Principles of Accounting: Balancing off the Accounts Example

ZIMSEC O Level Principles of Accounts Notes: Balancing off the Accounts Example

We have already looked at the steps you need to take when balancing off the accounts here
We will now look at a simple example:

The following transactions took place in the books of Esnath Pasipanodya in the month of August

20X7
August
1 Credit sales G Wadii $310; K Huni $42; F Dube $1,100; M Shumba $309.
2 Credit purchases from T Simba $190; J Nhata $63; P Muchena $210; F Dombo $190.
8 Credit sales to K Huni $161; F Dube $224.
9 Credit purchases from J Nhata $215; F Dombo $164.
10 Goods returned to us by F Dube $31; M Shumba $82.
12 Cash paid to us by M Shumba $227.
15 We returned goods to T Simba $15; F Dombo $21.
19 We received cheques from F Dube $750; G Wadii $310.
21 We sold goods on credit to G Wadii $90; K Huni $430.
28 We paid by cheque the following: T Simba $175; F Dombo $100; P Muchena $180.
31 We returned goods to F Dombo $18.

Required:

Enter the above transactions in personal accounts only.
Balance off the accounts for the end of the month
Calculate the total figures for Creditors and Debtors

Solution

			Purchases Ledger
		Dr	T Simba Account
Date	Details	Amount($)		Date	Details	Amount($)
15 August	Returns Outwards	15		2 August	Purchases	190
28 August	Bank	175
		190				190

			J Nhata Account
Date	Details	Amount($)		Date	Details	Amount($)
31 August	Balance c/d	278		2 August	Purchases	63
				9 August	Purchases	215
		278				278
				1 September	Balance b/d	278

			P Muchena Account
Date	Details	Amount($)		Date	Details	Amount($)
28 August	Bank	180		2 August	Purchases	210
31 August	Balance c/d	30
		210				210
				1 September	Balance b/d	30

			F Dombo Account
Date	Details	Amount($)		Date	Details	Amount($)
15 August	Returns Outwards	21		2 August	Purchases	190
28 August	Bank	100		9 August	Purchases	164
31 August	Returns Outwards	18
31 August	Balance c/d	215
		354				354
				1 September	Balance b/d	215

			Sales Ledger
		Dr	G Wadii Account			Cr
Date	Details	Amount($)		Date	Details	Amount($)
1 August	Sales	310		19 August	Bank	310
21 August	Sales	90		31 August	Balance c/d	90
		400				400

			K Huni Account
Date	Details	Amount($)		Date	Details	Amount($)
1 August	Sales	42		31 August	Balance c/d	633
8 August	Sales	161
21 August	Sales	430
		633				633
1 September	Balance b/d	633

			F Dube Account
Date	Details	Amount($)		Date	Details	Amount($)
1 August	Sales	1100		10 August	Returns Inwards	31
8 August	Sales	224		19 August	Bank	750
				31 August	Balance c/d	543
		1324				1324
1 September	Balance b/d	543

			M Shumba Account
Date	Details	Amount($)		Date	Details	Amount($)
1 August	Sales	309		10 August	Returns Inwards	82
				12 August	Cash	227
		309				309

You are being asked to show entries in the personal accounts i.e. Purchases and Sales Ledger Accounts. Accounts in the Cash Book and General Ledger are known as nominal accounts
General Ledger entries can be a bit daunting to new comers when it comes to balancing them as some of them are closed off at the end of the period e.g. Expense accounts are “balanced off” by transferring them to the Profit and Loss Account
The order of the accounts in not important nor is the order of the ledgers we could have started with the Sales Ledger and the solution would still be acceptable. The accounts within the ledgers can be presented in any order

3) Here is the list of total creditors and debtors

Dr	CR
0	0
633	278
543	30
0	215
1176	523

The total accounts payable(Trade Creditors) is: $523
The total for accounts receivable( Trade Debtors) is: $1176
To find these figures all you need to do is add up all the balances for creditors and debtors

To access more topics go to the Principles of Accounts Notes.