Hello guys,

Welcome to The Accountants' Lounge!

This thread is solely for bookkeepers and accountants that may have issues with there double entries. It's also for learners of simple double entry principles and for experts of accounting that may have one or two information to pass across.

We will post transactions here from time to time and allow people proffer the double entries solutions. We may be tempted to given out prices as well.

We may also post verified accounting vacancies when we have any.

Feel free to post relevant information and please don't derail.

Thank you.
Virtualaccountant.ng

Miss P is a bookkeeper at ABC Ltd. Her Boss, Mr. G has asked her for NGN200,000 for business travels.

Kindly assist Miss P with the double entries for the following scenarios;

1. When Miss P pays the sum to Mr G
2. If Mr G retires NGN190,000
3. If Mr G retires NGN230,000

(30marks)

We will provide the solution to this question tomorrow if we don't get an answer from the gurus.

Virtualaccountant.ng

1. When Miss P pays the sum to Mr G

Dr. Staff Debtor's Account (Mr. G) - NGN200,000
Cr. Cash/Bank Account - NGN200,000
Being amount paid to MD for business travels

Virtualaccountant.ng

Double post

2. If Mr G retires NGN190,000

a. Dr Travel Expense NGN190,000
Cr Staff Debtor's Account (Mr G) NGN190,000
Being Mr G's travel expense

b. Dr Cash/Bank Account NGN10,000
Cr Staff Debtor's Account (Mr G) NGN10,000
Being balance on retirement of Mr G's travel expense.


The trick is to debit the receiving account and credit the giving account.

3. If Mr G retires NGN230,000

Dr Travel Expense NGN230,000
Cr Staff Debtor's Account (Mr G) NGN200,000
Cr Cash/Bank Account NGN30,000

Being Mr G's travel expense


The trick is to debit the receiving account and credit the giving account.

Hello guys,

Happy weekend.

You have been recently appointed as an Accountant with TPK Limited and your boss requested that you issue an invoice to a customer - Messrs Enterprises for the supply of 6 units of magnifying glass at N7,500 per unit.

How is this transaction treated up to the point where the customer makes full payment for the goods? Recognise applicable taxes.
(Assume withholding tax at 10%)

Cool, am in. Contact some guru in career section too

Virtualaccounts:
3. If Mr G retires NGN230,000

Dr Travel Expense NGN230,000
Cr Staff Debtor's Account (Mr G) NGN200,000
Cr Cash/Bank Account NGN30,000

Being Mr G's travel expense


The trick is to debit the receiving account and credit the giving account.

I totally did not agree with this posting.It is technically wrong.
The correct entries should be:
Dr Travel expenses NGN230,000
CR Staff/Debtor's Account NGN230,000
This leaves the staff debtors account with a credit balance of NGN30,000.

Then you can pass the entries below upon payment of the 30k balance to the staff
CR Bank/Cash Account NGN30,000
DR staff/Debtor's Account. NGN30,000

julyb:


I totally did not agree with this posting.It is technically wrong.
The correct entries should be:
Dr Travel expenses NGN230,000
CR Staff/Debtor's Account NGN230,000
This leaves the staff debtors account with a credit balance of NGN30,000.

Then you can pass the entries below upon payment of the 30k balance to the staff
CR Bank/Cash Account NGN30,000
DR staff/Debtor's Account. NGN30,000

You are correct sir! So am I. You simply separated the transactions that I merged. The same effect eventually. Study my entries again.

If you study my entries you'd discover that the accounts that matter are the cash/bank account and Expense account and these two accounts already have the correct amounts accounted for. The staff debtor account is only a "reduntant" account to capture in/out only.

Thank you for your comment.

Virtualaccountant.ng

Virtualaccounts:
Hello guys,

Happy weekend.

You have been recently appointed as an Accountant with TPK Limited and your boss requested that you issue an invoice to a customer - Messrs Enterprises for the supply of 6 units of magnifying glass at N7,500 per unit.

How is this transaction treated up to the point where the customer makes full payment for the goods? Recognise applicable taxes.
(Assume withholding tax at 10%)

Hello friends,

Happy holidays

So... here we go with the treatment of the scenario above:

Issue an invoice to Messrs Enterprises -

N7,500.00 x 6 = N45,000.00
VAT @ 5% of N45,000.00 = N2,250.00

Total invoice value - N45,000.00 + N2,250.00 = N47,250.00

In the books of TPK Limited, raise a journal...

Dr: Account receivables - N47,250.00
Cr: Sales (item ledger code) - N45.000.00
Cr: VAT payable - N2,250.00

Being invoice to Messrs Enterprises for the sale of magnifying glass.

On receipt of invoice value from customer, we can have 2 cases:

- The customer deducts WHT and pays N42,750.00, then give you WHT credit note of N4,500.00

WHT @ 10% of N45,000.00 = N4,500.00
N47,250.00 - N4,500.00 = N42,750.00

Dr: Bank/Cash - N42,750.00
Dr: WHT receivable - N4,500.00
Cr: Account receivable - N47,250.00

- The client pays the full invoice value of N47,250.00

Dr: Bank - N47,250.00
Cr: Account receivable - N47,250.00

Before the 21st of the next month, issue a cheque/cash to FIRS for VAT remittance and file your returns.

Dr: VAT payable - N2,250.00
Cr: Bank - N2,250.00

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Bookkeeping 101 - Ensure you prepare a comprehensive invoice for your customers and keep a copy.

Bookkeeping 102 - Consider and incorporate the tax implications on the invoice issued.

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Bookkeeping 104 - Ensure you get a receipt/invoice for your purchases and supplies from vendors, that properly captures the details of your transactions

Bookkeeping 105 - maintain a file for the receipts with proper index for easy access. Use an excel sheet or notebook to record the expenses and highlight the transactions that are not receipted

Bookkeeping 106 - endeavour to make/receive payments for business related expenses/income from your business account or cheque book. You are a separate entity from your business.

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TYPES OF TAXES IN NIGERIA AND THEIR PENALTIES

1.VAT

VAT is a tax on consumption. It is charged on Revenue earned and paid to the FIRS. It is at the rate of 5%. However VAT is not to be charged on reimbursement.
Failure to pay VAT will attract interest and penalties at 21% and 15% respectively. Please note that filing VAT is a monthly Obligation and it is expected to be done on or before 21st of the month subsequent to the month of transaction. Failure to file the returns will mean a penalty for every month of default cumulatively.

2.Withholding tax (WHT)

This is a tax on contract jobs. It is deducted from your expenses and remitted to the relevant tax authority. For example, if MTN has a contract with your company, at
the point of payment, you will deduct 10% (5% for an enterprise) from their payment and remit to either FIRS (for companies) or State IRS (Individuals and Companies). The rate for rent is 10%. The WHT is an advance payment of Tax.

If you work for government agencies, they will deduct both VAT and WHT from your payment. Failure to deduct WHT will attract penalties and interest as well.

3.PAYE TAX

This is to be deducted from employee pay and remitted on or before 10days after payment of employees’ salary. Failure to pay as at when due will attract interest and penalties. Please note that interest and penalties are subject to CBN’s pronouncement and could vary from time to time.

4.BUSINESS PAYE

This is the income tax on the enterprise itself. It is to be computed yearly and paid on or before 6months after year end of the business. Failure to file the returns will attract NGN 25,000 on the first month of default and NGN 5,000 on subsequent months.

However with VAIDS which will end on 31st March 2018, the penalties can be dropped while the compliance is kept to date.

We can assist you on this by Ensuring that proper accounting records are kept, financial statement is prepared and filed with the relevant authority. We can as well advice you on how to structure your invoice and reduce possible tax liabilities. Please note that every finance decision has a tax implication. Kindly get back to us for further clarification.