Purchase Returns

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

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

Topic: Control accounts and account reconciliations

FA – L1 – Q15 – Control accounts and account reconciliations

Record Kweku's May transactions in receivables and payables control accounts using T accounts.

Question

The following are the transactions of Kweku, who commenced a new business on 1 May.

May

Transaction	Details
1	Started the business with capital of GH₵2,500,000, paid into a business bank account.
2	Bought goods on credit from the following entities: Elliot GH₵810,000; Martinez Traders GH₵1,305,000; Grayson GH₵375,000; Legacy GH₵1,140,000; Linden GH₵960,000. (Total: GH₵4,590,000).
3	Sold goods on credit to: Benson Retail for GH₵753,000, Quickmart for GH₵1,120,000 and Sanders for GH₵3,080,000. (Total: GH₵4,953,000).
4	Benson Retail paid by cheque GH₵723,000 taking a discount of GH₵30,000 for early payment. Benson Retail had not been expected to take the discount when the goods were originally sold to them.
5	Sanders paid GH₵1,500,000 by cheque.
6	GH₵700,000 was paid to Elliot.
7	The following payment was made to Grayson: GH₵350,000. A discount of GH₵25,000 was received for early payment.
8	Paid carriage outwards: GH₵345,000.
9	Purchase returns to Legacy GH₵400,000.
10	Sales returns from Sanders: GH₵270,000.
11	Purchases on credit from Martinez Traders GH₵753,000; Legacy GH₵1,650,000. (Total: GH₵2,403,000).
12	Sold goods on credit to Quickmart GH₵1,005,000.

Kweku maintains control accounts for receivables and payables in the main ledger, and accounts for individual customers and suppliers in a receivables ledger and a payables ledger respectively.

Required
(a) Use T accounts to show how the relevant transactions will be recorded in the receivables control account and the payables control account in the main ledger of Kweku in May. (You are not required to prepare T accounts for any of the other main ledger accounts.)

(b) Show the list of balances in the receivables ledger after recording the above transactions.

Answer

Find Related Questions by Tags, levels, etc.

Tags: Account Balances, Control Accounts, Discounts, Payables Ledger, Purchase Returns, Reconciliation
Level: Level 1

Topic: Control accounts and account reconciliations

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FA – L1 – Q16 – Double entry bookkeeping

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

FA – L1 – Q15 – Control accounts and account reconciliations

Record Kweku's May transactions in receivables and payables control accounts using T accounts.

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

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FA – L1 – Q15 – Control accounts and account reconciliations

Record Kweku's May transactions in receivables and payables control accounts using T accounts.

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