Books of Original Entry and Ledger Practice Questions — JAMB UTME

Question 1Question →

Match each accounting item relating to sales and sales returns with its correct book of original entry or source document.

Click a left item, then click its matching right item

Show answer & explanation

Answer

Credit sales of trading inventory match with the Sales Journal; returns of merchandise by credit customers match with the Sales Returns Journal; the primary source document for credit sales is the Sales Invoice; and the primary source document for sales returns is the Credit Note.

Credit sales of goods are recorded in the Sales Journal supported by a Sales Invoice. Conversely, goods returned by credit customers (returns inward) are entered in the Sales Returns Journal supported by a Credit Note.

Step-by-Step Solution

1

Identify the appropriate journal of original entry for credit transactions.

Credit sales of stock belong in the Sales Journal, and credit returns from customers belong in the Sales Returns Journal.

Specialized journals record specific types of credit transactions prior to posting to the ledger.

2

Determine the corresponding source documents for each journal.

Sales Invoices substantiate entries in the Sales Journal, whereas Credit Notes substantiate entries in the Sales Returns Journal.

Source documents provide documentary evidence required to enter transactions into day books.

Key Concept

Books of Original Entry and Source Documents for Sales and Sales Returns

Question 2Question →

Which of the following transactions should be recorded in the Purchases Journal of a business entity?

Purchase of goods on credit for resale

Purchase of office machinery on credit

Purchase of a delivery van on credit

Purchase of office furniture on credit

Show answer & explanation

Answer: Purchase of goods on credit for resale

Answer

Purchase of goods on credit for resale

The correct answer is the purchase of goods on credit for resale because the Purchases Journal (Purchases Day Book) is specifically designed to record only credit purchases of merchandise intended for resale.

Step-by-Step Solution

1

Identify the accounting rule governing the Purchases Journal

The Purchases Journal (Purchases Day Book) only records credit purchases of trading stock meant for resale.

It acts as a book of original entry specifically designed to summarize trade credit purchases before posting to individual creditor accounts and the ledger.

2

Evaluate the nature of non-current asset purchases on credit

Capital expenditures, such as office machinery, delivery vans, and office furniture, are excluded from the Purchases Journal.

Assets bought for long-term use rather than resale must be recorded in the General Journal (Journal Proper).

3

Select the option representing trading inventory acquired on credit terms

The purchase of goods on credit for resale is the correct transaction.

It satisfies both criteria: being bought on credit and intended for resale.

Key Concept

Scope of Purchases Journal

Question 3Question →

Which of the following accounting entries is correct when a business purchases office equipment on credit from Ade & Co.?

Debit Equipment Account, Credit Ade & Co. Account

Debit Purchases Account, Credit Ade & Co. Account

Debit Ade & Co. Account, Credit Equipment Account

Debit Equipment Account, Credit Discount Allowed Account

Show answer & explanation

Answer: Debit Equipment Account, Credit Ade & Co. Account

Answer

Debit Equipment Account, Credit Ade & Co. Account

When office equipment is purchased on credit, the business acquires a non-current asset (which must be debited) and incurs a financial obligation/liability to the supplier (which must be credited).

Step-by-Step Solution

1

Identify the nature of the accounts involved in the transaction.

Equipment Account is a Real/Asset account, and Ade & Co. Account is a Personal/Liability account.

Office equipment is a non-current asset being acquired, while Ade & Co. is a trade creditor.

2

Apply the double entry rules of bookkeeping.

Debit Equipment Account (increase in asset) and Credit Ade & Co. Account (increase in liability).

The rule states: Debit what comes in (or increase in assets) and Credit the giver (or increase in liabilities).

Key Concept

Double Entry Rules for Credit Purchases of Non-Current Assets

Question 4Question →

During May 2026, Ade Trading Enterprise engaged in the following transactions:

1. May 4: Purchased $100$ bags of rice for resale from Alhaji & Sons at $\text{₦}20,000$ per bag, subject to a $10\%$ trade discount.
2. May 10: Purchased office furniture on credit from Woodworks Ltd for $\text{₦}400,000$ less a $5\%$ trade discount.
3. May 15: Purchased $50$ cartons of milk for resale from Dairy Co. for $\text{₦}500,000$ cash.
4. May 22: Purchased $40$ bags of sugar for resale from Sweet Traders at $\text{₦}15,000$ per bag, subject to a $15\%$ trade discount with prompt payment cash discount terms of $2/10, \text{n}/30$ .
5. May 28: Returned $10$ defective bags of rice to Alhaji & Sons from the May 4 purchase.

What is the total amount (in $\text{₦}$ ) to be entered into the Purchases Journal for May 2026?

Show answer & explanation

Answer: 2310000

Answer

The total amount to be entered into the Purchases Journal for May 2026 is ₦2,310,000.

The Purchases Journal records only credit purchases of merchandise intended for resale, calculated after trade discounts. Summing the May 4 net purchase (₦1,800,000) and May 22 net purchase (₦510,000) gives a total of ₦2,310,000.

Step-by-Step Solution

1

Filter transactions for entry into the Purchases Journal

Only transactions on May 4 and May 22 qualify.

The Purchases Journal strictly records credit purchases of inventory/goods intended for resale. Fixed asset purchases on credit go to the General Journal, cash purchases go to the Cash Book, and returns go to the Purchases Returns Journal.

2

Calculate the net price for the May 4 transaction

₦1,800,000

Gross amount is

100 \times \text{₦}20,000 = \text{₦}2,000,000

. Deducting the

10\%

trade discount (

\text{₦}200,000

) gives

\text{₦}1,800,000

.

3

Calculate the net price for the May 22 transaction

₦510,000

Gross amount is

40 \times \text{₦}15,000 = \text{₦}600,000

. Deducting the

15\%

trade discount (

\text{₦}90,000

) gives

\text{₦}510,000

. Cash discounts are ignored when recording entries in the Purchases Journal.

4

Calculate the total Purchases Journal balance for the month

₦2,310,000

Sum the net amounts of eligible transactions:

\text{₦}1,800,000 + \text{₦}510,000 = \text{₦}2,310,000

.

Key Concept

Scope and calculation rules of the Purchases Journal

Question 5Question →

Ade purchased goods listed at $₦50,000$ , subject to a $10\%$ trade discount and a $5\%$ cash discount for prompt settlement. If Ade settled the account within the discount period, what is the amount of cash discount received in Naira ( $₦$ ) to be recorded in the three-column cash book?

Show answer & explanation

Answer: 2250

Answer

The amount of cash discount received to be entered in the three-column cash book is ₦2,250.

Trade discount is subtracted from the catalog price to get the net invoice value of ₦45,000. Cash discount for prompt payment is calculated as 5% of ₦45,000, giving ₦2,250, which is recorded in the discount column of the cash book.

Step-by-Step Solution

1

Calculate the trade discount

Trade discount = 10% of ₦50,000 = ₦5,000

Trade discount is a reduction in catalog price and is calculated first.

2

Determine the net invoice amount

Net Invoice Amount = ₦50,000 - ₦5,000 = ₦45,000

Trade discount is deducted from the list price before calculating cash discount.

3

Calculate the cash discount

Cash discount = 5% of ₦45,000 = ₦2,250

Cash discount is applied to the net invoice price for prompt payment.

Key Concept

Calculation of cash discount after deducting trade discount from list price

Question 6Question →

Match each transaction or accounting event relating to sales and sales returns with its correct book of original entry or ledger accounting treatment.

Click a left item, then click its matching right item

Show answer & explanation

Answer

Credit sales of trading goods match the Sales Journal (net of trade discount). Goods returned by credit customers match the Sales Returns Journal (supported by a credit note). Credit sales of fixed assets match the General Journal. The periodic total of the Sales Returns Journal is debited to the Sales Returns Account in the General Ledger.

Each item matches its corresponding accounting rule: credit inventory sales net of trade discount belong in the Sales Journal; customer returns supported by credit notes belong in the Sales Returns Journal; credit sales of non-current assets belong in the General Journal; and the periodic total of sales returns is debited to the Sales Returns Account in the General Ledger.

Step-by-Step Solution

1

Identify the nature of the transaction in the first item (credit sale of inventory with trade discount).

Trading inventory sold on credit belongs in the Sales Journal. Trade discount must be deducted from list price prior to recording.

The Sales Journal only captures credit sales of merchandise at net invoice price.

2

Identify the source document and journal for returned goods from credit customers.

Returns inward are recorded in the Sales Returns Journal using a Credit Note issued to the buyer.

Credit notes reduce the amount owed by debtors and serve as primary evidence for returns inward entries.

3

Distinguish between trading inventory and capital asset disposals on credit.

Credit sales of non-current assets like office equipment belong in the General Journal (Journal Proper).

Sales journals are reserved exclusively for goods intended for resale.

4

Determine the General Ledger double-entry rule for the Sales Returns Journal total.

The total is debited to the Sales Returns (Returns Inward) Account.

Sales returns reduce gross sales income, requiring a debit entry in the returns account, while individual customer accounts in the personal ledger are credited.

Key Concept

Classification of credit transactions between Sales Journal, Sales Returns Journal, General Journal, and General Ledger double entry rules.

Estimated Time:2m 0s

Question 7Question →

A trader pays a creditor $₦19,000$ in cash after receiving a cash discount of $₦1,000$ . How should the $₦1,000$ discount be entered in the trader's three-column cash book?

On the credit side in the discount column

On the debit side in the discount column

On the credit side in the cash column

On the debit side in the bank column

Show answer & explanation

Answer: On the credit side in the discount column

Answer

The discount of

₦1,000

should be entered on the credit side in the discount column.

In a three-column cash book, all payments made by a business are entered on the credit side. The discount column on the credit side is dedicated to discount received from suppliers. Therefore, the

₦1,000

cash discount must be recorded in the discount column on the credit side.

Step-by-Step Solution

1

Identify the nature of the transaction and discount

Payment to a creditor with a cash discount received of

₦1,000

.

A reduction given by a creditor for prompt payment is classified as discount received.

2

Determine column and side placement in the cash book

Enter

₦1,000

in the discount column on the credit side.

In a three-column cash book, payments are credited. The discount column on the credit side records discount received.

Key Concept

Treatment of Discount Received in a Three-Column Cash Book

Estimated Time:45s

Question 8Question →

Folake Traders completed the following transactions during June 2026:

• June 4: Purchased goods for resale on credit from Balogun Enterprise valued at $\text{₦}150,000$ , subject to a $10\%$ trade discount.
• June 10: Purchased office furniture on credit from Kwara Furniture Mart for $\text{₦}80,000$ .
• June 18: Bought inventory for resale on credit from Danjuma & Sons for $\text{₦}200,000$ less a $5\%$ trade discount.
• June 22: Acquired computer equipment on credit from Tech Hub for $\text{₦}120,000$ .
• June 27: Bought goods for resale paying $\text{₦}50,000$ cash from Okafor Stores.

What is the total amount that should be entered into the Purchases Journal at the end of June 2026?

₦325,000

₦350,000

₦375,000

₦525,000

Show answer & explanation

Answer: ₦325,000

Answer

The total amount entered into the Purchases Journal is ₦325,000.

The Purchases Journal is used exclusively to record credit purchases of goods meant for resale. Trade discounts are subtracted before entering figures into the journal. Here, net credit purchases are

\text{₦}135,000

(June 4) plus

\text{₦}190,000

(June 18), giving

\text{₦}325,000

. Office furniture and computer equipment are capital items recorded in the General Journal, while cash purchases are entered in the Cash Book.

Step-by-Step Solution

1

Identify transactions eligible for the Purchases Journal

Only credit purchases of merchandise intended for resale (June 4 and June 18) are included.

The Purchases Journal strictly records credit purchases of goods for resale. Credit purchases of fixed assets (June 10 and June 22) go to the General Journal, and cash purchases (June 27) go to the Cash Book.

2

Calculate the net price for the June 4 transaction

\text{₦}150,000 - (10\% \times \text{₦}150,000) = \text{₦}135,000

Trade discounts are deducted immediately from the invoice price before recording in the day book.

3

Calculate the net price for the June 18 transaction

\text{₦}200,000 - (5\% \times \text{₦}200,000) = \text{₦}190,000

Trade discount must be subtracted to arrive at net credit purchases.

4

Sum the eligible net credit purchases

\text{₦}135,000 + \text{₦}190,000 = \text{₦}325,000

The Purchases Journal total reflects net credit purchases of inventory for the month.

Key Concept

Scope and Rules of the Purchases Journal

Estimated Time:2m 0s

Question 9Question →

The following transactions took place in the business of Kalu Enterprises during March 2026:

- March 5: Purchased goods on credit from Tunde Traders for ₦450,000, less 10% trade discount.
- March 12: Purchased office equipment on credit from Woodworks Ltd for ₦200,000.
- March 18: Returned damaged goods (list price ₦50,000) purchased on March 5 to Tunde Traders.
- March 22: Purchased goods for cash from Okon & Sons for ₦120,000.
- March 28: Purchased goods on credit from Bola & Co. for ₦300,000.

What are the correct total amounts to be posted to the Purchases Account and Purchases Returns Account in the General Ledger at the end of March 2026?

Purchases Account: ₦705,000 (Debit); Purchases Returns Account: ₦45,000 (Credit)

Purchases Account: ₦905,000 (Debit); Purchases Returns Account: ₦50,000 (Credit)

Purchases Account: ₦825,000 (Debit); Purchases Returns Account: ₦45,000 (Credit)

Purchases Account: ₦750,000 (Debit); Purchases Returns Account: ₦50,000 (Credit)

Show answer & explanation

Answer: Purchases Account: ₦705,000 (Debit); Purchases Returns Account: ₦45,000 (Credit)

Answer

Purchases Account: ₦705,000 (Debit); Purchases Returns Account: ₦45,000 (Credit)

The Purchases Journal records only credit purchases of goods meant for resale, measured net of trade discount. The credit purchase from Tunde Traders amounts to ₦405,000 (₦450,000 less 10%) and Bola & Co. amounts to ₦300,000, giving a total of ₦705,000 which is debited to the Purchases Account. The Purchases Returns Journal records goods returned to credit suppliers net of the trade discount received at purchase, which equals ₦45,000 (₦50,000 less 10%) and is credited to the Purchases Returns Account.

Step-by-Step Solution

1

Identify transactions that belong in the Purchases Journal

Only credit purchases of goods intended for resale are included: March 5 (Tunde Traders) and March 28 (Bola & Co.). Office equipment is capital expenditure (General Journal), and cash purchases belong in the Cash Book.

The Purchases Journal strictly records credit purchases of trading inventory.

2

Calculate net credit purchases for the Purchases Journal total

Tunde Traders net amount: ₦450,000 - (10% of ₦450,000) = ₦405,000. Bola & Co. net amount: ₦300,000. Total Purchases Journal balance = ₦405,000 + ₦300,000 = ₦705,000.

Trade discounts must be deducted before entering transactions into subsidiary books.

3

Calculate net purchases returns for the Purchases Returns Journal total

Returned goods list price ₦50,000 less 10% trade discount (₦5,000) = ₦45,000 net returns balance.

Returned goods must be valued at the actual net cost price paid after deducting the original trade discount.

4

Determine General Ledger posting directions

Total Purchases Journal (₦705,000) is debited to Purchases Account; total Purchases Returns Journal (₦45,000) is credited to Purchases Returns Account.

Purchases represents an asset/expense increase (debit balance), whereas returns reduce purchases (credit balance).

Key Concept

Classification of transactions in subsidiary books and net valuation of credit purchases and returns after trade discounts.

Estimated Time:2m 0s

Question 10Question →

A petty cashier was allocated an imprest float of ₦15,000 at the beginning of the month. During the month, payments were made for office stationery of ₦3,500, transport fares of ₦2,200, and cleaning supplies of ₦1,800. What amount of cash is required to reimburse the petty cashier at the end of the month to restore the float to its initial balance?

Show answer & explanation

Answer: 7500

Answer

The reimbursement amount required to restore the imprest float is ₦7,500.

Under the imprest system of petty cash, a fixed float is established at the start of a period. At regular intervals, the petty cashier is reimbursed an amount equal to the total disbursements made during that period. Since total expenses incurred are ₦3,500 + ₦2,200 + ₦1,800 = ₦7,500, the reimbursement needed to restore the float to ₦15,000 is ₦7,500.

Step-by-Step Solution

1

Calculate total petty cash expenditure for the period

Total expenditure = ₦3,500 + ₦2,200 + ₦1,800 = ₦7,500

To find how much money was spent, sum up all petty cash vouchers.

2

Determine reimbursement under the imprest system

Reimbursement = ₦7,500

The core rule of the imprest system specifies that the cash float must be restored to its original balance by topping it up with the exact total amount spent.

Key Concept

Imprest System Float Reimbursement

Estimated Time:45s

Question 11Question →

A merchant's three-column cash book recorded the following transactions with a customer:
- Sold goods listed at $₦120,000$ subject to a $15\%$ trade discount.
- The customer settled half of the net invoice value by cheque within the prompt settlement period, receiving a $5\%$ cash discount.
- The remaining balance was settled later in cash, receiving a $2.5\%$ cash discount for early payment.

What is the total amount, in naira, recorded in the discount allowed column of the cash book for these transactions?

Show answer & explanation

Answer: 3825

Answer

The total amount recorded in the discount allowed column is ₦3,825.

Trade discount of 15% (₦18,000) reduces the gross sales price from ₦120,000 to a net invoice amount of ₦102,000. Cash discounts apply only to cash payments made for prompt settlement and are calculated on the net invoice figure. The first settlement of half the account (₦51,000) earns a 5% discount equal to ₦2,550. The second settlement of the remaining ₦51,000 earns a 2.5% discount equal to ₦1,275. Adding both cash discounts yields a total of ₦3,825 entered in the discount allowed column.

Step-by-Step Solution

1

Calculate the net invoice value after trade discount

Net Invoice Value = ₦102,000

Trade discounts are deducted from catalog list prices prior to recording transactions and do not appear in cash book discount columns.

2

Calculate the cash discount allowed on the first settlement

First Cash Discount = ₦2,550

5% discount is calculated on the ₦51,000 portion being settled.

3

Calculate the cash discount allowed on the second settlement

Second Cash Discount = ₦1,275

2.5% discount is calculated on the remaining ₦51,000 portion being settled.

4

Sum all cash discounts granted to determine total discount allowed

Total Discount Allowed = ₦3,825

The discount allowed column on the debit side of the three-column cash book aggregates all cash discounts granted to customers.

Key Concept

Calculation and recording of cash discounts versus trade discounts in a three-column cash book

Question 12Question →

Olu, a sole trader, started the month of May with a cash balance of $\text{₦}45,000$ and a bank overdraft of $\text{₦}12,000$ . During the month, the following transactions occurred:
1. Bought goods with a catalog list price of $\text{₦}80,000$ on credit, subject to a $10\%$ trade discount.
2. Settled the supplier's account by cheque within the stipulated period, receiving a $5\%$ cash discount.
3. Withdrew $\text{₦}15,000$ cash from the bank for business use.
4. Received a cheque of $\text{₦}28,500$ from a debtor in full settlement of a $\text{₦}30,000$ account balance.

What is the closing balance of the bank column in the three-column cash book at the end of May?

\text{₦}66,900

overdraft

\text{₦}66,500

overdraft

\text{₦}51,900

overdraft

\text{₦}42,900

overdraft

Show answer & explanation

Answer: $\text{₦}66,900$ overdraft

Answer

\text{₦}66,900

overdraft (Credit balance)

To find the closing bank balance, we calculate the net bank transactions:
1. Opening Bank Overdraft (Credit):

\text{₦}12,000

2. Net Purchase Price after

10\%

trade discount =

\text{₦}80,000 - \text{₦}8,000 = \text{₦}72,000

. Cash discount of

5\% \times \text{₦}72,000 = \text{₦}3,600

. Cheque paid (Credit) =

\text{₦}72,000 - \text{₦}3,600 = \text{₦}68,400

.
3. Cash withdrawn for office use (Contra, Credit) =

\text{₦}15,000

.
4. Cheque received from debtor (Debit) =

\text{₦}28,500

.
Total Credit side =

\text{₦}12,000 + \text{₦}68,400 + \text{₦}15,000 = \text{₦}95,400

.
Total Debit side =

\text{₦}28,500

.
Closing Overdraft =

\text{₦}95,400 - \text{₦}28,500 = \text{₦}66,900

overdraft.

Step-by-Step Solution

1

Calculate the net invoice price after trade discount and the net cheque payment after cash discount.

Invoice Price =

\text{₦}80,000 - (10\% \times 80,000) = \text{₦}72,000

. Cash Discount Received =

5\% \times 72,000 = \text{₦}3,600

. Cheque Paid =

\text{₦}72,000 - \text{₦}3,600 = \text{₦}68,400

.

Trade discounts are deducted from list price prior to entry and are not shown in the cash book; cash discount is computed on the net invoice amount.

2

Identify debit entries (bank receipts) in the bank column.

Cheque received from debtor =

\text{₦}28,500

. Total Debit =

\text{₦}28,500

.

Cheques received increase bank funds and are debited to the bank column.

3

Identify credit entries (bank payments/outflows) in the bank column.

Opening Overdraft =

\text{₦}12,000

; Cheque paid to supplier =

\text{₦}68,400

; Cash withdrawn for office use (Contra entry) =

\text{₦}15,000

. Total Credit =

\text{₦}12,000 + \text{₦}68,400 + \text{₦}15,000 = \text{₦}95,400

.

Overdrafts, payments, and contra withdrawals from the bank are all recorded on the credit side of the bank column.

4

Determine the net closing balance of the bank column.

Closing Balance = Credit Total (

\text{₦}95,400

) - Debit Total (

\text{₦}28,500

) =

\text{₦}66,900

overdraft (Credit balance).

When the credit side exceeds the debit side in a cash book bank column, the remaining balance represents a bank overdraft.

Key Concept

Accounting treatment of trade/cash discounts and contra entries in a three-column cash book

Question 13Question →

Ade, a sole trader, extracted the following account balances from his ledger at the end of the accounting period:

- Capital: $₦50,000$
- Sales: $₦80,000$
- Purchases: $₦45,000$
- Rent Expense: $₦5,000$
- Cash at Bank: $₦30,000$
- Machinery: $₦50,000$

What is the total of the Trial Balance extracted from these accounts?

Show answer & explanation

Answer: 130000

Answer

The total of the trial balance extracted from the ledger accounts is

₦130,000

.

The total of the trial balance is obtained by adding up either all debit balances (

₦45,000 + ₦5,000 + ₦30,000 + ₦50,000 = ₦130,000

) or all credit balances (

₦50,000 + ₦80,000 = ₦130,000

). Since total debits equal total credits, the total is

₦130,000

.

Step-by-Step Solution

1

Classify the ledger balances into Debit and Credit sides.

Debit balances: Purchases (

₦45,000

), Rent Expense (

₦5,000

), Cash at Bank (

₦30,000

), Machinery (

₦50,000

). Credit balances: Capital (

₦50,000

), Sales (

₦80,000

).

Assets and expenses have debit balances, while equity and revenue accounts have credit balances.

2

Sum either column to find the trial balance total.

Total Debit =

₦45,000 + ₦5,000 + ₦30,000 + ₦50,000 = ₦130,000

. (Total Credit =

₦50,000 + ₦80,000 = ₦130,000

).

Under double-entry bookkeeping, the total of all debit balances must equal the total of all credit balances.

Key Concept

Extraction and balancing of Trial Balance column totals

Question 14Question →

A petty cashier was maintained on the imprest system with an initial float of $₦50,000$ on March 1, 2026. During the month of March, the following transactions took place:

- Paid for office stationery: $₦8,400$
- Paid for postage and stamps: $₦4,600$
- Paid for office cleaning: $₦6,500$
- Paid for staff traveling expenses: $₦9,200$
- Paid to a ledger creditor (Mr. Okafor): $₦5,000$
- Received refund from an employee for overpaid traveling expenses: $₦1,500$

At the end of the month, management decided to increase the imprest float by $₦10,000$ starting from April 1. What is the total amount (in $₦$ ) required from the chief cashier to restore and adjust the petty cash float to its new level?

Show answer & explanation

Answer: 42200

Answer

The total amount required from the chief cashier to restore and adjust the petty cash float is

₦42,200

.

Under the imprest system, the amount issued by the chief cashier must restore spent funds and accommodate any decided increase in the float. Net expenditure incurred during the period is total disbursements (

₦33,700

) minus refunds received (

₦1,500

), yielding

₦32,200

. Adding the

₦10,000

increase in float gives a total required amount of

₦32,200 + ₦10,000 = ₦42,200

.

Step-by-Step Solution

1

Calculate total petty cash disbursements during the month

₦33,700

Sum all petty payments made:

8,400 + 4,600 + 6,500 + 9,200 + 5,000 = ₦33,700

.

2

Determine net expenditure by subtracting petty receipts

₦32,200

The

₦1,500

refund received reduces net spent cash from float:

33,700 - 1,500 = ₦32,200

.

3

Calculate cash remaining in hand at month end

₦17,800

Subtract net spent amount from original float:

50,000 - 32,200 = ₦17,800

.

4

Determine cash required from chief cashier for new float level

₦42,200

New float requirement is

₦50,000 + ₦10,000 = ₦60,000

. Cash needed =

60,000 - 17,800 = ₦42,200

(or net expenses of

₦32,200

plus float increase of

₦10,000

).

Key Concept

Imprest system reimbursement and float adjustment calculation

Estimated Time:2m 0s

Question 15Question →

A business firm returned a defective delivery van previously purchased on credit from Apex Motors Ltd. How should this transaction be posted to the ledger, and what are the correct classifications of the affected accounts?

Debit Returns Outwards Account (Nominal Account) and credit Apex Motors Ltd Account (Personal Account)

Debit Apex Motors Ltd Account (Personal Account) and credit Delivery Vans Account (Real Account)

Debit Apex Motors Ltd Account (Personal Account) and credit Returns Outwards Account (Nominal Account)

Debit Delivery Vans Account (Real Account) and credit Apex Motors Ltd Account (Personal Account)

Show answer & explanation

Answer: Debit Apex Motors Ltd Account (Personal Account) and credit Delivery Vans Account (Real Account)

Answer

Debit Apex Motors Ltd Account (Personal Account) and credit Delivery Vans Account (Real Account)

When a non-current asset such as a delivery van is returned to a supplier, the supplier's account (Apex Motors Ltd, a Personal Account) is debited because the liability owed to them decreases. The Delivery Vans Account (a Real Account representing tangible business property) is credited because the asset value decreases. Returns Outwards is used only for merchandise goods purchased for resale.

Step-by-Step Solution

1

Identify the specific accounts affected by the transaction.

The accounts involved are Apex Motors Ltd Account and Delivery Vans Account.

The transaction involves returning a non-current asset (delivery van) to the creditor from whom it was bought on credit.

2

Classify each affected account into personal, real, or nominal categories.

Apex Motors Ltd is a Personal Account (creditor/person); Delivery Vans Account is a Real Account (property/tangible asset).

Personal accounts relate to individuals and corporate bodies, while real accounts represent tangible property and assets.

3

Apply double entry posting rules to determine debit and credit sides.

Debit Apex Motors Ltd Account (to reduce liability); credit Delivery Vans Account (to reduce asset value).

Under double entry rules, debit the receiver (or decrease in liability) and credit what goes out (or decrease in asset). Returns Outwards is not used because the item returned is a fixed asset, not trading inventory.

Key Concept

Double Entry Rules for Fixed Asset Returns and Account Classification

Estimated Time:2m 0s

Question 16Question →

Kalu had a cash balance of $\text{₦}18,500$ and a bank overdraft of $\text{₦}6,200$ on June 1. During June, the following transactions took place:

- June 5: Purchased goods listed at $\text{₦}40,000$ subject to a $10\%$ trade discount and a $5\%$ cash discount, paying immediately by cheque.
- June 12: Received a cheque from Tunde for $\text{₦}24,000$ in full settlement of a debt of $\text{₦}25,000$ .
- June 18: Deposited $\text{₦}8,000$ cash into the bank account.
- June 24: Tunde's cheque was returned by the bank dishonoured.

What is the closing balance of the Bank column in Kalu's three-column cash book at the end of June?

\text{₦}32,400

overdraft

\text{₦}8,400

overdraft

\text{₦}33,400

overdraft

\text{₦}36,200

overdraft

Show answer & explanation

Answer: $\text{₦}32,400$ overdraft

Answer

\text{₦}32,400

overdraft

Trade discount (

10\%

of

\text{₦}40,000 = \text{₦}4,000

) reduces the net price to

\text{₦}36,000

. The

5\%

cash discount is calculated on

\text{₦}36,000

(

1,800

), leaving a net cheque payment of

\text{₦}34,200

credited to the Bank column. Tunde's cheque receipt of

\text{₦}24,000

and the cash deposit of

\text{₦}8,000

are debited to Bank (totaling

\text{₦}32,000

). When Tunde's cheque is dishonoured,

\text{₦}24,000

is credited back to the Bank column. Summing the credits (

\text{₦}6,200

opening overdraft +

\text{₦}34,200

cheque paid +

\text{₦}24,000

dishonoured cheque =

\text{₦}64,400

) and subtracting debits (

\text{₦}32,000

) gives a closing credit balance of

\text{₦}32,400

overdraft.

Step-by-Step Solution

1

Calculate the net cheque payment for the June 5 purchase

Trade discount =

10\% \times 40,000 = \text{₦}4,000

. Net invoice price =

40,000 - 4,000 = \text{₦}36,000

. Cash discount =

5\% \times 36,000 = \text{₦}1,800

. Net amount paid by cheque =

36,000 - 1,800 = \text{₦}34,200

(Credited to Bank column).

Trade discount is deducted first before entering into the cash book. Cash discount is calculated on the net invoice price and recorded in the Discount Received column.

2

Record the receipt of Tunde's cheque on June 12 and the cash deposit on June 18

June 12 cheque received =

\text{₦}24,000

(Debited to Bank column). June 18 contra cash deposit =

\text{₦}8,000

(Debited to Bank column).

Cheques received and cash paid into bank increase the bank balance and are debited to the Bank column.

3

Record the dishonoured cheque on June 24

Credited

\text{₦}24,000

to the Bank column.

When a customer's cheque is dishonoured, the exact cheque amount previously debited must be credited to the Bank column to reverse the entry.

4

Compute total Debits and total Credits for the Bank column

Total Credit entries = Opening Overdraft (

\text{₦}6,200

) + Purchases Cheque (

\text{₦}34,200

) + Dishonoured Cheque (

\text{₦}24,000

) =

\text{₦}64,400

.
Total Debit entries = Tunde Cheque (

\text{₦}24,000

) + Cash Deposit (

\text{₦}8,000

) =

\text{₦}32,000

.

Aggregate all receipts and payments to determine the net position.

5

Calculate the closing Bank balance

Net Credit Balance =

\text{₦}64,400 - \text{₦}32,000 = \text{₦}32,400

Overdraft.

Since total credits exceed total debits, the closing balance is a bank overdraft.

Key Concept

Treatment of compound discounts, contra entries, dishonoured cheques, and bank overdraft balancing in a three-column cash book.

Estimated Time:3m 0s

Question 17Question →

A trading business records its daily credit sales and customer returns in specialized books of prime entry. Match each accounting document or transaction summary on the left with its corresponding book of original entry or ledger posting rule on the right.

Click a left item, then click its matching right item

Show answer & explanation

Answer

Credit note matches with source document for the Sales Returns Journal; duplicate invoice matches with source document for the Sales Journal; monthly total of the Sales Day Book matches with credited to the Sales Account in the General Ledger; monthly total of the Returns Inward Day Book matches with debited to the Sales Returns Account in the General Ledger.

The accounting entries and source documents are properly paired based on standard double-entry bookkeeping rules: credit notes document returns inward, sales invoices document credit sales, the Sales Day Book total increases revenue via a credit to the Sales Account, and the Returns Inward Day Book total reduces revenue via a debit to the Sales Returns Account.

Step-by-Step Solution

1

Identify the source document for returns inward

A credit note issued to a debtor is matched to the Sales Returns Journal.

Credit notes serve as written evidence for reducing a customer's debt following a return of merchandise.

2

Identify the source document for credit sales

A duplicate sales invoice issued to a customer is matched to the Sales Journal.

Outward sales invoices provide proof of goods delivered on credit and detail the amount owed by the buyer.

3

Determine general ledger double entry for total credit sales

The periodic total of the Sales Day Book is credited to the Sales Account in the General Ledger.

Individual debtors are debited in the Sales Ledger, so the total revenue generated is credited to the main Sales Account.

4

Determine general ledger double entry for total sales returns

The periodic total of the Returns Inward Day Book is debited to the Sales Returns Account in the General Ledger.

Sales returns reduce total gross sales revenue and carry a debit balance in the general ledger.

Key Concept

Books of Original Entry and General Ledger Posting Rules for Sales and Sales Returns

Estimated Time:1m 30s

Question 18Question →

The following ledger account balances were extracted from the books of Binta Traders at 31 December 2025:

- Purchases: ₦240,000
- Sales: ₦410,000
- Motor Vehicles (Cost): ₦180,000
- Provision for Depreciation on Motor Vehicles: ₦36,000
- Trade Debtors: ₦75,000
- Trade Creditors: ₦52,000
- Cash at Bank: ₦34,000
- Capital: ₦150,000
- Returns Inwards: ₦14,000
- Returns Outwards: ₦9,000
- Rent and Rates: ₦22,000
- Discount Received: ₦6,000
- Provision for Doubtful Debts: ₦4,000
- Opening Inventory: ₦45,000
- Drawings: ₦18,000

When preparing the trial balance, the bookkeeper inserted a Suspense Account balance to make the total of the debit column equal the total of the credit column. What is the value of the balance (in ��) required in the Suspense Account?

Show answer & explanation

Answer: 39000

Answer

The balance required in the Suspense Account to make the Trial Balance agree is ₦39,000.

The total of all credit balances (Sales ₦410,000 + Provision for Depreciation ₦36,000 + Trade Creditors ₦52,000 + Capital ₦150,000 + Returns Outwards ₦9,000 + Discount Received ₦6,000 + Provision for Doubtful Debts ₦4,000) is ₦667,000. The total of all debit balances (Purchases ₦240,000 + Motor Vehicles ₦180,000 + Trade Debtors ₦75,000 + Cash at Bank ₦34,000 + Returns Inwards ₦14,000 + Rent and Rates ₦22,000 + Opening Inventory ₦45,000 + Drawings ₦18,000) is ₦628,000. The shortfall on the debit side is ₦667,000 - ₦628,000 = ₦39,000, which is the required Suspense Account balance.

Step-by-Step Solution

1

Classify each ledger account balance into debit or credit columns according to double-entry rules.

Debit Balances: Purchases (₦240,000), Motor Vehicles (₦180,000), Trade Debtors (₦75,000), Cash at Bank (₦34,000), Returns Inwards (₦14,000), Rent and Rates (₦22,000), Opening Inventory (₦45,000), Drawings (₦18,000). Credit Balances: Sales (₦410,000), Provision for Depreciation (₦36,000), Trade Creditors (₦52,000), Capital (₦150,000), Returns Outwards (₦9,000), Discount Received (₦6,000), Provision for Doubtful Debts (₦4,000).

Assets, expenses, drawings, and sales returns carry debit balances, whereas liabilities, capital, revenues, contra-asset provisions, purchase returns, and gains carry credit balances.

2

Sum up the debit balances and credit balances separately.

Total Debits = ₦628,000; Total Credits = ₦667,000.

Comparing both column totals determines the discrepancy in the Trial Balance.

3

Compute the missing Suspense Account balance.

Suspense Account Balance = ₦667,000 - ₦628,000 = ₦39,000.

A debit entry of ₦39,000 is required in the Suspense Account to equalize the debit side with the credit total of ₦667,000.

Key Concept

Balancing Ledger Accounts and Extracting Trial Balance

Estimated Time:2m 0s

Question 19Question →

On 12 June 2026, Mabera Merchants bought goods costing ₦500,000 on credit from Danladi & Sons, subject to a 10% trade discount. On the same day, the firm also bought office furniture on credit for ₦120,000 from Woodworks Ltd. What is the total amount to be recorded in Mabera Merchants' Purchases Journal for these transactions?

₦450,000

₦570,000

₦500,000

₦620,000

Show answer & explanation

Answer: ₦450,000

Answer

₦450,000

The Purchases Journal is used exclusively to record credit purchases of goods intended for resale. The net amount recorded for the goods is calculated after deducting the 10% trade discount:

₦500,000 - (10\% \times ₦500,000) = ₦450,000

. Office furniture is a non-current asset (capital expenditure) and must be entered in the General Journal.

Step-by-Step Solution

1

Calculate the net price of goods purchased for resale

Gross cost = ₦500,000. Trade discount = 10% of ₦500,000 = ₦50,000. Net price = ₦500,000 - ₦50,000 = ₦450,000.

Trade discounts are deducted immediately before recording transactions in subsidiary books.

2

Identify which transactions belong in the Purchases Journal

Only credit purchases of inventory/goods for resale (₦450,000) are entered in the Purchases Journal. The office furniture (₦120,000) is a fixed asset purchase on credit and belongs in the General Journal.

The Purchases Journal is strictly reserved for credit purchases of trading merchandise.

Key Concept

Purchases Journal Scope and Trade Discount Deduction

Question 20Question →

During October 2026, Emeka Enterprises completed the following transactions:
- Oct 4: Purchased goods for resale on credit from Chidi Ltd valued at $\text{₦}180,000$ , subject to a $10\%$ trade discount.
- Oct 12: Purchased office equipment on credit from Prime Tech Ltd for $\text{₦}120,000$ .
- Oct 20: Purchased goods for resale on credit from Bola & Sons valued at $\text{₦}240,000$ , subject to a $15\%$ trade discount.
- Oct 22: Purchased goods for resale for cash amounting to $\text{₦}45,000$ .

What is the total amount (in $\text{₦}$ ) to be recorded in the Purchases Journal for October 2026?

Show answer & explanation

Answer: 366000

Answer

The total amount to be recorded in the Purchases Journal for October 2026 is ₦366,000.

The Purchases Journal only records credit purchases of goods intended for resale. The net amounts after trade discounts are ₦162,000 for the Oct 4 transaction and ₦204,000 for the Oct 20 transaction. Office equipment is a non-current asset (General Journal) and cash purchases belong in the Cash Book. Thus, the total balance of the Purchases Journal is ₦162,000 + ₦204,000 = ₦366,000.

Step-by-Step Solution

1

Calculate the net price of goods purchased on credit from Chidi Ltd on Oct 4

₦162,000

Trade discounts are deducted immediately from the gross price when entering invoices into books of original entry:

\text{₦}180,000 - (10\% \times \text{₦}180,000) = \text{₦}162,000

.

2

Evaluate the transaction on Oct 12 for office equipment

Excluded (₦0)

The Purchases Journal strictly records credit purchases of goods intended for resale (trading inventory). Non-current asset purchases on credit are entered in the General Journal (Journal Proper).

3

Calculate the net price of goods purchased on credit from Bola & Sons on Oct 20

₦204,000

Apply the

15\%

trade discount:

\text{₦}240,000 - (15\% \times \text{₦}240,000) = \text{₦}204,000

.

4

Evaluate the cash purchase on Oct 22

Excluded (₦0)

Cash transactions are recorded in the Cash Book, not in the Purchases Journal.

5

Calculate the monthly total for the Purchases Journal

₦366,000

Sum the net amounts of eligible credit purchases of inventory:

\text{₦}162,000 + \text{₦}204,000 = \text{₦}366,000

.

Key Concept

Purchases Journal Scope and Trade Discount Calculations

Books of Original Entry and Ledger

Answer

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