Level: Easy
Easy Worked Examples: Ledger
Six graded examples for Form 4 Chapter 5 (The Ledger): recording transactions with the double-entry system, balancing accounts and preparing a basic control account.
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Example 1: Starting a business with cash capital
Question
Solution plan
Two accounts are involved: Cash Account (asset) and Capital Account (owner's equity). An increase in an asset is debited, so Cash Account is debited RM50,000. An increase in capital is credited, so Capital Account is credited RM50,000.
| Date | Particulars | RM | Date | Particulars | RM |
|---|---|---|---|---|---|
| 2024 Jan 1 | Capital | 50,000 |
| Date | Particulars | RM | Date | Particulars | RM |
|---|---|---|---|---|---|
| 2024 Jan 1 | Cash | 50,000 |
Answer
The Cash Account has a debit balance of RM50,000 and the Capital Account a credit balance of RM50,000. Accounting equation: Assets (RM50,000) = Owner's Equity (RM50,000).
Where marks are usually lost
Example 2: Buying an asset for cash
Question
Solution plan
Two asset accounts are involved: Furniture Account (asset increases, debited RM8,000) and Cash Account (asset decreases, credited RM8,000).
| Date | Particulars | RM | Date | Particulars | RM |
|---|---|---|---|---|---|
| 2024 Feb 5 | Cash | 8,000 |
| Date | Particulars | RM | Date | Particulars | RM |
|---|---|---|---|---|---|
| 2024 Feb 5 | Furniture | 8,000 |
Answer
The Furniture Account has a debit balance of RM8,000 and the Cash Account is credited RM8,000. Total assets are unchanged because one asset (furniture) replaces another (cash).
Where marks are usually lost
Example 3: Buying goods on credit
Question
Solution plan
The goods are bought for resale, so the Purchases Account (nominal) is debited RM3,000. A credit purchase creates a creditor, so the Zaki Enterprise Account (liability) is credited RM3,000.
| Date | Particulars | RM | Date | Particulars | RM |
|---|---|---|---|---|---|
| 2024 Mar 10 | Zaki Enterprise | 3,000 |
| Date | Particulars | RM | Date | Particulars | RM |
|---|---|---|---|---|---|
| 2024 Mar 10 | Purchases | 3,000 |
Answer
The Purchases Account has a debit balance of RM3,000 and the Zaki Enterprise Account (creditor) a credit balance of RM3,000, showing the amount owed to the supplier.
Where marks are usually lost
Example 4: Paying an expense in cash
Question
Solution plan
Rent is an expense (nominal account). An increase in expense is debited, so the Rent Account is debited RM1,200. Cash decreases, so the Cash Account is credited RM1,200.
| Date | Particulars | RM | Date | Particulars | RM |
|---|---|---|---|---|---|
| 2024 Apr 15 | Cash | 1,200 |
| Date | Particulars | RM | Date | Particulars | RM |
|---|---|---|---|---|---|
| 2024 Apr 15 | Rent | 1,200 |
Answer
The Rent Account has a debit balance of RM1,200 (expense incurred) and the Cash Account is credited RM1,200. The normal balance of an expense is on the debit side.
Where marks are usually lost
Example 5: Balancing the Cash Account
Question
Solution plan
Debit the Cash Account for receipts (balance b/d and sales), credit it for payments (purchases and rent). Total debits = 10,000 + 5,000 = 15,000. Total credits before balancing = 4,000 + 2,000 = 6,000. Balance c/d = 15,000 - 6,000 = 9,000 (on the credit side). The balance b/d of RM9,000 is brought down to the debit side on 1 June 2024.
| Date | Particulars | RM | Date | Particulars | RM |
|---|---|---|---|---|---|
| May 1 | Balance b/d | 10,000 | May 10 | Purchases | 4,000 |
| May 3 | Sales | 5,000 | May 20 | Rent | 2,000 |
| May 31 | Balance c/d | 9,000 | |||
| 15,000 | 15,000 | ||||
| Jun 1 | Balance b/d | 9,000 |
Answer
The Cash Account has a debit balance of RM9,000 on 31 May 2024, brought down as balance b/d on 1 June 2024. This is the cash in hand at month-end.
Where marks are usually lost
Example 6: Trade Receivables Control Account
Question
Solution plan
The opening receivables and credit sales increase what debtors owe, so they are debited. Money received reduces what debtors owe, so it is credited. Total debits = 15,000 + 10,000 = 25,000. Credits before balancing = 18,000. Balance c/d = 25,000 - 18,000 = 7,000. Balance b/d RM7,000 (debit) on 1 August 2024 is the total still owed by debtors.
| Date | Particulars | RM | Date | Particulars | RM |
|---|---|---|---|---|---|
| Jul 1 | Balance b/d | 15,000 | Jul 31 | Bank | 18,000 |
| Jul 31 | Sales | 10,000 | Jul 31 | Balance c/d | 7,000 |
| 25,000 | 25,000 | ||||
| Aug 1 | Balance b/d | 7,000 |
Answer
The Trade Receivables Control Account has a debit balance of RM7,000 on 31 July 2024. This balance is brought down (b/d) on 1 August 2024 and represents the total amount still to be collected from debtors.