Payment relating to personal accounts (e.g IVOS) are recorded in a separate column headed ledger . at the end of very period, the combined totals of the analysis and ledge columns must equal the total expenditure for the period.
ILLUSTRATION
enter the following transactions in the petty cash book (maintained) on the imprest system for the month of July, 2007
July 1 imprest cash received from main cashier N 20000
July 2 typing papers 500
July 5 office cleaning 1000
July 8 postages and stamps 100
July 11 fuel for office van 1500
July 15 photocopying of documents 200
July 18 telephone charge 800
July 19 office cleaning 600
July 21 IVO to nweke 1000
July24 envelopes 160
July 26 fuel 1000
July 27 paid john 800
July 29 stationeries 1000
July 31 telephone charges 600
REVISION QUESTIONS
ILLUSTRATIONS
1. open a petty cash book for M. Dantata a petty cashier and enter the following cash transactions made in the month of December, 2003 classify the expenses into stationl &printing, postages and telegrams, traveling expenses, and sundry expenses.
DEC.1. Received imprest from the main cashier 6,000
“ 1. Bought typing papers
“ 1. Paid Okada fare
“ 4 .Bought envelop
paid for stramps
sent E-mail to directors
“ 6. paid for “keke Napepe” fare
paid insurance premium
Bought stationary
“15 hired telephone expenses
“ 19 paid rents & rates
paid printing charges
“ 25 travelling expenses paid
envelops
“ 31. Taxi fares
2a. Why is the cash book normally reguarded as the most important book of prime and final entry?
(b) explain why cash book is ugarded as both a book of prime entry and a leader account.
1. explain the following terms
(i) Petty cash book
(ii) Float
(iii) Imprest system.
2. Idris Aloma is a merchant, information entracted from his records in the months of February 2008 were as follows;
Feb. 1. Opening balance: cash 66,125
Bank 87,531
Feb.3. Purchased goods for cash 36,000
“ 5. Received cheque from Sam. Nweke 51,260
“ 6. cash sales to date 81,000
“ 9. paid insurance expenses in cash 3,164 31,250
“ 11. Sam Nweke’s cheque was returned by the bank as dishonoured.
“ 16. received cheque from a customer after allowing him discount of N450
“ 18. Paid hoted expenses in cash 9,500
“ 21. Cash sales paid into bank 62,005
“ 23. Withdrawal cash from the bank for office use 21,340
“ 26. Paid ndife in cash after deducting a discount of N500
“ 27 paid cash into bank 22,135
“ 28 bank charges for the month 4,850
required ;
to enter the following transactions of Idris Aloma in his cash book and extract the balance
1. The following relate to the business of Ugochuwku for the month of November, 2005
Nov. 1 opening balances cash 56,000
bank 50,000
Nov 2 cash sales 40,000
Nov 4 cash purchses
Nov 6 received N 8550 cheque in full settlement of N10,000 from Okeafor
Nov 9 paid advertising expenses by cheque 1000
Nov 11 cash sales to date 30,000
“ 13 paid rent in cash 5000
“ 16 paid Mohammed cash discount received from Mohammed 8,000
‘ 18 purchased goods by cheque 40,000
“ 19 cash sales paid into bank 65,000
“ 21 paid cash into bank 25,000
’24 cash sales 35,000
‘ 26 paid upair charges in cash 5000
“ 28 withdrew cash from bank for office us 20,000
‘ 29 Bought Office machines in cash 10,000
“ 30 paid wages and salaries in cash 40000
“31 cash sales 38,000
required
to enter the following transaction in the ca
sh book Ugochukwu as at 28th Feb. 2005 and extract the balances
topic ledger posting and the trial balance
the next step after initial recording of transactions is the cash book and other journals is to post the themes to the general ledger . however, this was deliberately ignored in our previous discussions because it was assumed that students are yet to grasp the basic principles of double entry under which ledger accounts are maintained . they should however, be able to do postings after studying this topic because this topic inalas it possible for them to:
1. appreciate the role of ledger in recording business transactions
2. understands the rules of double entry book-keeping
3. describe the meaning and objects of preparing a trial balance
4. make posting and prepare a trial balance
The ledger
the ledger is the principle book of accounts . The ledger is the book containing various accounts it thus, contains all accounts of the business enterprise, whether personal or impersonal. The classification of account in ledger is shown in the diagram below:
1. Personal accounts are those which records transactions between the business and individuals firms or companies . they thus, contains record of financial dealings with individuals and fimsoci creditors, debtors etc
2. impersonal accounts are those accounts which records particular transactions as the affect the business itself . impersonal accounts are grouped into two:
a. real accounts, which related to tangible things such as cash, fixed assets, stock etc and
b. nominal accounts, which record expenses and income, gains, and losses eg sales accounts, wages accounts, discount accounts etc.
Posting
the term posting refers to the process of transferring items from the journal to the debit and credit sides of their respective accounts in the ledger . posting may be done at any time, but in any case, must be completed before financial statement are prepared .
the book –keeper may do the posting of items from journal to the ledger by any of the following methods:
1. he may take a particular side first (eg the debit side) and make the complete posting of all items in the journals to the debit side of the ledger accounts and then proceed with the credit items. This is the least preferred method and is rarely recommended
2. he may take a particular account (eg sales account) and post all the debits and credits. Relating to that accounts appearing on a particular, page of the journal. He then proceed with another account till the end.
3. he may complete posting of each journal entry before proceeding to the next. That is, he post individual transactions chronologically as they occur. This is the most preferred method for practical purpose, and it is the one recommended to students.
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