Answer to Question #123564 in Macroeconomics for Nhlaphu

Question

Recognise the following transactions in the accounting records(general journal)

1. Trade inventories, with a cost price of R44 000, that were taken by the owner during december 2019 for personal use,were accounted for as follows: cost of sales was debited and trade inventories were credited with R44 00. The necessary adjustment is still has to be recognised.
2. The term deposit of R900 000 was made at the bank on 30 june 2019 for a period of 12 months. The interest rate is 8% per year and the interest accrues evenly over the term of the deposit

Answer 1

Workings

Bank deposit of R900000 at 8% interest rate for 12 months.

Interest rate = (8/100) x 900000

= R72000

Therefore;

Total amount + interest rate = R( 900000 + 72000)

= R972000

Interest accrues = R72000

Trade inventories = R4400

Cost of sales = R39600

Therefore;

Balance b/f = R(39600 - 4400)

= R35200