Recording Business Transaction

RECORDING BUSINESS
TRANSACTION

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY ..................................................................................................................................3
JOURNAL...................................................................................................................................3
LEDGER......................................................................................................................................4
Trial Balance as on 31 October 2020...........................................................................................6
Income Statement for the period ending 31 October 2020..........................................................7
Balance Sheet as at 31 October 2020...........................................................................................7
REFERENCES................................................................................................................................1
CONCLUSION................................................................................................................................1

INTRODUCTION
The present report is prepared for recording various transaction that has been arisen during
economic activity. There are various steps that must be followed by every business owner in
recording transaction of financial nature. The report will depict the step by step procedure in
maintaining financial accounts (Kimmel, Weygandt and Kieso, 2018). A case scenario of Linda
who has started her business currently has been undertaken for financial accounting perspective.
The report will begin with recording of business transaction in journal book, then posting these
transactions to ledger account, summarising the accounts by extracting trial balance depicting
summary of all transactions, and finally analysing profitability of the business by preparing
income statement. At last the balance sheet will be prepared to indicate the financial position of
the business. In second part of the report, we will calculate various ratios like profitability,
liquidity and efficiency ratios and will compare Linda's business performance with that of its
competitor.
MAIN BODY
JOURNAL
Date Particulars Debit Credit
01/10/20 Bank A/c 8000
Cash A/c 5200
Van A/c 3000
To Capital A/c 16200
02/10/20 Laptop A/c 1000
To Bank A/c 1000
04/10/20 Purchase A/c 2450
To Toys Ltd. 2450
05/10/20 Bank A/c 1500
To Sales A/c 1500
12/10/20 Repair A/c 80
To Cash A/c 80
18/10/20 Toys Ltd. A/c 100

To Purchase A/c 100
21/10/20 Bank A/c 500
To Rent for premises A/c 500
23/10/20 Cash A/c 1500
Fred A/c 400
To Sales A/c 1900
23/10/20 Cash A/c 500
To Sales A/c 500
24/10/20 Second-hand car 2500
To Bank A/c 2500
26/10/20 Wages A/c 820
To Bank A/c 820
30/10/20 Rent A/c 1000
To Bank A/c 1000
31/10/20 **Drawings A/c 1600
To Bank A/c 1600
Total 30150 30150
**Note: The trip to Florida undertaken by Linda and its associated expenses will be considered
as business expenses as the question is silent about the cause of the trip. So the given expenses
made by Linda out of her business account will not be treated as business expense and rather
than that, this will be treated as Drawings made by her out of her own capital (Li, 2018).
LEDGER
Capital A/c
Date Particulars Amount Date Particulars Amount
31/10/20 To Drawings a/c 1600 01/10/20 By Bank a/c 8000
By Cash a/c 5200
By Van a/c 3000
31/10/20 To Balance c/f 14600
01/11/20 By Balance b/d 14600
Bank A/c