Tabular Statements Question

kevin12345

Ok we're doing Tabular Statements now in Accounting (we always do OL q's before starting the HL), and one of the questions says "Paid creditors by cheque, €3000, and received discount of €100."

To answer this do you:
A) Minus 3000 from the Creditors account and add back 100 to the Capital account. Having (€2900) in the totals.
Or
Do you take it that you paid €3100 i.e you take €3100 from the Creditors account (minus) then add back 100 to the Profit and Loss account in Liabilites. Leaving (€3000) in both totals.

My teacher said it's option B but I'm pretty sure for similar q's in the exam papers they follow option A in the marking schemes (plus it makes more sense). The q above is from our book.
Just don't want to be confused before moving on to the HL q's.
Thanks.

ChemHickey

kevin12345 wrote: »

Ok we're doing Tabular Statements now in Accounting (we always do OL q's before starting the HL), and one of the questions says "Paid creditors by cheque, €3000, and received discount of €100."

To answer this do you:
A) Minus 3000 from the Creditors account and add back 100 to the Capital account. Having (€2900) in the totals.
Or
Do you take it that you paid €3100 i.e you take €3100 from the Creditors account (minus) then add back 100 to the Profit and Loss account in Liabilites. Leaving (€3000) in both totals.

My teacher said it's option B but I'm pretty sure for similar q's in the exam papers they follow option A in the marking schemes (plus it makes more sense). The q above is from our book.
Just don't want to be confused before moving on to the HL q's.
Thanks.

Hey, this is how I would do it,

creditors = (3000) as you reduce them by their full amount.

Bank = (2900) as you paid by cheque but received 100 euro discount so only amount. paid.

profit/loss = +100 as you did't have to pay the whole 3000.



That for me would leave (2900) on both pages ( i do mine over 2 A4 pages and bank as a negative asset.)

hope this helps!

kevin12345

ChemHickey wrote: »

Hey, this is how I would do it,

creditors = (3000) as you reduce them by their full amount.

Bank = (2900) as you paid by cheque but received 100 euro discount so only amount. paid.

profit/loss = +100 as you did't have to pay the whole 3000.



That for me would leave (2900) on both pages ( i do mine over 2 A4 pages and bank as a negative asset.)

hope this helps!

That's exactly what I would do too. Thanks