Recording Business Transaction

Recording business
transactions

Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................1
PART 1............................................................................................................................................1
1. Recording the transactions of a company that Linda owns in a T- account in an effective and
efficient manner...........................................................................................................................1
2. Balancing the accounts so as to bring down an opening balance............................................2
3. Extracting a trial balance as at 31st October 2020....................................................................6
4. Preparing an Income statement................................................................................................6
5. Preparing a statement of financial position.............................................................................7
6. Detailed evaluation of all the answers in an appropriate and impactful way..........................8
PART 2............................................................................................................................................8
1. Calculation and interpretation of different ratios for the firm that is mentioned above..........8
2. Comparison of the above calculated ratios including their interpretation...............................9
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Recording all business transactions is among the most integral and critical aspects because it
can help a company grow and prosper in today's market while also having the potential to harm
and destruct the company's operations if not evaluated in a consistent and effective manner
(Barry, 2016). With effect from October 1, 2020, this report extracts the balance of a business
owned by an individual called Linda. Aside from the ledger accounts, trial balance, and income
statement of the aforementioned corporation, various ratios are estimated and interpreted
appropriately in this study.
PART 1
1. Recording the transactions of a company that Linda owns in a T- account in an effective and
efficient manner
Journal entry in the books of Linda from 1st October 2020
Date Particulars DR CR
1/10/2020 Bank a/c DR
Cash a/c DR
Van a/c DR
To capital a/c
(Being capital in the business invested)
8000
5200
3000
16200
2/10/2020 Laptop a/c DR
To bank a/c
(Being Laptop purchased on credit)
1000
1000
4/10/2020 Purchase a/c DR
To Toys limited
(Being Toys purchased on credit)
2450
2450
5/10/2020 Bank a/c DR
To sales a/c
(Being goods sold in cash)
1500
1500
12/10/2020 Repairing laptop a/c DR
To cash a/c
80
80

(Being amount paid for repairing laptop in
cash)
18/10/2020 Toys limited a/c DR
To purchase return a/c
(Being goods returned to Toys limited)
100
100
21/10/2020 Bank a/c DR
To rent a/c
(Being rent received)
500
500
23/09/2020 Cash a/c DR
Fred a/c DR
To sales a/c
(Being goods sold on cash and credit)
1500
400
1900
23/10/2020 Cash a/c DR
To sales a/c
(Being goods sold in cash)
500
500
24/09/2020 Car a/c DR
To bank a/c
(Being car purchased)
2500
2500
26/10/2020 Wages a/c DR
To bank a/c
(Being wages paid)
820
820
31/10/2020 Rent a/c DR
To bank a/c
(Being rent paid)
1000
1000
30/09/2020 Drawings a/c DR
To bank a/c
(being amount withdraw from bank for
holiday)
1600
1600
2. Balancing the accounts so as to bring down an opening balance
Bank a/c
Date Particulars Amount Date Particulars Amount