Sec 3E HBL T3 Week 4

Cash of $2000 withdrawn from the business' bank for office use.

• +Equipment

  -Cash at bank

• +Equipment

  -Cash in hand

• +Cash at bank

  -Cash in hand

• +Cash in hand

  -Cash at bank

Answer explanation

Money for office use is referring to Cash in hand.

Received an invoice of $5000 for goods from Ace Trading.

• This is a credit transaction involves in buying of goods.

• This is a cash transaction involves in buying of goods

• This is a credit transaction involves in the selling of goods

• This is a cash transaction involves in the selling of goods

Answer explanation

Invoice is always from the seller. So when a business received the invoice, it must be from the supplier involving a buying

Invoice of $5000 was issued to Tan for goods costing $3800. Which of the followings is/are correct. You may choose more than 1 answer.

• +Sales revenue 5000

  +Cash at bank 5000

• +Inventory 3800

  -Cost of sales 3800

• +Cost of sales 3800

  -Inventory 3800

• +Trade receivable 5000

  +Sales revenue 5000

Answer explanation

4 entries to be recorded for selling of goods.

Selling price of goods sold on credit (invoice issued) involves

Sales revenue & Trade receivable

Cost price of the goods sold involves Cost of sales and Inventory

Credit note, $900, received for goods returned.

• +Sales returns 900

  -Trade receivables 900

• -Trade receivables 900

  -Sales revenue 900

• + Trade payable

  900

  +Inventory 900

• -Trade payable 900

  -Inventory 900

Answer explanation

Credit note is used for returning of goods. It is received from a supplier, thus showing that business has returned goods to a supplier

Owner used his personal cheque to pay for business insurance of $1800.

• +Insurance 1800

  - Cash at bank 1800

• +Drawings 1800

  +Insurance 1800

• +Drawings 1800

  -Cash at bank 1800

• +Insurance 1800

  +Capital 1800

Answer explanation

Whenever the owner brings in his personal items into the business, it will be additional capital (+)

Rent income of $5600 received was wrongly recorded as $6500 in the business' books.

• +Rent income 900

  +Cash at bank 900

• -Rent income 900

  +Cash at bank 900

• -Rent income 900

  -Cash at bank 900

• +Rent income 900

  -Cash at bank 900

Answer explanation

Correct value for rent received was $5600 but was recorded as $6500. Meaning recorded $900 too much, so to correct, must -rent $900 and - cash at bank $900

Interest expense of $400 paid by cheque was recorded as Dr interest expense $40 and Cr Cash at bank $40. To corrrect......

• -Interest expense 360

  -Cash at bank 360

• +Interest expense 360

  -Cash at bank 360

• +Interest expense

  360

  +cash at bank 360

• -Interest expense 360

  +Cash at bank 360

Answer explanation

Since the amount paid and recorded was too little, to correct, expense must increase, so +rent. Cash at bank was deducted too little, so must minus so more.

Cheque of $10000 was received from a credit customer in full settlement of a debt of $10500.

• +Discount allowed 500

  +Cash at bank 10500

• +Discount allowed 500

  +Cash at bank 10000

  -Trade receivables 10500

• +Discount received 500

  +Cash at bank 10000

  -Trade receivables 10500

• +Discount received 500

  +Cash at bank 10500

  +

Answer explanation

The word 'full settlement' means final payment with a cash discount. In this question, money was received early, so ther will b discount allowed

Goods returned by business to credit supplier will lead to .......

• -Inventory

  -Trade payable

• +Inventory

  +Trade payable

• -Inventory

  +Trade payable

• -Trade payable

  +Inventory

Answer explanation

When goods returned to supplier, inventory goes down so minus. At the same time, when goods are returned, business owe the supplier lesser, so minus Trade payable.

Defective goods returned by a credit customers will lead to .........

(You may choose more than one answer)

• -Trade receivables

  -Sales revenue

• -Trade receivables

  +Sales returns

• -Inventory

  +Cost of sales

• +Inventory

  -Cost of sales