FA – L1 – Q14 – Sales and Purchases

Prepare sales and purchase day book extracts for Green Haven Garden Traders' May 20X9 transactions.

Question

The following transactions in May 20X9 are those of a new business entity, Green Haven Garden Traders.

May 20X9

Date	Transaction
1	Set up the entity with capital in cash: GH₵2,500,000.
2	Bought goods on credit from the following suppliers: Bushwood Suppliers GH₵540,000, Blossom Town GH₵870,000, D. Grayson GH₵250,000, Weedstop GH₵760,000, T. Verdant GH₵640,000. (Total: GH₵3,060,000).
4	Sold goods on credit to: Office Works GH₵430,000, V. Carson GH₵640,000, Southern Retail GH₵1,760,000. (Total: GH₵2,830,000).
6	Paid rent GH₵120,000.
9	Office Works paid the GH₵430,000 that it owed.
10	Southern Retail paid GH₵1,500,000.
12	The following payments were made: to D. Grayson GH₵250,000 and to Bushwood Suppliers GH₵540,000. (Total: GH₵790,000).
15	Advertising costs of GH₵230,000 were paid to the local newspaper publisher.
18	Bought goods on credit from the following suppliers: Bushwood Suppliers GH₵430,000, Landview GH₵1,100,000. (Total: GH₵1,530,000).
21	Sold goods on credit to Community Greens GH₵670,000.
31	Paid rent GH₵180,000.

Required
(a) Prepare extracts of the sales day book and purchase day book for the relevant transactions above.

(b) Use T accounts to show how these transactions should be recorded in the main ledger accounts of the entity. The accounting system contains a receivables ledger and a payables ledger for individual accounts, and there are control accounts (Total: accounts) for receivables and payables in the main ledger.

(c) Post the transactions to individuals’ accounts in the receivables ledger and the payables ledger and extract a list of balances from these. (The total of each list should agree with the balance on the receivables control account and payables control account respectively).

(d) Prepare a trial balance as at 31 May 20X9.

Answer

(A)

Purchases day book

Date	Supplier	GH₵
2 May	Bushwood Suppliers	540,000
	Blossom Town	870,000
	D. Grayson	250,000
	Weedstop	760,000
	T. Verdant	640,000
		3,060,000
18 May	Bushwood Suppliers	430,000
	Landview	1,100,000
		1,530,000

Sales day book

Date	Customer	GH₵
4 May	Office Works	430,000
	V. Carson	640,000
	Southern Retail	1,760,000
		2,830,000
21 May	Community Greens	670,000
		670,000

(B)

Accounts in the main ledger

Capital

Date	Details	GH₵	Date	Details	GH₵
31 May	Balance c/d	2,500,000	1 May	Bank	2,500,000
Total		2,500,000	Total		2,500,000
			1 June	Balance b/d	2,500,000

Cash at bank

Date	Details	GH₵	Date	Details	GH₵
1 May	Capital	2,500,000	6 May	Rent	120,000
9 May	Office Works	430,000	12 May	D. Grayson	250,000
10 May	Southern Retail	1,500,000	12 May	Bushwood Suppliers	540,000
			15 May	Advertising	230,000
			31 May	Rent	180,000
			31 May	Balance c/d	3,110,000
Total		4,430,000	Total		4,430,000
1 June	Balance b/d	3,110,000

Purchases

Date	Details	GH₵	Date	Details	GH₵
2 May	Bushwood Suppliers	540,000	31 May	Balance c/d	4,590,000
2 May	Blossom Town	870,000
2 May	D. Grayson	250,000
2 May	Weedstop	760,000
2 May	T. Verdant	640,000
18 May	Bushwood Suppliers	430,000
18 May	Landview	1,100,000
Total		4,590,000	Total		4,590,000
1 June	Balance b/d	4,590,000

Sales

Date	Details	GH₵	Date	Details	GH₵
31 May	Balance c/d	3,500,000	4 May	Office Works	430,000
			4 May	V. Carson	640,000
			4 May	Southern Retail	1,760,000
			21 May	Community Greens	670,000
Total		3,500,000	Total		3,500,000
			1 June	Balance b/d	3,500,000

Rent

Date	Details	GH₵	Date	Details	GH₵
6 May	Bank	120,000	31 May	Balance c/d	300,000
31 May	Bank	180,000
Total		300,000	Total		300,000
1 June	Balance b/d	300,000

Advertising

Date	Details	GH₵	Date	Details	GH₵
15 May	Bank	230,000	31 May	Balance c/d	230,000
Total		230,000	Total		230,000
1 June	Balance b/d	230,000

Payables – Bushwood Suppliers

Date	Details	GH₵	Date	Details	GH₵
12 May	Bank	540,000	2 May	Purchases	540,000
31 May	Balance c/d	430,000	18 May	Purchases	430,000
Total		970,000	Total		970,000
			1 June	Balance b/d	430,000

Payables – Blossom Town

Date	Details	GH₵	Date	Details	GH₵
31 May	Balance c/d	870,000	2 May	Purchases	870,000
Total		870,000	Total		870,000
			1 June	Balance b/d	870,000

Payables – D. Grayson

Date	Details	GH₵	Date	Details	GH₵
12 May	Bank	250,000	2 May	Purchases	250,000
Total		250,000	Total		250,000

Payables – Weedstop

Date	Details	GH₵	Date	Details	GH₵
31 May	Balance c/d	760,000	2 May	Purchases	760,000
Total		760,000	Total		760,000
			1 June	Balance b/d	760,000

Payables – T. Verdant

Date	Details	GH₵	Date	Details	GH₵
31 May	Balance c/d	640,000	2 May	Purchases	640,000
Total		640,000	Total		640,000
			1 June	Balance b/d	640,000

Payables – Landview

Date	Details	GH₵	Date	Details	GH₵
31 May	Balance c/d	1,100,000	18 May	Purchases	1,100,000
Total		1,100,000	Total		1,100,000
			1 June	Balance b/d	1,100,000

Receivables – Office Works

Date	Details	GH₵	Date	Details	GH₵
4 May	Sales	430,000	9 May	Cash at bank	430,000
Total		430,000	Total		430,000

Receivables – V. Carson

Date	Details	GH₵	Date	Details	GH₵
4 May	Sales	640,000	31 May	Balance c/d	640,000
Total		640,000	Total		640,000
1 June	Balance b/d	640,000

Receivables – Southern Retail

Date	Details	GH₵	Date	Details	GH₵
4 May	Sales	1,760,000	10 May	Cash at bank	1,500,000
			31 May	Balance c/d	260,000
Total		1,760,000	Total		1,760,000
1 June	Balance b/d	260,000

Receivables – Community Greens

Date	Details	GH₵	Date	Details	GH₵
21 May	Sales	670,000	31 May	Balance c/d	670,000
Total		670,000	Total		670,000
1 June	Balance b/d	670,000

(C)

Receivables ledger balances at 31 May

Customer	GH₵
V. Carson	640,000
Southern Retail	260,000
Community Greens	670,000
Total balances	1,570,000

Payables ledger balances at 31 May

Supplier	GH₵
Bushwood Suppliers	430,000
Blossom Town	870,000
Weedstop	760,000
T. Verdant	640,000
Landview	1,100,000
Total balances	3,800,000

(D)

Trial Balance as at 31 May 20X9

Account	Debit GH₵	Credit GH₵
Capital		2,500,000
Cash at bank	3,110,000
Purchases	4,590,000
Sales		3,500,000
Rent	300,000
Advertising	230,000
Payables – Bushwood Suppliers		430,000
Payables – Blossom Town		870,000
Payables – Weedstop		760,000
Payables – T. Verdant		640,000
Payables – Landview		1,100,000
Receivables – V. Carson	640,000
Receivables – Southern Retail	260,000
Receivables – Community Greens	670,000
Total	9,800,000	9,800,000

Tags: Capital, Double Entry, Ledger accounts, Payables, Purchases, Receivables, Sales, Trial Balance
Level: Level 1

Topic: Double entry bookkeeping

Uploader: Samuel Duah