Question

Problem 1 – (AC2.1, 2.2. 2.3 & 2.4) Jack Uzi, wholesale toys online, operates out of his office in his parents’ apartment, with 0 inventory. Every toy he sells is first purchased then re-sold, but only after the order comes through. You need to help him out with his bookkeeping. The following transactions occurred in October:

a. Paid £500 for lease of computer equipment in advance for November

b. Cash Sales of £4,847. (for stuffed animal)

c. Cash sales of £4,486 (for Educational Toys)

d. Cash sales of £4,702 (for Video Games)

e. Cash Sales of £1,827 (for Pretend-play toys)

f. Purchase of office supplies on account from Bing's Office Supply, £416.

g. Withdrawal by owner (Jack Uzi) of £1,600.

h. Payment on account (Bing's), £390. i. Payment of wages with cash, £2,500.

j. Payment for cleaning services with cash, £74 k. Payment to purchase stuffed animal, £4,044

l. Payment to purchase Educational Toys, £3,547

m. Payment to purchase Video Games, £4,169

n. Payment to purchase Pretend-play toys, £1,382

Further, he has account balances for the beginning of October as follows:

Cash £ 2,000

Accounts Payable,

Bing's Office Supply Hut £ 75

Office Supplies £ 75

Jack Uzi, Capital £ 2000 Instructions

1. Prepare books of original entries (Sales journal, purchase journal, cash journal)

2. Prepare the general ledger

3. Jack checked his bank balance and he noticed that his actual cash balance was £20 less due to overdraft fees, make the necessary adjustments

Answer 1

1. Books of Original Entries:

a) Sales Journal

Serial No	Account Debited	Items	Amount
1	Cash	Stuffed Animal	4,847
2	Cash	Educational Toys	4,486
3	Cash	Video Games	4,702
4	Cash	Pretend Play Toys	1,827
Total			15,862

b) Purchase Journal

Serial No	Account Credited	Items	Cash Credit	Account Payable Credit	Purchase(Cash) Debit	Office Supplies Debit
1	Bing's	Office Supplies		416		416
2	Cash	Stuffed Animal	4,044		4,044
3	Cash	Educational Toys	3,547		3,547
4	Cash	Video Games	4,169		4,169
5	Cash	Pretend Play Toys	1,382		1,382
Total			13,142	416	13,142	416

C) Cash Journal

Serial No	Accounts Credited	Item	Accounts Debited
Sales ( Cash)	Prepaid Expenses	Owners Withdrawal	Account Payable	Wages	Cleaning Services	Cash Purchase
1		Advance Lease Payment	500
2	4,847	Stuffed Animal
3	4,486	Educational Toys
4	4,702	Video Games
5	1,827	Pretend Play Toys
6		Withdrawl by owner		1,600
7		Bing			390
8		Wages				2,500
9		Cleaning Services					74
10		Cash Purchase						13,142
Total	15,862		500	1,600	390	2,500	74	13,142

2.

Cash
Particulars	Debit	Particulars	Credit
Ope. Bal	2,000
To Sales (Cash) Accounts	15,862	By Prepaid Expenses Accounts	500
		By Jack Uzis Withdrawl Accounts	1,600
		By Accounts Payable (Bing's) Accounts	390
		By Wages Accounts	2,500
		By Cleaning Services Accounts	74
		By Purchase (Cash) Accounts	13,142
		By Overdraft Fees	20
Ending Bal.	364
Total	18,226		18,226
Prepaid Expenses
Particulars	Debit	Particulars	Credit
Ope. Bal
To Cash Accounts	500
Ending Bal.			500
Total	500		500
Accounts Payable (Bing's)
Particulars	Debit	Particulars	Credit
Ope. Bal			75
To Cash Accounts	390	By Office Supplies	416
Ending Bal.	101
Total	491		491
Jack Uzis Withdrawal
Particulars	Debit	Particulars	Credit
Ope. Bal
To Cash Accounts	1,600	By Arron Paquette Capital	1,600
Ending Bal.
Total	1,600		1,600
Office Supplies
Particulars	Debit	Particulars	Credit
Ope. Bal
To Accounts Payable (Bing's) Accounts	416
Ending Bal.			416
Total	416		416
Jack Uzis Capital
Particulars	Debit	Particulars	Credit
Ope. Bal			2,000
To Jack Uzis Withdrawal Accounts	1,600
Ending Bal.	400
Total	2,000		2,000

3. Adjustment entry adjusted in Cash Ledger Above, Entry as per following:

Overdraft Fees Account Debit 20

To Cash/Bank Account Credit 20

Note:- All amounts are Pound.