1.

Gloria Jadesola Enterprises made the following purchases on credit

1/12/2023 Rereloluwa ltd ¢ 150,000 with invoice N0.1062

Sofiat Adenike Ltd. ¢ 108,000 with invoice No. 083

4/12/2023 Success Nyong ¢ 60,000 with invoice No. 003

Bioku Oduola Enterprise ¢ 82,800 with invoice No 288

Adeoti Monsurat & Co ¢ 98,250 with invoice No. 1124

7/12/2023 Jaiyesimi Alameen & Sons ¢120,000 with invoice No. 002

Usman Rodiat Ltd. ¢ 67,500 with invoice No. 116

Sanni Ayisat Enterprises ¢ 337,500 with invoice No. 644

Enter the transactions in the purchases day book of Gloria Jadesola Enterprises

2. Damilola Sarah Enterprises

Sept. 10, 2023 Seyon Anthony and Sons returned 3 wooden chairs

Sept. 12 2023 Shittu Mariam Enterprises returned 2 wall clocks

Sept. 14 2023 Dosunmu Zainab Enterprises returned 1 wooden chair

Prepare the Sales returns book for Victor Enterprises.

3. Fipa-finu business affairs on 1 January, 2016 stood as follows:

Cash in hand 66,000

Cash at bank 366,000

Inventories 375,000

Furniture and fittings 180,000

Trade Payables 150,000

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Prepare the opening Journal of the business.

Record these transactions in a Journal.

Principle of Double Entry

Double entry principle states that for every debit entry, there must be a corresponding credit

entry and vice versa. If the principle is properly followed, the total of the debit entries in the

accounts must be equal to the total of the credit entries.

There are three pairs of concepts that aid the understanding of the double entity principles and

they are:

Debit Credit

1 Incoming Outgoings

2 Receiving Giving (giver)

(Receiver)

3 Losses/ Profit/gains

Expenses

Ledger Accounts

A ledger is the book containing a group of accounts. It contains the permanent records of the

assets, liabilities, income, expenses and equity of a business entity. The accounts in a ledger

are those to which entries are posted from the subsidiary books.

Importance of the ledger accounts

(i) They serve as the means of keeping permanent records of assets, liabilities, income,

expenses and Owner’s equity.

(ii) They provide relevant information that is required to prepare the statement of profit or

loss and the statement of financial position.

(iii) They give the origin of every transaction and the parties involved.

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(iv) They show the details of the movement in each account. For instance, a bank account

will show what amount had been deposited or how much had been withdrawn and for what

purpose.

(v) The Trial Balance is extracted from the ledger accounts at the end of the accounting

period.

Types of Accounts:

Accounts can be grouped under three main headings

 Real Accounts

 Personal Accounts

 Nominal Accounts

Real Accounts: These are accounts relating to tangible things that can be seen, felt, touched

and moved in most cases e.g. cash, cars, goods etc. The rule of double entry to these types of

accounts is Debit, when there are additions, that is, when more of these items are acquired.

Credit, when these items are disposed off, either by selling them off, when damaged beyond

use or when given out as gift.

Personal Accounts: These are accounts dealing with persons, corporate bodies or even

partnerships. Before these accounts can exist, there must be credit transactions unlike the real

accounts where both cash and credit transactions are involved.

In personal accounts, the accounts are opened only if the persons concerned purchase goods

or services on credit or if they sell goods or services on credit. There is no need of writing or

recording the names of persons who have purchased on cash basis. This amounts to a waste

of time and efforts since the company has nothing to do with the persons again. However,

cash paid or received for debt owed or receivable can be recorded in the personal accounts.

The case will be different if payment is deferred till a future date, it will be necessary to know

those who owe and those who are owed as the case may be.

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Nominal Accounts: These are the accounts opened for income and expenses’. They are not

real or personal but are for gains and losses items. We only talk of benefits arising from these

accounts as a result of the services rendered. Examples are rent, salaries, electricity,

discounts, drawings, net profits or losses on trading or disposal of non-current assets etc.

5.3.3 Types of Ledgers

Ledgers can also be classified into the following four groups:-

(a) Sales Ledger or Trade Receivables Ledger

This contains all the personal accounts of customers otherwise referred to as trade

receivables.

(b) Purchases Ledger or Payables Ledger

This contains the personal accounts of suppliers of goods and services, otherwise referred to

as trade payables.

(c) Private Ledger

The Private ledger contains details of capital accounts, drawings account, loan account and

investment account. Usually only the senior managers have access to these accounts in order

to prevent details of the items contained therein from being publicized.

(d) General Ledger

The general ledger, also referred to as the nominal ledger, contains the remaining accounts

such as:-

 Nominal accounts; relating to expenses, wages, rent, sales, purchases, bad debts accounts;

and

 Real accounts; relating to assets such as land and buildings, motor vehicles, inventories,

plant and machinery.

Application of the double entry principle

To record a transaction using the double entry principle the following steps must be taken.

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(i) Ensure that a transaction has actually taken place. That is at least two parties are involved

and the transaction can be measured in monetary terms.

(ii) Identify the two main accounts involved. That is, under which two main subject matters

the transaction can be divided.

For example: Jumoke Enterprises purchased a motor car for N750,000 cash.

 The transaction can be measured monetarily and it involves at least two parties (Jumoke

Enterprises and the motor dealer)

 Two main subject matters can be identified

(a) Motor car was purchased

(b) Cash was paid

(iii) Identify the one that receives value. In the above example motor car has increased,

therefore it has received value.

(iv) Identify the one that has given value – cash has been reduced, in this case it has given

value

(v) Debit the account that has received value with N750,000 (i.e. debit motor car)

and credit the account that has given value (i.e. credit cash)

1. The following transactions took place in the books of Ewa-Diekolola Enterprises in 2024

(i) January 4, 2024 Cash sales of N900,000

(ii) January 10, 2024 Payment of office rent N250,000 in cash

(iii) January 18, 2024 Purchased N200,000 goods for cash

(iv) January 25, 2024 Purchased stationery for N40,000 cash.

Prepare the necessary ledger Accounts for each of the transactions.

2. Gloria Jadesola is a sole trader. The following transactions took place in her books.

(i) Bought goods on credit 85,000

from Jumoke Ltd.

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(ii) Sold goods on credit to 176,000
Shittu Mariam & Co
(iii) Purchased some office 150,000
machines on credit from
Onibudo Damilola
Engineering Ltd.
Show the double entries for each of the transactions.

Balancing a ledger Account

At the end of every period, all ledger accounts must be balanced off. Balancing means to find

the difference between the debit side and credit side of one account.

(i) Balance carried down (bal c/d): This is the figure that is used to force the lesser side to

agree with the higher side, because the total of the two sides of an account must be equal.

(ii) Balance brought down (bal b/d): This is the closing balance (bal c/d) of the period that

becomes the opening balance at the beginning of the next period.

Interpretation of the balances

(i) In a trade receivables account, the debit side is expected to be greater than the credit side,

therefore the balance c/d would be on the credit side of the trade receivables account but

when it is brought down (bal b/d) in the next period, it is debit balance. Therefore a debit

balance in trade receivables account and other assets account represents an asset.

(ii) In a trade payables account, the credit side is usually greater than the debit side. Balance

c/d is on the debit side and balance b/d on the credit side. This is a liability.

(iii) The cash account will always be a debit balance, except where it is a bank account when

it can either be a credit balance (bank overdraft) or debit balance(an asset).

(iv) The capital account will always be a credit balance.

3. Pedro Munirat Enterprises started a retail business, selling cement on retail basis. On

March 1 2023, he introduced the following into the business:

(i) Motor van valued at N480,000

(ii) Cash from his salary account N330,000

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(iii) Money borrowed from a friend N66,000

The following transactions also took place in March

3 Paid carriage on cement to warehouse 16,456

6 Sold goods on credit to Oluwatayo Faith & Co 190,000
8 Sold cement for cash 26,280
15 Purchased cement on credit from Idris 60,000
Aminat Ltd.
11 Paid sundry expenses 16,278
17 Bought some Dunlop tyres from Okechukwu
Enterprises on credit 10,852
20 Paid cash to Idris Aminat Ltd. on account 167,500
22 Oluwatayo Faith & Co paid cash on account 125,000
25 Paid Salaries and wages 77,958
25 Paid electricity bill 6,000
27 Sold cement on credit to Oshinowo Funke 68,000
Required
(i) An opening Journal.

(ii) Open the ledger accounts and post the opening journal and transactions during the month.

(iii) Balance the ledger accounts.

(iv) Draw up a trial balance as at 31 March 2023