FA – L1 – Q10 – Double entry bookkeeping

Record May 20X9 transactions in T accounts and prepare a trial balance for Pine Grove Garden Traders.

Question

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

May 20X9
Date
1 Set up the entity with capital in cash: GH₵2,500,000.
2 Bought goods on credit from the following suppliers: Green Leaf Company GH₵540,000, Blossom Town GH₵870,000, D Smith GH₵250,000, HerbSafe GH₵760,000, Forest Green GH₵640,000.
4 Sold goods on credit to: City Office Supplies GH₵430,000, V Pine GH₵640,000, Coastal Chain Stores GH₵1,760,000.
6 Paid rent GH₵120,000.
9 City Office Supplies paid the GH₵430,000 that it owed.
10 Coastal Chain Stores paid GH₵1,500,000.
12 The following payments were made: to D Smith GH₵250,000 and to Green Leaf Company GH₵540,000.
15 Advertising costs of GH₵230,000 were paid to the local newspaper publisher.
18 Bought goods on credit from the following suppliers: Green Leaf Company GH₵430,000, Horizon Plants GH₵1,100,000.
21 Sold goods on credit to Community Gardens GH₵670,000.
31 Paid rent GH₵180,000.

Required
(a) Use T accounts to show how these transactions should be recorded in the main ledger accounts of the entity. The accounting system maintains separate accounts for each individual payable and receivable in the main ledger.
(b) Prepare a trial balance as at 31 May 20X9.

Answer

(a) Accounts in the main ledger

Capital

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

Cash at bank

Date	Description	GH₵	Date	Description	GH₵
1 May	Capital	2,500,000	6 May	Rent	120,000
9 May	City Office Supplies	430,000	12 May	D Smith	250,000
10 May	Coastal Chain Stores	1,500,000	12 May	Green Leaf Company	540,000
			15 May	Advertising	230,000
			31 May	Rent	180,000
			31 May	Balance c/d	3,110,000
		4,430,000			4,430,000
1 June	Balance b/d	3,110,000

Purchases

Date	Description	GH₵	Date	Description	GH₵
2 May	Green Leaf Company	540,000	31 May	Balance c/d	4,590,000
2 May	Blossom Town	870,000
2 May	D Smith	250,000
2 May	HerbSafe	760,000
2 May	Forest Green	640,000
18 May	Green Leaf Company	430,000
18 May	Horizon Plants	1,100,000
		4,590,000			4,590,000
1 June	Balance b/d	4,590,000

Sales

Date	Description	GH₵	Date	Description	GH₵
31 May	Balance c/d	3,500,000	4 May	City Office Supplies	430,000
			4 May	V Pine	640,000
			4 May	Coastal Chain Stores	1,760,000
			21 May	Community Gardens	670,000
		3,500,000			3,500,000
			1 June	Balance b/d	3,500,000

Rent

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

Advertising

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

Payables – Green Leaf Company

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

Payables – Blossom Town

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

Payables – D Smith

Date	Description	GH₵	Date	Description	GH₵
12 May	Bank	250,000	2 May	Purchases	250,000
		250,000			250,000

Payables – HerbSafe

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

Payables – Forest Green

| Date |اهل| Description | GH₵ | Date | Description | GH₵ |
|——|———————|———–|——|———————|———–|
| 31 May | Balance c/d | 640,000 | 2 May | Purchases | 640,000 |
| | | 640,000 | | | 640,000 |
| | | | 1 June | Balance b/d | 640,000 |

Payables – Horizon Plants

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

Receivables – City Office Supplies

Date	Description	GH₵	Date	Description	GH₵
4 May	Sales	430,000	9 May	Bank	430,000
		430,000			430,000

Receivables – V Pine

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

Receivables – Coastal Chain Stores

Date	Description	GH₵	Date	Description	GH₵
4 May	Sales	1,760,000	10 May	Bank	1,500,000
			31 May	Balance c/d	260,000
		1,760,000			1,760,000
1 June	Balance b/d	260,000

Receivables – Community Gardens

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

(b) 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 – Green Leaf Company		430,000
Payables – Blossom Town		870,000
Payables – HerbSafe		760,000
Payables – Forest Green		640,000
Payables – Horizon Plants		1,100,000
Receivables – V Pine	640,000
Receivables – Coastal Chain Stores	260,000
Receivables – Community Gardens	670,000
Total	9,800,000	9,800,000

Tags: Accounting records, Capital, Cash Transactions, Ledger accounts, Payables, Purchases, Receivables, Sales, T accounts, Trial Balance
Level: Level 1

Topic: Double entry bookkeeping

Uploader: Samuel Duah