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Preparation of the final accounts of Carol Andrew

   

Added on  2020-10-22

16 Pages4595 Words222 Views
Financial Accounting

TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1LO1..................................................................................................................................................1P1. Preparing the journal and the ledger for recording and classifying the businesstransactions..................................................................................................................................1P2&M1&D1.Producing the trial balance by analysing all the transactions ...............................5LO2..................................................................................................................................................6P3. Preparation of the final accounts of Carol Andrew..............................................................6LO3..................................................................................................................................................8P5. Preparation of bank reconciliation Statement ......................................................................8a). Explaining various terms and the difference between the terms used in BankReconciliation Statement ...........................................................................................................8LO4..................................................................................................................................................9P6. Producing the process of the rectified entry by passing the journal entries..........................9CONCLUSION .............................................................................................................................11REFERENCES .............................................................................................................................13

INTRODUCTIONFinancial accounting is the area of the accounting in that emphasizes on facilitating theuseful information to the internal and the external users such as the management, owners,employees, creditors, government, investors and the tax authorities. It is the way in which thebusiness could record its financial transactions so that it could be communicated or reported tothe ultimate users. It provides for the financial information which helps the users in making thecritical decisions regarding their investment by tracking the performance and the position of theorganization through the accounting. It is known as practice of identifying, recording, classifying, summarizing, interpreting and communicating the results. It provides for the preparation of thefinancial statements like profit and loss account, balance sheet and the cash flow statement thatreflects the true and fair view of the performance and the position of the companies in the overallmarket as it is formulated by following all the guidelines provisioned by the GAAP and theinternational accounting standards. It facilitates the information regarding the income, assets ,liabilities and the common equity. The present study is based on the preparation of the journal,ledger, trial balance, profit and loss account and the balance sheet for different companies or thefirm. Furthermore, the report includes the formulation of the journal, ledger and the trial balancefor Muhammad's business and final accounts for Carol Andrew. In the scenario 2, the bankreconciliation for the month of the February is prepared of Akram and Rectified entries for theMilky by passing the appropriate journal entries and suspense account. LO1.P1. Preparing the journal and the ledger for recording and classifying the business transactionsJournal- It is stated as the record of the financial transactions in a logical order. Thetransactions are recorded as per considering the double entry book keeping system which meansthat every transaction contains the dual effect of recording that is debit as well as the credit. It isused for referring the trading transactions which involves the details of the trades that are madeby the investor (Mullinova, 2016). Journal is the called as the primary books of the accountingas it includes the recording aspect of the transactions. Journal entries act as the basis for thegeneral ledger accounts. The process in which recording takes place is known as the journalizingand the record of the every single transaction is called as journal entry. Journal is also said as thebook of the original entry. Muhammad1

Journal entriesDateParticularsDebitCredit01/06/16Cash A/c Dr.£65,000.00To Capital A/c£65,000.0002/06/16Purchase A/c Dr.£8,000.00To Creditors A/c£8,000.0007/06/16Cash A/c Dr.£4,000.00To sales A/c£4,000.0008/06/16Creditors A/c Dr.£4,000.00To Bank A/c£4,000.0014/06/16Insurance A/c Dr.£75.00To Bank A/c£75.0015/06/16Debtors A/c Dr. £12,000.00To sales A/c£12,000.0016/06/16Purchase A/c Dr.£10,000.00To Creditors A/c£10,000.0018/06/16Computer equipment A/c Dr.£3,000.00To Cash A/c£3,000.0020/06/16Rent A/c Dr.£150.00To Bank A/c£150.0021/06/16Cash A/c Dr.£10,000.00To sales A/c£10,000.0025/06/16Cash A/c Dr.£100.00To bank A/c£100.0030/06/16Stationary A/c Dr.£30.00To Cash A/c£30.00Ledger- It is the principle or secondary book that flies the recording made in the journaland sum up the economic transactions that are measured in context of the monetary value. Thetransactions recorded are classifies into various accounts with the separate columns of the debitsand the credit (Tong and Saladrigues, 2018). It indicates the summary of the amount of all thetransactions entered in for supporting the journal. Ledger facilitates the preparation of the trialbalance as it shows the carry forward balance of each and every account. The major purpose ofthe ledger is to summarize all the journal entries so that it can be used for the future referencingand also for formulating the financial statements. Ledger A/cDr.Cash A/c Cr.DateParticularsAmountDateParticularsAmount01/06/16To Capital A/c£65,000.0018/06/16By Computer £3,000.002

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