CAMBRIDGE INTERNATIONAL AS & A LEVEL ACCOUNTING: TEACHER'S RESOURCE

Exam-style questions and sample answers have been written by the authors. In examinations, the way marks are awarded may
be different.

Coursebook answers
Most of the answers are in ‘outline’ form indicating the appropriate points and skills that learners need
to include in their answers. They provide the necessary guidance to allow learners to develop and extend
the points for a fuller answer that contains the relevant skills. In many instances, there may be other valid
approaches to answering the question.

Chapter 3
Accounting in context
Cash or card?
Learners’ answers may include:
• Low value transactions; where purchases/sales are made in person rather than online etc.
• If customers buy goods using cash then small business owners will want to move money regularly into
bank accounts for security. A business owner may also transfer money out of the bank account to
ensure that they have an appropriate float of low denomination notes and coins for change in the till.

Activities
Activity 3.1
Purchases journal
$
Nov 1 Cora 8 000
Nov 2 Prem 14 000
Nov 5 Cora 12 800
Nov 10 34 800

Purchases returns journal

$
Nov 4 Cora 320
320

Cambridge International AS & A Level Accounting – Hopkins, Malpas, Randall & Seagrove
1 © Cambridge University Press 2021
 CAMBRIDGE INTERNATIONAL AS & A LEVEL ACCOUNTING: TEACHER'S RESOURCE

Cash book
Debit Credit
Disc Cash Bank Discounts Cash Bank
(received)
$ $ $ $ $ $
Nov 9 Cora 1 024 19 456
Nov 9 Prem 14 000
1 024

Discounts received account

Debit Credit
$ $
Nov 10 Cash book 1 024

Purchases account
Debit Credit
$ $
Nov 10 Purchases journal 34 800

Purchase returns account

Debit Credit
$ $
Nov 10 Purchases returns journal 320

Cora account
Debit Credit
$ $
Nov 4 Purchase returns 320 Nov 1 Purchases 8 000
Nov 9 Bank 19 456 Nov 5 Purchases 12 800
Nov 9 Discounts received 1 024

Prem account
Debit Credit
$ $
Nov 9 Bank 14 000 Nov 2 Purchases 14 000

Activity 3.2
Cash book
Debit Credit
Disc Cash Bank Discounts Cash Bank
(received)
$ $ $ $ $ $
Apr 1 Sales 1 000 Apr 2 Electricity   100
Apr 3 Sales   800 Apr 4 Bank C 1 400
Apr 4 Cash C 1 400 Apr 5 Stationery    20
Apr 6 Bank C   900 Apr 6 Cash C 900
Apr 7 Purchases    600

Cambridge International AS & A Level Accounting – Hopkins, Malpas, Randall & Seagrove
2 © Cambridge University Press 2021
 CAMBRIDGE INTERNATIONAL AS & A LEVEL ACCOUNTING: TEACHER'S RESOURCE

Activity 3.3
Journal
Date Details Dr Cr
$ $
Motor vehicle 14 000
Paul 14 000
Narrative: Purchase of vehicle from Paul. See Paul invoice no. 73.
Furniture 6 000
Purchases 6 000
Narrative: Correction of an error. Furniture debited to Purchases account in error.
Equipment 6 000
Furniture 3 000
Stationery 1 000
Capital 10 000
Narrative: Opening entries for new business
B Jones 170
C Jones 170
Narrative: Correction of an error. Credit note no. 34 from B. Jones posted to
C. Jones in error.

Practice questions
1 B $950 × 0.8 = $760; note: only the trade discount is deducted.
2 A $200 × 0.9 = $180; credit purchases affect the purchases a/c debit and the supplier’s a/c credit,
so both will be underadded.
3 Purchases journal
$
May 1 Bhanu 900 [1]
May 7 Adya 720 [2]
May 20 Adya 800 [3]
2 420

Notes:
[1] $1 000 less 10% trade discount is $900 ($1 000 × 0.9)
[2] $720 ($900 × 0.8)
[3] $800 ($1 000 × 0.8)

Sales journal
$
May 4 Krish 1 800 [1]
May 22 Nour 1 600 [2]
3 400

Notes:
[1] $1 800 ($2 000 × 0.9)
[2] $1 600 ($2 000 × 0.8)

Cambridge International AS & A Level Accounting – Hopkins, Malpas, Randall & Seagrove
3 © Cambridge University Press 2021
 CAMBRIDGE INTERNATIONAL AS & A LEVEL ACCOUNTING: TEACHER'S RESOURCE

Purchases returns journal

$
May 14 Bhanu 100
100

Sales returns journal

$
May 19 Krish 120
May 24 Krish 100
220

The journal
Date Details Dr Cr
$ $
May 8 Equipment 4 000
Sanjay 4 000
Narrative: Purchased equipment for business use. Invoice 156.

Cash book
Debit Credit
Disc Cash Bank Discounts Cash Bank
(received)
$ $ $ $ $ $
May 31 Krish [1]  79 1 501 May 31 Bhanu [3]  40   760
Nour [2]  80 1 520 Adya [4]  76 1 444
Sanjay 4 000
159 116

Notes:
[1] Krish: Sales − sales returns = $1 800 − $220 = $1 580; Cash discount is $79 ($1 580 × 0.05);
Payment is $1 501 ($1 580 − $79)
[2] Nour: Sales are $1 600; Cash discount is $80 ($1 600 × 0.05); Payment is $1 520 ($1 600 − $80)
[3] Bhanu: Purchases − purchase returns are $800; Cash discount is $40 ($800 × 0.05); Payment is $760
($800 − $40)
[4] Adya: Purchases are $1 520; Cash discount is $76 ($1 520 × 0.05); Payment is $1 444 ($1 520 − $76)

Purchases account
Debit Credit
$ $
May 31 Purchases journal 2 420

Sales account
Debit Credit
$ $
May 31 Sales journal 3 400

Cambridge International AS & A Level Accounting – Hopkins, Malpas, Randall & Seagrove
4 © Cambridge University Press 2021
 CAMBRIDGE INTERNATIONAL AS & A LEVEL ACCOUNTING: TEACHER'S RESOURCE

Purchase returns account

Debit Credit
$ $
May 31 Purchases returns journal 100

Sales returns account

Debit Credit
$ $
May 31 Sales returns journal 220

Bhanu account
Debit Credit
$ $
May 14 Purchase returns 100 May 1 Purchases 900
May 31 Discounts received  40
May 31 Bank 760

Adya account
Debit Credit
$ $
May 31 Discounts received    76 May 7 Purchases 720
May 31 Bank 1 444 May 20 Purchases 800

Krish account
Debit Credit
$ $
May 4 Sales 1 800 May 19 Sales returns   120
May 24 Sales returns   100
May 31 Discounts allowed    79
May 31 Bank 1 501

Nour account
Debit Credit
$ $
May 22 Sales 1 600 May 31 Discounts allowed 80
May 31 Bank 1 520

Sanjay account
Debit Credit
$ $
May 31 Bank 4 000 May 8 Equipment 4 000

Equipment account
Debit Credit
$ $
May 8 Sanjay 4 000

Cambridge International AS & A Level Accounting – Hopkins, Malpas, Randall & Seagrove
5 © Cambridge University Press 2021
 CAMBRIDGE INTERNATIONAL AS & A LEVEL ACCOUNTING: TEACHER'S RESOURCE

Discounts received account

Debit Credit
$ $
May 31 Cash book 116

Discounts allowed account

Debit Credit
$ $
May 31 Cashbook 159

4 Learners’ answers might include:

• The sales journal is the book of prime entry that records sales made on credit only, while the
general journal records many different transactions that are not recorded in other books of prime
entry, for example the correction of errors.
• Entries in the sales journal are made from copies of invoices sent to customers whereas there can be
different sources of information that give rise to a general journal entry. For example, an error found
in the accounts may have an email from the accounts manager explaining the correction needed.
A narrative explaining the entry is only needed for a journal entry not a sales journal entry.

Cambridge International AS & A Level Accounting – Hopkins, Malpas, Randall & Seagrove
6 © Cambridge University Press 2021