CHAPTER 5: Ledger accounts and double entry

5.2. Accounting equation

3. Transaction & accounting equation

Transactions Assets Liabilities Capital ( equity)

Increase sales
Credit sales Increase reveivables (decrease by cost
of sales)
Decrease purchases
Increase sales
Cash sales Increase cash (decrease by cost
of sales)
Decrease purchases
Credit purchase Increase purchase Increase payable
Cash purchase Increase purchase
Decrease cash
Cash expense Decrease cash (Decrease expense)
Cash purchase
Increase non-current asset
(NCA)
Decrease cash

DAY 1
1. Jane commenced business introducing $20,000 cash (café shop)
2. Jane rent a house for a month and set up the cafeteria with $6,000
3. Jane also bought a café maker for $3,000
4. Jane uses $700 cash to buy direct material for making coffee

DAY 2
1. Jane obtained a $1,000 loan of her friend
2. Jane hire Alex as assistance with $10/day (paid instant at the end of the day)
3. Jane made marketing campaign of Facebook and it costed her $200
4. Jane sole 200 cups ($2 direct cost per cup) for cash and sole 30 cups for Alibaba's office on credit. With
5. Jane bought further $600 raw meterials from Trung Nguyeen on credit

DAY 3
1. Alex worked further 20 days with $10/day
2. Jane sold 4000 cups ($2 cost for each) on cash
3. Up to now, Alibaba bought further from Jane 600 cups on credit
4. Jane bought further $15000 raw meterials for Trung Nguyen on credit
5. Jane paid Ellery for the $1000 loan
6. Alibaba paid Jane $2000
7. Jane paid Trung Nguyen $10000 for raw materials
 33,680
DATE Transation Effects Asset
1 Commenced business Cash 20000.000
1 Opening capital
1 Rent a house Cash (6000.000)
1 Expense
1 Purchase mechinery Cash (3000.000)
1 Non- current asset 3000.000
1 Purchase Cash (700.000)
1 Inventory 700.000
2 Loan Cash 1000.000
2 Loan
2 Pay salary Cash (10.000)
2 Expense
2 Advertising Cash (200.000)
2 Expense
2 Cash sales Cash 1000.000
2 Revenue
2 Inventory (400.000)
2 Cost of sales
2 Credit sales Receivable 150.000
2 Revenue
2 Inventory (60.000)
2 Cost of sales
2 Credit purchase Payable
2 Inventory 600.000
3 Pay salary Cash (200.000)
3 Expense
3 Cash sales Cash 20000.000
3 Revenue
3 Inventory (8000.000)
3 Cost of sales
3 Credit sales Receivable 3000.000
3 Revenue
3 Inventory (1200.000)
3 Cost of sales
3 Credit purchase Payable
3 Inventory 15000.000
3 Loan repayment Cash (1000.000)
3 Loan
3 Credit payment Cash 2000.000
3 Receivable (2000.000)
3 Paid to supliers Cash (10000.000)
3 Payable
 uble entry

expense)

Alibaba's office on credit. With price of each cup is $5

 5,600 28,080 33,680
Liabilities Equity

20000.000 Data
Effects Sum of Asset Sum of Liabilities
(6000.000) Cash 22890.000
Cost of sales
Expense
Inventory 6640.000
Loan .000
Non- current asset 3000.000
1000.000 Opening capital
Payable 5600.000
(10.000) Receivable 1150.000
Revenue
(200.000) Total Result 33680.000 5600.000

1000.000
Revenue 24150
(400.000) Cost of sales (9660)
Gross profit 14,490
150.000 Expense (6410)
Profit 8,080
(60.000)
600.000 Closing capital 28,080

(200.000)

20000.000

(8000.000)

3000.000

(1200.000)
15000.000

(1000.000)

(10000.000)
 BAO CAO TAI CHINH
Sum of Equity
Asset Liabilities and equity
(9660.000) Cash 22890 Liabilities
(6410.000) Inventory 6640 Payable
Receivables 1150 Equity
Non-current asset capital
Total asset 33680 Retained earning
20000.000 Total liabilities and equity

24150.000
28080.000
 Liabilities and equity

5600

20000
8,080
abilities and equity 33,680
DATE DATE DESCRIPTION DR CR
### DR Cast at bank $1,000
CR Loan $1,000
( Obtain $ 1000 loan from Ellery)
### DR Salary expence $10
CR Cash $10
(pay Alex salary for 1 day)
### DR Advertisting expense $200
CR Cash $200
(Pay for Fb campaign)
1. Jane obtained a $ 1000 loan of Ellery - her friend
2. Jane hire Alex as assistance with $10/day ( paid instant at thr end of day)
3. Jane made amketing campaign of Facebook and it costed her $200
a1 a2
Purchase 500 on credit Purchase 500 on cash
DR Purchase 500 DR Purchase 500
CR Payable 500 CR cash at bank 500

b
Sale on credit Cash sale
DR Receivable 800 (asset) DR cash 240
CR Sales 800 (income) CR Sales 240

c
DR Other expenses 260
CR cash 260

6.2
 Cách trình bày 2 dựa vào trial balance 6.1
Profit or loss DR CR
Sales 15640
Cost of sales 13400
Local business tax 1880
Bank loan interest 1400
Other expense 11280
27960 15640

"=> loss: -12320

6.3
Statement of financial position for the year end at 31.03.20X7
Assets
Current assets:
Cash at bank 11180
Trade accounts payables 12800
Non - current assets
Vehicles 2020
Total assets 26000

Liabilities and equity

Liabilities
Current liabilites
Trade payables 11700
Sundry payables 1620
Non - current liabilites
Bank loan 12000
Total libilities 25320

Equity
Capital 13000
Cummulative loss -12320
Total equity 680
Total liabilities and equity 26000
WORKSHEET
Unadjusted balance
Type of accounts Account Debit Credit
Asset Cash at bank $11,700
Asset Purchases
Asset Trade accounts receivable $12,000
Asset Vehicles $2,020
Liabilities Bank loan $12,000
Liabilities Trade accounts payable $11,200
Liabilities Sundry payables $1,620
Equity Capital $13,000
Income Sales $14,600
Expenses Cost of sales $12,400
Expenses Local business taxes $1,880
Expenses Bank loan interest $1,400
Expenses Other expenses $11,020
$52,420 $52,420

Trial balance
Accounts Debit Credit
Cash at bank 11940 760
Trade accounts receivable 12800
Vehicles 2020
Bank loan 12000
Trade accounts payable 11700
Sundry payables 1620
Capital 13000
Sales 15640
Cost of sales 13400
Local business taxes 1880
Bank loan interest 1400
Other expense 11280
54720 54720

Profit or loss account

DR CR
Bank loan interest 1400 Sales
Other expenses 11280 Balance c/d
Cost of sales 13400
Taxes 1880
27960
 công ty loss: 12320
sau khi lập profit or loss account thì lập statement
Lập báo cáo cáo tài chính Preparing SOPL

Statement of profit or loss Column1

Sales 15640
Cost of sales -13400
Gross profit (lợi nhuận gộp) 2240
Expenses:
Other expense -11280
Bank interest -1400
Bussiness taxes -1880
Total expense -14560
balance 6.1 Loss of the year -12320

Trial balance
Accounts Debit Credit
Cash at bank 11940 760
Trade accounts rece 12800
Vehicles 2020
Bank loan 12000
Trade accounts payable 11700
Sundry payables 1620
Capital 13000
Sales 15640
Cost of sales 13400
Local business taxe 1880
Bank loan interest 1400
Other expense 11280
54720 54720
 Adjustment Adjusted balance
Debit 1 Credit 1 Debit 2 Credit 2
$240 $760 $11,940 $760
$0
$800 $12,800
$2,020
$12,000
$500 $11,700
$1,620
$13,000
$1,040 $15,640
$1,000 $13,400 $0
$1,880
$1,400
$260 $11,280
$2,300 $2,300 $54,720 $54,720

15640
12320

27960
account thì lập statement of profit or loss
7.5 Cost of inventory

2. Determining costs
Cost

Standard cost

Cost of inventory = cost of

Items can purchase in $10
purchase + conversion cost +
and sell in $15
other costs

1, Opening inventory (500 items) Inventory = 10*500 = 5000

2, Purchase inventory
Cost of purchase = 10*9500= 95000
(9,500 items)
3, Selling inventory (4,000 items) Revenue = 15*4000 = 60000

Closing inventory = 6000 items

4, Closing inventory
= 10*6000 = 60000

3. Cost formula/ the introduction

Cho bảng tính closing balance and cost of good sold theo 2 phương pháp

Date Received $ Issued (xuat) Inventory balance

Opening $50 100

3/8 300 $55 400
5/8 $80 -200 200
7/8 400 $60 600
9/8 $80 -500 100
15/8 400 $70 500

FIFO - Fist in fist out

Date Inventory Cost Total
opening 100 $50 5000
3/8 100 $50 5000
received 300 $55 16500
5-Aug 100 $50 5000
300 $55 16500
issued -100 $50 (5000)
-100 $55 (5500)
balance 200 $55 11000
 7-Aug 200 $55 11000
received 400 $60 24000
9-Aug 200 $55 11000
400 $60 24000
issued -200 $55 (11000)
-300 $60 (18000)
Balance 100 $60 6000
15-Aug 100 $60 6000
received 400 $70 28000

AVCO Continuous => have average cost at any time

Date Inventory Cost Total

opening 100 $50.00 5000
Average price $50.00
3-Aug 100 $50.00 5000
Received 300 $55.00 16500
Average price 400 $53.75 21500
5-Aug 400 $53.75 21500
Issued -200 $53.75 (10750)
Average price 200 $53.75 10750
7-Aug 200 $53.75 10750
Received 400 $60.00 24000
Average price 600 $57.92 34750
9-Aug 600 $57.92 34750
Issued -500 $57.92 (28960)
Average price 100 $57.92 5792
15-Aug 100 $57.92 5792
Received 400 $70.00 28000
Average price 500 $67.58 33792

AVCO - periodic => unit price is calculated at the end of the periods

Date Inventory $ Total

Opening 100 $50 $5,000

3/8 300 $55 $16,500
5/8 $0
7/8 400 $60 $24,000
9/8 $0
15/8 400 $70 $28,000
Adverage price 1200 $61.25 $73,500

7.6 Net realizable value

The following figures ralate to inventory led at the year end

A B C
cost 20 9 12
selling price 30 12 22
modification cost to enable sale - 2 8
maketing costs 7 2 2
units held 200 150 300
=> Calculate the value of inventory held

NRV 23 8 12
value of inventory 4000 1200 144
TOTAL 5344
Sale price

Retail method

Use gross profit margin to calculatecost of

inventory, record by selling price

Inventory at cost = 500*10=5000

Inventory at selling price = 7500

Purchase = 15*9500=142,500

Revenue = 60000

Closing inventory =
(6000*15)*10/15=60000
Báo cáo kết quả hoạt động kinh doanh
SOPL FIFO AVCO continousAVCO periodic
Revenue 56000 56000 56000
Cost of good sold (39500) (39710) 42875
Gross profit 16500 16542 13125

SOPL FIFO AVCO continousAVCO periodic

Inventory 34000 33792 $30,625

=> Với mỗi pp có 1 kết quả kinh doanh khác

=> biểu đồ để so sánh
FIFO: giá của inventory là giá của hàng tồn kho gần nhất
AVCO continous: giá của inventory vừa phải
AVCO periodic : giá của inventory là trung bình

Kết quả: Cost of inventory Closing balance = Quantity x cost Cost of sale = openin
FIFO => giá inventory cao 1st => Closing balance 1st => cost of sale 3st
AVCO continous => giá inventory cao 2st => Closing balance 2st => cost of sale 2st
AVCO periodic => giá inventory cao 3st => Closing balance 3st => cost of sale 1st
=> Closing càng lớn thì cost of sale càng giảm
=> value chọn lower giữa cost và NRV
Cost of sale = opening + purchase - closing Gross profit = revenue - cost of sale
=> cost of sale 3st => gross profit 1st
=> cost of sale 2st => gross profit 2st
=> cost of sale 1st => gross profit 3st