Balancing Off the Ledger Accounts – Illustration 2
Enter the transactions in the books for the month of May, balance off all the accounts, and then extract a trial balance as of 31/12/2000.
Starts business with
Bought goods for cash
N2,800 of the cash into the bank account
Bought goods on credit from: Lekan
N360, Bolade N490, Ade N110, Sola N340.
Bought Stationery on Credit from Seyinde
Sold goods on credit to Wale
Paid rent by cheque
Paid Salaries in cash
Bought fixtures on credit from Mutiu
Returned goods to Bolade
N90, Ade N50, Sola N40
Bought Motor Van by Cheque
Received loan from Gunju by cheque
N500 cash from Peju
We paid the following by cheque: Bolade
N400, Ade N60
Goods returned to us: Wale
N30, Banji N60
Received cheques from: Wale
N60, Banji N400
Paid Motor expenses in cash
Steps to be followed:
(i) Preparation of the two Column Cash book.
(ii) Posting of items from cash book to the ledgers
(iii) Preparation of day books/Journal
(iv) Extraction of Trial Balance.
Note: Any transaction that has to do with credit transaction must not be posted into the Cashbook instead open a daybook or Journal for such transaction. Also, apply the principle of Double Entry which states for every (Dr) entry there must be a corresponding (Cr) entry and Vice-versa.
The corresponding (Dr) and (Cr) entry in the Cash Book should be posted to the Ledger account.
Step 1: Preparation of Cash Book
Two Column Cash Book
Step 2: Posting From Cash Book to Ledgers
Step 3: Preparation of Day Book
Step 4: Extracting the Trial Balance