Financial Accounting and Ratio Analysis for James: A Case Study

PROJECT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
PART A...........................................................................................................................................1
a) Journal entries..........................................................................................................................1
b) Ledger accounts in books of James.........................................................................................2
c) Trial Balance as at 30th September, 2019...............................................................................5
e) Balance Sheet as at 30 the September 2019............................................................................6
PART B............................................................................................................................................7
I) Ratio analysis for the James on Income and Financial position Statements............................7
ii) Analysing the performance of James with reference to ratios with that of its competitors. . .8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Financial accounting deals with bookkeeping of financial transactions through
classification, analysis, summarising and recording financial transactions like sales, purchases,
payables and receivables and prepaying finally financial statements that includes balance sheet,
income statement and the cash flows. Objective of financial accounting is to present true and fair
positions of the financial affairs of company (Schroeder, Clark and Cathey, 2019). For
understanding it in a better and presentable format double entry book keeping is required. Report
includes the solutions for the given question for providing better understanding of the financial
statements. For making effective comparisons users of financial statements use ratio analysis for
knowing the actual position of company.
PART A
James has started a business in London on September 1, 2019. Accounts are prepared for
September 30, 2019.
a) Journal entries.
JOURNAL ENTRIES
Date Particulars DR.(£) CR.(£)
01/09/19 Bank a/c 12000
Cash a/c 3200
Computer a/c 1000
To capital a/c 16200
(being business commenced)
02/09/19 Purchase a/c 900
To David a/c 900
( being purchase on credit)
03/09/19 Computer a/c 2000
To bank a/c 2000
(being new computer purchased)
05/09/19 Bank a/c 500
To sales a/c 500
(being sales of goods)
1

06/09/19 Purchase a/c 400
To Cash a/c 400
(being cash purchase)
06/09/19 Rent a/c 600
To bank a/c 600
(being rent paid)
12/09/19 Repair a/c 100
To Cash a/c 100
(being computer repair charge)
18/09/19 David A/c 100
To purchase Return a/c 100
(being goods returned to David)
21/09/19 Bank a/c 300
To Rent received a/c 300
(being rent received)
23/09/19 Joseph a/c 400
To sales a/c 400
(being credit sales)
23/09/19 Cash a/c 1500
To sales a/c 1500
(being cash sales)
24/09/19 Car a/c 1000
To bank a/c 1000
(being car purchased)
30/09/19 Wages a/c 700
To Cash a/c 700
(being wages paid by cash)
30/09/19 Drawing a/c 450
To Cash a/c 450
(being cash withdrawn)
25150 25150
b) Ledger accounts in books of James
2