SSP
Advanced Level Accounting
PRIME ENTRY BOOKS & BANK RECONCILIATION
STATEMENTS.
CHAPTER TWO
ADVANCED LEVEL ACCOUNTING
All Rights Received
Author:
H.Susantha Peiris
1
Advanced Level Accounting
SSP
All Rights Received
First Edition Published: 2021 January
© KADIMA Publications
]
Published By:
KADIMA Publications
Horana
Tel: 0777 885 122
Email: kadimaprinters@gmail.com
2
SSP
Advanced Level Accounting
FOREWORD
To All Users of This Text
The main objective of this text is to provide guidance in the subject of
Advanced Level Accounting in according with new curriculum
The resource person appear to have made a reasonable attempts to cover. All
the areas pictured in the syllabus in preparation of this text. It is our belief that
this text will be helpful as a Guideline to prepare for your Advanced level
examination. Pilot Questions & suggested answers relating to this text will be
covered while attending to the lectures conducted by the lecturer
All rights of publication of this text are reserved by the Author H. Susantha
Peiris & Kadima Publications. We prefer and request for the users of this text
to send your suggestions, ideas, and views on any method which is acceptable.
Biz Guru Article also included for your General knowledge
H. Susantha Peiris
R
3
SSP
Advanced Level Accounting
Post transaction to the ledger using prime entry books.
Learning outcomes
:





Basic Terms and Concepts
Explains source documents and their importance.
Names source documents relevant for transactions.
Explains prime entry books and their importance.
Tabulates prime entry books and relevant source
documents.
Preparation of prime entry books in a business
registered for Value Added Tax (VAT)
:
Concept Map
Business Transactions
Benefits
Receipt
Journal
Voucher
Prime Entry Books
Voucher
Invoice
Petty cash
Voucher
Sales Journal
Receipts
Journal
Debit
Note
Credit
Note
Purchase Journal
Inwards
Returns
Journal
Payments
Journal
Petty cash
Payments
Journal
Returns Outwards
Journal
General
Journal
Primary books
Benefit
4
SSP
Advanced Level Accounting

Lead the discussion to highlight the following points:
o While various transactions take place in a business, the documents issued
detailing the relevant transactions are known as ‘source documents’ or
‘original documents’
o The original documents as appropriate to different transactions are varied.
o What is contained in these documents are important information that is
relevant to the particular transaction.
o The original documents are used to record transactions in the Books of
Prime Entry.
o These documents are useful in order to be able to discover shortcomings,
errors, wrong doings, and inconsistencies with regard to the particular
activity and also as proof that a particular transaction took place.
o These original documents are also an aid to confirm the value of the
transaction.

Based on the original documents and according to the mature of the transaction,
books of prime entry as follows, will be used by the business.
o
o
o
o
o
o
o
o

Receipts Journal
Payments Journal
Petty Cash payments Journal
Purchases Journal
Purchase returns Journal
Sales Journal
Sales returns Journal
General Journal
The books of prime entry, support books are also known as Journals.
Guidance to clarify subject matter:
 The importance of original documents and books of prime entry are given below:
 Original documents
o Using the original document as the basis on which the accounting entry is
made.
o The ability to obtain all relevant information about the transaction.
o It can be used as documentary proof that the transaction took place.
o The officer who has certified the original document can be held responsible
for it.
5
SSP
Advanced Level Accounting


1.
2.
3.
4.
5.
6.
7.
8.
The book of prime entry
o Similar transactions are entered in the same book.
o To minimize memory lapses and omissions.
o Any errors in posting of entries can be quickly identified and resolved.
o The ability to carry on business transaction with good control.
o As different staff members will enter the books of prime entry accounting
activities will become easier.
The Prime entry books and Original documents can be stated follows:
Transaction
Original documents
Book of Prime entry
Receipts of Cheques  Receipt / Deposit slip
Cash Receipts Journal
and Cash Deposits
Issue of Cheques
Cash Payments Journal
 Payment Voucher /
Counterfoil
Petty Cash Payment
Petty Cash Payments
according to the nature  Petty Cash Voucher
Journal
of the business.
Purchase goods on  Purchase Invoice
Purchase Journal
credit
Returns outwards
Returns outwards Journal
 Debit Note
Sale of goods on credit
Sales Journal
 Sales Invoice
Returns inwards
Returns Inwards Journal
 Credit Note
Transactions
not  Journal Voucher
General Journal
recorded
in other
books of prime entry
6
Advanced Level Accounting
SSP
Records cash transactions of a business.
Learning outcomes
:




Basic Terms and Concepts
Names source documents relevant to cash receipts
and payments.
Records cash receipts and bank transactions by
developing format of the Cash Receipts Journal.
Records cash payments transactions through
developing the format of the Cash Payments Journal.
Transactions in the Cash receipts journal and cash
payments journal post to the General Ledger.
:
Concept Map
Cash and cheque
transactions
Cash and cheque
receipts
Payments through
cheques
Receipts
Voucher
Cash receipts
Journal
Cash Payments
Journal
Format
Posting General Ledger
Cash control account
Including other accounts
:
7
SSP
Advanced Level Accounting
Assignment 01
1. Write down 10 transactions regarding the receipts and payments of cash with
dates for any month together with values, in a business organization that does
not have banking transactions. For this purpose, include transaction of the
following types:

Receipts from debtors

Payment to creditors
2. Enter the 10 transactions you have written into the Cash receipts Journal and
Cash payments Journal in the following formats and balance them as at the end
of the month.
Date
Receipt
No.
CASH RECEIPTS JOURNAL / RECEIPTS JOURNAL
Receipts analysis
Description
Discount
Value
Cash
Debtors Income
Allowed
(Rs.)
Sales
Receipts
(Rs.)
xx
(1)
xxx
xx
(2)
xx
(3)
xx
(4)
Other
Receipts
xx
(5)
CASH PAYMENTS JOURNAL / PATMENTS JOURNAL
Payments Analysis
Date
Voucher
No.
Description
Discount
Received Rs
xx
(6)
Value
(Rs.)
xxx
Cash
Purchases
xx
(7)
Payments
to
Creditors
xx
(8)
Expenses
xx
(9)
Other
Payments
xx
(10)
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SSP
Advanced Level Accounting
3. To make the double entries in the General Ledger from the sum totals in the
columns in the Cash receipts Journal and Cash payments Journal.
Posting transaction to the general ledger following manner.
Cash account / Cash Control account
(Rs.)
Balance b/f
xx
(7) Purchases a/c
(2) Sales a/c
xx
(8) Creditors Control a/c
(3) Debtors Control a/c
xx
(9) Expenses
(4) Other Income a/c
xx
(10) Other Payments
(5) Other receipts a/c
xx
Balance c/f
xxx
Balance b/f
xx
xx
xx
xx
xx
xx
xxx
OR
Cash account / Cash Control account
Balance b/f
xx
Various a/cs – Payments
Various a/cs – Receipts
xx
Balance c/f
xxx
Balance b/f
xxx
xx
Discount allowed a/c
(1) Debtors
xx
Control a/c
Balance b/f
xx
xx
Debtors control a/c
x (1) Discount
Allowed a/c
(3) Cash a/c
Discount Received a/c
(6) Creditors
Control a/c
Sales a/c
(2) Cash a/c
xx
Rent Income a/c
(4) Cash
xx
(Rs
xx
xx
xx
9
SSP
Advanced Level Accounting
Creditors Control a/c
(6) Discount
xx
Received a/c
(8) Cash a/c
xx
(10) Cash a/c
Drawings a/c
xx
(10) Cash a/c
Bank Loan a/c
xx (5) Cash a/c
(9) Cash a/c
xx
Staff salaries a/c
xx
Guidance to clarify subject matter:

Cash receipts Journal is the prime book of entry where receipts of money for
whatever reason is recorded for the first time.

The original document relevant to the receipt of money is the ‘receipt voucher’

When cash is paid out for various reasons, it is first recorded in the prime book of
entry called the Cash Payments Journal.

The original document relevant to cash payments is the Cash Payment Voucher.

After the cash transactions of a business are entered in the Receipts and Payments
Journals must relevant, they must be posted to the General Ledger following double
entry principles...
10
SSP
Advanced Level Accounting

The columnar totals in the Cash Receipts Journal must be posted to the General
Ledger in the following manner.
Discount allowed column total
Discount allowed a/c - debit Debtors control a/c
Sum total of each column
Cash control a/c
- debit
Respective receipts a/c’s - credit
Total of cash sales column
Cash control a/c
- debit
Sales a/c
- credit
Total of Debtors receipts column Cash control a/c
- debit
Debtors control a/c
- credit
Total of Income column
Cash control a/c
- debit
Respective income a/c’s - credit
Total of other income column
Cash control a/c
- debit
Respective receipts a/c’s - credit

- credit
The columnar total in the Cash Payments Journal must be posted to the General
Ledger in the following manner.
Sum of the Discounts received Creditors Control a/c column
Debit
Sum of the Cash Purchases
Purchases a/c
column
Debit
Discount received a/c
- credit
Cash control a/c
- credit
Sum of the Payments to Creditors
Column
Creditors Control a/c
Debit
Cash control a/c
- credit
Sum of the other expenses column
Individual expense a/c’s Debit
Debit Respective payments
a/c’s
Debit Respective payments
a/c’s
Cash control a/c
- credit
Cash control a/c
- credit
Cash control a/c
- credit
Sum of the other payments column
Sum of the total value column

-
When debt transactions are settled discounts are realized.
o The discount given when debtors settle within the agreed period is ‘Discount
allowed’.
o The discount received when creditors are settled within the agreed period is
‘Discount received’.
11
SSP
Advanced Level Accounting
Assignment 02

In Amal’s business transactions of cash receipts and similar transactions during the
month of April 2019 are given below.
(Rs.)
2019.04.05
Cash sales
R.No.1
60,000
2019.04.10
Building rent received
R.No.2
5,000
2019.04.15
Received Bank loan
R.No.3
100,000
2019.04.18
Receipts from Amal (debtor)
R.No.4
9,000
2019.04.18
Discount given to Amal
500
2019.04.20
Cash sales
R.No.5
50,000
2019.04.22
Receipt from Thilak (debtor)
R.No.6
48,000
Discount given to Thilak
2,000
2019.04.25
Commission received
R.No.7
1,000
2019.04.28
Investing additional capital
R.No.8
20,000
The cash payment transactions of the business given below.
2019.04.06
2019.04.08
2019.04.10
2019.04.12
2019.04.14
2019.04.16
2019.04.18
2019.04.20
2019.04.22
2019.04.26
Payment of monthly electricity bill
Paid Malinda – a creditor
Discount received
Cash purchases
Payment of monthly insurance
Payment to Sagara – creditor
Discount received
Purchased office furniture
Payment of wages and salaries
Payment of bank loan installment
Cash purchases
Cash drawings
V.No.01
V.No.02
V.No.03
V.No.04
V.No.05
V.No.06
V.No.07
V.No.08
V.No.09
V.No.10
Rs.
6,000
12,000
1,000
18,000
12,000
16,000
1,000
50,000
30,000
12,000
22,000
5,000
Required
1. Receipt journal
2. Payments journal
3. Assuming opening cash balance in the Amal’s business as at 1/4/2019 is Rs 25,000,
to posting cash receipt journal and cash payments journal to general ledger.
Guidance to clarify subject matter:


Most business carry out their transactions with cash as well as cheques.
Business that carry out their transactions with cheques as well, deposit all cheques
and cash received directly to the bank account. These are all entered in the Cash
Receipts Journal.
12
SSP
Advanced Level Accounting

Payments made by cheque are entered in the Cash Payments Journal.

When payments are made by cheque as well as cash, all cash payments must be
entered in the Cash payments Journal.
It must be clearly explained that all cash received by the business is deposited in
the bank account on the same day.

Assignment 03
On 2019.04.01 Thilina deposited Rs.800,000 in the business bank account to commence his
trading business. Given below are the transactions that took place during the month of
April.
Transaction
date
2019.04.01
2019.04.02
2019.04.02
2019.04.03
2019.04.04
2019.04.05
2019.04.06
2019.04.07
2019.04.08
2019.04.08
2019.04.09
2019.04.10
2019.04.12
2019.04.14
2019.04.15
2019.04.18
2019.04.22
2019.04.25
2019.04.26
2019.04.28
Description
Cash purchases
Purchase of furniture & fittings
Cash sales
Purchases from Athula
Sales on credit to Venura
Payment to Petty Cashier
Paid transport for goods inwards
Credit purchases from Thushan
Credit sales to Chatura
Loan from Bank
Paid Athula. Discount received Rs.5,000
Received payment from Venura.
Discount allowed 10%
Cash sales
Paid Building rent
Cash purchases
Paid Thushan – Discount received 10%
Receipts from Chathura – Discount
allowed 10%
Paid wages
Drawings by Thilina
Commission received
Receipt Voucher Cheque Amount
No.
No.
No.
(Rs.)
1 800400 120,000
2 800401 80,000
2
712520 200,000
100,000
150,000
3 800402 10,000
4 800403
5,000
80,000
90,000
3
300,000
5 800404 95,000
620703 135,000
5
6
7
8
6
9
10
7
Cash
250,000
800405 20,000
800406 110,000
800407 72,000
Cash
81,000
800408
800409
Cash
10,000
10,000
8,000
Required
Enter the above transactions of Thilina’s business in the Cash Receipts Journal and Cash
Payments Journal and then post them to the General Ledger.
13
SSP
Advanced Level Accounting
Assignment 04
Malidu’s business carries out all transactions through a bank account. The balance in the
bank account on 2019.04.01 was Rs. 1,200,000. The transactions during the month of April
2019 are given below.
Transaction Original
date
document
No.
2019.04.01
R.No.01
2019.04.02
V.No.01
2019.04.03
R.No.02
2019.04.04
V.No.02
2019.04.05
V.No.03
2019.04.06
R.No.03
2019.04.08
R.No.04
2019.04.10
V.No.04
2019.04.12
2019.04.14
2019.04.15
V.No.05
V.No.06
R.No.05
2019.04.18
2019.04.20
2019.04.22
R.No.06
V.No.07
2019.04.24
2019.04.26
2019.04.28
2019.04.29
2019.04.30
V.No.08
V.No.09
R.No.07
V.No.10
Details
Cheque
No.
Amount
(Rs.000’s)
Cash Sales
Cash purchases
Received from Sudesh
Paid Sujani
Paid Electricity bill
Rent income
Received from Namal subject to
10% discount
Paid Sudaraka subject to 10%
discount
Paid staff salaries
Purchased motor vehicle
Obtained Bank loan
Bank informed that Namal’s
cheque is dishonoured
Cash Sales
Paid Pasindu (Discount received)
electricity payment cheque
Returned due to error
Malidu’s drawings
Cash purchases
Received from Hasitha
Electricity expenses
135401
350150
Cash
350151
350152
Cash
4,000
2,000
1,500
1,400
300
400
125214
360
350153
350154
350155
Cash
180
120
2,500
3,000
125214
Cash
350156
360
4,400
450
350152
350157
138146
350158
300
100
1,300
350
300
Required:
1. Prepare the Cash receipts Journal and Cash Payments Journal for Malidu’s business
for the month of April 2019.
2. Use the information from the Cash Receipts Journal and Cash Payments Journal to
prepare the Cash Control account and relevant ledger accounts
14
SSP
Advanced Level Accounting
Assignment 05
Following cash receipts and cash payments are related to "Tharushi" super centre for the
month of October 2019. Assume this business is a VAT registered business & following all
figures indicated without VAT.
Date
10-01
10-01
10-02
10-03
10-04
10-05
10-06
10-09
10-12
10-15
10-17
10-19
10-21
10-23
10-25
10-27
10-29
10-30
10-30
10-31
Cheque No.
33200
45408
33201
14320
33202
11328
33203
25730
33204
33205
28740
13845
33206
17815
33207
14335
33208
25407
Transaction
Cash balance
Paid to the petty cashier
Sales
Purchases
Receipts from debtor Amal
Paid to creditor Geetha
Sales
Receipts from debtor Kamal
Paid to creditor Champa
Commission income
Electricity bill paid
Drawings
Sales
Receipts from debtor Vimal
Paid to creditor Nayana
Commission income
Paid salary
Receipts from debtor Amal
Purchases
Sales
Discount
1 000
500
800
3 000
4 000
1 500
5 000
Amount (Rs.)
45 000
8 000
30 000
18 000
19 000
9 500
25 000
7 200
27 000
5 000
2 000
3 000
65 000
36 000
13 500
6 000
8 000
45 000
18 000
8 000
All sales and purchases are shown without VAT. The VAT rate is 10%
Required
1.
2.
3.
Cash receipts journal and the cash payments journal of "Tharushi" super centre for
the month of Oct. 2019.
Cash control Account for the month of Oct. 2019 (with balancing off)
Relevant leader Accounts of the general ledger - including Trade receivables
control and Trade payables control account and VAT control account. (not
necessary balancing off)
15
SSP
Advanced Level Accounting
Assignment 06
Following cash receipts and cash payments are related to "xyz" super center for the month
of January 2019. Assume this business is a VAT registered business & following all figures
indicated without VAT.
1/1
1/3
1/5
1/6
1/7
1/8
1/12
1/15
1/18
1/20
1/21
1/23
1/25
1/26
1/28
1/30
1/31
Commenced a business by introducing of Rs.100, 000
Purchased office equipment of Rs.15, 000
Cash sales of Rs.20, 000 (VAT 10%)
Cash purchased of Rs.1, 500 (VAT 10%)
Purchased furniture by cash of Rs.20, 000
Paid factory rent of Rs.5, 000
Obtain a bank loan of Rs.25, 000
Paid for salaries & wages of Rs.6, 000
Paid to trade creditors of Rs.8, 000, Discount received Rs 200
Received cash from debtors of Rs.6, 000 & Discount allowed Rs 600
Purchased for cash of Rs.6, 000 (VAT 10%)
Drawing of Rs.2, 000
Paid to trade creditors of Rs.2, 000 & Discount received Rs 500
Paid to electricity bill of Rs.3, 000 (VAT 10%)
Motor vehicle purchased on credit of Rs.50, 000
Cash sales of Rs.60, 000 (VAT 10%)
Paid to salaries & wages of Rs.12, 000
Required
1. Cash receipts journal and the cash payments journal of "xyz" super center for the
month of January. 2019.
2. Cash control Account for the month of January. 2019 (with balancing off)
3. Relevant leader Accounts of the general ledger – including Trade receivables
control and Trade payables control account and VAT control account. (not
necessary balancing off)
Guidance to clarify the subject matter:

If a cheque received from a Debtor is deposited in the bank and returned unpaid
the original entries in this connection must be entered in the General Journal.

In this case, if the debtor has been allowed a discount this too should be reversed.
16
SSP
Advanced Level Accounting

Accordingly, make the following entry in the General Journal
Debtors control a/c
Discount allowed a/c
Cash a/c
Debit
Credit
Credit
xxx
xx
xxx
(Being reversal of entries as the cheque has been dishonored)


Where a cheque issued by the business is returned for some reason, this too should
be entered in the General Journal.
If the creditor has given a discount, the business becomes ineligible to this too.
Accordingly, record he following in the General Journal.
Cash a/c
Debit xx
Discount received a/c
Debit xx
Creditors control a/c
Credit xx
Ineligibility to receive discount due to cheque being returned.

When a cheque paid for expenses is dishonored by the bank and a new cheque is
issued in lieu, make the following entries in the General Journal.
Cash a/c
Accrued expense a/c / Expense a/c
Cheque issued for expenses returned.
Debit
Credit
xxx
xxx
17
SSP
Advanced Level Accounting
Maintains the petty cash payment journal to record petty
cash expenses.
Learning outcomes
:





Basic Terms and Concepts
Names source documents related to petty cash
transactions.
Explains petty cash imprest and the reimbursement.
Develops format of the Petty Cash payment journal.
Prepares the Petty Cash Payment Journal.
Posts petty cash payments to the ledger.
:
Concept Map
Petty Cash Book
Introduction
Its need and
advantages
Original documents
Receipts
Format
Petty Cash
Payments
Imprest
Analytical columns
Reimbursement of
Imprest
Posting the ledger
18
SSP
Advanced Level Accounting
Assignment 10
Date
2019
3/01
3/02
3/03
3/04
3/05
3/06
3/07
3/08
3/09
3/10
3/11
Ruvani’s business
Rs.
1. Cash given to petty Cashier
2. Purchase of inventory
3. Hire charge for transporting goods
4. Entertainment expenses
5. Stamps and envelopes
6. Cleaning expenses
7. Purchase of furniture
8. Postage
9. Hire of motor vehicle
10. Gave Ranil
11. Cleaning expenses
2500
60000
8000
200
180
300
6000
300
250
600
150
Aruni’s business
1. Cash given to petty Cashier
2. Trishaw expenses
3. Stationary expenses
4. Purchase of furniture
5. Pens and paper
6. Sugar and Tea leaves
7. Sundry expenses
8. Registered letters
9. Photocopy paper
10. Paid piyal
11. Bus fare
Rs.
5000
150
250
5300
80
300
360
160
250
200
50
Required for both business
1. Identifying the comparatively low value transactions.
2. Arriving at the value of the Petty cash Imprest.
3. The original documents required to confirm the transactions.
4. Recording the low value transactions of the business and money received in a
format similar to the following.
Petty Cash payment Journal
Analysis columns
Date Details V.No. Amount Stationery Labour
(Rs.)
(Rs.)
(Rs.)
Travelling Miscellaneous Other Ledger
(Rs.)
(Rs.)
(Rs.)
Ref.
5. Balancing the Petty Cash Payment Journal to 2019.03.15
6. Posting the entries in the Petty Cash Payment Journal to the Ledger.
7. Show that the reimbursement of the petty cash imprest must be made.
Guidance to clarify Subject matter:

Among the daily transactions that take place in a business, the low value
transactions must be identified and recorded in a separate book of prime entry. This
book of prime entry is identified as the Petty Cash Payment Journal.

The original documents used to make entries in the Petty Cash Payment Journal are
the receipt and Petty Cash voucher.
19
SSP
Advanced Level Accounting

The amount of money given to the Petty cashier for expenses for a specific period,
decided by the management as the likely expenses for that period, at the beginning
of that period, is known as the Petty Cash Imprest.

At the end of each period the petty cashier will obtain the money spent from the
Chief Cashier and this known as the reimbursement of the imprest.

The petty cash payments must be entered in a Petty Cash Payment Journal that has
analysis columns.

If a payment that should be made by the Chief Cashier is paid by the Petty Cashier,
then this must be entered in the ‘Ledger a/c’ column. Such payments must be
entered directly in the relevant ledger account on the same day.

The petty cash payments made in respect of an account that is already existing in the
ledger must be entered in the ‘ledger’ column.

The double entry for the transactions entered in the Petty Cash book are given
below.
o Receiving the Petty Cash Imprest :
Petty Cash control a/c
Cash control a/c
Debit
o Reimbursement of the Imprest
Petty Cash control a/c
Cash control a/c
Debit
o Sum totals of analysis columns
Respective account
Petty Cash control a/c
Debit
Credit
Credit
Credit
20
SSP
Advanced Level Accounting
Assignment 11
(01)
(i) Explain briefly the Petty Cash imprest and the reimbursement of the Imprest.
(ii) The original documents relevant to the petty cash transactions.
(i) Receipt of the Petty Cash imprest
(ii) Petty cash payments
(02)
The Petty Cash Imprest in a business is Rs. 3,000. The sum total of the Petty cash
expenses are as follows:
Rs.
Stationery expenses
Travel expenses
Entertainment expenses
Postage expenses
Sunday expenses
120
240
300
450
900
The balance in carried forward in the Petty Cash control account as at 2019/01/31
will be:
(i) Rs.990
(ii) Rs.2,010
(iii) Rs.3,000
(iv) Rs.3,990
(v) Rs.5,010
(03)
The balances in Sathsarani business on 2019/04/01 are given below.
 Cash Control a/c balance
Rs.24,000
 Vimukthi (creditor)
Rs. 2,500
 Monthly Petty Cash imprest
Rs. 2,000



The petty cashier received the imprest amount for the month of April 2017 on
2017.04.01
The sum total of the Petty cash payments made by the Petty cashier are given
below:
 Entertainment expenses 265
 Stationary expenses
315
 Postage expenses
340
 Payment to Vimukthi
300
 Travel expenses
160
Required:
Post the transactions entered in the petty Cash payment journal as at 2017/04/30 to
the Ledger.
21
SSP
Advanced Level Accounting
(04)
State whether the following statements are true (T) of false (F)
(1) It is possible to have control over the petty cash payments through
maintaining Petty cash in the Imprest system.
( )
(2) The petty cash Payment Journal is a book of prime entry as well as a Ledger
a/c.
( )
Assignment 12
Rohan’s company is kept under the imprest system of petty cash control. Imprest value is
Rs.2500.The balance on 1st May 2019 is Rs.260.You are given the summarized form, the
transaction of May 2019.
May
01
05
06
10
15
20
22
25
27
28
30
Description
Reimbursement the imprest of petty cash
Postage
Stamps charges
Purchased stationery
Travelling charges
cleaning charges
Salaries
cleaning charges
Salaries
Paid to trade creditor Piyal
Travelling charges
50
180
50
230
75
100
180
250
350
80
Required:a. Prepare a petty cash Payment Journal with analytical columnar using Postage,
stationery, cleaning, salaries and travelling expenses and other
b. Copy the petty cash transaction in to ledger accounts.
22
SSP
Advanced Level Accounting
Assignment 13
"Sawsiri Traders" Following information relates to petty cash payments for the month of
Oct. 2019.
-
The petty cash imprest is Rs. 5 000
The cash in hand of the petty cashier Rs. 400 as at 01-10-2019
Following are the petty cash transactions for the moth of Oct 2019
10-01
10-01
10-03
10-06
10-08
10-10
10-14
10-16
10-18
10-20
10-22
10-23
10-25
10-30
Reimbursed the petty cash imprest
Travelling charges
Postage
Stationary purchased
Purchased broom and brushes
Stamps
Paid to creditor Ruwan
Soap and cleaning materials
Three wheeler charges
Printing expenses - bill books
Bus fare
Carbon papers, A4 papers
Stamp envelopes
Donations
200
150
400
350
180
1 220
300
400
500
800
150
170
600
Required,
1. Prepare the petty cash payment, journal with the Analysis columns, Travelling
charges, Postage charges, stationary charges, cleaning charges and other.
2. Post them in to the ledger Accounts on 31-10-2019.
23
SSP
Advanced Level Accounting
Prepares bank reconciliation statement
Learning outcomes
:






Basic Terms and Concepts
Explains bank statement
Presents transactions included in a bank statement
Discloses the reasons for the differences in the
balances between the Bank statement and the Cash
receipts Journal and Cash Payments Journal by
comparing them.
Rectifies the Cash Control account balance.
Indicates the need for preparing the bank
reconciliation statement.
Prepares bank reconciliation statement.
:
Concept Map
Bank Reconciliation statement
Necessity
Bank Statement
Cash Receipts
Journal
Cash Payments
Journal
Comparison
Identifying
differences
Rectifying Cash
Control a/c
Preparing Bank
Reconciliation
Statement
24
Advanced Level Accounting
SSP
Lead a discussion that brings out the following points.

That the balance in the Cash Control a/c of the business and the cash balance as per
the Bank Statement will very often differ.

That the relevant transactions in the Cash Control a/c are obtained from the Cash
Receipts Journal and Cash Payments Journal.

That the transactions done by the bank will be contained in the Bank Statement.

That the reasons for the differences between the cash Control a/c and the Bank
Statement can be identified under the following two sections.

Comparisons to be made with the Cash Control a/c prepared by the business
organization.

Periodical changers that must be included in the Bank Reconciliation statement
and possible errors made by the bank.

That in order to reveal the differences that affect the balances in the Cash Control a/c
and the Bank statement balance, comparisons must be made in the following manner.

Comparison of the Cash Receipts Journal and credit column of the Bank
Statement.

Comparison of the Cash Payments Journal and debit column of the Bank
Statement.
Guidance to clarify Subject matter:

While the Cash Control a/c from the point of view of the business is an Asset
account, the current account maintained by the Bank on behalf of the business is a
Liability account from the point of view of the Bank.

Accordingly, the transactions with the bank that are entered in the Cash Receipts
Journal will be credited to the Current account by the bank.
Eg : Cash deposit to the bank.
The value of cheques deposited in the bank and subsequently dishonored.

The transactions with the bank entered in the Cash Payments Journal by the
business will be debited to the Current account by the bank.
Eg :
The total value of the cheques issued by the business and payment effected
by the bank.
25
Advanced Level Accounting
SSP

The following items which may not have been included in the cash Control a/c may
be included in the Bank Statement (In the Receipts Journal and Payments Journal)
Not included in Payments Journal
 Payments made on a Standing Order
Not included in Receipts Journal
 Amounts received by the bank directly
(Direct transfers)

Bank charges imposed by the bank
 Debtors payments

Cheque book charges
 Investment income

Interest charges
 Dividends incomes, Interest income

In addition to the above the following reasons also may differences in the balances.
o Errors and omissions that may occur while recording transactions by the
business.
o Errors and omission of the bank.

In correcting the Cash Control a/c balance, only the following reasons are relevant.
Items debited to the cash Control a/c Items credited to the Cash Control a/c

Direct transfers made to the bank
 Payments deducted by the bank

Errors & Omissions made by the
in respect of Standing Orders.
business
transactions.
when
recording
 Bank and cheque book charges
 Mistakes made by the business
when recording transactions.

The Bank Reconciliation statement will be prepared after the Cash Control a/c balance is
corrected. The following adjustments will be made to the revised Cash Control a/c
balance.
o The cheques issued by the business during the period but not presented to the bank
for payment must be added.
o The value of any cheques deposited business current account but were returned
unpaid must be deducted.
o Any errors or omissions of the bank must be added or deducted as appropriate.

When the adjustments have been completed, the balance should tally with the Bank
Statement balance.
26
Advanced Level Accounting
SSP

The formats for the correction of the Cash Control a/c and the Bank Reconciliation
statement are given below.
Cash account / Cash Control account (Revised)
Balance b/f
Direct transfers not recorded
Issued cheques returned
Reduction in value of cheques deposited
xxx
xx
x
x
Standing Orders not recorded
Bank charges
Cheque book charges
Cheque deposits dishonored
Cheques issued but not recorded
Balance c/f
xxx
xx
Balance c/f
xxx
xx
x
x
x
xx
xxx
Bank Reconciliation Statement
Rs.
Cash Control a/c as revised
Add:
Cheques not presented
Errors made by the bank
x
x
Rs.
xxx
xx
Less:
Cheques not realized
Errors made by the bank
Balance as per Bank Statement
xx
xx
(xx)
xxx
Assignment 14
Information about Amal’s business.
The Cash Receipts Journal of “Amal’s business” for the month of April 2019 is given below.
Cash Receipts Journal
Analysis
Date
Details
Cheque
Amount
Discount
Debtors
sales
No
Rs.
allowed Rs.
2019.04.05
Sales
147585
16,000
16,000
2019.04.08
Chamara 218570
10,000
500
10,000
2019.04.10
Sales
5,000
5,000
2019.04.15
Menaka
412870
12,000
800
12,000
2019.04.20
Sampath 241711
8,000
300
8,000
2019.04.22
Ruwan
281620
15,000
700
15,000
2019.04.25
Sagara
19,000
1,000
19,000
85,000
3,300
64,000
21,000
27
Advanced Level Accounting
SSP
The Cash Payments Journal of “Amal’s business” for the month of April 2019 is given below:
Cash Payment Journal
Analysis
Date
Details
2019.04.04
2019.04.06
2019.04.08
2019.04.12
2019.04.18
2019.04.25
2019.04.28
2019.04.29
Purchases
Senaka
Electricity
Kokila
Petty cash
Purchases
Building rent
Purchases
Cheque
No
Amount
Rs.
211010
211011
211012
211013
211014
211015
211016
211017
6,000
15,000
6,000
18,000
2,000
5,000
6,000
4,000
62,000
4/1

Discount
received
Rs.
Creditors
Purchases Expenses Other
expenses
6,000
500
15,000
6,000
1,000
18,000
2,000
5,000
6,000
4,000
1,500
33,000
10,000
Cash Control a/c for the month of April
Rs.
Balance b/f
12,000
Creditors Control
Sales
21,000
Purchases
Debtors Control
64,000
Expenses
Other payments
4/30
Balance c/f
97,000
Balance c/f
44,000
12,000
7,000
Rs.
33,000
1,000
12,000
7,000
44,000
97,000
The Bank Statement received for the month of April 2019 is given below.
Bank Statement for the month of April 2019
Date
Details
Debit
Credit
Balance
Rs.
Rs.
Rs.
4/01
4/08
4/10
4/10
4/12
4/15
4/16
4/18
4/20
4/25
4/25
4/30
Balance
Cheque 147585
Cheque 211010
Cash
Cheque 211011
Cheque 412870
Cheque 211013
Cheque 211014
Cheque 218570
Cheque 211015
Cash
Cheque 211016
Cheque book charges
Dividends
16,000
6,000
5,000
15,000
12,000
18,000
2,000
10,000
5,000
19,000
6,000
1,000
4,000
12,000
28,000
22,000
27,000
12,000
24,000
6,000
4,000
14,000
9,000
28,000
22,000
21,000
25,000
28
SSP
Advanced Level Accounting
Required:
1. State the reasons for the differences in the above Bank statement and the Cash
Control a/c
2. Revise the balance in the Cash Control a/c
3. Prepare the Bank Reconciliation Statement
Assignment 15
Debit balance (favorable balance) as at 31st May 2018 of cash control account of Hasitha
Traders was Rs.328,500/-and a summary of cash receipts journal and cash payments
Journal for the month of May 2018 is as follows:
Cash Receipts Journal
Date
Receipts
Cash Payments Journal
Amount (Rs.)
02.05.2018 Cash Deposit
Ahmad - Cheque No.
343212
Bernard (Pvt) Ltd. 12.05.2018
Cheque No. 451678
Amali Printers 18.05.2018
Cheque No. 231457
W. Nihal - Cheque
30.05.2018
No.117654
05.05.2018
Date
28,000
02.05.2018
60,000
05.05.2018
45,000
08.05.2018
30,000
26.05.2018
35,000
29.05.2018
Payments
Amount (Rs.)
Manohara - Cheque
No. 157842
Harendra - Cheque
No. 157843
P.Donald - Cheque
No. 157844
M.Harsha - Cheque
No. 157845
Manahara (Pvt) Ltd. Cheque No. 157846
198,000
50,000
26,000
34,000
11,000
13,500
134,500
The extract of the bank statement of Hasitha Traders for the month of May 2018 was
as follows:
Date
Description
01.05.2018
Balance
03.05.2018
Cash Deposit
05.05.2018
Cheque payment - 157842
08.05.2018
Cheque deposit - 343212
12.05.2018
Cheque payment - 157843
15.05.2018
Cheque deposit - 451678
18.05.2018
Cheque payment - 157844
23.05.2018
Cheque deposit - 231457
25.05.2018
Loan installment
27.05.2018
Direct deposit - 141567
31.05.2018
Bank Charges
Debits (Rs.) Credits (Rs.) Balance (Rs.)
265,000
28,000
50,000
243,000
60,000
26,000
303,000
277,000
45,000
34,000
322,000
288,000
30,000
30,000
318,000
288,000
12,000
2,500
293,000
300,000
297,500
29
SSP
Advanced Level Accounting
Required to: Prepare the following:
a.
The Adjusted Cash Control Account as at 31st May 2018
b.
The bank reconciliation statement as at 31st May 2018.
Assignment 16
Cash Receipts Journal
Date
Details
2019.01.05
Piyal
2019.01.06
Sales
2019.01.07
Sarath
2019.01.09
Ajith
2019.01.16 Interest income
2019.01.29
Sales
Cheque
No
450 300
210 206
301 501
751 200
106 408
306 608
Amount
Rs.
49,000
30,000
35,000
68,000
15,000
35,000
232,000
Discount
allowed
Rs.
1,000
Debtors
200
35,000
68,000
Analysis
Sales
Income
49,000
30,000
15,000
35,000
1,200
152,000
65,000
15,000
Cash Payment Journal
Date
Details
Cheque
No
Amount
Rs.
2019.01.04
2019.01.05
2019.01.12
2019.01.18
2019.01.26
2019.01.30
2019.01.30
Purchases
Vinuri
Drawings
Furniture
Menuli
Salary
Loan
installment
820 107
820 108
820 109
820 110
820 111
820 112
20,000
29,000
8,000
120,000
38,500
25,000
9,000
249,500
Discount
received
Rs.
Creditor
s
Analysis
Purchases Expenses Other
expenses
20,000
1,000
29,000
8,000
120,000
1,500
38,500
25,000
9,000
2,500
67,500
20,000
25,000
137,000
30
Advanced Level Accounting
SSP

The Bank Statement received for the month of January 2019 is given below.
Bank Statement for the month of January 2019
Date
Details
Debit
Credit
Balance
Rs.
Rs.
Rs.
01/01
Balance
65,000
01/05
Cheque 450 300
49,000
114,000
01/06
Cheque 820 107
20,000
94,000
01/08
Cheque 820 108
29,000
65,000
01/09
Cheque 210 206
30,000
95,000
01/10
Cheque 301 501
25,000
120,000
01/10
Cheque return 210 206
30,000
90,000
01/11
Cheque 751 200
68,000
158,000
01/13
Cheque 820 102
8,000
150,000
01/29
Cheque 820 110
120,000
30,000
01/30
Cheque 106 408
15,000
45,000
01/30
Cheque 820 111
38,500
06,500
Cheque book charges
1,000
05,500
Loan installment
9,000
(03,500)
Dividends income
10,000
06,500
Additional information.
1) Cash control account balance as at 1/1/2019 did not tally with the balance of bank
statement.
Cheque numbers
Values
820 102
8,000
820 105
10,000
2) Dishonored cheque , Cheque book charges, Dividends income has not been recorded
in the cash control account of the business.
Required to: Prepare the following:
a. The Cash Control Account of the business before adjusting.
b. Adjusted Cash Control account.
c. The bank reconciliation statement as at 31st January 2019.
31
SSP
Advanced Level Accounting
Assignment 17
Saman commenced a stationery trading business on 01.01.2018 all cash transactions of
business are carried out through a bank current account. Saman while serving as the
manager of the business recruited an employee to assist in carrying out sales and
maintaining inventory.
The following transaction took place in the business during January 2018
No
Date
01/01
Cheque no
03/01
07/01
10/01
5001
4450
12/01
12/01
15/01
18/01
25/01
6005
2005
5002
5003
26/01
5004
29/01
3010
30/01
5005
Transaction
Saman Invested Rs.600 000 in cash and brought Rs. 180 000 worth of
furniture.
Purchased stationary for Rs. 300 000 on cash
stationary costing Rs. 100 000 was sold for Rs. 150 000 on cash
Stationary costing Rs. 150 000 was sold on credit to gamini for Rs. 200
000
Purchased stationary for Rs. 400 000 on credit from Jayamal PLC
Stationary costing Rs.300 000 was sold on credit to nimal for Rs. 280 000
Received the full amount due from gamini
Stationary costing Rs. 150 000 was sold for Rs. 120 000 on cash
Paid salaries:
Saman Rs. 50 000
Assistant Rs. 25 000
Office expenses incurred for the month was Rs. 40 000. Of which Rs.30
000 was paid
Received the full amount due from nimal after allowing a discount of Rs.
10 000
Settled the amount due to Jayamal
The bank statement of the business for the month of January received on was as follows:
Date
01/01
03/01
07/01
15/01
18/01
25/01
26/01
31/01
Saman traders Account No.5063-7000-8002
Description
Debit (Rs.)
Credit (Rs.)
Cash deposit
600 000
Cheque No. 5001
300 000
Cheque No. 4450
150 000
Cheque No. 6005
200 000
Cheque No. 2005
120 000
Cheque No. 5002
50 000
Cheque No. 5003
25 000
Cheque No. 5004
30 000
Bank charges
5 000
Balance
Balance (Rs.)
600 000
300 000
450 000
650 000
770 000
720 000
695 000
665 000
660 000
660 000
32
SSP
Advanced Level Accounting
Required:
1. Show the impact on transaction 1 to 12 (with values) using the accounting equation and
state whether each value increases (+) or decreases (-) in front of the value. (In answering
this question use a format similar to the one given below)
2.
Transaction
No.
Assets
PPE
Inventory
Trade
receivables
Cash
Liabilities
Trade
Other
payable
payable
Capital
Equity
Retained
earnings
3. Cash receipts journal for the month ending 31.03.2018
4. Bank reconciliation statement for the month of January 2018 (start with the balance as per
bank statement)
33
SSP
Advanced Level Accounting
Assignment 18
Following transactions occurred during month of January 2018. Pubudu Ltd is a VAT
registered company. Which engaged in selling fresh fruits and vegetables. All cash
transactions are done through bank current account. Balance of bank account as at
1/1/2018 is 120,000.
Date
Receipt
No.
01-02
10
01-03
11
Voucher
No
Cheque
No
120
Transaction.
Cash sales 46000 including 6000 VAT.
Cash receipt from debtor (Eranga) 90,000
discount received 1,200
01-04
50
299
Payment to creditor (Ranga) 110,000
01-05
51
300
Cash purchase 11,500 including VAT 1,500
01-07
52
301
Electricity expenses 3,000
01-10
53
302
Purchase of machinery 60,000
01-12
12
Obtain a bank loan 200,000
01-15
13
Cash receipt from debtor Eranga 40,000
Discount allowed 600
01-16
54
303
Payment to creditor Tharanga 80,000
Discount received 900
01-17
14
01-20
01-22
01-25
Cash sales 34500 including 4500 VAT
55
304
Salary payment 95,000
56
305
Payment to creditor Tharanga 3,000.
15
Rent income received 30,000.
01-30
57
306
Payment to creditor Ranga 33,000
01-30
58
307
Salary payment 15,000
34
Advanced Level Accounting
SSP

The Bank Statement received for the month of January 2018 is given below.
Bank Statement for the month of January 2018
Date
Details
Debit
Credit
Balance
Rs.
Rs.
Rs.
1/01
Balance
120,000
1/01
Deposit cheque 120
46,000
166,000
1/03
Deposit
90,000
256,000
1/04
Payment cheque 299
110,000
146,000
1/08
Payment cheque 301
3,000
143,000
1/12
Payment cheque 302
60,000
83,000
1/12
Bank loan
200,000
283,000
1/15
Deposit
40,000
323,000
1/17
Payment cheque 303
80,000
243,000
1/17
Deposit
34,500
277,500
1/22
Payment cheque 304
95,000
182,500
1/25
Payment cheque 305
3,000
179,500
1/30
Dividends income
3,000
182,500
Bank charges
400
182,100
Required:
a. Cash receipt journal and Cash Control Account for the month ended
31/01/2018.
b. Relevant journal entries of receipt and payment journal recording in general
ledger.
c. Adjusted cash control account and bank reconciliation statement as at
31st January 2018.
Assignment 19
The extracts of cash receipts and cash payments journal for the month of March 2018
of Somasundara’s business are as follows.
Cash receipts:
Date
03/01
03/10
03/28
Description
Cheque No.
Sales
250250
Receipt – Sisira 375750
Building rent
Total
Discount Allowed (Rs.)
800
800
Value (Rs.)
80 000
9 200
10 000
99 200
35
SSP
Advanced Level Accounting
Cash Payments:
Date
Description
03/08
Sirimal
03/12
Salary
03/20
Jayasiri
03/28
Purchases
Total
(ii)
Cheque No.
301302
301303
301305
301306
Discount Received (Rs.)
1 500
2 000
3 500
Bank statement send for the month ended 31.03.2018
Date
Description
Debit
Credit
(Rs.)
(Rs.)
03/01
Balance
03/01
Deposit – cheque 250250
- 80 000
03/12
Cheque – 301303
10 000
03/21
Deposit - Cash
- 10 000
03/29
Cheque – 301306
40 000
03/30
Bank charges
1 000
03/30
Deposit (Kumari) 17973
- 22 000
03/31
Insurance installment
6 000
-
Value (Rs.)
18 000
10 000
48 000
40 000
116 500
Balance
(Rs.)
25 000
105 000
95 000
105 000
65 000
64 000
86 000
80 000
Additional Information:
 Balance as at 31.03.2018 in cash control account was Rs. 16 700
 Total of expenses columns in the cash payment journal Rs. 10 000 has been recorded as
Rs. 1 000 in the cash control account.
 The bank has informed that the cheque issued on 20.03.2018 was dishonored. Creditor
has informed that the discount offered was cancelled.
Required:
(1) Correct balance of the cash control as at 31.03.2018
(2) Bank reconciliation statement for the month of March 2018
36
Advanced Level Accounting
SSP
Assignment 20
The Cash control A/C of the Kumara PLC Recorded on debit balance of Rs. 52, 000 as at
31/03/2018. But the bank statement showed Rs. 128, 000 credit balance as at the same
date.
The following reasons were found out for the difference.
i.
ii.
iii.
iv.
v.
vi.
Cheques amounting Rs. 35, 500 and Rs. 17, 500 issued to a supplier were not
presented to the bank for payment till the end of March.
Under the standing instructions, the bank has made a members subscription charges
of Rs. 5 000 to the trade union were not recorded in the Cash control A/C.
Bank charges of Rs. 1 500 has not been recorded in the Cash control A/C as at 31st
/3/2018.
Cheques deposited but not yet realized Rs. 12, 000
Direct remittances received on behalf of debtors Rs. 18, 000 and Rs 31, 000 to the
bank account were not recorded in the Cash control A/C.
No entry has been made in the Cash control A/C with respect to a cheque amounting
Rs. 7 500 returned by the bank. This cheque had been received from debtor and
deposited in the bank.
Required:a) Make required adjustments in the Cash control A/C of the company.
b) Prepare bank reconciliation statement as at 31st march 2018 after adjusting Cash
control A/C.
Assignment 21
The Cash control A/C of Vasana Trading Company showed a debit balance of Rs. 14, 000 and
the bank statement showed a credit balance of Rs. 42,500 on 31.03.2018. Subsequent
examination revealed the following.
i.
ii.
iii.
iv.
v.
A cheque of Rs. 14, 500 deposited in the Cash control A/C on 30.03.2018 was not
recorded in the bank statement.
A cheque of Rs. 50, 000 has been directly deposited by a customer in the bank account
on 25.03.2018. This amount was not recorded in the Cash control A/C till 31.03.2018.
Cheques amounting to Rs. 15, 000 and Rs. 20, 000 issued to a supplier were not
presented to the bank for payment till the end of March.
A cheque received from a customer for Rs. 32, 000 was deposited in the bank on
26.03.2018.This cheque was dishonored. However this dishonored cheque was not
recorded in the Cash control A/C till 31.03.2018.
Bank debit tax of Rs. 500 and standing order payment for owner’s life insurance
premium of Rs. 9 500 appeared in the bank statement were not recorded in the Cash
control A/C till 31.03.2018.
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SSP
Advanced Level Accounting
Required:a) Record the relevant transactions in the Cash control A/C showing the adjusted bank
balance on 31.03.2018.
b) Prepare the bank reconciliation statement for the month of March 2018.
Assignment 22
The Cash control A/C of Crown Ltd. Showed a credit balance of Rs. 30, 000 on 31.12.2018.
However, on this date the bank statement showed a balance of Rs. 18, 000 overdrawn. The
following were revealed at the subsequent examination conducted by the Accountant of the
company.
i.
A cheque of Rs. 30, 000 deposited with the bank has not yet realized.
ii.
A cheque of Rs. 50, 000 issued has not yet been presented for payment.
iii. An investment income of Rs. 7 000 directly collected by the bank has not been
recorded in the Cash control A/C.
iv. A payment of Rs. 5 000 for insurance premium made on a standing order has not
been recorded in the Cash control A/C.
v.
A deposited cheque of Rs. 10, 000 had been dishonored by the bank, but no entry
has been made in the Cash control A/C.
Required:a) Make required adjustments in the Cash control A/C of the company.
b) Prepare the bank Reconciliation statement as at 31.12.2018 after adjusting the Cash
control A/C.
Assignment 23
The bank statement of a business showed a credit balance of Rs. 3 000 as at 31.03.2018. The
following information was revealed when reconciling the cash control A/C balance with the
bank statement balance as of that date.
i.
ii.
iii.
iv.
Cheques deposited amounting to Rs. 80, 000 has not been realized.
A cheque issued to a supplier for Rs. 30, 000 has not been presented to the bank.
Bank charges of Rs. 500 and standing order payment of Rs. 1500 for rent as per bank
statement have not been recorded to the control A/C.
No entry has been made in the cash control A/C with respect to a cheque amounting
to Rs. 20,000 returned by the bank. This cheque had been received from a debtor
and deposited in the bank.
Required:a) Bank Reconciliation Statement for the month of March 2018
b) The balance of cash control A/C as at 31st March 2018 after making necessary
adjustments
c) Journal entry to record the dishonored cheque
38
SSP
Advanced Level Accounting
Assignment 24
Use the following information to answer activity no.01 and .02.
A business carries out all its cash transactions through a bank current account.
A summary of cash transactions as per books of account for the month of March 2017.
Description
Rs 000
Cash balance as at 1/03/2017
100
Total of Cash Receipt journal as at 31/03/2017
1,200
Total of Cash Payment journal as at 31/03/2017
900
A summary of the bank statement for the month of March 2017 received on 04/04/2017.
Description
Rs 000
Balance as at 1/03/2017
100
Cheques realized
1000
Cheques paid
750
Fixed deposit interest credited directly
200
Standing order payments
50
Fixed deposit interest and standing order payments are recorded in the books after
receiving the bank statement. There were no unrealized or unpresented cheques as at
01/03/2017.
Activity 01
What is the adjusted balance of the cash account of the business as at 01/03/2017?
1)
4)
Rs 300,000
Rs 500,000
2) Rs 350,000
5) Rs 550,000
3) Rs 400,000
Activity 02
Which of the following statements are correct with respect to cash transactions of the
business for the month of March 2017.
A. The total cash receipts for the month of March were Rs 1,400,000.
B. The total cash payments for the month of March 2017 were Rs 950,000.
C. The unrealized cheques as at 31/03/2017 were Rs 200,000.
D. The unpresented cheques as at 31/03/2017 were Rs 150,000.
1) A and B only
4) C and D only
2) A and C only
5) All A, B, C and D
3) B and D only
39
SSP
Advanced Level Accounting
Assignment 25
Use the following information to answer Activity no 01 and 02
The cash control of Ranjith Enterprises showed a debit balance of Rs. 9600 on 31.03.2018.
On that date balance in the bank statement did not agree with the cash control A/C balance.
The following differences were revealed when the cash control A/C was compared with the
bank statement.
i)
Cheques deposited but not realized Rs. 7000
ii) Cheques issued but not presented for payments Rs. 4000
iii) Bank charges not recorded in the cash control A/C Rs. 100
iv) Cheques deposited directly in the bank but not recorded in the cash control A/C Rs.
2000
Activity 01
The correct balance of the cash control A/C on 31.03.2018 is,
A. Rs 8500
B. Rs 10, 700
C. Rs 11, 500
D. Rs 7700
E.Rs 5 500
Activity 02
The balance appeared on the bank statement as at 31.03.2018 is,
A. Rs 14, 500
B. Rs 10, 700
C. Rs 1 500
D. Rs 8 500
E Rs 4700
Activity 03
Dishonoring of a cheque received from a debtor is recorded in the ledger through the,
A. Sales journal B. Sales return journal
E Cash paying journal.
C. General Journal
D .Cash receiving journal
Activity 04
An entity deposits all cash collections daily in the bank and makes all payments by cheques.
The following information for a month is provided.





Balance at the beginning of the month as per the bank statement and cash
control A/C were Rs. 10, 000 and Rs. 25, 000 respectively. The difference was
due to unrealized cheques.
Total of cash receipt journal
- Rs150, 000
Total of cash payment journal
-Rs90, 000
Discounts allowed at the time of collecting money from debtors - Rs5,000
The only reason for the difference between the balance as per the bank
statement and the cash control A/C at the month-end was the bank charges
of Rs.10 000 which appeared in the bank statement.
What was the month –end balance as per the bank statement?
A.Rs 55,000
B. Rs. 60, 000
C. Rs. 65,000
D .Rs 70, 000
E.Rs 75, 000
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SSP
Advanced Level Accounting
Activity 05
The cash account balance of BETA Company Ltd. As at 31.03.2018 was Rs. 142,000. The bank
statement sent by the showed a credit balance of Rs. 115,000 the following reasons were
noted for the difference.


A cheque amounting to Rs. 35,000 has been deposited on 28.03.2018 but has not
still been realized.
A cheque amounting to Rs. 8,000 has been issued on 22 nd March 2018. But has not
still been presented to the bank.
Required:Prepare a bank reconciliation statement.
41
SSP
Advanced Level Accounting
Prepares statement of profit or loss and statement of
Financial Position using accounting equation.
Learning outcomes




Basic Terms and Concepts
Explains matching concept.
Explains income statement and statement of financial
position.
Prepares the Income Statement using the accounting
equation.
Prepares Statement of Financial Position using the
accounting equation.
:
Concept map
Transactions
Accounting equation
Assets
Equity
Liabilities
Current
Profit
Current
Non-current
Drawings
Long Term
Additional
capital
Income Statement
Expense
Matching
concept
Income
Statement of Financial
Position
42
SSP
Advanced Level Accounting
Assignment 26
The assets and liabilities of Dumindu’s business as at 2020/01/01 is given below.
Assets
Land & buildings
Motor vehicle
Inventory
Debtors
Cash
(Rs.)
7,000
2,000
3,000
5,300
2,700
Liabilities
Bank loan
Creditors
(Rs.)
2,500
500
A summary of the transactions that took place during the month of January is given below.
1.
2.
3.
4.
5.
6.
7.
Sale of goods for Rs.500 for cash which cost 300.
The depreciation for a month for the Motor vehicle is Rs. 50
Dumindu invests Rs.400 in the business.
Sale for Rs.600 of goods costing Rs.400
Dumindu’s drawings total Rs.100
Received Rs.10 for the sale of old newspapers.
The debtors paid Rs.450 in settlement of a debt of Rs.500. A discount of Rs.50 was
given.
8. Paid creditors Rs.300 and received a discount of Rs.30.
9. Loan installment of Rs.280 was paid inclusive of Rs. 80 interest.
10. Paid staff salaries for a month Rs.80.
Required
1.
2.
3.
Record the above transactions in an equation as follows commencing with the opening
balance.
‘Land & buildings + Motor vehicle + Inventory + Debtors + Cash = Bank loan +
Creditors + Equity’
Calculate net profit according to net assets basis.
Prepare statement of financial position as at 31/01/2020
43
SSP
Advanced Level Accounting
Assignment 27
The Statement of financial position of Mathew Traders, a sole proprietorship, as at 01st
January 2020 is given below.
Statement of financial position as at 01.01.2020
Rs.
Rs.
Equity
55 000
Stocks
50 000
Bank loan
20 000
Cash
25 000
Total liabilities and equity
75 000
Total assets
75 000
The following transactions and events took place during the month of January 2020.
Date
Transaction/event
January 04
January 08
January 12
January 16
January 18
January 25
January 31
Goods with a cost of Rs. 15 000 were sold for Rs. 30 000 on credit.
Goods were purchased for Rs. 10 000 on one month credit.
Goods sold for Rs. 5 000 on 04.01.2020 were returned by the
customers.
Goods with a cost of Rs. 20 000 were sold for Rs. 35 000 in cash.
Employees' salaries for the month of January amounting to Rs. 12 000
were paid.
loan installment of Rs. 800 for the month including interest of Rs. 200
was paid.
Goods with a cost of Rs. 4 000 were written off from stocks.
Required:
(1)
Show the effect of these transactions and events on the accounting equation using a
format similar to the one given below with numerical values by placing "+" sign for an
increase and "-" sign for a decrease.
Date
Stocks
(Rs.)
Assets
Cash
(Rs.)
Debtors
(Rs.)
Liabilities
Bank Loan Creditors
(Rs.)
(Rs.)
Equity
(Rs.)
January 04
(2)
Statement of financial position of Mathew Trades as at 31.01.2020.
44
SSP
Advanced Level Accounting
Assignment 28
The Statement of financial position of Dilani Traders, a sole proprietorship, as at 01.01.2020
is given below
Statement of financial position as at 01.01.2020
Rs. '000
Assets
Furniture and firings (Cost Rs. 180 000)
120
Inventory
70
Debtors
10
Cash
30
230
Equity
180
Liabilities
Creditors
50
230
The following transactions and events took place during the month of January 2019.
No.
(i)
Date
January
(iii)
4
8
12
(iv)
15
(v)
18
(vi)
(vii)
20
25
(viii)
(ix)
28
30
(x)
31
Transaction/Event
Sold goods for cash Rs.40 000.The cost of these goods was Rs.30 000
Purchased goods worth Rs.35 000 on credit.
Returned to the supplier Rs.5 000 worth of goods purchased on
08.01.2020
Sold goods for credit Rs.50 000.The cost of these goods was Rs.
40 000
Received Rs.9 000 cash from debtors and Rs. 1 000 was written off
as impairment loss.
Paid Rs.12 000 as salaries of employees
Paid cash to settle the creditors balance as at 01.01.2020 and
Rs. 5 000 was received as cash discount.
The owner withdraw Rs. 5 000 in cash for personal use.
received in cash the amount written off as impairment loss on
18.01.2020
provided depreciation of Rs. 3 000 on furniture and fittings for the
month of January
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SSP
Advanced Level Accounting
Required:
1)
Using the accounting equation show the impact of above transactions and events
(with values) and state whether each value increases (+) or decreases (-) in front of
the value. (Use the following format)
No.
Furniture
and Fittings
Assets
Cash
Inventory
Debtors
Liabilities
Creditors
Equity
(i)
2)
3)
4)
Using net assets basis, calculate net profit or loss for the month of January 2020.
Prepare income statement for the month ending 31/01/2020.
Prepare statement of financial position as at 31/01/2020.
Assignment 29
Narada opened a stationary shop in part of his home on 01.03.2020 by investing Rs. 150 000
in cash. He also brought Rs. 60 000 worth of furniture for use in the business on this date.
He opened a bank account in the name of the business and carried out all transactions
through this account. The following transactions took place during the first month of
operations.
Transaction
No.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Transaction
Purchased stationery item for Rs. 100 000 on cash.
Sold stationery items with a cost of Rs. 70 000 for Rs. 100 000 on cash.
Purchased stationary items for Rs. 150 000 on credit.
Returned Rs. 30 000 stationery items to the supplier due to defects.
Purchased a computer on 15.03.2020 for Rs. 120 000 on credit. This amount
is payable over period of 18 months.
Sold stationery items with a cost of Rs. 100 000 for Rs. 140 000 on credit.
Paid Rs. 15 000, the monthly salary of the office assistant.
Obtained Rs. 30 000 from the business for personal use of Narada.
Paid the stationery supplier subject to a 5% discount on the outstanding
balance.
Received the amount due from debtors after allowing a 5% discount.
Additional Information:
 The telephone bill of the business for the month of March, 2015 amounting to Rs. 3 000
was received on 02.04.2020
 The property, plant and equipment of the business should be depreciated on straight
line method at 20% per annum.
46
SSP
Advanced Level Accounting
Required:
(1) Using the accounting equation, show the impact of above transactions from No. 1 to
10 (with values) and state whether each value increases (+) or decreases (-) in front
of the value. (Use the following format for this purpose)
Transaction
No.
(2)
(3)
Assets
Property, plant Inventory
Trade
and equipment
receivables
Liabilities
Bank
Trade
Loans
payables
Equity
Income statement of the business for the month ending 31.03.2020
Composition of equity of the business as at 31.03.2020 using the following format:
Rs.’000
Opening Capital
Profit / (Loss) for the period
Less: Drawings
Equity as at 31.03.2015
Assignment 30
Insert the following words in the appropriate blanks in the following statements to complete
them:
Matching concept, statement of profit or loss, Statement of Financial Position, Net Assets,
Profit/Loss.
(i)
A ………………………………….. is prepared to determine the operating results of the
business at the end of a specific period.
(ii) In order to calculate the profit or loss at the end of a specific period of time the
expenses incurred to generate income is calculated according to the
…………………………………..
(iii) The document that provides information on the assets, liabilities and equity a
business as at a given date is known as the …………………………………..
(iv) The main purpose of the Income Statement is to calculate the
………………………………….. for a given period.
(v) The equity of a business is also known as the …………………………………..
47
SSP
Advanced Level Accounting
Assignment 29
Rajitha is carrying on business as a retail trader. His transactions and events for the month
of January 2019 have been included in the format of the accounting equation given below:
Assets
Transaction
Ref.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
Land & + Inventory + Debtors + Cash
Bldgs.
………
………
………
+1,000,000
………
………
………
-10,000
………
………
………
………
+80,000
-150,000
………
………
………
………
-8,000
………
………
-2,000
+40,000
………
………
-80000
+250,000
………
-30,000 +28,000
……… -1,000,000
………
-36,000
………
-15,000
………
………
………
………
……… +1,200,000
………
………
………
………
………
-12,000
=
=
Liabilities
+ Equity
Bank + Creditor + Equity
Loans
=
=
=
=
=
=
=
=
=
=
=
=
………
………
………
………
………
+100,000
………
………
-2,000
………
………
………
………
-40,000
+4,000
-12,000
………
-3,000
………
………
-8,000
………
………
-10,000
………
……… +1,200,000
………
………
-2,000
……… +40,000
………
………
………
-12,000
Additional information:
(a)
(b)
Transaction no, 07 and 09 have no impact on profit.
The assets and liabilities of the business as at 2019/01/01 are as follows:
(Rs.)
Land and buildings
1,000,000
Stocks
200,000
Debtors
900,000
Cash
280,000
Bank loan
180,000
Creditors
70,000
Required
1.
2.
3.
Explain each of the transactions/events in the above table.
Prepare the Income Statement for the month of January 2019
Prepare the statement of Financial Position as at January 31, 2019.
48
SSP
Advanced Level Accounting
In the following statements mark () if it is correct and () if incorrect.
1.
2.
3.
4.
5.
The accounting equation shows the assets of the business and the connection with
its ownership.
( )
When calculating the profit/loss from the Net Assets, the opening net assets and
drawings are deducted from the closing net assets.
( )
When preparing the Income Statement, the matching concept should be considered.
( )
By recording how business transactions impact the accounting equation it is possible
to prepare a Statement of financial Position.
( )
Cash drawings and additional capital, do not impact the profit or loss calculation
according to net assets basis.
( )
49
SSP
Advanced Level Accounting
50
SSP
Advanced Level Accounting
51
SSP
Advanced Level Accounting
52