Page 57 - F3 -FA Integrated Workbook STUDENT 2018-19

Recording transactions and balancing the ledgers

1.2 Recording credit transactions

Credit transactions are those when goods are sold or purchased and
paid for at a later date. Most commonly these transactions are
eventually paid using electronic payment methods directly into the bank
account.

Money that a business entity is owed is accounted for in the receivables’ ledger.

Money that a business entity owes is accounted for in the payables’ ledger.

Example 2

Recording cash transactions

Continuing with the example of Mylee, she also entered into the following
transactions on credit:

5 Sold goods on credit to Tayo which had cost $1,700 for $3,500

6 Purchased a delivery van from on credit for $3,000 from Morrison’s
Vans

7 Purchased goods for resale on credit from Tommy at a cost of $3,000

Required:

For each of the transactions, state the acocunting entries required and
show how they would be recorded in ledger accounts. (Note: continue
to use the ledger accounts already opened for purchases and sales
revenue).

Solution

Accounting entries

Debit $ Credit $
5 Receivable – Tayo 3,500 Sales revenue 3,500
6 Delivery van 3,000 Payable – 3,000
Morrison’s Vans

7 Purchases 4,000 Payable – Tommy 4,000

51