Tutorial 2 Cash Cycle 1 LTJ 2018

Tutorial 2 – The Cash Cycle 4

1 Introduced further capital RM1,000 by cheque
Section A: 5
1 Todds paid for the amount owing by cheque, less 5% discount (calculate
1. (a) What is the difference between cash and credit transactions? 6 the amount)
2 Withdrew cash for own use RM120
(b) What is the difference between trade discounts and cash discounts? 0
2 Purchased goods with office cash RM28
(c) What are the differet types of cash in a business? Briefly explain. 4
2 Paid Zen & Co a cheque in full settlement of the amount owing, less 5%
2. (a) What is the purpose of preparing a three column cash book? Briefly 5 discount (calculate the amount)
explain its format. 2 Sold goods on credit to Tali RM450
6
(b) Why is the cash book both a book of prime entry and ledger account? 2 Paid transport by cash RM10
Explain. 8
3 Transferred cash from office to bank RM400
(c) What is an overdraft? How does it work? 0
3 Credit purchase from Zen & Co RM300
3. (a) What is the purpose of preparing an analsysed petty cash book? 0
3 Refund cash to Todds for returning empty containers for recycling RM5
(b) Explain what is an imprest system? How does it work? 1
3 Bought office furniture, paid by cheque RM200
4. The following are the transactions of Axis Trading in May: 1
3 Paid Samuel a cheque in settlement of outstanding invoice of RM700 and
May 1 deducting RM35 cash discount
1 Start a business with Cash in hand RM800 and Cash at bank RM1,000 3 Receive a cheque from Kenneth RM475 after deducting RM25 cash
2 Purchased goods by cheque RM400 1 discount
2 Paid rates to Dewan Bandaraya Kuala Lumpur by cheque RM40
Required:
4 Bought goods on credit from Zen & Co RM200
(a) Enter the above transactions in a three-column Cash Book and close the
8 Sold goods to Todds on credit RM300 Cash Book at the end of May (ignore those transactions that do not
9 Cash sales RM80 involve the Cash Book).
1 Paid transport by cash RM12
0 (b) Post those items involving the Cash Book to the appropriate ledgers .
1 Credit sales to Todds RM300
3
1 Paid for stationery in cash RM16
Tutorial 2 Cash Cycle 2 LTJ 2018

Section B: Extra exercise questions (for students’ own practice) 2 Withdrew cash of RM330 from bank for office use
9
Question 1 3 Received cheque from Kenny RM475 after deducting RM25 cash discount
0
Maxwell buys and sells machinery. During the month of March, the 3 Received cheque from Donny RM722 after deducting RM38 cash
following receipts and payments occurred. 0 discount
3 Paid Sammy a cheque in settlement of outstanding invoice of RM700, and
March 1 deducting RM35 cash discount
1 Balances as per Cash Book: Bank RM2,100; Cash RM1,010 3 Paid Gracey a cheque in settlement of outstanding invoice of RM360, and
3 Cash sales paid into bank RM620 1 deducting RM18 cash discount
4 Cash purchases RM380
6 Paid an electricity bill of RM660 by cheque
3 Received a cheque from Joy for RM1,254 after deducting cash discount of
9 Sales by cheque RM530 1 RM66. However, the cash discount was wrongly deducted (not allowed).
1 Drew a cheque for RM400 in respect of wages Joy needs to pay up for the shortfall of RM66 very soon.
0
1 Cash sales RM440 Required:
2 (a) Enter the above transactions in a three-column Cash Book and close the
1 Paid RM190 in cash for travelling expenses Cash Book at the end of March (ignore those transactions that do not
5 involve the Cash Book).
1 Paid water bill by cheque RM560
6 (b) Post those items involving the Cash Book to the appropriate ledgers.
1 Drawings by cheque RM300
9
2 Purchases by cheque RM470
0
2 Paid postage of RM30 in cash
1
2 Paid cash of RM450 into the bank
2
2 Introduced further capital of RM650 by cheque
4
2 Purchased a delivery vehicle for RM4,000 and paid by cheque
5
2 Received a cheque for RM3,500 from Morris as a three year loan
6
2 Paid road tax and insurance on delivery vehicle of RM430 in cash
8
Tutorial 2 Cash Cycle 3 LTJ 2018

Question 2

Vincent K is a sole trader who records all his cash and bank transactions in a
three-column Cash Book. On 1 August, his cash in hand was RM68 but he
had a bank overdraft of RM1,692.
The following are her transactions for the month of August:
Required:
(a) State three (3) purposes for preparing a Cash Book.
(b) Define the two (2) types of cash discounts in the 3-column Cash Book
and the purpose of a cash discount.

August (c) Draw up the 3-column Cash Book of Vincent K for the month of
2 Received a cheque of RM160 from Patrick in full settlement of a debt of August. Balance up the cash and bank columns, bringing down the
RM168 balances at 1 September.
1 Cash sales paid directly to bank RM2,086
0 (d) Total up the two discount columns and post the amounts to the relevant
1 Drew a cheque RM75 in favour of Winifred Engineering, in settlement of accounts in the General Ledger.
2 an outstanding debt
1 Paid RM35 cash for stationery
4
1 Paid Frederick Sung the sum of RM86 by cheque in settlement of an
6 amount owed to him of RM90
1 Drew a cheque for office cash RM150
8
2 Cash sales RM1,120; cash kept in the office safe
0
2 Received interest of RM60 and paid this into the bank
1 The sales of the previous day were also banked in
2 Paid telephone charges by cheque RM147
4
2 Received a cheque of RM704 from Benny Chan in settlement of his
6 account amounting to RM720
2 Paid RM40 out of cash for office expenses
8
3 Paid RM254 to Larry Heng by cheque in full settlement of the RM270
0 balance on his account
3 The bank notified Vincent K that it had charged RM20 bank charges to his
0 account
Tutorial 2 Cash Cycle 4 LTJ 2018

Question 3
Prepare a petty cash book with analysis columns for office expenses, motor (a) Write up the petty cash book to record relevant analysis as
expenses, cleaning expenses and casual labour. The cash float is RM 1,000 indicated.
and the amount spent is reimbursed on 1 December 2017. (b) Balance the petty cash book on 30 November 2017 and carry down
the balance
2017 RM (c) Make the entry on 1 December 2017 to restore the petty cash
Nov 1 Siti – casual labour 10.00 imprest amount.
Envelopes 4.80
2 Jif – cleaning liquid 4.20
Adhesive tapes 6.80
3 Paper clips 1.40
4 Petrol WAY 44 5.00
5 May – casual labour 10.00
6 Nathan casual labour 10.00
7 A4 copy papers 14.30
Pens 7.20
8 Andy 22.00
9 Change oil 12.00
10 Motor tax 8.00
11 Correction tape 2.20
12 White coffee 13.90
13 A3 copy papers 10.70
14 Sponge and cleaning liquid 14.35
15 Wipers 28.90
16 Tim – casual labour 15.00
Sakdon – casual labour 15.00
18 Carbon papers 5.40
20 Cardboard files 3.5” 3.60
21 Rubber bands 11.20
22 Petrol BAB 12 5.00
23 Broom, brushes and soap 24.60
24 Printer ribbon 26.60
25 Taxi fare 12.20
26 Photocopy repair 34.40
27 Postage stamps 11.50
27 Office boy services (outsourced) 7.70
Petrol WAY44 10.00