Osborne Books Tutor Zone. Bookkeeping Controls. Practice assessment 2

Osborne Books Tutor Zone Bookkeeping Controls Practice assessment 2 Osborne Books Limited, 2016

2 b o o k k e e p i n g c o n t r o l s t u t o r z o n e Complete all 10 tasks. Each task is independent. You will not need to refer to your answers in previous tasks. The tasks are set in a business where the following apply: You are employed by the business, Clean Style, as a bookkeeper. Clean Style uses a manual bookkeeping system. Double-entry takes place in the general ledger. Individual accounts of trade receivables and trade payables are kept in the sales and purchases ledgers as subsidiary accounts. The cash book and petty cash book should be treated as part of the double-entry system unless the task instructions state otherwise. The VAT rate is 20%. Task 1 Show which of the following payment methods best suits each situation below. Choose one payment method for each situation. Direct debit Business credit card CHAPS payment Bank draft Faster payment Cash Standing order Cheque Variable monthly bill for broadband and telephone services Payment of a credit supplier s account due in one day Purchase of computer equipment online in a one-day special offer. No credit account exists Guaranteed payment for a new vehicle costing 26,000. Payment must be made in person when the vehicle is collected from the dealer. Indicate whether each of the statements below is true or false. True False When Clean Style makes payments to suppliers by credit card, the amount leaves the bank current account immediately When Clean Style makes payments to suppliers by debit card, the amount paid does not affect the bank current account

p r a c t i c e a s s e s s m e n t 2 3 (c) Show whether the errors below cause an imbalance in the trial balance or not. Error in the general ledger Error causes Error does NOT an imbalance cause an imbalance A cash purchase has been correctly recorded in purchases account as 65, but has been recorded in cash book as 56 A bank payment to a trade payable has been recorded in the cash book only Purchases returns of 150 have been debited to purchases account A sales invoice has not been recorded in the accounting system (d) Which one of the errors below is an error of original entry? The cost of a new vehicle has been debited to vehicle repairs account Rent received of 450 by cheque has been recorded in both accounts as 540 (c) A cash sale has been debited to sales account and credited in the cash book (e) A journal entry consists of debit and credit entries for the same amount or total. True / False

4 b o o k k e e p i n g c o n t r o l s t u t o r z o n e Task 2 Clean Style pays its employees every month and maintains a wages control account. A summary of last month s payroll transactions is shown below: Item Gross wages 24,105 Employer s NI 1,981 Employees NI 1,624 Income tax 3,544 Employer s pension contributions 655 Employees pension contributions 655 Record the journal entries needed in the general ledger to: (c) (d) Record the wages expense. Record the HM Revenue & Customs liability. Record the net wages paid to the employees. Record the pension fund liability. Select your account names from the following list: Bank, Employees NI, Employer s NI, HM Revenue & Customs, Income tax, Net wages, Pension fund, Wages control, Wages expense. Enter the names and amounts and tick the appropriate debit or credit column.

p r a c t i c e a s s e s s m e n t 2 5 (c) (d) Task 3 A credit customer, Gomez Ltd, has ceased trading, owing Clean Style 648, which includes VAT. Record the journal entries needed in the general ledger to write off the net amount and the VAT. Select your account names from the following list: Clean Style, Gomez Ltd, Irrecoverable debts, Purchases, Purchases ledger control, Sales, Sales ledger control, VAT. Enter the names and amounts and select the appropriate debit or credit column.

6 b o o k k e e p i n g c o n t r o l s t u t o r z o n e Clean Style has started a new business, Clean Home, and a new set of accounts are to be opened. A partially completed journal to record the opening entries is shown below. Record the journal entries needed in the accounts in the general ledger of Clean Home to deal with the opening entries. Inventory 4,108 Bank overdraft 1,095 Capital 21,757 Sales ledger control 12,395 Purchases ledger control 7,962 Wages 3,855 Miscellaneous expenses 976 Machinery 4,550 Office equipment 2,680 Rent 2,250 Journal to record the opening entries of new business

p r a c t i c e a s s e s s m e n t 2 7 Task 4 The following is a list of the VAT totals from Clean Style s books of prime entry: Books of prime entry VAT totals for quarter Sales day book 13,104 Purchases day book 6,373 Sales returns day book 469 Purchases returns day book 346 Discounts allowed day book 340 Discounts received day book 166 Cash book: cash sales 924 Cash book: cash purchases 224 Other VAT items for the quarter are as follows: VAT on irrecoverable debt written off 90 VAT on purchase of computer equipment 460 VAT paid to HMRC 5,273 What will be the entries in the VAT control account to record the VAT transactions in the quarter? Select your entries for the Details columns from the following list: Bank, Cash book, Cash purchases, Cash sales, Discounts allowed, Discounts received, Irrecoverable debt, Office equipment, Petty cash, Purchases, Purchases returns, Sales, Sales returns, VAT. VAT control account Details Amount Details Amount Balance b/f 5,273 What will be the balance brought down on the VAT control account after the transactions have been recorded? Amount Dr Cr

8 b o o k k e e p i n g c o n t r o l s t u t o r z o n e Task 5 This is a summary of transactions with credit suppliers during the month of June. Show whether each entry will be a debit or credit in the purchases ledger control account in the general ledger. Details Amount Debit Credit Balance of credit suppliers at 1 June 13,241 Goods bought on credit 6,935 Payments made to credit suppliers 6,752 Discount received 112 Goods returned to credit suppliers 1,046 What will be the balance brought down on 1 July on the account from? Dr 12,266 Cr 12,266 (c) Dr 11,900 (d) Cr 11,900 (e) Dr 12,490 (f) Cr 12,490 (c) The following credit balances were in the purchases ledger on 1 July. Southern Suppliers Ltd 3,097 Martley Manufacturing 2,636 Nelson & Co 1,792 Linsell & Stuart 2,081 Felsberg & Co 1,238 Hudson Ltd 1,201

p r a c t i c e a s s e s s m e n t 2 9 What is the difference between the total of the balances shown on the previous page and the purchases ledger control account balance calculated in part? Purchases ledger control account balance as at 1 July Total of purchases ledger accounts as at 1 July Difference (d) What may have caused the difference you calculated in part (c)? (c) (d) An invoice was entered twice in the purchases ledger A credit note was not entered in the purchases ledger A payment to a credit supplier was entered twice in the purchases ledger Settlement (cash) discount was entered twice in the purchases ledger control account

1 0 b o o k k e e p i n g c o n t r o l s t u t o r z o n e Task 6 On 28 June Clean Style received the following bank statement as at 24 June. BANK STATEMENT Date Details Paid out Paid in Balance 20-4 01 Jun Balance brought forward 1,860 D 02 Jun Cheque 240764 485 2,345 D 04 Jun BACS credit: Scotts 3,640 1,295 C 06 Jun Cheque 240765 839 456 C 12 Jun Cheque 240766 248 208 C 15 Jun Cheque 240768 1,107 899 D 19 Jun Direct debit: Western Gas 763 1,662 D 20 Jun Direct debit: Aiken Insurance 1,241 2,903 D 20 Jun Paid into bank 2,469 434 D 22 Jun Bank charges 255 689 D 24 Jun Cheque 240770 2,322 3,011 D 24 Jun BACS credit: Amery Ltd 2,384 627 D D = Debit C = Credit

p r a c t i c e a s s e s s m e n t 2 1 1 The cash book as at 24 June is shown below. CASH BOOK Date Details Bank Date Cheque Details Bank 20-4 20-4 number 02 Jun Scotts 3,640 01 Jun Balance b/f 2,345 19 Jun D Dunlevy 1,638 01 Jun 240765 Walls plc 839 20 Jun Melia & Co 831 03 Jun 240766 Linsell & Stuart 248 24 Jun Dixon & Co 1,747 06 Jun 240767 Silk & Co 493 24 Jun Trew Ltd 3,745 10 Jun 240768 Siddique Brothers 1,107 14 Jun 240769 Hudson Ltd 554 19 Jun 240770 Yanez Ltd 2,322 19 Jun Western Gas 763 Check the items on the bank statement against the items in the cash book. Enter any items in the cash book as needed. Total the cash book and clearly show the balance carried down at 24 June (closing balance) and brought down at 25 June (opening balance). Select your entries for the Details columns from the following list: Aiken Insurance, Amery Ltd, Balance b/d, Balance c/d, Bank charges, Closing balance, Dixon & Co, D Dunlevy, Hudson Ltd, Linsell & Stuart, Melia & Co, Opening balance, Scotts, Siddique Brothers, Silk & Co, Trew Ltd, Walls plc, Western Gas, Yanez Ltd.

1 2 b o o k k e e p i n g c o n t r o l s t u t o r z o n e Task 7 On 1 October Clean Style received the following bank statement as at 30 September. BANK STATEMENT Date Paid out Paid in Balance 20-4 01 Sep Balance b/f 345 C 02 Sep 240830 1,422 1,077 D 04 Sep Paid in 1,738 661 C 08 Sep 240832 247 414 C 12 Sep 240831 556 142 D 13 Sep Paid in 697 555 C 18 Sep 240833 496 59 C 20 Sep BACS Khan Ltd 1,028 1,087 C 23 Sep SO Bridge Property 750 337 C 25 Sep Paid in 754 1,091 C 26 Sep Bank charges 75 1,016 C The cash book as at 30 September is shown below. Date Details Amount Date Cheque Details Amount 20-4 20-4 number 04 Sep Elend Ltd 1,738 01 Sep Balance b/f 1,077 13 Sep Draper & Co 697 06 Sep 240831 Bell Kitchens 556 20 Sep BACS Khan Ltd 1,028 09 Sep 240832 Velani Ltd 247 25 Sep Kelly Ltd 754 13 Sep 240833 JQ Trading 496 30 Sep Marsh & Co 968 17 Sep 240834 Parry Cleaning 836 23 Sep SO Bridge Properties 750 24 Sep BACS Haddon Ltd 1,507 26 Sep Bank charges 75

p r a c t i c e a s s e s s m e n t 2 1 3 Identify the three transactions that are included in the cash book but missing from the bank statement and complete the bank reconciliation statement below as at 30 September. Select your entries for the name rows from the following list: Bank charges, Bell Kitchens, Bridge Properties, Draper & Co, Elend Ltd, Haddon Ltd, JQ Trading, Kelly Ltd, Khan Ltd, Marsh & Co, Parry Cleaning, Velani Ltd. Bank reconciliation statement as at 30 September 20-4 Balance as per bank statement Add: Name: Total to add Less: Name: Name: Total to subtract Balance as per cash book Refer to the cash book in and check that the bank statement has been correctly reconciled by calculating: the cash book balance and whether it is a debit or a credit the total of each of the bank columns after the balance carried down has been recorded Cash book balance Bank column totals Debit / Credit

1 4 b o o k k e e p i n g c o n t r o l s t u t o r z o n e Task 8 A suspense account has been opened with a balance of 100. The error has been traced to the sales returns day book shown below. Sales returns day book Date 20-4 Details Credit note number Total VAT Net 30 Jun Western Trains CN45 1,440 240 1,200 30 Jun Blenheim Care CN46 684 114 570 30 Jun Nelson Hotel Ltd CN47 384 64 320 Totals 2,508 418 2,190 Identify the error and record the journal entries needed in the general ledger to: (1) Remove the incorrect entry. (2) Record the correct entry. (3) Remove the suspense account balance. Select your account names from the following list: Blenheim Care, Nelson Hotel Ltd, Purchases, Purchases ledger control, Purchases returns, Sales, Sales ledger control, Sales returns, Suspense, VAT, Western Trains. Enter the names and amounts and tick the appropriate debit or credit column. (1) (2) (3)

p r a c t i c e a s s e s s m e n t 2 1 5 A direct debit for insurance of 870 has been entered in the accounts as 780. Record the journal entries needed in the general ledger to remove the incorrect entry. Select your account names from the following list: Bank, Cash, Direct debit, Insurance, Purchases, Suspense. Enter the names and amounts and select the appropriate debit or credit column. Record the journal entries needed in the general ledger to record the correct entry. Select your account names from the following list: Bank, Cash, Direct debit, Insurance, Purchases, Suspense. Enter the names and amounts and tick the appropriate debit or credit column.

1 6 b o o k k e e p i n g c o n t r o l s t u t o r z o n e Task 9 Journal entries shown below have been prepared to correct an error. Journal entries Account name Debit Credit Rent received 1,245 Suspense 1,245 Suspense 1,425 Rent received 1,425 Record the journal entries in the general ledger accounts and show the balance carried down on the rent received account. Select your entries from the following list: Balance b/d, Balance c/d, Bank, Rent received, Suspense Suspense Details Amount Details Amount Balance b/d 180 Rent received Details Amount Details Amount Balance b/d 1,245

p r a c t i c e a s s e s s m e n t 2 1 7 Task 10 On 31 July a trial balance was extracted and did not balance. The debit column totalled 116,953 and the credit column totalled 116,023. What entry is needed in the suspense account to balance the trial balance? Account name Debit Credit Suspense The journals to correct the bookkeeping errors, and a list of balances as they appear in the trial balance, are shown below. Journal entries Account name Debit Credit Suspense 330 Commission received 330 Suspense 330 Commission received 330 Account name Debit Credit Sales 1,360 Suspense 1,360 Suspense 1,630 Sales 1,630 Complete the table on the next page to show: the balance of each account after the journal entries have been recorded whether each balance will be a debit or credit entry in the trial balance

1 8 b o o k k e e p i n g c o n t r o l s t u t o r z o n e Account name Original balance New balance Debit Credit Commission received 1,392 Sales 73,391 (c) On 30 September a partially prepared trial balance had debit balances totalling 117,493 and credit balances totalling 120,613. The accounts below have not yet been entered into the trial balance. Complete the table below to show whether each balance is a debit or a credit entry in the trial balance. Account name Balance Debit in the Credit in the trial balance trial balance Capital 16,271 Sales ledger control 15,624 Advertising 3,767 (d) What will be the totals of each column of the trial balance after the balances in (c) have been entered? Account name Debit Credit Totals