Recording Business Transactions

This document provides an overview of different types of business organizations, their advantages, and the main users of accounting information. It also includes examples of journal entries and ledgers for recording business transactions.

RECORDING BUSINESS
TRANSACTIONS

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
PART 1............................................................................................................................................1
A) Different types of business organisations and its advantages.................................................1
b) Main Users of accounting information and the use of financial information to others...........2
PART 2............................................................................................................................................3
PART 3............................................................................................................................................4
PART 4............................................................................................................................................7
a) Income Statement of S Keyes for year ending 30th September 2019.....................................7
b) Statement of Financial Position as at 30th September 2019. .................................................7
REFERENCES................................................................................................................................9

INTRODUCTION
In the present times there are different types of organisation operating in the market.
These organisations have different benefits and flaws. The profit based organisation structure
included sole proprietor, partnership and corporations. Every organisation have to prepare the
statement of profit and loss for knowing the profitability and position of the company. Financial
statement of the company are prepared for analysing the performance and operational efficiency
of company. It helps users in making decisions about their investment.
PART 1
A) Different types of business organisations and its advantages
Sole Proprietorship
In this type of business the owner makes all the decisions for the business and all the
responsibility regarding the decision is on the owner only. The owner do not have to ask anyone
else for making decisions like which place to operate his business, who should be employed,
what product to sell etc., since all the responsibility and risk is taken by the owner all the profit
generated or the losses incurred will be taken by the owner only (Kennan, 2016). The major
problem with sole proprietorship is that if the business incurs any losses then he or she is going
to bear it all by themselves, as they have unlimited liabilities toward there business and they may
even have to sell there personal asset to pay there business debt.
Advantages
 Sole proprietor is not dependent on other for activities related to business.
 Profits of business are not shared with others.
 It is not required to follow heavy regulatory requirements for establishment of business.
Partnership
A partnership business is owned by 2 or more individual. In this type of business the whole
business is being operated by all the partners. Firstly raising finance as there are more than one
individual working the finance is available more easily as compared to the sole proprietorship as
each partner brings there capital into the business. Again, there is again no separation between
the firm and the partners so if the business is sued all the partners will be sued (Chané and
Killander, 2019). The major problem is that even if there are losses incurred by the mistake of
any one partner the consequences will be beard by all the partners.
Advantages
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 Risks will be shared by all the partners it is not to be born by single person.
 There is an increased availability of resources.
 It is easy to incorporate a partnership firm.
Corporation
Company acts as a legal entity from its owner which is its biggest advantage. The other major
advantage of operating as a company is that they can easily raise finance as they have the option
of raising finance through public issue. The owners are not sued if the company is sued as the
company operates as a separate legal person. The problems being faced as operating as a
company is that there are strict regulatory restrictions being imposed on this corporation by the
government and non compliance with these laws and regulations can cause the company large
amount of fine (Goffee and Scase, 2015).
Advantages
 It is a separate legal entity therefore all risks and rewards are limited to company.
 All the income generated belong to the corporation only.
 In corporation ownership is freely transferable.
b) Main Users of accounting information and the use of financial information to others
They are required for decision making purposes by the investors as well as business
executives. Users require accounting information for facilitating process of decision-making,
this is serving as platform for framing guidelines for ensuring uniformity, accuracy and relevance
of accounting informations & procedures over different organisations
Owners
Accounting information provides all the essential information to its owners related to business.
Main requirement of having accounting information of organisation is of keeping track over the
financial performance of businesses, changes in financial position and economic conditions of
organisation (Flower and Ebbers, 2018).
Lenders
They require this information for knowing the economic performance & financial standing of
organisations for assessing the profitability of entities and their capacity of paying interest on the
borrowed amounts. They should have enough resources for paying principal as well interest on
loan.
Suppliers
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These parties provide organisations with products and services that are essential for
sustenance and business of organisations (Schroeder, Clark and Cathey, 2019). Supplies range
over raw materials used in manufacturing, outsourced services & transportation services.
PART 2
Journal Entries
Journal Entries
Date Particulars Debit Credit
01/06/19 Van 2696
To Pressed Garages 2696
( Being van purchased on credit
from Pressed Garages)
03/06/19 Bad Debts 50
To K. Patel 50
(Being bed debt written off for due
from K.Patel)
08/06/19 Past Time ltd 400
To Office Fixtures 400
(Being office fixtures returned to
Past Time Ltd)
12/06/19 Bank 100
Bad Debts 60
To Q Hanson 160
(Being settlement of Q Hanson a/c)
14/06/19 Drawings 100
To Inventory 100
(Being goods drawn by owner)
28/06/19 Capital a/c 50
To Insurance 50
(Being insurance debited for
personal expense reversed)
28/06/19 Machinery 650
To Electronics R Us 650
(Being machinery purchased on
credit)
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PART 3
Transaction in books of S.Keyes & Co.
A) Journals and Ledgers
Journal Entries
Date Particulars Debit Credit
02/06/19 Van 3700
To Bank 3700
05/06/19 Office Fixtures 850
To Office Hand ltd 850
08/06/19 Van 2 3600
To Draycarts ltd 3600
12/06/19 Cash 90
To Bank 90
15/06/19 Office Fixtures 60
To Cash 60
19/06/19 Dray Carts ltd 3600
To Bank 3600
21/06/19 Cash 2500
To Loan (Y Henry) 2500
25/06/19 Bank 200
To Cash 200
30/06/19 Office Fixtures 340
To Bank 340
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Ledgers
a) Ledgers
LEDGER OF S. KEYES
CASH A/C
Date Particulars DR. £ Date Particulars CR. £
01/06/19 To capital 7500 15/06/19 By fixtures 60
25/06/19 By bank 200
30/06/19 By bal b/f 7240
7500 7500
CAPITAL A/C
Date Particulars DR. £ Date Particulars CR. £
30/06/19 To bal b/f 7500 01/06/19 By cash 7500
7500 7500
VAN A/C
Date Particulars DR. £ Date Particulars CR. £
02/06/19 To bank 3700
08/06/19
To
Draycarts 3600 30/06/19 By bal b/f 7300
7300 7300
BANK A/C
Date Particulars DR. £ Date Particulars CR. £
25/06/19 To cash 200 02/06/19 By van 3700
30/06/19 To bal b/f 7530 12/06/19
By petty
cash 90
19/06/19
By
Draycarts 3600
30/06/19 By fixtures 340
7730 7730
FIXTURES A/C
Date Particulars DR. £ Date Particulars CR. £
05/06/19
To office
hand ltd 850 30/06/19 By bal b/f 1250
15/06/19 To cash 60
30/06/19 To bank 340
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1250 1250
OFFICE HAND LTD. A/C
Date Particulars DR. £ Date Particulars CR. £
30/06/19 To bal b/f 850 05/06/19 By fixtures 850
850 850
DRAYCARTS LTD. A/C
Date Particulars DR. £ Date Particulars CR. £
19/06/19 To bank 3600 08/06/19 By van 3600
3600 3600
PETTY CASH A/C
Date Particulars DR. £ Date Particulars CR. £
12/06/19 To bank 90 30/06/19 By bal b/f 90
90 90
Y. HENRY A/C
Date Particulars DR. £ Date Particulars CR. £
21/06/19 To loan 2500 30/06/19 By bal b/f 2500
2500 2500
LOAN A/C
Date Particulars DR. £ Date Particulars CR. £
30/06/19 To bal b/f 2500 21/06/19
By Y.
Henry 2500
2500 2500
b) Trial Balance
TRIAL BALANCE AS AT 30 JUNE 2019
PARTICULARS DR. £ CR. £
Capital 7500
Cash 7240
Van 7300
Bank 7530
Fixtures 1250
Office Hand ltd 850
Petty cash 90
Y. Henry 2500
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Loan 2500
TOTAL 18380 18380
PART 4
a) Income Statement of S Keyes for year ending 30th September 2019.
Income statement as at 31 September
Revenues
Sales 400000
less returns 2000 398000
Total Revenues 398000
Expenses
Cost of goods sold 245400
Carriage inwards 810
Motor expenses 1500
Carriage outward 2400
Rent 4000
Telephone charges 540
Wages and salaries 21000
Insurance 750
Office Expenses 400
Sundry Expenses 200
Total Expenses 277000
Net Income 121000
b) Statement of Financial Position as at 30th September 2019.
Statement of Financial Performance as at 30
September 2019
ASSETS
Non Current Assets
Van 21000
Fixtures and fittings 18000
Current Assets
Accounts receivables 52000
Inventory 40000
Cash in hand 3500
Cash at bank 9000
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Total Assets 143500
LIABILITIES
Non Current Liabilities
Current Liabilities
Creditors 12000
Shareholder's equity
Capital 25000
Less: drawings 14500 10500
Retained Earnings 121000
Total Liabilities 143500
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REFERENCES
Books and Journals
Kennan, M.A., 2016. Data Management: Knowledge and skills required in research, scientific
and technical organisations.
Chané, A.L. and Killander, M., 2019. Research Handbook on the European Union's Engagement
with International Organisations.
Goffee, R. and Scase, R., 2015. Corporate Realities (Routledge Revivals): The Dynamics of
Large and Small Organisations. Routledge.
Flower, J. and Ebbers, G., 2018. Global financial reporting. Macmillan International Higher
Education.
Schroeder, R.G., Clark, M.W. and Cathey, J.M., 2019. Financial accounting theory and
analysis: text and cases. John Wiley & Sons.
Online
[Online]. Available through : <>.
[Online]. Available through : <>.
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