Activity $4$: Ledger entries

Ron Knuckle set up a business selling keep$-$fit equipment, trading under the name of Buy Your

Biceps Shop. He put $$7,000$ of his own money into a business bank account $($transaction A$)$ and, in

his first period of trading to $31$ March $20$X$7,$ the following transactions occurred:

Post transactions $A$ to $L$ to the ledger accounts and balance off the ledger accounts.

You will need the following ledger accounts:

Bank

Rent

Capital

Bank loan

Purchases

Trade payables

Non$-$current assets

Sales

Trade receivables

Bank loan interest

Other expenses

Drawings

Solution Solution

Double entry journal

Once we have worked out the double entry, it is time to post the transactions to the T$-$accounts.

Key points

Each asset, liability, income and expense will have its own T$-$account;

The left side is the Debit and the right side is the Credit;

Each T$-$account will include a narrative that tells the user of the information where the opposite double entry is eg for a cash sale, the narrative in the bank general ledger account will be sales.

Activity $2$: Douglas

Douglas has the following transactions during January:

$(1)$ Introduced $$5,000$ cash as capital

$(2)$ Purchased goods on credit from Richard, worth $$2,000$

$(3)$ Paid rent for one month, $$500$

$(4)$ Paid electricity for one month, $$200$

$(5)$ Purchased car for cash, $$1,000$

$(6)$ Sold half of the goods on credit to Tish for $$1,750$

$(7)$ Drew $$300$ for his own expenses

$(8)$ Sold goods for cash, $$2,100$

Required

Post transactions $1$ to $8$ to the relevant ledger accounts.