By Margaret Nicholson (auth.)
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Extra info for Accounting Skills
29 Cash purchases (£45). 30 The insurance was overpaid. A refund of £5 is received by cheque. 31 H. Dale paid us by cheque (£181). 8 You are to enter the following transactions in the double entry accounts in the books ofT. Garside for the month of October 19-8. Oct 1 Started business with £7,000 in the business bank account and £500 in cash. 2 Bought goods on credit from T. Richie (£750); R. Kemp (£375); P. Douglas (£480). 3 Paid rates (£75) by cheque. 4 Bought motor van on credit (£2,000) from Abbot Garages.
If the business kept only one account, called 'expenses account', this would only give the overall total of all the expenses. However, the business will need to know exactly how much is spent on each individual expense and, therefore, to meet this requirement an expense account is opened for each type of expense. The double entry for expense accounts is as follows: Expense account The payment - bank or cash account (receiving) (paying) debit entry credit entry To illustrate the two-fold effect, consider the following transaction: on 1 March, paid wages of £50 in cash.
Stevens paid his account (£225) by cheque. 35 29 G. Blackman returned goods to the firm (£58). 30 Paid motor expenses (£55) in cash. 7 You are required to open the double entry accounts in the books of D. Shelley for the month of August 19-7. Aug 1 Started business with £5,000 in the bank. 2 Purchased goods on credit (£359) from Smith & Weston Ltd. 4 Bought office furniture on credit (£460) from Newstylax. 5 Bought goods (£675), paying by cheque. 7 Returned goods (£29) to Smith & Weston Ltd. 9 Sold goods on credit (£450) to H.
Accounting Skills by Margaret Nicholson (auth.)