Package 1 (LT 1 - 6) Includes Tutorials
Package 1 (LT 1 - 6) Includes Tutorials
Package 1 (LT 1 - 6) Includes Tutorials
Learning Objectives
At the end of the lecture you should be able to:
• state the nature and purpose of accounting.
• identify the users of financial information and discuss how accounting serves their needs.
• describe the nature of business and types of ownership.
• explain accounting assumptions and principles underlying the preparation of financial reports.
Basic Text Warren, Reeve, Duchac, Fung, Cheong, Fadhlina, Ooi – ‘Accounting: An Asian
edition’, third edition, Singapore: Cengage Learning, Chapter 1 p. 8 - 12
1. What is Accounting?
Definition
Accounting is that discipline which measures and records financial and other information
about an entity, and reports and interprets that information to interested parties to enable them
to make appropriate decisions.
Bookkeeping is usually associated with the physical recording of the monetary transactions
of a business and tends to be mechanical – and at times repetitive. Accounting, on the other
hand, has a much wider interpretation (see definition above)
B A: Accounting
A
B: Bookkeeping
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Business Accounting
Individuals need some simple form of accounting to deal with their personal financial matters.
Business firms and other organisations need accounting systems to provide information (via
financial reports / statements) on profitability and financial position of the firms to various
interested parties.
Please refer to Warren p. 8 – 12 for a more detailed explanation of the following concepts:
• _________________________________________
The business is an entity or body separate from the owners.
The transactions are recorded from the viewpoint of the business and the owners are
treated as outsiders. The accounting process is concerned with the activities of the
business organisations and not the activities of the owners.
• _________________________________________
It assumes that all transactions affecting the business are recorded in the common
monetary unit in use, i.e. in dollars and cents.
Any transaction of the business that cannot be expressed in money terms will be excluded
from the accounting records.
• _________________________________________
Assumes that business transactions are recorded in terms of their cost at the time the
transaction occurred.
• _________________________________________
This concept is closely related to the concept of historical cost.
It is assumed that the business will continue to operate for a long time and will not be
selling its assets in the near future. As such, we report assets at their historical costs.
Where a firm is going out of business or into liquidation (i.e. continuity assumption is no
longer applicable), the firm will typically report the assets at their liquidating values
(selling prices) instead.
• _________________________________________
It assumes that the indefinite life of a business is divided into arbitrary time periods. This
period is generally one year for reporting to external parties, but can be varied for internal
reporting.
• _________________________________________
Generally, the principle means the adoption of cautious accounting practices. When
determining the periodic profit for a business, accountants traditionally tend towards
caution with profits being recognised only when they have actually been earned. On the
other hand, provision must be made to account for all probable losses.
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Business Accounting
• _________________________________________
The principle requires that the accounting methods adopted should remain unchanged from
period to period so that accounting reports for consecutive periods have greater
comparability.
• _________________________________________
All information and explanation necessary for interpretation of reports and statements
should be conveyed to users.
• _________________________________________
The principle means that the treatment of an item depends on its importance and
accounting significance. It depends on the judgement of the accountant and the size of the
business. For example, cents are ignored or rounded to the nearest dollar, and even dollars
may be rounded to the nearest ten or hundred dollars in published accounting reports.
• _________________________________________
Recognises revenue and expenses in the same period when they are earned or incurred, not
when cash has been received or paid for that transaction.
2. Alan Cafeteria bought a refrigerator for $800 from a neighbourhood shop. The same
refrigerator would cost $960 at most departmental stores. Alan decided to put in his
accounting records, the cost at $800.
____________________________________________
3. A fire destroyed the warehouse of a shoe manufacturer last week. The company has to report
its financial position at the end of this month. The manager does not want to disclose the
incident in the financial reports because he fears that it will reflect badly on the financial status
of the company.
____________________________________________
4. Dr Fickle is a general practitioner in private practice. Over the weekend, he invited some of his
friends for BBQ at his new house. He intends to show the full costs of the BBQ in the
accounting records of his medical practice because he claims that it is perfectly all right since
it is against his own profits.
____________________________________________
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Business Accounting
5. In submitting the current year’s sales figures to management for budgeting purpose for the
coming year, the accountant decides to report it as $1,200,500 instead of the actual figure of
$1,200,510.45.
____________________________________________
6. If a hotel is suing a guest for setting its room on fire and its lawyer indicates the case will be
won (by the hotel) and estimates the amount of settlement, the amount is not recorded.
On the other hand, if the hotel is a defendant in a lawsuit and its lawyer indicates the hotel will
lose the lawsuit and most likely will pay a stated amount, this “expense” is recognised and
recorded immediately.
____________________________________________
7. Simple Co. Pte Ltd reports the revenues earned and expenses incurred on a monthly basis for
internal management review. It also prepares an audited annual income statement that covers
the 12 month-period ended 31 December for submission to the Accounting and Corporate
Regulatory Authority.
____________________________________________
8. A business excludes such relevant information as the prime location of its retail outlets, quality
of service, morale of employees and health of owner from the accounting records as these
could not be quantified in terms of money.
____________________________________________
Please refer to Appendix 1 for full answers. (Appendix 1 will be released through LMS on last day of
week to assist in preparation of tutorial)
• Relevance
• Reliability
• Materiality
• Comparability
• Understandability
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Business Accounting
• _____________________________
• Investing decisions
• _____________________________
• Planning, co-ordinating and controlling
• _____________________________
• Credit, lending decisions
• _____________________________
• Tax, economic decisions
• _____________________________
• Concerned with performance and financial stability of organisation
• _____________________________
• Concerned with continued existence of firm (honouring of warranties)
• _____________________________
- A manufacturing firm converts raw materials into products to be sold to trading firms.
• _____________________________
- A wholesaler buys in very large quantities from the manufacturer and distributes in
smaller quantities to the retailer.
- E.g.: Sole distributor of printers, electronic products
- A retailer buys goods from the wholesaler and sells goods to the final consumers.
- E.g.: Departmental store, provision shop, minimart
• _____________________________
- A service business provides services to the public for which a fee is charged.
- E.g.: Solicitor, accounting firm, transport company, airline
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Business Accounting
• Sole proprietorships
• Partnerships
• Corporation or companies
• Statutory bodies
• Co-operatives
~ End of Lecture 1 ~
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IMPORTANT NOTE
Do your homework before your lesson – attempt all questions
Please bring along Warren to tutorial class this week
Warren: Textbook by Warren, Reeve, Duchac, Fung, Cheong, Fadhlina, Ooi – ‘Accounting: An
Asian edition’, third edition.
1. Accounting, unlike bookkeeping, involves more than counting and recording of financial
data. Do you agree? Explain.
3.
(a) The accounting entity assumption means:
i the business is the same body as the owner
ii the books are kept from the owner’s point of view
iii the business is a separate body from the owner
iv the law regards the business as responsible for its own debts
(b) The business pays the owner’s personal insurance policy. The amount of $500 is not
regarded as a business item. Which of the following principles is being applied?
i monetary assumption
ii accounting entity assumption
iii materiality
iv reliability
(c) The business anticipates that it will make a large gain in two months’ time. This is not
reported in the financial statements at this time. Which of the following principles is being
applied?
i continuity assumption
ii materiality
iii principle of conservatism
iv understandability
(d) A very large business has a small amount of stationery on hand at the end of the financial
year. It does not make an effort to count this up and value it. Which of the following
principles is being applied?
i historical cost assumption
ii accounting entity assumption
iii reliability characteristic
iv materiality characteristic
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(e) A profit or loss figure is calculated every year for reporting to the interested parties of the
organisation. Which of the following principles is being applied?
i comparability characteristic
ii accounting period assumption
iii monetary assumption
iv relevance characteristic
(b) Complete the following table by filling in the beginning or the end of the given
accounting period.
1. The company’s machinery purchased several years ago for $10,000 is now worth $18,000.
The directors decided to reflect the Machinery account at the original value of $10,000.
2. A general practitioner mixes her personal accounting records with those of the medical
practice.
4. A business enjoys good reputation and a regular clientele. Besides, it has a highly efficient
and dynamic manager. Nevertheless, all these ‘assets’ are excluded from the financial
statements.
5. A printing shop changes accounting methods every year in order to report the maximum
amount of net profit possible under accounting standards.
6. Competition has taken away much of the business of a small airline. The airline is
unwilling to report its plans to sell half its fleet of aircraft.
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7. Warren, Exercise 1-2, p. 28. [Exclude Section A - 1 & 12 and Section B - g & i]
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Classwork
Warren, Problem 1-1A, p. 33 [do only (d), (f), (g) and (h)]
~ End of Tutorial 1 ~
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Learning Objectives
At the end of the lecture, you should be able to:
• define the terms: assets, liabilities, owner’s equity, revenue and expense.
• explain how the accounting equation is derived.
• prepare a simple balance sheet.
• determine the effects of transactions on the accounting equation / balance sheet.
• determine the effect of revenue and expense on owner’s equity.
Basic Text Warren, Reeve, Duchac, Fung, Cheong, Fadhlina, Ooi – ‘Accounting: An Asian
edition’, third edition, Singapore: Cengage Learning, Chapter 1 p. 12 - 19
For a business to operate, it needs resources – known as assets in accounting. Such resources have to
be supplied by someone – the owner himself (owner’s equity) and / or some external parties
(liabilities).
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KW 2.8, p. 22
If M Rode had the following assets and liabilities, what is the investment in the business?
$
Cash in hand 1,000
Loan from bank 4,000
Accounts payable 500
Accounts receivable 8,000
Inventories 2,000
Furniture 3,500
Solution:
Assets $ Liabilities $
Cash in hand 1,000 Loan from bank 4,000
Accounts receivable 8,000 Accounts payable 500
Inventories 2,000
Furniture 3,500
14,500 4,500
Using A = L + OE
OE = A – L
= $(14,500 – 4,500)
= $10,000
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OE = A - L
M Rode
Balance Sheet as at … … (at a particular date)
Owner’s Equity OE
Capital, Rode 10,000
=
Represented by:
Assets A
Cash in hand 1,000
Accounts receivable 8,000
Inventories 2,000
Furniture 3,500 14,500 -
Less: Liabilities L
Loan from bank 4,000
Accounts payable 500 4,500
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Example: Warren, p. 13 - 14
20X1
(a) Nov 1 Chris Chee deposits $25,000 in a bank account in the name of Internet Solutions.
(b) Nov 2 Internet Solutions paid $20,000 cash for land.
(c) Nov 3 Internet Solutions bought supplies for $1,350 and agreeing to pay the supplier in the
near future.
A = L + OE
20X1 Cash at bank + Land + Supplies Accounts payable + Capital, Chris Chee
(a) Nov 1 + $25,000 + $25,000
(b) Nov 2 - $20,000 + $20,000
(c) Nov 3 + $1,350 + $1,350
Bal --------------- ------------ ---------- ----------- -------------
$5,000 $20,000 $1,350 $1,350 $25,000
--------------- ------------ ----------- ----------- ------------
So far, we’ve examined transactions involving only assets, liabilities and owner’s equity. Herein,
we’ll discover the other 2 basic elements in accounting.
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NOTE:
______________________
inflow of resources to the business resulting from Both revenue and
the sale of inventories / services performed expense affect profit,
general operations of business which belong to owner
increases profits and hence OE (OE).
e.g.: sales, service fees revenue, and interest revenue
Hence, R and E are
subsumed under OE in
________________________ the accounting
outflow of resources from the business resulting from equation.
the purchase of inventories / services acquired
general operations of business
reduces profits and hence OE
e.g.: rent expense, advertising, postage, salaries
where OE is made up of :
owner’s investment / interest at the beginning of the period
profits generated ( revenue - expense ) during the period
and is reduced by :
any withdrawals made by owner ( ‘drawings’ → negative OE ) during the period
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20X1
d Internet Solutions provided services to customers, earning fees of $7,500 and
receiving the amount in cash.
e Expenses paid during the month amounted to $3,650.
f Internet Solutions pays $950 to creditors.
h Owner, Chris Chee withdraws $2,000 in cash.
A =L +OE
d +$7,500 $7,500
(Fees Revenue)
(OE as revenue )
e -$3,650 -$3,650
(Expenses)
(OE as expense )
f -$950 -$950
h -$2,000 -$2,000
(OE as
drawings
)
-------- -------- -------- -------- -------- -------- --------
Bal $5,900 $20,000 $1,350 $400 $25,000 $3,850 -$2,000
-------- -------- -------- -------- -------- -------- --------
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Internet Solutions
Balance Sheet
as at 30 November 20X1
Owner’s Equity $ $
Capital, Chris Chee 25,000
Add: Net Profit 3,850
Less: Drawings 2,000
26,850
Represented by:
Assets
Cash at bank 5,0900
Land 20,000
Supplies 1,350 27,250
Less: Liabilities
Accounts Payable 400
~ End of Lecture 2 ~
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IMPORTANT NOTE
Please remember to bring along Warren to tutorial class this week.
4. For each of the following items which relate to the business of Woolly Cotton, retailer
of children’s wear:
i. Select a short name which you consider suitable and unambiguous to describe
each item.
ii. Classify the item as an asset (A), liability (L) or owner’s equity (OE).
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Balance sheet
(a) Compute the net profit for the year ended 30 April 20X1.
(b) Prepare the balance sheet as at 30 April 20X1 using the narrative form (lecture
notes p. 3). Please begin with OE section followed by A – L.
In addition, prepare the balance sheet as at 31 March 20X1 using the narrative form
(lecture notes p. 3). Please begin with OE section followed by A – L.
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(b)
(c)
(d) + $5,250
(Fees Revenue)
(e) - $1,000
(Rent Expense)
(f) - $880
(Vehicle Expense)
- $350
(Misc Expense)
(g) - $1,200
(Salaries Expense)
(h) - $575
(Supplies Expense)
(i) + $7,350
(Fees Revenue)
(j)
Bal $8,595
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CLASSWORK
1. Smart Alec has the following assets and capital as at 1 April 20X1:
Cash at bank $ 3,000 Debtors $ 900 Capital, Alec $3,900
Apr Purchased a motor vehicle from Blue Motors Ltd for $8,500, paying $1,000
2 and the balance payable by end of April.
9 Purchased office furniture for $450 cash.
12 Received amount owing to the business by a debtor $300.
13 Owner introduced additional cash, $1,000
15 Make a payment of $500 to Blue Motors Ltd for the motor vehicle purchased.
Required:
(a) Using the analysis chart in the next page (as in Lecture example on pg 4), show
the effect of each of the above transactions on the items in the balance sheet.
(The effects of transaction on April 2 is partially done for you)
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Classwork (cont.)
1 (a)
~ End of Tutorial 2 ~
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Suggested Solutions
1.
For a business to operate, it needs resources (known as assets); these resources have to be supplied
by someone, either the owner and / or other external parties. That amount of the owner’s
investment or interest in the business is known as owner’s equity while the amounts owed by a
business to external parties are known as liabilities.
Thus, the relationship between resources owned and the sources from which the resources have
been supplied can be expressed as
Resources = Sources of resources
This relationship is always in equality. The accounting equation must always balance.
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4. For each of the following items which relate to the business of Woolly Cotton, retailer of
children’s wear:
i. Select a short name which you consider suitable and unambiguous to describe each
item.
ii. Classify the item as an asset ( A ), liability ( L ) or owner’s equity ( OE ).
Part (a) has been done for you as an illustration.
(i) ( ii )
a. Cash in the business bank account. Cash at Bank A
b. Tables and racks used to display goods for sale. Furniture & A
Fittings
c. The amount which C Wool (the owner) paid in to Capital, Wool OE
commence the business.
d. Amounts owing by the firm to manufacturers who have Creditors or L
supplied goods. A/cs Payable
e. Amounts owing by customers who have purchased Debtors or A
goods. A/cs Receivable
f. A loan to the firm by B Nylon (a friend) Loan from L
Nylon
g. Goods which are held for resale. Stock or A
Inventory
h. Change kept in the cash registers. Cash in hand A
k. The amount that C Wool has withdrawn from the Drawings, Wool -OE
business in anticipation of profits.
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(a) Compute the net profit for the year ended 30 April 20X1.
(b) Prepare the balance sheet as at 30 April 20X1 using the narrative form (lecture notes p.
3). Please begin with OE section followed by A – L.
Owner’s Equity $ $
Capital 25,000
Add: Net Profit 27,775
Less: Drawings 15,000
37,775
Represented by:
Assets
Cash 26,525
Accounts Receivable 15,675
Supplies 1,675 43,875
Less: Liabilities
Accounts Payable 6,100
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In addition, prepare the balance sheet as at 31 March 20X1 using the narrative form (lecture notes p. 3). Please begin with OE section followed by A – L.
Owners’ equity is the right of owners to the assets of the business. These rights are increased by owners’ investments and revenues and decreased by
owners’ withdrawals and expenses.
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Assets
Cash 14,695
Accounts Receivable 7,350
Supplies 175 22,220
Less: Liabilities
Accounts Payable 125
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CLASSWORK SOLUTION
1 (a) on p. 12.
1 (b)
Smart Alec
Balance Sheet
as at 15 Apr 20X1
Owner’s Equity $ $
Capital, Alec 4,900
Represented by:
Assets
Cash at bank 2,350
Debtors 600
Motor vehicle 8,500
Office furniture 450 11,900
Less: Liabilities
Creditor, Blue Motors Ltd 7,000
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Learning Objectives
At the end of the lecture, you should be able to:
• explain the accounting process.
• explain the need for an account.
• apply the basic debit and credit rules in accounting.
• apply the double entry principles in analysing business transactions.
Basic Text Warren, Reeve, Duchac, Fung, Cheong, Fadhlina, Ooi – ‘Accounting: An Asian
edition’, third edition, Singapore: Cengage Learning, Chapter 2 p. 48 – 68
Many transactions occur in all businesses every day; it is impossible to draw up a new balance sheet
after every transaction. Neither do we keep track of the changes to the various A, L, OE, R and E
items by updating the accounting equation each time a transaction occurs (see Lecture 2, page 6).
How do we solve this problem then?
1. Ledger Accounts
An _________________ is a device to record (capture) all the changes (increases and decreases) to
a particular item.
E.g. all transactions affecting (increasing or decreasing) cash are recorded in the ‘Cash at bank’
account and those involving furniture will be recorded in the ‘Furniture’ account.
One column (either debit column or credit column) of the account will record all increases to the
item while the other column will record all the decreases. After every record of increase or
decrease to that account, the balance in the account is calculated.
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Liability
Owner’s equity
Revenue
Expenses
A simple way to remember the nature of each type of account and hence the account rules is via the
accounting equation.
Recall: A = OE + L
A = (OE {at beginning) + R – E) + L If OE is credit in
A = (Capital – Drawings + R – E) + L nature; then what is
the nature of the
‘Drawings’ account –
A + E + D = L + R + C which is considered
–ve OE?
Debit nature Credit nature Answer: Debit !
After Eating Dinner , Let’s Read Comics
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Answer: _____________
Capital, Chris Chee
Nov 1 25,00
0
Land
Nov 2 20,000
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Exercise: Analyse the transactions and ascertain the accounts to be debited and credited for
Alpha Repair Shop (refer to p. 5). Use the following accounts for this exercise:
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Assets
Debtor
Balance
Date Particulars DR($) CR($) DR($) CR($)
+ -
Jun12 200
22 200
Liabilities
Loan from bank Creditor, N Motors
Balance Balance
Date Particulars DR($) CR($) DR($) CR($) Date Particulars DR($) CR($) DR($) CR($)
- + - +
Jun 7 10,000 Jun 8 15,000
25 3,000
Owner’s Equity
Capital, Adam Drawings, Adam
Balance Balance
Date Particulars DR($) CR($) DR($) CR($) Date Particulars DR($) CR($) DR($) CR($)
- + + -
Jun 2 5,000 Jun 30 100
~ End of Lecture 3 ~
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A = (OE + R – E) + L
A = (C – D + R – E) + L
A + E + D = L + R + C
Asset Liability
Account Name Account Name
Legend
Balance Balance A – Asset
Date Particulars DR ($) CR ($) DR ($) CR ($) Date Particulars DR ($) CR ($) DR ($) CR ($) E – Expense
+ - - + D – Drawings
L – Liability
Expense Revenue R – Revenue
Account Name Account Name C – Capital
Balance Balance
Date Particulars DR ($) CR ($) Date Particulars DR ($) CR ($) DR ($) CR ($)
DR ($) CR ($)
+ - - +
Drawings Capital
Account Name Account Name
Balance Balance
Date Particulars DR ($) CR ($) DR ($) CR ($) Date Particulars DR ($) CR ($) DR ($) CR ($)
+ - - +
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Business Accounting
APPENDIX 2
ACCOUNTING PROCESS
BUSINESS TRANSACTIONS
captured in
SOURCE DOCUMENTS
recorded in
JOURNALS
Lecture 4
posted to
CASH
THE LEDGER
Lecture 5
checked by
XYZ Company
Trial Balance
As at 31 May 2016
TRIAL BALANCE
Lecture 5
prepared into
Lectures 7 - 11
FINANCIAL REPORTS
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Required:
(c) Draw up the balance sheet (in narrative format) as at 15 January 20X1.
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Required:
For each transaction, identify the ledger accounts affected and complete the following table.
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
(k)
(l)
(m)
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Required:
(c) In which of the two financial statements (Balance Sheet or Profit and Loss
Statement) can you find the following 5 types of accounts :
(Hint: Assets, liabilities and OE are found in Balance Sheet whereas revenue and
expenses are found in Profit and Loss Statement)
~ End of Tutorial 3 ~
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Learning Objectives
At the end of the lecture, you should be able to:
• explain the purpose of a journal.
• prepare general journal entries to record business transactions.
Basic Text Warren, Reeve, Duchac, Fung, Cheong, Fadhlina, Ooi – ‘Accounting: An Asian
edition’, third edition, Singapore: Cengage Learning, Chapter 2 p. 48 – 68
Reference Kirkwood, Ryan, Falt, Stanley – ‘Accounting: An Introductory Framework’ 2nd
Edition, Pearson Longman, Chapter 2 p. 29 – 47
In the last lecture, we learnt to analyse the business transactions and ascertain the accounts that are
affected. The next step would be to record the business transactions in a journal.
Format of Journal
Date Particulars Dr Cr
A/c to be debited $?
A/c to be credited $?
Description of
transaction
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Date Transaction
20X1
Jun 2 Adam, the owner, invested cash $5,000 to start his business.
4 Purchased tools and equipment for cash $2,000.
7 Obtained a $10,000 loan from bank.
8 Bought a van on credit from Neesun Motors for $15,000.
12 Performed repair service and earned fees revenue of $1,000 of which
$800 is received.
15 Paid rental expense $600.
22 Received the balance of $200 from customer owing on 12th.
25 Paid Neesun Motors $3,000 for amount outstanding.
30 Adam took $100 from the bank to pay for daughter’s school fees.
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General Journal
Date Particulars DR CR
20X1 $ $
Jun 2 5,000
Cash at bank 5,000
Capital, Adam
Owner invested cash to start business.
4 Tools and equip 2,000
ment 2,000
Cash at Bank
Purchased tools and equipment.
7 Cash at bank 10,000
Loan fro 10,000
m bank
Obtained a loan from bank.
8 Motor vehicle 15,000
Creditor, N 15,000
Motors
Bought van on credit.
12 Cash at bank 800
Debtor 200
Repair fees revenue 1,000
Performed repair service, receiving cash and balance is on
credit.
means for every transaction, the total ________ amounts = total __________ amounts.
does NOT mean only two accounts are affected in every transaction.
every transaction will affect ___________ two accounts in the accounting equation.
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General Journal
Date Particulars DR CR
20X1 $ $
Jan 03 Rent expense 300
Cash at bank 300
Paid rent fo
r premises.
~ End of Lecture 4 ~
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Learning Objectives:
• prepare ledger accounts by posting transactions from the general journal to the general
ledger.
• derive the balance of the accounts in the general ledger.
• explain the functions of a trial balance.
• prepare a trial balance by extracting the account balances from the general ledger.
• describe the different types of errors revealed and not revealed by the trial balance.
• prepare a corrected trial balance given the errors in recording.
• describe the impact of computerisation on the trial balance and financial statements.
Basic Text Warren, Reeve, Duchac, Fung, Cheong, Fadhlina, Ooi – ‘Accounting: An Asian
edition’, third edition, Singapore: Cengage Learning, Chapter 2 p. 46 – 48, 56 - 71.
Reference Kirkwood, Ryan, Falt, Stanley – ‘Accounting: An Introductory Framework’ 2nd
Edition, Pearson Longman, Chapter 2 p.47 - 52
In the last lecture, we learnt to record business transaction in a journal. In this lecture, we will learn
to transfer the journal entries to the accounts. This process is called posting.
Account Name
Balance
Date Particulars Debit ($) Credit ($) Debit ($) Credit ($)
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Cash
A ledger is a group of
accounts for a business.
(Warren p. 46)
Cash
Creditor Creditor
Capital
Capital
(Ledger)
Procedure for posting transactions from the journal to the ledger is as follows: - KW p. 52.
(1) Identify the account to be opened and fill in the account name.
(2) Identify the side of the account affected, i.e. DR or CR.
(3) Transfer/Fill in the date, the particulars (which is the corresponding account
affected) and the amount.
(4) Calculate the balance (either DR bal. or CR bal.) and fill in the amount in the
balance column.
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Business Accounting Temasek Polytechnic
Lecture Exercise: Alpha Repair Shop Ledger (Refer to journal entries on p. 3 Lecture 4)
Date Particulars $ $
20X1
Jun 02 Cash at bank 5,000
Capital, Adam 5,000
Owner invested cash to start business.
Cash at bank
Balance
Date Particulars DR ($) CR ($) DR ($) CR ($)
Jun 2 Capital, Adam 5,000 5,000
Capital, Adam
Balance
Date Particulars DR ($) CR ($) DR ($) CR ($)
20X1
Jun 2 Cash at bank 5,000 5,000
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Business Accounting Temasek Polytechnic
The entire exercise is illustrated as follows:
Cash at bank
Balance
Date Particulars DR ($) CR ($) DR ($) CR ($)
20X1
Jun 2 Capital, Adam 5,000 5,000
4 Tools and equipment 2,000 3,000
7 Loan from bank 10,000 13,000
12 Repair fees revenue 800 13,800
15 Rental expense 600 13,200
22 Debtor 200 13,400
25 Creditor, N Motors 3,000 10,400
30 Drawings, Adam 100 10,300
Capital, Adam
Balance
Date Particulars DR ($) CR ($) DR ($) CR ($)
20X1
Jun 2 Cash at bank 5,000 5,000
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Business Accounting Temasek Polytechnic
Motor Vehicle
Balance
Date Particulars DR ($) CR ($) DR ($) CR ($)
20X1
Jun 8 Creditor, N Motors 15,000 15,000
Debtor
Balance
Date Particulars DR ($) CR ($) DR ($) CR ($)
20X1
Jun 12 Repair fees revenue 200 200
22 Cash at bank 200 0
Creditor, N Motors
Balance
Date Particulars DR ($) CR ($) DR ($) CR ($)
20X1
Jun 8 Motor vehicle 15,000 15,000
25 Cash at bank 3,000 12,000
Rental Expense
Balance
Date Particulars DR ($) CR ($) DR ($) CR ($)
20X1
Jun 15 Cash at bank 600 600
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Business Accounting Temasek Polytechnic
Drawings, Adam
Balance
Date Particulars DR ($) CR ($) DR ($) CR ($)
20X1
Jun 30 Cash at bank 100 100
Balance =
=_______________
Q1:
What is a trial balance?
A1: The trial balance is a list of
all ledger account balances
Q2: prepared at regular intervals
Why do we need a Trial usually at the end of each
Balance? month.
(What is its purpose)?
A2: It helps to check the
arithmetic accuracy of the
ledger and to ensure that double
entry has taken place.
(by showing whether the total
debits equal the total credits).
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Business Accounting Temasek Polytechnic
Trial Balance
XYZ Company
Ledger Trial Balance
Balances of individual as at June 30, 20X1
ledger account
Dr = Cr
The above exhibit presents a simple process. The procedure of preparing a trial balance is listed as
follows (KW p. 54):
1. Record the heading of the trial balance (company name, trial balance and the date).
2. Locate the balance of each ledger account. (ledger accounts have been balanced off).
3. Transfer the account names; the balances from each ledger account onto the
corresponding debit or credit column of the trial balance.
4. Total the debit and credit columns. The column totals must be equal.
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Business Accounting Temasek Polytechnic
Why?
A3: trial balance is always balance because for every
transaction, there is a double entry - total debits equal
total credits.
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Business Accounting Temasek Polytechnic
Errors NOT Disclosed by the Trial Balance Errors Disclosed by the Trial Balance
(Trial Balance is equal even though there are errors) (Trial Balance is unequal)
- Can happen in computerised accounting system. (1) Debit or credit posting omitted
If such errors occur in the journals, then the computer (2) Debit posted as credit or vice-versa
system will post erroneous journal to ledger resulting i.e. posted 2 debits or 2 credits
in Garbage In Garbage Out (3) Transposition error (sequence of a number is
wrong) for 1 side of entry
(4) Error in addition and balancing of accounts Debit
or credit posting omitted
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Business Accounting Temasek Polytechnic
Errors Not Disclosed by the Trial Balance
(Trial balance is equal even though there are errors)
A number of errors may be made that will not be revealed by a trial balance that
balances. This is especially so in a computerised accounting system. Often these
errors go undetected unless circumstances cause a check to be made. These errors are
entered at the journal stage. Errors at the journal stage are posted automatically by the
computer system to the ledger.
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Business Accounting Temasek Polytechnic
Utilities expense paid $120 was recorded by debiting Office Expense and
crediting Cash at Bank.
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Business Accounting Temasek Polytechnic
(2) Transactions are not recorded in the system (i.e. entirely omitted)
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(3) Transactions are recorded twice in the system
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Business Accounting Temasek Polytechnic
7. Prepare Corrected Trial Balance
Lecture Exercise 1
Required:
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Business Accounting Temasek Polytechnic
Solution:
(a) Journal Entries
Date Particulars $ $
1 Jun 30 Cash at Bank 200
Repair Fees Revenue 200
To reverse wrong entry for cash revenue
transaction.
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Business Accounting Temasek Polytechnic
Trial balance is a valuable tool for checking the accuracy of the double entry system
and the accuracy of the journalise stage of the accounting process. It gives a
preliminary result of the business recording status before the final reports are
prepared.
~ End of Lecture 5 ~
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Business Accounting Temasek Polytechnic
Online Learning
(a) Post the transactions from the journal to the ledger, and complete the balancing of
accounts at the end of the month.
Important Note: This firm has been in business before 1 January 20X1. Some assets
and liabilities were there at the start of current financial period.
Dental Equipment
Balance
Date Particulars DR ($) CR ($) DR ($) CR ($)
20X1
Jan 1 Bal b/d 10,000
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Business Accounting Temasek Polytechnic
Debtors
Balance
Date Particulars DR ($) CR ($) DR ($) CR ($)
20X1
Jan 1 Bal b/d 200
10 Cash at bank 200
24 Dental fees revenue 300 300
Creditors
Balance
Date Particulars DR ($) CR ($) DR ($) CR ($)
20X1
Jan 1 Bal b/d 3,500
20 Cash at bank 2,500 1,000
Capital, Dr East
Balance
Date Particulars DR ($) CR ($) DR ($) CR ($)
20X1
Jan 1 Bal b/d 13,500
15 Cash at bank 800 14,300
Office equipment 5,000 19,300
Rent Expense
Balance
Date Particulars DR ($) CR ($) DR ($) CR ($)
20X1
Jan 3 Cash at bank 300 300
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Business Accounting Temasek Polytechnic
Office Equipment
Balance
Date Particulars DR ($) CR ($) DR ($) CR ($)
20X1
Jan 15 Capital, Dr East 5,000 5,000
Salaries Expense
Balance
Date Particulars DR ($) CR ($) DR ($) CR ($)
20X1
Jan 28 Cash at bank 1,000 1,000
Drawings, Dr East
Balance
Date Particulars DR ($) CR ($) DR ($) CR ($)
20X1
Jan 30 Cash at bank 600 600
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Business Accounting Temasek Polytechnic
(b)
Beta Dentist
Trial balance as at 31 January 20X1
DR ($) CR ($)
Cash at bank 9,100
Debtors 300
Dental Equipment 10,000
Office Equipment 5,000
Creditors 1,000
Capital, Dr. East 19,300
Drawings, Dr. East 600
Dental Fees Revenue 6,000
Salaries Expense 1,000
Rental Expense 300
Total 26,300 26,300
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Business Accounting Temasek Polytechnic
Self Study
Computers have a high degree of reliability and are suitable for repetitive processing.
Many businesses are now using an accounting software package to record their
business transactions. There are many off-the-shelf accounting packages for small and
medium size businesses such as MYOB (Mind Your Own Businesses), Sage 300
ERP, SAP, Oracle, QuickBooks. These programmes follow instructions accurately
and consistently. There are many built-in internal controls to ensure data that are
keyed into the system are accurately processed.
In a computerised accounting system, the same accounting processes apply except that
most of the steps are performed automatically by the system.
• Journal entries will not be accepted unless debit totals equal credit totals.
• Transactions listing of entries for audit trail is generated.
• Automatic postings are made to ledger accounts (not done manually) and
balances will be generated automatically.
• Trial balance and final statements are generated automatically.
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Business Accounting Temasek Polytechnic
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Business Accounting Temasek Polytechnic
The trial balance of Ron Ang’s business as at 30 April 20X1 does not balance:
Dr ($) Cr ($)
Cash at bank 7,100
Debtors 1,150
Creditors 1,900
Capital, Ron Ang 3,000
Service revenue 3,450
Rent expense 850
8,250 9,200
Required:
Prepare the corrected trial balance as at 30 April 20X1, complete with a heading.
Solution:
The corrected trial balance is prepared as follows:
Ang’s Co.
Trial Balance as at 30 April 20X1
DR ($) CR ($)
Cash at bank [7,100 + 400] 7,500
Debtors 1,150
Creditors [1,900 + (6,500-5,600)] 2,800
Capital, Ron Ang [3,000 + 400] 3,400
Service revenue 3,450
Rent expense 850
Telephone expense 150
9,650 9,650
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Business Accounting Temasek Polytechnic
(a) Required:
For each transaction, identify the ledger accounts affected and complete the Analysis Table
below. Use the chart of accounts given in the question but replace the accounts: “Prepaid
Insurance” and “Fees Earned” with “Insurance Expense” and “Fees Revenue”
respectively.
14 Purchased supplies
for cash, $1,050.
14 Paid annual
premiums on
property insurance,
$750.
15 Received cash for job
completed, $3,100.
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Business Accounting Temasek Polytechnic
26 Received an invoice
for truck expenses, to
be paid in Nov, $280.
27 Paid utilities
expense, $1,205.
27 Paid miscellaneous
expenses, $180.
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Business Accounting Temasek Polytechnic
(b) Required:
Prepare the general journal entries to record all the business transactions. Use the template
provided below:
10 1,600
1,600
Paid rent for the month
11 15,000
5,000
10,000
Bought a truck for $15,000, paid $5,000 cash and took a
bank loan for $10,000.
13 3,500
3,500
Purchased equipment on account
14 1,050
1,050
Purchases supplies using cash
14 750
750
Paid annual premiums on property
15 3,100
3,100
Received cash for job completed
21 3,500
3,500
Paid creditor for equipment purchased on 13 Oct
24 5,100
5,100
Invoiced customers for completed jobs
26 280
280
Received invoice for truck expense
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Business Accounting Temasek Polytechnic
27 180
180
Paid miscellaneous expense
29 2,420
2,420
Received cash from customers
30 2,500
2,500
Paid employees’ salaries
31 1,000
1,000
Withdrew cash for personal use
Required:
Following from your answers in the analysis table, prepare the general journal entries to
record all business transactions.
(b) 12,000
12,000
Received cash for sale of 6,000 teacups for $2 each
(c) 5,000
2,500
2,500
Purchased $5,000 of supplies, paying half upon delivery
and the other half on credit.
(e) 1,500
1,500
Received a bill for $1,500 from S’pore Power for August
to be paid next month.
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Business Accounting Temasek Polytechnic
(g) 5,000
5,000
Paid for advertising expense $5,000
(h) 6,000
6,000
Paid $6,000 for her home renovation
(i) 1,000
1,000
Paid $1,000 to supplier for amounts owed
(j) 600
600
Returned $600 worth of defective supplies and received
full credit for the cost.
(k) 20,000
20,000
Bought $20,000 of equipment needed to prepare the ice
cream
(m) 1,400
1,400
Cost of used supplies at the end of the month
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Business Accounting Temasek Polytechnic
3. Joseph and Associates, a firm of real estate brokers, had the following transactions during the
first two weeks of April 20X1.
Apr
1 Joseph, the owner, paid into a separate bank account for use in the business $10,000
2 Purchased office equipment on credit from Designers Ltd 5,000
Received commission from the sale of a business office unit. 12,000
4 Paid for half month’s rental of a furnished office 1,000
6 Paid for utilities expense 600
Arranged a sale of an apartment unit; commission earned was $8,000 but 8,000
this amount would not be received until 12th April
8 Joseph contributed his own motor car worth $30,000 to the business as 30,000
additional capital
9 Paid salaries to staff 800
10 Paid the first instalment to Designers Ltd 2,500
12 Received the commission with respect to the unit sold on 6th April 8,000
13 Paid for repairs and fuel of car 250
15 Collected two weeks rental revenue from a florist shop to whom Joseph and 300
Associates sub-rented part of its office space
30 Full settlement of balance owing to Designers Ltd and received a discount
of $100
Required:
Record the above transactions in the General Journal of Joseph and Associates. Please use template
in next page.
(No journal narrations required)
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Business Accounting Temasek Polytechnic
7
Business Accounting Temasek Polytechnic
CLASSWORK
James started a music school in Tampines Mall two years ago. The school provides a variety of
music lessons to children. The school’s financial year ends on 31 December.
As at 1 January 20X1, the music school has the following balances in its ledger:
$
Music Equipment 40,000 Dr
Cash at bank 6,000 Cr
Creditors 9,000 Cr
Capital, James ?
Jan 2 Collected $8,000 cash for January’s tuition fees. Another $4,000 of fees for January
were still owing by students.
4 Music school bought a new musical instrument costing $5,000. James paid $2,000
using his personal cheque and the balance was paid from the business’ bank account.
15 Paid January’s rental for music school $1,000.
30 Received a telephone bill of $300 to be paid in February 20X1.
31 Collect $4,000 cash from those students owing as at 2 January 20X1.
Required:
(b) Prepare general journal entries for the transactions in January 20X1.
(c) Explain the accounting principle applied in processing the transaction on 4 January 20X1.
~ End of Tutorial 4 ~
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Business Accounting Temasek Polytechnic
1. Refer to the journal entries in Tutorial 4 Qn 2, determine the balance in the Cash at Bank account
at the end of the month. (There is no need to prepare the Cash at Bank account.)
2. A trial balance gives a preliminary result of the business recording status before the final reports
are prepared. The types of errors in a manually prepare trial balance differ from those in a trial
balance generated by a computerised accounting system. How do these errors differ?
Thomson Brothers
Trial Balance as at 30 April 20X1
DR ($) CR ($)
Cash at bank 2,200
Debtors 8,200
Creditors 2,500
Capital, Thomson Brothers 5,000
Service revenue 12,000
Wages 900
Supplies 5,000
Telephone expense 800
Electricity expense 400
Rent expense 2,000
Total 19,500 19,500
Required:
(a) Prepare the journal entries for correction of errors.
(b) Prepare the corrected trial balance as at 30 April 20X1.
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Business Accounting Temasek Polytechnic
Required
(b) Prepare the corrected trial balance as at 31 December 20X1. (Show all workings)
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Business Accounting Temasek Polytechnic
Post the journal entries into the columnar format Cash at Bank account below:
Cash at bank
Balance
Date Particulars DR ($) CR ($) DR ($) CR ($)
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Business Accounting Temasek Polytechnic
Refer to journal entries prepared in Tutorial 4 Question 1 (b), post the journal entries into
the general ledger in columnar format using the templates below:
Cash at bank
Balance
Date Particulars DR ($) CR ($) DR ($) CR ($)
Rent Expense
Balance
Date Particulars DR ($) CR ($) DR ($) CR ($)
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Business Accounting Temasek Polytechnic
Truck
Balance
Date Particulars DR ($) CR ($) DR ($) CR ($)
Bank Loan
Balance
Date Particulars DR ($) CR ($) DR ($) CR ($)
Equipment
Balance
Date Particulars DR ($) CR ($) DR ($) CR ($)
Accounts Payable
Balance
Date Particulars DR ($) CR ($) DR ($) CR ($)
Supplies
Balance
Date Particulars DR ($) CR ($) DR ($) CR ($)
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Business Accounting Temasek Polytechnic
Insurance Expense
Balance
Date Particulars DR ($) CR ($) DR ($) CR ($)
Fees Revenue
Balance
Date Particulars DR ($) CR ($) DR ($) CR ($)
Accounts Receivable
Balance
Date Particulars DR ($) CR ($) DR ($) CR ($)
Truck Expense
Balance
Date Particulars DR ($) CR ($) DR ($) CR ($)
Utilities Expense
Balance
Date Particulars DR ($) CR ($) DR ($) CR ($)
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Business Accounting Temasek Polytechnic
Miscellaneous Expense
Balance
Date Particulars DR ($) CR ($) DR ($) CR ($)
Salaries Expense
Balance
Date Particulars DR ($) CR ($) DR ($) CR ($)
7. Using the ledger accounts prepared in Question 6 (Warren, Problem 2-3B, p. 92), prepare the
trial balance of Mandarin Designs as at 31 October.
Do not follow the instructions in Warren for this question. Replace the account
“Prepaid Insurance” to “Insurance Expense” and “Fees Earned” to “Fees Revenue”.
(a) Prepare the journal entries to record all the business transactions. Narrations are not
required.
(b) Post the journal entries into the general ledger in columnar format. Use the templates in
the following pages. (Do note the opening balance for the respective accounts as at
1 December. i.e. the closing balances at end of November)
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Business Accounting Temasek Polytechnic
CLASSWORK
The draft trial balance of Shin Enterprise is shown below:
1. Commission received $250. The journal entry was Dr Cash at Bank for $250 and Cr Capital
account instead of Commission revenue account.
2. The purchase of office equipment on credit for $4,000 had been completely omitted from the
books.
3. A payment of $89 to a creditor was debited to Cash at bank account and credited to Creditor
account for the amount of $98.
Required:
(a) Prepare the journal entries for correction of errors.
(b) Prepare the corrected trial balance as at 31 May 20X1 using the template in page 9.
~ End of Tutorial 5 ~
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Business Accounting Temasek Polytechnic
Shin Enterprise
Trial Balance as at 31 May 20X1
DR ($) CR ($)
Cash at bank
Debtors
Office equipment
Creditors
Commission revenue
Salary expenses
Advertising expenses
Rent expenses
Telephone expenses
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Business Accounting Temasek Polytechnic
Learning Objectives
At the end of the lecture, you should be able to:
Basic Text Warren, Reeve, Duchac, Fung, Cheong, Fadhlina, Ooi – ‘Accounting: An Asian
edition’, third edition, Singapore: Cengage Learning, Chapter 1 p.17 – 19
Guide to decision-making
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Business Accounting Temasek Polytechnic
Profit is obtained by
________________________________ for the period
with the _____________________________ in earning
that revenue.
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Business Accounting Temasek Polytechnic
3
Business Accounting Temasek Polytechnic
Less: Liabilities
Loan from bank 10,000
Creditor, Neesun Motors 12,000 22,000
Net Assets 6,150
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Business Accounting Temasek Polytechnic
• The purpose of preparing the Profit and Loss (P&L) Statement is to show how much
net profit (or loss) has been made by the business firm during a period. Refer to
Warren, p. 19.
• Includes the results from trading (i.e. gross profit or loss), other revenue and other
expense of the business operations.
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Business Accounting Temasek Polytechnic
• The revenues and expenses of trading firms are summarised and then reported in the
following:
Trading Statement
Profit and Loss Statement
$ $
Sales 9,500
Less:
Cost of goods sold (2,100) Trading
Gross Profit 7,400
Glossary
Sales • Revenue earned from performing the trade (e.g. selling the goods)
Cost of Goods Sold (COGS) • Cost of inventories purchased include:
- the purchase price of goods bought from supplier
- any other costs incurred in bringing the goods into the location /
condition ready for sale. (e.g. freight inwards, customs duty, etc)
• When the inventories are sold, this cost of inventories becomes cost of
inventories sold i.e. Cost of Goods Sold (COGS)
Gross profit • Profit derived from the sale of goods (i.e. trading activities) alone,
before considering other revenue and expenses
• For definition, refer Warren, p. 192.
Gross profit = Sales – Cost of goods sold
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Business Accounting Temasek Polytechnic
The difference in the format of the Profit and Loss Statement … … (example)
Sales 9,500
2,100 Trading
Less: Cost of goods sold
• Only trading firms have the additional trading statement. The P&L statement for a service
firm is without the trading section.
• In practice, the term Profit and Loss Statement for a trading firm is understood to include the
trading statement.
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Business Accounting Temasek Polytechnic
Poly Book Store operates in one of the polytechnics in Singapore. It sells textbooks, books,
stationery and snacks. It started with a capital contribution of $160,000. It generated $70,000 sales
but incurred a loss of $60,000 in its first year of operations.
Poly Bookstore
Trial Balance (extract) as at 31 December 20X1
Debit Credit
$ $
T Sales 140,000
T Sales returns 1,000
T Cost of goods sold 85,000
P/L Commission revenue 3,000
P/L Advertising 1,500
P/L Insurance 12,000
P/L Rent 24,000
P/L Utilities 3,600
P/L Sales staff salaries 26,400
P/L Office salaries 16,000
P/L Sundry expenses 6,600
P/L Bank charges 100
P/L Interest expense 800
Cash at bank 25,000
Accounts receivable 2,000
Inventories 20,000
Furniture & fittings 36,000
Accounts payable 8,000
Bank loan 10,000
Capital 100,000
Drawings 1,000
261,000 261,000
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Business Accounting Temasek Polytechnic
Poly Bookstore
Profit and Loss Statement for the year ended 31 December 20X1 (unclassified)
$ $ $
Sales 140,000
Less: Sales returns (1,000)
Net sales 139,000
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Business Accounting Temasek Polytechnic
Poly Bookstore
Balance Sheet as at 31 December 20X1 (unclassified)
$ $
Owner’s equity
Capital 100,000
Add: Net loss (34,000)
Less: Drawings (1,000)
65,000
Represented by:
Assets
Cash at bank 25,000
Accounts receivable 2,000
Inventories 20,000
Furniture & Fittings 36,000 83,000
Less: Liabilities
Account payable 8,000
Bank loan 10,000 18,000
~ End of Lecture 6 ~
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Business Accounting Temasek Polytechnic
Online Learning
Lecture Exercise 3: Beta Dentist (continuation from lecture 5 p. 20)
Beta Dentist
Trial balance as at 31 January 20X1
DR $ CR $
Cash at bank 9,100
Debtors 300
Dental Equipment 10,000
Office Equipment 5,000
Creditors 1,000
Capital, Dr. East 19,300
Drawings, Dr. East 600
Dental Fees Revenue 6,000
Salaries Expense 1,000
Rental Expense 300
Total 26,300 26,300
Less: Liabilities
Creditors 1,000
Net Assets 23,400
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Business Accounting Temasek Polytechnic
1. Explain the importance of the following concepts in the preparation of profit and loss
statements:
(a) the accounting period assumption
(b) the matching principle
2. For an airline company like Singapore Airlines, revenues are recognised when the passenger
(a) makes the reservation
(b) pays for the ticket
(c) takes the flight
Explain.
3. The following ledger balances are extracted from Jacob’s Plumbing Service on
31 March 20X1:
$ $
Motor vehicle 10,000 Rent expense 1,200
Tools and equipment 22,000 Salaries ( office ) 19,600
Furniture and fittings 8,000 Advertising 1,350
Cash at bank 4,500 Bank interest expense 500
Debtors 2,700 Telephone and postage 200
Creditors 1,800 Insurance on motor vehicle 800
Capital, Jacob 21,100 Shares in XYZ Ltd 8,000
Drawings, Jacob 3,200 Loan from bank 15,000
Fees revenue 45,000 ( repayable in Jan 20X4 )
Motor vehicle expenses 850
Required:
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Business Accounting Temasek Polytechnic
Use the corrected trial balance as at 31 December 20X1 (given below) to prepare the Profit
and Loss Statement for the year ended 31 December 20X1.
Ronaldo Trading
Corrected Trial Balance as at 31 December 20X1
Dr ($) Cr ($)
Cash at bank 16,350
Debtors 3,700
Furniture and equipment 10,800
Creditors 3,850
Capital, Ronaldo 21,200
Drawings, Ronaldo 2,000
Sales 22,500
Salary expenses 12,100
Advertising expenses 600
Utilities and telephone expenses 2,000
47,550 47,550
5. The following ledger balances are extracted from Basic Retailer on 31 December 20X1:
$ $
Sales 30,000 Insurance expense 800
Sales returns 600 Interest expense 300
Discount revenue 400 Sales salaries 5,000
Interest revenue 100 Office salaries 6,500
Advertising expense 500 Rental expense 2,000
Discount expense 100 Utilities expense 200
Cost of goods sold 10,800
Prepare the Trading, Profit and Loss Statement for the year ended 31 December for Basic
Retailer.
2
Business Accounting Temasek Polytechnic
Question 3 Templates
Less: Expenses
24,500
Less: Liabilities
3
Business Accounting Temasek Polytechnic
CLASSWORK
Refer to Classwork for Tutorial 5 – Shin Enterprise
Use the trial balance as at 31 May 20X1 (given below) to prepare the following:
(a) Present the profit and loss statement for the month ended 31 May 20X1.
(b) Present the balance sheet as at 31 May 20X1.
Note: Use templates given for profit and loss statement and balance sheet on page 5.
Shin Enterprise
Trial Balance as at 31 May 20X1
Dr ($) Cr ($)
Cash at bank 5,160
Debtors 12,720
Office equipment 11,230
Creditors 12,150
Capital, Billy Wee 15,350
Drawings, Billy Wee 380
Commission revenue 7,500
Salary expenses 1,950
Advertising expenses 1,700
Rent expenses 1,290
Telephone expenses 570
35,000 35,000
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Business Accounting Temasek Polytechnic
Classwork Templates
Less: Expenses
Represented by:
Assets
29,110
Less: Liabilities
~ End of Tutorial 6 ~