Principles of Accounts for CSEC®

2nd edition

Answers to Chapter 2: Accounting as a system

2.1 Background to accounting
Question 1
Accounting concepts and conventions are designed so that accounting statements are prepared
in the same way, so that users can have confidence in the information they contain. The concepts
and conventions are designed to ensure that the contents of financial statements cannot be
distorted or manipulated.
Question 2
The main stages in the accounting cycle are:
1st Collecting source documents
2nd Completion of books of original entry
3rd Posting from books of original entry to ledger accounts
4th Verifying the accuracy of accounting records, including
preparation of a trial balance
5th Preparing financial statements

Question 3
A wholesaler buys goods from manufacturers and other producers and sells them to retailers.
A retailer sells goods to the general public.
Question 4
Possible answers:
Sole trader Partnership
Receives all the profit made by the business/suffers Profits/losses are shared among the
any loss made by the business partners
Provides all the capital requirements of the business Each partner contributes a share of the
capital
Makes all the decisions Partners have to agree any decisions
Carries responsibility for running the business alone Partners can share expertise and responsi-
bility for running the business
Question 5
a.  Cost of training – D
b.  Improved accuracy – A
c.  Aged accounts receivable analysis – A
d.  Automatic processing and updating – A
e.  Computer virus – D
f.  Technical support – D
1 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019
Answers to Chapter 2: Accounting as a system

Question 6
a.  Management reports – A
b.  Increased speed of processing – A
c.  Reduced workload of staff – A
d.  Cost of computer installation – D
e.  Security breach (“hacking”) – D
f.  Frequency of software upgrades – D

Question 7
Possible answers
Advantage Disadvantage
Cost Possible saving in staffing costs; possible Capital expenditure on equipment, soft-
cost savings because aspects of business ware, upgrades, maintenance; transition
are better managed (e.g. collection of period when introducing computerised
amounts due from accounts receivable, system will increase costs
more effective inventory control)
Staffing Reduction in staffing levels Cost of training on software and its
upgrades
Information More detailed information available on Data can be lost or misappropriated
various aspects of the business required if systems are insecure; managers
for effective management; information is sometimes feel overwhelmed by the
also likely to be available instantaneously information which is available

Question 8
Possible answers
Advantage Disadvantage
Workload Reduction in workload because some Reduction in workload can lead to job
aspects of recording information are losses
automatic
Career Training provided to use software can Some individual members of staff may feel
prospects lead to becoming more highly skilled they are unable to cope with aspects of the
with improved job prospects technology

2.2 Introducing the statement of financial position

(balance sheet)
Question 9
a. Vehicle Asset f. Inventory Asset
b. Shop fittings Asset g. Accounts receivable Asset
c. Cash at bank Asset h. Bank overdraft Liability
d. Bank loan Liability i. Accounts payable Liability
e. Owner’s investment in the business Capital j. Machinery Asset

2 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019
 Answers to Chapter 2: Accounting as a system

Question 10
a. Cash in hand Asset f. Loan from a friend Liability
b. Equipment Asset g. Value of owner’s stake in the Capital
business
c. Amounts owing to suppliers Liability h. Amounts owed by customers Asset
d. Furniture Asset i. Cash at bank Asset
e. Land Asset j. Fittings Asset
Question 11
Total assets Capital Total liabilities
Assets = Capital + Liabilities
$ $ $
Business A 80 000 60 000 20 000
Business B 42 000 31 000 11 000
Business C 57 000 24 000 33 000
Business D 650 000 490 000 160 000
Business E 190 000 170 000 20 000
Business F 640 000 558 000 82 000

Question 12
Total assets Capital Total liabilities
Assets = Capital + Liabilities
$ $ $
Business G 220 000 190 000 30 000
Business H 912 000 826 000 86 000
Business I 325 000 273 000 52 000
Business J 560 000 483 000 77 000
Business K 917 000 865 000 52 000
Business L 262 000 220 000 42 000

Question 13
a.  Total assets: $123 000
b.  Total liabilities: $34 000
c.  Capital: $89 000
d.
Marlene’s retail unit
Statement of financial position (balance sheet) at 31 December 2018
$ $
ASSETS CAPITAL 89 000
Furniture and fittings 64 000  
Inventory 36 000 LIABILITIES  
Accounts receivable 10 000 Bank loan 20 000
Cash at bank 8 000 Accounts payable 14 000
Cash in hand 5 000
123 000   123 000
3 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019
 Answers to Chapter 2: Accounting as a system

Question 14
a.  Total assets: $141 000
b.  Total liabilities: $66 000
c.  Capital: $75 000
d.
Andy’s bicycle business
Statement of financial position (balance sheet) at 28 February 2018
$ $
ASSETS   CAPITAL 75 000
Equipment 78 000  
Inventory 33 000 LIABILITIES  
Accounts receivable 9 000 Bank loan 42 000
Cast at bank 15 000 Accounts payable 24 000
Cash in hand 6 000
141 000   141 000

Question 15
a.  Total assets: $456 000
b.  Total liabilities: $90 000
c.  Capital: $366 000
d.
Donnie’s software business
Statement of financial position (balance sheet) at 31 October 2018
  $ $   $ $
NON-CURRENT ASSETS   CAPITAL   366 000
Premises 300 000      
Equipment 90 000 NON-CURRENT LIABILITIES    
Delivery vehicle 32 000 Bank loan   60 000
  422 000      
CURRENT ASSEETS
Inventory 16 000
Accounts receivable 14 000 CURRENT LIABILITIES    
Cash in hand 4 000 Accounts payable 22 000
  34 000 Bank overdraft 8 000  
  30 000
  456 000   456 000

4 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019
Answers to Chapter 2: Accounting as a system

e.
Donnie’s software business
Statement of financial position (balance sheet) at 31 October 2018
  $ $   $ $
CURRENT ASSETS CURRENT LIABILITIES
Cash in hand 4 000 Bank overdraft 8 000
Accounts receivable 14 000 Accounts payable 22 000
Inventory 16 000 30 000
34 000 NON-CURRENT LIABILITIES
Bank loan 60 000
NON-CURRENT ASSETS
Delivery vehicle 32 000 CAPITAL 366 000
Equipment 90 000
Premises 300 000
422 000
  456 000   456 000

Question 16
a.  Total assets: $711 000
b.  Total liabilities: $147 000
c.  Capital: $564 000
d.
Kisha’s Restaurant
Statement of financial position (balance sheet) at 31 January 2018
  $ $   $ $
NON-CURRENT ASSETS   CAPITAL   564 000
Restaurant premises 570 000      
Equipment 51 000 NON-CURRENT LIABILITIES    
Furniture and fittings 45 000 Bank loan   120 000
  666 000      
CURRENT ASSETS CURRENT LIABILITIES    
Inventory (food etc.) 24 000 Accounts payable 18 000
Accounts receivable 3 000 Loan from friend 9 000  
Cash at bank 12 000     27 000
Cash in hand 6 000
  45 000    
  711 000   711 000

5 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019
Answers to Chapter 2: Accounting as a system

e.
Kisha’s Restaurant
Statement of financial position (balance sheet) at 31 January 2018
  $ $   $ $
CURRENT ASSETS CURRENT LIABILITIES
Cash in hand 6 000 Loan from friend 9 000
Cash at bank 12 000 Accounts payable 18 000
Accounts receivable 3 000 27 000
Inventory (food etc.) 24 000
45 000 NON-CURRENT LIABILITIES
NON-CURRENT ASSETS Bank loan 120 000
Furniture and fittings 45 000
Equipment 51 000 CAPITAL 564 000
Restaurant premises 570 000
666 000
  711 000   711 000

2.3 The effect of transactions on a statement of financial position

(balance sheet)
Question 17
Adam’s Hardware Store
Statement of financial position (balance sheet) at 2 March 2018
$   $
ASSETS CAPITAL 40 000
Vehicle 12 000  
Equipment 15 000
Bank 13 000  
40 000   40 000

Adam’s Hardware Store

Statement of financial position (balance sheet) at 3 March 2018
$   $
ASSETS CAPITAL 40 000
Vehicle 12 000  
Equipment 15 000 LIABILITY
Furniture 8 000 Accounts payable 8 000
Bank 13 000  
48 000   48 000

Adam’s Hardware Store

Statement of financial position (balance sheet) at 4 March 2018
$   $
ASSETS CAPITAL 40 000
Vehicle 12 000  
Equipment 15 000 LIABILITY
Furniture 8 000 Accounts payable 8 000
Bank 28 000 Bank loan 15 000
63 000   63 000

6 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019
Answers to Chapter 2: Accounting as a system

Adam’s Hardware Store

Statement of financial position (balance sheet) at 5 March 2018
$   $
ASSETS CAPITAL 37 000
Vehicle 12 000  
Equipment 15 000 LIABILITY
Furniture 8 000 Accounts payable 8 000
Bank 25 000 Bank loan 15 000
60 000   60 000

Adam’s Hardware Store

Statement of financial position (balance sheet) at 6 March 2018
$   $
ASSETS CAPITAL 37 000
Vehicle 12 000  
Equipment 15 000 LIABILITY
Furniture 8 000 Accounts payable 2 000
Bank 19 000 Bank loan 15 000
54 000   54 000

Question 18
Tiffany
Statement of financial position (balance sheet) at 2 January 2018
$   $
ASSETS CAPITAL 110 000
Premises 90 000  
Vehicle 15 000
Bank 5 000  
110 000   110 000

Tiffany
Statement of financial position (balance sheet) at 3 January 2018
$   $
ASSETS CAPITAL 110 000
Premises 90 000  
Vehicle 15 000 LIABILITY
Bank 17 000 Bank loan 12 000
122 000   122 000

Tiffany
Statement of financial position (balance sheet) at 4 January 2018
$   $
ASSETS CAPITAL 110 000
Premises 90 000  
Vehicle 15 000 LIABILITY
Equipment 24 000 Accounts payable 24 000
Bank 17 000 Bank loan 12 000
146 000   146 000

7 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019
Answers to Chapter 2: Accounting as a system

Tiffany
Statement of financial position (balance sheet) at 5 January 2018
$   $
ASSETS CAPITAL 118 000
Premises 90 000  
Vehicle 15 000 LIABILITY
Equipment 24 000 Accounts payable 24 000
Bank 25 000 Bank loan 12 000
154 000   154 000

Tiffany
Statement of financial position (balance sheet) at 5 January 2018
$   $
ASSETS CAPITAL 118 000
Premises 90 000  
Vehicle 15 000 LIABILITY
Equipment 24 000 Accounts payable 4 000
Bank 5 000 Bank loan 12 000
134 000   134 000

Question 19

Total Assets Capital Total Liabilities

Assets = Capital + Liabilities
$ $ $
Starting figures 40 000 30 000 10 000
a. Owner withdrew cheque $4 000 for private use 36 000 26 000 10 000
b. Purchased new vehicle $16 000 on credit 52 000 26 000 26 000
(+16 000) (+16 000)
c. Repaid $2 000 of a loan from the bank. The 50 000 26 000 24 000
funds were taken from the business’s bank (−2 000) (−2 000)
account
d. Purchased some machinery for $7 000 and 50 000 26 000 24 000
paid by cheque (+7 000)
(−7 000)
e. Paid accounts payable $5 000 by cheque 45 000 26 000 19 000
(−5 000) (−5 000)
f. Sold some equipment worth $3 000 and 45 000 26 000 19 000
received a cheque for this amount (−3 000)
(+3 000)

8 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019
Answers to Chapter 2: Accounting as a system

Question 20
Total Assets Capital Total Liabilities
A = C + L
$ $ $
Starting figures 90 000 75 000 15 000
a. Paid accounts payable $8 000 by cheque 82 000 75 000 7 000
b. Purchases a new vehicle and paid $17 000 by 82 000 75 000 7 000
cheque (+17 000)
(−17 000)
c. The owner withdrew a cheque for $1 000 for 81 000 74 000 7 000
private use (−1 000) (−1 000)
d. Purchased some new equipment for $10 000 91 000 74 000 17 000
on credit (+10 000) (+10 000)
e. Repaid part of a bank loan $6 000. The funds 85 000 74 000 11 000
were taken from the business’s bank account (−6 000) (−6 000)
f. Some old machinery worth $6 000 was sold on 85 000 74 000 11 000
credit for this amount (+6 000)
(−6 000)

Question 21
Feb 3: owner withdrew a cheque for $3 000 for private use
Feb 4: purchased some equipment on credit for $16 000
Feb 5: paid accounts payable $6 000 by cheque
Question 22
Dec 3: borrowed $15 000 from the bank. The funds were paid into the business’s bank account
Dec 4: some equipment worth $6 000 was sold for this amount on credit
Dec 5: accounts receivable was paid $3 000 by cheque
Dec 6: paid accounts payable $11 000 by cheque
Question 23
Leo’s Hardware Store
Statement of financial position (balance sheet) at 2 March 2018
$   $
ASSETS CAPITAL 32 900
Equipment 14 100  
Delivery van 19 600 LIABILITY
Bank 28 200 Accounts payable 19 600
Cash   600 Bank Loan 10 000
62 500   62 500

9 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019
 Answers to Chapter 2: Accounting as a system

Leo’s Hardware Store

Statement of financial position (balance sheet) at 3 March 2018
$   $
ASSETS CAPITAL 32 900
Equipment 14 100  
Shop fittings  7 200 LIABILITY
Delivery van 19 600 Accounts payable 19 600
Bank 21 000 Bank Loan 10 000
Cash   600
62 500   62 500

Leo’s Hardware Store

Statement of financial position (balance sheet) at 4 March 2018
$   $
ASSETS CAPITAL 32 400
Equipment 14 100  
Shop fittings  7 200 LIABILITY
Delivery van 19 600 Accounts payable 19 600
Bank 21 000 Bank Loan 10 000
Cash   100
62 000   62 000

Leo’s Hardware Store

Statement of financial position (balance sheet) at 5 March 2018
$   $
ASSETS CAPITAL 32 400
Equipment 11 700  
Shop fittings  7 200 LIABILITY
Delivery van 19 600 Accounts payable 19 600
Accounts receivable  2 400 Bank Loan 10 000
Bank 21 000
Cash  100
62 000   62 000

Leo’s Hardware Store

Statement of financial position (balance sheet) at 6 March 2018
$   $
ASSETS CAPITAL 32 400
Equipment 11 700  
Shop fittings  7 200 LIABILITY
Delivery van 19 600 Accounts payable  8 100
Accounts receivable  2 400 Bank Loan 10 000
Bank  9 500
Cash   100
50 500   50 500

10 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019
 Answers to Chapter 2: Accounting as a system

Leo’s Hardware Store

Statement of financial position (balance sheet) at 7 March 2018
  $ $   $ $
NON-CURRENT ASSETS   CAPITAL   32 400
Delivery van 19 600      
Equipment 11 700 NON-CURRENT LIABILITY   
Shop fittings  7 200 Bank loan   10 000
  38 500      
CURRENT ASSETS CURRENT LIABILITIES    
Accounts receivable  1 200 Accounts payable    8 100
Bank 10 700
Cash   100
  12 000    
  50 500   50 500

Question 24
Anita’s Hairdressing
Statement of financial position (balance sheet) at 2 April 2018
$   $
ASSETS CAPITAL 17 600
Equipment 15 100
Accounts receivable  2 900 LIABILITY
Bank  6 300 Accounts payable  7 500
Cash   800
25 100   25 100

Anita’s Hairdressing
Statement of financial position (balance sheet) at 3 April 2018
$   $
ASSETS CAPITAL 17 600
Equipment 15 100
Accounts receivable  2 700 LIABILITY
Bank  6 300 Accounts payable  7 500
Cash  1 000
25 100   25 100

Anita’s Hairdressing
Statement of financial position (balance sheet) at 4 April 2018
$   $
ASSETS CAPITAL 17 600
Equipment 15 100
Accounts receivable  2 700 LIABILITY
Bank 15 300 Bank loan  9 000
Cash  1 000 Accounts payable  7 500
34 100   34 100

11 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019
 Answers to Chapter 2: Accounting as a system

Anita’s Hairdressing
Statement of financial position (balance sheet) at 5 April 2018
$   $
ASSETS CAPITAL 17 200
Equipment 15 100
Accounts receivable  2 700 LIABILITY
Bank 15 300 Bank loan  9 000
Cash   600 Accounts payable  7 500
33 700   33 700

Anita’s Hairdressing
Statement of financial position (balance sheet) at 6 April 2018
$   $
ASSETS CAPITAL 17 200
Equipment 13 600
Accounts receivable  4 200 LIABILITY
Bank 15 300 Bank loan  9 000
Cash   600 Accounts payable  7 500
33 700   33 700

Anita’s Hairdressing
Statement of financial position (balance sheet) at 7 April 2018
  $ $   $ $
NON-CURRENT ASSETS   CAPITAL   17 200
Equipment 13 600      
NON-CURRENT LIABILITY   
CURRENT ASSETS Bank loan    9 000
Accounts receivable 4 200      
Bank 9 100 CURRENT LIABILITIES    
Cash  600 Accounts payable    1 300
  13 900
  27 500   27 500

2.4 Preparing simple ledger accounts

Question 25
Vehicles
$ $
40 000
14 000
Bank
$ $
19 000 14 000
4 000 2 000

Capital
$ $
2 000 47 000

12 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019
 Answers to Chapter 2: Accounting as a system

Bank Loan
$ $
12 000
4 000

Question 26
Equipment
$ $
27 000
4 000

Bank
$ $
8 000 4 000
2 000
700

Capital
$ $
700 29 000

Accounts payable
$ $
2 000 6 000

Question 27
First account affected Second account affected
Transaction Account Increase/ Account Increase/
Decrease Decrease
Owner started business by investing Bank Increase Capital Increase
money in a business bank account
Purchased a vehicle and paid by Vehicle Increase Bank Decrease
cheque
Purchased some equipment on credit Equipment Increase Accounts Increase
payable
The owner withdrew a cheque for Capital Decrease Bank Decrease
private use
Paid the account payable by cheque Accounts Decrease Bank Decrease
payable

Question 28
First account affected Second account affected
Transaction Account Increase/ Account Increase/
Decrease Decrease
Some furniture was purchased Furniture Increase Bank Decrease
by cheque
A bank loan was arranged. The Bank Increase Bank loan Increase
funds were paid into the business
bank account

13 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019
 Answers to Chapter 2: Accounting as a system

First account affected Second account affected

Transaction Account Increase/ Account Increase/
Decrease Decrease
Purchased a vehicle on credit Vehicle Increase Accounts payable Increase
Sold some unwanted furniture Furniture Decrease Receivable Increase
on credit
Repaid part of the bank loan by Bank loan Decrease Bank Decrease
a withdrawal of funds from the
business bank account

Question 29

Dr Vehicle Cr
$ $
14 000

Dr Bank Cr
$ $
7 000    300
6 000 9 200
2 500

Dr Capital Cr
$ $
300 17 000

Dr Accounts payable Cr
$ $
2 500 4 000
9 000

Dr Equipment Cr
$ $
9 000
9 200

Dr Bank loan Cr
$ $
6 000

Question 30
Dr Vehicle Cr
$ $
13 000

Dr Equipment Cr
$ $
8 000 800
5 000

14 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019
 Answers to Chapter 2: Accounting as a system

Dr Bank Cr
$ $
4 000 1 000

Dr Cash Cr
$ $
400 200
100

Dr Capital Cr
$ $
200 24 200

Dr Accounts payable Cr
$ $
1 000 1 200
5 000

Dr Accounts receivable Cr
$ $
800 100

Question 31
Transaction Accounts affected Increase/Decrease Debit/Credit
Purchased some furniture by Furniture Increase Debit
cheque Bank Decrease Credit

Paid an account payable by Accounts payable Decrease Debit

cheque Bank Decrease Credit

Owner withdrew cash for Capital Decrease Debit

private use Cash Decrease Credit

Purchased a vehicle Vehicle Increase Debit

on credit Account payable Increase Credit

Question 32
Transaction Accounts affected Increase/Decrease Debit/Credit
Owner withdrew a cheque Capital Decrease Debit
for private use Bank Decrease Credit

Purchased equipment on Equipment Increase Debit

credit Account payable Increase Credit

Paid the account payable in Accounts payable Decrease Debit

cash Cash Decrease Credit

Sold some unwanted Account receivable Increase Debit

furniture on credit Furniture Decrease Credit

Received cash from the Cash Increase Debit

account receivable Accounts receivable Decrease Credit

15 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019
 Answers to Chapter 2: Accounting as a system

Question 33
Debit Credit
Receiving value Giving value
In Out
Account Explanation Account Explanation
Purchases furniture and Furniture Receives value as new Cash Gives value as money
paid in cash furniture purchased goes out of the account
Purchases machinery Machinery Receives value as new Bank Gives value as money
and paid by cheque machinery purchased goes out of the account
Purchases equipment on Equipment Receives value as new Accounts Gives value as supplier
credit equipment purchased payable provides equipment
Paid the account payable Accounts Receives value as money Bank Gives value as money
by cheque payable given to supplier goes out of the account
Owner invested an Bank Receives value as money Capital Gives value as owner
additional amount in the goes into the account provides money for the
business’s bank account business
Owner withdrew a Capital Receives value as money Bank Gives value as money
cheque for private use goes into the account goes out of the account

Question 34
Debit Credit
Receiving value Giving value
In Out
Account Explanation Account Explanation
Purchased a vehicle and paid Vehicle Receives value Bank Gives value as money
by cheque as new vehicle goes out of the account
purchased
Paid an account payable by Accounts Receives value as Bank Gives value as money
cheque payable money given to goes out of the account
supplier
Sold some unwanted furniture Accounts Receives value Furniture Gives value as furniture
on credit receivable as customer re- goes out of account
ceives furniture
Received cash from an Cash Receives value as Accounts Gives value as money
account receivable money goes into receivable goes out of the account
account
Owner increased investment Bank Receives value as Capital Gives value as owner
in the business by transferring money goes into provides money for the
private funds into the the account business
business’s bank account
Owner withdrew cash for Capital Receives value as Cash Gives value as money
private use money goes into goes out of the account
the account
Transferred cash to the Bank Receives value as Cash Gives value as money
business’s bank account money goes into goes out of the account
the account

16 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019
 Answers to Chapter 2: Accounting as a system

Question 35
a.
Dr Premises Cr
$ $
Jan 1 Balance 90 000
Dr Equipment Cr
$ $
Jan 1 Balance 12 000 Jan 5 Accounts receivable 500
3 Accounts payable 4 100

Dr Vehicle Cr
$ $
Jan 1 Balance 9 000
Dr Bank Cr
$ $
Jan 1 Balance 3 300 Jan 2 Bank loan 1 000
6 Capital 4 000
7 Cash 200
Dr Cash Cr
$ $
Jan 1 Balance 700 Jan 4 Capital 300
7 Bank 200

Dr Capital Cr
$ $
Jan 4 Cash 300 Jan 1 Balance 100 000
6 Bank 4 000

Dr Bank Loan Cr
$ $
Jan 2 Bank 1 000 Jan 1 Balance 15 000
Dr Accounts payable Cr
$ $
Jan 3 Equipment 4 100

Dr Accounts receivable Cr
$ $
Jan 5 Equipment 500
b.
Ross
Statement of financial position (balance sheet) at 7 January 2018
  $ $   $ $
NON-CURRENT ASSETS   CAPITAL   103 700
Premises 90 000      
Equipment 15 600 NON-CURRENT LIABILITIES   
Vehicle 9 000 Bank loan   14 000
  114 600      
CURRENT ASSETS CURRENT LIABILITIES    
Accounts receivable 500 Accounts payable   4 100
Bank 6 500
Cash 200
  7 200    
  121 800   121 800

17 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019
 Answers to Chapter 2: Accounting as a system

Question 36
Dr Vehicle Cr
$ $
Apr 1 Balance 16 000

Dr Furniture Cr
$ $
Apr 1 Balance 11 000
2 Bank 2 400

Dr Accounts receivable Cr
$ $
Apr 1 Balance 4 400 Apr 4 Bank 2 900

Dr Bank  Cr
$ $
Apr 1 Balance 2 800 Apr 2 Furniture 2 400
  4 Accounts receivable  2 900   3 Capital 200
  5 Bank loan 7 200        
  7 Cash 100        

Dr Cash Cr
$ $
Apr 1 Balance 900 Apr 6 Accounts payable 400
7 Bank 100

Dr Capital Cr
$ $
Apr 3 Bank 200 Apr 1 Balance 32 900

Dr Accounts payable Cr
$ $
Apr 6 Cash 400 Apr 1 Balance 2 200

Dr Bank Loan Cr
$ $
Apr 5 Bank 7 200

Becky
Statement of financial position (balance sheet) at April 2018
  $ $   $ $
NON-CURRENTASSETS   CAPITAL   32 700
Vehicle 16 000
Furniture 13 400 NON-CURRENT LIABILITIES  
29 400 Bank loan   7 200
CURRENT ASSETS      
Accounts receivable 1 500 CURRENT LIABILITIES    
Bank 10 400 Accounts payable   1 800
Cash 400
  12 300  
  41 700   41 700
18 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019
 Answers to Chapter 2: Accounting as a system

2.5 Using expenses, purchases, sales and drawings accounts

Question 37
Dr Bank Cr
$ $
Feb 1 Balance 12 000 Feb 2 Purchases 1 200
21 Sales 520 4 Rent 420
8 Insurance 180
18 Rent 420

Dr Cash Cr
$ $
Feb 1 Balance 400 Feb 19 Insurance 40
5 Sales 330 24 Purchases 60

Dr Capital Cr
$ $
Feb 1 Balance 12 400

Dr Purchases Cr
$ $
Feb 2 Bank 1 200
11 Accounts payable 840
24 Cash 60

Dr Rent Cr
$ $
Feb 4 Bank 420
18 Bank 420

Dr Sales Cr
$ $
Feb 5 Cash 330
14 Accounts receivable 910
21 Bank 520

Dr Insurance Cr
$ $
Feb 8 Bank 180
19 Cash 40

Dr Accounts payable Cr
$ $
May 11 Purchases 840

Dr Accounts receivable Cr
$ $
Feb 14 Sales 910

Question 38
Dr Bank Cr
$ $
June 1 Balance 14 400 June 2 Purchases 4 700
21 Sales 810 3 Rent 740
19 Electricity 210

19 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019
 Answers to Chapter 2: Accounting as a system

Dr Cash Cr
$ $
June 1 Balance 700 June 7 Wages 580
6 Sales 490 14 Wages 490
24 Purchases 110

Dr Capital Cr
$ $
June 1 Balance 15 100

Dr Purchases Cr
$ $
June 2 Bank 4 700
11 Accounts payable 1 470
24 Cash 110

Dr Rent Cr
$ $
June 3 Bank 740

Dr Sales Cr
$ $
June 6 Cash 490
13 Accounts receivable 1 420
21 Bank 810

Dr Wages Cr
$ $
June 7 Cash 580
14 Cash 490

Dr Accounts payable Cr
$ $
June 11 Purchases 1 470

Dr Accounts receivable Cr
$ $
June 13 Sales 1 420

Dr Electricity Cr
$ $
June 19 Bank 210

Question 39
Dr Equipment Cr
$ $
April 1 Balance 6 200
18 Bank 1 020

Dr Bank Cr
$ $
April 1 Balance 8 400 April 8 Drawings 240
21 Sales 720 11 Purchases 510
18 Equipment 1 020

20 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019
 Answers to Chapter 2: Accounting as a system

Dr Cash Cr
$ $
April 1 Balance 300 April 13 Wages 620
5 Sales 1 230 19 Drawings 90
27 Wages 580

Dr Capital Cr
$ $
April 1 Balance 14 900

Dr Purchases Cr
$ $
April 4 Payable 3 600
11 Bank 510

Dr Sales Cr
$ $
April 5 Cash 1 230
9 Accounts receivable 470
21 Bank 720

Dr Drawings Cr
$ $
April 8 Bank 240
19 Cash 90

Dr Accounts payable Cr
$ $
April 4 Purchases 3 600

Dr Accounts receivable Cr
$ $
April 9 Sales 470

Dr Wages Cr
$ $
April 11 Cash 620
27 Cash 580

Question 40
Dr Fittings Cr
$ $
Oct 1 Balance 8 600 Oct 18 Cash 300

Dr Bank Cr
$ $
Oct 1 Balance 7 800 Oct 11 Rent 770
22 Accounts payable 3 000
29 Drawings 390

Dr Cash Cr
$ $
Oct 1 Balance 700 Oct 4 Purchases 500
7 Sales 990 12 Drawings 110
18 Fittings 300
25 Receivable 210

21 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019
 Answers to Chapter 2: Accounting as a system

Dr Capital Cr
$ $
Oct 1 Balance 17 100

Dr Purchases Cr
$ $
Oct 4 Cash 500
6 Accounts payable 4 240

Dr Sales Cr
$ $
Oct 7 Cash 990
14 Accounts receivable 440

Dr Drawings Cr
$ $
Oct 12 Cash 110
29 Bank 390

Dr Accounts payable Cr
$ $
Oct 22 Bank 3 000 Oct 6 Purchases 4 240

Dr Account receivable Cr
$ $
Oct 14 Sales 440 Oct 25 Cash 210

Dr Rent Cr
$ $
Oct 11 Bank 770

Question 41
Transaction Account to be Account to be
debited credited
Paid wages in cash Wages Cash
Purchased goods for resale on credit Purchases Accounts payable
Owner withdrew cheque for private use Drawings Bank
Paid an account payable in cash Accounts payable Cash
Sold goods on credit Accounts receivable Sales
Sold goods for cash Cash Sales
Purchased furniture by cheque Furniture Bank
Owner made additional investment of money in the
Cash/Bank Capital
business
Paid rent by cheque Rent Bank
Received cheque from an account receivable Bank Accounts receivable

22 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019
 Answers to Chapter 2: Accounting as a system

Question 42
Transaction Account to be Account to be
debited credited
Paid salaries by cheque Salaries Bank
Arranged a bank loan. The funds were paid into the
Bank Bank loan
business’s bank account
Sold goods and paid the proceeds into the bank Bank Sales
Purchased goods for resale for cash Purchases Cash
Owner withdrew cash for private use Drawings Cash
Paid an account payable by cheque Accounts payable Bank
Sold goods on credit Accounts receivable Sales
Paid bank loan interest. The funds were transferred
Loan interest Bank
from the business bank account
Received cash from an account receivable Accounts
Cash
receivable

Question 43
1 January Purchased goods for resale and paid by cheque, $6 000
2 January Cash sales totalled $3 200
3 January Paid general expenses by cheque, $320
4 January Sold goods on credit, $1 730
5 January Purchased goods on credit, $2 290

Question 44
1 May Sold goods on credit, $3 790
2 May Paid wages in cash, $280
3 May Purchased goods for resale and paid in cash, $170
4 May Purchased goods for resale on credit, $1 200
5 May Received cheque from an account receivable, $2 000

Question 45
Dr Premises Cr
$ $
March 1 Balance 120 000

Dr Vehicle Cr
$ $
March 1 Balance 11 500

Dr Equipment Cr
$ $
March 1 Balance 8 900 March 17 Bank 400
24 Bank 2 800

Dr Accounts Receivable Cr
$ $
March 1 Balance 7 300 March 15 Bank 2 800

23 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019
 Answers to Chapter 2: Accounting as a system

Dr Bank Cr
$ $
March 1 Balance 6 400 March 3 Accounts payable 1 700
5 Cash 800 10 Insurance 420
15 Accounts receivable 2 800 18 Loan interest 120
17 Equipment 400 24 Equipment 2 800
30 Vehicle expenses 230

Dr Cash Cr
$ $
March 1 Balance 800 March 5 Bank 800
4 Sales 1 470 12 Wages 580
22 Sales 1 280 19 Drawings 250
26 Wages 630
29 Insurance 180

Dr Capital Cr
$ $
March 1 Balance 116 000
Dr Bank Loan Cr
$ $
March 1 Balance 30 000
Dr Accounts payable Cr
$ $
March 3 Bank 1 700 March 1 Balance 8 900
8 Purchases 3 200
Dr Sales Cr
$ $
March 4 Cash 1 470
22 Cash 1 280
Dr Purchases Cr
$ $
March 8 Accounts payable 3 200
Dr Drawings Cr
$ $
March 19 Cash 250
Dr Insurance Cr
$ $
March 10 Bank 420
29 Cash 180
Dr Wages Cr
$ $
March 12 Cash 580
26 Cash 630
Dr Loan interest Cr
$ $
March 18 Bank 120
Dr Vehicle expenses Cr
$ $
March 30 Bank 230

24 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019
 Answers to Chapter 2: Accounting as a system

2.6 The trial balance

Question 46
Trial balance at 31 December 2017
Dr Cr
$ $
Furniture 15 200
Accounts receivable 2 600
Bank 700
Cash 300
Capital 17 900
Accounts payable 3 300
Purchases 4 100
Sales 3 100
Wages 1 100
Drawings 300
24 300 24 300

Question 47
Trial balance at 31 January 2018
Dr Cr
$ $
Vehicle 18 900
Accounts receivable 3 300
Bank 1 100
Cash 500
Capital 10 200
Accounts payable 8 400
Bank loan 6 000
Purchases 5 600
Sales 6 500
Rent 900
Drawings 800
31 100 31 100

25 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019
 Answers to Chapter 2: Accounting as a system

Question 48
Trial balance at 31 December 2017
Dr Cr
$ $
Advertising 600
Bank loan 7 000
Capital 10 500
Cash at bank 1 200
Accounts payable 400
Accounts receivable 900
Drawings 2 300
General expenses 700
Purchases 6 100
Sales 8 800
Vehicle 14 900
26 700 26 700

Question 49
Trial balance at 31 March 2018
Dr Cr
$ $
Capital 13 700
Cash at bank 600
Cash in hand 100
Accounts payable 2 500
Accounts receivable 1 400
Drawings 2 200
Furniture 14 900
Light and heat 300
Loan interest 500
Purchases 7 700
Salaries 11 200
Sales 22 700
38 900 38 900

Question 50
Dr Vehicle Cr
$ $
April 1 Balance 14 800

Dr Equipment Cr
$ $
April 1 Balance 11 200
11 Bank 800

26 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019
 Answers to Chapter 2: Accounting as a system

Dr Accounts receivable Cr
$ $
April 1 Balance 4 700 April 18 Bank 2 700
22 Sales 1 600

Dr Bank Cr
$   $
April 1 Balance 3 100 April 9 Rent 700
12 Cash 600 11 Equipment 800
18 Receivable 2 700 19 Drawings 600
20 Accounts payable 2 000

Dr Cash Cr
$     $
April 1 Balance 500 April 7 Drawings 200
4 Sales 1 000 12 Bank 600
25 Sales 800 15 Wages 500
28 Wages 900

Dr Capital Cr
$ $
April 1 Balance 30 700

Dr Accounts payable Cr
$    $
April 20 Bank 2 000 April 1 Balance 3 600
1 Purchases 1 100

Dr Sales Cr
$    $
April 4 Cash 1 000
22 Accounts receivable 1 600
25 Cash 800

Dr Purchases Cr
$    $
April 1 Accounts payable 1 100

Dr Drawings Cr
 $    $
April 7 Cash 200
19 Bank 600

Dr Rent Cr
 $    $
April 9 Bank 700

Dr Wages Cr
 $    $
April 15 Cash 500
28 Cash 900

27 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019
 Answers to Chapter 2: Accounting as a system

Trial balance at 30 April 2018

Dr Cr
$ $
Vehicle 14 800
Equipment 12 000
Accounts receivable 3 600
Bank 2 300
Cash 100
Capital 30 700
Accounts payable 2 700
Sales 3 400
Purchases 1 100
Drawings 800
Rent 700
Wages 1 400
36 800 36 800

Question 51
Dr Equipment Cr
$ $
May 1 Balance 8 500 May 20 Bank 1 000

Dr Fittings Cr
$ $
May 1 Balance 7 900
23 Bank 1 300

Dr Accounts receivable Cr
$ $
May 1 Balance 900 May 10 Cash 700
29 Sales 1 700

Dr Bank Cr
$ $
May 1 Balance 2 200 May 4 Purchases 600
10 Cash 900 6 Bank loan 700
20 Equipment 1 000 12 Loan interest 300
23 Fittings 1 300

Dr Cash Cr
$ $
May 1 Balance 800 May 2 Wages 400
9 Sales 1 300 10 Bank 900
13 Accounts receivable 700 16 Drawings 500
19 Wages 600

Dr Capital Cr
$ $
May 1 Balance 14 600

28 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019
 Answers to Chapter 2: Accounting as a system

Dr Bank loan Cr
$ $
May 6 Bank 700 May 1 Balance 4 000

Dr Accounts payable Cr
$ $
May 1 Balance 1 700

Dr Sales Cr
$ $
May 9 Cash 1 300
29 Accounts receivable 1 700

Dr Purchases Cr
$ $
May 4 Bank 600

Dr Drawings Cr
$ $
May 16 Cash 500

Dr Wages Cr
$ $
May 2 Cash 400
19 Cash 600

Dr Loan interest Cr
$ $
May 12 Bank 300

Trial balance at 31 May 2018

Dr Cr
$ $
Equipment 7 500
Fittings 9 200
Accounts receivable 1 900
Bank 1 200
Cash 400
Capital 14 600
Bank loan 3 300
Accounts payable 1 700
Sales 3 000
Purchases 600
Drawings 500
Wages 1 000
Loan interest 300
22 600 22 600

29 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019
 Answers to Chapter 2: Accounting as a system

2.7 Preparing simple income statements

Question 52
a.  Calculation of gross profit
$
Sales 16 300
Less purchases (7 500)
Gross profit 8 800

b.  Calculation of net profit

$
Gross profit 8 800
Less total expenses 4 200
Net profit 4 600

c.  Bank account for February 2018

Dr Bank Cr
$ $
Feb Balance 2 300 Feb Purchases 7 500
Sales 16 300 Rent 2 500
Wages of assistant 900
Insurance 800

d.  Statement of financial position (balance sheet) at 28 February 2018

Sophie
Statement of financial position (balance sheet)
at 28 February 2018
 $    $
ASSETS CAPITAL 30 600
Fittings 19 400
Equipment 6 200 LIABILITIES
Bank 6 900 Accounts payable 1 900
32 500   32 500

Question 53
a.  Calculation of gross profit
$
Sales 22 500
Less purchases (11 800)
Gross profit 10 700

b.  Calculation of net profit

$
Gross profit 10 700
Less total expenses (5 600)
Net profit 5 100

30 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019
 Answers to Chapter 2: Accounting as a system

c.  Bank account for June 2018

Dr Bank Cr
$    $
June Balance 3 500 June Purchases 11 800
Sales 22 500 Wages 4 200
Light and heat 500
Administration expenses 900

d.  Statement of financial position (balance sheet) at 30 June 2018

Jack
Statement of financial position (balance sheet)
at 30 June 2018
$   $
ASSETS CAPITAL 93 600
Shop premises 92 000
Vehicle 18 000 LIABILITIES
Bank 8 600 Bank loan 25 000
118 600   118 600

Question 54
a.  Calculation of gross profit
$
Sales 9 900
Less purchases (3 200)
Gross profit 6 700

b.  Calculation of net profit

$
Gross profit 6 700
Less total expenses (2 100)
Net profit 4 600

c.  Ledger accounts

Dr Equipment Cr
$ $
Aug 1 Balance 11 600

Dr Furniture Cr
$ $
Aug 1 Balance 10 500

Dr Bank Cr
$    $
Aug 1 Balance 2 900 Aug Purchases 3 200
Sales 9 900 Wages 800
Rent 700
Light and heat 600

31 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019
 Answers to Chapter 2: Accounting as a system

Dr Capital Cr
$ $
Aug 1 Balance 23 900
31 Net profit 4 600

Dr Accounts payable Cr
$ $
Aug 1 Balance 1 100

Dr Sales Cr
$ $
Aug  31 Trading 9 900 Aug Bank 9 900

Dr Purchases Cr
$ $
Aug Bank 3 200 Aug 31 Trading 3 200

Dr Wages Cr
$ $
Aug Bank 800 Aug 31 Profit and loss 800

Dr Rent Cr
$ $
Aug Bank 700 Aug 31 Profit and loss 700

Dr Light and heat Cr

$ $
Aug Bank 600 Aug 31 Profit and loss 600

d.  Trading account

Dr Trading Account for the month ended 31 August 2018 Cr
$ $
Purchases 3 200 Sales 9 900
Gross profit 6 700
e.  Profit and loss account and f. transfer of profit to capital account
Dr Profit and loss account for the month ended 31 August 2018 Cr
$ $
Wages 800 Gross profit 6 700
Rent 700
Light and heat 600
Net profit 4 600
g.  Statement of financial position (balance sheet) at 31 August
Amy
Statement of financial position (balance sheet)
at 31 August 2018
$   $
ASSETS CAPITAL 28 500
Equipment 11 600
Furniture 10 500 LIABILITIES
Bank 7 500 Accounts payable 1 100
29 600   29 600

32 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019
 Answers to Chapter 2: Accounting as a system

Question 55
a.  Calculation of gross profit
$
Sales 10 300
Less purchases (2 100)
Gross profit 8 200

b.  Calculation of net profit

$
Gross profit 8 200
Less total expenses (2 000)
Net profit 6 200

c.  Ledger accounts

Dr Premises Cr
$ $
Sept 1 Balance 65 000

Dr Equipment Cr
$ $
Sept 1 Balance 12 200

Dr Bank Cr
$ $
Sept 1 Balance 4 400 Sept Purchases 2 100
Sales 10 300 Insurance 700
Loan interest 200
Wages 1 100

Dr Capital Cr
$ $
Sept 1 Balance 73 600
30 Net profit 6 200

Dr Bank loan Cr
$ $
Sept 1 Balance 8 000

Dr Sales Cr
$ $
Sept 30 Trading 10 300 Sept Bank 10 300

Dr Purchases Cr
$ $
Sept Bank 2 100 Sept 30 Trading 2 100

Dr Insurance Cr
$ $
Sept Bank 700 Sept 30 Profit and loss 700

Dr Loan interest Cr
$ $
Sept Bank 200 Sept 30 Profit and loss 200

33 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019
 Answers to Chapter 2: Accounting as a system

Dr Wages Cr
$ $
Sept Bank 1 100 Sept 30 Profit and loss 1 100

d.  Trading Account

Dr Trading account for the month ended 30 September 2018 Cr
$    $
Purchases 2 100 Sales 10 300
Gross profit 8 200

e.  Profit and loss account and f. transfer of profit to capital account
Dr Profit and loss account for the month ended 30 September 2018 Cr
$ $
Insurance 700 Gross profit 8 200
Loan interest 200
Wages 1 100
Net profit 6 200

g.  Statement of financial position (balance sheet) at 30 September

Neil
Statement of financial position (balance sheet)
at 30 September 2018
$   $
ASSETS CAPITAL 79 800
Premises 65 000
Equipment 12 200 LIABILITIES
Bank 10 600 Bank loan 8 000
87 800   87 800
Question 56
a.  Calculation of gross profit
$
Sales  7 700
Less purchases (5 300)
Gross profit 2 400

b.  Calculation of net loss

$
Gross profit 2 400
Less total expenses (3 000)
Net loss 600
c.  Ledger accounts
Dr Furniture Cr
$ $
July 1 Balance 11 200
34 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019
 Answers to Chapter 2: Accounting as a system

Dr Equipment Cr
$ $
July 1 Balance 3 200

Dr Bank Cr
$ $
July 1 Balance 1 800 July Purchases 5 300
Sales 7 700 Rent 1 100
Light and heat 600
Wages 1 300

Dr Capital Cr
$ $
July 31 Net loss 600 July 1 Balance 13 600

Dr Accounts payable Cr
$ $
July 1 Balance 2 600

Dr Sales Cr
$ $
July 31 Trading 7 700 July Bank 7 700

Dr Purchases Cr
$ $
July Bank 5 300 July 31 Trading 5 300

Dr Rent Cr
$ $
July Bank 1 100 July 31 Profit and loss 1 100

Dr Light and heat Cr

$ $
July Bank 600 July 31 Profit and loss 600

Dr Wages Cr
$ $
July Bank 1 300 July 31 Profit and loss 1 300

d.  Trading account

Dr Trading account for the month ended 31 July 2018 Cr
$ $
Purchases 5 300 Sales 7 700
Gross profit 2 400

e.  Profit and loss account and f. transfer of profit to capital account
Dr Profit and loss account for the month ended 31 July 2018 Cr
$ $
Rent 1 100 Gross profit 2 400
Light and heat 600 Net loss 600
Wages 1 300

35 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019
 Answers to Chapter 2: Accounting as a system

g.  Statement of financial position (balance sheet) at 31 July

Winston
Statement of financial position (balance sheet)
at 31 July 2018
$   $
ASSETS CAPITAL 13 000
Furniture 11 200
Equipment 3 200 LIABILITIES
Bank 1 200 Accounts payable 2 600
15 600   15 600

Question 57
a.  Calculation of gross profit
$
Sales 12 900
Less purchases (9 200)
Gross profit 3 700

b.  Calculation of loss

$
Gross profit 3 700
Less total expenses (5 200)
Net loss 1 500

c.  Ledger accounts

Dr Premises Cr
$ $
April 1 Balance 105 000

Dr Equipment Cr
$ $
July 1 Balance 16 000

Dr Bank Cr
$ $
April 1 Balance 2 700 April Purchases 9 200
Sales 12 900 Wages 3 100
Administration expenses 1 300
Loan interest 800

Dr Capital Cr
$ $
April 30 Net loss 1 500 April 1 Balance 83 700

Dr Bank loan Cr
$ $
April 1 Balance 40 000

36 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019
 Answers to Chapter 2: Accounting as a system

Dr Sales Cr
$ $
April 30 Trading 12 900 April Bank 12 900

Dr Purchases Cr
$ $
April Bank 9 200 April 30 Trading 9 200

Dr Wages Cr
$ $
April Bank 3 100 April 30 Profit and loss 3 100

Dr Administration expenses Cr
$ $
April Bank 1 300 April 30 Profit and loss 1 300

Dr Loan interest Cr
$ $
April Bank 800 April 30 Profit and loss 800

d.  Trading account

Dr Trading account for the month ended 30 April 2018 Cr
$ $
Purchases 9 200 Sales 12 900
Gross profit 3 700
e.  Profit and loss account and f. transfer of profit to capital account
Dr Profit and loss account for the month ended 30 April 2018 Cr
$ $
Wages 3 100 Gross profit 3 700
Administration expenses 1 300 Net loss 1 500
Loan interest 800

g.  Statement of financial position (balance sheet) at 30 April

Dawn
Statement of financial position (balance sheet)
at 30 April 2018
$   $
ASSETS CAPITAL 82 200
Premises 105 000
Equipment 16 000 LIABILITIES
Bank 1 200 Bank loan 40 000
122 200   122 200

Question 58
a.
Dr Fittings Cr
$ $
Mar 1 Balance 21 200
24 Bank 1 300

37 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019
 Answers to Chapter 2: Accounting as a system

Dr Vehicle Cr
$ $
Mar 1 Balance 16 400

Dr Accounts receivable Cr
$ $
Mar 1 Balance 3 200 Mar 9 Bank 1 900
17 Sales 2 400

Dr Bank Cr
$ $
Mar 1 Balance 2 400 Mar 7 Rent 1 000
9 Accounts receivable 1 900 10 Bank loan 500
30 Cash 700 18 Loan interest 400
21 Accounts payable 1 000
22 Drawings 700
24 Fittings 1 300

Dr Cash Cr
$ $
Mar 1 Balance 500 Mar 11 Drawings 200
4 Sales 900 14 Wages 700
25 Sales 1 400 28 Wages 800
30 Bank 700

Dr Capital Cr
$ $
Mar 31 Drawings 900 Mar 1 Balance 34 900
31 Net profit 500

Dr Bank loan Cr
$ $
Mar 10 Bank 500 Mar 1 Balance 6 000

Dr Accounts payable Cr
$ $
Mar 21 Bank 1 000 Mar 1 Balance 2 800
3 Purchases 1 300

Dr Drawings Cr
$ $
Mar 11 Cash 200 Mar 31 Capital 900
22 Bank 700

Dr Sales Cr
$ $
Mar 31 Trading 4 700 Mar 4 Cash 900
17 Accounts receivable 2 400
25 Cash 1 400

Dr Purchases Cr
$ $
Mar 3 Accounts payable 1 300 Mar 31 Trading 1 300

38 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019
 Answers to Chapter 2: Accounting as a system

Dr Rent Cr
$ $
Mar 7 Bank 1 000 Mar 31 Profit and loss 1 000

Dr Wages Cr
$ $
Mar 14 Cash 700 Mar 31 Profit and loss 1 500
28 Cash 800

Dr Loan interest Cr
$ $
Mar 18 Bank 400 Mar 31 Profit and loss 400

b.
Trial balance at 31 March 2018
Dr Cr
$ $
Fittings 22 500
Vehicle 16 400
Accounts receivable 3 700
Bank 100
Cash 400
Capital 34 900
Bank loan 5 500
Accounts payable 3 100
Drawings 900
Sales 4 700
Purchases 1 300
Rent 1 000
Wages 1 500
Loan interest 400
48 200 48 200
c.
Dr Trading account for the month ended 31 March 2018 Cr
$ $
Purchases 1 300 Sales 4 700
Gross profit 3 400

d.
Dr Profit and loss account for the month ended 31 March 2018 Cr
$ $
Rent 1 000 Gross profit 3 400
Wages 1 500
Loan interest 400
Net profit 500

39 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019
 Answers to Chapter 2: Accounting as a system

e.
Thomas
Statement of financial position (balance sheet)
at 30 April 2018
$   $
ASSETS CAPITAL 34 500
Fittings 22 500
Vehicle 16 400 LIABILITIES
Accounts receivable 3 700 Bank loan 5 500
Bank 100 Accounts payable 3 100
Cash 400
43 100 43 100

Question 59
a.
Dr Premises Cr
$ $
Sept 1 Balance 66 000

Dr Equipment Cr
$ $
Sept 1 Balance 17 400 Sept 10 Bank 1 100

Dr Accounts receivable Cr
$ $
Sept 1 Balance 300 Sept 7 Cash 200
17 Sales 600

Dr Bank Cr
$ $
Sept 1 Balance 2 700 Sept 4 Accounts payable 1 800
10 Equipment 1 100 5 Insurance 300
30 Sales 1 300 11 Drawings 600
25 Purchases 900

Dr Cash Cr
$ $
Sept 1 Balance 600 Sept 13 Wages 1 400
7 Accounts receivable 200 22 Insurance 100
9 Sales 3 300 24 Drawings 300
18 Sales 2 800 28 Wages 1 000

Dr Capital Cr
$ $
Sept 30 Drawings 900 Sept 1 Balance 70 100
30 Net profit 2 000

Dr Bank loan Cr
$ $
Sept 1 Balance 15 000
40 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019
 Answers to Chapter 2: Accounting as a system

Dr Accounts payable Cr
$ $
Sept 4 Bank 1 800 Sept 1 Balance 1 900
21 Purchases 2 300

Dr Drawings Cr
$ $
Sept 11 Bank 600 Sept 30 Capital 900
24 Cash 300

Dr Sales Cr
$ $
Sept 30 Trading 8 000 Sept 9 Cash 3 300
17 Accounts receivable 600
18 Cash 2 800
30 Bank 1 300

Dr Purchases Cr
$ $
Sept 21 Accounts payable 2 300 Sept 30 Trading 3 200
25 Bank 900

Dr Insurance Cr
$ $
Sept 5 Bank 300 Sept 30 Profit and loss 400
22 Cash 100

Dr Wages Cr
$ $
Sept 13 Cash 1 400 Sept 30 Profit and loss 2 400
28 Cash 1 000
b.
Trial balance at 30 September 2018
Dr Cr
$ $
Premises 66 000
Equipment 16 300
Accounts receivable 700
Bank 1 500
Cash 4 100
Capital 70 100
Bank loan 15 000
Accounts payable 2 400
Drawings 900
Sales 8 000
Purchases 3 200
Insurance 400
Wages 2 400
95 500 95 500

41 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019
 Answers to Chapter 2: Accounting as a system

c.
Dr Trading account for the month ended 30 September 2018 Cr
$ $
Purchases 3 200 Sales 8 000
Gross profit 4 800

d.
Dr Profit and loss account for the month ended 31 March 2018 Cr
$ $
Insurance 400 Gross profit 4 800
Wages 2 400
Net profit 2 000

e.
Maggie
Statement of financial position (balance sheet)
at 30 September 2018
$   $
ASSETS CAPITAL 71 200
Premises 66 000
Equipment 16 300 LIABILITIES
Accounts receivable 700 Bank loan 15 000
Bank 1 500 Accounts payable 2 400
Cash 4 100
88 600 88 600

Question 60
a.
Dr Administration expenses Cr
$ $
Dec 1 Balance 8 250 Dec 31 Profit and loss 8 690
17 Cash 440

Dr Bank Cr
$ $
Dec 1 Balance 3 190 Dec 2 Purchases 2 200
30 Cash 6 200 8 Rent 1 250
10 Bank loan 500
22 Accounts payable 2 600
23 Fittings 970

Dr Bank loan Cr
$ $
Dec 10 Bank 500 Dec 1 Balance 8 000

Dr Capital Cr
$ $
Dec 31 Drawings 21 810 Dec 1 Balance 31 870
31 Net profit 7 990

42 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019
 Answers to Chapter 2: Accounting as a system

Dr Cash Cr
$ $
Dec 1 Balance 340 Dec 15 Wages 1 620
3 Sales 5 220 16 Drawings 600
6 Accounts receivable 330 17 Administration expenses 440
20 Sales 3 130 28 Wages 1 880
29 Sales 2 440 30 Bank 6 200

Dr Drawings Cr
$ $
Dec 1 Balance 21 210 Dec 31 Capital 21 810
16 Cash 600

Dr Fittings Cr
$ $
Dec 1 Balance 8 920
23 Bank 970

Dr Loan interest Cr
$ $
Dec 1 Balance 640 Dec 31 Profit and loss 640

Dr Accounts payable Cr
$ $
Dec 22 Bank 2 600 Dec 1 Balance 3 480

Dr Purchases Cr
$ $
Dec 1 Balance 83 470 Dec 31 Trading 85 670
2 Bank 2 200

Dr Accounts receivable Cr
$ $
Dec 1 Balance 570 Dec 6 Cash 330
13 Sales 210

Dr Rent Cr
$ $
Dec 1 Balance 13 230 Dec 31 Profit and loss 14 480
8 Bank 1 250

Dr Sales Cr
$ $
Dec 31 Trading 152 300 Dec 1 Balance 141 300
3 Cash 5 220
13 Accounts receivable 210
20 Cash 3 130
29 Cash 2 440

Dr Vehicle Cr
$    $
Dec 1 Balance 13 500

43 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019
 Answers to Chapter 2: Accounting as a system

Dr Wages Cr
$ $
Dec 1 Balance 31 330 Dec 31 Profit and loss 34 830
15 Cash 1 620
28 Cash 1 880

b.
Trial balance at 31 December 2017
Dr Cr
$ $
Administration expenses 8 690
Bank 1 870
Bank loan 7 500
Capital 31 870
Cash 720
Drawings 21 810
Fittings 9 890
Loan interest 640
Accounts payable 880
Purchases 85 670
Accounts receivable 450
Rent 14 480
Sales 152 300
Vehicle 13 500
Wages 34 830
192 550 192 550

c.
Dr Trading account for the year ended 31 December 2017 Cr
$ $
Purchases 85 670 Sales 152 300
Gross profit 66 630

d.
Dr Profit and loss account for the year ended 31 December 2017 Cr
$ $
Administration expenses 8 690 Gross profit 66 630
Loan interest 640
Rent 14 480
Wages 34 830
Net profit 7 990

44 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019
 Answers to Chapter 2: Accounting as a system

e.
Statement of financial position (balance sheet) at 31 December 2017
  $ $   $ $
NON-CURRENTASSETS   CAPITAL   18 050
Vehicle 13 500
Fittings 9 890 NON-CURRENT LIABILITIES   
23 390 Bank loan   7 500
CURRENT ASSETS      
Accounts receivable 450 CURRENT LIABILITIES    
Bank 1 870 Accounts payable   880
Cash 720
  3 040    
  26 430   26 430

2.8 Balancing and closing accounts

Question 61
Dr Cash Cr
$ $
Feb 1 Balance 450 Feb 8 Drawings 150
14 Sales 1 200 24 Wages 990
28 Balance c/d 510
1 650 1 650
Mar 1 Balance b/d 510
Question 62
Dr Bank Cr
$ $
Oct 1 Balance 2 200 Oct 6 Accounts payable 1 400
12 Cash 500 12 Insurance 300
17 1 300 24 Drawings 400
31 Balance c/d 1 900
4 000 4 000
Nov 1 Balance b/d 1 900
Question 63
Dr Bank loan Cr
$ $
May 10 Bank 600 May 1 Balance 8 000
31 Balance c/d 7 400
8 000 8 000
June 1 Balance b/d 7 400
Question 64
Dr Accounts payable Cr
$ $
Dec 15 Bank 2 900 Dec 1 Balance 3 200
31 Balance c/d 1 700 28 Purchases 1 400
4 600 4 600
Jan 1 Balance b/d 1 700
45 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019
 Answers to Chapter 2: Accounting as a system

Question 65
Dr Cash Cr
$ $
Aug 1 Balance 370 Aug 12 Purchases 120
14 Sales 130 28 Drawings 210
31 Balance c/d 170
500 500
Sept 1 Balance b/d 170

Dr Capital Cr
$ $
Aug 31 Drawings 11 900 Aug 1 Balance 39 400
31 Balance c/d 45 900   31 Profit 18 400
57 800   57 800
Sept 1 Balance b/d 45 900

Dr Premises Cr
$ $
Aug 1 Balance 74 000

Dr Accounts receivable Cr
$ $
Aug 1 Balance 3 600 Aug 31 Balance c/d 5 300
26 Sales 1 700
5 300 5 300
Sept 1 Balance b/d 5 300

Dr Accounts payable Cr
$ $
Aug 31 Balance c/d 4 200 Aug 1 Balance 2 100
11 Purchases 800
25 Purchases 1 300
4 200 4 200
Sept 1 Balance b/d 4 200
Question 66
Dr Bank Cr
$ $
Jan 1 Balance 3 240 Jan 8 Rent 1 050
15 Cash 620 14 Drawings 450
28 Cash 290 29 Salaries 2 140
31 Balance c/d 510
4 150 4 150
Feb 1 Balance b/d 510

Dr Accounts payable Cr
$ $
Jan 31 Balance c/d 6 190 Jan 1 Balance 4 150
16 Purchases 2 040
6 190 6 190
Feb 1 Balance b/d 6 190
46 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019
 Answers to Chapter 2: Accounting as a system

Dr Capital Cr
$ $
Jan 31 Drawings 3 870 Jan 1 Balance 62 100
31 Balance c/d 73 310 31 Profit 15 080
77 180 77 180
Feb 1 Balance b/d 73 310

Dr Fittings Cr
$ $
Jan 1 Balance 14 900

Dr Equipment Cr
$ $
Jan 1 Balance 4 980 Jan 31 Balance c/d 8 050
18 Bank 3 070
8 050 8 050
Feb 1 Balance b/d 8 050

Question 67

Dr Purchases Cr
$ $
Oct 14 Bank 3 820 Oct 31 Income statement 5 910
29 Accounts payable 2 090
5 910 5 910

Dr Sales Cr
$ $
Oct 31 Income statement 7 070 Oct 5 Cash 1 250
11 Bank 3 780
25 Accounts receivable 2 040
7 070 7 070

Dr Drawings Cr
$ $
Oct 15 Bank 1 980 Oct 31 Capital 1 980

Dr Accounts receivable Cr
$ $
Oct 1 Balance 4 240 Oct 29 Bank 6 280
25 Sales 2 040
6 280 6 280

Dr Trading account for the month ended 31 October 2018 Cr

$ $
Purchases 5 910 Sales 7 070
Gross profit 1 160
7 070 7 070

47 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019
 Answers to Chapter 2: Accounting as a system

Question 68
Dr Sales Cr
$ $
April 30 Income statement 5 810 April 7 Bank 3 720
14 Accounts receivable 2 090
5 810 5 810

Dr Wages Cr
$ $
April 14 Cash 2 640 April 30 Income statement 4 910
28 Cash 2 270
4 910 4 910

Dr General expenses Cr
$ $
April 6 Bank 320 April 30 Income statement 410
18 Cash 90
410 410

Dr Accounts payable Cr
$ $
April 29 Bank 3 770 April 1 Balance 1 040
17 Purchases 2 730
3 770 3 770

Dr Profit and loss account for the month ended 30 April 2018 Cr
$ $
Wages 4 910 Gross profit 12 880
General expenses 410
Insurance 560
Net profit 7 000
12 880 12 880

Question 69
Accounts receivable
Date Details Dr Cr Balance
$ $ $  
June  1 Balance     4 800 Dr
  11 Sales 3 450 8 250 Dr
17 Bank 3 600 4 650 Dr
24 Sales 1 400 6 050 Dr
  30 Bank 2 900 3 150 Dr

48 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019
 Answers to Chapter 2: Accounting as a system

Question 70
Accounts payable
Date Details Dr Cr Balance
$ $ $  
Aug  1 Balance     2 700 Cr
   5 Purchases 7 400 10 100 Cr
11 Purchases 1 200 11 300 Cr
18 Bank 6 300 5 000 Cr
  24 Bank 3 500 1 500 Cr

Question 71
Cash
Date Details Dr Cr Balance
$ $ $  
May 1 Balance 630 Dr
   8 Office expenses 170 460 Dr
17 Drawings 80 380 Dr
22 Sales 1 050 1 430 Dr
23 Bank 1 200 230 Dr

Accounts payable
Date Details Dr Cr Balance
$ $ $  
May  1 Balance     1 820 Cr
  17 Purchases 1440 3 260 Cr
25 Bank 2 300  960 Cr

Question 72
Bank
Date Details Dr Cr Balance
$ $ $  
Sept  1 Balance 1 420 Dr
   8 Rent  520  900 Dr
11 Drawings  200 700 Dr
11 Sales 1 600 2 300 Dr
18 Cash  750 3 050 Dr
27 Purchases 1 580 1 470 Dr

Bank loan
Date Details Dr Cr Balance
$ $ $  
Sept  1 Balance     10 000 Cr
  10 Bank 600  9 400 Cr
15 Bank 3 000 12 400 Cr

49 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019
 Answers to Chapter 2: Accounting as a system

Question 73
a., b., f.
Dr Bank Cr
$ $
Dec 1 Balance 2 040 Dec 5 Accounts payable 5 840
8 Accounts receivable 6 400   14 Purchases 1 290
  18 Equipment 860
  31 Balance c/d 450
8 440   8 440
Jan 1 Balance b/d 450  

Dr Capital Cr
$ $
Dec 31 Drawings 17 780 Dec 1 Balance 124 650
31 Balance c/d 134 560   31 Income statement 27 690
152 340   152 340
Jan 1 Balance b/d 134 560

Dr Cash Cr
$ $
Dec 1 Balance 310 Dec 23 Wages 1 450
22 Sales 2 180   28 Drawings 290
  31 Balance c/d 750
2 490   2 490
Jan 1 Balance b/d 750  

Dr Drawings Cr
$ $
Dec 1 Balance 17 490 Dec 31 Capital 17 780
28 Cash 290  
17 780   17 780

Dr Equipment Cr
$ $
Dec 1 Balance 12 200 Dec 31 Balance c/d 13 060
18 Bank 860  
13 060   13 060
Jan 1 Balance b/d 13 060  

Dr General expenses Cr
$ $
Dec 1 Balance 2 080 Dec 31 Income statement 2 080

Dr Insurance Cr
$ $
Dec 1 Balance 3 650 Dec 31 Income statement 3 650

Dr Accounts payable Cr
$ $
Dec 5 Bank 5 840 Dec 1 Balance 5 840

50 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019
 Answers to Chapter 2: Accounting as a system

Dr Premises Cr
$ $
Dec 1 Balance 88 000  

Dr Purchases Cr
$ $
Dec 1 Balance 142 300 Dec 31 Income statement 143 590
14 Bank 1 290  
143 590   143 590

Dr Accounts receivable Cr
$ $
Dec 1 Balance 3 140 Dec 8 Bank 6 400
1 Sales 4 560   31 Balance c/d 1 300
7 700   7 700
Jan 1 Balance b/d 1 300  

Dr Sales Cr
$ $
Dec 31 Income statement 245 300 Dec 1 Balance 238 560
  1 Accounts receivable 4 560
  22 Cash 2 180
245 300   245 300

Dr Vehicles Cr
$ $
Dec 1 Balance 31 000  

Dr Wages Cr
$ $
Dec 1 Balance 66 840 Dec 31 Income statement 68 290
23 Cash 1 450  
68 290   68 290
c.
Trial balance at 31 December 2018
Dr Cr
$ $
Bank 450
Capital 124 650
Cash 750
Accounts payable Nil
Accounts receivable 1 300
Drawings 17 780
Equipment 13 060
General expenses 2 080
Insurance 3 650
Premises 88 000
Purchases 143 590
Sales 245 300
Vehicle 31 000
Wages 68 290
369 950 369 950

51 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019
 Answers to Chapter 2: Accounting as a system

d., e.
Mike
Income statement (trading and profit and loss account)
Dr for the year ended 31 December 2018 Cr
$ $
Purchases 143 590   Sales 245 300
Gross profit 101 710  
245 300   245 300
General expenses 2 080   Gross profit 101 710
Insurance 3 650  
Wages 68 290  
Net profit 27 690  
101 710   101 710

g.
Statement of financial position (balance sheet) at 31 December 2018
$ $   $ $
NON-CURRENT ASSETS CAPITAL 134 560
Premises 88 000  
Vehicle 31 000  
Equipment 13 060  
132 060  
CURRENT ASSETS  
Accounts receivable 1 300  
Bank 450  
Cash 750  
2 500  
134 560   134 560

Develop your exam skills

Paper 1
1. C   2. D   3. D   4. A   5. C
6. C   7. D   8. B   9. A   10. 
B

Paper 2
Case Study 1: Carlos
a.
Dr Bank Cr
$ $
Feb 1 Capital 40 000 Feb 3 Rent 2 300
2 Bank loan 10 000 7 Purchases 15 400
23 Accounts receivable 700 9 Vehicle 21 000
25 Cash 2 500 24 Accounts payable 3 500

52 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019
 Answers to Chapter 2: Accounting as a system

Dr Capital Cr
$ $
Feb 1 Bank 40 000

Dr Bank loan Cr
$ $
Feb 2 Bank 10 000

Dr Rent Cr
$ $
Feb 3 Bank 2 300

Dr Purchases Cr
$ $
Feb 7 Bank 15 400
22 Accounts payable 3 700

Dr Vehicle Cr
$ $
Feb 9 Bank 21 000

Dr Cash Cr
$ $
Feb 14 Sales 3 600 Feb 15 Drawings 400
17 Insurance 500
25 Bank 2 500

Dr Sales Cr
$ $
Feb 14 Cash 3 600
16 Accounts receivable 1 800

Dr Drawings Cr
$ $
Feb 15 Cash 400

Dr Accounts receivable Cr
$ $
Feb 16 Sales 1 800 Feb 23 Bank 700

Dr Insurance Cr
$ $
Feb 17 Cash 500

Dr Accounts payable Cr
$ $
Feb 24 Bank 3 500 Feb 22 Purchases 3 700

53 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019
 Answers to Chapter 2: Accounting as a system

b.
Trial balance at 28 February 2018
Dr Cr
$ $
Bank 11 000
Capital 40 000
Bank loan 10 000
Rent 2 300
Purchases 19 100
Vehicle 21 000
Cash 200
Sales 5 400
Drawings 400
Accounts receivable 1 100
Insurance 500
Accounts payable 200
55 600 55 600

Case Study 2: Maria

a.
Dr Vehicle Cr
$ $
May 1 Balance 11 800

Dr Furniture Cr
$ $
May 1 Balance 3 900

Dr Bank Cr
$ $
May 1 Balance 5 400 May 5 Cash 325
21 Accounts receivable 1 931 6 Drawings 148
26 Cash 390 17 Rent 822

Dr Capital Cr
$ $
May 1 Balance 21 100

Dr Purchases Cr
$ $
May 3 Accounts payable 4 735

Dr Accounts payable Cr
$ $
May 3 Purchases 4 735

Dr Cash Cr
$ $
May 5 Bank 325 May 11 Wages 489
9 Sales 1 684 18 Vehicle running expenses 95
25 Wages 32 19 Drawings 30
25 Wages 823
26 Bank 390
54 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019
 Answers to Chapter 2: Accounting as a system

Dr Drawings Cr
$ $
May 6 Bank 148
19 Cash 30

Dr Sales Cr
$ $
May 9 Cash 1 684
14 Accounts receivable 2 427

Dr Wages Cr
$ $
May 11 Cash 489 May 30 Cash 32
25 Cash 823

Dr Accounts receivable Cr
$ $
May 14 Sales 2 427 May 21 Bank 1 931

Dr Rent Cr
$ $
May 17 Bank 822

Dr Vehicle running expenses Cr

$ $
May 18 Cash 95

b.
Trial balance at 31 May 2018
Dr Cr
$ $
Vehicle 11 800
Furniture 3 900
Bank 6 426
Capital 21 100
Purchases 4 735
Accounts payable 4 735
Cash 214
Drawings 178
Sales 4 111
Wages 1 280
Accounts receivable 496
Rent 822
Vehicle running expenses 95
29 946 29 946

55 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019
 Answers to Chapter 2: Accounting as a system

Case Study 3: Harry

a., e.
Dr Administration expenses Cr
$ $
April 1 Balance 3 200 April 30 Income statement 3 600
4 Bank 400
3 600 3 600

Dr Bank Cr
$ $
April 1 Balance 5 100 April 4 Admin expenses 400
12 Accounts receivable 1 100 11 Equipment 3 600
21 Cash 1 200 28 Accounts payable 2 000
30 Balance c/d 1 400
7 400 7 400
May 1 Balance b/d 1 400

Dr Capital Cr
$ $
April 30 Drawings 27 100 April 1 Balance 140 000
30 Balance c/d 140 200 30 Net profit 27 300
167 300 167 300
May 1 Balance b/d 140 200

Dr Cash Cr
$ $
April 1 Balance 600 April 7 Drawings 600
5 Sales 4 800 19 General expenses 300
20 Sales 4 700 21 Bank 1 200
25 Wages 6 200
30 Balance c/d 1 800
10 100 10 100
May 1 Balance b/d 1 800

Dr Accounts payable Cr
$ $
April 28 Bank 2 000 April 1 Balance 3 700
30 Balance c/d 8 500 14 Purchases 6 800
10 500 10 500
May 1 Balance b/d 8 500

Dr Accounts receivable Cr
$ $
April 1 Balance 1 400 April 12 Bank 1 100
18 Sales 6 200 30 Balance c/d 6 500
7 600 7 600
May 1 Balance b/d 6 500

56 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019
 Answers to Chapter 2: Accounting as a system

Dr Drawings Cr
$ $
April 1 Balance 26 500 April 30 Capital 27 100
7 Cash 600
27 100 27 100

Dr Equipment Cr
$ $
April 1 Balance 22 400 April 30 Balance c./d 26 000
11 Bank 3 600
26 000 26 000
May 1 Balance b/d 26 000

Dr General expenses Cr
$ $
April 1 Balance 3 900 April 30 Income statement 4 200
19 Cash 300
4 200 4 200
 
Dr Premises Cr
$ $
April 1 Balance 95 000  

Dr Purchases Cr
$ $
April 1 Balance 56 800 April 30 Income statement 63 600
14 Accounts payable 6 800
63 600 63 600

Dr Sales Cr
$ $
April 30 Income statement 169 000 April 1 Balance 153 300
5 Cash 4 800
18 Accounts receivable 6 200
20 Cash 4 700
169 000 169 000

Dr Vehicle Cr
$ $
April 1 Balance 18 000  

Dr Wages Cr
$ $
April 1 Balance 64 100 April 30 Income statement 70 300
25 Cash 6 200
70 300 70 300

57 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019
 Answers to Chapter 2: Accounting as a system

b.
Trial balance at 30 April 2018
Dr Cr
$ $
Administration expenses 3 600
Bank 1 400
Capital 140 000
Cash 1 800
Accounts payable 8 500
Accounts receivable 6 500
Drawings 27 100
Equipment 26 000
General expenses 4 200
Premises 95 000
Purchases 63 600
Sales 169 000
Vehicle 18 000
Wages 70 300
317 500 317 500
c., d.
Harry
Income statement (trading and profit and loss account)
Dr for the year ended 30 April 2018 Cr
$ $
Purchases 63 600 Sales 169 000
Gross profit 105 400
169 000 169 000
Admin expenses 3 600 Gross profit 105 400
General expenses 4 200
Wages 70 300
Net profit 27 300
105 400 105 400

e.
Harry
Statement of financial position (balance sheet) at 30 April 2018
$ $   $ $
NON-CURRENT ASSETS CAPITAL 140 200
Premises 95 000  
Equipment 26 000  
Vehicle 18 000 CURRENT LIABILITIES
139 000 Accounts payable 8 500
CURRENT ASSETS  
Accounts receivable 6 500  
Bank 1 400  
Cash 1 800  
9 700  
148 700   148 700
58 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019
 Answers to Chapter 2: Accounting as a system

Case Study 4: Sophie

a., e.
Dr Bank Cr
$ $
July 1 Balance 4 920 July 4 Accounts payable 1 650
11 Accounts receivable 638 7 Rent 1 200
13 Rent 120 15 Fixtures and fittings 860
20 Fixtures and fittings 290 21 Loan interest 88
29 Cash 1 280 29 Drawings 520
31 Balance c/d 2 930
7 248 7 248
Aug 1 Balance b/d 2 930

Dr Bank loan Cr
$ $
July 1 Balance 15 000

Dr Capital Cr
$ $
July 31 Drawings 20 330 July 1 Balance 28 556
31 Balance c/d 14 146 31 Net profit 5 920
34 476 34 476
Aug 1 Balance b/d 14 146

Dr Cash Cr
$ $
July 1 Balance 372 July 18 General expenses 449
5 Sales 1 064 19 Drawings 180
25 Sales 1 720 26 Wages 1 547
27 Equipment 550 29 Bank 1 280
31 Balance c/d 250
3 706 3 706
Aug 1 Balance b/d 250

Dr Drawings Cr
$ $
July 1 Balance 19 630 July 31 Capital 20 330
19 Cash 180
29 Bank 520
20 330 20 330

Dr Equipment Cr
$ $
July 1 Balance 8 500 July 27 Cash 550
31 Balance c/d 7 950
8 500 8 500
Aug 1 Balance b/d 7 950
59 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019
 Answers to Chapter 2: Accounting as a system

Dr Fixtures and fittings Cr

$ $
July 1 Balance 6 200 July 20 Bank 290
15 Bank 860 31 Balance c/d 6 770
7 060 7 060
Aug 1 Balance b/d 6 770  

Dr General expenses Cr
$ $
July 1 Balance 5 121 July 31 Income statement 5 570
18 Cash 449
5 570 5 570

Dr Light and heat Cr

$ $
July 1 Balance 576 July 31 Income statement 576

Dr Loan interest Cr
$ $
July 1 Balance 684 July 31 Income statement 772
21 Bank 88
772 772

Dr Accounts payable Cr
$ $
July 4 Bank 1 650 July 1 Balance 3 700
31 Balance c/d 3 690 12 Purchases 1 640
5 340 5 340
Aug 1 Balance b/d 3 690

Dr Purchases Cr
$ $
July 1 Balance 49 667 July 31 Income statement 51 307
12 Payable 1 640
51 307 51 307

Dr Accounts receivable Cr
$ $
July 1 Balance 883 July 11 Bank 638
28 Sales 691 31 Balance c/d 936
1 574 1 574
Aug 1 Balance b/d 936

Dr Rent Cr
$ $
July 1 Balance 11 490 July 13 Bank 120
7 Bank 1 200 31 Income statement 12 570
12 690 12 690
60 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019
 Answers to Chapter 2: Accounting as a system

Dr Sales Cr
$ $
July 31 Income statement 106 704 July 1 Balance 103 229
5 Cash 1 064
25 Cash 1 720
28 Accounts receivable 691
106 704 106 704

Dr Vehicle Cr
$ $
July 1 Balance 14 000

Dr Wages Cr
$ $
July 1 Balance 28 442 July 31 Income statement 29 989
26 Cash 1 547
29 989 29 989

b.
Trial balance at 31 July 2018
Dr Cr
$ $
Bank 2 930
Bank loan 15 000
Capital 28 556
Cash 250
Accounts payable 3 690
Accounts receivable 936
Drawings 20 330
Equipment 7 950
Fixtures and fittings 6 770
General expenses 5 570
Light and heat 576
Loan interest 772
Purchases 51 307
Rent 12 570
Sales 106 704
Vehicle 14 000
Wages 29 989
153 950 153 950

61 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019
 Answers to Chapter 2: Accounting as a system

c., d.
Dr Income statement for the year ended 31 July 2018 Cr
$ $
Purchases 51 307 Sales 106 704
Gross profit 55 397
106 704 106 704
General expenses 5 570 Gross profit 55 397
Light and heat 576
Loan interest 772
Rent 12 570
Wages 29 989
Net profit 5 920
55 397 55 397

e.
Sophie
Statement of financial position (balance sheet) at 31 July 2018
$ $   $ $
NON-CURRENT ASSETS CAPITAL 14 146
Vehicle 14 000  
Equipment 7 950 NON-CURRENT LIABILITIES
Fixtures and fittings 6 770 Bank loan 15 000
28 720
CURRENT ASSETS CURRENT LIABILITIES
Accounts receivable 936 Accounts payable 3 690
Bank 2 930  
Cash 250  
4 116  
32 836   32 836

62 Principles of Accounts for CSEC®, 2nd edition © Oxford University Press 2019