Question

Assume that you are the owner of a wholesale store and that you operate as a sole trader. On April 1, 2019 you had the following items in your business:

Stock, $14,500,000; Motor vehicles, $15,000,000; Creditors/Accounts payable- J. Downey $1,500,000, P. Wright $2,000,000; Cash in hand, $300,000; Pre-paid insurance, $80,000; Bank loan, $4,000,000; Furniture & fittings, $3,600,000; Accrued rent, $100,000; Cash at Bank, $12,000,000; Debtors/Accounts receivable-A. Howard $3,000,000, S. Simpson $2,800,000; K. Kirk $350,000.   

During April 2019 the following business were transacted:

April 1- Bought goods on credit from B. Burke $4,500,000.

          3- Paid rent with cheque $150,000.

          5- Sold goods on credit to A. Harvey, $5,600,000.

          7- Cash sales, $400,000.

        10- Paid electricity bill $130,000 cash.

        12- Paid J. Downey $1,000,000 by cheque.

        15- Sold goods on credit to S.Simpson, $7,000,000.

        15- Paid P. Wright $1,500,000 by cheque.

        18- S.Simpson paid $3,500,000 by cheque.

        19- Bought goods on credit from F. Smith, $2,400,000.

        22- Sold goods for cash to T. Royal, $1,800,000.

        24- Returned damaged goods valued at $300,000 to B.Burke.  

        25- Paid wages by cheque, $3,000,000.

        27- Paid insurance $70,000 cash.

        28- Paid $50,000 cash for transportation charge for goods bought from F. Daley.

        28- Received a cheque for $2,200,000 from A. Howard.

        29- Sold goods on credit to V. James, $6,200,000.

        29- Miscellaneous expenses paid with cheque, $1,250,000.

        29- Bought goods for cash from C. Croft for $350,000.

        30- Banked $1,000,000.

        30- A. Harvey returned incorrect goods delivered to him valued at $200,000.

        30- The balance on K. Kirk’s account was written off as irrecoverable.

        30- Received $300,000 cash as commission for selling goods for D. Riley.

         Notes:

(i)                 On April 30, 2019 stock on hand was valued at $11,000,000.

(ii)               Office furniture and motor vehicles are to be depreciated at 10% and 20% per annum respectively using the straight line method.

(iii)              $100,000 in rent was owed on April 30, 2019.

(iv)             On April 30, 2019 wages paid in advance amounted to $200,000.

(v)               There was no accumulated depreciation on fixed assets as at April 1, 2019.

Required:

Use the above information to prepare the following for the month of April 2019:

(a)    The opening position of your business on April 1, 2019.

(b)   The Sales Journal.

(c)    The Purchases Journal.

(d)   The Return Inwards Journal.

(e)    The Return Outwards Journal.

(f)    The General/Nominal Journal.

Answer 1

Note.

Only credit sales are entered in the sales journal, cash sales are recorded in cash book

Only credit purchase is recorded in the purchase journal, cash purchases are recorded in cash book