1.

2 Double-entry bookkeeping
(a) Recording of transactions by double-entry
(b) Balance an account and bring down the balance
Double entry bookkeeping
Reference: Frank Wood’s-Business Accounting Sangster 14th Edition - Chapter 2- Recording transactions
Page 21-43

Use the accounting equation

Book-keeping
Double entry book-keeping is a system where each transaction is entered twice, once on the debit side and once
on the credit side.

Basic Principles of Bookkeeping (still use in modern accounting!)

1. That all transactions should be recorded in great details in a book called the “Journal or Memorandum”.

2. The transactions should then be transferred to another book, the Ledger, and that each transaction has at least
two entries to it, a debit and a credit, hence the term ‘Double Entry’ bookkeeping.

Recording transactions through double entry (assets, capital and liabilities)

Dr ‘T’ Account Name Cr

--------------------------------------------------------------------------------------------------------------------------------------
Date Narrations $ ∣ Date Narrations $
∣
Debit(Dr) ∣ Credit(Cr)
*(It can be + or – depending on the type of account) ∣ *(It can be + or – depending on the type of account)
∣

Assets = Capital + Liabilities

Dr Assets Cr Dr Capital Cr Dr Liabilities Cr

------------------------------------- --------------------------------------- -------------------------------------
$ $ $ $ $ $
Debit Credit Debit Credit Debit Credit

(increase)↑ (decrease)↓ (decrease)↓ (increase)↑ (decrease)↓ (increase)↑

Disposal

+ - - + - +

Dr Drawings Cr
--------------------------------------------
$ $
Debit Credit
(increase)↑ (decrease) ↓

+ -
Double entry
Question 1
Complete the following table, showing which accounts are to be debited and which are credited:
Transactions Account to be Account to be
debited credited

(a) Bought a lorry in cash

(b) Paid a trade payable, T Lui, by cheque

(c) Repaid P Mok’s loan in cash

(d) Sold the lorry for cash.

(e) Bought office machinery on credit from Ultra Ltd

(f) A trade receivable, C Wing, paid us in cash

(g) A trade receivable, W Po, paid us by cheque

(h) The proprietor put a further amount

into the business by cheque

(i) A loan of $200 in cash was received from L Lo

(j) Paid a trade payable, S Chun, in cash

Question 2:
Complete the following table: Debit Credit

(a) Bought office machinery on credit from D Isaacs Ltd. ___________ ____________

(b) The proprietor paid a trade payable, C Jones, from his ___________ ____________
private monies outside the firm.

(c) A trade receivable, N fox, paid us in cash. ___________ ____________

(d) Repaid part of loan from P Exeter by cheque ___________ ____________

(e) Returned some of office machinery to D Isaacs Ltd ___________ ____________

(f) A trade receivable, N Lyn, pays us by cheque. ___________ ____________

(g) Bought motor van by cash. ___________ ____________

Question 3
1. A business bought a motor vehicle on credit from Cas Supplier Motor for $6,200

2. A trade receivable (debtor) pays $250 by cheque

3. Mandrake bought goods on credit from JJ Toys for $700

4. Yaya negotiates a 10 year-loan from Bank of China for $900,000.

5. Purchase of goods by cash $350

6. L Wang draws a cheque upon his bank to repay the full loan from T Wells.

7. The owner withdraws $160 from the firm’s bank account for his personal use.
Question 4
Write up the accounts to record the following transactions for T Wong:
2015
Jun 1 Started business with $30,000 cash and a $40,000 bank deposit.
Jun 2 Bought office furniture for $4,000 on credit from Sun Furniture.
Jun 6 The owner put $5,000 cash into the business
Jun 10 Bought a photocopy machine for $10,000 by cheque
Jun 13 Returned office furniture, which cost $200, to Sun Furniture.
Jun 16 Bought more office furniture for $3,000 in cash
Jun 17 Paid Sun Furniture $2,000 by cheque
Jun 19 Bought fixtures for $2,000 in cash.
Jun 22 Received a $10,000 loan in cash from D Hu.
Jun 25 Put $15,000 cash into bank account.
Jun 27 Paid Sun Furniture $1,800 in cash.
Jun 30 Bought a digital camera for $3,000 which was paid by the owner.

Dr Cash Cr Dr Bank Cr
2015 $ 2015 $ 2015 $ 2015 $

Dr Capital Cr Dr Office Furniture Cr

2015 $ 2015 $ 2015 $ 2015 $

Dr Sun Furniture Cr Dr Photocopy machine Cr

2015 $ 2015 $ 2015 $ 2015 $

Dr Fixtures Cr Dr Loan from D Hu Cr

2015 $ 2015 $ 2015 $ 2015 $

Dr Digital camera Cr Dr Cr
2015 $ 2015 $ 2015 $ 2015 $
Question 5
Write up the accounts of A Chiu to record the following transactions:
2006
Mar 1 Started business with $12,000 cash and a van worth $6,000.
Mar 3 Bought machinery for $16,000 on credit from Super Machines
Mar 6 Received a $50,000 bank loan, which was deposited in the company’s bank account.
Mar 8 Bought a computer for $25,000 on credit from Universal Ltd
Mar 15 Paid Super Machines $10,000 by cheque
Mar 17 Bought office furniture for $4,000 in cash
Mar 19 Paid Universal Ltd $10,000 by cheque
Mar 20 Paid Super Machines $6,000 in cash
Mar 23 Returned machinery costing $700 to Super Machines, which agreed to refund within a month.
Mar 25 Took $5,000 out of the bank and put it into the cash till.
Mar 27 Sold a van for $6,000 in cash
Mar 30 Paid Universal Ltd $15,000 by cheque

Dr Cash Cr Dr Van Cr
2006 $ 2006 $ 2006 $ 2006 $

Dr Capital Cr Dr Machinery Cr
2006 $ 2006 $ 2006 $ 2006 $

Dr Super Machines Cr Dr Bank Loan Cr

2006 $ 2006 $ 2006 $ 2006 $

Dr Bank Cr Dr Computer Cr
2006 $ 2006 $ 2006 $ 2006 $

Dr Universal Ltd Cr Dr Office Furniture Cr

2006 $ 2006 $ 2006 $ 2006 $
Assets = Capital + Liabilities
Frank Wood’s Business Accounting 14th Edition Alan Sangster Chapter 2 Recording Transactions Page
21 to 43
Ex 2.11A
Ex 2.14A
Ex 2.15A