Chapter 4 Double Entry (Set 3)

Sold goods on credit to A1 Trading for $500. The goods cost $200. Select two sets of double entry.

• Dr Trade receivable - A1 Trading $500

  Cr Sales revenue $500

• Dr Cost of sales $200

  Cr Inventory $200

• Dr Trade payable - A1 Trading $500

  Cr Sales revenue $500

• Dr Inventory $200

  Cr Cost of sales $200

Answer explanation

This is a sales transaction as there is a selling price and a cost price.

TR SR --> Use selling price

Cos I --> Use cost price

Returned goods purchased on credit to Best Trading. The goods cost $800.

• Dr Cash at bank $800

  Cr Inventory $800

• Dr Trade payable - Best Trading $800

  Cr inventory $800

• Dr Sales returns $800

  Cr Inventory $800

• Dr Inventory $800

  Cr Trade payable - Best Trading $800

Answer explanation

Best Trading is a credit supplier. Hence use Trade payable - Best Trading.

Credit customer, A1 Trading returned goods previously sold for $200. The goods cost $170. Select at least two sets of double entry.

• Dr Sales returns $200

  Cr Cash at bank $200

• Dr Sales returns $200

  Cr Trade receivable - A1 Trading $200

• Dr Trade payable - A1 Trading $200

  Cr Inventory $200

• Dr Inventory $170

  Cr Cost of sales $170

Withdrew cash from business bank account, $300, for use in the office.

• Dr Office use $300

  Cr Cash at bank $300

• Dr Office equipment $300

  Cr Cash at bank $300

• Dr Cash at bank $300

  Cr Cash in hand $300

• Dr Cash in hand $300

  Cr Cash at bank $300

Paid credit supplier, Oz Trading, $900 cheque.

• Dr Trade payable - Oz Trading $900

  Cr Cash at bank $900

• Dr Trade receivable - Oz Trading $900

  Cr Cash at bank $900

• Dr Cash at bank $900

  Cr Trade payable - Oz Trading $900

• Dr Trade payable - Oz Trading $900

  Cr Cash in hand $900

Owner withdrew some products from the shop costing $500 for personal use.

• Dr Drawings $500

  Cr Products $500

• Dr Drawings $500

  Cr Inventory $500

• Dr Drawings $500

  Cr Cash in hand $500

• Dr Inventory $500

  Cr Drawings $500

Received cash $2 000 from tenant as rental.

• Dr Cash at bank $2000

  Cr Rental income $2000

• Dr Rental income $2000

  Cr Cash in hand $2000

• Dr Cash in hand $2000

  Cr Rental income $2000

• Dr Cash in hand $2000

  Cr Rental expense $2000

Took a loan from Great Bank, $10 000

• Dr Cash at bank $10000

  Cr Trade payable - Great Bank $10000

• Dr Cash at bank $10000

  Cr Loan from Great Bank $10000

• Dr Loan from Great Bank $10000

  Cr Cash at bank $10000

Owner contributed a personal laptop worth $2 300 for office use.

• Dr Office equipment $2 300

  Cr Capital $2 300

• Dr Office equipment $2 300

  Cr Drawings $2 300

• Dr Drawings $2 300

  Cr Office equipment $2 300

• Dr Inventory $2 300

  Cr Capital $2 300

Answer explanation

For office use, cannot use Inventory. Inventory is only used for goods.

Paid interest on loan from Great Bank by cheque, $150.

• Dr Interest expense $150

  Cr Cash at bank $150

• Dr Loan from Great Bank $150

  Cr Cash at bank $150

• Dr Cash at bank $150

  Cr Interest expense $150

• Dr Cash at bank $150

  Cr Loan from Great Bank $150