DOC

Double Entry Bookkeeping

By Jeremy Smith,2014-08-13 12:15
10 views 0
Double Entry Bookkeeping ...

    Books of First Entry Across the Business

    Studies Course

    They appear all over the Buisness Studies course: Section A, parts b & c in long questions and Q1 Paper 2 (Higher Level). Students who do these questions well, tend to score highly and also do well in the Final Accounts question.

    In Section A Double-entry book keeping questions appear in a number of different ways.

Ledger Accounts

    There are two parts/accounts for each transaction. Students are asked to name the account and decide whether it is on the Debit or Credit side.

Example

    Daly Ltd purchased equipment by cheque.

Account 1 ____Equipment Account________(Debit side)_____

Account 2 ____Bank Account_____________(Credit side)_____

When goods are purchased or sold there are three main ways of payment:

Bank Account (watch out for the words lodged or cheque)

    Cash Account

    Credit

    All Assets should be recorded in an account named after the asset e.g. Machinery Account

    All expenses should be recorded in an account named after the expense e.g. Insurance Account

    All goods purchased should be recorded in an account called Purchases Account.

    All goods sold should be recorded in an account called Sales Account.

    The same rule applies to goods returned e.g Sales Returns Account and Purchases Returns Account.

    Joan Martin 15/11/08 1

Example 2008 Paper Section A

Credit Transactions

    This applies where goods are bought and sold ON CREDIT. This means

    goods are bought or sold now and payment is not received till a later date.

    The following is how to treat credit transactions Selling on Credit Sales Account and Debtors Account Buying on Credit Purchases A/C and Creditors Account Returning goods to Creditor Purchases Returns Account

    and Creditors Account

    Goods returned by a Debtor Sales Returns A/C and

    Debtors A/C

    Transaction Debit Credit

Purchased goods on credit from

    B Giles

    Purchased equipment on credit

    from Dental Suplies Ltd

    Sold goods on credit to M Reilly

    Joan Martin 15/11/08 2

    Layout of Accounts T Accounts

    These types of questions appear all over the paper especially at the end of long questions. Students should complete all parts outlined below.

There are two sides to T Accounts:

Debit Side

    Credit Side

    As mentioned every transaction has two accounts. When posting a T- Account, each transaction will have an entry on both sides.

Example

Debit Account Name Credit

    Date Details F ? Date Details F ?

    Divides the T Account in two

     Monetary value of transaction

     (Folio) Reference to find other account of transaction

     Record of the other account

    Date of transaction

    When completing T Accounts students must always fill the following in on both the DEBIT AND CREDIT SIDES.

Dates

    Details

    Folio

    ?

    “DEBIT THE RECEIVER AND CREDIT THE GIVER”

    Joan Martin 15/11/08 3

    BALANCING T-ACCOUNTS

    These types of questions appear all over the paper from Section A short questions and part (c) of long questions and other long accounting questions.

Example

Debit BANK ACCOUNT Credit

    DATE DETAILS F ? DATE DETAILS F ?

    1/3/08 Balance b/d 14,000 3/3/08 Purchases PB 4,500

    10/3/08 Sales SB 5,000 20/3/08 Insurane GL 3,000

     31/3/08 Balance c/d 11,500

     19,000 19,000

1/4/08 Balance b/d 11,500

; Add up both Debit and Credit side of account

    ; Insert Balance c/d on the smaller side

    ; Draw a single line and a double line to denote that the account is

    finished

    ; Put the larger amount in both total boxes i.e. accounts must show

    same totals to balance

    ; Calculate the Balance c/d by adding up the amounts and

    subtracting it from the total e.g. ?11,500

    ; The closing balance should be brought down (b/d) for the

    beginning of the next month.

    ; This closing balance b/d is on the debit side and will be used in the

    trial balance.

    Joan Martin 15/11/08 4

    Trial Balance

    This is list of entries from your ledger accounts to check that your double-entry bookkeeping is correct. Both sides should balance. If not then you check where you error is.

You will have entries from three accounts:

General Ledger

    Debtors Ledger

    Creditors ledger

    Junior Certificate Higher Level Question 1 Paper Two

    There are a number of questions asked in this question:

General Journal

    Day Books i.e. Sales and Purchases

    Analysed Cash Book

    Trial Balance

General Journal

    This can be asked in Section A short questions. Students may be asked to complete some or all of the General Journal.

Example

    A firm has the following Assets and Liabilities on 1 January 2008

Premises ?200,000 Loan ?80,000

    Complete the General Journal below and record this and calculate the Ordinary Share Capital.

     General Journal

    DATE DETAILS F DEBIT CREDIT

    1/1/08 Premises GL 200,000

     Loan GL 80,000

     Ordinary Share Capital GL 120,000

     Assets, Liabilities and Share

    Capital on 1/1/08 200,000 200,000

    Joan Martin 15/11/08 5

2008 Paper - Section A

2006 Paper Section A

Joan Martin 15/11/08 6

    Day Books

There are four Day Books:

    Sales Day Book

    Purchases Day Book

    Sales Returns Day Book

    Purchases Returns Day Book

Students may be given the Day books in the question or they may be

    asked to complete them.

Example: 2005 Q1 Paper 2 Part (b)

Record the folowing Credit Transactions in the Purchases and Purchases

    Returns Books.

5/3/05 Purchased goods on credit from Doyle Ltd Invoice No.12

    ?80,000 + VAT 21%.

    9/3/05 Returned goods to COYLE Ltd Credit Note No. 30

    ?15,000 + VAT 21%.

    PURCHASES DAY BOOK

    Date Details F NET VAT TOTAL

    5/3/05 DOYLE Ltd (Inv. 12) CL 80,000 16,800 96,800

     80,000 16,800 96,800

    PURCHASES RETURNS DAY BOOK

    Date Details F NET VAT TOTAL

    CL 9/3/05 COYLE Ltd (CrN. 30) 15,000 3,150 18,150

     15,000 3,150 18,150

    STUDENTS WILL BE ASKED TO ENTER THE RELEVANT FIGURES TO THE LEDGER ACCOUNTS.

    Joan Martin 15/11/08 7

Example 2008 Paper

PURCHASES DAY BOOK

There are three figures

     PURCHASES DAY BOOK

    NET VAT TOTAL

    ?80,000 ?16,800 ?96,800

     CREDIT SIDE CREDITORS A/C

     DEBIT SIDE VAT A/C

DEBIT SIDE PURCHASES A/C

     PURCHASES RETURNS DAY BOOK

    NET VAT TOTAL

    ?15,000 ?3,150 ?18,150

     DEBIT SIDE CREDITORS A/C

     CREDIT SIDE VAT A/C

    CREDIT SIDE PURCHSES RETURNS A/C

SIMILAR RULES APPLY TO THE SALES DAY BOOK AND THE SALES

    RETURNS DAY BOOK. SEE EXAMPLE BELOW.

    Joan Martin 15/11/08 8

    SALES DAY BOOK

    NET VAT TOTAL

    ? ? ?

     DEBIT SIDE DEBTORS A/C

     CREDIT SIDE VAT A/C

CREDIT SIDE SALES A/C

     SALES RETURNS DAY BOOK

    NET VAT TOTAL

    ? ? ?

     CREDIT SIDE DEBTORS A/C

    DEBIT SIDE VAT A/C

    DEBIT SIDE SALES RETURNS A/C

    Joan Martin 15/11/08 9

    ANALYSED CASH BOOK

    It is a normal T-Account with a Debit and Credit side but will have extra columns that allow a business to see how much is spent on Purchases, Sales etc.

    Students should label the question well, using the analysis headings given in the question.

    Analysed Cash Book

    DEBIT SIDE CREDIT SIDE

Receipts Payments

    Sales Purchases

    Debtors Creditors

    Wages

    The following are a number of common mistakes made by students in the Junior Certificate Examaination

    ; Opening balance (can be Debit or Credit entry i.e. Bank Overdraft) ; Dates either missing or not in full e.g. 22/3/08

    ; Folio not completed

    ; Receipt No. or Cheque No. not entered

    ; Putting the entry in both the Bank and the Analysis column ; Poor balancing of accounts and balance not b/d

    ; Totals for all columns

    Joan Martin 15/11/08 10

Report this document

For any questions or suggestions please email
cust-service@docsford.com