Agata - 17 Mar 2007, 03:34 pm
This is a review question from F. Wood’s book – Business Accounting vol. 1
But there is no answer to this question. So I decided to place it here and ask if my answer is correct.
Review question - 19.7A page 217
Mudgee Ltd issued the following invoices to customers in respect of credit sales made during the last week of May 20X7. The amounts stated are all net of Value Added Tax. All sales made by Mudgee Ltd are subject to VAT at 15%.
Invoice No Date Customer Amount $
3045 25 May Laira Brand 1060.00
3046 27 May Brown Bros 2200.00
3047 28 May Penfold’s 170.00
3048 29 May T Tyrrell 460.00
3049 30 May Laira Brand 1450.00
On 29 May Laira Brand returned half the goods (in value) purchased on 25 May. An allowance was made the same day to this customer for the appropriate amount.
On 1 May 20X7 Laira Brand owed Mudgee Ltd $2100.47. Other than the purchases detailed above Laira Brand made credit purchases (including VAT) of $680.23 form Mudgee Ltd on 15 May.
On 21 May Mudgee Ltd received a cheque for $2500 from Laira Brand.
Required:
(a) Show how the above transactions would be recorded in Mudgee Ltd’s Sales Day Book for the week ended 30 May 20X7.
(b) Describe how the information on the Sales Day Book would be incorporated into Mudgee Ltd’s double entry system.
(c) Reconstruct the personal account of Laira Brand as it would appear in Mudgee Ltd’s ledger for May 20X7.
(Association of Accounting Technicians)
My answer:
(a)
Mudgee Ltd
Sales Day Book for the week ended 30 May 20X7
Date Customer Invoice No. Receivables Sales Sales Tax
25 May Laira Brand 3045 1219.00 1060.00 159.00
27 May Brown Bros 3046 2530.00 2200.00 330.00
28 May Penfold’s 3047 195.50 170.00 25.50
29 May T Tyrrell 3048 529.00 460.00 69.00
29 May Laira Brand 3045R (609.50) (530.00) (79.50)
30 May Laira Brand 3049 1667.50 1450.00 217.50
Totals: 5531.50 4810.00 721.50
(b) Total Receivables ($5531.50) sholud be send to the debit side of RLCA in the Nominal Ledger. Total Sales ($4810.00) should be send to the credit side of Sales Account in the Nominal Ledger and total Sales Tax ($721.50) should be send to the credit side of the Sales Tax Account in the Nominal Ledger.
All particular amounts from invoices should be send to the Receivables Ledger to particular customers’ accounts, but this is not a part of double entry system.
(c)
Mudgee Ltd’s Purchases Ledger
Laira Brand
20X7 $ 20X7 $
1 May Balance b/d 2100.47 21 May Bank 2500.00
15 May Sales 680.23 29 May Returns Inwards 609.50
25 May Sales 1219.00 30 May Balance c/d 2557.70
30 May Sales 1667.50
Totals: 5667.20 Totals: 5667.20
20X7
1 June Balance b/d 2557.70
But there is no answer to this question. So I decided to place it here and ask if my answer is correct.
Review question - 19.7A page 217
Mudgee Ltd issued the following invoices to customers in respect of credit sales made during the last week of May 20X7. The amounts stated are all net of Value Added Tax. All sales made by Mudgee Ltd are subject to VAT at 15%.
Invoice No Date Customer Amount $
3045 25 May Laira Brand 1060.00
3046 27 May Brown Bros 2200.00
3047 28 May Penfold’s 170.00
3048 29 May T Tyrrell 460.00
3049 30 May Laira Brand 1450.00
On 29 May Laira Brand returned half the goods (in value) purchased on 25 May. An allowance was made the same day to this customer for the appropriate amount.
On 1 May 20X7 Laira Brand owed Mudgee Ltd $2100.47. Other than the purchases detailed above Laira Brand made credit purchases (including VAT) of $680.23 form Mudgee Ltd on 15 May.
On 21 May Mudgee Ltd received a cheque for $2500 from Laira Brand.
Required:
(a) Show how the above transactions would be recorded in Mudgee Ltd’s Sales Day Book for the week ended 30 May 20X7.
(b) Describe how the information on the Sales Day Book would be incorporated into Mudgee Ltd’s double entry system.
(c) Reconstruct the personal account of Laira Brand as it would appear in Mudgee Ltd’s ledger for May 20X7.
(Association of Accounting Technicians)
My answer:
(a)
Mudgee Ltd
Sales Day Book for the week ended 30 May 20X7
Date Customer Invoice No. Receivables Sales Sales Tax
25 May Laira Brand 3045 1219.00 1060.00 159.00
27 May Brown Bros 3046 2530.00 2200.00 330.00
28 May Penfold’s 3047 195.50 170.00 25.50
29 May T Tyrrell 3048 529.00 460.00 69.00
29 May Laira Brand 3045R (609.50) (530.00) (79.50)
30 May Laira Brand 3049 1667.50 1450.00 217.50
Totals: 5531.50 4810.00 721.50
(b) Total Receivables ($5531.50) sholud be send to the debit side of RLCA in the Nominal Ledger. Total Sales ($4810.00) should be send to the credit side of Sales Account in the Nominal Ledger and total Sales Tax ($721.50) should be send to the credit side of the Sales Tax Account in the Nominal Ledger.
All particular amounts from invoices should be send to the Receivables Ledger to particular customers’ accounts, but this is not a part of double entry system.
(c)
Mudgee Ltd’s Purchases Ledger
Laira Brand
20X7 $ 20X7 $
1 May Balance b/d 2100.47 21 May Bank 2500.00
15 May Sales 680.23 29 May Returns Inwards 609.50
25 May Sales 1219.00 30 May Balance c/d 2557.70
30 May Sales 1667.50
Totals: 5667.20 Totals: 5667.20
20X7
1 June Balance b/d 2557.70