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BookkeepingControlsPractice assessment 1

© Osborne Books Limited, 2016

Complete all 10 tasks.

Each task is independent. You will not need to refer to your answers in previous tasks.

The tasks are set in a business where the following apply:

• You are employed by the business, Kitchen Kraft, as a bookkeeper.

• Kitchen Kraft uses a manual bookkeeping system.

• Double-entry takes place in the general ledger. Individual accounts of trade receivables and tradepayables are kept in the sales and purchases ledgers as subsidiary accounts.

• The cash book and petty cash book should be treated as part of the double-entry system unless the task instructions state otherwise.

• The VAT rate is 20%.

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Task 1(a) Show the most appropriate form of payment method for each type of payment below by joining with

a line each box on the left with the appropriate box on the right.

Payment of expenses by a travelling sales rep

BACS credit

Variable monthly payment for insurance Bank draft

Employee payroll

CHAPS

Direct debit

Standing order

Payment Payment method

Company credit card

Fixed monthly payment to Water Aid charity

A paper-based payment for a vehicle purchase

Electronic payment for a £1m property purchase

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(b) Which three payment methods will reduce Kitchen Kraft’s bank account balance on the same daythat payment is made?

(a) Cheque paid in at issuer’s branch

(b) Faster payment

(c) Debit card

(d) CHAPS

(e) Credit card

(c) Show whether the errors below cause an imbalance in the trial balance or not.

Error in the general ledger Error causes Error does NOT an imbalance cause an imbalance

A bank receipt from a trade receivable has been recorded in the cash book only

A purchase invoice has not been recorded in the accounting system

A cash sale for £87 has been credited to sales account as £78

Rent received of £400 has been credited to rent paid account

(d) Which one of the errors below is an error of omission?

(a) A credit purchase has not been entered in the purchases account, VAT accountor in the purchases ledger control account

(b) An entry has been made in the sales ledger for the correct amount but it hasbeen recorded in the wrong customer’s account

(c) The cost of fuel for vehicles has been recorded correctly in the cash book, butthe vehicles account has been debited

(e) The journal is a book of prime entry / double entry used to record regular / non-regulartransactions.

Delete as appropriate.

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Task 2Kitchen Kraft pays its employees through the bank every month and maintains a wages control account.A summary of last month’s payroll transactions is shown below.

Item £Gross wages 15,045Income tax 2,319Employer’s National Insurance contributions 1,640Employees’ National Insurance contributions 1,320Trade Union fees 275

Record the journal entries needed in the general ledger to: (a) Record the wages expense.(b) Record HM Revenue & Customs liability.(c) Record the net wages paid to the employees.(d) Record the Trade Union liability.

Select your account names from the following list: Bank, Employees’ National Insurance, Employer’sNational Insurance, HM Revenue & Customs, Income tax, Net wages, Trade Union, Wages control, Wagesexpense.Enter the names and amounts and select the appropriate debit or credit column.

(a) Account name Amount Debit Credit £

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(b) Account name Amount Debit Credit £

(c) Account name Amount Debit Credit £

(d) Account name Amount Debit Credit £

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Task 3A credit customer, Campbell Limited, has ceased trading, owing Kitchen Kraft £780, which includes VAT.

(a) Record the journal entries needed in the general ledger to write off the net amount and the VAT. Select your account names from the following list: Campbell Ltd, Irrecoverable debts, Kitchen Kraft,

Purchases, Purchases ledger control, Sales, Sales ledger control, Value Added Tax.

Account name Amount Debit Credit £

(b) Kitchen Kraft has started a new business, Bathroom Kraft, and a new set of accounts is to beopened. A partially completed journal to record the opening entries is shown below.

Record the journal entries needed in the accounts in the general ledger of Bathroom Kraft to dealwith the opening entries.

Account name Amount Debit Credit £ Cash at bank 4,155 Loan from bank 4,400 Office equipment 4,900 Machinery 6,400 Capital 20,561 Inventory 4,685 Sales ledger control 2,641 Purchases ledger control 1,933 Wages 3,296 Miscellaneous expenses 817

Journal to record the opening entries of the new business

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Task 4The following is a list of the VAT totals from Kitchen Kraft’s books of prime entry:

Books of prime entry VAT totals for quarter £

Sales day book 17,800Purchases day book 8,056Sales returns day book 216Purchases returns day book 464Discounts received day book 160Cash book: cash sales 312

Other VAT items for the quarter are as follows:

VAT on petty cash payments 21VAT on irrecoverable debt written off 58VAT on purchase of office equipment 304VAT paid to HMRC 8,054

(a) What will be the entries in the VAT control account to record the VAT transactions in the quarter?

Select your entries for the Details columns from the following list: Bank, Cash sales, Computerequipment, Discounts allowed, Discounts received, Irrecoverable debts, Office equipment, Pettycash, Purchases, Purchases day book, Purchases returns, Sales, Sales returns, Value Added Tax.

(b) What will be the balance brought down on the VAT control account after the transactions have beenrecorded?

Amount £ Dr Cr

VAT control account

Details Amount £

Details Amount £

Balance b/f 8,054

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Task 5(a) This is a summary of transactions with credit customers during the month of June. Show whether each entry will be a debit or a credit in the sales ledger control account in the general

ledger.

Details Amount Debit Credit £

Balance of credit customers at 1 June 32,941 Goods sold on credit 18,261 Payments received from credit customers 15,958 Discounts allowed 550 Irrecoverable debt written off 227

(b) What will be the balance brought down on 1 July on the above account?

(a) Dr £35,567 (b) Cr £35,567 (c) Dr £29,861 (d) Cr £29,861 (e) Dr £34,467 (f) Cr £34,467

(c) The following credit balances were in the sales ledger on 1 July.

£Dixon & Co 4,107Passmores 2,595Phelps Plc 3,968Siddique Ltd 8,472S Stagl Ltd 6,859Mittax Trading 7,924

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What is the difference between the total of the balances shown on the previous page and the salesledger control account balance calculated in part (b)?

£ Balance on sales ledger control account at 1 July Total of the sales ledger balances at 1 July Difference

(d) What may have caused the difference you calculated in part (c)? (a) An invoice was not entered in the sales ledger control account (b) A credit note was entered twice in the sales ledger control account (c) The irrecoverable debt written off has been omitted from the sales ledger (d) Money received from customers was entered twice in the sales ledger

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Task 6On 28 June Kitchen Kraft received the following bank statement as at 25 June.

BANK STATEMENTDate Details Paid out Paid in Balance20-4 £ £ £01 Jun Balance brought forward 1,420 C07 Jun Cheque 284120 950 470 C07 Jun Cheque 284122 1,232 762 D10 Jun Cheque 284119 1,729 2,491 D16 Jun Direct debit: Insure Direct 795 3,286 D21 Jun BACS credit: Teme Traders 3,470 184 C22 Jun Bank charges 235 51 D22 Jun BACS credit: Wyvern Mills 1,584 1,533 C23 Jun Cheque 284121 2,384 851 D23 Jun Cheque 284124 655 1,506 D23 Jun Direct debit: National Gas 123 1,629 D23 Jun BACS credit: Brough Stores 1,436 193 D23 Jun Paid into bank 876 683 C

D = Debit C = Credit

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The cash book as at 25 June is shown below.

CASH BOOK Date Details Bank Date Cheque Details Bank 20-4 £ 20-4 number £

01 Jun Balance b/f 1,420 02 Jun 284119 N Charlton 1,729

18 Jun Gourdji Ltd 876 02 Jun 284120 Eiffert Ltd 950

23 Jun T Larcombe 1,214 02 Jun 284121 Gray & Co 2,384

23 Jun Prime Kitchens 3,851 02 Jun 284122 Sykes Timber 1,232

06 Jun 284123 Decor Supplies 1,099 18 Jun Insure Direct 795

18 Jun 284124 Aldred & Co 655

20 Jun 284125 Wain Ltd 3,176

Check the items on the bank statement against the items in the cash book.• Enter any items in the cash book as needed.• Total the cash book and clearly show the balance carried down at 25 June (closing balance) and

brought down at 26 June (opening balance).

Select your entries for the ‘Details’ column from the following list: Aldred & Co, Balance b/d,Balance c/d, Bank charges, Brough Stores, N Charlton, Closing balance, Decor Supplies, EiffertLtd, Gourdji Ltd, Gray & Co, Insure Direct, T Larcombe, National Gas, Opening balance, PrimeKitchens, Sykes Timber, Teme Traders, Wain Ltd, Wyvern Mills.

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Task 7On 1 October Kitchen Kraft received the following bank statement as at 30 September.

BANK STATEMENTDate Details Paid out Paid in Balance20-4 £ £ £

01 Sep Balance b/f 234 D02 Sep Credit 200194 3,108 2,874 C07 Sep 284181 347 2,527 C11 Sep 284182 625 1,902 C12 Sep Credit 200195 711 2,613 C17 Sep 284183 754 1,859 C19 Sep BACS Baxter 286 2,145 C22 Sep DD Wyvern Rentals 565 1,580 C24 Sep Credit 200196 368 1,948 C25 Sep Bank charges 35 1,913 C

The cash book as at 30 September is shown below.

Date Details Amount Date Cheque Details Amount20-4 £ 20-4 number £

01-Sep Balance b/f 2,874 05-Sep 284181 Gibb Ltd 34712-Sep Ellis Ltd 711 08-Sep 284182 Palmers 625

19-Sep BACS Baxter 286 12-Sep 284183 Polanski Ltd 754

24-Sep Dexter Ltd 368 16-Sep 284184 S Musa 391

29-Sep Davis & Co 829 22-Sep DD Wyvern Rentals 565

23-Sep BACS Ford 128

25-Sep Bank charges 35

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(a) Identify the three transactions that are included in the cash book but missing from the bankstatement and complete the bank reconciliation statement below as at 30 September.

Select your entries for the name boxes from the following list:Bank charges, Baxter, Davis & Co, Dexter Ltd, Ellis Ltd, Ford, Gibb Ltd, S Musa, Palmers, PolanskiLtd, Wyvern Rentals.

Bank reconciliation statement as at 30 September 20-4

Balance as per bank statement £

Add:

Name: £

Total to add £

Less:

Name: £

Name: £

Total to subtract £

Balance as per cash book £

(b) Refer to the cash book in (a) and check that the bank statement has been correctly reconciled bycalculating:• the cash book balance and whether it is a debit or a credit• the total of each of the bank columns after the balance carried down has been recorded

Cash book balance Bank column totals £ £ Debit / Credit

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Task 8A suspense account has been opened with a balance of £100.The error has been traced to the purchases returns day book as shown below.

Purchases returns day book

Date Details Credit note Total VAT Net 20-4 number £ £ £ 30 Jun Corbett Trading CN45 144 24 120

30 Jun Kift Ltd K/861 240 40 200

30 Jun Howard and Co 454 96 16 80

Totals 480 80 500

(a) Identify the error and record the journal entries needed in the general ledger to: (1) Remove the incorrect entry. (2) Record the correct entry. (3) Remove the suspense account balance. Select your account names from the following list: Corbett Trading, Howard and Co, Kift Ltd,

Purchases, Purchases day book, Purchases ledger control, Purchases returns, Sales, Sales daybook, Sales ledger control, Sales returns, Suspense, Value Added Tax.

(1) Account name Amount £ Debit Credit

(2) Account name Amount £ Debit Credit

(3) Account name Amount £ Debit Credit

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(b) An entry to record a bank payment of £280 for business rates has been reversed. Record the journal entries needed in the general ledger to: (1) Remove the incorrect entry. (2) Record the correct entry. Select your account names from the following list: Bank, Cash, Purchases, Purchases ledger

control, Rates, Sales, Sales ledger control, Suspense, Value Added Tax.

(1) Account name Amount £ Debit Credit

(2) Account name Amount £ Debit Credit

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Task 9Journal entries shown below have been prepared to correct an error.

Journal entries

Account name Debit Credit £ £

Suspense 909Sales returns 909Sales returns 990Suspense 990

Record the journal entries in the general ledger accounts and show the balance carried down on the salesreturns account.Select your entries for the Details column from the following list: Balance b/d, Balance c/d, Bank, Sales,Sales returns, Suspense.

Suspense

Details Amount £ Details Amount £ Balance b/d 81

Sales returns Details Amount £ Details Amount £ Balance b/d 2,210 Sales returns day book 552

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Task 10(a) On 31 July a trial balance was extracted and did not balance. The debit column totalled £209,460

and the credit column totalled £209,186. What entry is needed in the suspense account to balance the trial balance?

Account name Debit CreditSuspense

(b) The journals to correct the bookkeeping errors, and a list of balances as they appear in the trialbalance, are shown below.

Journal entries

Account name Debit Credit £ £Suspense 148Insurance 148Insurance 184Suspense 184

Account name Debit Credit £ £Sales returns 285Suspense 285

Account name Debit Credit £ £Suspense 595Purchases ledger control 595

Complete the table on the next page to show:• the balance of each account after the journal entries have been recorded• whether each balance will be a debit or credit entry in the trial balance

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Account name Original balance New balance Debit CreditInsurance 3,286 Sales returns 3,089 Purchases ledger control 11,473

(c) On 30 September a partially prepared trial balance had debit balances totalling £139,515 and creditbalances totalling £128,616. The accounts below have not yet been entered into the trial balance.Complete the table below to show whether each balance is a debit or a credit entry in the trialbalance.

Account name Balance £ Debit in the Credit in the trial balance trial balanceBank loan 9,820 Purchases returns 3,216 Heating and lighting 2,137

(d) What will be the totals of each column of the trial balance after the balances in (c) have beenentered?

Account name Debit CreditTotals