Business Transaction Journaling and Financial Adjustments

Opening Balances

Debit Balances

• Cash in Hand
• Banks
• Clients (Accounts Receivable)
• Documents Receivable
• Other Debtors
• Merchandise Inventory
• Building
• Furniture and Office Equipment
• Equipment Sharing
• Organizational Costs

Credit Balances

• Accumulated Depreciation - Building
• Accumulated Depreciation - Furniture and Office Equipment
• Accumulated Depreciation - Equipment Sharing
• Accumulated Depreciation - Organizational Costs
• Suppliers (Accounts Payable)
• Other Creditors
• Documents Payable
• Share Capital
• Retained Earnings (Net Income)

Daily Business Transactions

1. Office Facilities Adjustment

Adjustments made to office facilities for 10,000 plus VAT, paid by check.

• Debit: Installation Costs 10,000
• Debit: Creditable VAT 1,500
• Credit: Banks 11,500

2. Secretary Acquires Cleaning Services

The secretary acquires cleaning services for 312 plus VAT, paid in cash.

• Debit: Administrative Costs 312
• Debit: Creditable VAT 46.80
• Credit: Cash in Hand 358.80

3. Truck Maintenance Payment

Payment for truck maintenance service of 3,000, paid to the mechanic by check.

• Debit: Selling Expenses 3,000
• Credit: Banks 3,000

4. Merchandise Sales Transaction

Record sales of merchandise for 30,000 plus VAT. 50% on credit, 50% cash. Cost of sales is 13,000.

Sales Entry:

• Debit: Accounts Receivable 17,250
• Debit: Banks 17,250
• Credit: Sales Revenue 30,000
• Credit: Output VAT 4,500

Cost of Goods Sold Entry:

• Debit: Cost of Sales 13,000
• Credit: Merchandise Inventory 13,000

5. Merchandise Purchases on Credit

Goods purchased on credit, documented for 28,000 plus VAT.

• Debit: Merchandise Inventory 28,000
• Debit: Creditable VAT 4,200
• Credit: Documents Payable 32,200

6. Payroll Payment

Payment of payroll: Administrative Department 10,000, Sales Department 5,800.

• Debit: Administrative Expenses 10,000
• Debit: Selling Expenses 5,800
• Credit: Banks 15,800

7. Computer Equipment Acquisition

Acquisition of computer equipment for 18,000 plus VAT, on credit.

• Debit: Computer Equipment 18,000
• Debit: Creditable VAT 2,700
• Credit: Other Creditors 20,700

8. Merchandise Purchase with Mixed Payment

Merchandise purchased for 60,000 plus VAT. 30% of the total amount (including VAT) is paid in cash, and the remaining balance is on credit for 60 days.

• Debit: Merchandise Inventory 60,000
• Debit: Creditable VAT 9,000
• Credit: Banks 20,700
• Credit: Suppliers 48,300

9. Sale of Non-Operating Desktop

Sale of a desktop computer (not used in operations) for 3,000. Its carrying value was 2,600.

• Debit: Banks 3,000
• Credit: Furniture and Office Equipment 2,600
• Credit: Gain on Sale of Asset 400

10. Bank Loan Received

Received a bank loan of 300,000, with a 3% commission plus VAT deducted at source.

• Debit: Banks 289,650
• Debit: Loan Commission Expense 9,000
• Debit: Creditable VAT 1,350
• Credit: Bank Loan Payable 300,000

11. Depreciation Adjustments

Adjustments for depreciation: Building 1,150, Office Equipment 260, and Equipment Sharing 460.

• Debit: Administrative Expenses 1,410 (Building 1,150 + Office Equipment 260)
• Debit: Selling Expenses 460 (Equipment Sharing)
• Credit: Accumulated Depreciation - Building 1,150
• Credit: Accumulated Depreciation - Office Equipment 260
• Credit: Accumulated Depreciation - Equipment Sharing 460