Subject (SQ): FINANCIAL ACCOUNTING

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  • 30 Marks

FA – L1 – Q14 – Sales and Purchases

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

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.

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  • 10 Marks

FA – L1 – Q13 – Preparing financial statements of a sole trader

Prepare a statement of profit or loss and financial position for Worthe's business for the year ended 30 June 20X9 using the given trial balance and inventory data.

The following is a trial balance for Worthe after his first year’s trading. You are required to prepare a statement of profit or loss for the year ended 30 June 20X9 and a statement of financial position as at that date.

Worthe – Trial balance as at 30 June 20X9

DR GH₵(000) CR GH₵(000)
Sales 28,794
Purchases 23,803
Rent 854
Lighting and heating expenses 422
Salaries and wages 3,164
Insurance 105
Land and buildings 50,000
Fixtures and fittings 1,000
Receivables 3,166
Sundry expenses 506
Payables 1,206
Cash at bank 3,847
Drawings 2,400
Motor vans 5,500
Motor running expenses 1,133
Capital 65,900
Total 95,900 95,900

Inventory at 30 June 20X9 was GH₵4,166,000.

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  • 15 Marks

FA – L1 – Q12 – Double entry bookkeeping

Record Leah's March 20X9 transactions in main ledger T accounts and prepare a trial balance as at 31 March 20X9.

Enter the following transactions in the main ledger accounts of Leah, and extract a trial balance as at 31 March 20X9.
Assume that all receipts and payments are by cheque unless told otherwise.

March 20X9

Date Transaction
1 Started business with GH₵80,000 in the bank
2 Bought goods on credit from: K&H Supplies GH₵7,600; Hatton Traders GH₵2,700; Tobias Traders GH₵5,600
5 Cash sales GH₵8,700. The cash was kept in a safe in Leah’s office.
6 Paid wages GH₵1,400 by cheque.
7 Sold goods on credit to: Elliott Enterprises GH₵3,500; L. Lang GH₵4,200; Carter Leisure GH₵7,200
9 Bought goods for cash GH₵4,600 using cash from Leah’s safe.
10 Bought goods on credit from: K&H Supplies GH₵5,700; Tobias Traders GH₵9,800
12 Paid wages GH₵1,400 by cheque.
13 Sold goods on credit to: L. Lang GH₵3,200; Carter Leisure GH₵2,300
15 Bought shop fixtures on credit from Betta Fittings GH₵5,000
17 Paid K&H Supplies GH₵8,400
18 Goods returned to Tobias Traders GH₵2,000
21 Paid Betta Fittings GH₵5,000
24 Payment received from Carter Leisure GH₵9,500
27 Goods returned to K&H Supplies GH₵2,400
30 Royal Bank provides a loan of GH₵6,000
31 Bought a motor van, paying by cheque GH₵40,000

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  • 12 Marks

FA – L1 – Q11 – Preparing financial statements of a sole trader

Prepare statement of profit or loss and financial position for Blake's business for 20X9 using trial balance and inventory data.

Using the following information, prepare the statement of profit or loss for Blake for the year ended 31 December 20X9 and a statement of financial position as at that date.

Blake – Trial balance as at 31 December 20X9

Debit GH₵ Credit GH₵
Purchases 54,261
Sales 135,650
Sales returns 50
Purchase returns 61
Carriage inwards (delivery cost of purchases) 100
Carriage outwards (cost of deliveries to customers) 150
Inventory – 1 January 20X9 7,500
Wages and salaries 8,900
Rent 4,500
Telephone 560
Heat and lighting 890
Motor van running expenses 1,250
Bank interest 534
Land and buildings 60,000
Motor van 5,000
Payables 5,900
Bank overdraft 6,500
Receivables 8,700
Cash in hand 150
Drawings 15,000
Capital 19,434
Total 167,545 167,545

Inventory at 31 December 20X9 was GH₵9,500.

Required
Prepare the statement of profit or loss for the year ended 31 December 20X9 and a statement of financial position as at that date.

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  • 12 Marks

FA – L1 – Q10 – Double entry bookkeeping

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

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.

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  • 6 Marks

FA – L1 – Q9 – Preparing financial statements of a sole trader

Prepare profit or loss statement and financial position for Kwame's business for the year ended 31 December.

The following information is available for Kwame’s business for the year ended 31 December. He started his business on 1 January.

GH¢’000
Trade payables 1,206
Trade receivables 3,166
Purchases 23,803
Revenue 28,794
Motor van 5,500
Drawings 2,400
Insurance 105
General expenses 506
Rent and rates 854
Salaries 3,164
Inventory at 31 December 4,166
Sales returns 50
Cash at bank 3,847
Cash in hand 100
Capital introduced 65,900

Required:
Prepare a statement of profit or loss for the year ended 31 December and a statement of financial position at that date.

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  • 40 Marks

FA – L1 – Q8 – The Accounting Equation

Record transactions for Kweku's business, prepare accounting equation, and financial statements for August.

Kweku inherited GH¢10,000,000 and decided to set himself up as a merchant. The following transactions took place in July:

  1. He introduced GH¢10,000,000 capital into the business.
  2. He purchased Machine 1 for GH¢1,000,000.
  3. He purchased Machine 2 for GH¢2,500,000.
  4. He sold Machine 1 for GH¢1,500,000.
  5. He paid rent of GH¢300,000.

Required:
(a) Show how each of the above transactions would be recorded using the accounting equation.
(b) Show the accounting equation at 31 August, including additional transactions provided in the answer document.
(c) Prepare a statement of profit or loss for the month ended 31 August and a statement of financial position at 31 August.

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