Recording Business Transactions: Steps for Starting a Business, Stakeholders, Journal Entries, Ledger, Trial Balance, and Income Statement

This report discusses the steps for starting a business, identifying stakeholders, passing journal entries, preparing ledger and trial balance, and computing income statement. It also includes a forecasted income statement for B Moore Sole trader for the year ended 31st September, 2021. The report concludes that the company will experience a loss in the year 2022 due to the pandemic.

RECORDING BUSINESS
TRANSACTIONS

Table of Contents
INTRODUCTION...........................................................................................................................3
PART A...........................................................................................................................................3
1...................................................................................................................................................3
2...................................................................................................................................................4
PART B...........................................................................................................................................4
(1) Passing Journal Entries with narrative in the book of F Polk................................................4
(2) Preparation of Ledger a/c and trial balance of ABC Enterprise............................................6
(a).................................................................................................................................................6
(b)...............................................................................................................................................12
(3)...............................................................................................................................................12
(a) Computation of Income Statement of B Moore Sole trader for the year ended 31st
September, 2021........................................................................................................................12
b.................................................................................................................................................13
CONCLUSION..............................................................................................................................14
REFERENCES................................................................................................................................1

INTRODUCTION
Recoding business transaction is related with obtaining the significant information for
decision making process. The current report will highlight information regarding steps for
starting business and identifying the crucial stakeholders of decision making process. The current
study will give emphasis on having details journal entries, ledger, trial balance and income
statement. This will pay attention on assessing profitability or loss for the upcoming year.
PART A
1
 In the UK there are several steps which are required to be followed for starting a new
business. In the decoration industry, there are several steps which are needed to be
focused by David Green in respect to achieve the profitability and flexibility to function
in sector. The steps that are needed to be followed are as follows:
 The one of the crucial step is researching a new business name for starting the business as
decorator in the mentioned sector. Name play important role in establishing the brand
image in market (Urbański, Haque and Oino, 2019).
 Evaluating legal structure paly important role in deciding the continuation of further steps
so that writing new business plan can become possible. In this it has been identified that
David Green will adopt the structure of sole proprietor.
 Securing fund & finance in order to check the ability to decide level of operational
effectiveness David can derive can be evaluated in this stage.
 Making effectual advertising strategy in respect to attract customer by making them
aware about the type of services offered so that generating higher revenue can become
possible.
 Buying new insurance for business, working for paying tax as sole proprietor through
registering with HMRC & submitting an annual self-assessment.
 Creating system for book keeping business record and maintaining appropriate guidelines
can help in formulating and establishing the business as decorator. These mentioned
course of action can help in achieving the objective of David green to operate as
decorator in the sector by eliminating irrelevant complications which may arise in
absence of following mentioned steps. these are the steps which are important for

accomplishing in order to operate successfully in the decorator sector y maintaining the
competitive advantages.
2
ASDA is one of the company that is listed on London Stock Exchange and operates in
international level. There are several types of stakeholders who are connected with company in
order to assess performance so that significant decision can be made (Zorn and et.al., 2018).
Accounting play crucial role in recording, analysing and summarizing the financial details of
company. There are various types of accounting specialist who take this information for making
decisions. This comprises accountant, manager, genera & assistant manager, financial analyst,
etc.
There are internal and externa stakeholders who pay attention on having significant
information about ASDA so that different forms of decision can be made. The internal
stakeholders who refers to this statements involves employees, management and owner.
Management & owner utilizes to ensure that higher productive results are made. On the other
side, external stakeholders such as investors, creditor, financial institutions, suppliers,
competitor, etc. focus on gaining details of company (Kamaluddin, Ishak and Mohammed,
2019). Investor give emphasis on deriving information such profitability capacity of offering
return on investment, etc. so that favourable decision can be made. Creditor, financial
institutions, supplier can obtain insights that dealing with company is beneficial or not. On the
basis of this, it can be interpreted that these are stakeholders that have interest in company’s
performance and focus on using the stated statements in turn better decision can be made.
PART B
(1) Passing Journal Entries with narrative in the book of F Polk
Date
(2021)
Particulars Debit (£) Credit (£)

Sep.1 Van a/c
Fixture a/c
Stock a/c
Debtors a/c
Bank a/c
Cash a/c
To Creditors a/c
To Capital a/c (b/f)
(Being all opening balance of accounts
recorded)
5700
2800
5200
416
1060
85
309
14942
Sep 1 Bad-debt expenses a/c
To P Mullen a/c
(Being P Mullen a debtors was written
off as bad-debt)
105
105
Sep 5 Syme Limited a/c
To office fixtures a/c
(Being office fixture returned to creditor
Syme Ltd)
150
150
Sep 10 Cash a/c
P&L a/c
To M. Abel a/c
(Being only part payment is received
from the debtor M. Abel)
180
131
311
Sep 18 Machinery a/c
To Cash a/c
To bank a/c
To Brown Limited a/c
(Being machinery was purchased by
owner on both cash and credit basis)
1800
100
500
1200
Sep 26 Brown limited a/c
To Bank a/c
600
600

(Being half debt of Brown limited is
paid by sole trader F Polk)
Sep. 28 Insurance expense a/c
Drawing a/c
To Bank
(Being personal and business insurance
expense was paid by owner)
60
70
130
(2) Preparation of Ledger a/c and trial balance of ABC Enterprise
(a)
Ledger A/c
For the year month ending 31st August, 2021

Office Fixture A/c
Date Particulars Debit (£) Date Particulars Credit (£)
1/8/2021 To balance b/d 1200 31/08/2021 By balance c/f 5460
5/8/2021
To cash a/c 1000
To Sharp office Ltd a/c 2400
15/08/2021 To cash a/c 110
28/028/2021 To bank a/c 750
Total 5460 Total 5460
31/08/2021 To balance b/d 5460
Bank A/c
Date Particulars Debit (£) Date Particulars Credit (£)
1/8/2021 To balance b/d 36800 3/8/2021 By cash in hand a/c 2800

2/8/2021 To Loan (Santander Bank) a/c 12400 4/8/2021 By van a/c (second hand) 6200
25/08/2021 To cash in hand a/c 430 5/8/2021 By office fixture a/c 1000
19/08/2021 By Toyota Co. 8700
28/08/2021 By office fixture a/c 750
31/08/2021 By balance c/f 30180
Total 49630 Total 49630
31/08/2021 To balance b/d 30180
Cash in hand A/c
Date Particulars Debit (£) Date Particulars Credit (£)
3/8/2021 To bank a/c 2800 15/08/2021 By office fixture a/c 110

25/08/2021 By bank a/c 430
31/08/2021 By balance c/f 2260
Total 2800 Total 2800
31/08/2021 To balance b/d 2260
Toyota Co. A/c
Date Particulars Debit (£) Date Particulars Credit (£)
19/08/2021 To bank a/c 8700 8/8/2021 By van a/c 8700
Total 8700 Total 8700
Capital A/c
Date Particulars Debit (£) Date Particulars Credit (£)
31/08/2021 To balance c/f 70000 1/8/2021 By balance b/d 70000
Total 70000 Total 70000

31/08/2021 By balance b/d 70000
Van A/c
Date Particulars Debit (£) Date Particulars Credit (£)
1/8/2021 To balance b/d 32000 31/08/2021 By balance c/f 46900
4/8/2021 To Bank a/c (second-hand van) 6200
8/8/2021 To Toyota Co. a/c 8700
Total 46900 Total 46900
31/08/2021 To balance b/d 46900
Loan A/c (Santander Bank)
Date Particulars Debit (£) Date Particulars Credit (£)

31/08/2021 To balance c/f 12400 2/8/2021 By Bank a/c 12400
Total 12400 Total 12400
31/08/2021 By balance b/d 12400
Sharp Office Ltd. A/c
Date Particulars Debit (£) Date Particulars Credit (£)
31/08/2021 To balance c/f 2400 5/8/2021 By office fixtures a/c 2400
Total 2400 Total 2400
31/08/2021 By balance c/f 2400

(b)
Trial Balance
As at 31st August, 2021
Particulars Debit Credit
Office fixture a/c 5460
Bank a/c 30180
Cash in hand a/c 2260
Toyota co. a/c -
Capital a/c 70000
Van a/c 46900
Loan a/c 12400
Sharp office limited a/c 2400
Total 84800 84800
(3)
(a) Computation of Income Statement of B Moore Sole trader for the year ended 31st September,
2021
Particulars Details Amount (£)
Sales Revenue 95000
Less Sales returned -3500
Total sales revenue 91500
Less Cost of Sales:
Opening stock 18000
Add Purchase – purchase return
(110000 – 720) 109280
Add Carriage Inward 890
Less closing Inventory -13000
115170

Gross Profit -23670
Less Operating expenses:
Carriage outward 500
Motor expenses 1400
Rent 7000
Telephone charges 830
Wages and salaries 14000
Insurance 1030
Office Expenses 800
Sundry expenses 250
Total 25810
Net Loss -49480
b
year Profit/ loss
2013 55800
2014 77100
2015 85500
2016 98400
2017 87600
2018 97200
2019 112400
2020 -65400
2021 -49480
2022 -10522
From the valuation of above prepared forecasted statement by utilizing the excel tool it can
be mentioned that company is facing fluctuating trend of profit or losses. In addition to this, it
can be interpreted that from 2013 to 2018 there is inclining trend which is indicating that firm is
performing well. From the year 2019 to 2022 company is continuously facing downward growth
which need to be improved for gaining stable position in sector. The main reason behind the
decreasing efficiency of company to generate profitability and facing losses that pandemic. It
has decreased the ability to operate in the market which has resulted into lack of effectiveness

and performance to overcome prevailing complications (Ouenniche and Carrales, 2018). On
the basis of this, it can be specified that company will experience loss in the year 2022.
CONCLUSION
The report has concluded various facts and concepts of accounting transaction within the
business. The report has concluded the steps to start business along with the decision-maker of
large and listed company. Further, the report has concluded the journal entries, posting of
transaction along with the preparation of trial balance. Lastly, the report has computed net loss
incur by B Moore in the year 2021 on the basis of preparation of income statement using
information on trial balance.

REFERENCES
Books and journals
Urbański, M., Haque, A.U. and Oino, I., 2019. The moderating role of risk management in
project planning and project success: evidence from construction businesses of Pakistan
and the UK. Engineering Management in Production and Services, 11(1).
Ouenniche, J. and Carrales, S., 2018. Assessing efficiency profiles of UK commercial banks: a
DEA analysis with regression-based feedback. Annals of Operations Research, 266(1),
pp.551-587.
Kamaluddin, A., Ishak, N. and Mohammed, N.F., 2019. Financial distress prediction through
cash flow ratios analysis. International Journal of Financial Research, 10(3), pp.63-76.
Zorn, A. and et.al., 2018. Financial ratios as indicators of economic sustainability: A quantitative
analysis for Swiss dairy farms. Sustainability, 10(8), p.2942.
Online
. 2020. [Online]. Available through:
<https://ohiostate.pressbooks.pub/drivechange/chapter/chapter-1/>.
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