FA – MAY 2015 – L1 – SB – Q1b – Recording Financial Transactions (Including Source Documents, Books of Prime Entry, and Cash Books)

Provide journal entries for transactions in a trading company.

Question

Babariga Trading Company has the following extracts from its financial records as at 31 January 2014:

Date	Transaction Description	Amount (N’000)
Jan 1	Cash in hand	50
Jan 1	Cash at bank	150
Jan 1	Receivables	300
Jan 1	Inventory	100
Jan 2	Purchased goods for cash	70
Jan 5	Goods bought from Faleye	500
Jan 9	Bought shop fittings and paid by cheque	27
Jan 12	Cash sales	129
Jan 15	Goods sold to Okonkwo	100
Jan 16	Paid Faleye by cheque on account	400
Jan 17	Cash sales	350
Jan 18	Paid cash into bank	150
Jan 20	Bought goods from Faruk	140
Jan 25	Sold goods to Shola	150
Jan 28	Bought desk-top computer by cheque	70
Jan 31	Paid for stationery in cash	40

Required:
Use Journal entries to record the above balances and transactions in the books of Babariga Trading Company. (14 Marks)

Answer

Babariga Trading Company – Journal Entries for the Period Ended January 31, 2014

Date	Particulars	Dr (N’000)	Cr (N’000)
Jan 1	Cash account	50
	Bank account	150
	Trade receivables control account	300
	Inventory account	100
	Capital account (Difference)		600
	Being opening balances for January 2014
Jan 2	Purchases account	70
	Cash account		70
	Being cash purchases recorded
Jan 5	Purchases account	500
	Trade payables – Faleye account		500
	Being credit purchase from Faleye
Jan 9	Shop fittings account	27
	Bank account		27
	Being shop fittings purchased by cheque
Jan 12	Cash account	129
	Revenue account		129
	Being recording of cash sales
Jan 15	Trade receivables – Okonkwo account	100
	Revenue account		100
	Being sale of goods on credit to Okonkwo
Jan 16	Trade payables – Faleye account	400
	Bank account		400
	Being part payment to Faleye by cheque
Jan 17	Cash account	350
	Revenue account		350
	Being recording of cash sales
Jan 18	Bank account	150
	Cash account		150
	Being cash paid into bank
Jan 20	Purchases account	140
	Trade payables – Faruk account		140
	Being purchase of goods from Faruk
Jan 25	Trade receivables – Shola account	150
	Revenue account		150
	Being sale of goods on credit to Shola
Jan 28	Office equipment account	70
	Bank account		70
	Being purchase of desk-top computer
Jan 31	Stationery account	40
	Cash account		40
	Being payment for stationery in cash