Recording Business Transactions

Recording Business
Transactions

Table of Contents
INTRODUCTION ..........................................................................................................................3
PART A...........................................................................................................................................3
(a) Double entry transactions in T-Accounts..............................................................................3
b) Balance the Accounts..............................................................................................................5
c) Extract of Trial Balance as on 31st October 2020..................................................................9
d) Prepare an Income Statement for the period ended 31st October 2020..................................9
e) Prepare a Statement of Financial Position as at 31st October 2020......................................10
f) What are drawings concerned for small business and clarification of the query..................11
PART B..........................................................................................................................................11
a) Ratios Calculation.................................................................................................................11
b) Ratio Analysis of Linda's firm in comparison with the Industry Ratios trends....................12
CONCLUSION .............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Business transactions are the economic events done with the related third parties of the
organisation which are recorded as per the accounting system followed. These transactions are
usually measured in terms of money. An accounting system facilitates recording of transactions
in a usable data from the company's financial information. This helps in assessing and evaluating
firm's financial position, profitability and operations. Business transaction are firstly recorded in
the primary books of accounts and then are transferred to the secondary books. Primary books
includes Journals, cash book, purchase book, sales book. And the secondary books consists of
ledgers and other financial statements (Adekola and Sergi, 2016). Financial statements are the
final products of all the data entered in the primary books of accounts. In the double entry
Accounting system every entry affects two accounts, one having a debit effect and another
having credit effect.
PART A
(a) Double entry transactions in T-Accounts
Journal is referred as the detailed account for recording all the financial transactions
occurring in the business (Allen, 2018). These transactions are recorded as and when they
happen. These business transactions are recorded as Journal entries.
Date Particulars L.F. Dr. Amt. Cr. Amt.
October 1, 2020 Bank A/C. DR. 8000
Cash A/C. DR. 5200
Van A/C. DR. 3000
To Capital A/c. 16200
(Being business initiated by cash, van & bank)
October 2, 2020 Laptop A/c. DR. 1000
To Bank A/c. 1000
(Being amt. paid by bank for buying laptop)

October 4, 2020 Purchase A/c. DR. 2450
To Toy Ltd. 2450
(Being credit purchase made from Toy Ltd.)
October 5, 2020 Bank A/c. DR. 1500
To Sales A/c. 1500
(Being sales made and amt. received in bank)
October 12, 2020 Repairs A/c. DR. 80
To Cash A/c. 80
(Being repairs made by cash)
October 18, 2020 Toy Ltd. A/c. DR. 100
To Purchase Return A/c. 100
(Being goods return made to Toy Ltd.)
October 21, 2020 Bank A/c. DR. 500
To Rent A/c. 500
(Being rent amt. received in bank)
October 23, 2020 Cash A/c. DR. 1500
Fred A/c. DR. 400
To Sales A/c. 1900