Recording Business Transactions: Assessment 2

RECORDING
BUSINESS
TRANSACTIONS
Contents
INTRODUCTION...........................................................................................................................2
Assessment II...................................................................................................................................2
Part A...............................................................................................................................................2

(a) Recording of entities transaction in Journal books:...............................................................2
(b) Ledgers Accounts of Anne York Business:...........................................................................4
(c) Preparation of Trial Balance as on 31st October 2021:...........................................................9
(d) Income Statement for the period ended 31st October 2021:...................................................9
(e) Statement of Financial Position as under:............................................................................10
(f) Letter addressed to Linda;....................................................................................................11
Part B.............................................................................................................................................11
(a) Calculation of Accounting Ratios of Anne Business: -........................................................11
(b) Interpretation of ratios calculated above considering competitor and covid 19 impact on
the entity:...................................................................................................................................12
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Business transaction is a monetary activity’s which is interfered between two or more
peoples encompassing exchange of goods, cash and resources. Recording of these transaction in
books of accounts is a process which involves various steps such as passing journal entry,
preparation of ledgers and last completion of books of accounts (Angiulli, Fassetti, and Saccà,
2018). This report highlights how financial statements are prepared starting from journal entries,
making of ledger accounts, trial balance, profitability statement and balance sheet of a proprietor
named as Anne who is running the furniture business. At the end of this file a letter is addressed
to Anne clarifying her regarding drawings she made from the entity’s funds and replying to
query she raised for holidays taken by her. Lastly ratios are calculated & interpreted taking into
account competitors statistics and Covid 19 eruption.
Assessment II
Part A
(a) Recording of entities transaction in Journal books:
JOURNAL ENTRIES IN BOOKS: -
Date Particulars Debit Credit
01/10/21 Bank
Cash
Flat
Car
Capital
(Business incorporated with bank, cash, flat and car)
10000
4800
45000
12000
71800
02/10/21 Purchases
Home Ltd
(Goods purchased on credit from Home Ltd.)
5400
5400
04/10/21 Computer
Printer
Bank
800
200
1000

(Computer and printer purchased and payment made
through bank)
05/10/21 Bank
Sales
(Goods amounting to 2800 sold for cash)
2800
2800
12/10/21 Repair Expense
Cash
(Repair expenses incurred and payment made in cash)
110
110
18/10/21 Home Ltd.
Purchases
(Furniture of 250 returned to home Ltd as purchase
return.)
250
250
21/10/21 Bank
Rental Income
(Rent received by the enterprise)
800
800
23/10/21 Rayan
Cash
Sales
(Goods sole to Rayan for 2100, out of which 1800 have
been received by cash and remaining on credit)
300
1800
2100
23/10/21 Cash
Sales
(Goods sold to David and cash received)
700 700
24/10/21 Laptop
Bank
( Laptop has been purchase for office purpose)
1700
1700
26/10/21 Wages
Bank
820
820