Recording Business Transactions-Portfolio (1)

This document provides information on recording business transactions, including the role of accounting information for decision makers and its importance for profit business structures. It also includes journal entries, ledger accounts, trial balance, and a profit and loss statement. Additionally, it discusses the impact of COVID-19 on businesses and their financial performance. The document offers valuable insights for students studying accounting and related subjects.

Recording Business
Transactions-Portfolio (1)

TABLE OF CONTENTS
ASSESSMENT 1.......................................................................................................................3
PART 1.......................................................................................................................................3
PART 2.......................................................................................................................................3
PART 3.......................................................................................................................................4
PART 4.......................................................................................................................................7
REFERENCES.........................................................................................................................10

ASSESSMENT 1
PART 1
a.
In the given definition, the decision makers are the users of the accounting
information of the company. In terms of large organization like Unilever, the key decision
makers are the internal members of the organization like CFO, accounting team and
employees while on the external side are the investors, clients, suppliers, banks and other
financial institutions and lenders. The internal user of the company makes use of the
accounting information in order to gain an insight about the performance and position of the
company based on which future related decisions are undertaken. These are useful in carrying
out the other accounting activities which helps in getting further enhanced and better
information (Al-Dalabih, 2018). In respect to the external users like investors, banks and the
lenders make use of this information in terms of determining the profitability of the company
by comparing it with the past performance, liquidity and solvency position as well. With the
help of these information, decisions are undertaken in regard to whether to make an
investment in the company or provide funds to the company or not. For the big organizations,
proper disclosure of accounting information is important otherwise, it might result into
government intervention affecting the reputation of the company.
b.
Accounting is very useful for the profit business structures in respect to timely
recording of all the financial transactions of the company. For example, recording of credit
sales amount of which will be received next financial year such situation comes across the
accountant much of the time. By the way of making use of accounting proper entry for the
same can be done which will help in effectively meeting with the requirements. This will
result into getting a clear picture about the company’s financial performance in that financial
year. On the other hand, there are certain disadvantage of accounting as well (Bojarenko,
2017). There are chances that complete information might not be presented to the accountant
because of which there are chances that it might result into discrepancy in the accounting
information provided like vouchers, bills where the account without any choice has to record
whatever is being asked to. This results into inaccurate biased results. Therefore, for profit
business structure accounting is important even though it has certain drawbacks but its
benefits overcome those limitations.

PART 2
Date Particular Debit Credit
Feb 1 Cash a/c
To office fixtures a/c
(Being office fixtures returned to the supplier recorded)
350
350
Feb 4 Bad debt a/c
S. keyes a/c
(Being bad debts written off recorded)
85
85
Feb 9 Machinery a/c
To Bank a/c
To TS. Co a/c
(Being machinery purchased paid £200 paid through
cheque and remaining is due recorded)
2300
200
2100
Feb. 13 Cash a/c
Bad debt a/c
To S. Hill
(Being amount received in full settlement of debt)
220
50
270
Feb 20 Drawing a/c
To stock
(Being goods withdrawn from business for personal
use)
180
180
Feb. 26 Drawing a/c
To cash
(Being insurance bill paid for private house from
business)
85
85
Feb 28 TS co a/c
To bank
(Being half amount of machinery purchased ispaid
through cheque)
1050
1050
PART 3
a.
Journal entries

Date Particular Debit Credit
Feb 1 Bank a/c
Van a/c
Office fixtures
To capital
21500
25000
800
47300
Feb 2 Cash a/c
To loan from bank
2500
2500
Feb 3 Cash in hand a/c
Bank a/c
1500
1500
Feb 4 Van a/c
Bank a/c
4800
4800
Feb 5 Office fixture a/c
Quick office ltd
1100
1100
Feb 8 Van a/c
Nissan co.
5200
5200
Feb 15 Office fixture a/c
Cash a/c
70
70
Feb 19 Nissan co.
Bank a/c
5200
5200
Feb 25 Bank a/c
Cash a/c
350
350
Feb 28 Office fixture a/c
Bank a/c
620
620
Ledger accounts
Van a/c
Date Particulars JF Amount Date Particular JF Amount
Feb 1 To capital 25000
Feb 4 To bank 4800
Feb 8 To Nissan co. 5200 By bal. c/f 35000
Total 35000 Total 35000

Capital a/c
Date Particulars JF Amount Date Particular JF Amount
Feb 1 By bank 21500
By van 25000
To bal c/f 47300 By office fixture 200
Total 47300 Total 47300
Cash a/c
Date Particulars JF Amount Date Particular JF Amount
Feb 2 To loan from bank 2500 Feb
15
By offices
fixtures
70
Feb 3 To bank 1500 Feb
25
By bank 350
By bal c/f 3580
Total 4000 Total 4000
Bank a/c
Date Particulars JF Amount Date Particular JF Amount
Feb 1 To capital 21500 Feb 3 By cash in hand 1500
Feb 25 To cash a/c 350 Feb 4 By van a/c 4800
Feb
19
By Nissan 5200
Feb
28
By office
furniture
620
By bal c/f 9730
Total 21850 Total 21850
Loan from bank
Date Particulars JF Amount Date Particular JF Amount
By bal. c/f 2500 Feb 2 By cash 2500

Total 2500 Total 2500
Nissan co
Date Particulars JF Amount Date Particular JF Amount
Feb
19
To bank a/c 5200 Feb 8 By van 5200
Total 5200 Total 5200
Office fixtures a/c
Date Particulars JF Amount Date Particular JF Amount
Feb 1 To capital a/c 800
Feb 5 To quick office
ltd
1100
Feb
15
To cash 70
Feb
28
To bank 620 By bal. c/f 2590
Total 2590 Total 2590
Quick office ltd
Date Particulars JF Amount Date Particular JF Amount
By bal c/f 1100 Feb 5 By office fixtures 1100
Total 1100 Total 1100
b.
Trial balance
Particulars Debit Credit
Van a/c 35000
Capital a/c 47300

Cash a/c 3580
Bank a/c 9730
Loan from bank 2500
Office fixtures a/c 2590
Quick office ltd 1100
Total 50900 50900
PART 4
a.
Particulars
Amoun
t
Sales 80000
Less: sales return 2000
Net sales 78000
Less: cost of goods sold 66120
opening stock 36000
Add: purchases (150000-
600) 149400
Add: carriage inward 720
Less: closing stock 120000
Gross profit 11880
Expenses:
Motor expenses 1200
Carriage outward 400
Rent 5000
Telephone charges 620
Wages and salaries 32000
Insurance 830
Office expenses 600
Sundry expenses 300
Total expenses 40950
Net profit/loss -29070
b.
The impact of Covid-19 has resulted into disruption and the negative impact over the
business activities. The nation wide lockdown has resulted into ineffectively management of
the business, shutdown of the business. This had negative impact over the revenue of the

business entity. This has caused a reduction in the revenue which is because of the no sales as
there were the situation of cash crunch, job loss, inability of the people to incur expenses
which ahs resulted into huge losses for the company (Fairlie, 2020). Even though, there was
not revenue, there were times when the businesses were required to make payment of its
expenditures such as rent and making payment of the salaries of the employees. The Airman
Co has been profitable for the past 10 years but this is the first time that the company is
having loss which is because of Covid-19. This has affected the income statement of the
company in terms of reduction in the sales and increase in the making payment of the
operating and non-operating expenses of the business. This has affected the working capital
of the company along with the decrease in the cash being available with the business. For
overcoming te impact of it, it will requires a year or two for regaining the same position and
meeting with or recovering the amount of current losses and expenditure.
Covid-19 has material influence on the organization in regard to the reduction in the
profits and the emergence of the additional expenditure in order to manage the situation. The
business was mainly affected because of the non-availability of the money with the customers
which resulted into blocking of cash with the debtors along with decline in the sales of the
company as well. The Airman Co has also faced the situation of return of material which is
being received from its suppliers and this is mainly because of the stoppage of the
manufacturing cycle due to the lockdown imposed by the government. Not only, Airman co
faced this situation but every company has gone through this tough time (Muehlemann,
Pfeifer and Wittek, 2020). The organization has managed to pay expenditure which cannot be
ignored like rent. Therefore, the daily business activities of the company got affected as there
were shortage of resources both human and financial. This has resulted into affecting the
entire working capital cycle of the entity. As a result of which, this had a direct influence
over the income statement of the company on the key items like creating revenue and
efficiently meeting up with the daily business activities and tasks and other daily operational
expenditures. Therefore, all the given and stated factors has resulted into losses for the
organization and which can be handled and overcome only when the market condition
improves along with the limitations which were implemented by the government pertaining
to it. Thus, in this manner, the profit and loss statement of the Airman company got impact
as of the Covid-19 and consequently lead to the losses.

REFERENCES
Books and Journals
Al-Dalabih, F. A., 2018. The Impact of the Use of Accounting Information Systems on the
Quality of Financial Data. International Business Research. 11(5). pp.143-158.
Bojarenko, J., 2017. Variability of accounting policies–advantages and
disadvantages. Copernican Journal of Finance & Accounting. 6(3). pp.9-19.
Fairlie, R. W., 2020. The impact of COVID-19 on small business owners: The first three
months after social-distancing restrictions. NBER Working Paper, (w27462).
Muehlemann, S., Pfeifer, H. and Wittek, B. H., 2020. The effect of business cycle
expectations on the German apprenticeship market: Estimating the impact of Covid-
19. Empirical Research in Vocational Education and Training. 12(1). pp.1-30.