1 Note, this question should not be attempted until cash discounts and trade discounts have
been covered (see Chapters 13 and 14). It should also be noted that this is an example of the
exception to the rule that closing stock does not generally appear in a trial balance.
On 1 October 2009, the owner of the USS Enterprise, Mr Kirk, decided that he will boldly go and
keep his records on a double entry system. His assets and liabilities at that date were:
£
Fixtures and equipment 20,000
Stock including weapons 15,000
Balance at Universe Bank 17,500
Cash 375
Creditors – Spock 3,175
– Scott 200
– McCoy 500
Kirk’s transactions during October were as follows:
1
Sold faulty phasers, original cost £500, to Klingon Corp, for cash £5,000
2
Bought Photon Torpedoes (weapons), on credit from Central Council £2,500
3
Sold goods to Aardvarks, original cost £250, on credit, £1,500
4
Bought Cloaking Device (Fixtures and Fittings) from Klingon Corp £3,500
5
Paid the balance owed to Spock at 1 October less a 5% cash discount
6
Paid Central Council full amount due by cheque
7
Received full amount due from Aardvarks by cheque
8
Paid Klingon Corp by cheque after deducting 20% trade discount
9
Paid, by bankers order, £10,000 for repairs to Enterprise following disagreement over amount
owing to Klingon Corp and faulty phasers.
Required
:
Open Enterprise’s ledger accounts at 1 October, record all transactions for the month, balance the
ledger accounts, and prepare a trial balance as at 31 October.