Question

Answer all questions in this Section.

1. Read the following and answer questions that follow.

The following information was taken from Masego Leero’s books.

01/01/2015 Started business with P20, 000 cash

03/01/2015 Deposited P15, 000 cash into the bank account

05/01/2015 Bought furniture on credit P3, 000 from Supreme

07/01/2015 Bought goods P7, 000 paying by cheque.

09/01/2015 Sold goods P6, 000 by cash

11/01/2015 Sold goods on credit to Lesego R P1, 000, Lorato L P2, 000 and Kago M P3, 000

13/01/2015 Kago M returned goods P300, Lorato L returned goods P200 to the business

15/01/2015 Bought goods from Sefalana worth P5, 000 and paid P3, 000 deposit by cheque

17/01/2015 Returned P500 goods to Sefalana

19/01/2015 Paid a cab for transporting goods in the business P300 by cash.

21/01/2015 Lesego R paid us P500 cash, Lorato L and Kago M paid us the amount owed by cheque

23/01/2015 Bought goods from the following on credit: Choppies P3, 000, Superspar P5,000

25/01/2015 Sold goods by cheque P10, 000

26/01/ 2015 Bought a second hand car paying by cheque P8, 000

29/01/2015 Paid electricity P500, telephone P500, rent P2, 000 by cheque

30/01/2015 Bought stationary by cash P300

31/01/2015 Paid Choppies P2, 000, Superspar P3, 000 by cheque

31/01/2015 Sold goods by cheque P3, 000

Required

a. Do the double entry and balance off accounts for the above showing the following in your answer. (50 marks)

i. Show all the transactions that happen in the above scenario.

ii. Classify all accounts in the above scenario.

iii. Show the effect of each transaction.

iv. Show the double entry.

b. Draw up Masego Leero’s Trial balance (13 marks)

c. After drawing up the trial balance the following errors were discovered:

i. Credit Sales invoices to M Mothusi P3, 000, L Mokone P2, 500, M Moilwa P4, 000 were omitted from the books.

ii. P5, 000 cash banked was not recorded in the books

iii. A car bought for P10, 000 by cheque was mistakenly recorded in the books as P8, 000

iv. A purchase of furniture P500 was mistakenly recorded in the purchases account.

v. Interest Payable P300 was not recorded in the books.

d. Draw up a corrected trial balance (12marks)

Answer 1

Masego Leero Journal Enteries Date Particulars 1.1.2015 Cash a/c Dr. To Masego Leero, Capital (Capital invested) Debit in P Credit in P 20000 20000 3.1.2015 15000 Bank a/c Dr. To Cash (Opened a bank account) 15000 3000 5.1.2015 Furniture a/c Dr. To Accounts Payable (Furniture on credit) 3000 7.1.2015 Dr. 7000 Inventory a/c To Bank (Inventory purchased) 7000 9.1.2015 Dr. 6000 Cash a/c To Sales (Cash sales) 6000 11.1.2015 Accounts Receivable - Lesego a/c Accounts Receivable - Lorato a/c Accounts Receivable - Kago M a/c To Sales (Sales on account) Dr. Dr. Dr. 1000 2000 3000 6000 500 13.1.2015 Sales Return a/c Dr. To Accounts Receivable - Kago M To Accounts Receivable - Lorato (Goods returned by customer) 300 200 5000 15.1.2015 Inventory a/c Dr. To Bank To Accounts Payable (Goods purchased) 3000 2000 500 17.1.2015 Accounts Payable a/c Dr. To Inventory (Goods returned to creditor) 500 Dr. 300 19.1.2015 Transport expense a/c To Cash (Expense paid) 300

Date Particulars 21.1.2015 Cash a/c Dr. Bank a/c Dr. To Accounts Receivable - Kago M To Accounts Receivable - Lorato To Accounts Receivable - Lesego (Cash from debtors) Debit in P Credit in P 500 4500 2700 1800 500 8000 23.1.2018 Inventory a/c Dr. To Accounts Payable (Goods purchased) 8000 Dr. 10000 25.1.2015 Bank a/c To Sales (Sales by cheque) 10000 8000 26.1.2015 Car a/c Dr. To Bank (Second hand casr purchased) 8000 Dr. 29.1.2015 Telehone Expense a/c Dr. Electricity a/c Rent expense a/c Dr. To Bank (Telephone and electricity expense paid) 500 500 2000 3000 Dr. 30.1.2015 Stationary a/c To Cash (Stationary purchased) 300 Dr. 5000 31.1.2015 Accounts Payable a/c To Bank (Creditors paid) 5000 3000 31.1.2015 Bank a/c To Sales (Sales by cheque) 3000

Debit in P Credit in P 3000 Correction Enteries Date Particulars 31.1.2015 Accounts Receivable -M Mothusi a/c Accounts Receivable -L Mokone a/c Accounts Receivable - M Moilwa a/c To Sales (Sales on account) Dr. Dr. Dr. 2500 4000 9500 Dr. 5000 31.1.2015 Bank a/c To Cash (Cash banked) 5000 2000 31.1.2015 Car a/c To Bank (Car cost corrected) 2000 Dr. 31.1.2015 Furniture a/c To Inventory (Correction) 500 Dr. 31.1.2015 Interest Expense a/c To Interest Payable (Interest accrued) 300

Trial Balance For the period ending 31.1.2015 Corrections Corrected Debit in P Credit in P Debit in P Credit in P Debit in P Credit in P 10900 5000 5900 6500 3000 9500 500 500 0 0 3000 2500 4000 3000 2500 4000 20000 20000 500 Particulars Cash Bank Accounts Receivable - Lesego Accounts Receivable - Lorato Accounts Receivable - Kago M Accounts Receivable -M Mothusi Accounts Receivable -L Mokone Accounts Receivable - M Moilwa Masego Leero, Capital Inventory Stationary Car Furniture Accounts Payable Interest Payable Sales Sales Return Transport expense Telehone Expense Electricity Rent expense Interest Expense Totals 19500 300 8000 3000 19000 300 10000 3500 2000 500 7500 300 9500 7500 300 34500 25000 500 300 500 500 2000 500 300 500 500 2000 300 62300 300 15300 52500 52500 15300 62300