Recording Business Transactions: Accounting and Journal Entries

This report discusses the significance of accounting and journal entries in recording business transactions. It outlines the steps to start a new business and the role of decision makers in accounting. The report also provides insights on preparing trial balance and forecasting profits using Excel. The report is relevant for students studying accounting and finance.

Recording Business
Transactions

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
PART A...........................................................................................................................................3
1...................................................................................................................................................3
2...................................................................................................................................................4
PART B............................................................................................................................................4
1...................................................................................................................................................4
2...................................................................................................................................................5
PART C............................................................................................................................................8
A..................................................................................................................................................8
B..................................................................................................................................................9
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Accounting is being defined as the recording of all the transactions for 3 into the financial
nature in order to analyse the profitability of the company. The present report will outline
different aspects relating to accounting and recording of the business transaction. It will involve
the undertaking of journal entries and how ledger and trial balance are being prepared with help
of this.
PART A
1
For David Green it is essential that they must first understand t steps of starting new
business and then initiate the business as a decorator. This is particularly because of the reason
that there are many different steps under conditions to initiate a business for stop it is essential
for them to effectively and clearly understand the requirements of the business and then start a
business. Various steps which are involved in starting a new business as decorator is as follows-
 The first step in starting of the business as a decorator involves the selection of the name.
This is the most essential step because the sole proprietor works on their own mean
(Barrow, 2021). Hence all the registration of the web domain will be done on the basis of
that name only.
 In addition to this the next step will involve creating a business bank account. This is
necessary because all the transactions of the bank will be undertaken in the name of the
business only. And there will be a separate account for the business.
 In addition to this next step involves the getting the licence to run the business and to get
all the permissions by the regulatory authorities.
 Further next step involves the accounting strategies which the business will be
undertaking in order to evaluate the business and its performance. This is the most
essential step because without accounting the David Green cannot decide how much
profit has been attained by the business.
 The last stage under the business involves the paying of the taxes (Brown, 2018). This is
essential in order to have a good working and operational efficiency and many other
subsidies will also be gained by the business in case they will pay the taxes.

All these steps are very essential for David green to follow in order to set up the business for the
decorator. This is particularly because of the reason that this business of decorator can be set up
at the level of sole proprietor only as it is a small scale business. Hence, all these steps will assist
them in order to plan and set up the business in proper and accurate manner so that profits can be
earned without any problem.
2
The decision makers refer to within the definition of accounting involves the key
stakeholders of the business. With respect to the large company listed on London stock exchange
such as to your Toyota motor corporation hazard different decision makers who undertake the
use of accounting. These decision makers are generally internal and external users of the
accounting information. With respect to the internal users or the decision maker involves thing
owner, management and the employees (Putra, 2019). All these people are the key decision
makers as in case the accounting information will not be appropriately used then business cannot
run successfully. On the other hand the external decision making involves the people who are
interested in the working of the company indirectly. This generally involves the government,
investors, customers and other related parties. It is very crucial for the business like Toyota that
they must effectively keep both the internal and external decision makers happy and satisfied.
Also in case these decision-makers will not be happy and satisfied then the working and
operational efficiency of the business will also decrease. For instance in case the employees of
the company are not happy and satisfy then they will not work in proper and effective condition.
Thus as a result of this overall working efficiency of the business will be reduced. Moreover in
addition to this the external decision makers are also not happy then also the working of the
business will be impacted (Bebbington, Russell and Thomson, 2017). For example in case the
investors are not happy with the performance of the company then they will take off their
investment from the business. Also in case any other person will be investing in the company
they will recommend them to not invest within the company as the returns are not good.
PART B
1
Date Particular Debit Credit
September 1 Bad Debt A/C 105

To P Mullen
(Being P Mullen recorded as bad debt)
105
September 5 Syme Ltd A/C
To purchase return A/C
(being goods returned)
150
150
September 10 Cash a/c
Bad debt a/c
To M. Abel
(Being M. Abl declared bankrupt and only some
amount is recovered0
180
131
311
September 18 Machinery a/c
To cash
To bank
To Brown ltd
(being machinery purchased and cash, cheque and
credit being availed)
1800
100
500
1200
September 26 Brown ltd a/c
To Bank a/c
(being half of machine debt paid be cheque)
600
600
September 28 Insurance A/C
Drawing a/c
To bank a/c
(being amount paid for insurance both business and
private)
60
70
130
2
Date Particular Debit Credit
August 1 Bank a/c
To bank loan a/c
(being bank loan taken and deposited in bank)
12400
12400

August 2 Cash a/c
To Bank a/c
(being amount from bank transferred in cash)
2800
2800
August 3 Van a/c
To Bank a/c
(being van purchased and paid cheque)
6200
6200
August 4 Office fixtures
To bank
To Sharp Office ltd
(being office fixtures purchased and paid some
amount and remaining on credit)
3400
1000
2400
August 8 Van a/c
To Toyota Co
(Being van purchased on credit)
8700
8700
August 15 Office fixtures
To cash
(being office fixtures purchased on cash)
110
110
August 19 Toyota co
To bank
8700
8700
August 25 Bank a/c
To cash
(being cash paid in bank)
430
430
August 28 Office fixtures
To bank a/c
(being office fixtures purchased by cheque)
750
750
Ledgers
Bank
Date Particular Amount Date Particular Amount
1-Aug Bank loan 12400 2-Aug cash 2800
25-Aug To cash 430 3-Aug by van 6200
31-Aug To bal c/d 6620 4-Aug by office fixtures 1000

19-Aug by Toyota Co 8700
28-Aug by office fixtures 750
19450 19450
Bank loan a/c
Date Particular Amount Date Particular Amount
31-Aug to bal c/d 12400 1-Aug by Bank 12400
12400 12400
Cash a/c
Date Particular Amount Date Particular Amount
2-Aug to bank 2800 8-Aug by office fixtures 110
25-Aug by bank 430
31-Aug by bl c/d 2260
2800 2800
Van a/c
Date Particular Amount Date Particular Amount
3-Aug to bank 6200 31-Aug by bal c/d 14900
8-Aug to Toyota 8700
14900 14900
Office fixtures a/c
Date Particular Amount Date Particular Amount
4-Aug to bank 1000
4-Aug to sharp office 2400 31-Aug by bal c/d 4260
15-Aug to cash 110
28-Aug to bank 750
4260 4260
Sharp office Ltd
Date Particular Amount Date Particular Amount
4-Aug by office fixtures 2400
31-Aug to bal c/d 2400
2400 2400

Toyota
Date Particular Amount Date Particular Amount
19-Aug to bank 8700 8-Aug by van 8700
8700 8700
Trial balance
Particular Debit Credit
Bank 6620
Bank loan 12400
Cash 2260
Van 14900
Office fixtures 4260
Sharp office 2400
Total 21420 21420
PART C
A
Particular Amount Amount
Sales 95000
Less: sales return 3500 91500
Less: COGS
OP Stock 18000
Purchase 110000
Purchase return 720
CL stock 13000 114280
Gross profit/loss -22780
Carriage inward 90
Carriage outward 500
Motor expense 1400
Rent 7000
Telephone charges 830
Wages and salaries 14000
Insurance 1030
Office expense 800
Sundry expenses 250 25900

Net profit/ loss -48680
B
year Profit/ loss
2013 55800
2014 77100
2015 85500
2016 98400
2017 87600
2018 97200
2019 112400
2020 -65400
2021 -48680
2022 -10522
With the help of the function of forecast within Excel the profit or loss for the year of
2022 is being protected. With the help of this function it is analysed tractor a loss of 10522 is
estimated forecasted to be present within the company. Thus with the analysis of the complete
data set it can be evaluated that the profitability of the company is very fluctuating. This is
particularly in the initial here that is 2013 the profit was less but gradually increased till 2016.
Further it started to decline and again it in 2018 at increased and 19 it was maximum. But due to
the current pandemic the profitability of the company has started producing and it has been
converted into lost for the company. Thus on the basis of the data it is forecasted that in 2022 as
well the company will be suffering with the loss.
CONCLUSION
The above report concluded that for analysing the business working in operations the
accounting is very essential. This is because of the accounting profit or loss suffered by the
company while doing the normal course of business. The study also evaluated that using the
journal entries and posting them in ledger and for them making trial balance is very essential for
the business. The trial balance is a base for the company for making the profit and loss account
and balance sheet.

REFERENCES
Books and Journals
Barrow, C., 2021. Starting a business for dummies. John Wiley & Sons.
Bebbington, J., Russell, S. and Thomson, I., 2017. Accounting and sustainable development:
Reflections and propositions. Critical Perspectives on Accounting. 48. pp.21-34.
Brown, D., 2018. Business models for residential retrofit in the UK: a critical assessment of five
key archetypes. Energy Efficiency. 11(6). pp.1497-1517.
Putra, Y. M., 2019. Analysis of Factors Affecting the Interests of SMEs Using Accounting
Applications. Journal of Economics and Business. 2(3). pp.818-826.