SCHEME OF WORK
WEEK TOPIC
1. Revision of last term’s work
2. Balance sheet: (a) Assets and Liabilities:
• Distinction
• Identification of types
• Classification
3. Balance sheet: (b) The balance sheet:
• Layout
• Preparation
4. Adjustment in profit and loss account ( cont’d): (a) Posting entries and final account
5. Adjustment in profit and loss account ( cont’d): (b) Provisions for discounts allowable
(c) Provisions for depreciation- Identification- journalizing- entries into final account
THEME 5: CONTROL ACCOUNT
6. Sales Ledger Control Account: (a) Definition and uses of control account (b) Terminologies: (i) Bad debts (ii) Discount allowed (iii) Returns inward (iv) Cash refund (v) Dishonouredcheque (vi) Credit sales
7. Sales Ledger Control Account: (c) Preparation of sales ledger control account
8. Purchases Ledger Control Account: (a) Terminologies: (i)Credit purchase (ii)Return outward
9. Purchases Ledger Control Account: (iii) Cash/bank payment (iv)Discount received
10. Revision
3RD TERM
WEEK 1
TOPIC: Balance Sheet
CONTENT: Definition and Meaning of Balance sheet
(a) Assets and Liabilities
(i) Distinction
(ii) Identification of types
(iii) Classification
Sub – topic 1. Definition and Meaning of Balance sheet.
The term “balance sheet” can be defined as the statement that shows the presentation of summary of assets and liabilities in a well arranged form; so that the financial position may be clearly ascertained. Balance sheet is not an account but a mere statement showing the balances remaining in the assets and liabilities ledgers.
(a) Assets and Liabilities
Assets are: 1. something valuable that an entity owns, benefits from, or has use of, in generating income.
2. Something that an entity has acquired or purchased, and that has money value (its cost, book value, market value, or residual value). An asset can be (1) something physical, such as cash, machinery, inventory, land and building, (2) an enforceable claim against others, such as accounts receivable, (3) right, such as copyright, patent, trademark, or (4) an assumption, such as goodwill.
Assets shown on their owner'sbalance sheet are usually classified according to the ease with which they can be converted into cash.
Liabilities are:An obligation that legally binds an individual or company to settle a debt. When one is liable for a debt, they are responsible for paying the debt or settling a wrongful act they may have committed.
EVALUATION:
Classify each of the following into assets and liabilities:
(i) A salary advance to a staff
(ii) A motor vehicle
(iii) Capital
(iv) Money kept in the bank
(v) Acres of landed property
Sub – topic 2:
(i) Distinction:
Assets are what an entity OWNS while Liabilities are what it OWES.
(ii) Identification of types:
Current assets
Current assets are the key assets that your business uses up during a 12-month period and will likely not be there the next year. Current asset accounts include the following:
• Cash in Checking: Any company’s primary account is the checking account used for operating activities. This is the account used to deposit revenues and pay expenses.
• Cash in Savings: This account is used for surplus cash. Any cash for which there is no immediate plan is deposited in an interest-earning savings account so that it can earn interest.
• Cash on Hand: This account is used to track any cash kept at retail stores or in the office. In retail stores, cash must be kept in registers in order to provide change to customers. In the office, pettycash is often kept for immediate cash needs that pop up from time to time.
• AccountsReceivable: If you offer your products or services to customers on store credit, then you need this account to track the customers who buy on your dime.
Accounts Receivable isn’t used to track purchases made on other types of credit cards because your business gets paid directly by banks, not customers, when other credit cards are used.
• Inventory: This account tracks the products you have on hand to sell to your customers. The value of the assets in this account varies depending upon the way you decide to track the flow of inventory into and out of the business.
• Prepayments: This account tracks expenses you pay in advance that are credited as it’s used up each month.
Long-term assets
Long-term assets are assets that you anticipate your business will use for more than 12 months. Some of the most common long-term assets include:
• Land: This account tracks the land owned by the company. The value of the land is based on the cost of purchasing it.
• Buildings: This account tracks the value of any buildings a business owns. The value of the building is based on the cost of purchasing it. The key difference between buildings and land is that the building’s value is depreciated, while the value of the land is not depreciated.
• Leasehold Improvements: This account tracks the value of improvements to buildings or other facilities that a business leases rather than purchases. Leasehold improvements are depreciated as the value of the asset ages.
• Vehicles: This account tracks any cars, trucks, or other vehicles owned by the business. The initial value of any vehicle is listed in this account based on the total cost paid to put the vehicle in service. Vehicles also depreciate through their useful lifespan.
• Furniture and Fixtures: This account tracks any furniture or fixtures purchased for use in the business. The value of the furniture and fixtures in this account is based on the cost of purchasing these items. These items are depreciated during their useful lifespan.
Equipment: This account tracks equipment that was purchased for use for more than one year, such as computers, copiers, tools, and cash registers.
The various types of liabilities are given below:
Fixed liability:
The liability which is to be paid off at the time of dissolution of firm is called fixed liability. Examples are Capital, Reserve and Surplus.
Long-term liability:
The liability which is not payable within the next accounting period is called long-term liability. Examples are Debentures of a company, Mortgage Loan etc.
Current liability:
The liability which is to be paid off in the next accounting period is current liability.. Examples: Sundry, creditors, Bills Payable and Bank overdraft etc.
Trade liability:
Liability which is incurred for goods and services supplied or expenses incurred are called trade liability. Example; Bill payable and sundry period.
Financial liability:
Liability which is incurred for financial purposes is called financial liability. Example: Bank overdraft, load taken for a short period.
Contingent liability:
A contingent liability is one which is not an actual liability but which will become an actual one on the happening of some event which is uncertain. Examples: Bills discounted before maturity, liability of a case pending in the court.
Classification of Assets and Liabilities
Assets may be grouped as follows:–
In order of Liquidity In order of Performance
Liquidity: Liquidity means the case with which assets may be converted into cash. Assets which are most difficult in this respect are written last.
Permanence: Assets which are to be used permanently in the business and are meant to be sold are written first.
Assets and Liabilities may be classified as –
• Fixed Assets
o Tangible fixed assets.
o Intangible fixed assets.
o Investments (long-term)
• Current Assets
Fixed Assets: Fixed asset is an asset acquired for continuing use within the business with a view to earning income or making profits from its use either directly or indirectly. A fixed asset is not acquired for sale to a customer. A tangible fixed asset is a physical asset, e.g. Plant & Machinery. An intangible fixed asset is nothing but an asset which does not have a physical existence, e.g. Goodwill. An investment might also be a fixed asset, investment purchased with a view to holding them for more than a year are classified as fixed assets.
Current Assets: Current assets are either items owned by the business with the intention of their resale or cash including cash at bank deposited by the business. These assets are "Current" in the sense that they are continuously flowing.
Other current Assets are:–
Short term investment.This includes short term trade investment.
Prepayments: These are amounts which are already paid by the business for benefits which have not yetbeen consumed.
Trade Debtors: These are debtors to the business for supply of goods to them.
Liabilities:
These are debts of the business that must be paid within one year. They are –
• Loans payable within a year.
• Bank Overdraft.
• Trade creditors for supply of goods.
• Bills of exchange.
• Outstanding payments.
• Interest on loans due and accrued but not paid.
Long term liabilities:
Long term liability is a debt which is not payable within one year.
Owners’ equity or capital.
The amount owing to the proprietors as capital is shown separately.
EVALUATION
• Define Assets
• Differentiate between tangible and intangible assets.
• List 5 examples of current liabilities
• Why do we regard some assets as current?
GENERAL EVALUATION:
Objective Test:
(i) Prepayment is shown in the balance sheet as A. Current Asset B. Liability C. Capital D. Investment
(ii) The balance sheet is not an account. True or False?
(iii) Rent prepaid will appear on which side of the balance sheet? A. Right side B. Left side C. Debit side D. Credit side.
(iv) Goodwill is a type of A. Tangible asset B. Liquid asset C. Current asset D. Intangible asset.
(v) Which of the following is not found in the balance sheet? A. Capital B. Land C. Carriage inward D. Loan.
Essay Test:
(1) Explain the purpose of preparing each of the following:
i. Trading account
ii. Profit and loss account
iii. Balance sheet
(2) Write out the vertical format of a balance sheet
(3) List out six items each found in the asset and liability sides of the balance sheet of a sole proprietor.
WEEKEND ASSIGNMENT
Essential Financial Accounting For Senior Secondary Schools by O.A. Longe& R.A. Kazeem pages3, 141 &142.
PRE-READING ASSIGNMENT
Read about the layout and preparation of balance sheet.
WEEKEND ACTIVITY
Make a list of 5 items each in the asset side and liability side of balance sheet.
REFERENCE TEXTS:
Essential Financial Accounting For Senior Secondary Schools by O.A. Longe& R.A. Kazeem
Financial Accounting for Senior Secondary Schools 1 by M.A. Adesolaetal.
CONTENT: Definition and Meaning of Balance sheet
(a) Assets and Liabilities
(i) Distinction
(ii) Identification of types
(iii) Classification
Sub – topic 1. Definition and Meaning of Balance sheet.
The term “balance sheet” can be defined as the statement that shows the presentation of summary of assets and liabilities in a well arranged form; so that the financial position may be clearly ascertained. Balance sheet is not an account but a mere statement showing the balances remaining in the assets and liabilities ledgers.
(a) Assets and Liabilities
Assets are: 1. something valuable that an entity owns, benefits from, or has use of, in generating income.
2. Something that an entity has acquired or purchased, and that has money value (its cost, book value, market value, or residual value). An asset can be (1) something physical, such as cash, machinery, inventory, land and building, (2) an enforceable claim against others, such as accounts receivable, (3) right, such as copyright, patent, trademark, or (4) an assumption, such as goodwill.
Assets shown on their owner'sbalance sheet are usually classified according to the ease with which they can be converted into cash.
Liabilities are:An obligation that legally binds an individual or company to settle a debt. When one is liable for a debt, they are responsible for paying the debt or settling a wrongful act they may have committed.
EVALUATION:
Classify each of the following into assets and liabilities:
(i) A salary advance to a staff
(ii) A motor vehicle
(iii) Capital
(iv) Money kept in the bank
(v) Acres of landed property
Sub – topic 2:
(i) Distinction:
Assets are what an entity OWNS while Liabilities are what it OWES.
(ii) Identification of types:
Current assets
Current assets are the key assets that your business uses up during a 12-month period and will likely not be there the next year. Current asset accounts include the following:
• Cash in Checking: Any company’s primary account is the checking account used for operating activities. This is the account used to deposit revenues and pay expenses.
• Cash in Savings: This account is used for surplus cash. Any cash for which there is no immediate plan is deposited in an interest-earning savings account so that it can earn interest.
• Cash on Hand: This account is used to track any cash kept at retail stores or in the office. In retail stores, cash must be kept in registers in order to provide change to customers. In the office, pettycash is often kept for immediate cash needs that pop up from time to time.
• AccountsReceivable: If you offer your products or services to customers on store credit, then you need this account to track the customers who buy on your dime.
Accounts Receivable isn’t used to track purchases made on other types of credit cards because your business gets paid directly by banks, not customers, when other credit cards are used.
• Inventory: This account tracks the products you have on hand to sell to your customers. The value of the assets in this account varies depending upon the way you decide to track the flow of inventory into and out of the business.
• Prepayments: This account tracks expenses you pay in advance that are credited as it’s used up each month.
Long-term assets
Long-term assets are assets that you anticipate your business will use for more than 12 months. Some of the most common long-term assets include:
• Land: This account tracks the land owned by the company. The value of the land is based on the cost of purchasing it.
• Buildings: This account tracks the value of any buildings a business owns. The value of the building is based on the cost of purchasing it. The key difference between buildings and land is that the building’s value is depreciated, while the value of the land is not depreciated.
• Leasehold Improvements: This account tracks the value of improvements to buildings or other facilities that a business leases rather than purchases. Leasehold improvements are depreciated as the value of the asset ages.
• Vehicles: This account tracks any cars, trucks, or other vehicles owned by the business. The initial value of any vehicle is listed in this account based on the total cost paid to put the vehicle in service. Vehicles also depreciate through their useful lifespan.
• Furniture and Fixtures: This account tracks any furniture or fixtures purchased for use in the business. The value of the furniture and fixtures in this account is based on the cost of purchasing these items. These items are depreciated during their useful lifespan.
Equipment: This account tracks equipment that was purchased for use for more than one year, such as computers, copiers, tools, and cash registers.
The various types of liabilities are given below:
Fixed liability:
The liability which is to be paid off at the time of dissolution of firm is called fixed liability. Examples are Capital, Reserve and Surplus.
Long-term liability:
The liability which is not payable within the next accounting period is called long-term liability. Examples are Debentures of a company, Mortgage Loan etc.
Current liability:
The liability which is to be paid off in the next accounting period is current liability.. Examples: Sundry, creditors, Bills Payable and Bank overdraft etc.
Trade liability:
Liability which is incurred for goods and services supplied or expenses incurred are called trade liability. Example; Bill payable and sundry period.
Financial liability:
Liability which is incurred for financial purposes is called financial liability. Example: Bank overdraft, load taken for a short period.
Contingent liability:
A contingent liability is one which is not an actual liability but which will become an actual one on the happening of some event which is uncertain. Examples: Bills discounted before maturity, liability of a case pending in the court.
Classification of Assets and Liabilities
Assets may be grouped as follows:–
In order of Liquidity In order of Performance
Liquidity: Liquidity means the case with which assets may be converted into cash. Assets which are most difficult in this respect are written last.
Permanence: Assets which are to be used permanently in the business and are meant to be sold are written first.
Assets and Liabilities may be classified as –
• Fixed Assets
o Tangible fixed assets.
o Intangible fixed assets.
o Investments (long-term)
• Current Assets
Fixed Assets: Fixed asset is an asset acquired for continuing use within the business with a view to earning income or making profits from its use either directly or indirectly. A fixed asset is not acquired for sale to a customer. A tangible fixed asset is a physical asset, e.g. Plant & Machinery. An intangible fixed asset is nothing but an asset which does not have a physical existence, e.g. Goodwill. An investment might also be a fixed asset, investment purchased with a view to holding them for more than a year are classified as fixed assets.
Current Assets: Current assets are either items owned by the business with the intention of their resale or cash including cash at bank deposited by the business. These assets are "Current" in the sense that they are continuously flowing.
Other current Assets are:–
Short term investment.This includes short term trade investment.
Prepayments: These are amounts which are already paid by the business for benefits which have not yetbeen consumed.
Trade Debtors: These are debtors to the business for supply of goods to them.
Liabilities:
These are debts of the business that must be paid within one year. They are –
• Loans payable within a year.
• Bank Overdraft.
• Trade creditors for supply of goods.
• Bills of exchange.
• Outstanding payments.
• Interest on loans due and accrued but not paid.
Long term liabilities:
Long term liability is a debt which is not payable within one year.
Owners’ equity or capital.
The amount owing to the proprietors as capital is shown separately.
EVALUATION
• Define Assets
• Differentiate between tangible and intangible assets.
• List 5 examples of current liabilities
• Why do we regard some assets as current?
GENERAL EVALUATION:
Objective Test:
(i) Prepayment is shown in the balance sheet as A. Current Asset B. Liability C. Capital D. Investment
(ii) The balance sheet is not an account. True or False?
(iii) Rent prepaid will appear on which side of the balance sheet? A. Right side B. Left side C. Debit side D. Credit side.
(iv) Goodwill is a type of A. Tangible asset B. Liquid asset C. Current asset D. Intangible asset.
(v) Which of the following is not found in the balance sheet? A. Capital B. Land C. Carriage inward D. Loan.
Essay Test:
(1) Explain the purpose of preparing each of the following:
i. Trading account
ii. Profit and loss account
iii. Balance sheet
(2) Write out the vertical format of a balance sheet
(3) List out six items each found in the asset and liability sides of the balance sheet of a sole proprietor.
WEEKEND ASSIGNMENT
Essential Financial Accounting For Senior Secondary Schools by O.A. Longe& R.A. Kazeem pages3, 141 &142.
PRE-READING ASSIGNMENT
Read about the layout and preparation of balance sheet.
WEEKEND ACTIVITY
Make a list of 5 items each in the asset side and liability side of balance sheet.
REFERENCE TEXTS:
Essential Financial Accounting For Senior Secondary Schools by O.A. Longe& R.A. Kazeem
Financial Accounting for Senior Secondary Schools 1 by M.A. Adesolaetal.
WEEK 2
TOPIC: Balance Sheet
CONTENT: (b) The balance sheet:
i. Layout
ii. Preparation
(i) A balance sheet could be presented in two ways:
a. T-format
b. Vertical format
T- FORMAT
Balance sheet as at 31st December, 2000
Capital xx Fixed Assets:
Add Net Profit xx Goodwill xx
Xx Land & Building xx
Less Drawings xx Less Depr. xxxx xx Plant & Machinery xx
Long Term Liabilities LessDepr. xxxx
Debentures xx Motor Van xx
Current Liabilities: Less Depr. xxxx
Loan xx Furniture & Fittings xx
Creditors xx Less Depr. xxxx
Bills payable xx xx
Accrued Exp xx Current Assets
Income in Advance xx xx Cash in Hand xx
Cash at Bank xx
Debtors xx
Less prov. xx xx
Closing Stock xx
Payment in advance xx
Bills receivable xx
Income in Arrears xxxx
XX XX
VERTICAL FORMAT
BALANCE SHEET AS AT 31ST DECEMBER 2000
N N N
FIXED ASSETS:
Land & Building xx
Plant & Machinery xx
Motor Vehicle xx
Furniture & Fittings xx
xx
Goodwill xx
Current Assets
Cash in Hand xx
Cash at Bank xx
Debtors xx
Stock xx
Payment in advance xx
Bills receivable xx xx
Current Liabilities
Loan xx
Creditors xx
Bills Payable xx
Accrued Expenses xx (xx) xx
XX
FINANCED BY:
Capital xx
Net Profit xx
Less Drawings xx xx
xx
Long Term Liability:
Debentures xx
XX
Sub – topic 2. Preparation of balance sheet
A hypothetical question is used to demonstrate the preparation of balance sheet thus:
The trial balance of James Peters as at 30th June 2012 was as follows:
DR. CR.
N N
Sales 261,800
Purchases 184,200
Loan 10,000
Drawings 16,820
Capital 51,910
Bank 6,230
Cash in hand 590
Debtors 24,600
Creditors 18,740
Stock 1st July2011 47,820
Land & Building 8,200
Equipment 12,500
Carriage inwards 430
Return inwards 1,100
Carriage outwards 618
Furniture 810
Returns outwards 614
Wages & Salaries 3,260
Sundry expenses 5,940
Telephone 5,620
Advertising 20,000
Insurance 984
Rent 2754
Lighting 568
343,064 343,064
Stock at close was N50, 000.
Prepare:
(i) Trading, Profit and Loss Account for the year ending 30th June 2012
(ii) Balance Sheet as at that date.
Solution prepared using T- format
James Peters
Trading, Profit and Loss Account for the year ending 30th June 2012
N N
Opening Stock 47820 Sales 261800
Purchases 184200 Less Return inward 1,100
Less Returns outward 614 183,586 260,700
231,406
Carriage inward 430
231,836
Less Closing Stock 50,000
181,836
Gross Profit c/d 78,864
260,700 260,700
Carriage Outwards 618 Gross Profit b/d 78,864
Wages & Salaries 3,260
Sundry Expenses 5,940
Telephone 5,620
Advertising 20,000
Insurance 984
Rent 2,754
Lighting 568
Net Profit 39,120
78,864 78,864
GENERAL EVALUATION:
(1) The following Trial balance was extracted from the books of Charles Enterprises on 31st December 2011:
Dr Cr
N N
Stock 1st Jan. 2011 6225
Purchases and Sales 8625 21450
Returns 338 225
Discounts 555 608
Land & Building at cost 22500
Provision for depreciation:
Land& Building 4500
Debtors and Creditors 1080 600
Bad debts 97
Provision for bad debts 1st January 255
Rent 4500
Electricity 1373
Wages and salaries 3563
Drawings 1550
Cash on hand 10382
Capital 33150
60788 60788
Stock on hand at 31st December 2011 was N5288.
You are required to prepare a Trading, Profit and loss account and a balance sheet as at 31st December 2011. (Using vertical format).
WEEKEND ASSIGNMENT:
Read and solve questions on pages 152-156 of Essential Financial Accounting for Senior Secondary Schools by O.A. Longe&R.A.Kazeem.
PRE-READING ASSIGNMENT:
Read about Adjustments in Profit and loss account as it affects items in the final accounts.
REFERENCE TEXTS:
Essential Financial Accounting For Senior Secondary Schools by O.A. Longe& R.A. Kazeem
Financial Accounting for Senior Secondary Schools 1 by M.A. Adesolaetal.
CONTENT: (b) The balance sheet:
i. Layout
ii. Preparation
(i) A balance sheet could be presented in two ways:
a. T-format
b. Vertical format
T- FORMAT
Balance sheet as at 31st December, 2000
Capital xx Fixed Assets:
Add Net Profit xx Goodwill xx
Xx Land & Building xx
Less Drawings xx Less Depr. xxxx xx Plant & Machinery xx
Long Term Liabilities LessDepr. xxxx
Debentures xx Motor Van xx
Current Liabilities: Less Depr. xxxx
Loan xx Furniture & Fittings xx
Creditors xx Less Depr. xxxx
Bills payable xx xx
Accrued Exp xx Current Assets
Income in Advance xx xx Cash in Hand xx
Cash at Bank xx
Debtors xx
Less prov. xx xx
Closing Stock xx
Payment in advance xx
Bills receivable xx
Income in Arrears xxxx
XX XX
VERTICAL FORMAT
BALANCE SHEET AS AT 31ST DECEMBER 2000
N N N
FIXED ASSETS:
Land & Building xx
Plant & Machinery xx
Motor Vehicle xx
Furniture & Fittings xx
xx
Goodwill xx
Current Assets
Cash in Hand xx
Cash at Bank xx
Debtors xx
Stock xx
Payment in advance xx
Bills receivable xx xx
Current Liabilities
Loan xx
Creditors xx
Bills Payable xx
Accrued Expenses xx (xx) xx
XX
FINANCED BY:
Capital xx
Net Profit xx
Less Drawings xx xx
xx
Long Term Liability:
Debentures xx
XX
Sub – topic 2. Preparation of balance sheet
A hypothetical question is used to demonstrate the preparation of balance sheet thus:
The trial balance of James Peters as at 30th June 2012 was as follows:
DR. CR.
N N
Sales 261,800
Purchases 184,200
Loan 10,000
Drawings 16,820
Capital 51,910
Bank 6,230
Cash in hand 590
Debtors 24,600
Creditors 18,740
Stock 1st July2011 47,820
Land & Building 8,200
Equipment 12,500
Carriage inwards 430
Return inwards 1,100
Carriage outwards 618
Furniture 810
Returns outwards 614
Wages & Salaries 3,260
Sundry expenses 5,940
Telephone 5,620
Advertising 20,000
Insurance 984
Rent 2754
Lighting 568
343,064 343,064
Stock at close was N50, 000.
Prepare:
(i) Trading, Profit and Loss Account for the year ending 30th June 2012
(ii) Balance Sheet as at that date.
Solution prepared using T- format
James Peters
Trading, Profit and Loss Account for the year ending 30th June 2012
N N
Opening Stock 47820 Sales 261800
Purchases 184200 Less Return inward 1,100
Less Returns outward 614 183,586 260,700
231,406
Carriage inward 430
231,836
Less Closing Stock 50,000
181,836
Gross Profit c/d 78,864
260,700 260,700
Carriage Outwards 618 Gross Profit b/d 78,864
Wages & Salaries 3,260
Sundry Expenses 5,940
Telephone 5,620
Advertising 20,000
Insurance 984
Rent 2,754
Lighting 568
Net Profit 39,120
78,864 78,864
GENERAL EVALUATION:
(1) The following Trial balance was extracted from the books of Charles Enterprises on 31st December 2011:
Dr Cr
N N
Stock 1st Jan. 2011 6225
Purchases and Sales 8625 21450
Returns 338 225
Discounts 555 608
Land & Building at cost 22500
Provision for depreciation:
Land& Building 4500
Debtors and Creditors 1080 600
Bad debts 97
Provision for bad debts 1st January 255
Rent 4500
Electricity 1373
Wages and salaries 3563
Drawings 1550
Cash on hand 10382
Capital 33150
60788 60788
Stock on hand at 31st December 2011 was N5288.
You are required to prepare a Trading, Profit and loss account and a balance sheet as at 31st December 2011. (Using vertical format).
WEEKEND ASSIGNMENT:
Read and solve questions on pages 152-156 of Essential Financial Accounting for Senior Secondary Schools by O.A. Longe&R.A.Kazeem.
PRE-READING ASSIGNMENT:
Read about Adjustments in Profit and loss account as it affects items in the final accounts.
REFERENCE TEXTS:
Essential Financial Accounting For Senior Secondary Schools by O.A. Longe& R.A. Kazeem
Financial Accounting for Senior Secondary Schools 1 by M.A. Adesolaetal.
WEEK 3
TOPIC: Adjustment in profit and loss account (cont’d).
CONTENT: Posting entries, ledger and final account.
Introduction:
When a trial balance is extracted for the purpose of drawing up the final accounts, it will usually be necessary to make adjustments for items not yet dealt with properly or not dealt with in the books prior to the extraction of the trial balance.
The adjustments ensure that the final accounts show a true view of the transactions of the business.
NECESSARY ADJUSTMENTS:
CLOSING STOCKS
In the trading account, closing stock shall be deducted from the cost of goods available for sale to obtain the cost of goods sold which in turn shall be deducted from sales to obtain the gross profit.
In the balance sheet, closing stock shall be shown under current assets.
PREPAID EXPENSES/PREPAYMENTS
In the profit and loss account, deduct the prepayments from the expenses shown on the trial balance in order to obtain the expenses incurred.
In the balance sheet, show the prepayments under current assets.
ACCRUED EXPENSES/ACCRUALS
In the profit and loss account, add the accrued expenses to the expenses shown on the trial balance to obtain the expenses incurred.
In the balance sheet, show the accruals under current liabilities.
INCOMES RECEIVED IN ADVANCE
In the profit and loss account, deduct the incomes received in advance from the incomes shown on the trial balance to the incomes earned.
In the balance sheet, show the income received in advance under current liabilities.
ACCRUED INCOMES
In the profit and loss account, add accrued incomes to the incomes shown on the trial balance to obtain the incomes earned.
In the balance sheet, show the accrued incomes under the current assets.
PREPARATION OF FINAL ACCOUNTS WITH ADJUSTMENTS
The solution to Exercise 15.8 on pages158 & 159 of Essential Financial Accounting For Senior Secondary Schools by O.A. Longe& R.A. Kazeem, Furth Edition, February, 2012, is thus presented.
BOLLY – J ENTERPRISES
Trading, Profit and loss account for the year ending 31st December, 1998.
N
Opening Stock 7750
Purchases 60750
Add Carriage inwards 395
68895
Less closing stock 6635
62260
Gross profit c/d 11740
74000
Rent 950
Less prepayment 150
Electricity 675
General expenses 2350
Rates 625
Less prepayment 138 487
Bank charges 373
Salaries 1700
Add arrears 875 2575
Discount allowed 485
Depreciation: Furniture 1125
Office equipment 1000
Net profit 2265
12135
N
Capital 81445
Add Net Profit 2265
83710
Bank overdraft 4475
Trade creditors 26150
Accruals
Salaries 875
115210 N
Sales 74000
74000
Gross profit b/d 11740
Provision for bad debt 63
Discount received 332
12135
N
Freehold property 50000
Office equipment 20000
Less Depr. (4500+1000) 5500 14500
Furniture & Fitting 22500
Less Depr.(6250+1125) 737515125
79625
Current assets
Cash in hand 137
Debtors 28750
Less Provision for bad debts 225 28525
Closing stock 6635
Prepaid expenses:
Rent 150
Rates 13835585
115210
EVALUATION
• Define prepaid expenses
• How are prepaid expenses treated in the balance sheet?
• How are incomes received in advance treated in the profit and loss account?
GENERAL EVALUATION
Objective Test:
(i) The final account of a sole proprietor consists of:
a------------------------------------------------------------------
b------------------------------------------------------------------
c-------------------------------------------------------------------
(ii) Discount received is A. credited to the Trading Account B. debited to the profit and loss account C. credited to the profit and loss account D. credited to the balance sheet.
(iii) Carriage outward is charged to A. Trading account B. Appropriation account C. Purchases account D. Profit and loss account.
(iv) A bad debt is A. a debt that has changed colour B. a debt that is irrecoverable C. a debt that is bad.
(v) Sales less closing stock = ------------------------------
ESSAY TEST:
Please refer to Exercises 15.2A & 15.7A on pages153,157& 1598 of Essential Financial Accounting For Senior Secondary Schools by O.A. Longe& R.A. Kazeem, Furth Edition, February, 2012.
WEEKEND ASSIGNMENT:
Read and solve questions on pages 154-156 of Essential Financial Accounting for Senior Secondary Schools by O.A. Longe&R.A.Kazeem.
PRE-READING ASSIGNMENT:
Read about Adjustments in Profit and loss account as it affects provisions for discounts allowable and depreciation in the final accounts.
REFERENCE TEXTS:
Essential Financial Accounting For Senior Secondary Schools by O.A. Longe& R.A. Kazeem
Financial Accounting for Senior Secondary Schools 1 by M.A. Adesolaetal.
CONTENT: Posting entries, ledger and final account.
Introduction:
When a trial balance is extracted for the purpose of drawing up the final accounts, it will usually be necessary to make adjustments for items not yet dealt with properly or not dealt with in the books prior to the extraction of the trial balance.
The adjustments ensure that the final accounts show a true view of the transactions of the business.
NECESSARY ADJUSTMENTS:
CLOSING STOCKS
In the trading account, closing stock shall be deducted from the cost of goods available for sale to obtain the cost of goods sold which in turn shall be deducted from sales to obtain the gross profit.
In the balance sheet, closing stock shall be shown under current assets.
PREPAID EXPENSES/PREPAYMENTS
In the profit and loss account, deduct the prepayments from the expenses shown on the trial balance in order to obtain the expenses incurred.
In the balance sheet, show the prepayments under current assets.
ACCRUED EXPENSES/ACCRUALS
In the profit and loss account, add the accrued expenses to the expenses shown on the trial balance to obtain the expenses incurred.
In the balance sheet, show the accruals under current liabilities.
INCOMES RECEIVED IN ADVANCE
In the profit and loss account, deduct the incomes received in advance from the incomes shown on the trial balance to the incomes earned.
In the balance sheet, show the income received in advance under current liabilities.
ACCRUED INCOMES
In the profit and loss account, add accrued incomes to the incomes shown on the trial balance to obtain the incomes earned.
In the balance sheet, show the accrued incomes under the current assets.
PREPARATION OF FINAL ACCOUNTS WITH ADJUSTMENTS
The solution to Exercise 15.8 on pages158 & 159 of Essential Financial Accounting For Senior Secondary Schools by O.A. Longe& R.A. Kazeem, Furth Edition, February, 2012, is thus presented.
BOLLY – J ENTERPRISES
Trading, Profit and loss account for the year ending 31st December, 1998.
N
Opening Stock 7750
Purchases 60750
Add Carriage inwards 395
68895
Less closing stock 6635
62260
Gross profit c/d 11740
74000
Rent 950
Less prepayment 150
Electricity 675
General expenses 2350
Rates 625
Less prepayment 138 487
Bank charges 373
Salaries 1700
Add arrears 875 2575
Discount allowed 485
Depreciation: Furniture 1125
Office equipment 1000
Net profit 2265
12135
N
Capital 81445
Add Net Profit 2265
83710
Bank overdraft 4475
Trade creditors 26150
Accruals
Salaries 875
115210 N
Sales 74000
74000
Gross profit b/d 11740
Provision for bad debt 63
Discount received 332
12135
N
Freehold property 50000
Office equipment 20000
Less Depr. (4500+1000) 5500 14500
Furniture & Fitting 22500
Less Depr.(6250+1125) 737515125
79625
Current assets
Cash in hand 137
Debtors 28750
Less Provision for bad debts 225 28525
Closing stock 6635
Prepaid expenses:
Rent 150
Rates 13835585
115210
EVALUATION
• Define prepaid expenses
• How are prepaid expenses treated in the balance sheet?
• How are incomes received in advance treated in the profit and loss account?
GENERAL EVALUATION
Objective Test:
(i) The final account of a sole proprietor consists of:
a------------------------------------------------------------------
b------------------------------------------------------------------
c-------------------------------------------------------------------
(ii) Discount received is A. credited to the Trading Account B. debited to the profit and loss account C. credited to the profit and loss account D. credited to the balance sheet.
(iii) Carriage outward is charged to A. Trading account B. Appropriation account C. Purchases account D. Profit and loss account.
(iv) A bad debt is A. a debt that has changed colour B. a debt that is irrecoverable C. a debt that is bad.
(v) Sales less closing stock = ------------------------------
ESSAY TEST:
Please refer to Exercises 15.2A & 15.7A on pages153,157& 1598 of Essential Financial Accounting For Senior Secondary Schools by O.A. Longe& R.A. Kazeem, Furth Edition, February, 2012.
WEEKEND ASSIGNMENT:
Read and solve questions on pages 154-156 of Essential Financial Accounting for Senior Secondary Schools by O.A. Longe&R.A.Kazeem.
PRE-READING ASSIGNMENT:
Read about Adjustments in Profit and loss account as it affects provisions for discounts allowable and depreciation in the final accounts.
REFERENCE TEXTS:
Essential Financial Accounting For Senior Secondary Schools by O.A. Longe& R.A. Kazeem
Financial Accounting for Senior Secondary Schools 1 by M.A. Adesolaetal.
WEEK 4
TOPIC: Adjustment in profit and loss account (cont’d).
CONTENT: (a) Provisions for discount allowable
(b) Provisions for depreciation
Provisions are amounts set aside out of profits to provide for depreciation or diminution in the value of assets or for the purpose of providing for a liability or loss certain to be incurred but uncertain as to amount or the date it will arise. Examples are:
• Provision for bad/doubtful debt
• Provision for discount on debtors; and
• Provision for depreciation
The first two provisions above represent an attempt to charge against profits, charge or losses which, even though they are certain to be incurred, cannot be accurately calculated.
The third example, provision for depreciation is an attempt to charge against profits, the estimated amount of depreciable value of a fixed asset which has been used up in the operations of the business during the year.
The entries for provisions for bad/doubtful debt and provision for discount on debtors are as follows:
(a) In the first year of raising the provision:
DR : Profit and loss account
CR : Provision account
(with the amount of the provision)
(b) In subsequent year(s), the entry will depend on whether the provision is being increased or decreased:
In case of increase in the provision:
DR : Profit and loss account
CR : Provision account
(with the amount of increase in the provision)
In case of decrease in the provision:
DR : Provision account
CR : Profit and loss account
(with the amount of the decrease in provision).
EVALUATION
i. List 3 types of provisions that are charged against profit
ii. What is the contrast between provisions and accruals?
iii. State the accounting treatment of a decrease in provision in the subsequent year to the year of raising the provision.
GENERAL EVALUATION
Objective Test:
(i) Which of the following is the effect of a reduction in the provision for doubtful debts? A. Reduction in net profit. B. Reduction in cash balance. C. Reduction in gross profit. D. Increase in gross profit.
Use the following information to answer questions ii and iii.
The total debtors’ account of a trading concern is N13, 000. Out of this 2 % is irrecoverable; 5% of the balance is unlikely to be collected.
(ii) What is the provision for doubtful debts? A. N910 B. N650 C. N637 D. N377 E. N260.
(iii) Bad debt is A. N910 B. N650 C. N637 D. N377 E. N260.
(iv) The double entry for increasing provision for bad debt is debit A. Debtor’s account, credit Provision for bad debt account. B. Profit and loss account, credit debtor’s account. C. Debtor’s account, credit Profit and loss account. D. Profit and loss account, credit Provision for bad debt account.
ESSAY:
1. (a) What is provision?
(c) State the divisions of reserves.
(d) Define provision for doubtful debts
2. The following information were extracted from the books of John Jerry Enterprises for the year ended 31st December 2002.
June 1, 2001 Bad and doubtful debt provision N18, 000
Discounts allowed provision N8400
Debtors as per ledger N150900
Dec 31, 2001 Discounts allowed during the year N13950
Bad debts written off N7050
Bad debts recovered N375
Additional information:
(a) An additional sum of N3600 is to be written off as bad debt.
(b) Discounts allowed provision is to be maintained at 3% while bad and doubtful debts provision is at 10%.
You are required to prepare:
(i) Provision for bad and doubtful debts accounts
(ii) Bad debts account
(iii) Discount allowed account
(iv) Sundry debtors account.
WEEKEND ASSIGNMENT:
Read and solve these questions. Exercise 13.1A & 13.2A on pages 117-118 of Essential Financial Accounting for Senior Secondary Schools by O.A. Longe&R.A.Kazeem.
PRE-READING ASSIGNMENT:
Read about Sales Ledger Control Account on Chapter 17 pages 172 & 173 of Essential Financial Accounting for Senior Secondary Schools by O.A. Longe&R.A.Kazeem.
REFERENCE TEXTS:
Essential Financial Accounting For Senior Secondary Schools by O.A. Longe& R.A. Kazeem
Financial Accounting for Senior Secondary Schools 1 by M.A. Adesolaetal.
Financial Accounting Made Simple by Robert O. Igben.
CONTENT: (a) Provisions for discount allowable
(b) Provisions for depreciation
Provisions are amounts set aside out of profits to provide for depreciation or diminution in the value of assets or for the purpose of providing for a liability or loss certain to be incurred but uncertain as to amount or the date it will arise. Examples are:
• Provision for bad/doubtful debt
• Provision for discount on debtors; and
• Provision for depreciation
The first two provisions above represent an attempt to charge against profits, charge or losses which, even though they are certain to be incurred, cannot be accurately calculated.
The third example, provision for depreciation is an attempt to charge against profits, the estimated amount of depreciable value of a fixed asset which has been used up in the operations of the business during the year.
The entries for provisions for bad/doubtful debt and provision for discount on debtors are as follows:
(a) In the first year of raising the provision:
DR : Profit and loss account
CR : Provision account
(with the amount of the provision)
(b) In subsequent year(s), the entry will depend on whether the provision is being increased or decreased:
In case of increase in the provision:
DR : Profit and loss account
CR : Provision account
(with the amount of increase in the provision)
In case of decrease in the provision:
DR : Provision account
CR : Profit and loss account
(with the amount of the decrease in provision).
EVALUATION
i. List 3 types of provisions that are charged against profit
ii. What is the contrast between provisions and accruals?
iii. State the accounting treatment of a decrease in provision in the subsequent year to the year of raising the provision.
GENERAL EVALUATION
Objective Test:
(i) Which of the following is the effect of a reduction in the provision for doubtful debts? A. Reduction in net profit. B. Reduction in cash balance. C. Reduction in gross profit. D. Increase in gross profit.
Use the following information to answer questions ii and iii.
The total debtors’ account of a trading concern is N13, 000. Out of this 2 % is irrecoverable; 5% of the balance is unlikely to be collected.
(ii) What is the provision for doubtful debts? A. N910 B. N650 C. N637 D. N377 E. N260.
(iii) Bad debt is A. N910 B. N650 C. N637 D. N377 E. N260.
(iv) The double entry for increasing provision for bad debt is debit A. Debtor’s account, credit Provision for bad debt account. B. Profit and loss account, credit debtor’s account. C. Debtor’s account, credit Profit and loss account. D. Profit and loss account, credit Provision for bad debt account.
ESSAY:
1. (a) What is provision?
(c) State the divisions of reserves.
(d) Define provision for doubtful debts
2. The following information were extracted from the books of John Jerry Enterprises for the year ended 31st December 2002.
June 1, 2001 Bad and doubtful debt provision N18, 000
Discounts allowed provision N8400
Debtors as per ledger N150900
Dec 31, 2001 Discounts allowed during the year N13950
Bad debts written off N7050
Bad debts recovered N375
Additional information:
(a) An additional sum of N3600 is to be written off as bad debt.
(b) Discounts allowed provision is to be maintained at 3% while bad and doubtful debts provision is at 10%.
You are required to prepare:
(i) Provision for bad and doubtful debts accounts
(ii) Bad debts account
(iii) Discount allowed account
(iv) Sundry debtors account.
WEEKEND ASSIGNMENT:
Read and solve these questions. Exercise 13.1A & 13.2A on pages 117-118 of Essential Financial Accounting for Senior Secondary Schools by O.A. Longe&R.A.Kazeem.
PRE-READING ASSIGNMENT:
Read about Sales Ledger Control Account on Chapter 17 pages 172 & 173 of Essential Financial Accounting for Senior Secondary Schools by O.A. Longe&R.A.Kazeem.
REFERENCE TEXTS:
Essential Financial Accounting For Senior Secondary Schools by O.A. Longe& R.A. Kazeem
Financial Accounting for Senior Secondary Schools 1 by M.A. Adesolaetal.
Financial Accounting Made Simple by Robert O. Igben.
WEEK 5
TOPIC: CONTROL ACCOUNT
CONTENT: Sales Ledger Control Account
Sub – topic 1. Definition and uses of Control account.
A control account is an account which contains summary or total of entries in the individual accounts in each ledger. In other words, a control account is a replica in summarized form of the accounts in the ledger to which it relates.
Theoretically the principle of control accounts could be applied to all ledgers but it is more popularly applied to sales ledger and purchases ledger. Another name for control account is TOTAL ACCOUNT.
Uses of control account
i. Location of errors: Control accounts make it possible to localize errors so that time is not wasted checking ledger(s) where there are no errors.
ii. Internal check on ledgers clerk: Because control accounts are normally put under the charge of a senior official, they serve as a check against fraud by junior officials keeping the ledgers.
iii. Aids to management control: For management purposes the balance on the sales ledger control account can be taken to be the total amount owed by debtors and the balance on the purchases ledger control account can be taken to be the total amount owed to creditors.
iv. Saves time: It saves time and effort of drawing up the schedules of debtors and creditors and, thereby, aids the preparation of draft annual or periodic accounts.
v. Ascertainment of debtors and creditors balances: The amount owed to suppliers and money owed by customers can readily be ascertained.
vi. Preparation of interim final account: Control accounts facilitate easy preparation of interim final account.
EVALUATION:
i. Give a concise definition of control accounts.
ii. List 5 uses of control account.
Sub-topic 2: Terminologies:
• Bad debts
• Discount allowed
• Returns inward
• Cash refund
• Dishonouredcheque
• Credit sales
FORMATS OF CONTROL ACCOUNTS
Debtors’ Control Accounts/ Sales Ledger Control Account
N
Balance b/d xx
Credit sales xx
Dishonouredcheques xx
Interest charged to customers xx
Bills dishonoured xx
Balance c/d xx
xx
Balance b/d xx N
Balance b/d xx
Discount allowed xx
Bad debts xx
Bills receivable xx
Cheques received from customers xx
Cash received from customers xx
Returns inwards xx
Purchase ledger contra (set-off) xx
Balance c/d xx
xx
Balance b/d xx
Creditors’ Control Account/Purchases Ledger Control Account
N
Balance b/d xx
Discount received xx
Bills payable xx
Cheques paid to suppliers xx
Cash paid to suppliers xx
Returns outwards xx
Sales ledger contra (se-off) xx
Balance c/d xx
xx
Balance b/d xx
N
Balance b/d xx
Credit purchases xx
Dishonouredcheques xx
Interest charged by suppliers xx
Bills payable dishonoured xx
Balance c/d xx
xx
Balance b/d xx
EVALUATION
i. List 5 items on the debit side of a sales ledger control account
ii. Itemize 6 information on the credit side of creditors control account
iii. What is contra entry in control account?
GENERAL EVALUATION
Objective Test:
( i) Which of the following is not contained in sales ledger control account? A. Returns inwards Returns outwards C. Receipts from debtors D. Dishonouredcheques.
(iii) Which of the following is used to derive missing figures in a system of incomplete records? A. Bank account B. Control account C. Bank statement D. Profit and loss account.
(iv) Return inwards is an item on the CREDIT side of A. creditors control account B. purchases ledger control account C. total debtors control account D. profit and loss account.
ESSAY:
(i) What is a control account?
(ii) List 5 advantages of control account
(iii) Mention two types of control account.
WEEKEND ASSIGNMENT:
Read pages 172-176 of Essential Financial Accounting for Senior Secondary Schools by O.A. Longe&R.A.Kazeem.
PRE-READING ASSIGNMENT:
Read about Sales Ledger Control Account on Chapter 17 pages 172 & 176 of Essential Financial Accounting for Senior Secondary Schools by O.A. Longe&R.A.Kazeem.
REFERENCE TEXTS:
Essential Financial Accounting For Senior Secondary Schools by O.A. Longe& R.A. Kazeem
Financial Accounting for Senior Secondary Schools 1 by M.A. Adesolaetal.
Financial Accounting Made Simple by Robert O. Igben.
CONTENT: Sales Ledger Control Account
Sub – topic 1. Definition and uses of Control account.
A control account is an account which contains summary or total of entries in the individual accounts in each ledger. In other words, a control account is a replica in summarized form of the accounts in the ledger to which it relates.
Theoretically the principle of control accounts could be applied to all ledgers but it is more popularly applied to sales ledger and purchases ledger. Another name for control account is TOTAL ACCOUNT.
Uses of control account
i. Location of errors: Control accounts make it possible to localize errors so that time is not wasted checking ledger(s) where there are no errors.
ii. Internal check on ledgers clerk: Because control accounts are normally put under the charge of a senior official, they serve as a check against fraud by junior officials keeping the ledgers.
iii. Aids to management control: For management purposes the balance on the sales ledger control account can be taken to be the total amount owed by debtors and the balance on the purchases ledger control account can be taken to be the total amount owed to creditors.
iv. Saves time: It saves time and effort of drawing up the schedules of debtors and creditors and, thereby, aids the preparation of draft annual or periodic accounts.
v. Ascertainment of debtors and creditors balances: The amount owed to suppliers and money owed by customers can readily be ascertained.
vi. Preparation of interim final account: Control accounts facilitate easy preparation of interim final account.
EVALUATION:
i. Give a concise definition of control accounts.
ii. List 5 uses of control account.
Sub-topic 2: Terminologies:
• Bad debts
• Discount allowed
• Returns inward
• Cash refund
• Dishonouredcheque
• Credit sales
FORMATS OF CONTROL ACCOUNTS
Debtors’ Control Accounts/ Sales Ledger Control Account
N
Balance b/d xx
Credit sales xx
Dishonouredcheques xx
Interest charged to customers xx
Bills dishonoured xx
Balance c/d xx
xx
Balance b/d xx N
Balance b/d xx
Discount allowed xx
Bad debts xx
Bills receivable xx
Cheques received from customers xx
Cash received from customers xx
Returns inwards xx
Purchase ledger contra (set-off) xx
Balance c/d xx
xx
Balance b/d xx
Creditors’ Control Account/Purchases Ledger Control Account
N
Balance b/d xx
Discount received xx
Bills payable xx
Cheques paid to suppliers xx
Cash paid to suppliers xx
Returns outwards xx
Sales ledger contra (se-off) xx
Balance c/d xx
xx
Balance b/d xx
N
Balance b/d xx
Credit purchases xx
Dishonouredcheques xx
Interest charged by suppliers xx
Bills payable dishonoured xx
Balance c/d xx
xx
Balance b/d xx
EVALUATION
i. List 5 items on the debit side of a sales ledger control account
ii. Itemize 6 information on the credit side of creditors control account
iii. What is contra entry in control account?
GENERAL EVALUATION
Objective Test:
( i) Which of the following is not contained in sales ledger control account? A. Returns inwards Returns outwards C. Receipts from debtors D. Dishonouredcheques.
(iii) Which of the following is used to derive missing figures in a system of incomplete records? A. Bank account B. Control account C. Bank statement D. Profit and loss account.
(iv) Return inwards is an item on the CREDIT side of A. creditors control account B. purchases ledger control account C. total debtors control account D. profit and loss account.
ESSAY:
(i) What is a control account?
(ii) List 5 advantages of control account
(iii) Mention two types of control account.
WEEKEND ASSIGNMENT:
Read pages 172-176 of Essential Financial Accounting for Senior Secondary Schools by O.A. Longe&R.A.Kazeem.
PRE-READING ASSIGNMENT:
Read about Sales Ledger Control Account on Chapter 17 pages 172 & 176 of Essential Financial Accounting for Senior Secondary Schools by O.A. Longe&R.A.Kazeem.
REFERENCE TEXTS:
Essential Financial Accounting For Senior Secondary Schools by O.A. Longe& R.A. Kazeem
Financial Accounting for Senior Secondary Schools 1 by M.A. Adesolaetal.
Financial Accounting Made Simple by Robert O. Igben.
WEEK 6
TOPIC: CONTROL ACCOUNT
CONTENT: Sales Ledger Control Account
Sub – topic 1. Preparation of sales ledger control account
Exercise 17.1 on page 176 of Essential Financial Accounting for Senior Secondary School by O.A. Longe& R.A. Kazeem is treated and solved.
ADE & SEGUN ENTERPRISES
Sales Ledger Control Account
N
Balance b/d 23230
Sales journal 93290
Customers cheques dishonored 350
116870
Balance b/d 28140
N
Sales returns 1955
Discounts allowed 547
Credit notes issued 345
Bad debts 183
Cheque received from customer 85700
Balance c/d 28140
116870
Purchases Ledger Control Account
N
Discounts received 735
Cash paid to suppliers 3000
Balance c/d 93199
96934 N
Balance b/d 18180
Purchases journal 78470
Debit notes received 284
96934
EVALUATION
Prepare Exercise 17.3 on page 177 of Essential Financial Accounting for Senior Secondary Schools by O.A. Longe&R.A.Kazeem.
GENERAL EVALUATION
Objective Test:
Use the following information to answer questions 1 to 3
Debtors Control Account
N
Balance b/d 8000
“X” 12000 N
Bank Y”
Discount 200
Balance c/d 3000
1. “X” refers to A. Stock B. Returns C. Discount D. Sales
2. How much is the figure for bank? A. N20000 B. N17000 C. N16800 D. N120000
3. The closing balance is a A. current asset B. current liability C. fixed asset D. fictitious asset
ESSAY:
Prepare Exercises 17.8A and 17.9A on page 180of Essential Financial Accounting for Senior Secondary Schools by O.A. Longe&R.A.Kazeem.
WEEKEND ASSIGNMENT:
Solve Exercises 17.2A and 17.10A pages 177and 181of Essential Financial Accounting for Senior Secondary Schools by O.A. Longe&R.A.Kazeem.
PRE-READING ASSIGNMENT:
Read about Purchases Ledger Control Account on Chapter 10, pages 211 to 216 of Financial Accounting Made Simple by Robert O. Igben.
REFERENCE TEXTS:
Essential Financial Accounting For Senior Secondary Schools by O.A. Longe& R.A. Kazeem
Financial Accounting for Senior Secondary Schools 1 by M.A. Adesolaetal.
Financial Accounting Made Simple by Robert O. Igben.
CONTENT: Sales Ledger Control Account
Sub – topic 1. Preparation of sales ledger control account
Exercise 17.1 on page 176 of Essential Financial Accounting for Senior Secondary School by O.A. Longe& R.A. Kazeem is treated and solved.
ADE & SEGUN ENTERPRISES
Sales Ledger Control Account
N
Balance b/d 23230
Sales journal 93290
Customers cheques dishonored 350
116870
Balance b/d 28140
N
Sales returns 1955
Discounts allowed 547
Credit notes issued 345
Bad debts 183
Cheque received from customer 85700
Balance c/d 28140
116870
Purchases Ledger Control Account
N
Discounts received 735
Cash paid to suppliers 3000
Balance c/d 93199
96934 N
Balance b/d 18180
Purchases journal 78470
Debit notes received 284
96934
EVALUATION
Prepare Exercise 17.3 on page 177 of Essential Financial Accounting for Senior Secondary Schools by O.A. Longe&R.A.Kazeem.
GENERAL EVALUATION
Objective Test:
Use the following information to answer questions 1 to 3
Debtors Control Account
N
Balance b/d 8000
“X” 12000 N
Bank Y”
Discount 200
Balance c/d 3000
1. “X” refers to A. Stock B. Returns C. Discount D. Sales
2. How much is the figure for bank? A. N20000 B. N17000 C. N16800 D. N120000
3. The closing balance is a A. current asset B. current liability C. fixed asset D. fictitious asset
ESSAY:
Prepare Exercises 17.8A and 17.9A on page 180of Essential Financial Accounting for Senior Secondary Schools by O.A. Longe&R.A.Kazeem.
WEEKEND ASSIGNMENT:
Solve Exercises 17.2A and 17.10A pages 177and 181of Essential Financial Accounting for Senior Secondary Schools by O.A. Longe&R.A.Kazeem.
PRE-READING ASSIGNMENT:
Read about Purchases Ledger Control Account on Chapter 10, pages 211 to 216 of Financial Accounting Made Simple by Robert O. Igben.
REFERENCE TEXTS:
Essential Financial Accounting For Senior Secondary Schools by O.A. Longe& R.A. Kazeem
Financial Accounting for Senior Secondary Schools 1 by M.A. Adesolaetal.
Financial Accounting Made Simple by Robert O. Igben.
WEEK 7
TOPIC: CONTROL ACCOUNT
CONTENT: Purchases Ledger Control Account
Sub – topic 1. Terminologies, Credit Purchases and Return outward
Exercise 17.2 on pages 176 & 177 of Essential Financial Accounting for Senior Secondary School by O.A. Longe& R.A. Kazeem is treated and solved.
EDALA ENTERPRISES
Sales Ledger Control Account
N
Balance b/d 98260
Credit sales 781540
Bills dishonoured 7500
Cash refunded to customers 1270
Balance c/d 2010
890580 N
Balance b/d 2370
Accounts settled by contra 6220
Bad debts written off 5260
Bills of exchange drawn on customers 34730
Return inwards 7450
Cash received from debtors 689230
Discounts allowed 24750
Balance c/d 120570
890580
Purchases Ledger Control Account
N
Accounts settled by contra 6220
Returns outwards 8920
Cash paid to suppliers 495140
Discounts received 19320
Balance c/d 59550
589150 N
Balance b/d 72190
Credit purchases 513620
Balance c/d 3340
589150
EVALUATION
Prepare Exercise 17.7 on page 179 of Essential Financial Accounting for Senior Secondary Schools by O.A. Longe&R.A.Kazeem.
GENERAL EVALUATION
Objective Test:
Use the following information to answer questions 1 to 3
N
Opening stock 1800
Closing stock 1350
Creditors -----1/01/2004 1275
Creditors ------31/12/2004 1140
Cash paid to creditors 6900
Debtors 1/01//2004 465
Cash received from debtors 11130
Debtors 31/12/2004 300
1. Sales for the year was A. N11430 B. N11295 C. N11130 D. N10965
2. Cost of sales for the year was A. N10965 B.N8565 C. N7215 D. N6765
3. Gross profit for the year was A. N4650 B. N4200 C. N3750 D. N2400
ESSAY:
Prepare Exercises 17.4 and 17.5 on page 178of Essential Financial Accounting for Senior Secondary Schools by O.A. Longe&R.A.Kazeem.
WEEKEND ASSIGNMENT:
Solve Exercises 9X and 11X on pages 233and 234 of Simplified and Amplified Book Keeping & Accounting for SSS 1, 2, 3 third edition 2012 by Femi Longe.
PRE-READING ASSIGNMENT:
Read about Purchases Ledger Control Account on Chapter 21, pages 223 to 230 of Simplified and Amplified Book Keeping & Accounting for SSS 1, 2, 3 third edition 2012 by Femi Longe
REFERENCE TEXTS:
Essential Financial Accounting For Senior Secondary Schools by O.A. Longe& R.A. Kazeem
Financial Accounting for Senior Secondary Schools 1 by M.A. Adesolaetal.
Financial Accounting Made Simple by Robert O. Igben.
Simplified and Amplified Book Keeping & Accounting for SSS 1, 2, 3 third edition 2012 by Femi Longe
CONTENT: Purchases Ledger Control Account
Sub – topic 1. Terminologies, Credit Purchases and Return outward
Exercise 17.2 on pages 176 & 177 of Essential Financial Accounting for Senior Secondary School by O.A. Longe& R.A. Kazeem is treated and solved.
EDALA ENTERPRISES
Sales Ledger Control Account
N
Balance b/d 98260
Credit sales 781540
Bills dishonoured 7500
Cash refunded to customers 1270
Balance c/d 2010
890580 N
Balance b/d 2370
Accounts settled by contra 6220
Bad debts written off 5260
Bills of exchange drawn on customers 34730
Return inwards 7450
Cash received from debtors 689230
Discounts allowed 24750
Balance c/d 120570
890580
Purchases Ledger Control Account
N
Accounts settled by contra 6220
Returns outwards 8920
Cash paid to suppliers 495140
Discounts received 19320
Balance c/d 59550
589150 N
Balance b/d 72190
Credit purchases 513620
Balance c/d 3340
589150
EVALUATION
Prepare Exercise 17.7 on page 179 of Essential Financial Accounting for Senior Secondary Schools by O.A. Longe&R.A.Kazeem.
GENERAL EVALUATION
Objective Test:
Use the following information to answer questions 1 to 3
N
Opening stock 1800
Closing stock 1350
Creditors -----1/01/2004 1275
Creditors ------31/12/2004 1140
Cash paid to creditors 6900
Debtors 1/01//2004 465
Cash received from debtors 11130
Debtors 31/12/2004 300
1. Sales for the year was A. N11430 B. N11295 C. N11130 D. N10965
2. Cost of sales for the year was A. N10965 B.N8565 C. N7215 D. N6765
3. Gross profit for the year was A. N4650 B. N4200 C. N3750 D. N2400
ESSAY:
Prepare Exercises 17.4 and 17.5 on page 178of Essential Financial Accounting for Senior Secondary Schools by O.A. Longe&R.A.Kazeem.
WEEKEND ASSIGNMENT:
Solve Exercises 9X and 11X on pages 233and 234 of Simplified and Amplified Book Keeping & Accounting for SSS 1, 2, 3 third edition 2012 by Femi Longe.
PRE-READING ASSIGNMENT:
Read about Purchases Ledger Control Account on Chapter 21, pages 223 to 230 of Simplified and Amplified Book Keeping & Accounting for SSS 1, 2, 3 third edition 2012 by Femi Longe
REFERENCE TEXTS:
Essential Financial Accounting For Senior Secondary Schools by O.A. Longe& R.A. Kazeem
Financial Accounting for Senior Secondary Schools 1 by M.A. Adesolaetal.
Financial Accounting Made Simple by Robert O. Igben.
Simplified and Amplified Book Keeping & Accounting for SSS 1, 2, 3 third edition 2012 by Femi Longe
WEEK 8
TOPIC: CONTROL ACCOUNT
CONTENT: Purchases Ledger Control Account
Sub – topic 1 Treatment of cash /bank payment and discount received.
Exercise 10, page 234 of Simplified and Amplified Book Keeping & Accounting for SSS 1, 2, 3 third edition 2012 by Femi Longe is treated and solved.
LOLA ENTERPRISES
Debtors Control Account
N
Balance b/d 79480
Sales day book 775300
Debit note issued 5300
860080
Balance b/d 113740 N
Returns inward day book 141800
Cheques received from customers 566800
Discounts allowed 37740
Balance c/d 113740
860080
Creditors Control Account
N
Returns outward day book 39600
Cheques paid to suppliers 618600
Discounts received 26780
Credit note received 2800
Balance c/d 294480
982260 N
Balance b/d 75320
Purchases day book 904540
Cash refunded from a supplier 2400
Balance c/d 294480
982260
Balance b/d 294480
EVALUATION
Prepare Exercise 7 & 8 on pages232 &233 of Simplified and Amplified Book Keeping & Accounting for SSS 1, 2, 3 third edition 2012 by Femi Longe.
GENERAL EVALUATION
Objective Test:
Use the following information to answer questions 1 and 2
N N
1st Jan. 31st Dec.
Creditors 4200 5200
Stocks 3600 3200
Cash paid to creditors during the year was N18000.
1. Purchases for the year was A. N19400 B. N19000 C. N18000 D. N17000.
2. Cost of sales for the year was A. N19800 B.N19400 C.N18400 D.N17400
3. The closing creditors balance was A.N4200 B.N5200 C.N3600 D.N3200
ESSAY:
Solve Exercise 3X, 4, 5 and 6 on pages231 & 232 of Simplified and Amplified Book Keeping & Accounting for SSS 1, 2, 3 third editions 2012 by Femi Longe.
WEEKEND ASSIGNMENT:
Solve Exercises 7 and 8 on pages 232and 233 of Simplified and Amplified Book Keeping & Accounting for SSS 1, 2, 3 third edition 2012 by Femi Longe.
PRE-READING ASSIGNMENT:
Read your E-Notes and prepare for examination.
REFERENCE TEXTS:
Essential Financial Accounting For Senior Secondary Schools by O.A. Longe& R.A. Kazeem
Financial Accounting for Senior Secondary Schools 1 by M.A. Adesolaetal.
Financial Accounting Made Simple by Robert O. Igben.
Simplified and Amplified Book Keeping & Accounting for SSS 1, 2, 3 third edition 2012 by Femi Longe
CONTENT: Purchases Ledger Control Account
Sub – topic 1 Treatment of cash /bank payment and discount received.
Exercise 10, page 234 of Simplified and Amplified Book Keeping & Accounting for SSS 1, 2, 3 third edition 2012 by Femi Longe is treated and solved.
LOLA ENTERPRISES
Debtors Control Account
N
Balance b/d 79480
Sales day book 775300
Debit note issued 5300
860080
Balance b/d 113740 N
Returns inward day book 141800
Cheques received from customers 566800
Discounts allowed 37740
Balance c/d 113740
860080
Creditors Control Account
N
Returns outward day book 39600
Cheques paid to suppliers 618600
Discounts received 26780
Credit note received 2800
Balance c/d 294480
982260 N
Balance b/d 75320
Purchases day book 904540
Cash refunded from a supplier 2400
Balance c/d 294480
982260
Balance b/d 294480
EVALUATION
Prepare Exercise 7 & 8 on pages232 &233 of Simplified and Amplified Book Keeping & Accounting for SSS 1, 2, 3 third edition 2012 by Femi Longe.
GENERAL EVALUATION
Objective Test:
Use the following information to answer questions 1 and 2
N N
1st Jan. 31st Dec.
Creditors 4200 5200
Stocks 3600 3200
Cash paid to creditors during the year was N18000.
1. Purchases for the year was A. N19400 B. N19000 C. N18000 D. N17000.
2. Cost of sales for the year was A. N19800 B.N19400 C.N18400 D.N17400
3. The closing creditors balance was A.N4200 B.N5200 C.N3600 D.N3200
ESSAY:
Solve Exercise 3X, 4, 5 and 6 on pages231 & 232 of Simplified and Amplified Book Keeping & Accounting for SSS 1, 2, 3 third editions 2012 by Femi Longe.
WEEKEND ASSIGNMENT:
Solve Exercises 7 and 8 on pages 232and 233 of Simplified and Amplified Book Keeping & Accounting for SSS 1, 2, 3 third edition 2012 by Femi Longe.
PRE-READING ASSIGNMENT:
Read your E-Notes and prepare for examination.
REFERENCE TEXTS:
Essential Financial Accounting For Senior Secondary Schools by O.A. Longe& R.A. Kazeem
Financial Accounting for Senior Secondary Schools 1 by M.A. Adesolaetal.
Financial Accounting Made Simple by Robert O. Igben.
Simplified and Amplified Book Keeping & Accounting for SSS 1, 2, 3 third edition 2012 by Femi Longe