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a) On 6 May 20X7, Blake buys some goods for EM7,000 from Smith, and agrees to pay
for them sometime within the next two weeks. The effect of this is that a new asset,
stock of goods, is acquired, and a liability for the goods is created. A person whom
money is owed for goods is known in accounting language as a creditor. The balance
sheet becomes:
B Blake
Balance Sheet as at 6 May 20X7
Asset
RM
Shop
32,000
Stock of Goods
7,000
Cash at bank
28,000
67,000
Less : Creditor
(7,000)
60,000
Capital
i)
60,000
The financial statements usually requires basic information about the type,
number and value of property owned by a business. To get this information we
need to provide inventories.
A complete inventory is a list of all financial assets and physical assets owned by
the business. It involves personnel either property such as livestock, machinery,
rice, stock and bank balances as well as real estate such as buildings and land. If
there are no records available, make an inventory is the first step in providing a
complete farm records. To complete the recording system useful, must be in the
inventory finance. Therefore, provides the inventory has two steps; physical
calculation and assessment.
ii)
Why do you think the RM7,000 value for creditors is shown in brackets?
The information in brackets is used to show the amounts that make up a
particular item which constitute a deductible of creditors.
You are required to draw up a balance sheet as on 7 December 20X9 after the above
transactions have been complete.
Hill
Balance Sheet as at 7 December 20X9
Asset
RM
RM
TOTAL
Equipment
6,000
110
6,110
Car
7,300
Stock of Goods
8,100
380
8,480
Cash at bank
9,100
1,500
10,600
Debtors
4,050
730
4,780
34,550
2,720
37,270
(2,800)
(1,150)
(3,950)
31,750
1,570
33,320
31,750
1,570
33,320
Less : Creditor
Capital
QUESTION 2
7,300
a) Enter the following transaction in the personal accounts (i.e. the creditor and debtor
accounts) only. Balance off each personal account at the end of the month. After
completing this, state which of the balances represent debtors and which represent
creditors.
20X8
Sept
1
2
8
10
12
17
20
24
26
28
30
Description
Sales to Johnny
Sales to Thomas
Sales to Sean
Purchase from Ben
Purchase from Raymond
Purchase from Patrick
Sales to Thomas
Sales to Lance
Purchase from Raymond
Purchase from James
Returns inwards from Sean
Returns inwards from Thomas
Returned goods to Raymond
Returned goods to James
Paid Ben by cheque
Johnny paid us by cheque
Paid James by cheque
Johnny paid us by cash
Lance pays us by cheque
Debit (out)
Credit (in)
520
630
240
390
510
280
640
418
92
870
25
190
12
84
390
400
766
80
418
Assets
12,500
28,000
16,800
19,600
25,500
51,400
4,200
3,750
Liabilities
1,800
4,900
4,300
3,150
6,300
11,650
2,100
2,000
Capital
10,700
23,100
12,500
16,450
19,200
39,750
2,100
1,750