Unit: CAFF001 Accounting Systems and Processes

Topic: 03 The Accounting Process

Document: Practice Questions & Activities

Topic 3: The Accounting Process

David has been running his business for a month now and he is struggling to keep track of things.
While David has some rudimentary business skills he picked up, he is no accountant.

David recalls that you are currently studying Accounting at University and he has decided to
approach you for help. Being the good friend that you are you decided to said ‘for sure’ as you’re
the type of person that loves to help out a mate in need.

David provides you with details regarding the Shirt Shop in January 20X8. He would like to know -
how much cash was in the business bank account at the end of January 20X8? And how much did
the business owe suppliers (accounts payable) at the end of Jan 20X8?

1. David, (sole owner of The Shirt Shop) deposited $20,000 in the bank to provide the business with
additional cash flow.
2. Paid rent for January $3,500.
3. During the month, cash sales were made totalling $18,900. The cost price of the goods sold was
$8,820.
4. Purchased office supplies $300 and paid cash.
5. David withdrew $8,000 from the business bank account as monthly drawings.
6. Received $33,360 from credit sales made in previous periods.
7. Paid advertising bill for the month of January 20x8 $2,100.
8. Purchased inventory on credit $43,000.
9. During the month, credit sales were made totalling $75,600. The cost price of the goods sold was
$35,280.
10. Paid sales commission to employees for the month $2,360 cash.
11. Paid Delivery Expenses for month $3,780.
12. Received $49,900 from credit sales made during the month.
13. Paid $47,648 to suppliers for purchases of inventory on credit.
14. Paid interest on the loan for the month $200.
15. Paid salaries – Sales staff for the month $14,000.
16. Paid salaries – Office staff for the month $6,500.
31st. Purchased shop fittings for $20,400 cash.

REQUIRED:

In order to help calculate the overall “cash at bank” and “accounts payable” closing balances you will need
to complete a BASIC Transaction Analysis Table as below. Please note that the opening balances have
already been pre-filled to get you started.

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 Unit: CAFF001 Accounting Systems and Processes
Topic: 03 The Accounting Process
Document: Practice Questions & Activities

BASIC TRANSACTION ANALYSIS TABLE

ASSETS ($) LIABILITIES ($) OWNER’S EQUITY ($)
Date

+12,000 Cash
+42,000 Accounts Receivable
+10,800 Inventory
+250 Supplies
+16,800 Computer Equipment +24,624 Accounts payable
1 JAN +71,226 Capital
-4,000 Accumulated depreciation +30,000 Bank Loan
(Computer)
+12,000 Shop Fittings
+36,000 Delivery vehicle

1 JAN +20,000 capital

+20,000 cash

2 JAN -3,500 cash

+ 3,500 prepaid rent

+18,900 Cash +18,900 Sales revenue

3 JAN

3 JAN -8,820 Inventory -8,820 cost of goods sold

+300 office supplies

4 JAN
- 300 cash

5 JAN -8,000 Cash - 8,000 drawings

+33,360 cash
6 JAN
-33,360 accounts rec

-2,100 cash
7 JAN
+2,100 prepaid expense

8 JAN +43,000 inventory +43,000 accounts payable

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 Unit: CAFF001 Accounting Systems and Processes
Topic: 03 The Accounting Process
Document: Practice Questions & Activities

9 JAN +75,600 Accounts rec +75,600 sales revenue

9 JAN -35,280 inventory -35,280 cost of goods sold

10 JAN -2,360 cash -2,360 commission expense

-3,780 cash
11 JAN
+3,780 prepaid expense

+49,900 cash
12 JAN
-49,900 accounts rec

13 JAN -47,648 cash -47,648 accounts payable

14 JAN -200 cash -200 interest expense

15 JAN -14,000 cash -14,000 employee expenses

16 JAN -6,500 cash -6,500 employee expenses

-20,400 cash
31 JAN
+20,400 shop fittings

Totals

The closing balance for cash account and accounts payable are as follows:

Cash at Bank (Closing Balance)

25,372

Accounts Payable (Closing Balance)

19,994