Accounting Fundamentals: Journal Entries, Trial Balance, Financial Statements

ACCOUNTING
FUNDAMENTALS

TABLE OF CONTENTS
TASK ..............................................................................................................................................1
1.a) Journal Entries .....................................................................................................................1
1.b) Updated Trial balance ..........................................................................................................3
1.c) Financial Statements for year ending 31st December .........................................................4
2 Relevance of financial literacy to the business managers.........................................................6
3.a) Journal Entries......................................................................................................................8
3.b) Updated Trial balance...........................................................................................................9
3.c) Financial Statements for year ending 31st December 2017...............................................10
4 Analysing the profitability and liquidity of the two businesses using ratio analysis .............11
REFERENCES..............................................................................................................................15

TASK
1.a) Journal Entries
Sr. no. Particulars Debit Credit
2 Depreciation on motor vehicle A/c Dr. 8400
To Accumulated depreciation a/c 8400
Depreciation on equipment A/c Dr. 1000
To Computer equipment a/c 1000
3 Electricity expense A/c Dr 1000
To outstanding electricity bill A/c 1000
4 Prepaid Insurance A/c Dr. 500
To Insurance A/c 500
5 Income tax expense A/c Dr. 1920
To income tax payable A/c 1920
Ledger
Dr. Depreciation A/c Cr.
Particulars Amount Particulars Amount
To Accumulated
depreciation on motor
vehicle a/c 8400 By bal c/d 9400
To computer equipment
a/c 1000
9400 9400
Dr.
Accumulated depreciation on motor vehicle
A/c Cr.
Particulars Amount Particulars Amount
To bal c/d 17600 By bal b/d 9200
By depreciation on motor
vehicle 8400
1

17600 17600
Dr. Computer Equipment Cr.
Particulars Amount Particulars Amount
To bal b/d 10000
By depreciation on computer
equipment 1000
By bal C/d 9000
10000 10000
Dr. Electricity expense A/c Cr.
Particulars Amount Particulars Amount
To bal b/d 7000 To bal c/d 8000
To outstanding telephone
bill 1000
8000 8000
Dr. Outstanding electricity bill A/c Cr.
Particulars Amount Particulars Amount
To bal c/d 1000 By electricity expense 1000
1000 1000
Dr. Prepaid insurance A/c Cr.
Particulars Amount Particulars Amount
To insurance 500 By bal c/d 500
500 500
Dr. Insurance A/c Cr.
Particulars Amount Particulars Amount
To bal b/d 1500 By prepaid insurance 500
By bal c/d 1000
1500 1500
2