The following transactions were extracted from the books of Adamu, a sole trader for the month of March 2016. March 4: Sold 80 bags of maize on credit to Pa...
Question 1 Report
The following transactions were extracted from the books of Adamu, a sole trader for the month of March 2016.
March 4: Sold 80 bags of maize on credit to Papuk at N255 per bag subject to a trade discount of 5%.
March 10: Sold goods on credit to Abass for N1,170.
March 15: Received a cheque from Papuk for the amount due, less a discount of 10%.
March 20: Received cash of N900 from Abass.
You are required to prepare:
(a) Sales Journal;
(b) Customers' Accounts in the Sales Ledger;
(c) Sales Ledger Control Account
Answer Details
Workings. March 4 sale to Papuk = \(80 \times N255 = N20{,}400\); less 5% trade discount \(= N1{,}020\); net invoice \(= N19{,}380\). Trade discount is deducted on the invoice and never entered in the ledger. March 15 cheque from Papuk = \(N19{,}380 - 10\% \text{ cash discount} = N19{,}380 - N1{,}938 = N17{,}442\).
(a) Sales Journal (Sales Day Book)
| Date | Customer | Details | Amount (N) |
|---|---|---|---|
| Mar 4 | Papuk | 80 bags maize less 5% trade discount | 19,380 |
| Mar 10 | Abass | Goods on credit | 1,170 |
| Transferred to Sales Account | 20,550 |
(b) Customers' Accounts in the Sales Ledger
Papuk Account
| Dr | N | Cr | N |
|---|---|---|---|
| Mar 4 Sales | 19,380 | Mar 15 Bank | 17,442 |
| Mar 15 Discount allowed | 1,938 | ||
| 19,380 | 19,380 |
Abass Account
| Dr | N | Cr | N |
|---|---|---|---|
| Mar 10 Sales | 1,170 | Mar 20 Cash | 900 |
| Mar 31 Balance c/d | 270 | ||
| 1,170 | 1,170 |
(c) Sales Ledger Control Account
| Dr | N | Cr | N |
|---|---|---|---|
| Sales (credit sales) | 20,550 | Bank | 17,442 |
| Cash | 900 | ||
| Discount allowed | 1,938 | ||
| Balance c/d | 270 | ||
| 20,550 | 20,550 |
The closing balance of N270 (owed by Abass) agrees with the total of the individual debtors, proving the control account.
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