CHAPTER 4 (a)


Journal for G. Horan Ltd Journal Entries


(i) Bank Furniture NP P & L


Being a recording of sale of cabinet and profit on disposal [1] (ii) Debtor Bank


[2] 700 [2]


NP Discount Debtors


NP Bad Debt [3] [2] 700


Being a recording of a dishonoured cheque and a bad debt [1] (iii) Creditors Furniture Suspense


[3]


24,300 2,700


Being a correction of an incorrect recording of the purchase of furniture on credit [1]


(iv) Capital NP Rent P & L Rent Prepaid


(v) Creditors NP Purchases Suspense


[3]


1,200 [3]


300


Being private funds used to pay twelve months rent for the current year and three months rent for the following year [1]


[3] [3] [3]


33,000 56,000


Being correction of incorrect recording of the purchases on credit [1]


Always double check the debit and credit sides add up. Otherwise an error has been made. Don’t forget wording.


NP shows figures that affect net profit.


89,000 [2] 1,500 [3] 27,000 (c) Statement of Correct Net Profit Net Profit add P & L Discount


less Bad Debt Rent


Purchases Correct Net Loss [2] [2] [2]


500 100


[2] 700 1,200


[2] 33,000 (34,900) [2] (14,300)


The credit side in the journal represents an increase in Net Profit Cr + The debit side in the journal represents a reduction in Net Profit Dr – .


4 [2] 20,000 600 20,600 [2] [2]


600 100 700


(b)


Suspense Account [2]


Dr [3]


Cr 2,000 [3]


1,500 [3]


500


Pick out the suspense figure from the journal. Enter into a T Account using key words from the text. Balance the account – this is called the difference. This difference will be used later in the Balance Sheet.


Furniture Purchases


2,700


[2] 56,000 Difference [2] 58,700


58,700 58,700


45


TIP


TIP


Note


Note


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