This document provides an introduction to financial accounting, covering topics such as journal entries, ledgers, trial balance, income statement, and statement of financial position. It includes examples and explanations to help readers understand the concepts. The document also includes practice questions for further learning.
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INTRODUCTION TO FINANCIAL ACCOUNTING
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TABLE OF CONTENTS INTRODUCTION...........................................................................................................................3 MAIN BODY..................................................................................................................................3 QUESTION 1..............................................................................................................................3 QUESTION 2..............................................................................................................................8 QUESTION 3..............................................................................................................................8 CONCLUSION................................................................................................................................8
INTRODUCTION MAIN BODY QUESTION 1 Journal Entries in the book of Epic are enumerated below: ParticularsAmount (in£)Amount (in£) Rent a/c Dr To cash 10120 10120 Bank a/c Dr To loan a/c 15000 15000 Equipment a/c Dr To Cash a/c 15000 15000 Wages a/c Dr To cash 3000 3000 Wages a/c Dr To outstanding wages a/c 1200 1200 Prepaid rent a/c Dr To Rent a/c 800 800 Depreciation a/c Dr To Equipment a/c 12000 12000 Ledgers of Epic ‘ Sales day book DateCustomerInvoice No.Amount Opening balance289400 01-SepRita plc11000
Rent44620 Electricity26100 Inventory57000 Loans15000 Trade receivables52600 Allowances for receivables600 Trade payables34430 Equipment’s205000 Depreciation on equipment’s61000 Bank42000 Drawing15000 Capital196400 Income statement of Epic at 30 September 2018 ParticularsDetailsAmount Sales revenue296680 Less: COGS148980 Opening inventory51600 Add: Purchase147880 Less: carriage inwards1700 Add: Return outwards8200 Less: Closing stock57000 Gross Profit147700 Operating expenses Wages expenses3000 Rent expenses10120 Electricity expenses26100 Depreciation on equipment12000 Total operating expenses51220
Total Profit96480 Epic’s Statement of financial position at 30 September 2018 ParticularsAmount(in£)Amount(in£) Assets Current assets Inventory Opening inventory51600 Add: Purchase147880 Less: carriage inwards1700 Add: Return outwards8200 Less: Closing stock57000148980 Trade receivables52600 Less:Allowancesfortrade receivables 60052000 Bank42000 Total current assets242980 Non-current assets Equipment205000 Less: Depreciation61000144000 Total non-current assets144000 Total Assets386980 Liabilities Current liabilities Trade payables34430 Total current liabilities34430 Non-current liabilities Loans15000 Long term loan190580
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