Accounting: Ledger Accounts, Profitability Statement, Balance Sheet

This document provides a comprehensive guide to accounting, covering topics such as ledger accounts, profitability statement, and balance sheet. It includes examples of journal entries, trial balance, income statement, and more. Suitable for students studying accounting or anyone interested in learning about financial statements.

ACCOUNTING

Table of Contents
TASK 1............................................................................................................................................2
a. Ledger accounts and balances..................................................................................................2
b. Profitability statement..............................................................................................................6
c. Balance sheet...........................................................................................................................7
TASK 2............................................................................................................................................8
a. Journal Entries......................................................................................................................8
b. Trial balance..........................................................................................................................13
c. Income statement and balance sheet......................................................................................14
TASK 3..........................................................................................................................................15
a) Journal entries.....................................................................................................................15
b) Ledger Accounts.............................................................................................................16
c) Trial Balance.......................................................................................................................19
d) Profit or Loss and Balance Sheet....................................................................................19
TASK 4..........................................................................................................................................20
a) Journal Entries....................................................................................................................20
b) Ledger Accounts.............................................................................................................21
c) Trial Balance.......................................................................................................................24
TASK 5..........................................................................................................................................25
Differentiate between Revenue Expenditure and Capital Expenditure.....................................25

TASK 1
a. Ledger accounts and balances
Ledger accounts of Maxim for the month of April
Date Particulars Debit (in £) Credit (in £)
5th April Cash a/c Dr
To capital a/c
300
300
7th April Purchase a/c Dr
To cash a/c
200
200
8th April Bank a/c Dr
To loan a/c
250
250
15th April Motor van a/c Dr
To cash a/c
150
150
20th April Cash a/c Dr
To Sales a/c
350
350
28th April Rent a/c Dr
To cash a/c
50
50
29th April Loan a/c
To cash at bank
200
200
30th April Drawing a/c Dr
To cash a/c
60
60
Cash a/c

Debit side Credit side
Date Particulars Amount (in
£)
Date Particulars Amount (in
£)
5th April To capital a/c 300 7th April By purchase
a/c
200
8th April To loan a/c 250 15th April By Motor van
a/c
150
20th April To Sales a/c 350 28th April By Rent a/c 50
29th April By Loan a/c 200
30th April By Drawing
a/c
60
30th April By balance
c/d
240
900 900
Capital a/c
Debit side Credit side
Date Particulars Amount (in
£)
Date Particulars Amount (in
£)
5th April By cash a/c 300
30th April To balance
c/d
300
300 300

Purchase a/c
Debit side Credit side
Date Particulars Amount (in
£)
Date Particulars Amount (in
£)
7th April To cash a/c 200
30th April By balance
c/d
200
200 200
Sales a/c
Debit side Credit side
Date Particulars Amount (in
£)
Date Particulars Amount (in
£)
20th April By Cash a/c 350
30th April To balance
c/d
350
350 350
Motor van a/c
Debit side Credit side
Date Particulars Amount (in
£)
Date Particulars Amount (in
£)

15th April To cash a/c 150
30th April To balance
c/d
150
150 150
Rent a/c
Debit side Credit side
Date Particulars Amount (in
£)
Date Particulars Amount (in
£)
28th April To cash a/c 50
30th April To balance
c/d
50
50 50
Loan a/c
Debit side Credit side
Date Particulars Amount (in
£)
Date Particulars Amount (in
£)
29th April To cash at
bank
200 8th April By cash at
bank
250
30th April To balance
c/d
50
250 250

Drawing a/c
Debit side Credit side
Date Particulars Amount (in
£)
Date Particulars Amount (in
£)
30th April To cash a/c 60
30th April To balance
c/d
60
60 60
Trial balance
Debit (in £) Credit (in £)
Cash 240
Capital 300
Loan 50
Purchase 200
Sales 350
Closing stock 100
Motor van 150
Rent 50
Drawing 60
b. Profitability statement
Income statement of Maxim at the end of 30th April

Particulars Amount (in £) Amount (in £)
Sales 350
Less: COGS
Opening stock 0
Add: purchase 200
Less: closing stock 100 100
GP 250
Less: indirect expense
Rent 50
NP 200
c. Balance sheet
Statement of financial position of Maxim at the end of 30th April
Particulars Amount (in £) Amount (in £)
Assets
Fixed assets
Motor Van 150 150
Current assets
Cash 240
Closing stock 100 340
Total assets 490

Liabilities and shareholders’
equity
Loan 50
Capital 300
Add: net profit 200
Less: Drawing 60 440
Total Liabilities and
shareholders’ equity
490
TASK 2
a. Journal Entries
Date Particulars Debit (in £) Credit (in £)
1st Jan Cash a/c Dr
To capital a/c
5000
5000
2nd Jan Motor van a/c Dr
To cash a/c
600
600
3rd Jan Purchase a/c Dr
To cash a/c
1300
1300
4th Jan Cash a/c Dr
To loan a/c
1000
1000
10th Jan Expenses a/c Dr
To cash a/c
200
200

13th Jan Cash a/c Dr
To sales a/c
300
300
20th Jan Cash a/c Dr
To sales a/c
500
500
24th Jan Storage expenses a/c
Dr
To cash a/c
150
150
27th Jan Loan a/c Dr
To cash a/c
350
350
30th Jan Drawing a/c Dr
To cash a/c
175
175
Cash a/c
Debit side Credit side
Date Particulars Amount (in
£)
Date Particulars Amount (in
£)
1st Jan To capital a/c 5000 3rd Jan By purchase
a/c
1300
4th Jan To loan a/c 1000 2nd Jan By Motor van
a/c
600
13th Jan To Sales a/c 300 24th Jan Storage
expenses a/c
150
20th Jan To Sales a/c 500 27th Jan By Loan a/c 350

30th Jan By Drawing
a/c
175
10th Jan By expense
a/c
200
31st Jan By balance
c/d
4025
6800 6800
Capital a/c
Debit side Credit side
Date Particulars Amount (in
£)
Date Particulars Amount (in
£)
1st Jan By cash a/c 5000
31st Jan To balance
c/d
5000
5000 5000
Purchase a/c
Debit side Credit side
Date Particulars Amount (in
£)
Date Particulars Amount (in
£)
3rd Jan To cash a/c 1300
31st Jan By balance 1300

c/d
1300 1300
Sales a/c
Debit side Credit side
Date Particulars Amount (in
£)
Date Particulars Amount (in
£)
13th Jan By Cash a/c 300
30th April To balance
c/d
800 20th Jan By Cash a/c 500
800 800
Motor van a/c
Debit side Credit side
Date Particulars Amount (in
£)
Date Particulars Amount (in
£)
2nd Jan To cash a/c 600
31st Jan To balance
c/d
600
600 600
Storage expenses a/c
Debit side Credit side

Date Particulars Amount (in
£)
Date Particulars Amount (in
£)
24h Jan To cash a/c 150
30th April To balance
c/d
150
150 150
Loan a/c
Debit side Credit side
Date Particulars Amount (in
£)
Date Particulars Amount (in
£)
27th Jan To cash at
bank
350 4th Jan By cash at
bank
1000
31st Jan To balance
c/d
650
1000 1000
Drawing a/c
Debit side Credit side
Date Particulars Amount (in
£)
Date Particulars Amount (in
£)
30th Jan To cash a/c 175
31st Jan To balance
c/d
175

175 175
Expenses a/c
Debit side Credit side
Date Particulars Amount (in
£)
Date Particulars Amount (in
£)
10th Jan To cash a/c 200
31st Jan To balance
c/d
200
200 200
b. Trial balance
Particulars Debit (in £) Credit (in £)
Cash 4025
Capital 5000
Loan 650
Purchase 1300
Sales 800
Closing stock 800
Motor van 600
Expenses 200
Drawing 175

Storage expenses 150
c. Income statement and balance sheet
Profitability statement of Pendo for the month ended on 31st January
Particulars Figures (in £) Figures (in £)
Sales 800
Less: COGS
Opening stock
Add: purchase 1300
Less: closing stock 800 500
GP 300
Lees: Expenses 200
Less: Storage expenses 150
Net loss 50
Balance sheet of Pendo for the month ended on 31st Jan
Particulars Amount (in £) Amount (in £)
Assets
Fixed assets
Motor Van 600 600
Current assets
Cash 4025

Closing stock 800 4825
Total assets 5425
Liabilities and shareholders’
equity
Loan 650
Capital 5000
Less: net loss 50
Less: Drawing 175 4775
Total Liabilities and
shareholders’ equity
5425
TASK 3
a) Journal entries
Mafuta
Journal entries
Date Particulars
Debit
(£) Credit(£)
02-01-19 Harvey 124
To Sales 124
05-01-19 Wages 12
To cash 12
Purchase 150
To Rich 150
07-01-19 Cash 18
To smith 18
09-01-19 Max 21
To cash 21
11-01-19 Cash 64
To Sales 64
14-01-19 Wages 14
To cash 14

Purchases 75
To cash 75
15-01-19 Rich 162
To cash 162
20-01-19 Office desk 32
To cash 32
21-01-19 Wages 17
To cash 17
Cash 110
To Sales 110
23-01-19 Office expenses 3
To cash 3
Cash 25
To Harvey 25
28-01-19 Cash 84
To Sales 84
Wages 15
To cash 15
31-01-19 Cash 30
To Sales 30
£956.00 £956.00
b) Ledger Accounts
Ledgers
Cash a/c
Date Particulars
Amount(£
) Date Particulars
Amount(£
)
01-01-
19
To opening
bal. 343
05-01-
19 By wages a/c 12
07-01-
19 To smith 18
09-01-
19 By Max 21
11-01-
19 To Sales 64
14-01-
19 By wages 14
21-01-
19 To Sales 110
15-01-
19 By rich 162
23-01-
19 To Harvey 25
20-01-
19 By office desk 32
28-01-
19 To Sales 84
21-01-
19 By wages 17
31-01-
19 To Sales 30
23-01-
19 By office expenses 3
28-01- By wages 15

19
14-01-
19 By purchase 75
31-01-
19 By closing bal 323
674 674
Sales a/c
Date Particulars
Amount(£
) Date Particulars
Amount(£
)
02-01-
19 By Harvey 124
11-01-
19 By cash 64
21-01-
19 By cash 110
28-01-
19 By cash 84
31-01-
19 By cash 30
31-01-
19
To closing
bal. 412
412 412
Purchase a/c
Date Particulars
Amount(£
) Date Particulars
Amount(£
)
05-01-
19 To Rich a/c 150
14-01-
19 To cash a/c 75
31-01-
19 By closing bal. 225
225 225
Office expense a/c
Date Particulars
Amount(£
) Date Particulars
Amount(£
)
23-01-
19 To cash 3
31-01-
19 By closing bal. 3
3 3

Harvey a/c
Date Particulars
Amount(£
) Date Particulars
Amount(£
)
01-01-
19
To opening
bal. 39
23-01-
19 By cash 25
02-01-
19 To Sales 124
31-01-
19 By closing bal. 138
163 163
Wages a/c
Date Particulars
Amount(£
) Date Particulars
Amount(£
)
05-01-
19 To cash 12
14-01-
19 To cash 14
21-01-
19 To cash 17
28-01-
19 To cash 15
31-01-
19 By closing bal. 58
58 58
Smith a/c
Date Particulars
Amount(£
) Date Particulars
Amount(£
)
01-01-
19
To Opening
bal. 18
07-01-
19 By cash 18
18 18
Max a/c
Date Particulars
Amount(£
) Date Particulars
Amount(£
)
01-01-
19 By opening bal. 21
09-01-
19 To cash 21
21 21

Furniture and Fittings a/c
Date Particulars
Amount(£
) Date Particulars
Amount(£
)
01-01-
19
To opening
bal. 198
31-01-
19 By closing bal. 198
198 198
Inventory a/c
Date Particulars
Amount(£
) Date Particulars
Amount(£
)
01-01-
19
To opening
bal. 458
31-01-
19
By cost of goods
sold 84
31-01-
19 By closing bal. 374
458 458
Moon a/c
Date Particulars
Amount(£
) Date Particulars
Amount(£
)
01-01-
19
To opening
bal. 26
31-01-
19 By closing bal. 26
26 26
c) Trial Balance
Trial balance
Particulars
Debi
t Credit
Cash a/c 323
Sales a/c 412
Wages a/c 58
Office expense a/c 3
Office desk a/c 32
Harvey a/c 138
Purchase a/c 225
Inventory a/c 374
Moon a/c 198
Furniture and fittings a/c 26
Capital (bal.) 965

1377 1377
d) Profit or Loss and Balance Sheet
Profit and loss account
Particular Amount Total
Revenues 412
less:Cost of goods
sold 309
Gross profit 103
Expenses
office expenses 3
Wages a/c 58
Net Income 42
Balance sheet
Particulars Amount
Total
amount
Liabilities
Capital 965
add: profits 42 1007
Current liabilities
Bank overdraft 84 84
Total liabilities 1091
Fixed assets 230
Furniture and fittings 198
Office desk 32
Current assets 861
cash 323
Inventory 374
Debtors:
Harvey 138
Moon 26
Total assets 1091

TASK 4
a) Journal Entries
Ricardo
Journal entries
Date Particulars
Debit
(£) Credit(£)
02-06-19 Claire 425
To sales 425
13-06-19 Purchase 12000
To discount received 840
To Georgina 11160
14-06-19 Hywel a/c 8550
Discount allowed 450
To sales 9000
20-06-19 Cash 6000
To sales 6000
21-06-19 Purchase 4500
To discount received 90
To Andrew 4410
22-06-19 Sales return 1000
To Claire 1000
24-06-19 Mandy 4850
Discount allowed 150
To sales 5000
24-06-19 Cash 7075
Discount allowed 425
To Claire 7500
25-06-19 Cash 8550
To Hywel 8550
25-06-19 Georgina 11160
To Ricardo 11160
27-06-19 Andrew 4410
To Ricardo 4410
69545 69545
b) Ledger Accounts
Ledger a/c
Cash a/c
Date Particulars Amount(£ Date Particulars Amount(£

) )
20-06-
19 To sales 6000
24-06-
19 To Claire a 7075
27-06-
19 By closing bal. 13075
13075 13075
Sales a/c
Date Particulars
Amount(£
) Date Particulars
Amount(£
)
02-06-
19 By Claire a/c 425
14-06-
19 By Hywel a/c 8550
20-06-
19 By cash a/c 6000
14-06-
19
By Discount allowed
a/c 450
24-06-
19 By mandy's a/c 4850
24-06-
19
By Discount allowed
a/c 150
27-06-
19 To closing bal. 20425
20425 20425
Sales return a/c
Date Particulars
Amount(£
) Date Particulars
Amount(£
)
22-06-
19 To Claire 1000
27-06-
19 BY closing bal. 1000
1000 1000
Purchase a/c
Date Particulars
Amount(£
) Date Particulars
Amount(£
)
13-06-
19
To Discount
received a/c 840
13-06-
19 To Georgina a/c 11160
21-06-
19
To Discount
received a/c 90
21-06- To Andrew a/c 4410 27-06- By closing bal. 16500

19 19
16500 16500
Claire a/c
Date Particulars
Amount(£
) Date Particulars
Amount(£
)
02-06-
19 To sales a/c 425
22-06-
19 By sales return a/c 1000
24-06-
19 By cash a/c 7075
24-06-
19
By Discount allowed
a/c 425
27-06-
19 To closing bal. 8075
8500 8500
Discount received a/c
Date Particulars
Amount(£
) Date Particulars
Amount(£
)
13-06-
19 BY purchase a/c 840
21-06-
19 BY purchase a/c 90
27-06-
19 To Closing bal. 930
930 930
Georgina a/c
Date Particulars
Amount(£
) Date Particulars
Amount(£
)
13-06-
19 BY purchase a/c 11160
25-06-
19 To Ricardo a/c 11160
11160 11160
Hywel a/c
Date Particulars
Amount(£
) Date Particulars
Amount(£
)
25-06-
19 By cash a/c 8550
14-06- To sales a/c 8550

19
8550 8550
Discount allowed a/c
Date Particulars
Amount(£
) Date Particulars
Amount(£
)
14-06-
19 To sales a/c 450
24-06-
19 To sales a/c 150
24-06-
19 To Claire a/c 425
27-06-
19 By Closing bal. 1025
1025 1025
Andrew a/c
Date Particulars
Amount(£
) Date Particulars
Amount(£
)
21-06-
19 BY purchase a/c 4410
27-06-
19 To Ricardo a/c 4410
4410 4410
Mandy a/c
Date Particulars
Amount(£
) Date Particulars
Amount(£
)
24-06-
19 To sales a/c 4850
27-06-
19 By closing bal. 4850
4850 4850
Ricardo a/c
Date Particulars
Amount(£
) Date Particulars
Amount(£
)
25-06-
19 By Georgina a/c 11160
27-06-
19 By Andrew a/c 4410
27-06-
19 To closing bal. 15570
15570 15570

c) Trial Balance
Trial balance
Particulars Debit Credit
Claire 8075
Sales 20425
Purchase 16500
Discount
received 930
Discount allowed 1025
Cash 13075
Sales Return 1000
Mandy 4850
Ricardo 15570
Suspense 2000
41775 41775
TASK 5
Differentiate between Revenue Expenditure and Capital Expenditure.
Capital expenditures
Capital expenditure refers to expenditure if benefit of expenditure tends to extend over
several years of trading. Capital expenditures can include following expenditures.
Expenditure incurred for acquisition of fixed assets that are related to business enterprise for
earning profits and with no intention of reselling such fixed assets. Fixed assets include all the
expenditures that are necessary till the time asset is ready for use.
Revenue Expenditures
Expenditure on any item the benefit of which would be expiring within year is known as
revenue expenditure. Revenue expenditures do not increase efficiency of firm. Expenditures
incurred for floating assets like assets for the purpose of resale like raw material, merchandise
and the stores that are required for the manufacturing process. Establishment and daily expenses
in conduct and the administration of business like salaries, taxes, rent and stationary and like
expenditures.

Difference Between revenue and capital expenditures
Capital expenditures are incurred for fixed assets that will benefit for long period of time.
Revenue expenditure relates to the revenue transactions like cost of goods sold, repairs or
maintenance. Main differences are given below.
Timing : Expense of capital expenditure is charged gradually over period of time through
depreciation. On the other hand revenue expenditure is charged as expense in current period.
Consumption : Capital expenditures will be charged over the useful life of fixed assets. Revenue
expenditures are consumed within very short time period.
Size: Questionable differences between capital and revenue expenditure is that capital
expenditure involve larger amount of monetary funds. Capital expenditures will be classified if it
exceeds threshold values. Revenue expenditure do not include huge monetary funds and ar
associated directly with the period costs and sale transactions.