Reference no: EM133046210

Question - Clarina started a business as a sole trader and deposited £15,000 into the bank account. The following transactions took place during the first week of trading:

Purchased a five-year licence for an accounting software and paid £2,200 in cash. As Clarina was unsure how to categorise the amount, she posted the credit entry correctly but posted the debit entry to the suspense account.

Paid rent of £300 by cheque.

Bought goods for resale and paid £3,500 by cheque.

Sold goods on credit to a customer, Randy, for £1,500.

Sold goods for £1,750 and the customer paid in cash.

Bought goods for resale on credit from James for £1,300.

Paid wages of £150 in cash.

An amount of £1,000 was credited on the bank statement and automatically entered in the cash at bank account by the computerised accounting system, but it could not match the amount to a known transaction and a credit entry was made to the suspense account.

Paid other expenses in cash at the amount of £100.

Withdrew £750 to cover her personal expenses.The following information is also relevant:

a) After a consultation with her mother, working as a bookkeeper in a big company, Clarina realized that the five-year licence for the accounting software should be recorded as a non-current asset.

b) Clarina subsequently discovered that the received amount of £1,000 was a part-payment from Randy.

Prepare and provide the journal entries to record the transactions, including the correcting entries for clearing the suspense account.