Question 1
The following transactions appeared in the books of Travelling Bookstore for January 20.3. Travelling Bookstore sell books, magazines,
stationery and uses the periodic inventory system.
Transactions for the January 20.3
1
The owner, B Moloi, transferred his small delivery van worth R250 000 to Travelling Bookstore as an additional
capital contribution.
5
Bought merchandise on credit from Readers Wholesalers for R15 525 less a 10% trade discount.
12
Made an EFT to pay Naidoo Traders R12 000 less 5% discount.
15
Credit card sales, R32 000.
18
The owner drew R 2 000 cash for private use.
20
Received a direct payment of R6 000 from P Sithole in full settlement of his account of R6 400
Required:
Analyse the transactions of Travelling Bookstore according to the following table. You may ignore VAT implications of the above
transactions.
Date
Journal
Account
debited
Element
General Ledger
Amount
Account
R
Credited
Element
Amount
R
Assets
Effect on:
Equity
Liabilities
Question 1 - Solution
Date
Journal
Account
debited
Element
General Ledger
Amount
Account
R
Credited
Element
Amount
R
Assets
Effect on:
Equity
Liabilities
1
GJ
Delivery vehicles
Asset
250 000
Capital
Equity
250 000
Increases
Increases
No effect on
liabilities
5
PJ
Purchases
Expense
13 972,50
Readers
Wholesalers/Trade
payables
Liability
13 972,50
No effect
on assets
Decreases
Increases
12
CPJ
Naidoo
Traders/Trade
payables
Liability
12000
Bank
Asset
11 400
Decreases
-
Decreases
Settlement discount
received
Income
600
-
Increases
-
15
CRJ
Bank
Asset
32 000
Sales
Income
32 000
Increases
Increases
No effect on
liabilities
18
CPJ
Drawings
Equity
2 000
Bank
Asset
2000
Decreases
Decreases
No effect on
liabilities
-
-
20
CRJ
Bank
Asset
6 000
P Sithole/Trade
receivables
Asset
6 400
Settlement
discount granted
Expense
400
Increases
and
decreases
-
Decreases
-
Transaction on 5 of January 20.3 explanation:
Travelling Bookstore purchased merchandise on credit from Readers Wholesalers R15 525. Travelling Bookstore was given a trade
discount of 10%. Therefore, the amount Travelling Bookstore owes Readers Wholesalers is calculated as follows:
Trade discount
Total credit purchases
=
R15 525 x 10%
=
R1552,50
=
R15 525
=
R13 972,50
–
R1 552,50
Transaction on 12 January explanation:
Travelling Bookstore owed Naidoo Traders (a creditor) R12 000. When an EFT was done on 12 January, Naidoo Traders granted Travelling
Bookstore a 5% settlement discount.
Settlement discount received
=
R12 000 x 5% = R600
Transaction on 20 January explanation:
P Sithole(debtor) owed Travelling Bookstore, R6 400. Travelling Bookstore gives P Sithole(debtor) a settlement discount of R400.
Settlement discount granted
=
R6 400 – R6 000 = R400.
REFER TO STUDY UNIT 5 FOR EXERCISES WITH SOLUTIONS ON HOW TO RECORD SETTLEMENT DISCOUNT RECEIVED AND
SETTLEMENT DISCOUNT GRANTED IN THE RESPECTIVE BOOKS OF FIRST ENTRY AND THE GENERAL LEDGER.
Question 2
T Nkome is the owner of Nkome Traders. Nkome Traders is a registered VAT vendor. The VAT rate of 15% is applicable in the
transactions provided below.
Transactions for the February 20.3:
3
Received and invoice (re-numbered to 20.3/105) from Bapela Wholesalers for merchandise purchased on credit for
R18 975.
5
Some of the items to the value of R 1265 on invoice number:20.3/105 was not received. Issued a debit note for the
amount. Bapela Wholesalers granted the claim and issued credit note for the amount claimed.
10
Bought stationery, R 1 035, from Big Stationers and received their invoice.
12
Received an invoice from Electronics Traders for the purchase of a new printer for R3 680.
17
Received an invoice from Bangani Wholesalers for merchandise purchased to the value of R21 965.
Required:
Prepare the Purchases Journal and the Purchases Returns Journal for the month February 20.3.
Question 2 : Solution
NKOME TRADERS
PURCHASES JOURNAL-FEBRUARY 20.3
Date
3
17
Details
Fol
Trade
VAT Input Purchases
payables
18 975
2 475
16 500
21 965
2 865
19 100
40 940
5 340
35 600
Fol
Trade
VAT
Purchases
payables
Input
returns
1 265
165
1 100
Bapela Wholesalers
Bangani Wholesalers
NKOME TRADERS
PURCHASES RETURNS JOURNAL - FEBRUARY 20.3
Date
5
Details
Bapela Wholesalers
1 265
165
1 100