Question

PURCHASE LEDGER                      
                      
You have been appointed as a Purchase Ledger Control Manager for Garry Limited. The core business activities of the company is to sale Home Furniture and the business is VAT registered in the United kingdom. Following transactions have took place during the month of January 2018 regarding purchasing of stock items.                      
                      
                      
                      
                      
                      
                      
Date                      
                      
01/01/2018   Purchased Wooden Wardrobes worth £ 5,000 on credit from the following entities, the credit limit is 30 days and if the payment is made within 30 days, a discount of 3% of the purchase value will be offered. The amount is inclusive of VAT.                  
                      
                      
   Entity Name   "Amount
£"              
   Woodworks Limited   3,000               
   Woaks Interiors   2,000               
                      
                      
01/10/2018   Placed an order for Wooden beds from Woaks Limited at the value of £ 5,000, the value is inclusive of VAT.                  
                      
                      
15/01/2018   Made a partial payment of £ 1,500 to Woodworks Limited and 1,000 to Woaks Limited.                  
                      
                      
18/01/2018   Recceived Wooden beds from Waoks Limited ordered on 10/01/2018                  
                      
                      
25/01/2018   Wardrobes worth £ 1,000 is damaged and returned to Woodworks Limited.                  
                      
                      
31/01/2018   Create a provision of discount receive at the rate of 2% on the outstanding balances of Woodworks Limited, Woaks Limited.                  
                      
                      
Required:                      
                      
a)   Dynasty Limited maintains control accounts for payables in the main ledger, and accounts for individual suppliers / creditors in a payable ledgers.                  
                      
                      
   You are required to record journa entries for the above transactions and post them to the Purchases Ledgers, Control Accounts and payables ledgers                  
                      

Answer 1

Answer:

(1)

Journal Entries

For the month of Jan 2018

Date	Particulars	Amount (in Pound)	Amount (in Pound)
01/01/2018	Purchase A/c Dr	5000
	To Woodworks Limited		3000
	To Woaks Interiors		2000
10/01/2018	No Entry will be passed for order placed
15/01/2018	Woodworks Limited Dr	1500
	Woaks Interiors Dr	1000
	To Cash A/c		2500
18/01/2018	Purchase A/c Dr	5000
	To Woaks Interiors		5000
25/01/2018	Woodworks Limited Dr	1000
	To Purchase Return		1000
31/01/2018	Provision for Discount on Creditors A/c Dr	130
	To Profit & Loss A/c (Being provision made of woodworks is 10 and woaks interiors is 120)		130

(2)

Purchase A/c

Date	Particulars	Amount	Date	Particulars	Amount
01/01/2018	To Woodworks Limited	3000	31/01/2018	By Balance C/d	10000
	To Woaks Interiors	2000
18/01/2018	To Woaks Interiors	5000
		10000			10000

(3)

Woodworks Limited

Date	Particulars	Amount	Date	Particulars	Amount
15/01/2018	To cash	1500	01/01/2018	By Purchase	3000
25/01/2018	To Purchase Return	1000
31/01/2018	To Provision for discount on creditors	10
31/01/2018	To Balance C/d	490
		3000			3000

(3)

Woaks Interiors

Date	Particulars	Amount	Date	Particulars	Amount
15/01/2018	To cash	1000	01/01/2018	By Purchase	2000
31/01/2018	To Provision for discount on creditors	120	18/01/2018	By Purchase	5000
31/01/2018	To Balance C/d	5880
		7000			7000

(4)

Control Payable Account

Particulars	Amount	Particulars	Amount
Purchase Returns	1000	Purchases on Credit	10000
Cash Payment to suppliers	2500
Provision for discount on creditors	130
Transfer (Bal. Fig.)	6370
	10000		10000