Level: HOTS (KBAT)
HOTS (KBAT) Worked Examples: Books of Prime Entry
Six graded, higher-order-thinking (HOTS) worked examples for Chapter 4 (Books of Prime Entry), covering error correction, opening entries, drawings and additional capital, the three-column Cash Book, the imprest Petty Cash Book, and analysing the effect of errors on the Trial Balance.
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Example 1: Correcting an Error of Principle in the General Journal
Question
Solution plan
This is an error of principle: a non-current asset was misclassified as purchases. The creditor account is correct and is left untouched. The error is the debit to Purchases, which should have been a debit to Photocopier. Correction: Debit Photocopier RM4,500 (record as an asset), Credit Purchases RM4,500 (remove from purchases). The Trial Balance still balanced because the debit amount was correct; only the account was wrong.
| Date | Particulars | Folio | Debit (RM) | Credit (RM) |
|---|---|---|---|---|
| 2025 May 31 | Photocopier | 4,500 | ||
| Purchases | 4,500 | |||
| (Correcting a photocopier bought on credit but wrongly recorded as purchases) | ||||
| Total | 4,500 | 4,500 |
Answer
Correcting entry: Debit Photocopier RM4,500; Credit Purchases RM4,500. The creditor account of Perabot Maju is unchanged. Effect: purchases are reduced by RM4,500 and non-current assets increase by RM4,500; before the correction, gross profit and assets were understated.
Where marks are usually lost
Example 2: Opening Entry with Capital as the Balancing Figure
Question
Solution plan
Use the accounting equation: Capital = Assets - Liabilities. Total assets = 80,000+12,000+8,000+3,000+15,000+500 = RM118,500. Total liabilities = 6,000+20,000 = RM26,000. Capital = 118,500 - 26,000 = RM92,500. In the General Journal, debit all assets and credit all liabilities and capital. Total debit must equal total credit.
| Date | Particulars | Folio | Debit (RM) | Credit (RM) |
|---|---|---|---|---|
| 2025 Jan 1 | Premises | 80,000 | ||
| Fittings | 12,000 | |||
| Inventory | 8,000 | |||
| Debtor: Zaki | 3,000 | |||
| Bank | 15,000 | |||
| Cash | 500 | |||
| Creditor: Syarikat Bina | 6,000 | |||
| Bank loan | 20,000 | |||
| Capital | 92,500 | |||
| (Recording assets, liabilities and capital at the start of the period) | ||||
| Total | 118,500 | 118,500 |
Answer
Opening capital = RM118,500 - RM26,000 = RM92,500. The opening entry balances: total debit RM118,500 = total credit RM118,500.
Where marks are usually lost
Example 3: Drawings of Goods and Assets, and Non-Cash Additional Capital
Question
Solution plan
(a) Drawings of goods: Debit Drawings RM800, Credit Purchases RM800 (goods out at cost). (b) Drawings of a non-current asset: Debit Drawings RM1,500, Credit Computer RM1,500 (asset removed at book value). (c) Additional non-cash capital: Debit Motor Vehicle RM35,000 (asset in), Credit Capital RM35,000. Each entry must balance.
| Date | Particulars | Folio | Debit (RM) | Credit (RM) |
|---|---|---|---|---|
| Mar 5 | Drawings | 800 | ||
| Purchases | 800 | |||
| (Drawings of goods for personal use) | ||||
| Mar 15 | Drawings | 1,500 | ||
| Computer | 1,500 | |||
| (Drawings of a non-current asset at book value) | ||||
| Mar 25 | Motor Vehicle | 35,000 | ||
| Capital | 35,000 | |||
| (Additional capital in the form of a private car) | ||||
| Total | 37,300 | 37,300 |
Answer
Total Drawings recorded = RM800 + RM1,500 = RM2,300 (reducing capital). Additional capital of RM35,000 increases capital and motor vehicle. The journal balances: debit RM37,300 = credit RM37,300.
Where marks are usually lost
Example 4: Three-Column Cash Book: Contra, Discounts & Balances
Question
Solution plan
Receipts on the debit side, payments on the credit side. 20 May is a contra entry (money withdrawn from the bank into cash): mark it 'C', debit Cash and credit Bank RM1,000. Cash column: debit 1,200+1,000=2,200; credit 800+600=1,400; balance c/d cash = RM800. Bank column: debit 8,500+2,000+3,000=13,500; credit 1,470+1,000+1,200=3,670; balance c/d bank = RM9,830. The discount columns are only totalled (memorandum) and need not balance against each other.
| Date | Particulars | Fo | Discount Allowed | Cash (RM) | Bank (RM) |
|---|---|---|---|---|---|
| May 1 | Balance b/d | 1,200 | 8,500 | ||
| May 3 | Ravi | 100 | 2,000 | ||
| May 12 | Sales | 3,000 | |||
| May 20 | Bank (C) | 1,000 | |||
| Total | 100 | 2,200 | 13,500 | ||
| Jun 1 | Balance b/d | 800 | 9,830 |
| Date | Particulars | Fo | Discount Received | Cash (RM) | Bank (RM) |
|---|---|---|---|---|---|
| May 8 | Lim | 30 | 1,470 | ||
| May 15 | Wages | 800 | |||
| May 20 | Cash (C) | 1,000 | |||
| May 25 | Rent | 1,200 | |||
| May 28 | Purchases | 600 | |||
| May 31 | Balance c/d | 800 | 9,830 | ||
| Total | 30 | 2,200 | 13,500 |
Answer
Cash balance c/d = RM800 (debit balance, cash in hand). Bank balance c/d = RM9,830 (debit balance, money at bank). Total discount allowed RM100 (posted to Debit of the Discount Allowed account); total discount received RM30 (posted to Credit of the Discount Received account).
Where marks are usually lost
Example 5: Petty Cash Book: Imprest System, Analysis & Reimbursement
Question
Solution plan
Imprest system: the reimbursement equals the total spent so the float is restored to RM500. Totals of each analysis column: Postage & Stamps = 45+35 = RM80; Transport = 80+90 = RM170; Stationery = RM60; Sundry = 50+70 = RM120. Total payments = 80+170+60+120 = RM430. Balance c/d = 500-430 = RM70. Reimbursement on 1 July = RM430 (restoring the float to 70+430 = RM500).
| Received (RM) | Date | Particulars | Total Payment (RM) | Postage & Stamps | Transport | Stationery | Sundry |
|---|---|---|---|---|---|---|---|
| 500 | Jun 1 | Balance b/d (float) | |||||
| Jun 2 | Postage | 45 | 45 | ||||
| Jun 5 | Transport | 80 | 80 | ||||
| Jun 9 | Stationery | 60 | 60 | ||||
| Jun 14 | Cleaning wages | 50 | 50 | ||||
| Jun 18 | Postage stamps | 35 | 35 | ||||
| Jun 22 | Customer refreshments | 70 | 70 | ||||
| Jun 25 | Transport | 90 | 90 | ||||
| Total expenditure | 430 | 80 | 170 | 60 | 120 | ||
| Jun 30 | Balance c/d | 70 | |||||
| 500 | 500 | ||||||
| 70 | Jul 1 | Balance b/d | |||||
| 430 | Jul 1 | Reimbursement (cash received) |
Answer
Total petty expenditure = RM430. Balance c/d on 30 Jun = RM70. Reimbursement on 1 July = RM430, restoring the float to RM500 (70 + 430). Column totals: Postage & Stamps RM80, Transport RM170, Stationery RM60, Sundry RM120 (RM80+170+60+120 = RM430).
Where marks are usually lost
Example 6: Correcting Two Errors & the Effect on the Trial Balance
Question
Solution plan
Error A is an error of omission (not recorded at all). Correct it by recording the full sale: Debit Debtor (Zaidi) RM950, Credit Sales RM950. Error B is an error of principle (a revenue expense misclassified as an asset). Correct it: Debit Repairs Expense RM320, Credit Motor Vehicle RM320. Neither type of error affects the balancing of the Trial Balance because each still has an equal debit and credit, so the original Trial Balance still balanced.
| Date | Particulars | Folio | Debit (RM) | Credit (RM) |
|---|---|---|---|---|
| Jun 30 | Debtor: Zaidi | 950 | ||
| Sales | 950 | |||
| (Recording an omitted credit sale, error of omission) | ||||
| Jun 30 | Repairs Expense | 320 | ||
| Motor Vehicle | 320 | |||
| (Correcting repairs expense wrongly debited to Motor Vehicle, error of principle) | ||||
| Total | 1,270 | 1,270 |
Answer
Error A = error of omission; corrected by Debit Debtor Zaidi RM950, Credit Sales RM950. Error B = error of principle; corrected by Debit Repairs Expense RM320, Credit Motor Vehicle RM320. Neither error affects the balancing of the Trial Balance, so the original Trial Balance still balanced. The correcting journal balances: debit RM1,270 = credit RM1,270.
Where marks are usually lost
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