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Double Entry Bookkeeping Exercise Guide

Cliff started a business on July 1, 20X7, with various transactions including personal investments, purchases, and sales throughout the month. The document outlines specific financial activities, such as setting up a bank account, purchasing goods, and making sales, which need to be recorded in ledger accounts. Additionally, it requires the preparation of a trial balance as of July 31, 20X7, and suggests using Excel for the exercise.

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Xi Wei
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7 views2 pages

Double Entry Bookkeeping Exercise Guide

Cliff started a business on July 1, 20X7, with various transactions including personal investments, purchases, and sales throughout the month. The document outlines specific financial activities, such as setting up a bank account, purchasing goods, and making sales, which need to be recorded in ledger accounts. Additionally, it requires the preparation of a trial balance as of July 31, 20X7, and suggests using Excel for the exercise.

Uploaded by

Xi Wei
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Week 1

Review question

Double Entry Bookkeeping

Cliff started a business on 1 July 20X7. During the first month, the following transactions
took place:

20X7
1 July Cliff set up a business bank account by transferring £10,000 of his own
money into it.
1 July He decided to use his own car which had a second-hand value of £4,500
as at 1 July for his business. The original purchase price of the car was
£10,500.
2 July He took £6,000 from the business bank account and left it in the cash
register.
5 July He paid £1,000 in cash for the rental charge of the premises he rented
for the business.
6 July He paid £580 by cheque for a second-hand computer for office use.
6 July He purchased goods for resale for £1,000 from John on credit.
10 July Susan supplied Cliff’s business with £3,000 of goods for resale on
credit.
15 July Cliff returned £200 of the goods to John.
18 July Cash sales amounted to £2,560 was made.
22 July Cliff sold goods to Fred for £4,000 on credit.
23 July Fred returned £250 of the goods to Cliff.
31 July Cliff settled his account with Susan by cheque and was able to claim a
settlement discount of 10% of the outstanding amount.
31 July Fred sent Cliff a cheque for £2,500.
31 July Cliff paid £150 by cheque as a part payment towards a holiday for his
partner in life.

Required

1. Enter the above transactions in Cliff’s ledger accounts, show clearly the date of each
transaction, balance off the accounts and bring forward the balances as at 31 July 20X7.

2. Prepare a trial balance as at 31 July 20X7.

Hints:

1. Review the concept and technique of double-entry bookkeeping before you attempt this
exercise.

2. For each ledger account (also known as the T-account), you should have the date of the
transaction, a brief description of the transaction, the correct amount entered in the
applicable debit or credit side of the account.

3. You may find it easier to use excel spreadsheet for this exercise.
4. Once you have completed this question, download the suggested solution on Moodle.
Compare your answer to the suggested solution. Make a note of those incorrect double-
entries.

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