Trial Questions

1.
Questions (a) to (c):
(a) Differentiate between real accounts and nominal accounts.
 Real Accounts: These are accounts that represent the assets and liabilities of a business. They
are permanent in nature and carried forward to the next accounting period. Examples include
Cash, Equipment, Buildings, Debtors, Creditors.
 Nominal Accounts: These accounts relate to expenses, losses, incomes, and gains. They are
temporary accounts and are closed at the end of the accounting period. Examples include
Salaries Expense, Rent Income, Sales, Purchase Returns.
(b) Explain the purpose of maintaining a general journal.
 The General Journal records all transactions that don’t fit into specialized journals such as the
cash book, purchases journal, or sales journal. It's used for recording:
o Opening and closing entries.
o Adjusting entries.
o Non-routine transactions (like errors or transfers).
o Miscellaneous entries, such as depreciation, accruals, and bad debt provisions.
(c) Circumstances where goods initially purchased may be returned:
1. Defective or Damaged Goods: Goods found to be faulty or damaged upon delivery may be
returned.
2. Wrong Quantity or Item Delivered: If a supplier delivers the wrong quantity or wrong items, a
return might be necessary.
2. Preparing the Relevant Journals for Kas-Kas Enterprises Ltd (Part d(i)):
We will journalize each transaction in chronological order:
2nd February:
 Purchased goods worth Shs 20,000,000 on credit from Twasoma Wholesalers Ltd.
Journal Entry:
o Debit Purchases: Shs 20,000,000
o Credit Accounts Payable (Twasoma Wholesalers Ltd): Shs 20,000,000

3rd February:
 Supplied goods worth Shs 10,000,000 to ABC Ltd (invoice no.100).
Journal Entry:
o Debit Accounts Receivable (ABC Ltd): Shs 10,000,000
o Credit Sales: Shs 10,000,000
4th February:
 Issued a credit note to ABC Ltd for Shs 4,500,000 in respect of returned goods.
Journal Entry:
o Debit Sales Returns & Allowances: Shs 4,500,000
o Credit Accounts Receivable (ABC Ltd): Shs 4,500,000
6th February:
 Purchased goods worth Shs 7,600,000 via cheque.
Journal Entry:
o Credit Bank: Shs 7,600,000
7th February:
 Debit note no. 01007 sent to Twasoma Wholesalers Ltd for Shs 3,400,000 was accepted.
Journal Entry:
o Debit Accounts Payable (Twasoma Wholesalers Ltd): Shs 3,400,000
o Credit Purchases Returns: Shs 3,400,000
8th February:
 Made cash sales of Shs 12,000,000.
Journal Entry:
o Debit Cash: Shs 12,000,000

11th February:
 Made credit purchases from XYZ & Sons Ltd of Shs 6,000,000 (invoice no. 10002).
Journal Entry:
o Credit Accounts Payable (XYZ & Sons Ltd): Shs 6,000,000
15th February:
 Made credit sales to KKM Traders Ltd of Shs 8,100,000 (invoice no. 101).
Journal Entry:
o Debit Accounts Receivable (KKM Traders Ltd): Shs 8,100,000
20th February:
 Rejected goods worth Shs 2,000,000 were returned by KKM Traders Ltd.
Journal Entry:
o Debit Sales Returns & Allowances: Shs 2,000,000
o Credit Accounts Receivable (KKM Traders Ltd): Shs 2,000,000
25th February:
 Cash expenses paid during the month include rent Shs 1,200,000 and wages Shs 3,600,000.
Journal Entry:
o Debit Rent Expense: Shs 1,200,000
o Debit Wages Expense: Shs 3,600,000
o Credit Cash: Shs 4,800,000
27th February:
 Debit note no. 01508 to XYZ & Sons Ltd for Shs 2,400,000 was accepted.
Journal Entry:
o Debit Accounts Payable (XYZ & Sons Ltd): Shs 2,400,000
o Credit Purchases Returns: Shs 2,400,000
3. Posting to the Ledger (Part d(ii))
For each journal entry, we would now post to the relevant ledger accounts. For example:
1. Purchases Ledger:
o 20,000,000 purchased from Twasoma Wholesalers on 2nd February.
o 7,600,000 purchased via cheque on 6th February.
o 6,000,000 credit purchases from XYZ & Sons Ltd on 11th February.
o Total Purchases: Debit side.
2. Sales Ledger:
o 10,000,000 credit sales to ABC Ltd on 3rd February.
o 12,000,000 cash sales on 8th February.
o 8,100,000 credit sales to KKM Traders Ltd on 15th February.
o Total Sales: Credit side.
3. Accounts Receivable (ABC Ltd, KKM Traders Ltd):
o Post all sales, returns, and payments in their respective accounts.
4. Accounts Payable (Twasoma Wholesalers, XYZ & Sons Ltd):
o Post all purchases, returns, and payments in their respective accounts.
5. Bank Account:
o Post all payments made via cheque or cash to the bank account.
6. Expense Accounts (Rent, Wages, etc.):
o Debit the relevant expenses based on the cash payments made on 25th February.
7. (i) Prepare the relevant journals for KAS-KAS Enterprises Ltd.

8. Here are the journal entries based on the transactions in the image:
Date Details Debit Credit (Shs)

(Shs)
2 Feb Purchases (Goods from Twasoma 20,000,000 Accounts Payable (Twasoma
Wholesalers) Wholesalers)
3 Feb Accounts Receivable (ABC Ltd) 10,000,000 Sales
4 Feb Sales Returns (ABC Ltd) 4,500,000 Accounts Receivable (ABC Ltd)
6 Feb Purchases (Goods from XYZ & 7,600,000 Bank (Cheque Payment)
Sons Ltd)
7 Feb Accounts Payable (Twasoma 3,400,000 Purchases Returns (Debit Note)
Wholesalers)
8 Feb Cash 12,000,000 Sales
11 Purchases (XYZ & Sons Ltd) 6,000,000 Accounts Payable (XYZ & Sons
Feb Ltd)
15 Accounts Receivable (KKM 8,100,000 Sales
Feb Traders Ltd)
20 Purchases Returns (KKM Traders 2,000,000 Accounts Payable (KKM Traders
Feb Ltd) Ltd)
25 Rent Expense 1,200,000 Cash
Feb
Wages Expense 3,600,000 Cash
27 Accounts Payable (XYZ & Sons 2,400,000 Purchases Returns (Debit Note)
Feb Ltd)
9. (ii) Post the transactions to the relevant ledgers

10. Now, let's outline how these transactions would be posted to the ledgers:
11. Purchases Ledger
Date Details Debit (Shs) Credit (Shs)

2 Feb Twasoma Wholesalers 20,000,000
6 Feb XYZ & Sons Ltd (Cheque) 7,600,000
7 Feb Twasoma Wholesalers (Debit Note) 3,400,000
11 Feb XYZ & Sons Ltd 6,000,000
20 Feb KKM Traders Ltd (Purchases Returned) 2,000,000
27 Feb XYZ & Sons Ltd (Debit Note) 2,400,000
12. Sales Ledger

3 Feb ABC Ltd (Sales Invoice) 10,000,000
4 Feb ABC Ltd (Sales Returns) 4,500,000
8 Feb Cash Sales 12,000,000
15 KKM Traders Ltd 8,100,000
Feb
13. Cash/Bank Ledger

6 Feb Purchases (Cheque Paid to XYZ & Sons Ltd) 7,600,000
8 Feb Cash Sales 12,000,000
25 Rent Expense 1,200,000
Feb
Wages Expense 3,600,000
14. Accounts Payable Ledger

2 Feb Twasoma Wholesalers 20,000,000
7 Feb Twasoma Wholesalers (Debit 3,400,000
Note)
11 Feb XYZ & Sons Ltd 6,000,000
27 Feb XYZ & Sons Ltd (Debit Note) 2,400,000
15. Accounts Receivable Ledger

3 Feb ABC Ltd 10,000,000
4 Feb ABC Ltd (Sales Returns) 4,500,000
15 KKM Traders Ltd 8,100,000
Feb

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1.

Questions (a) to (c):

(a) Differentiate between real accounts and nominal accounts.

(b) Explain the purpose of maintaining a general journal.

o Opening and closing entries.

o Non-routine transactions (like errors or transfers).

o Miscellaneous entries, such as depreciation, accruals, and bad debt provisions.

(c) Circumstances where goods initially purchased may be returned:

We will journalize each transaction in chronological order:

o Debit Purchases: Shs 20,000,000

o Credit Accounts Payable (Twasoma Wholesalers Ltd): Shs 20,000,000

 Supplied goods worth Shs 10,000,000 to ABC Ltd (invoice no.100).

o Debit Accounts Receivable (ABC Ltd): Shs 10,000,000

o Credit Sales: Shs 10,000,000

o Debit Sales Returns & Allowances: Shs 4,500,000

o Credit Accounts Receivable (ABC Ltd): Shs 4,500,000

 Purchased goods worth Shs 7,600,000 via cheque.

o Debit Purchases: Shs 7,600,000

o Credit Bank: Shs 7,600,000

o Debit Accounts Payable (Twasoma Wholesalers Ltd): Shs 3,400,000

o Credit Purchases Returns: Shs 3,400,000

 Made cash sales of Shs 12,000,000.

o Debit Cash: Shs 12,000,000

o Debit Purchases: Shs 6,000,000

o Credit Accounts Payable (XYZ & Sons Ltd): Shs 6,000,000

o Debit Accounts Receivable (KKM Traders Ltd): Shs 8,100,000

o Credit Sales: Shs 8,100,000

o Debit Sales Returns & Allowances: Shs 2,000,000

o Credit Accounts Receivable (KKM Traders Ltd): Shs 2,000,000

o Debit Rent Expense: Shs 1,200,000

o Debit Wages Expense: Shs 3,600,000

o Credit Cash: Shs 4,800,000

o Debit Accounts Payable (XYZ & Sons Ltd): Shs 2,400,000

o Credit Purchases Returns: Shs 2,400,000

3. Posting to the Ledger (Part d(ii))

o 20,000,000 purchased from Twasoma Wholesalers on 2nd February.

o 7,600,000 purchased via cheque on 6th February.

o Total Purchases: Debit side.

o 10,000,000 credit sales to ABC Ltd on 3rd February.

o 12,000,000 cash sales on 8th February.

o 8,100,000 credit sales to KKM Traders Ltd on 15th February.

o Total Sales: Credit side.

3. Accounts Receivable (ABC Ltd, KKM Traders Ltd):

o Post all sales, returns, and payments in their respective accounts.

4. Accounts Payable (Twasoma Wholesalers, XYZ & Sons Ltd):

o Post all purchases, returns, and payments in their respective accounts.

6. Expense Accounts (Rent, Wages, etc.):

7. (i) Prepare the relevant journals for KAS-KAS Enterprises Ltd.

Date Details Debit Credit (Shs)

9. (ii) Post the transactions to the relevant ledgers

Date Details Debit (Shs) Credit (Shs)

12. Sales Ledger

Date Details Debit (Shs) Credit (Shs)

13. Cash/Bank Ledger

Date Details Debit (Shs) Credit (Shs)

14. Accounts Payable Ledger

Date Details Debit (Shs) Credit (Shs)

15. Accounts Receivable Ledger

Date Details Debit (Shs) Credit (Shs)

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