accounting , Jim owns and manages a small business, which provides an office design, Accounting Basics

accounting , Accounting Basics

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Jim owns and manages a small business, which provides an office design service, as well as buying and selling office furniture. Jim is a sole trader who manages all aspects of the business. Jim balances the business accounts at the end of each month.

On 1 June, the balances on his accounts were as follows.

Account name £ Debit/credit

Capital 12,000 Credit

Equipment 7,851 Debit

Van 3,000 Debit

Bank 4,600 Debit

Receivables control 16,599 Debit

Payables control 20,050 Credit

On 1 June, the debit balances on the receivables ledger were as follows.

Receivables ledger accounts £

Tim Jones 5,800

Evans Ltd 9,000

DBC Ltd 5,250

During June, the following transactions took place.

Date Amount, as entered Transaction

In cash book

2 450 Jim buys a camera to use in the business

3 2,400 Receives payment from Sunil Ltd

4 80 Receives a credit note from Evans Ltd for damaged chair

6 3,600 Receives payment from K. Peters

8 5,800 Pays in full the amount outstanding on the account of Tim Jones 10 5,000 Receives cash from Richards plc in part settlement of amount outstanding 15 10,500 Invoices Ted Turner for design services now completed to Ted''s satisfaction 16 425 Pays cash on delivery to Smiths for two desk and chair sets, taking up 15% discount for prompt payment 20 825 Buys a sofa and chair set from Tim Jones, agreeing 30 days credit terms 21 97 Pays telephone bill immediately on receipt, taking up 3% discount for prompt payment 23 8,800 Pays in full the amount outstanding on the account of Evans Ltd 27 5,200 Pays DBC Ltd 28 480 Issues a credit note to Ted Turner to correct an error on the invoice issued on 15 June to Ted Turner

(a) Set out Jim''s nominal ledger accounts and the receivables and payables ledger accounts at 1 June.

(b) Post the June transactions and balance the nominal ledger accounts and the receivables and payables ledger accounts. Assume that the cash book and the day books are posted daily.

(c) Present the trial balance at 1 July.

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accounting , Accounting Basics

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