Lecture Notes: Accounting for Thule Traders

Introduction

• Speaker: Mrs. Brimacombe
• Focus: Activity 5 from Thule traders' accounting records
• Business Nature: Trading in house appliances
• Key Detail: Markup percentage of 70% on cost price

Important Instructions

• Markup Percentage: Always note the given percentage for calculations.
• Tasks: Complete missing figures labeled A to F from the journals for October.
• General Ledger Accounts Required: Drawings, Trading Stock, Creditors Control, Stationery.

Solving Missing Figures

Question 1

• Solving A:

  • Cash Receipts Journal: Bank and cost of sales debited; others credited.
  • Exclude Cost of Sales: Cost of goods (trading stock) sold.
  • Calculation: Sales + Debtors Control + Sundry Accounts = Total for Bank.

• Cost of Sales Calculation:

  • Formula: Selling Price (Sales) x 100 / (100 + percentage markup)
  • Consider Discounts: 10% cash discount impacts original selling price calculations.
  • Example Calculation:
    • Given: 68,850 after 10% discount.
    • Original Price Calculation: 68,850 x 100 / 90.
    • Cost Calculation: (Original Price x 100) / 170.

Solving C

• Cash Payment Journal:
  • Bank Credited: Money outflow.
  • Calculation: Bank - Creditors Control - Trading Stock - Consumer Bills - Sundry Accounts = Total Wages.

Solving D

• Sales: Cost provided.
• Selling Price Calculation:
  • Formula: Cost x (100 + Markup %)/100
  • Example: Cost x 170/100.

Creditors Journal

• Solving E:

  • Equipment Purchase: Cash purchase 19,600 = 40% of total.
  • Credit Purchase Calculation:
    • 60% on credit.
    • Credit Purchase = 19,600 x 60/40 = 29,400.

• Solving F:

  • Add up all items in Creditors Journal after calculating E.
  • Creditor’s Control: Always credited, rest debited.

General Ledger Posting

• Steps:
  1. Write Balances: Brought down on 1st October for required accounts.
  2. Journal Posting: Follow correct processes for drawings, trading stock, creditors control, and consumables.

Account Specific Details

Drawings Account

• Owner’s Equity: Decreases on debit side.
• Examples:
  • Invoice from General Motors: 6,200 subject to 5% discount.
  • Online Payment to Mweb: Business and personal amounts differentiated.

Trading Stock Account

• Appearance in Journals: All journals indirectly through cost of sales.
• Adjustments:
  • Cash Receipts: Decreases
  • Cash Payments: Increases
  • Debtors Journal: Decreases
  • Creditors Journal: Increases

Creditors Control Account

• Cash Payment Journal: Decreases debt.
• Creditors Journal: Increases debt.

Consumable Stores Account

• Expense Account: Increases with purchases.
• Posting from: Cash Payment and Creditors Journal.

Closing Balances

• Steps:
  1. Total the accounts considering debits and credits.
  2. Balance Carried Down: Indicate closing and opening balances correctly.

Conclusion

• Encouragement: Understand theory for effective application.
• Quote: "The beautiful thing about learning is nobody can take it away from you."

---

Study Reminder

• Consult Theory Booklets: For foundational understanding of service vs. trading businesses, and related accounting processes.