.
Dr.
Cr.
Cr.
Cr.
COGS Dr.
Sales
Accounts
Mer. Inv. Cr.
May
27
Ted Roth
28
Notes Receivable 113

Interest Revenue 416
29
31
980
20
3,000
3,360
360
370
Don Calb
1,000
370
400
260
400
5,110
20
1,400
370
3,360
260
(111)
(412)
(114)
(411)
(x)
(505)(120)
IFRS: No
Solution 78
(10 min.)
1.
Cash receipts journal.
2.
May 27
Td Roth has paid for merchandise previously purchased on account. He is paying within the
discount period and taking the discount.

May 28
A note receivable has matured. Payment is received for the $3,000 face value and $360 of interest
May 29
A cash sale of merchandise is made for $370. The cost of the merchandise sold was $260.
May 31
Don Calb has paid $400 on account.
revenue.
3.
(a)
The numbers in parentheses under the bottom line of the journal indicate that these column totals have been
posted to the general ledger accounts with these account numbers.
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(b)
The checks in the posting reference column of the journal indicate that the accounts receivable subsidiary
account for that customer has been credited for the amount shown in the accounts receivable column of this journal.
(c)
The 113 indicates that account No. 113 in the general ledger, Notes Receivable, has been credited for the
$4,000. The 416 indicates that account No. 416 in the general ledger, Interest Revenue, has been credited for $480.
(d)
The (x) below the Other Accounts column indicates that this column total is not posted. All the amounts in
this column have already been posted individually to the appropriate general ledger account.
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COMPLETION STATEMENTS
79.
The accounts receivable _____________ provides detailed information about customer accounts which is
summarized in one ______________ account in the general ledger.

Answer: N/A, SO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: Reflective Thinking, AICPA-BB: Industry/Sector
Perspective, AICPA-FN: Measurement, AICPA-PC: Problem Solving/Decision Making, IMA: Business Applications, Sector:
General, IFRS: No
80.
If a certain type of transaction occurs with great frequency, it is more efficient to create a ______________
to record that type of transaction.

General, IFRS: No
81.
If a company maintains special journals, sales of merchandise on credit should be recorded in a
_______________ whereas sales of merchandise for cash should be recorded in the _______________.
General, IFRS: No
82.
The use of special journals often saves time in the _______________ process.
General, IFRS: No
83.
The entries in the Accounts Receivable Credit column of the cash receipts journal must be posted
_______________ to the accounts in the accounts receivable subsidiary ledger and in _______________ to the control
account in the general ledger.
General, IFRS: No
84.
Transactions that cannot be entered in a special journal are recorded in the _______________, and if
control and subsidiary accounts are involved, there must be a _______________ posting.
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General, IFRS: No
Answers to Completion Statements
79.
subsidiary ledger, control
80.
special journal
81.
sales journal, cash receipts journal
82.
posting
83.
individually, total
84.
general journal, dual
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MATCHING
85.
Match the items below by entering the appropriate code letter in the space provided.
A.
Accounts payable ledger D.
B.
Columnar journal E.
C.
Special journals
Subsidiary ledger
Control account
1.
A general ledger account that summarizes detailed information in a subsidiary ledger.
2.
A subsidiary ledger that contains accounts with individual creditors.
3.
A special journal with more than one column.
4.
Detailed information about a group of accounts with a common characteristic.
5.
Used to record high volume, similar type transactions.
General, IFRS: No
Answers to Matching
1.
2.
3.
4.
5.
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MULTIPLE-CHOICE QUESTIONS
1.
Bill payable book is a?

(a) Journal
2.
(b) Principal book
6.
(c) Goods account
(d) Accounts receivable
(b) Sales ledger
(c) Daily sales
(d) Sales day book
Which of the following is not a book of prime or original entry?

(a) Sales daybook
5.
(b) Return inward account
An alternative name for a sales journal is?

(a) Sales invoice
4.
(d) Memorandum book
The return of goods by a customer should be debited to?

(a) Return outward
3.
(c) Ledger
(b) Purchase daybook
(c) Debtors account
(d) Cashbook
X sends back Rs. 80 of faulty goods to Y. In which book of prime entry would Y record this transaction?
(a) General Journal
(b) Purchase Return Journal
(c) Sales Journal
(d) Sales Return Journal
A bookkeeper discovers that an amount paid to a supplier has been wrongly entered in another suppliers account. Which
book of original entry will the bookkeeper use when correcting this error?
(a) Cash Book
7.
8.
(b) General Journal
(d) Sales day book
There are two books of account they are?

(a) Journal & ledger
(b) Journal & trail balance
(c) Trail Balance & Ledger
(d) None of these
The basic principle of book-keeping decrease is debit and increase is credit is applicable?
(a) Revenue
9.
(c) Purchase day book
(b) Expenses
(c) Income
(d) a and c
Which of the followings are books of prime entry?

(a) Sales day book and trial balance
(b) Petty cash book and accounts receivable ledger
(c) Petty cash book and journal
(d) Cash book and assets register
10. Transactions are initially recorded in the?

(a) Book of prime entry
(b) Book of original entry
(c) Journal
(d) All of before
11. Record goods return inward?

(a) Debit sale account and credit payable account
(b) Debit returns inward account and credit payable account
(c) Debit returns inward account and credit receivable account

(d) Debit receivables account and credit return inward account
12. Cash book is a part of?
(a) Voucher
(b) General Journal
(c) General Ledger
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13. If a company uses special journals, purchase of supplies on account should be recorded in which journal?
(a) Cash receipts journal
(b) Purchases journal
(c) Cash disbursements journal
(d) General journal
14. Which of the following is the correct journal entry to record a credit note issued to a customer for goods returned?
(a) Debit Sales returns and Credit Cash
(b) Debit Cash and Credit Sales returns
(c) Debit Trade receivables and Credit Sales returns
(d) Debit Sales returns and Credit Trade receivables
15. Mr. Ali buys goods on credit from Star Co. but finds that some of them are faulty. What document would Mr. Ali return
to Star Co. with the faulty goods?
(a) Statement
(b) Debit note
(c) Sales invoice
(d) Purchase invoice
16. Which of the following book(s) is (are) a part of Journal?

(a) Cash Book
(b) Purchase Return Book
(c) Purchase Book
(d) All of the given options
17. Mr. Hussain sends a debit note to one of his suppliers. In which of Mr. Hussains books of prime entry would this be
recorded?
(a) Sales
(b) Purchases
(c) Purchase returns
(d) Sales returns
18. If a company uses special journals, credit sales should be recorded in which journal?
(a) General journal
(b) Purchases journal
(c) Sales journal
(d) Cash receipts journal
19. If a company uses special journals, purchase of a building financed by a mortgage payable should be recorded in which
journal?
(a) Sales journal
(b) General journal
(c) Cash receipts journal
(d) Purchases journal
20. In a firm that uses special journals, a sale of merchandise on credit is recorded in the?
(a) Cash payments journal
(b) Cash receipts journal
(c) Sales journal
21. In a firm that uses special journals, the sale of merchandise for cash is recorded in the?
(a) Cash payments journal
(b) Cash receipts journal
(c) Sales journal
22. If a firm does not have a sales returns and allowances journal, the entries for these transactions are made in?
(a) Sales journal
(b) General journal
(c) Cash receipts journal
(d) Cash payments journal
23. Sales returns refer to?

(a) Merchandise that customers return to the seller after the sale
(b) Reductions in the selling price of merchandise sold to customers
(c) Cash discounts taken by customers
(d) Merchandise inventory that is marked down
24. Bill receivable book is a part of the?

(a) Profit and Loss account
(b) Ledger
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25. At the end of accounting period, after all postings have been made, equality should exist between the balance of the
Account Receivable control account and ___________?
(a) Purchases Journal
(b) Cash Receipts Journal
(c) Sum of all the customer balances in the Accounts Receivable Subsidiary Ledger
(d) Sum of all the creditor balances in the Accounts Payable Subsidiary Ledger
26. If a company uses special journals, the general ledger sales revenue account will receive postings from the _________?
(a) Sales journal and cash receipts journal
(b) Purchases journal and cash disbursements journal
(c) Cash receipts journal and cash disbursements journal
(d) None of the above are correct
27. At the end of accounting period, after all postings have been made, equality should exist between the balance of the
Account Payable control account and __________________?
(a) Sum of all the customer balances in the Accounts Receivable Subsidiary Ledger
(c) Purchases Journal
(d) Sum of all the creditor balances in the Accounts Payable Subsidiary Ledger
28. _________________ for ABC business, when a commercial bank advances a fixed sum of money for a definite period of
time on some agreed interest rate?
(a) Advance
(b) Bank loan
(c) Saving account
(d) Overdraft account
29. Adjustment to record accrued salaries at the end of the year?

(a) Cash Payments Journal
(c) Revenue Journal
(d) General Journal
30. Receipt of cash from sale of office equipment recorded in?

(d) General Journal
31. Adjustment is to record depreciation at the end of the month in?

(c) General Journal
(d) Purchases Journal
32. Provided legal services on account will record?

(d) Revenue Journal
33. Corrected the balance in the prepaid insurance at the end of the month in?
(b) General Journal
(c) Cash Receipts Journal
34. Purchase of an office equipment on account?

(d) Revenue Journal
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35. Providing accounting services for cash?

(d) Revenue Journal
36. Closing of drawing account at the end of the year in?

(c) General Journal
37. Purchase of office equipment for cash?

(d) Revenue Journal
38. Receipt of cash of rent from an office building is?

(d) Revenue Journal
39. Billed a customer for landscaping work performed recorded in?

(a) Cash Receipts Journal
(b) Purchases Journal
(c) Revenue Journal
(d) General Journal
40. Purchase of office Supplies on account is?

(d) Revenue Journal
41. Receipt of cash refund from overpayment of taxes is?

(c) Revenue Journal
(d) General Journal
42. Purchase of repair services on account?

(d) Revenue Journal
43. Advance payment of a one-year fire insurance policy on the office?

(d) General Journal
44. Receipt of cash on account from a customer is?

(d) Revenue Journal
45. Purchase of office supplies for cash?

(d) Revenue Journal
46. Investment of additional cash in the business by the owner is?

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(d) Revenue Journal
47. Sale of office supplies on account, at cost, to a neighboring business?

(c) Revenue Journal
(d) General Journal
48. An exchange of supplies from one company to another company?

(a) General Journal
(c) Revenue Journal
(d) Cash Receipts Journal
49. Purpose of Sales Book is?

(a) To record all sales made by the firm
(b) To record payment due to creditors
(c) To record credit sales of goods made by the firm
(d) None of above
50. Which of the following is not true regarding the use of special journals?
(a) Special journals are used to record repetitive, frequent transactions
(b) The use of the General Journal is eliminated by the use of special journals
(c) The Purchases Journal is used to record purchases or expenses on account
(d) The Revenue Journal is used only for recording revenues earned on account
51. Transactions involving customers payments are often recorded in prime entry in?
(a) General Journal
(c) T-account
(d) Revenue Journal
52. Chaman's Ice Cream purchased Rs. 500 worth of supplies on account from ICEE Inc. In which special journal
should this transaction be recorded?
(a) Purchases Journal
(b) Cash receipts Journal
(c) Cash payments Journal
(d) General Journal
53. Expenses are?

(a) Incurred only when cash is paid
(b) Costs incurred to generate revenues
(c) Increases to owner's equity
(d) Recorded as credits in journal entries
54. Merchandise is sold on credit for Rs. 600 plus 5 percent sales tax. The entry in the sales journal will include a debit
to Accounts Receivable for?
(a) Rs. 600.00
(b) Rs. 603.50
(c) Rs. 605.50
(d) Rs. 630.00
55. Accrued rent is recorded at the end of the period?

(b) Revenue Journal
(d) General Journal
The balance of a control account in the general ledger

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a. must always be zero.

b. must equal the amount of total assets.
c. is always greater than the composite balance of individual accounts in a related
subsidiary ledger.
d. must equal the composite balance of individual accounts in a related subsidiary
ledger.
Answer: d, SO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: Reflective Thinking, AICPA-BB: Industry/Sector Perspective, AICPA-FN:
Measurement, AICPA-PC: Project Management, IMA: FSA, Sector: General, IFRS: No
22.
A subsidiary ledger is
a. used in place of the general ledger if the general ledger is destroyed or stolen.
b. a group of accounts used by branches and subsidiaries of a corporate business.
c. a group of accounts with a common characteristic that provides detailed
information about a control account in the general ledger.
d. used to post excess transactions if a general ledger account becomes full during
an accounting period.
Answer: c, SO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: Reflective Thinking, AICPA-BB: Industry/Sector Perspective, AICPA-FN: Measurement,
23.
A subsidiary ledger frees the general ledger from details of

a. individual balances.
b. external transactions.
c. internal transactions.
d. the control account.
Answer: a, SO: 1, Bloom: K, Difficulty: Easy, Min: 1, AACSB: Reflective Thinking, AICPA-BB: Industry/Sector Perspective, AICPA-FN: Reporting,
AICPA-PC: Project Management, IMA: Reporting, Sector: General, IFRS: No
24.
A company would not likely use subsidiary ledgers for

a. inventory.
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b. retained earnings.
c. equipment.
d. accounts receivable.
Answer: b, SO: 1, Bloom: C, Difficulty: Easy, Min: 1, AACSB: Reflective Thinking, AICPA-BB: Industry/Sector Perspective, AICPA-FN:
25.
Postings are made daily to subsidiary ledgers so that

a. employees are kept busy.
b. debits equal credits.
c. individual account information is kept current.
d. the control account will balance to the subsidiary ledger.
26.
A sales journal is used to record

a. only cash sales of merchandise.
b. sales of all assets on credit and for cash.
c. only credit sales of merchandise.
d. credit sales of merchandise, sales returns and allowances, and sales discounts.
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27.
If a transaction cannot be recorded in a special journal

a. the company must refuse to enter into the transaction.
b. it is recorded in the general journal.
c. it is recorded directly in the accounts in the general ledger.
d. it is recorded as an adjustment on the work sheet.
Answer: b, SO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: Reflective Thinking, AICPA-BB: Industry/Sector Perspective, AICPA-FN:
28.
The one characteristic that all entries recorded in a cash receipts journal have in
common is
a. a credit to the Cash account.
b. that they all represent collections from customers.
c. that they originate from the sales of merchandise.
d. a debit to the Cash account.
Answer: d, SO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: Reflective Thinking, AICPA-BB: Industry/Sector Perspective, AICPA-FN:
29.
A single-column purchases journal indicates that

a. only purchases of merchandise on account can be recorded.
b. all purchases of merchandise can be recorded.
c. all acquisitions on account can be recorded.
d. another column must be added so that debits and credits can be recorded.
Answer: a, SO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: Reflective Thinking, AICPA-BB: Industry/Sector Perspective, AICPA-FN: Measurement,
30.
The one characteristic that all entries recorded in a multiple-column purchases

journal have in common is a
a. credit to the Cash account.
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b. debit to the Cash account.

c. debit to the Accounts Payable account.
d. credit to the Accounts Payable account.
31.
A company which uses special journals should record a transaction involving the
purchase of merchandise for cash in a
a. single-column purchases journal.
b. multiple-column purchases journal.
c. cash payments journal.
d. general journal.
32.
If merchandise from a cash sale is returned by a customer for a refund, the sales
return is recorded in the
a. general journal.
b. cash receipts journal.
d. sales journal.
Answer: c, SO: 2, Bloom: C, Difficulty: Easy, Min: 1, AACSB: Reflective Thinking, AICPA-BB: Industry/Sector Perspective, AICPA-FN: Measurement,
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33.
Which of the following is not a special journal?

a. Sales journal
b. Purchases journal
c. General journal
d. Cash receipts journal
34.
Correcting entries are journalized in

a. a special journal.
b. the general journal.
c. the general ledger.
d. a correcting journal.
35.
Adjusting entries are recorded

a. only on the worksheet.
b. only in the general ledger.
c. in the general journal.
d. in the special journals.
36.
If a transaction cannot be recorded in a special journal, it is

a. not recorded.
b. a correcting entry.
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c. recorded in the general journal.

d. an error.
37.
A company uses a sales journal, cash receipts journal, purchases journal, cash payments journal, and a general journal. A cash sales return would be recorded in the
a. sales journal.
d. general journal.
38.
The entries in a sales journal will show

a. all sales of merchandise.
b. the cash sales of the company.
c. the credit sales of merchandise.
d. all sales of the company.
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39.
Entries in a sales journal

a. are made from sales invoices.
b. will indicate the invoice number in the reference column of the sales journal.
c. will occupy two lines of the sales journal.
d. indicate either a cash debit or accounts receivable debit.
Answer: a, SO: 2, Bloom: K, Difficulty: Easy, Min: 1, AACSB: Reflective Thinking, AICPA-BB: Industry/Sector Perspective, AICPA-FN: Measurement,
40.
Journalizing in a sales journal will not

a. require a debit to Accounts Receivable.
b. show a sales invoice number.
c. affect the reference column of the journal.
d. include a credit to the Sales account.
Answer: c, SO: 2, Bloom: K, Difficulty: Medium, Min: 1, AACSB: Reflective Thinking, AICPA-BB: Industry/Sector Perspective, AICPA-FN:
41.
If a company purchases merchandise for cash, the transaction should be recorded in

the
a. purchases journal.
b. general journal.
d. sales journal.
AICPA-PC: Project Management, IMA: Business Applications, Sector: Retail, IFRS: No
42.
Cash from sales of merchandise will be recorded in the

a. purchases journal.
b. sales journal.
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c. cash receipts journal.

d. general journal.
AICPA-PC: Project Management, IMA: Business Applications, Sector: Retail, IFRS: No
43.
Debit postings to the individual accounts in an accounts receivable subsidiary

ledger generally come from the
a. sales journal.
c. purchases journal.
d. cash payments journal.
Answer: a, SO: 3, Bloom: C, Difficulty: Medium, Min: 1, AACSB: Reflective Thinking, AICPA-BB: Industry/Sector Perspective, AICPA-FN:
44.
Entries in a sales journal are

a. posted only to accounts in an accounts receivable subsidiary ledger.
b. posted only to accounts in the general ledger.
c. posted to accounts in an accounts receivable subsidiary ledger and to accounts
in the general ledger.
d. never posted.
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45.
Which one of the following columns in a cash receipts journal is not posted in total
to an account in the general ledger?
a. Cash column
b. Sales Discounts column
c. Accounts Receivable column
d. Other Accounts column
Answer: d, SO: 3, Bloom: K, Difficulty: Medium, Min: 1, AACSB: Reflective Thinking, AICPA-BB: Industry/Sector Perspective, AICPA-FN:
46.
The use of special journals to record transactions

a. eliminates the need for a general ledger.
b. can save time in the posting process.
c. eliminates the need for a general journal.
d. should only be used if the volume of transactions is small.
47.
Posting a sales journal to the accounts in the general ledger requires a

a. debit to Cash and a credit to Sales.
b. debit to Sales and a credit to Inventory.
c. debit to Accounts Receivable and a credit to Merchandise Inventory.
d. debit to Accounts Receivable and a credit to Sales.
48.
The entries recorded in the Other Accounts column of a cash payments journal
a. are posted to the accounts payable subsidiary ledger daily.
b. are posted individually to accounts in the general ledger.
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c. are not posted individually but are posted as a column total to the general
ledger.
d. do not require posting.
49.
Proving the equality of the totals in the columns of multiple-column special journals
is called
a. posting to the subsidiary.
b. debiting and crediting.
c. footing and crossfooting.
d. updating the master file.
50.
If a company records merchandise it returns to suppliers in the general journal, then

a. a posting must be made only to the accounts payable control account.
b. a posting must be made only to the accounts payable subsidiary ledger account.
c. a dual posting must be made.
d. there will be a debit to Merchandise Inventory.
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51.
Gable's Wholesale uses a sales journal. An entry in this journal represents a

a. debit to Cash; credit to Sales.
b. debit to Accounts Receivable; credit to Sales.
c. debit to Sales Discounts; credit to Cash.
d. debit to Accounts Payable; credit to Sales Returns and Allowances.
Answer: b, SO: 3, Bloom: K, Difficulty: Medium, Min: 1, AACSB: Reflective Thinking, AICPA-BB: Industry/Sector Perspective, AICPA-FN:
52.
Which accounts in the general ledger are affected when the monthly posting is
made from the sales journal?
a. Accounts Receivable; accounts receivable subsidiary accounts
b. Accounts receivable subsidiary accounts; Sales
c. Accounts Receivable; Sales
d. Accounts Receivable; Merchandise Inventory
53.
Which of the following is not a true statement about the daily posting of the sales
journal?
a. There is a debit posting to accounts in the accounts receivable subsidiary ledger.
b. There is no credit posting.
c. The reference column in the sales journal is checked when the posting is
complete for each entry in the journal.
d. The invoice number supporting the sales transaction is posted to the reference
column in the subsidiary ledger.
54.
Evidence that the monthly posting of the sales journal total has been accomplished
is indicated by
a. a signature of the accountant doing the posting.
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b. a date under the double-line total.

c. the general ledger account numbers under the double-lined total.
d. inspecting the postings in the accounts payable subsidiary ledger.
55.
Which of the following economic events would not be recorded in the cash receipts
journal?
a. Cash sales of merchandise
b. Collections of accounts receivable
c. Cash from sale of land
d. Cash purchases of merchandise
Answer: d, SO: 3, Bloom: C, Difficulty: Easy, Min: 1, AACSB: Reflective Thinking, AICPA-BB: Industry/Sector Perspective, AICPA-FN:
56.
The "Other Accounts" column in a cash receipts journal is also referred to as the
a. miscellaneous column.
b. excess column.
c. sundry accounts column.
d. compound-entry column.
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57.
The process of totaling the columns of a journal is termed

a. ruling.
b. columnizing.
c. sizing.
d. footing.
58.
An (x) below the "Other Accounts" column in a cash receipts journal indicates the
a. total has been posted to the general ledger.
b. total is not posted to the general ledger.
c. column has been footed.
d. column has been cross-footed.
59.
Crossfooting a cash receipts journal means

a. the equality of debits and credits in the journal has been proved.
b. each line of the journal has a horizontal total.
c. the columns of the journal have been cross-referenced.
d. all necessary postings have been completed.
Answer: a, SO: 3, Bloom: K, Difficulty: Medium, Min: 1, AACSB: Reflective Thinking, AICPA-BB: Industry/Sector Perspective, AICPA-FN:
60.
Which of the following would not be an appropriate heading for a column in the cash
receipts journal?
a. Cash
b. Accounts Payable
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c. Sales Discounts
d. Sales
Answer: b, SO: 3, Bloom: C, Difficulty: Medium, Min: 1, AACSB: Reflective Thinking, AICPA-BB: Industry/Sector Perspective, AICPA-FN:
61.
Proving the postings of a single-column purchases journal would involve comparing

the
a. general ledger posting to Accounts Payable to the debit postings of the accounts
receivable subsidiary ledger.
b. general ledger posting to Accounts Payable to the general ledger posting to
Merchandise Inventory.
c. general ledger credit posting to Accounts Payable to the general ledger debit
posting to Merchandise Inventory.
d. debit postings to the accounts receivable subsidiary ledger to the credit postings
to the accounts payable subsidiary ledger.
62.
If a company uses a multiple-column purchases journal, which of the following

possible headings for debit columns of the journal would not be appropriate?
a. Accounts Payable
b. Merchandise Inventory
c. Store Supplies
d. Office Supplies
Answer: a, SO: 3, Bloom: C, Difficulty: Medium, Min: 2, AACSB: Reflective Thinking, AICPA-BB: Industry/Sector Perspective, AICPA-FN:
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63.
Entries in the cash payments journal are made from

a. sales invoices.
b. purchase invoices.
c. prenumbered checks.
d. canceled checks.
64.
The reference column of a multiple-column cash payments journal after posting

a. will only contain check marks.
b. will be blank.
c. will only contain account numbers.
d. may contain either account numbers or check marks.
65.
The reference column of the accounts in the accounts payable subsidiary ledger
after
posting may show
a. only P references.
b. CP, P, or G references.
c. G, P, or S references.
d. only CP references.
Answer: b, SO: 3, Bloom: K, Difficulty: Medium, Min: 1, AACSB: Reflective Thinking, AICPA-BB: Industry/Sector Perspective, AICPA-FN:
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PROBLEMS
Illustration One
The following transactions were obtained from the records of Alhaji Ado Traveler
for the month of January, 2008:
35
Jan.1 Assets: Machinery N94, 000; Motor Vehicles N129, 000; Stock N82, 250;
Debtors N2, 975; Cash N385.
Liabilities: Creditors N4, 450; Bank overdraft N17, 250.
Jan. 3 Bought from Alh. Yusuf Isa & Sons Ltd:
50 bags of Millet @ N2,500 a bag
25 bags of Wheat @ N4,000 a bag
10 bags of Maize @ N3,000 a bag
Invoice subject to 20% trade discount.
Jan.8 Sold to B.B Jafaar & Co.
Jan.10 Returned to Alh. Yusuf Isa & Sons Ltd
3 bags of Millet
1 bag of Maize
All damaged in transit
Jan.12 B.B Jafaar & Co. returned
2 bags of Wheat
Jan.15 Bought from Idi Trader
Invoice subject to 15% trade discount
Jan.22 Sold to Musa Minjibir
Whole transaction subject to 20% trade discount
Jan.30 Musa Minjibir returned
2 bags of Maize
4 bags of Millet
All defective.
You are required to prepare the various journals to record the above transactions
for the month of January, 2008.
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Books of Account
Unit 9
Accounting
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Accounting
The following transactions were obtained from the books of KANDE &
SONS for the month of August, 2008.
Aug. 5 Bought from D. Usman & Sons:
5 dining tables @ N3,200 each
20 armless chairs @ N4,000 each
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Books of Account
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Accounting
Aug. 7 Returned by D. Usman & Sons:

One dining table which was damaged in transit
Aug. 13 Sold to F. Johnson & Sons:
10 bags of Dangote Cement @ N1,800 per bag
80 bags of Dangote Flour @ N2,200 per bag
Aug. 25 F. Johnson returned 4 bags of Cement which coagulated.
Required:
You are required to prepare the purchases, sales and returns day books for
the month of August, 2008.
Alangubro is in business as a dealer in building materials. His
transactions in January, 2009 were as follows:
January 3 Bought on credit from Emmanson Trading Co.:
39
60 bags of cement @ N450 a bag.
January 6 Bought from Wuru-Wuru & Sons on credit:
6 pairs of louver frames @ N100 a pair
100 piece of louver blades @ N20 a piece.
January 10 Sold on credit to P. Paulinus:
10 bags of cement @ N550 a bag.
January 15 Sold to H. Hamzat on credit:
20 bags of cement @ N550 a bag
6 pairs of louver frames @ N120 a pair
50 pieces of louver blades @ N30 a piece
The whole transaction is subject to 15% trade discount.
January 20 Bought on credit from Deluxe Paints Ltd.:
100 tins of gloss star paints @ N85 a tin
20 tins of emulsion star paints @ N69 a tin, less 10% trade
discounts.
January 21 Returned to Deluxe Paints Ltd.:
2 tins of gloss star paints
2 tins of emulsion star paints.
January 25 Sold to M. Umar:
80 tins of gloss star paints @ N100 a tin
January 29 M. Umar returned:
2 tins of gloss star paints.
You are required to prepare:
(a) Purchases Journal;
(b) Sales Journal;
(c) Returns Outward Journal; and
(d) Returns Inward Journal.
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Books of Account
Unit 9
Accounting
FILL IN THE BLACKS
1.
An account
Payable
is a liability created by buying goods or services on credit?
2.
An account
Receivable
3.
A BALANCE SHEET is a financial statement providing information that helps users understand a company's financial
is an asset created by selling products or services on credit?
status.
DIVIDENDS are distributions of assets by a corporation to its owners.
The statement of OWNER'S EQUITY reports the changes in equity over the reporting period.
A business with many
customers would set up the general ledger Accounts Receivable account for all credit
customers and a separate account for each credit customer.

17. The term
has long been used in accounting literature to describe all types of plant and equipment.
18. A journal may be a
journal or it may be a group of special journals.
19. The advantages of
ledger are as following1reduces ledger detail2permits better division of
labor3permits a different sequence of accounts4permits better internal control.

20. In a western accounting system, the information about each business transaction is initially recorded in an accounting
record called a
.
.
The balance in Accounts Payable is decreased with a _______debit__________ entry.
PO is the abbreviation for _____purchase order____________ _________________.
A form or record sometimes used to assemble the documentation and approvals necessary for paying a vendor's invoice is a
______voucher___________.
A Rs. 1,000 invoice from a supplier has terms of 2/10, n/30. The amount that should be remitted to the supplier if the amount
is paid within the discount period isRs. ____980_____________.
The seller of goods that is offering credit terms of net 30 days will likely be one of its customer's ____unsecured_________
creditors until it receives payment.
3. A journal entry can consist of no more than one account to be debited and one account to be credited.
True
False
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Books of Account
Unit 9
Accounting
5. Transactions
True
are
recorded
in
either
journal
or
ledger,
but
not
in
both.
False
6. An amount debited to Cash in a journal entry should be posted as a credit to the Cash account in the ledger.
True
False
10. The
True
normal
balance
of
contra
asset
account
is
False
283
Books of Account
debit.

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Unit 9

The Book of Original Entry

Return Outward Book

Return Inward Book

Sales Day Book

Purchase Day Book

There are two main books of account, Journal and Ledger

Journal used to record the economic transaction chronologically

Ledger used to classifying economic activities according to nature

9.1 Subdivision of Journal

Purchases book is written up daily from the invoices received

The invoices are consecutively numbered

The invoice of each number is noted in the purchases book

Work Book Foundation Level

Purchase Journal (Format)

Purchased goods from Qurat Ul Ain & Co

Purchased goods from Saba Sajjad

Purchased goods from Omer Nawaz & Co

Purchased goods from Maqbool & Co

Account Payable_ Qurat Ul Ain & Co

Account Payable_ Saba Sajjad

Account Payable_ Omer Nawaz & Co

Account Payable_ Maqbool & Co

9.1.2 Sales Day Book

Work Book Foundation Level

Sold goods to Ideal College

Sold goods to Ahmad & Co

Credit sales to Ayesha Bibi

Sold goods to Gulbaz Khan

Account Receivable _ Ideal College

9.1.3 Return Inward Book

Return Inward Journal (Format)

Goods returned by Sana Khalid & Co

Goods returned by Ideal Traders

Return Inward Journal

Account Receivable _ Sana Khalid & Co

9.1.4 Return Outward Book

Return Outward Journal (Format)

Karim & Sons

Maria Waheed & Co

Return Outward Journal

Account Payable _ Karim & Sons

Account Payable_ Maria Waheed & Co

Account Payable_ Saeed Bros

Work Book Foundation Level

Work Book Foundation Level

9.1.5 Proper/ General Journal

Work Book Foundation Level

Work Book Foundation Level

Example # 9.6: Record the following transactions in the appropriate journal?

Purchased goods from Ali & Co for Rs. 4,500

Sold merchandise to Naeem & Sons worth of Rs. 6,000

Purchase merchandise from B & Brothers Rs. 3,000

Credit sales of goods to Z & Co for Rs. 2,500

Naeem & Sons returned goods Rs. 1,000

Return merchandise to Ali & Co Rs. 500

Purchase Furniture from Mr. Saeed of Rs. 3,200

Returned goods to B & Brothers of Rs. 200

Purchase Machinery on account from MMM Machines Rs. 7,000

Z & Co returned merchandise of Rs. 300

Account Payable_ Ali & Co

Account Payable_ B & Brothers

Account Receivable_ Naeem & Sons