Principles of Accounting: Balancing off the Accounts Example

////Principles of Accounting: Balancing off the Accounts Example

Principles of Accounting: Balancing off the Accounts Example

ZIMSEC O Level Principles of Accounts Notes: Balancing off the Accounts Example

  • We have already looked at the steps you need to take when balancing off the accounts here
  • We will now look at a simple example:

The following transactions took place in the books of Esnath Pasipanodya in the month of August

20X7
August
1 Credit sales G Wadii $310; K Huni $42; F Dube $1,100; M Shumba $309.
2 Credit purchases from T Simba $190; J Nhata $63; P Muchena $210; F Dombo $190.
8 Credit sales to K Huni $161; F Dube $224.
9 Credit purchases from J Nhata $215; F Dombo $164.
10 Goods returned to us by F Dube $31; M Shumba $82.
12 Cash paid to us by M Shumba $227.
15 We returned goods to T Simba $15; F Dombo $21.
19 We received cheques from F Dube $750; G Wadii $310.
21 We sold goods on credit to G Wadii $90; K Huni $430.
28 We paid by cheque the following: T Simba $175; F Dombo $100; P Muchena $180.
31 We returned goods to F Dombo $18.

Required:

  1. Enter the above transactions in personal accounts only.
  2. Balance off the accounts for the end of the month
  3. Calculate the total figures for Creditors and Debtors

Solution

Purchases Ledger
DrT Simba Account
DateDetailsAmount($)DateDetailsAmount($)
15 AugustReturns Outwards152 AugustPurchases190
28 AugustBank175

190

190

J Nhata Account
DateDetailsAmount($)DateDetailsAmount($)
31 AugustBalance c/d2782 AugustPurchases63
9 AugustPurchases215

278

278

1 SeptemberBalance b/d278
P Muchena Account
DateDetailsAmount($)DateDetailsAmount($)
28 AugustBank1802 AugustPurchases210
31 AugustBalance c/d30

210

210

1 SeptemberBalance b/d30
F Dombo Account
DateDetailsAmount($)DateDetailsAmount($)
15 AugustReturns Outwards212 AugustPurchases190
28 AugustBank1009 AugustPurchases164
31 AugustReturns Outwards18
31 AugustBalance c/d215

354

354

1 SeptemberBalance b/d215
Sales Ledger
DrG Wadii AccountCr
DateDetailsAmount($)DateDetailsAmount($)
1 AugustSales31019 AugustBank310
21 AugustSales9031 AugustBalance c/d90

400

400

K Huni Account
DateDetailsAmount($)DateDetailsAmount($)
1 AugustSales4231 AugustBalance c/d633
8 AugustSales161
21 AugustSales430

633

633

1 SeptemberBalance b/d633
F Dube Account
DateDetailsAmount($)DateDetailsAmount($)
1 AugustSales110010 AugustReturns Inwards31
8 AugustSales22419 AugustBank750
31 AugustBalance c/d543

1324

1324

1 SeptemberBalance b/d543
M Shumba Account
DateDetailsAmount($)DateDetailsAmount($)
1 AugustSales30910 AugustReturns Inwards82
12 AugustCash227

309

309

  • You are being asked to show entries in the personal accounts i.e. Purchases and Sales Ledger Accounts. Accounts in the Cash Book and General Ledger are known as nominal accounts
  • General Ledger entries can be a bit daunting to new comers when it comes to balancing them as some of them are closed off at the end of the period e.g. Expense accounts are “balanced off” by transferring them to the Profit and Loss Account
  • The order of the accounts in not important nor is the order of the ledgers we could have started with the Sales Ledger and the solution would still be acceptable. The accounts within the ledgers can be presented in any order

3) Here is the list of total creditors and debtors

DrCR
00
633278
54330
0215

1176

523

  • The total accounts payable(Trade Creditors) is: $523
  • The total for accounts receivable( Trade Debtors) is: $1176
  • To find these figures all you need to do is add up all the balances for creditors and debtors

To access more topics go to the Principles of Accounts Notes.

By |2017-07-28T07:42:13+00:00July 28th, 2017|Notes, Ordinary Level Notes, Principles of Accounts Notes|1 Comment

About the Author:

He holds an Honours in Accountancy degree from the University of Zimbabwe. He is passionate about technology and its practical application in today's world.
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