Recording Business Transaction: Steps to Start a New Business, Decision-Makers of Large Companies, and Accounting Entries

This report covers the process of recording business transactions, including steps to start a new business, decision-makers of large companies, and recording necessary journal entries in the books of a bakery business. It also includes the preparation of a general ledger account and trial balance account of ABC Enterprise, Maurice and brothers, and an income statement of B Moore with profit and loss prediction for 2022.

RECORDING BUSINESS
TRANSACTION

Table of Contents
INTRODUCTION...........................................................................................................................3
PART A...........................................................................................................................................3
(1) Steps to start new business.....................................................................................................3
(2) Decision-maker of large and listed company.........................................................................4
PART B...........................................................................................................................................5
(1) Recording necessary Journal entries in the books of Bakery business of F Polk..................5
(2) Preparation of General Ledger account and Trial Balance account of ABC Enterprise,
Maurice and brothers...................................................................................................................7
(3) Preparation of Income Statement of B Moore and making prediction................................10
CONCLUSION..............................................................................................................................11
REFERENCES................................................................................................................................1

INTRODUCTION
Recording business transaction is a process in which the owner need to maintain proper
books of accounts via recording each and every transaction related to business as per double
entry system. The report will cover the various recording, posting and preparation of trial balance
using the business transactions. Further, using the trail balance of B Moore, the report has also
prepared the income statement of business for the year 2021 along with the prediction of profit
and loss of the company in the year 2022. Lastly, the report has also cover the steps to start a
decorating business in UK along with the identification of decision-maker of Large company
listed on London stock exchange.
PART A
(1) Steps to start new business
In order to start the small business in UK as a Decorator, David Green need to follows the
respective eight steps which are as follows:
 Nail down own business model: This is the first stage in which owner need to decide the
model for their small business. In this they have to select whether they will run contract
shop or retail shop. In contract shop customer will supply blanks and business will
decorate it and further charge for it. While in retail shop, the business will supply both
blanks as well as decoration and charge for the same (Thottoli, 2020). In this stage, the
owner also need to decide the location where they will start the business such as UK
industrial location or retail location.
 Create a business plan: In the second step, David Green need to create a business plan
for their small business in which they should include products and service they will offer,
target customer, marketing and operational strategies, business structure, budget etc. This
is basically providing road map of the business. Also, owner need to arrange the fund for
starting business and for this they have to decide source such as loan, own capital etc.
 Getting equipment ducks in a row: At this stage, owner of sole trader need to make a
short list of all the decoration equipment’s and supplies require for their start-up. Also,
they have to do some market research to identify the best offerings from the supplier of
those equipment’s (Onuoha and Enyi, 2019).

 Start blanks shopping: If they want to offer decorated apparel, hard good or both it is
recommended to the owner that they should start shopping with the supplier who can
align with you as per the taste and preference of customers. It is further recommended
that David Green have work with regional supplier of UK to save shipping cost and get
goods faster (Nasir and Talib, 2018).
 Getting Logo: In this step, it is advisable to the owner of decoration shop that they should
get their logo along with the business card, broacher, stationery, invoice book with logo
in them. It is because it helps in increasing the brand value of the company in the market.
 Social media platform: Further, engaging into social media is basically one of the most
important step for staring any new business. With the help of social media apps, the sole
trader can connect with huge customer and also increase their customer base. It is
advisable that they should post their decorations images over social media apps such as
Instagram, Facebook etc. (Jasim and Raewf, 2020).
 Building own website: In this stage, it is recommended to sole trader than they should
build their own website from where customer can easily place online orders and they will
provide online delivery option. This is best to satisfy and keep the customers happy
(Wulanditya and Aprillianita, 2018).
 Network in community: Lastly, it is advisable to David Green that they should engage in
community welfare such as donation, sponsoring children sport program etc. to increase
their brand value in the UK local market.
(2) Decision-maker of large and listed company
The decision-maker of listed company are those people which ultimately make the decision
of the company acquisition, expansion and investment. They also need to make the decision
regarding the organization policy along with various tactical, operational, programmed and non-
programmed decisions. The various decision-maker of large company listed on London stock
exchange such as Tesco are as follows:
 Shareholders: They are basically the owner of the company who make the decision
regarding whether company need to invest profit or retain within the business. They also
make the decision regarding how much profit is need to be distributed among themselves
as dividend (Jizdan, 2018).

 Board of Directors: The board of directors basically make the decision regarding the
hiring and firing of personnel, dividend policies, pay-outs and executive compensations
(Weigand, Blums and de Kruijff, 2020).
 Chairman and Managing director: They need to take the decision regarding the ways
with the help of which meetings will run smoothly and remain orderly. They also need to
organize and coordinate meetings by setting annual agenda etc.
 Executive directors and executive: They will make very tough decision regarding how to
take the company global which basically involve high amount of business as well as
professional risks (Yulianto and Pratiwi, 2019).
 Managers: The managers are also decision-makers of Tesco company because they need
to make the decision regarding budgets, identify problems and conflicts among staffs,
suggesting alternative to solve the same etc. They are also entitling for establishing
control and evaluation system within the business.
In this way, the internal staffs of the company are considered as a decision-maker and make
the decision for the growth of the company (Quinn and et.al., 2019). They decision involve
various risk but with their skills, experience and expertise the company will make the decision
for the welfare of business. Their decision also involves the buy and in house production
decision.
PART B
(1) Recording necessary Journal entries in the books of Bakery business of F Polk
Journal Entries in the book of F Polk
For the month of September 2021
Date Particulars Debit (£) Credit (£)
September
1, 2021
Bad debt expenses account debit
To P Mullen (accounts receivable) account
(Being debt owing to P Mullen was written off
as bad debt in the books of account)
105
105
September Syme Ltd. (creditors) account debit 150

5, 2021 To Office fixtures accounts
(Being office fixture returned to supplier Syme
Ltd in recorded in books of account)
150
September
10, 2021
Cash / Bank account debit
Profit and Loss account debit
To M. Abel (accounts receivable) account
(Being only part payment is received from
debtor M Abel as he is declared bankrupt and
unrecovered amount is transferred to P&L
account)
180
131
311
September
18, 2021
Machinery account debit
To Cash account
To bank account
To Brown Ltd. (creditor) account
(Being business purchase new machinery for
their business and paid payment in cash, bank
with remaining remains in credit)
1800
100
500
1200
September
26, 2021
Brown Ltd. (creditor) Account debit
To Bank account
(Being half of the payment to creditor Brown
Ltd is paid and recorded in books of account)
600
600
September
28, 2021
Insurance bill account debit
To Bank account
(Being insurance bill related to business is paid
via cheque)
60
60
September
28, 2021
Drawings account debit
To bank account
(Being the payment of insurance related to
private house is drawing for owner)
70
70

(2) Preparation of General Ledger account and Trial Balance account of ABC Enterprise,
Maurice and brothers
(a) Ledger Account in the book of ABC Enterprise, Maurice & brothers
For the month of August, 2021
Capital Account
Date Particulars Debit (£) Date Particulars Amount (£)
31/08/2021 To balance c/f 70000 1/08/2021 By balance b/d 70000
Total 70000 Total 70000
31/08/2021 By balance b/d 70000
Office Fixture Account
Date Particulars Debit (£) Date Particulars Amount
(£)
1/08/2021 To balance b/d 1200 31/08/2021 By balance c/f 5460
5/08/2021 To cash account
To Sharp office Ltd
account
1000
2400
15/08/2021 To cash account 110
28/028/2021 To bank account 750
Total 5460 Total 5460
31/08/2021 To balance b/d 5460
Van Account
Date Particulars Debit (£) Date Particulars Amount (£)
1/08/2021 To balance b/d 32000 31/08/2021 By balance c/f 46900
4/08/2021 To Bank account
(second-hand van)
6200
8/08/2021 To Toyota Co. 8700

account
Total 46900 Total 46900
31/08/2021 To balance b/d 46900
Bank Account
Date Particulars Debit (£) Date Particulars Amount (£)
1/08/2021 To balance b/d 36800 3/08/2021 By cash in hand
account
2800
2/08/2021 To Loan (Santander
Bank) account
12400 4/08/2021 By van account
(second hand)
6200
25/08/2021 To cash in hand
account
430 5/08/2021 By office fixture
account
1000
19/08/2021 By Toyota Co. 8700
28/08/2021 By office fixture
account
750
31/08/2021 By balance c/f 30180
Total 49630 Total 49630
31/08/2021 To balance b/d 30180
Loan Account (Santander Bank)
Date Particulars Debit (£) Date Particulars Amount (£)
31/08/2021 To balance c/f 12400 2/08/2021 By Bank account 12400
Total 12400 Total 12400
31/08/2021 By balance b/d 12400
Cash in hand Account
Date Particulars Debit (£) Date Particulars Amount (£)
3/08/2021 To bank account 2800 15/08/2021 By office fixture 110

account
25/08/2021 By bank account 430
31/08/2021 By balance c/f 2260
Total 2800 Total 2800
31/08/2021 To balance b/d 2260
Sharp Office Ltd. Account
Date Particulars Debit (£) Date Particulars Amount (£)
31/08/2021 To balance c/f 2400 5/08/2021 By office fixtures
account
2400
Total 2400 Total 2400
31/08/2021 By balance c/f 2400
Toyota Co. Account
Date Particulars Debit (£) Date Particulars Amount (£)
19/08/2021 To bank account 8700 8/08/2021 By van account 8700
Total 8700 Total 8700
(b) Trial Balance in the book of ABC Enterprises, Maurice & brother
As at 31st August, 2021
Particulars Debit Credit
Capital Account 70000
Office Fixture Account 5460
Van Account 46900
Bank Account 30180
Loan (Santander Bank) Account 12400
Cash in Hand Account 2260

Sharp Office Ltd. Account 2400
Toyota Co. Account 0
Total Balance 84800 84800
(3) Preparation of Income Statement of B Moore and making prediction
(a) Income Statement for B Moore
For the year ended 30th September, 2021
Particulars Details Amount (£)
Sales (minus sales returned) 95000 - 3500 91500
Less Cost of Sales:
Opening stock 18000
Add Purchase (minus purchase returned) 109280
Add Carriage Inward 890
Less closing Inventory -13000
115170
Gross Profit -23670
Less Operating expenses:
Carriage outward 500
Motor expenses 1400
Rent 7000
Telephone charges 830
Wages and salaries 14000
Insurance 1030
Office Expenses 800
Sundry expenses 250
25810
Net Loss -49480
Notes: Sales return of 3500 pound is substrate from the total sales revenue and the purchase
return of 720 pound is subtracted from the total purchase amount.

(b) Explanation on prediction of profit and loss of company for the year 2022
In the year 2021, the company has incurred net loss of 49480 because of the lower sales
and higher cost of production along with administration & distribution expenses. On this basis, it
can be predicting that B Moore sole trader will also incur net loss of around 37453 pound in the
year 2022. It is because in the year 2021 the sole trader has incurred loss of 65400 and in the
year 2021 they have incurred loss of 49480 so the growth percentage based on past year actual
will be as follows:
49480 – 65400 / 65400 * 100 = -24.34%
So, on this basis the net loss of sole trader in the year 2022 will be decreased by 24.34%
i.e., by 12044.7 pound. This result into net loss of company in the year 2022 will be 49480 –
12044.7 = 37453 pound. It might be because the trend of company from 2020 to 2021 has state
than the company net loss is decreasing so it is predicted that the net loss that sole trader is
incurring will also decrease in the year 2022 (Hasanah, Anggraini and Purwohedi, 2018).
CONCLUSION
After summing the above information, it can be concluded that maintaining books of
accounts using double entry bookkeeping system is significant for both small as well as large
business. The report has also computed the net loss incur by B Moore in the year 2021 after
preparing the income statement. Lastly. The report has further predicted the next year i.e., 2022
net profit / loss of sole trader. It is found out that in the year 2022, the net loss of B Moore
company will decrease by 24.34% as compared to 2021 actuals.

REFERENCES
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