Recording Business Transactions - Desklib

This report covers the steps required to start a business, how accounting helps decision makers, and how to record transactions in different books of accounts. It includes examples of journal entries and an income statement. The report also discusses the impact of Covid-19 on businesses.

Recording Business
Transactions

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK ..............................................................................................................................................3
Part A ..............................................................................................................................................3
1) Steps required by an entrepreneur to start a business.............................................................3
2) How does accounting helps different decision makers of a company. (Use a company listed
in London Stock Exchange)........................................................................................................4
Part B ..............................................................................................................................................4
1) Pass the journal entries with narrations .................................................................................4
2) Solve the following ................................................................................................................6
a) Record the transactions in General ledger of Maurice and brothers..................................6
b) Trial Balance......................................................................................................................8
Part C ..............................................................................................................................................8
1) Prepare an Income statement for B Moore.............................................................................8
2) Predict whether the company will attain profits or losses in the year 2022 taking into
account the Covid-19 Pandemic .................................................................................................9
CONCLUSION ...............................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Business is a form of activity which is commercial in nature, it has two or more parties and
trading of some kinds of goods in relation to monetary exchange is done. The main purpose of
business is earning profits. Many events occur in the life of business which may refer to as
transactions. These business transactions include the basic trading of the business and other
events (Platonova, 2016). These transactions are recorded and analysed over a period of time to
ascertain the profit or loss earned during the period. This report mainly focuses on the recording
of transactions into different books of accounts. The report is divided into three segments, the
first part talks about the case of David Green and how he wishes to start a business, it also
discusses how the accounting information helps different users of the information. For this
purpose the company taken up is Jaguar cars. The second part highlights the recording of
different transactions into the books of accounts and in the third part a brief analysis is done in
regards to Covid-19.
TASK
Part A
1) Steps required by an entrepreneur to start a business
Sole proprietorship is one of the three main business enterprises. In sole proprietorship, one
single person starts the business. This person invests and manages all the business activities of
the organisation. David Green wants to start a new sole proprietorship business as a decorator.
He is aware how he will manage the business but he does not know the roles and responsibilities
that he needs to gain before starting a business (McLaney and Atrill, 2016). To help David
Green, following are the steps he might want to go for before starting a new business:
 The first step to start a business is to formulate a business model which would give
insights to the leaders about the opportunities in the market.
 The entrepreneur in this step has to be clear of the visions and missions of the business
that he they want to take up for the business (Yu, Lin and Tang, 2018).
 After forming the strategies, the leaders have to make a business portfolio about the
products and services the business will deal in.
 After deciding the product line, the business now have to decide the long term strategy
for growth that they will follow to hold the competitive edge in the market.

 The business is also required to have an online presence on the social media which
would aid the business in its settlement in the marketplace and gain potential customers.
2) How does accounting helps different decision makers of a company. (Use a company listed in
London Stock Exchange)
Accounting refers to the process of recording, evaluating, and reporting of the financial data and
transactions of a business over a period of time. The main purpose of accounting is to determine
the profit and financial position of the business (Tsoumakas, 2019). Jaguar Cars is a plc listed in
the London stock exchange and the company have different stakeholders who uses the
accounting information to decide different things related to business. These stakeholders are
discussed below.
 Owners: they use this info to analyze the profitableness of their investments. It gives
them vision about the business and its ability to pay dividends for their investments. It
also helps them ascertain future course of activity.
 Creditors: these are curious to ascertain credit worthiness of the enterprise. These
includes suppliers, banks, lenders of finance. It helps them analyse financial position of
the business and if they can extend any loans to them.
 Regulatory Authorities: they need to ascertain that the accounting information is in
accordance with the rules and their compliance with the law of state where the business is
taking place
 Management: These users of the accounting information uses it to plan, control and
decision making. It helps them evaluate the performance of the organisation and position.
It basically helps them do their job better (Obidairo, 2016).
 Investors: they need the accounting information as they want to ascertain the risk in
investing and the returns and plan accordingly how much amount and where they should
invest for better returns.
Part B
1) Pass the journal entries with narrations
Date Particulars Debit Credit

01/09/21 Assets A/c
Fixtures
Stock
Debtors ( 105 + 311 )
Bank
Cash
Creditors ( 229 + 80 )
Capital
(Business being started)
5700
2800
5200
416
1060
85
309
14952
01/09/21 Bad Debts
P Mullen
(Bad Debts written-off)
105
105
05/09/21 Syme Ltd
Office Fixtures
(Office fixtures bought through credit was written-
off)
150
150
10/09/21 Bank
Bad Debts
M Abel
(M Abel declared bankruptcy and received the
amount in full settlement)
180
131
311
18/09/21 Machinery
Cash
Bank
Brown Ltd
(Purchased a machinery and the amount paid by
cheque, cash and on credit)
1800
100
500
1200
26/09/21 Brown Ltd
Bank
600
600

(Half of the amount due paid through cheque)
28/09/21 Insurance Expenses
Drawings
Bank
(Insurance expenses paid by bank but later realised
that £ 70 is of personal house)
60
70
130
2) Solve the following
a) Record the transactions in General ledger of Maurice and brothers
Cash Account
Date Particulars Ref Amount Date Particulars Ref Amount
03/08/21 Bank 2800 15/08/21 Office Fixtures 110
19/08/21 Toyota Co. 8700
31/08/21 Balance c/d 6440 25/08/21 Bank 430
9240 9240
Bank Account
Date Particulars Ref Amount Date Particulars Ref Amount
03/08/21 Cash 2800
01/08/21 Capital 36800 04/08/21 Van 6200
25/08/21 Cash 430 05/08/21 Office Fixtures 1000
02/08/21 Loan Payable 12400 28/08/21 Office Fixtures 750
31/08/21 Balance c/d 38880
49630 49630
Van Account

Date Particulars Ref Amount Date Particulars Ref Amount
01/08/21 Capital 32000
04/08/21 Bank 6200 31/08/21 Balance c/d 46900
08/08/21 Toyota Co. 8700
46900 46900
Office Fixtures
Date Particulars Ref Amount Date Particulars Ref Amount
01/08/21 Capital 1200
05/08/21 Bank 1000
05/08/21 Sharp Office Ltd 2400 31/08/21 Balance c/d 5460
15/08/21 Cash 110
28/08/21 Bank 750
5460 5460
Sharp Office (Creditor)
Date Particulars Ref Amount Date Particulars Ref Amount
31/08/21 Balance c/d 2400 05/08/21 Office Fixtures 2400
2400 2400
Toyota Co. Accountable
Date Particulars Ref Amount Date Particulars Ref Amount
19/08/21 Cash 8700 08/08/21 Van 8700
8700 8700
Loan Payable Account

Date Particulars Ref Amount Date Particulars Ref Amount
31/08/21 Balance c/d 12400 02/08/21 Bank 12400
12400 12400
Capital Account
Date Particulars Ref Amount Date Particulars Ref Amount
31/08/21 Office Fixtures 1200
31/08/21 Van 32000 31/08/21 Balance c/d 70000
31/08/21 Bank 36800
70000 70000
b) Trial Balance
TRIAL BALANCE
Maurice & Brothers
Debit Credit
Bank 38880
Cash 6440
Van 46900
Office Fixtures 5460
Sharp Office Ltd ( Creditor ) 2400
Loan Payable 12400
Capital 70000
TOTAL 91240 91240

Part C
1) Prepare an Income statement for B Moore
Particulars Amount (£)
Sales 95000
Less: Sales Returns 3500
Less: Carriage Inwards 890
Net Sales ( A ) 90610
Opening Stock 18000
Purchases 110000
Less: Return Outwards 720
Less: Closing Stock 13000
Net Purchases ( B ) 114280
Motor Expenses 1400
Rent 7000
Telephone Charges 830
Wages and Salaries 14000
Insurance 1030
Office Expenses 800
Sundry Expenses 250
Operating Expenses ( C ) 25310
TOTALS ( A – B – C ) -48980

2) Predict whether the company will attain profits or losses in the year 2022 taking into account
the Covid-19 Pandemic
The year of 2020 has been really bad for the company. It has been a challenging year all over the
world but many businesses have to shut their operations as they have no earnings to meet their
costs (Nawawi and Salin, 2018). The income statement of the case company have shown loss for
the year 2020. The main reason for this is the loss of sales due to safety precautions among the
customers. This made a steep fall in the revenue of the business. The income statements of the
previous years shows that the company was doing great as the profits have been seen an
increasing trend. To make profits in the year 2022, the company needs to recover the loss of
2020 in the year 2021 and make at least a sufficient amount of profit which would help company
retain its business.
CONCLUSION
From the above report it can be concluded that accounting is an important aspect in the business.
The business transactions are important events which are required to be recorded and analysed in
the books of accounts. Trial balance helps the strategic managers be sure about the accounts that
are created are right or not. The statement of profit and loss and performance is also made in the
above report for different companies as provided. The report also highlights what are the steps
needed for starting a business. And also talks about the users of accounts. In the report, Jaguar
plc has been taken up to discuss the decision-makers of the business and how accounting helps
these users.

REFERENCES
Books and Journals
McLaney, E. and Atrill, P., 2016. Accounting and finance: an introduction. Prentice Hill.
Nawawi, A. and Salin, A.S.A.P., 2018. Employee fraud and misconduct: empirical evidence
from a telecommunication company. Information & Computer Security.
Obidairo, S., 2016. Transnational corruption and corporations: regulating bribery through
corporate liability. Routledge.
Platonova, N.V., 2016. FV Ezersky and the Development of Accounting Thought and Practices
in Russia. Vestnik NSUEM. (4). pp.160-170.
Tsoumakas, G., 2019. A survey of machine learning techniques for food sales
prediction. Artificial Intelligence Review. 52(1). pp.441-447.
Yu, T., Lin, Z. and Tang, Q., 2018. Blockchain: the introduction and its application in financial
accounting. Journal of Corporate Accounting & Finance. 29(4). pp.37-47.