TOPIC THREE – QUESTIONS

Example 1:
From the following transactions during the month of January, write up Ben Majanga’s
one column cash book (cash account). He started business on 1 st January, 2018 having
transferred shs. 96,000 from his private bank account to the business office.

Jan 1: Paid shs. 4,000 for rent for the month and made purchases of shs. 38,300
Jan 2: Paid shs. 3,800 for stationery and shs. 1,920 for stamp.
Jan 4: Cash sales shs. 17,280
Jan 7: Paid shs. 2,880 in respect of wages to assistant
Jan 10: Borrowed shs. 48,000 from Joyce Kantono, a friend
Jan 13: Bought a used pick-up for shs. 92,160 from Kabras Garage against shs.
19,200 deposit.
Jan 19: Cash sales shs. 42,240
Jan 20: Paid wages for two weeks shs. 5,760
Jan 23: Bought shs. 62,400 goods from Webuye Wholesalers Ltd on credit
Jan 29: Drew shs 28,800 for private use.
Jan 30: Cash sales shs. 26,880
Jan 31: Paid another shs. 57,600 off pick up account.

Example 2:
S. Waweru starts business as at April 1, 2019 with cash sh. 50,000. The following
transactions took place during April 2019:

April 1: Opened a bank account with K.C.B paying in sh. 45,000

April 2: Bought goods for cash sh. 1,000
April 3: Bought motor vehicle and paid by cheque sh. 20,000
April 5: Bought goods for sh. 5,000 and paid by cheque.
April 7: Sold goods for cash sh. 2,000
April 10: Paid expenses sh. 500 in cash
April 15: Sold goods and received a cheque for sh. 3,500
April 16: Paid cash into bank sh. 2,000
April 17: Bought goods for cash sh. 1,500
April 20: Paid wages to an assistant sh. 1,000 in cash.
April 22: Cashed cheque for office cash sh. 1,500
April 30: Paid expenses sh. 800 in cash.

Required: Record the above transactions in two columns cash book and balance it.

Example 3:
Write up three columns cash book for M. Kairuki from the details given below, then
balance off this cash book at the end of the month and show the discount accounts in
the general ledger:
 2020
July 1: Balances b/d Cash sh. 2,500
Bank sh. 7,400
July 2: Bought goods by cheque sh. 2,000
July 3: Cash sales sh. 1,800
July 5: Banked cash sh. 2,000
July 6: Paid by cheque, in each case, cash discount 3%, A. John sh. 1,500, H.
Hofman sh. 3,000 and D. Jackson sh. 1,400
July 7: Received by cheque, in each case, discount allowed 5%, B. Shaw sh.
4,000, B. Benham sh. 3,000 and J. Malthus sh. 3,200
July 10: Bought office furniture by cheque sh. 3,000
July 15: Cash drawings sh. 500
July 20: Paid to A. Adleman sh. 800 cheque less 3%.
July 22: Received cash from A. Smith sh. 1,500 less 4%.
July 30: Paid wages in cash sh. 1,000

Example 4:
Emmanuel Kimotho keeps a petty cash book. On 1 st May, 2020 his petty was given as
shs. 2,400 and he made the following payments in the course of the month:
Shs.

May 1: Postage stamps 220

May 5: String and paper 88
May 7: Milk and tea leaves 48
May 11: Bus fare for messenger 56
May 13: Khisa K. a creditor 480
May 14: Cleaning materials 100
May 16: Stationery 52
May 18: Postage stamps 200
May 23: Glue and sellotape 40
May 27: Cleaning materials 60
May 28: Bus fare for messenger 64
May 30: Duplicating ink. 96

Required:
a) Enter the above transactions in a suitably ruled petty cash book for the month of
May and show the balance of petty cash in hand on 31 st May 2020, use
appropriate analysis columns.

Example 5:
J. Njuguna maintains a petty cash book on the imprest system. The imprest being shs.
30,000. The following transactions took place in April 2017.

Shs
April 1: Received imprest from the cashier 30,000
April 3: Bought postage stamps 2,000
April 6: Paid for Peter’s account in purchase ledger 4,000
April 7: Bought stationeries 5,000
April 8: Paid travelling allowance to S. Otieno, an employee 4,000
April 10: Paid window cleaning expenses 6,000
April 12: Paid lenna’s account in the purchases ledger 5,000
April 14: Paid subscription for trade association 2,000
April 17: Paid office cleaning expenses 2,000
April 18: Received cash from the cashier 30,000
April 19: Paid S. Otieno for travelling exp 10,000
April 22: Bought electric light bulbs 2,000
April 25: Paid Lenna’s account in the purchases ledger 2,500
April 26: Paid travelling expenses 1,000
April 27: Paid for sugar, tea and milk 3,000

Required:
i. Enter the transactions into a petty cash book under the analysis column: Postage
and stationery, travelling expenses, cleaning expenses, sundries and a ledger
column.

ii. Balance the cash book showing the reimbursement required to restore the
imprest and the balance brought forward at 1 st May, 2017.

Example 6:
During the month of February 2017, Ndizi Merchants had the following transactions in
its business:

Febr 1: Bought 2,000 bunches of bananas at shs. 125 each, on credit from Malindi
Foods.
Febr 2: Bought 2,500 bunches of bananas at shs. 120 each, on credit from M.
Maina Farm, less 25% trade discount.
Febr 13: Bought 1,000 bunches of bananas at shs. 135 each, on credit from Harun
Muganda Farm.

Required:
Enter the above transactions in a purchases day book for the month.

Example 7:
Record the following particulars in the appropriate subsidiary book of Ndizi Merchants
for the month of February, 2017;

Febr 3: Returned 100 bunches of bananas bought at shs. 125 each from Malindi
Foods, and received a credit note.
Febr 14: 50 overripe bunches of bananas costing shs. 135 each were returned to
Harun Muganda Farm and a credit note was received.
Example 8:
The following credit transactions took place in the firm of Ndizi Merchants during the
month of February, 2017;
Febr 2: Sold 500 bunches of bananas at shs. 140 each, on credit to Nairobi Ndizi
Exporters.
Febr 2: Sold on credit, 70 bunches of bananas to Butali Hotel at shs. 150 each.
Febr 3: Sold 1,200 bunches of bananas to Kisii Co-operative Group at shs. 150
each less 33% trade discount, on credit.
Febr 10: Sold 600 bunches of bananas at shs. 145 each to Lodwar Town Market
received half the amount in cash.

Example 9:
Record in a suitable book of prime entry the following transactions which took place in
the firm of Ndizi Merchants during the month of February, 2017;

Febr 5: Nairobi Ndizi Exporters returned 55 bunches worth shs. 140 each sold to
them on credit on 2nd February, credit note issued.
Febr 7: Kisii Co-operative Group returned 300 undersize bunches of bananas
which they had bought on credit for shs. 150 each, less 33% trade
discount, credit note issued.

Example 10:
Smith whose financial position on January 1, 2018 is as below, decide to open a set of
books, show the opening journal entries.

Shs
Cash in hand 1,500
Cash at bank 12,000
Furniture & fittings 25,000
Stock of goods 18,000

Debtors:
P. Black 1,800
R. Burton 2,300

Creditors:
A. Thomas 2,100
Capital 58,500

Example 11:
Journalize the closing entries on the transfer of the following balances to the Trading
Account and Profit and Loss Account on 31st December, 2018:
Shs
Purchases 30,000
Sales 45,000
Stock at start 5,000
Salaries and wages 3,000
Expenses 2,500
Rent expense 1,500

Example 12:
Record the following transactions by journal entries:

2019
March 15: The purchase of a motor van on credit from Simba Motors for sh. 40,000
March 20: The credit purchase of an office table from Furniture Ltd for sh. 500
March 21: The credit purchase of machinery from AB & Co. for sh. 5,000

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 GROUP ASSIGNMENT

DFUD 7301 – FINANCIAL ACCOUNTING

Complete illustration;
On 1st March 2020, B. Asha started in business of buying and selling shoes at Namanga with
investment of shs. 1,500,000 in cash and shs. 500,000 at bank. During the month the following
transactions took place.

March 2: Bought shoes worth shs. 200,000 and paid by cash.

March 3: She paid shs. 30,000 cash for 3 months rent of the shop.
March 5: Sold shoes for cash, shs. 180,000
March 6: Sold 8 pairs of shoes at shs. 20,000 @ on credit to Noisy Inn.
March 10: Bought 20 pairs of at shs. 10,000 @ on credit from Apex Wholesalers.
March 10 Bought shoes for shs. 80,000 and paid by cheque, less 2% discount
March 11 Noice Inn returned 1 pair of shoes worth shs. 20,000 sold to them on March 6 as
wrong type ordered, credit note issued.
March 12: Sold shoes and received a cheque shs. 120,000 less 4% discount
March 13 Bought office furniture by cheque sh. 150,000
March 14 Sold 12 pairs of shoes at shs. 15,000 @ on credit to Mwenge shoppers.
March 15: Mwenge Shoppers returned 2 pairs of shoes worth shs. 15,000 @ sold to them on
credit on March 14, credit note issued.
March 16 Returned 2 pairs of shoes bought at shs. 10,000 @ from Apex Wholesalers as of
poor quality, credit note received.
March 15: Bought motor van on credit from Simba Motors for sh. 100,000
March 16 Bought machinery on credit from AB & Co. for sh. 150,000
March 17: Bought 10 pairs of shoes at shs. 10,000 @ on credit from Ubungo Traders
March 18: B. Asha took shs. 10,000 cash for her personal use.
March 19 Bought shoes and paid by cheque sh. 200,000 less 5% discount
March 20: Sold 6 pairs of shoes at shs. 15,000 @ on credit to Makongo Duka
March 20: Sold 10 pairs of shoes worth shs. 150,000 and received a cheque.
March 21: Returned 1 pair of shoes bought at shs. 10,000 @ from Ubungo traders and
received a credit note.
March 26 Banked cash sh. 60,000

Required;
a) Record the above transactions in the appropriate books of prime entry
b) Post the entries to the relevant accounts in the ledger
c) Balance off the accounts and extract a trial balance as at 31st March, 2020

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