Question

Abbas Ltd. Basic Bookkeeping Abbas has decided to set up in business selling football shirts in the market place. Following transactions took place fien k St of the business He begins the business by putting E 30,000 into a bank Account 1) Mr. Abbas borrowed £ 4,000 from his brother to purchase a motor van for the business. 2) Mr. Abbas buys a market stall and pays £ 5,000 in cash. 3) 4) He buys some football shirts for £ 18,000. He buys these on credit and does not have to pay for them immediately. Mr. Abbas pays £ 10,000 to his suppliers for some of the shirts he purchased 5) Mr. Abbas sold 50% of the shirts for £ 12.000 in cash 6) credit He sold shirts for £ 9,000 to a shop owner in another town, these shirts originally cost £ 5,000. He sold these shits on 7) giving the purchaser one month to pay. 8) Mr. Abbas repays £ 1,000 of the loan 9) Mr. Abbas paid his trade suppliers£ 6,000 Mr. Abbas recceives £ 8,000 of the money owed to him by the customer (trade receivable) 10) Mr. Abbas purchased another £ 2,500 of shirts on credit. 11) 12) Mr. Abbas decided decides to take £ 4,000 in cash out of his business, and he also takes inventory with a value of £2000 Required: 1) Journal Entries to record above transactions 2) Ledger /T-Accounts for the above transactions 3) Trial Balance Profit & Loss Account and Balance Sheet 4)

Answer 1

First, Journalise the transactions using the accounting rules of Personal, Real and Nominal.

Next Post the entries in the ledger accounts. each entry in two ledger accounts.

Next, Prepare the trial balance based no the ending balances in the ledger accounts.

Prepare financial statements.

Please go through the following attachment for the solution.
Credit 1) Journal entries Number Account title 1 Cash Mr. Abbas, Capital Debit 30000 30000 4000 2 Motor Van Loan 4000 5000 3 Market stall cash 5000 18000 4 Inventory Trade Payable 18000 10000 5 Trade Payable Cash 10000 12000 6 Cash Sales 12000 9000 9000 Cost of Goods sold Inventory (Being 50% of 18,000 is 9000) 7 Trade Receivables Sales 9000 9000 5000 Cost of Goods sold Inventory 5000 1000 8 Loan Cash 1000 6000 9 Trade Payable Cash 6000 8000 10 Cash Trade Receivables 8000 2500 11 Inventory Trade Payables 2500 6000 12 Drawings Cash Inventory 4000 2000

2) Ledgers Debit Debit Cash Cash Trade Payable Amount Credit 10000 Inventory 6000 Inventory Balance c/d Mr. Abbas, Capital Amount Credit Cash Amount 30000 Amount 18000 2500 4500 Balance c/d 30000 Debit Motor Van Amount Credit 4000 Amount Debit Cash Loan Amount Credit 1000 Motor Van Amount 4000 Loan Balance c/d 4000 Balance c/d 3000 Market stall Amount Credit 5000 Debit cash Amount cash Debit Amount Credit Mr. Abbas, Capital 30000 Market stall Trade Receivables 8000 Trade Payable sales 12000 Loan Trade Payable Drawings Amount 5000 10000 1000 6000 4000 Balance c/d 5000 Debit Balance c/d 24000 Sales Amount Credit Cash Trade Receivables Balance c/d Amount 12000 9000 21000 Trade Receivables Amount Credit 9000 Cash Debit Sales Amount Amount 8000 Debit Inventory Inventory Cost of Goods sold Amount Credit 9000 5000 Balance c/d 1000 Balance c/d 14000 Amount Inventory Debit Amount Credit Amount Trade Payab 18000 Cost of Goods sold 5000 Trade Payab 2500 Cost of Goods sold 9000 Drawings 2000 Balance c/d 4500 Debit Cash Inventory Drawings Amount Credit 4000 2000 Balance c/d 6000

Credit Debit 24000 4500 1000 4000 5000 3) Trial Balance Account Title Cash Inventory Trade Receivables Motor Van Market stall Mr. Abbas, Capital Loan Trade Payables Drawings Sales Cost of Goods sold Total 30000 3000 4500 6000 21000 14000 585001 58500 4) Profit and Loss Account Particulars Sales Less: Cost of Goods sold Net Income Amount 21000 14000 7000 24000 45001 1000 4000 5000 38500 Balance sheet Assets Cash Inventory Trade Receivables Motor Van Market stall Total Assets Liabilities and Equity Liabilities Trade Payables 4500 Loan 3000 Equity Mr. Abbas, Capital 30000 Add: Net Income 7000 Less: Drawings 6000 Total liabilities and Equity 7500 31000 38500