O-LevelAccountingSources and recording of data7707/21 · Oct/Nov 2011 · Q118 Marks

Christos is in business buying and selling goods on credit. The following details relate to the account of his customer Michelle for the month of July 2011. $ July 1 Michelle owed Christos 200 July 7 Christos sent an invoice to Michelle 150 July 16 Christos sent a credit note to Michelle 8 July 31 Michelle sent Christos a cheque 195 July 31 Christos allowed Michelle cash discount 5 REQUIRED

(a)Prepare the account of Michelle in the books of Christos. Bring down the balance on 1 August 2011.[6]
(b)Name the book of prime entry in which Christos would record the transaction of 16 July 2011.[1]
(c)Prepare the trial balance for Christos at 31 July 2011, including the balance on the capital account. Christos Trial Balance at 31 July 2011 Dr Cr $[6]
(d)State the item in the trial balance which would include the balance on Michelle's account.[1]
(e)State two differences between a trial balance and a balance sheet. 1 2[4]

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2011). The mark or mark type is shown in brackets.

[1] (a) Michelle Account heading
[1] (a) July 1 Balance b/d 200
[1] (a) July 7 Sales 150
[1] (a) July 16 Sales returns 8
[1] (a) July 31 Bank 195
[1] (a) July 31 Discount Allowed 5
[1] (a) July 31 Balance c/d 142
[1] (a) 1 Aug Balance b/d 142
[1] (b) Sales returns journal
[1] (c) Christos - Trial Balance at 31 July 2011 heading
[2] (c) Capital 5 900 (calculated balancing figure)
[1] (c) Drawings 8 000 (Dr)
[1] (c) Office furniture 5 000 (Dr)
[1] (c) Provision for depreciation on office furniture 3 200 (Cr)
[1] (c) Inventory 4 150 (Dr)
[1] (c) Bank overdraft 250 (Cr)
[1] (c) Trade payables 2 950 (Cr)
[1] (c) Sundry expenses 10 600 (Dr)
[1] (c) Purchases 32 400 (Dr)
[1] (c) Provision for doubtful debts 350 (Cr)
[1] (c) Revenue (sales) 53 750 (Cr)
[1] (c) Trade receivables 6 250 (Dr)
[2] (c) Totals 66 400
[1] (d) Trade receivables
[1] (e) Trial balance: Proves arithmetic accuracy of double entry equation; Balance sheet: Proves agreement of the balance sheet
[1] (e) Trial balance: Includes all account balances; Balance sheet: Includes only assets and liabilities
[1] (e) Trial balance: Recorded as debit and credit balances and includes revenue items; Balance sheet: Recorded as assets and liabilities after revenue accounts prepared
[1] (e) Trial balance: Recorded in any order; Balance sheet: Recorded in defined categories e.g. fixed assets
[1] (e) Trial balance: Contains only exact balances; Balance sheet: Contains net figures e.g. book value of fixed assets of debtors after provisions

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