FA – L1 – Q16 – Double entry bookkeeping

Prepare journal entries for Sparrow’s June 20X9 transactions in the main ledger.

Question

The following transactions in June are those of a new business entity, Sparrow.

June

Date	Transaction
1	Set up the entity with capital in cash of GH₵6,500,000 paid into a bank account.
2	Bought goods on credit from C. Jenkins GH₵1,800,000.
3	Credit sales: J. Finch GH₵660,000, D. Swan GH₵250,000, Swift Enterprises GH₵430,000. (Total: GH₵1,340,000).
4	Purchased goods for cash (by cheque) GH₵230,000.
5	Bought second-hand motor van for GH₵2,560,000, paying by cheque.
7	Paid motor expenses GH₵120,000.
9	Credit sales: M. Partridge GH₵240,000, Finch Traders GH₵260,000, G. Sparrow GH₵680,000. (Total: GH₵1,180,000).
11	Purchased goods on credit: C. Jenkins GH₵2,400,000, E. Dawson GH₵620,000, A. Ellis GH₵460,000. (Total: GH₵3,480,000).
13	Purchases returned to C. Jenkins GH₵250,000.
19	Sales returns from D. Swan GH₵110,000.
20	Cash drawings taken by owner: GH₵440,000 by cheque.
21	Payments made to E. Dawson GH₵620,000, A. Ellis GH₵460,000. (Total: GH₵1,080,000). All payments were made by cheque.
23	Received payment from J. Finch: GH₵660,000 by cheque.
25	Received payment from Swift Enterprises: GH₵430,000 in cash which was kept in the office.
28	Purchases returned to C. Jenkins: GH₵420,000.
29	Purchased stationery GH₵40,000 (record as a sundry expense) using cash.
30	Credit sales: D. Swan GH₵420,000, Finch Traders GH₵540,000. (Total: GH₵960,000).

Required
(a) Prepare journal entries to show how the following transactions in June 20X9 should be recorded in the main ledger accounts of Sparrow, a newly established business 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. You are not required to include any narrative in the journal entries.

(b) List the transactions that will be entered in the receivables ledger accounts for the month.

Answer

(A)

Date	Debit	Credit
June	GH₵(000)	GH₵(000)
1	Cash at bank	6,500
2	Purchases	1,800
3	Receivables control	1,340
4	Purchases	230
5	Motor van	2,560
7	Motor expenses	120
9	Receivables control	1,180
11	Purchases	3,480
13	Payables control	250
19	Sales returns	110
20	Drawings	440
21	Payables control	1,080
23	Cash at bank	660
25	Cash in hand	430
28	Payables control	420
29	Sundry expenses	40
30	Receivables control	960

(B)

Date		Debit GH₵(000)	Credit GH₵(000)
June
3	J. Finch	660
3	D. Swan	250
3	Swift Enterprises	430
9	M. Partridge	240
9	Finch Traders	260
9	G. Sparrow	680
19	D. Swan		110
23	J. Finch		660
25	Swift Enterprises		430
30	D. Swan	420
30	Finch Traders	540

(C)

Date		Debit GH₵(000)	Credit GH₵(000)
June
2	C. Jenkins		1,800
11	C. Jenkins		2,400
11	E. Dawson		620
11	A. Ellis		460
13	C. Jenkins	250
21	E. Dawson	620
21	A. Ellis	460
28	C. Jenkins	420

Tags: Account Balances, Control Accounts, Credit Purchases, Payables Ledger, Payments, Purchase Returns
Level: Level 1

Topic: Control accounts and account reconciliations

Uploader: Samuel Duah