Question

Company X is located in the commercial sector of Trinidad and Tobago and has been operating from 1992. The company purchased office supplies from Florida Distributors Co. Ltd on May 12, 2016 that valued US$50,000.00. Company X pays US$20,000.00 by cash on May 31, 2016, US$25,000.00 by cheque on June 2, 2016, and then settled its bill by transferring the balance from its bank account directly into the bank account of the supplier on June 3, 2016.

Record the transactions in the books of Company X using the cash basis?

Answer 1

• When Cash basis is used, transactions are recorded ONLY when cash is paid or received.
• Transactions will be recorded in following way:

Date	Accounts title	Debit	Credit
12-May-16	NO ENTRY
31-May-16	Office Supplies	$            20,000.00
	Cash		$        20,000.00
02-Jun-16	Office Supplies	$            25,000.00
	Cash/Bank		$        25,000.00
03-Jun-16	Office Supplies	$              5,000.00
	Cash/Bank		$           5,000.00