Lesson Progress
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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.

May 1:

Starts business with N3,500

May 2:

Bought goods for cash N150

May 3:

Put N2,800 of the cash into the bank account

May 4:

Bought goods on credit from: Lekan N360, Bolade N490, Ade N110, Sola N340.

May 5:

Bought Stationery on Credit from Seyinde N170

May 6:

Sold goods on credit to Wale N90

May 8:

Cash sales N900

May 9:

Paid rent by cheque N55

May 10:

Paid Salaries in cash N120

May 11:

Bought fixtures on credit from Mutiu N480

May 12:

Returned goods to Bolade N90, Ade N50, Sola N40

May 15:

Bought Motor Van by Cheque N700

May 16:

Received loan from Gunju by cheque N600

May 18:

Received N500 cash from Peju

May 20:

We paid the following by cheque: Bolade N400, Ade N60

May 24:

Cash Sales N90

May 25:

Banked cash N200

May 26:

Goods returned to us: Wale N30, Banji N60

May 29:

Received cheques from: Wale N60, Banji N400

May 30:

Paid Motor expenses in cash N10

Solution

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

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Step 2: Posting From Cash Book to Ledgers

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Step 3: Preparation of Day Book

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Step 4: Extracting the Trial Balance

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