Bookkeeping 1. Prompt Payment Discount for Assessments from January 2017

Transcription

1 Bookkeeping 1 Workbook Prompt Payment Discount for Assessments from January 2017 Prompt Payment Discount (PPD), previously referred to as cash discount or settlement discount has recently been the subject of changes in legislation. The treatment of this type of discount in terms of invoicing and accounting entries is examinable by the AAT in the two Bookkeeping Units and Indirect Taxation. HMRC Regulations Since 1 April 2015 sellers are no longer able to charge VAT on the discounted price. The situation now is that sellers must: (a) include the VAT on the invoice as the full amount chargeable before any adjustment is made for Prompt Payment Discount (b) then account for VAT on the money actually received This supplement to the AQ2013 Bookkeeping 1 Workbook shows how the questions and Practice Assessments should be amended to reflect the revised treatment of Prompt Payment Discounts (PPD).

2 AMENDMENTS TO CHAPTER 2 FINANCIAL DOCUMENTS FOR SALES Page 7, Activity 2.5 (b) Replace the options with: Answer (a) 128 (b) 768

3 AMENDMENTS TO CHAPTER 4 ACCOUNTING SYSTEM FOR DISCOUNTS ALLOWED A new Activity, numbered as 4.7, is attached together with the answer. 1 b o o k k e e p i n g 1 P P D d i s c o u n t f r o m J a n u a r y C h a p t e r 4

4 2 b o o k k e e p i n g 1 P P D d i s c o u n t f r o m J a n u a r y C h a p t e r 4

5 3 b o o k k e e p i n g 1 P P D d i s c o u n t f r o m J a n u a r y C h a p t e r 4

6 4 b o o k k e e p i n g 1 P P D d i s c o u n t f r o m J a n u a r y C h a p t e r 4 a n s w e r A n s w e r

7 AMENDMENTS TO CHAPTER 7 ACCOUNTING SYSTEM FOR DISCOUNTS RECEIVED A new Activity, numbered as 7.7, is attached together with the answer. 1 b o o k k e e p i n g 1 P P D d i s c o u n t f r o m J a n u a r y C h a p t e r 7

8 2 b o o k k e e p i n g 1 P P D d i s c o u n t f r o m J a n u a r y C h a p t e r 7

9 3 b o o k k e e p i n g 1 P P D d i s c o u n t f r o m J a n u a r y C h a p t e r 7

10 4 b o o k k e e p i n g 1 P P D d i s c o u n t f r o m J a n u a r y C h a p t e r 7 a n s w e r s A n s w e r

11 AMENDMENTS TO CHAPTERS 9 and 10 CASH BOOK AND ANALYSED CASH BOOK CHANGES FOR DISCOUNTS ALLOWED AND DISCOUNTS RECEIVED 9.1 is deleted 9.2 ignore all references to discounts 9.3 ignore all references to discounts 9.4 ignore all references to discounts 9.5 ignore all references to discounts 9.6 ignore all references to discounts 10.3 delete part (c) 10.4 ignore all references to discounts 10.5 ignore all references to discounts PRACTICE ASSESSMENT 1 Task 3: Delete current Task 3 and replace with new Task 3 attached. Task 4: Delete current Task 4 and replace with new Task 4 attached. Task 8: Answer (c) VAT amount should be 225 and the total 1,350

12 1 b o o k k e e p i n g 1 P P D d i s c o u n t f r o m J a n u a r y A s e s s m e npt r1a c t i c e a s s e s s m e n t Task 3 There are three payments to be entered in the credit side of Kington Supplies' cash book during one week. Cash purchases listing Suppliers paid in cash Net VAT Gross Alvington Supplies Trade payables listing Credit suppliers paid by cheque Amount paid Halwell Ltd 2,106 Frogmore & Co 1,164 (a) From the cash purchases listing and the trade payables listing above, make entries in the relevant columns of the credit side of the cash book shown below. Select your entries for the Details column from the following list: Alvington Supplies, Bank, Cash, Cash purchases, Halwell Ltd, Trade payables, Frogmore & Co, VAT. (b) Total each column. Cash book credit side Details Cash Bank VAT Trade Cash payables purchases Balance b/f 4,720 Totals.

13 b o obk ok oe ke kp ei en pg i n1 g 1 PwP od r kd bi so co ok u n t f r o m J a n u a r y A s e s s m e n t 1 (c) The debit side of the cash book shows the cash balance brought forward at the beginning of the week was 250 and a further 412 has been received during the week. Using your answers above, calculate the cash balance. (d) The debit side of the cash book shows the total amount of money banked during the week was 5,341. Using your answers above, calculate the bank balance. If your calculations show that the bank account is overdrawn, your answer should start with a minus sign, for example 123. Task 4 Kington Supplies' cash book is both a book of prime entry and part of the double-entry bookkeeping system. These are the totals of the columns in the credit side of the cash book at the end of the month. Cash book credit side Details Cash Bank VAT Trade Cash Bank payables purchases charges Totals , , (a) What will be the four entries in the general ledger? Select your account name from the following list: Bank, Bank charges, Cash, Cash purchases, Cash sales, Purchases ledger control, Sales ledger control, Trade payables, VAT.

14 3 b o o k k e e p i n g 1 P P D d i s c o u n t f r o m J a n u a r y A s e s s mp er na t c t1i c e a s s e s s m e n t Enter the names and amounts and tick the appropriate debit or credit column. General ledger 4 4 (b) One of the bank payments to trade payables was to H King for 254. What will be the entry in the purchases ledger? Select your account name from the following list: Bank, Kington Supplies, H King, Purchases, Purchases ledger, Purchases ledger control, Sales, Sales ledger, Sales ledger control, Trade payables. Enter the name and amount and tick the appropriate debit or credit column. Purchases ledger 4 4

15 A s s e s s m e n t 1 A n s w e r s 3 b o o k k e e p i n g 1 P P D d i s c o u n t f r o m J a n u a r y Ap sre asc st mi ce n t a s1 s ae ns s wm e rns t 1 a n s w e r s Task 3 (a) and (b) Cash book credit side Details Cash Bank VAT Trade Cash payables purchases Balance b/f 4,720 Alvington Supplies Halwell Ltd 2,106 2,106 Frogmore & Co 1,164 1,164 Totals 180 7, , (c) 482 (d) 2,649 Task 4 (a) General ledger VAT Purchases ledger control 15,928 4 Cash purchases Bank charges 52 4 (b) Purchases ledger H King Task 8: Answer (c) VAT amount should be 225 and the total 1,350

16 PRACTICE ASSESSMENT 2 Task 2: Delete current Task 2 and replace with new Task 2 attached. Task 3: Delete current Task 3 and replace with new Task 3 attached. Task 4: Delete current Task 4 and replace with new Task 4 attached. Task 8: Answer (e) the total amount should be W b o o k k e e p i n g 1 P P D d i s c o u n t f r o m J a n u a r y A s e s s m e n t 2 Task 2 The following credit transactions have been entered into the discounts received day book as shown below. No entries have yet been made into the ledgers. Discounts received day book Date Details Credit note Total VAT Net 20-4 number 30 June India Trading June Kennedy Stores CR Totals (a) What will be the entries in the purchases ledger? Select your account names from the following list: India Trading, Kennedy Stores, Purchases, Purchases ledger control, Purchases returns, Sales, Sales ledger control, Sales returns, VAT. Purchases ledger 4 4

17 b ob o ko kke ke pe ipn ig n g 1 1 wp op rd k bd oi os ck o u n t f r o m J a n u a r y A s e s s m e n t 2 (b) What will be the entries in the general ledger? Select your account names from the following list: Discounts allowed, Discounts received, India Trading, Kennedy Stores, Purchases, Purchases ledger control, Purchases returns, Sales, Sales ledger control, Sales returns, VAT. General ledger 4 4 Task 3 Three receipts are to be entered in the debit side of GWW Trading's cash book during one week. Cash sales listing Customer receipts in cash Net VAT Gross Cash sales 1, Trade receivables listing Customer cheque receipts Amount paid Watling Enterprises 1,240 O'Hara & Co 570 (a) From the cash sales listing and the trade receivables listing above, make entries in the relevant columns of the debit side of the cash book shown on the next page. Select your entries for the Details column from the following list: Bank, Cash, Cash sales, O'Hara & Co, Trade receivables, VAT, Watling Enterprises.

18 3 b o o k k e e p i n g 1 P P D d i s c o u n t f r o m J a n u a r y A s e s s mp er an ct t2i c e a s s e s s m e n t (b) Total each column. Cash book debit side Details Cash Bank VAT Trade Cash receivables sales Balance b/f 156 2,369 Totals (c) The credit side of the cash book shows cash payments of 106 during the week. Using your answers above, calculate the cash balance. (d) The credit side of the cash book shows the total bank payments during the week were 6,278. Using your answers above, calculate the bank balance. If your calculations show that the bank account is overdrawn, your answer should start with a minus sign, for example 123.

19 b ob o ko kke ke pe ipn ig n g 1 1 wp op rd k bd oi os ck o u n t f r o m J a n u a r y A s e s s m e n t 2 Task 4 GWW Trading's cash book is both a book of prime entry and part of the double-entry bookkeeping system. These are the totals of the columns in the debit side of the cash book at the end of the month. Cash book - debit side Details Cash Bank VAT Trade Cash Bank receivables sales interest Totals 8,568 6,640 1,428 6,613 7, (a) What will be the four entries in the general ledger? Select your account names from the following list: Bank, Bank interest received, Bank interest paid, Cash, Cash purchases, Cash sales, Purchases ledger control, Sales ledger control, Trade receivables, VAT. General ledger 4 4 (b) One of the bank receipts from trade receivables was from R Butler Ltd for 752. What will be the entry in the sales ledger? Select your account name from the following list: Bank, R Butler Ltd, GWW Trading, Purchases, Purchases ledger, Purchases ledger control, Sales, Sales ledger, Sales ledger control, Trade receivables. Enter the amounts and names and tick the appropriate debit or credit column. 4 4 G b

20 A s s e s s m e n t 2 A n s w e r s 3 W W b o o k k e e p i n g 1 P P D d i s c o u n t f r o m J a n u a r y A s e s s m e n t 2 a n s w e r s Task 2 (a) Purchases ledger India Trading 36 4 Kennedy Stores 30 4 (b) General ledger Discounts received 55 4 VAT 11 4 Purchases ledger control 66 4

21 6 b o o k k e e p i n g 1 P P D d i s c o u n t f r o m J a n u a r y Ap sre asc st mi ce n t a s2 s ae ns s wm e rns t 2 a n s w e r s Task 3 (a) and (b) Task 4 Cash book debit side Details Cash Bank VAT Trade Cash receivables sales (c) Balance b/f 156 2,369 Cash sales 1, ,550 Watling Enterprises 1,240 1,240 O Hara & Co Totals 2,016 4, ,810 1,550 (d) 1,910 2,099 (a) General ledger VAT 1,428 4 Sales ledger control 6,613 4 Cash sales 7,140 4 Bank interest received 27 4 (b) R Butler Ltd Task 8: Answer (e) the total amount should be 660

22 PRACTICE ASSESSMENT 3 Task 3: Delete current Task 3 and replace with new Task 3 attached. Task 4: Delete current Task 4 and replace with new Task 4 attached. Task 8: Note change to (b): The first option for (3) should read Prompt payment discount not Settlement discount. Answer (a) (1) the VAT should be and the total amount should be b o o k k e e p i n g 1 P P D d i s c o u n t f r o m J a n u a r y A s e s s mp er an ct t3i c e a s s e s s m e n t Task 3 The following receipts are to be entered in the debit side of Lympstone Ltd s cash book on one day. 1 Cash received from cash sales: 420 including VAT at 20%. 2 Cheque received for 777 from Brent Tools in payment of their account. 3 Bank receipt for 426 from Cameron Ltd in payment of their account. (a) Make entries in the relevant columns of the debit side of the cash book shown below. Select your entries for the Details column from the following list: Bank, Brent Tools, Cameron Ltd, Cash, Cash sales, Trade receivables, VAT. (b) Total each column. Cash book debit side Details Cash Bank VAT Trade Cash sales receivables Balance b/f 256 Totals (c) The credit side of the cash book shows total cash paid out of 432 on the same day. Using your answers above, calculate the cash balance at the end of the day. (d) The credit side of the cash book shows an overdraft brought forward at the beginning of the day of 501 and other bank payments on the day of 198. Using your answers above, calculate the bank balance. If your calculations show that the bank account is overdrawn, your answer should start with a minus sign, for example 123.

23 b ob o ko k ek e pe ipn ig n g 1 1 wp op rd k bdo ios kc o u n t f r o m J a n u a r y A s e s s m e n t 3 Task 4 Lympstone Ltd s cash book is both a book of prime entry and part of the double-entry bookkeeping system. These are the totals of the columns in the credit side of the cash book at the end of the month. Cash book - credit side Details Cash Bank VAT Trade Office Premises payables expenses expenses Totals 2,136 14, , (a) What will be the four entries in the general ledger? Select your account names from the following list: Bank, Cash, Cash purchases, Office expenses, Premises expenses, Purchases ledger control, Sales ledger control, Trade payables, VAT. Enter the names and amounts and tick the appropriate debit or credit column. General ledger 4 4 (b) One of the bank payments to trade payables was to Expo Products for 306. What will be the entry in the purchases ledger? Select your account names from the following list: Bank, Expo Products, Lympstone Ltd, Purchases, Purchases ledger, Purchases ledger control, Sales, Sales ledger, Sales ledger control, Trade payables. Enter the name and amount and tick the appropriate debit or credit column. 4 4

24 A s s e s s m e n t 3 A n s w e r s 3 b o o k k e e p i n g 1 P P D d i s c o u n t f r o m J a n u a r y Ap sre asc st mi ce n t a s3 s ae ns s wm e rns t 3 a n s w e r s Task 3 (a) and (b) Cash book debit side Details Cash Bank VAT Trade Cash sales receivables Balance b/f 256 Cash sales Brent Tools Cameron Ltd Totals 676 1, , (c) 244 (d) 504 Task 4 (a) General ledger VAT Purchases ledger control 14,722 4 Office expenses Premises expenses (b) Expo Products Task 8: Answer (a) (1) the VAT should be and the total amount should be