Assignment Title

The assignment content provides the purchase account and VAT accounts for October, 2014. The purchase account shows purchases made by Material Plus (500), Silk n silk (400), and Wool Worth (385). The VAT input account reflects the input VAT amounts from these purchases, totaling 257. The VAT output account lists the VAT outputs to various businesses, including Sainsbury's, Marks and Spencer, Wallis, Next, Prime Mark, and others. The total VAT output is 4260.5. The assignment provides a comprehensive record of business transactions for October, 2014.

ACCOUNTING
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Table of Contents
INTRODUCTION ...............................................................................................................................3
TASK 1.................................................................................................................................................3
Double Entry Transactions..............................................................................................................3
Trial Balance...................................................................................................................................7
Errors Affecting Trial Balance........................................................................................................7
Difference Between Assets and Liabilities......................................................................................8
CONCLUSION ...................................................................................................................................8
REFERENCES.....................................................................................................................................9
Appendix............................................................................................................................................10
Sales Day Book, Purchase day book and Sales Return Book......................................................10
Cash Book.....................................................................................................................................10
Ledger Accounts...........................................................................................................................11
Index of Tables
Table 1: Journal for the month of October 2014..................................................................................3
Table 2: Trial Balance for the month of October 2014 7
Table 3: Sales Day Book for October 2014 10
Table 4: Sales Return day book for October 2014. 10
Table 5: Purchase day book for the month of October 2014. 10
Table 6: Cash Account fore the month of October 2014. 10
Table 7: Sales Account for the month of October 2014......................................................................11
Table 8: Purchase Account for the month of October 2014 11
Table 9: VAT Input Account for the month of October 2014. 12
Table 10: VAT Output Account for the month of October 2014. 12
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INTRODUCTION
Accounting is the language of Business. Nutty Fruity involved in clothing business follows accrual
concept of accounting. This report presents the double entry system of bookkeeping by preparing
Journal. Further Subsidiary books are prepared and posting to ledger accounts are depicted in
certain accounts. Balances of all the accounts are demonstrated in Trial Balance. Moreover, errors
affecting trial balance are explained. This report further differentiates assets and liabilities.
TASK 1
Double Entry Transactions
Table 1: Journal for the month of October 2014.
Date Particulars
Debit
(Amount in
£)
Credit
(Amount in
£)
01/10/14
Bank A/c Dr.
To Capital A/c
(Being capital introduced into business by Miss Fruity) 30000 30000
02/10/14
Cash A/c Dr.
To Bank A/c (Being cash withdrawn from the bank
account.) 5000 5000
03/10/14
Rent A/c Dr.
To Bank A/c(Being rent paid by cheque) 1000 1000
04/10/14
Stationary A/c Dr.
To Cash A/c
(Being stationary purchased through cash) 50 50
05/10/14
Equipment A/c Dr.
To Bank A/c
(Being Equipment purchased) 900 900
06/10/14
Computers A/c Dr.
To Bank A/c
(Being Computers purchased) 2200 2200
07/10/14
Marks and Spencer A/c Dr.
To Sales A/c 1500
1250
250
3

To VAT output A/c
(Being 50 male shirts sold at 25 each in addition to
VAT @ 20%)
08/10/14
Wallis A/c Dr.
To Sales A/c
To VAT output A/c
(Being 25 female dresses sold at 35 each in addition to
VAT @ 20%) 1050
875
175
09/10/14
Next A/c Dr.
To Sales A/c
To VAT output
(Being 60 female Trousers sold at 15 each in addition
to VAT @ 20%) 1080
900
180
10/10/14
Marks and Spencer A/c Dr.
To Sales A/c
To VAT
(Being 30 male Trousers sold at 18 each in addition to
VAT @ 20%) 648
540
108
11/10/14
Prime Mark A/c Dr.
To Sales A/c
To VAT
(Being 100 female blouses sold at eight each in
addition to VAT @ 20%) 960
800
160
12/10/14
Sainsbury A/c Dr.
To Sales A/c
To VAT output
(Being 15 polo shirts sold at 2.5 each in addition to
VAT @ 20%) 45
37.5
7.5
13/10/14
Purchases A/c Dr.
VAT input A/c Dr.
To Material Plus
(Being 1000 yards of cotton purchased at 0.5 per yard
in addition to VAT from Material plus on credit)
500
100 600
14/10/14 Purchases A/c Dr. 400 480
4

VAT input A/c Dr.
To Silk n silk
(Being 500 yards of cotton purchased at 0.8 per yard in
addition to VAT from Silk n Silk plus on credit) 80
15/10/14
Purchases A/c Dr.
VAT input A/c Dr.
To wool worth
(Being 1100 yards of cotton purchased at 0.35 per yard
in addition to VAT from Woolworth plus on credit)
385
77 462
16/10/14
Salary A/c Dr.
To Bank A/c
(Being Salary paid by cheque) 150 150
17/10/14
Petty expense A/c Dr.
To Cash A/c
(Being Petrol purchased by cash) 25 25
18/10/14
Next A/c Dr.
To Sales A/c
To VAT output
(Being 80 ties sold at five each in addition to VAT @
20%) 480
400
80
19/10/14
Next A/c Dr.
To Sales A/c
To VAT output
(Being 200 dresses sold at 45 each in addition to VAT
@ 20%) 10800
9000
1800
20/10/14
Marks and Spencer A/c Dr.
To Sales A/c
To VAT output
(Being 600 male Trousers sold at 12.5 each in addition
to VAT @ 20%) 9000
7500
1500
21/10/14
Rent A/c Dr.
To Bank A/c
(Being rent paid paid by cheque) 1000 1000
22/10/14 Capital A/c Dr. 300 300
5

To Bank A/c
(Being capital reduced to the extent of drawings for
personal use)
23/10/14
Petty expense A/c Dr.
To Cash A/c
(Being stamps purchased by cash) 5 5
24/10/14
Sales Return A/c Dr.
VAT output A/c Dr.
To Sainsbury
(Being Sales of 5 polo t-shirts of 5 each in addition to
VAT Returned by Sainsbury )
25
5 30
25/10/14
Sales Return A/c Dr.
VAT Output a/c Dr.
To Marks and Spencer
(Being Sales of 7 male trousers of 18 each in addition
to VAT Returned by Marks and Spencer )
126
25.2 151.2
26/10/14
Bank A/c Dr.
To Next A/c
(Being amount due from Next received) 12360 12360
27/10/14
Bank A/c Dr.
To Mark and Spencer A/c
(Being amount due from Marks and Spencer Received) 10996.8 10996.8
28/10/14
Bank A/c Dr.
To Wallis A/c
(Being amount due from Wallis Received) 525 525
29/10/14
Material Plus A/c Dr.
To Bank A/c
(Being amount paid to Creditors via cheque) 600 600
30/10/14
Silk n Silk A/c Dr.
To Bank A/c
(Being amount paid to Creditors via cheque) 480 480
Assumptions:
1. Nutty Fruity operates on all seven days of the week.
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2. VAT is exclusive of all the unit prices and applied at 20% on all the commodities sold and
purchased.
Trial Balance
Table 2: Trial Balance for the month of October 2014
Account Title
Debit Balances (Amount
in £)
Credit Balances (Amount
in £)
Cash 4920
Vat Input 257
Vat Output 4230.3
Purchases 1285
Sales 21302.5
Sales Return 151
Rent 2000
Petty expenses 30
Salary 150
Wallis 525
Prime Mark 960
Sainsbury 15
Woolworth 462
Bank 42251.8
Stationary 50
Capital 29700
Vat Payable
Miscellaneous Provision
Computers 2200
Equipment 900
55694.8 55694.8
Errors Affecting Trial Balance
There are different types of errors affecting Trial Balance. Some of them are listed below:
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 The error of Principle: If any of the (GAAP) are violated or not followed by the guidelines
it causes the error of Principle(Cumby, 2013). For example, Equipment purchased is treated
as revenue expenditure and charged to Profit and loss account will cause the error of
principle.
 Error Of Omission: The error of omission occurs when the transaction is ignored and not
recorded into books of accounts completely. Therefore it is not recorded or not posted.
For example, if credit purchases are recorded in purchase day book but not posted to journal and
ledger accounts.
 The error of Recording: Error of recording is a clerical error which is occurred when the
transaction is recorded wrongly in books of account(Lee, 2016). For example, Credit
purchases of 1500 are recorded as 5100.
Difference Between Assets and Liabilities
Assets are the resources of the entity which provides future economic benefits and liabilities
represents obligations to be paid in future(What is the difference between assets and liabilities ?
2016). Assets can be classified into Fixed and current mainly. Fixed assets involve assets with a
longer period of life such as buildings, furniture, machinery, etc. and current assets includes debtors,
cash and bank balance, etc.
Liabilities can be broadly classified into current and non-current liabilities(Deegan, 2013). Current
liabilities consists of trade payables, overdraft, etc. and non-current liabilities includes debentures,
long term loans, etc.
For example Debtors are assets as they will provide cash in future and creditors are liabilities as
entity owe them the money to be paid in specific time.
CONCLUSION
From the above report, it can be concluded that Nutty Fruity maintains good liquidity into business
and is profitable. Further, it can be concluded that it has good control over the expenses. Assets and
liabilities are two different concepts and therefore the treatment are different.
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REFERENCES
Books and Journals
Cumby, J., 2013. Business 2100. Introduction to accounting. 5-1 Preparing an adjusted trial balance
and closing entries.
Lee, D.K., 2016. Method and apparatus for accounting process using integrated trial balance. U.S.
Patent Application .15(074).072.
Deegan, C., 2013. Financial accounting theory. McGraw-Hill Education Australia.
Online
What is the difference between assets and liabilities ?, 2016. [Online]. Available
through<http://www.accountingtools.com/questions-and-answers/what-is-the-difference-
between-assets-and-liabilities.html>. Accessed on 2nd January, 2017.
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APPENDIX
Sales Day Book, Purchase day book and Sales Return Book
Table 3: Sales Day Book for October, 2014
Amount in £ Amount in £ Amount in £
Date Details Invoice No. Gross VAT Net
07/10/14 Marks and Spencer 1500 250 1250
08/10/14 Wallis 1050 175 875
09/10/14 Next 1080 180 900
10/10/14 Marks and Spencer 648 108 540
11/10/14 Price Mark 960 160 800
12/10/14 Sainsbury 45 7.5 37.5
18/10/14 Next 480 80 400
19/10/14 Next 10800 1800 9000
20/10/14 Marks and Spencer 9000 1500 7500
total 25563 4260.5 21302.5
Table 4: Sales Return day book for October, 2014.
Date Details
Credit Note
No. Gross VAT Net
24/10/14 Sainsbury 30 5 25
25/10/14 Marks and Spencer 151.2 25.2 126
Total 181.2 30.2 151
Table 5: Purchase day book for the month of October, 2014.
Date Details Invoice Gross VAT Net
13/10/14 Material Plus 600 100 500
14/10/14 Silk n silk 480 80 400
15/10/14 Wool Worth 462 77 385
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Total 1542 257 1285
Cash Book
Table 6: Cash Account fore the month of October, 2014.
Debit Cash Book Credit
Date Details
Fo
lio
Dis
cou
nt VAT
Cas
h Bank Date Details
Fol
io
Dis
cou
nt VAT Cash Bank
01/10/1
4 To Capital 0 0
3000
0
02/10/1
4 By cash 5000
02/10/1
4 To Bank 0
500
0
03/10/1
4 By rent 1000
26/10/1
4 To Next 2060
1030
0
04/10/1
4
By
stationary 50
27/10/1
4
To Marks and
Spencer 1832.8 9164
05/10/1
4
By
Equipment 900
28/10/1
4 To Wallis 87.5 437.5
06/10/1
4
By
Computers 2200
16/10/1
4 By salary 150
17/10/1
4
By petty
cash 25
21/10/1
4 By rent 1000
22/10/1
4 By Capital 300
23/10/1
4
By petty
cash 5
29/10/1
4
By Material
Plus 100 500
30/10/1
4
By Silk n
silk 80 400
30/10/1 By Balance 3800. 4920 38451.5
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4 c/d 3
3980.3
500
0
4990
1.5
3980.
3 5000 49901.5
Ledger Accounts
Table 7: Sales Account for the month of October 2014
Debit Sales Account Credit
Date Particulars Amount Date Particulars Amount
30/10/14 To bal c/d 21302.5 07/10/14 By Marks and Spencer 1250
08/10/14 By Wallis 875
09/10/14 By Next 900
10/10/14 By Marks and Spencer 540
11/10/14 By Prime Mark 800
12/10/14 By Sainsbury 37.5
18/10/14 By Next 400
19/10/14 By Next 9000
20/10/14 By Marks and Spencer 7500
21302.5 21302.5
Table 8: Purchase Account for the month of October, 2014
Debit Purchases Account Credit
Date Particulars Amount Date Particulars Amount
13/10/14 To Material Plus 500 30/10/14 By bal c/d 1285
14/10/14 To Silk n silk 400
15/10/14 To Wool Worth 385
1285 1285
Table 9: VAT Input Account for the month of October, 2014.
Debit VAT Input Account Credit
Date Particulars Amount Date Particulars Amount
13/10/14 To Material Plus 100 30/10/14 By bal c/d 257
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14/10/14 To Silk n silk 80
15/10/14 To Wool Worth 77
257 257
Table 10: VAT Output Account for the month of October, 2014.
Debit VAT Output Account Credit
Date Particulars Amount Date Particulars Amount
24/10/14 To Sainsbury 5 07/10/14 By Marks and Spencer 250
25/10/14 To Marks and Spencer 25.2 08/10/14 By Wallis 175
30/10/14 To bal c/d 4230.3 09/10/14 By Next 180
10/10/14 By Marks and Spencer 108
11/10/14 By Prime Mark 160
12/10/14 By Sainsbury 7.5
18/10/14 By Next 80
19/10/14 By Next 1800
20/10/14 By Marks and Spencer 1500
4260.5 4260.5
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