ACCT1008-General Journal General Ledger Trial Balance

5 Pages / 1,069 Words Published On: 13-07-2020

Questions:

1.Part A

Record the General Journal entries in the proforma provided on the following page to record each of the following transactions where required. Remember to format the journals correctly and include narration (explanation) for each journal entry.

Claude Cogsworth is the sole proprietor of Classic Clocks. He has been operating Classic Clocks successfully and has now decided to expand his business to include a watchmaking school. The following is a list of transactions that took place during the month of November 2017.

Nov 1 Classic Clocks received $1,540 from a new student who has enrolled in the watchmaking school.

Nov 2 Claude Cogsworth visited a physiotherapist for a sore back as a result of an injury sustained while coaching the local soccer team. He paid $183 for the appointment using the business bank account.

Nov 4 Classic Clocks sold and delivered 4 new silver framed wall clocks to the Hilton Hotel for their foyer for $2 520 each. The Hilton Hotel paid 20% in cash and would pay the remaining amount within 30 days.

Nov 13 Classic Clocks purchased a new laptop for $2,760 cash.

Nov 14 Busy Bee Cleaners Ltd cleaned the shop and left invoice #6435 for $120 with payment terms of 30 days.

Nov 17 Classic Clocks purchased 7 new adjustable tables for the watchmaking school. The adjustable tables cost $896 each, 50% of the purchase was paid for in cash, with the balance payable in 30 days.

Nov 29 Classic Clocks paid the business electricity bill for the quarter which amounted to $1376.

Nov 30 Classic Clocks received the outstanding amount from the Hilton Hotel from the sale of the silver framed wall clocks on November 4th.

Part B

Post the General Journals recorded below to the General Ledger provided on the following page. Remember to foot each ledger to determine the ledger balance.

Date	Details	Debit ($)	Credit ($)

1 Dec	Shop Fittings	54 000
	Cash at Bank		15 000
	Loan		39 000
	(The business purchased shop fittings)

4	Drawings	15
	Cash at Bank		15
	(The owner took money from the business for his own use)

9	Cash at Bank	23 500
	Computer	1 500
	Capital – C Cogsworth		25 000
	(The owner contributed a computer and cash to the business)

18	Loan	15 800
	Cash at Bank		15 800
	(The business repaid $15 800 off the loan)

24	Cash at Bank	11 980
	Accounts Receivable	3 200
	Sales		15 180
	(The business sold a ladies Rolex watch for $15 180 and has received $11 980 in cash. The remaining amount is to be collected from the customer)

26	Advertising	1 250
	Advertising Payable		1 250
	(The business has signed up for an advertising campaign in the Watch Journal and must pay within 30 days)

Part C

Required:

Post the General Ledger balances from Part B to the Trial Balance below.

Complete the Unadjusted Trial Balance provided below. Please total both the debit and credit column on completion.

	Debit ($)	Credit ($)
Classic Clocks
Trial Balance
31-December-18

Electricity Expense	9 165
Telephone Expense	1 555
Motor Vehicle	31 150
Cash at Bank
Advertising Expense
Accounts Payable
Office Supplies Expense	1 713
Drawings – Cogsworth
Office Gas Expense	2 275
Water Expense	2 661
Capital – Cogsworth
Accounts Receivable
Loan
Accumulated Depreciation – Motor Vehicle		14 489
Stock / Clocks	65 256
Shop Fittings
Repairs and Maintenance Payable		4 913
Sales
Accumulated Depreciation – Cash Register and Scanning Equipment		15 042
Cash Register and Scanning Equipment	22 542
Discount Allowed	919
Rent Expense	52 354
Repairs and Maintenance	3 637
Sales Returns & Allowances	473
Interest expense	4 429
Computer

Totals

2.Element: Asset, Liability, Revenue, Expense, Equity)

Claude Cogsworth has written to the managing partner of the accounting firm you work at because he is confused about some of the transactions you have recorded in question 1 Part A.

Required

Please write a letter in your own words to the managing partner of your accounting firm explaining the following with reference to your journal entries in question 1 Part A:
Explain with reference to the appropriate accounting definition the accounting element** that was credited on the 14th of November. (4 marks)

Identify which accounting assumption is relevant to the transaction which occurred on November 2nd and explain in your own words how this assumption is relevant to recording the transaction.

Answer:

Part A:

Date	Details	Debit ($)	Credit ($)
01-Nov	Bank and Cash a/c	1,540.00
	To Revenue a/c		1,540.00
	(Being cash received form a student towards fee for watch-making school)

02-Nov	Drawings a/c	183.00
	To Bank and Cash a/c		183.00
	(Being spent by the proprietor towards personal expenses towards physiotherapist charges)

04-Nov	Bank and Cash a/c	2,016.00
	Debtors for goods-Hilton Hotels a/c	8,064.00
	To Revenue a/c		10,080.00
	(Being sold to Hilton hotel partly in cash and partly in credit)

13-Nov	Laptop a/c	2,760.00
	To Bank and Cash a/c		2,760.00
	(Being laptop purchased in cash for business)

14-Nov	Cleaning Expenses a/c	120.00
	To Creditors for expense- Busy bee Cleaners		120.00
	(Being invoiced raised by busy bee cleaners towards cleaning expense- invoice ref 6435)

17-Nov	Furniture a/c	6,272.00
	To Bank and Cash a/c		3,136.00
	To Creditors for furniture a/c		3,136.00
	(Being 7 adjustable purchased, partly in cash partly in credit)

29-Nov	Electricity Expenses a/c	1,376.00
	To Bank and Cash a/c		1,376.00
	(Being electricity expenses for the quarter paid)

30-Nov	Bank and Cash a/c	8,064.00
	To Debtors for goods-Hilton Hotels a/c		8,064.00
	(Being Amount received form Hilton Hotels towards sale made on 4th Nov)

Part B:

Cash at Bank (CAB)


December 1	Balance	44668	December 1	Shop Fittings	15000

December 9	Capital	23500	December 4	Drawings	15

December 24	Sales	11980	December 18	Loan	15800

			December 31	Balance	49333

		80148			80148

Accounts Receivable (A/R)


December 1	Balance	8656	December 31	Balance	11856

December 24	Sales	3200

		11856			11856

Shop Fittings


December 1	Balance	26850	December 31	Balance	80850

December 1	Cash and Bank	15000

December 1	Loan	39000

		80850			80850

Computer


December 9	Capital	1500	December 31	Balance	1500

		1500			1500

Advertising Payable


December 31	Balance	1250	December 24	Advertising	1250

		1250			1250

Loan


December 18	Cash and Bank	15800	December 1	Shop Fittings	39000

December 31	Balance	23200

		39000			39000

Drawings


December 1	Balance	40 400	December 31	Balance	40415

December 4	Cash and Bank	15

		40415			40415

Capital


December 31	Balance	153708	December 1	Balance	128708

			December 9	Cash and bank	23500

			December 9	Computer	1500

		153708			153708

Sales


December 31	Balance	170731	December 1	Balance	155551

			December 24	Cash and Bank	11980

			December 24	Account Receivables	3200

		170731			170731

Advertising


December 26	Advertising Payable	1250	December 31	Balance	1250

		1250			1250

Part C:

Classic Clocks - Trial Balance-31-Dec-18

	Debit ($)	Credit ($)
Electricity Expense	9,165
Telephone Expense	1,555
Motor Vehicle	31,150
Cash at Bank	49,333
Advertising Expense	1,250
Accounts Payable		1,250
Office Supplies Expense	1,713
Drawings – Cogsworth	40,415
Office Gas Expense	2,275
Water Expense	2,661
Capital – Cogsworth		1,53,708
Accounts Receivable	11,856
Loan		23,200
Accumulated Depreciation – Motor Vehicle		14,489
Stock / Clocks	65,256
Shop Fittings	80,850
Repairs and Maintenance Payable		4,913
Sales		1,70,731
Accumulated Depreciation – Cash Register and Scanning Equipment		15,042
Cash Register and Scanning Equipment	22,542
Discount Allowed	919
Rent Expense	52,354
Repairs and Maintenance	3,637
Sales Returns & Allowances	473
Interest expense	4,429
Computer	1,500

Totals	3,83,333	3,83,333

2.Dan Stevens

Managing Director

Mandeville Accounting Solutions Pty Ltd

1800 Adelaide Terrace

Adelaide, SA 5000

3^rd December 2017

Dear Mr Stevens,

With respect to the journal entries passed in the books on 2^nd of November and on 14^th of November the following explanation is being provided:

2^ndNovember 2017: the accounting assumption used for this transaction is business entity assumption, also popularly known as separate entity assumption. Under this assumption it has been explained that the entity has a separate financial status and that it is separate from its owners. To further explain this, we can say that the business entity is to be treated as a separate person from its owners. Under this transaction, since the expense is a personal expense of the proprietor, it has been charged to the drawings account. It is not a business expense and has been deducted from the capital of the proprietor. (Piper, 2015)
14^thNovember 2017: the account credited in this journal is Creditors for expense- Busy bee Cleaners account which is in the element of liability. The company has used the services of Busy Bee Cleaners and is entitled to pay for the same. A liability is a sacrifice of the economic benefits of the entity as a result of any past event which will be settled by outflow of resources. Therefore, in the given case the past event is using the services of Busy Bee Cleaners and sacrifice will be made by outflow of cash. (Siciliano, 2015)

I hope that the above helps to clear the confusion regarding the transactions recorded. Kindly let me know in case any future explanation is required.

Yours Sincerely

Claude Cogsworth

Classic Clocks

References:

Piper, M. (2015). Accounting made simple. United States: CreateSpace Pub.

Siciliano, G. (2015). Finance for Nonfinancial Managers. New York: McGraw-Hill.

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