Recording Business Transaction

RECORDING BUSINESS
TRANSACTION

Table of Contents
INTRODUCTION...........................................................................................................................2
PART A...........................................................................................................................................2
(a) Journal Entries in the books of Linda Ltd..............................................................................2
(B) Ledger A/c.............................................................................................................................4
(c). Extracting a trial balance.......................................................................................................5
(d). Preparing profitability statement for the year ended on 31st Oct 2020.................................7
(e). Drafting statement of financial position for Linda business Ltd...........................................7
(f). Presenting a brief letter to Linda Ltd for explaining concerns about drawings.....................8
PART B...........................................................................................................................................9
(i) Calculating ratios for Linda Ltd..............................................................................................9
(ii) Analysis of Linda's financial performance..........................................................................10
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13
1

INTRODUCTION
Recording the business transaction is defined as the recording of all the financial
transaction in the books of accounts and then reaching to profit or loss incurred. For the business
to reach to the fact that whether they have earned profit or loss the most essential thing is the
recording of the financial transaction in effective manner. The present report will deal with
recording the various transaction of the business and then posting them in ledger and extracting
trial balance from it. Further for analysing the financial position of the company the ratio
analysis will also be used and this will also be compared with the competitors. This comparison
will assist the company in managing their performance so that it can be improved.
PART A
(a) Journal Entries in the books of Linda Ltd
Date Particular Debit(£) Credit(£)
01/10/20 Bank A/c Dr
Cash A/c Dr
Van A/c Dr
To Capital A/c
(Being capital introduced in the business in the form of
cash, bank and Van)
8000
5200
3000
16200
02/10/20 Laptop A/c Dr
To bank A/c
(Being laptop purchased in the business )
1000
1000
04/10/20 Purchase A/c Dr
To Toys Ltd A/c
(Being goods purchased from Toys Limited On Credit)
2450
2450
05/10/20 Bank A/c Dr
To Sales A/c
(Being goods sold and money received)
1500
1500
2

12/10/20 Repairing A/c Dr
To cash A/c
(Being laptop Repaired and paid in cash)
80
80
18/10/20 Toys Ltd A/c Dr
To Purchase Return A/c
(Being goods return To Toys limited)
100
100
21/10/20 Bank A/c Dr
To Rent A/c
(Being Rent received for premises By cheque)
500
500
23/10/20 Cash A/c Dr
To sales A/c
(Being good sold to David And received cash)
500
500
23/10/20 Cash a/c Dr
Fred A/c Dr
To sales a/c
(being goods sold to Fred in cash and credit both)
1500
400
1900
24/10/20 Car A/c Dr
To Bank A/c
(Being car purchased from Ox Ford motor vehicle
Auction)
2500
2500
26/10/20 Wages A/c Dr
To Bank A/c
(Being wages paid By cheque)
820
820
30/10/20 Rent A/c Dr
To Bank a/c
(being wages paid to the part time shopkeeper)
1000
1000
31/10/20 Drawings A/c Dr
To bank a/c
1600
1600
3