Diocesan Girls School S5 BAFS Homework Answer Chapters 7: Cash Book and Petty Cash Book & Chapter

8: The Journal Multiple-choice Question (19 marks) 1. A business owner withdrew $20,000 from the businesss bank account and put it in the safe. Assuming that the bank has opened a cash book, which of the following entries is correct? A. Debit cash account $20,000Credit bank account $20,000 B. Debit bank account $20,000Credit cash account $20,000 C. Debit cash column $20,000Credit bank column $20,000 D. Debit bank column $20,000Credit cash column $20,000 C 2. Statement 1: The cash book is a book of original entry for all cash and bank transactions. Statement 2: Even though a cash book is opened, the cash account and bank account are still kept in the general ledger. A. Statement 1 is correct but statement 2 is incorrect. B. Statement 1 is incorrect but statement 2 is correct. C. Both statement 1 and statement 2 are correct. D. Both statement 1 and statement 2 are incorrect. A Jamie Company bought motor vehicles for $400,000 from Ivan Limited on credit on 14 June 20X9. Ivan Limited allowed Jamie Company a cash discount of 3% for settlement within one month. Jamie Company paid Ivan Limited on 20 June 20X9. Jamie Company ___________ a discount of _____________. A. allowed $12,000 B. allowed $388,000 C. received $12,000 D. received $388,000 C Which of the following persons will properly receive cash discounts from the supplier? A. Mr. Tung who settled the payment with the credit period B. Mrs. Leung who purchased from the supplier in cash C. Mr. Yau who took the goods by himself D. Miss Choi who bought office equipment frequently from the same supplier

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5.

Kennis Limited bought 15 computers at $6,000 each on credit from Candy Company on 14 December 20X6. Candy Company gave a trade discount of 2% to Kennis Limited. Moreover, a cash discount of 4% would be allowed for settlement within two months. Kennis Limited paid Candy Company on 29 January 20X7. How much should Kennis Limited pay? A. $84,672 B. $86,400 C. $88,200 D. $90,000 A

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On 18 June 20X5, Charter Limited sold 100 books at $250 each on credit to Oliver, less 5% trade discount. A cash discount of 4% would be allowed for settlement within two months. On 1 July 20X5, Oliver returned five books to Charter Limited. Charter Limited received the payment on 28 July 20X5. Which of the following is INCORRECT? A. The total amount to be received by Charter Limited was $21,660. B The trade discount was $1,187.5. C. The purchases returns were $1,250. D. The discount received by Oliver was $902.5. C On 15 November 20X8, Chan Company bought 100 printers at $1,200 each on credit from Alan Computer, less 4% trade discount. A cash discount of 5% would be allowed for settlement within one month. On 10 December 20X8, Chan Company returned 20 printers to Alan Computer. Chan Company settled the payment one week after it returned the goods. How much should Chan Company pay? A. $87,552 B. $92,160 C. $96,000 D. $109,440 B Which of the following events will NOT be recorded in the general journal of a motor van trader? (1) Purchased office equipment for $10,000 on credit (2) Purchased furniture for $34,000 on credit (3) Purchased a motor van for $85,000 for resale on credit (4) Sold a motor van for $60,000 in cash A. (1) and (2) only B. (1) and (3) only C. (2) and (4) only D. (3) and (4) only D When a transaction is recorded in the general journal: A. it does not need to be posted to ledger accounts. B. it does not affect the financial position of the business. C. the accounting equation is imbalanced. D. None of the above

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10. If the three-column cash book is used, discounts allowed will be recorded in: A. the cash book only B. the cash book and sales ledger C. the cash book and general ledger D. the purchases ledger and general ledger 11. The total of the credit side of the discounts column in the cash book is posted to: A. the credit side of the discounts allowed account in the sales ledger. B. the debit side of the discounts allowed account in the sales ledger. C. the credit side of the discounts received account in the general ledger. D. the debit side of the discounts received account in the general ledger.

12. A firm purchased an item of office equipment on credit. Payment was made a week after the delivery. As the equipment kept breaking down in the following weeks, the supplier accepted the return of the equipment and a full refund was given. If the return was made before the payment, which of the following books of original entry should be used? A. Returns inwards journal B. Returns outwards journal C. General journal D. Cash book C 13. Which of the following events relating to a wholesaler should not be recorded in the general journal? A. Receipt of a credit note from a supplier B. Purchase of office equipment on credit C. Correction of an error found in the sales account D. Exchange of a used car for a delivery van of equal value 14. Reasons for keeping a petty cash book are: (i) to ease the workload of the cashier. (ii) to reduce the possibility of having a bank overdraft. (iii) to reduce the number of entries made in the ledgers. (iv) to restore cash on hand so that it will not run out. A. B. C. D. (i) and (ii) (i) and (iii) (iii) and (iv) (ii), (iii) and (iv) A

15. The owner of a business, Kelvin Ma, received the following cheque on 22 May 2008. He deposited the cheque into his business bank account at Standard Chartered Bank on the same day.

The bank informed the business owner that the cheque had been rejected. Which of the following is the most probable reason for the cheque being dishonoured? A. The bank would not accept cheques issued by another bank. B. The amount in words differed from the amount in figures. C. The cheque was a stale cheque. D. The drawer did not have enough funds in the account.

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Lee Ltd 135 Super Road, Hong Kong Date: Invoice No.: Invoice

To:

Tammy Electronics 22 Sunshine Road Hong Kong Quantity Description 5 6 TV sets MP3 players

17 April 2009 1435 Amount $ 40,000 5,880 45,880 4,588 41,292

Unit Price Discount $ % 8,000 10 980 10 Gross amount Trade discount Net amount

5/10; n/30.

A cheque was issued in full settlement of the amount of the above invoice seven days after the invoice date. What should the cheque amount be and who was the payer? A. $41,292; Lee Ltd B. $41,292; Tammy Electronics C. $39,227.40; Lee Ltd D. $39,227.40; Tammy Electronics D 17. The double entry required for the cancellation of a stale cheque issued by a firm to a trade creditor is: Dr Cr A. Accounts payable Bank B. Bank Accounts payable C. Bank Accounts receivable D. No entry is required. B 18. A company keeps its petty cash book on the imprest system. Given a cash float of $1,000 at the beginning of a period and $476 reimbursed at the end of the period, which of the following statements is true? A. The amount spent during the period was $476. B. The amount spent during the period was $524. C. The amount spent during the period was $1,476. D. The amount spent during the period was $1,524. A 19. Which of the following about trade discounts and cash discounts is true? A. Trade discounts are price reductions given to creditors while cash discounts are given to debtors. B. Cash discounts are given when accounts are settled in cash while trade discounts are given when accounts are settled by cheque. C. Trade discounts are usually offered to customers who buy in large quantities while cash discounts are offered to debtors who pay within a certain period. D. Trade discounts should be recorded on the debit side of an account while cash discounts should be recorded on the credit side of the account. C

Short Questions (26 marks) 20. Ms. Pang was the owner of a garment factory. The transactions of the factory in March 20X8 were as follows: 20X8 Mar 1 Mar 3 Mar 14 Mar 17

Purchased motor vehicles for $45,000 from Ms. Chan on credit. Purchased office equipment for $28,000 from Mr. Yau on credit. Sold office equipment for $15,000 to Mr. Kong on credit. Purchased office equipment for $35,000 from Ms. Chan on credit.

You are required to: Enter the above transactions in the general journal and post the above transactions to the relevant accounts in the general ledger. (8 marks)

General journal Date 20X8 Mar 1 Details Motor vehicles Ms. Chan Acquisition of motor vehicles on credit. Office equipment Mr. Yau Acquisition of office equipment on credit. Mr. Kong Office equipment Disposal of office equipment on credit. Office equipment Ms. Chan Acquisition of office equipment on credit. Dr. $ 45,000 Cr. $ 45,000

Mar 3

28,000 28,000

Mar 14

15,000 15,000

Mar 17

35,000 35,000 (4)

General Ledger Motor vehicles 20X8 Mar 1 Ms. Chan $ 45,000 (0.5) Office equipment 20X8 Mar 3 Mar 17 Mr. Yau Ms. Chan $ 20X8 28,000 Mar 14 35,000 Ms. Chan 20X8 Mar 1 Mar 17 Mr. Yau 20X8 Mar 3 Mr. Kong 20X8 Mar 14 Office equipment $ 15,000 (0.5) Office equipment $ 28,000 (0.5) Motor vehicles Office equipment $ 45,000 35,000 (1) Mr. Kong $ 15,000 (1.5)

21. Lucy Ip keeps her petty cash book on the imprest system. The imprest amount is $3,000. On 1 October 2009, petty cash in hand was $2,344. The following transactions took place during the month:
2009 Oct " " " " " " " " " " " " " $ 1 5 6 8 10 11 15 16 18 21 23 24 28 31 Petty cash restored to the imprest amount Postage stamps Taxi fares Petrol for the motor van Ballpoint pens and paper Bus fares Refund to Jimmy Wong for an overpayment on his account in the accounts receivable ledger Stamps Magazines Motor van repairs Envelopes Petrol for the motor van Courier charge Cinema tickets for staff 50 90 300 200 15 87 100 16 600 40 310 120 280

Required: Record the above transactions in a petty cash book with analysis columns for postage, travelling, motor expenses, stationery, sundry expenses and ledger account. Show the balance carried down to 1 November 2009 and the restoration of the cash float. (9 marks)
Petty Cash Book
Receipt Date Details Total Postage Travelling expenses Motor expenses Sundry Stationery expenses Ledger account

$ 2009 2,344 Oct 1 Balance b/d 656 " 1 Cash " 5 Postage stamps " 6 Taxi fares " 8 Petrol for the motor van " 10 Ballpoint pens and paper " 11 Bus fares " 15 Jimmy Wong " 16 Stamps " 18 Magazines " 21 Motor van repairs " 23 Envelopes " 24 Petrol for the motor van " 28 Courier charge " 31 Cinema tickets for staff Oct 31 Balance c/d 3,000 792 Nov 2,208 " 1 Balance b/d 1 Cash

$
0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5

50 90 300 200 15 87 100 16 600 40 310 120 280 2,208 792 3,000

50 90 300 200 15 87 100 16 600 40 310 120 270 105 1,210 240 280 296 87

22. <HKCEE2003/Q3b> Jenny Cheung is a sole proprietor who keeps records of her cash and bank transactions in a two-column cash book. The opening balances in the cash book at 1 April 2003 were: cash $6,400 and bank $34,196. Jenny made the following transactions in the month of April 2003: April 4 A cheque for $28,000 was received from a customer in full settlement of a debt for $29,000. 9 Jenny settled her outstanding account of $12,000 by cheque and received a cash discount of 5% from the supplier. 10 Paid wages by cheques $21,000. 12 Paid various suppliers by cheques $31,534. 15 Cash sales $44,940 19 Paid salaries in cash $29,800 26 Paid cash into bank $10,000 27 Cash sales amounted to $14,200. Jenny banked the remaining amount after deducting $12,000 for private use. 29 Banked a cash receipt of $2,180 from a debtor in settlement of his account $2,200. 29 An autopay was made by the bank for an electricity bill of $1,890. You are required to prepare: The two-column cash book of Jenny Cheung for the month of April 2003. Cash Book 2003 Apr 1 4 15 26 27 27 29 Cash $ 6,400 44,940 10,000 14,200 2,200 2,180 Bank $ 34,196 28,000 2003 Apr 9 10 12 19 26 27 27 29 30 Cash $ Creditors Wages Creditors Salaries Bank Drawings Bank Electricity Balance c/d Bank $ 11,400 21,000 31,534 (9 marks)

1
0.5 0.5 0.5 0.5 0.5 0.5

Balance b/d Debtors Sales Cash Sales Cash Debtors

0.5 0.5 0.5 0.5 0.5 0.5 0.5

29,800 10,000 12,000 2,200 11,540 65,540 1,890 10,752 76,576

0.5

65,540

76,576 - The End -