Comprehensive Financial Accounting Exam: Journal to Balance Sheet

This document presents a comprehensive solution to an online finance exam, encompassing the creation of journal entries, ledger accounts, and a trial balance. The solution begins with journalizing various transactions, including cash investments, rent payments, equipment purchases, credit purchases and sales, bank deposits, and drawings. These entries are then posted to their respective ledger accounts, and a trial balance is prepared to ensure the equality of debits and credits. Furthermore, the document includes an analysis of consolidated financial statements, demonstrating the impact of intercompany transactions and the calculation of non-controlling interests (NCI) and goodwill in the context of company acquisitions. This resource is ideal for students seeking to understand the practical application of accounting principles and the preparation of financial statements. Desklib provides a platform to access similar solved assignments and past papers.

Online Exam

TABLE OF CONTENTS
QUESTION 1...................................................................................................................................3
QUESTION 2...................................................................................................................................8
QUESTION 3...................................................................................................................................9
REFERENCES..............................................................................................................................11

QUESTION 1
Journal
Date Particular Folio Debit Credit
1.7.21 Cash a/c Dr
To capital a/c
(Being cash brought in business)
20000
20000
Rent a/c Dr
To cash a/c
(being rent paid in cash)
2400
2400
2.7.21 Office equipment a/c Dr
To cash a/c
(being office equipment purchased in cash)
5000
5000
Purchase a/c Dr
To Supplier A a/c
(being goods purchased on credit from Supplier
A)
4000
4000
Bank a/c Dr
To cash a/c
(being cash deposited in bank)
5000
5000
4.7.21 Purchase a/c Dr
To cash a/c
(being goods purchased in cash)
2500
2500
6.7.21 Customer X a/c Dr
To sales a/c
(being sales made on credit to customer X)
5000
5000
10.7.21 Cash a/c Dr
To sales a/c
(being goods sold in cash)
2000
2000
15.7.21 Office supplies a/c Dr
To bank
2200
2200

(being office supplies purchased by cheque)
22.7.21 Supplier A a/c Dr
To purchase return a/c
(being goods returned to supplier)
500
500
24.7.21 Sales return a/c Dr
Profit and loss a/c Dr
To Customer X a/c
150
150
300
27.7.21 Supplier A a/c Dr
To Bank a/c
(being payment made to Supplier A by Bank)
2800
2800
28.7.21 Bank a/c Dr
Trade discount a/c Dr
To customer X a/c
(being settlement of Customer X done and trade
discount allowed)
4500
200
4700
31.7.21 Drawing a/c Dr
To bank a/c
(being drawings made by Mary from bank)
1500
1500
Salary to shop assistant a/c
To cash a/c
(being salary paid to shop assistant)
1000
1000
Ledger
Cash a/c
Date Particular Amount Date Particular Amount
1.7.21 TO capital 20000 1.7.21 By rent 2400
10.7.21 To sales 2000 2.7.21 By office equipment 5000
2.7.21 By bank 5000
4.7.21 By purchase 2500
31.7.21 By salary to shop assistant 1000
31.7.21 By bal c/d 6100

22000 22000
Capital a/c
Date Particular Amount Date Particular Amount
31.7.21 To bal c/d 20000 1.7.21 By cash 20000
20000 20000
Rent a/c
Date Particular Amount Date Particular Amount
1.7.21 To cash 2400 31.7.21 By bal c/d 2400
2400 2400
Office equipment
Date Particular Amount Date Particular Amount
2.7.21 To cash 5000 31.7.21 By bal c/d 5000
5000 5000
Purchase a/c
Date Particular Amount Date Particular Amount
2.7.21 To supplier A 4000
4.7.21 To cash 2500
31.7.21 By bal c/d 6500
6500 6500
Supplier A
Date Particular Amount Date Particular Amount
22.7.21 To purchase return 500 2.7.21 By purchase 4000
27.7.21 To bank 2800
31.7.21 To bal c/d 700
4000 4000
Bank a/c
Date Particular Amount Date Particular Amount

2.7.21 To cash 5000 15.7.21 By office supplies 2200
28.7.21 To customer X 4500 27.7.21 By supplier A 2800
31.7.21 By drawing 1500
31.7.21 By bal c/d 3000
9500 9500
Customer X a/c
Date Particular Amount Date Particular Amount
6.7.21 To sales 5000 24.7.21 By sales return 150
24.7.21 By loss on return 150
28.7.21 By bank 4500
28.7.21 By trade discount 200
5000 5000
Sales a/c
Date Particular Amount Date Particular Amount
6.7.21 By customer X 5000
31.7.21 To bal c/d 7000 10.7.21 By cash 2000
7000 7000
Office supplies a/c
Date Particular Amount Date Particular Amount
15.7.21 To bank 2200 31.7.21 By bal c/d 2200
2200 2200
Purcahse return a/c
Date Particular Amount Date Particular Amount
31.7.21 To bal c/d 500 22.7.21 By supplier A 500
500 500
Sales return a/c
Date Particular Amount Date Particular Amount
24.7.21 To customer X 150 31.7.21 By bal c/d 150

150 150
Trade discount a/c
Date Particular Amount Date Particular Amount
28.7.21 To customer X 200 31.7.21 By bal c/d 200
200 200
Drawing a/c
Date Particular Amount Date Particular Amount
31.7.21 To bank 1500 31.7.21 By bal c/d 1500
1500 1500
Loss on sales return
Date Particular Amount Date Particular Amount
24.7.21 To customer X 150 31.7.21 By bal c/d 150
150 150
Salary to shop assistant
Date Particular Amount Date Particular Amount
31.7.21 To cash 1000 31.7.21 By bal c/d 1000
1000 1000
Trial balance
Trial balance
Particular Debit Credit
Cash a/c 6100
Capital a/c 20000
Rent a/c 2400
Office equipment 5000
Purchase a/c 6500
Supplier A 700
Bank a/c 3000

Loss on sales return 150
Sales a/c 7000
Office supplies a/c 2200
Purchase return a/c 500
Sales return a/c 150
Trade discount a/c 200
Drawing a/c 1500
Salary to shop assistant 1000
Total 28200 28200
QUESTION 2
Particulars A B C
Consolidated balance
sheet
Amount (£) Amount (£)
Amount
(£) Amount (£)
Sales 3860000 1300000 170000 5330000
Cost of sales 1950500 537500 120000 2608000
Gross profit 1909500 762500 50000 2722000
Operating expenses 467000 279560 23500 770060
Operating profit 1442500 482940 26500 1951940
Interest 100000 50000 3000 153000
Profit before tax 1342500 432940 23500 1798940
Tax 356400 56000 8400 420800
Profit after tax 986100 376940 15100 1378140
With the help of the above statement it is clear that the consolidation of the income
statement is necessary at time when there is involvement of the parent company acquiring other
company. at the time of acquisition, the working of the company is affected and this is also
highlighted in the financial statements as well (Prodanova and et.al., 2019). in the present case of
B selling good to A will be added in the sales of B and also will be added in the sales of A as
well. the whole amount will be added in the sales of A as well because it is mentioned that there
is not any inventory being left with A.
Moreover, in the next adjustment A sold good to B and a quarter of goods were
remaining in the inventory of B. hence in the present case, for A, the sales will be of whole
amount that is 200000 but in case of B the total amount in sales will be quarter less. This implies

that a quarter from 120000, that is 30000 will be deducted and 170000 will be added in the sales
of B as well. in the present case, 120000 is being selected because the original cost was 120000
and the selling price was 200000.
QUESTION 3
Particular Amount (£)
retained profit from X 40000000*60% 24000000
retained profit from Z 20000000*30% 6000000
NCI Amount (£)
NCI of x from y 75000000*40% 30000000
NCI of X in Z 25000000*70% 17500000
goodwill Amount (£) Amount (£)
y z
cash 75000000 25000000
NCI at acquisition 30000000 17500000
Less: net asset at acquisition 10000000
goodwill 95000000 42500000
Particular Consolidated statement
Other non- current asset 570570
570570
Goodwill 137500000
Net current asset 240250
Loan 380000
137930820
Ordinary shares 280000
Retained profit 30210570
NCI 47500000
77990570

In the present case, the consolidated financial position statement is being prepared. Under
this the company X is acquiring some of the shares in remaining both company that is Y and Z.
The consolidated statement is being prepared at time when two or more company merge their
operations. Hence, as a result of this, the single balance sheet is being prepared by merging the
operations of the all the companies (Santis, Grossi and Bisogno, 2019). For this purpose, the first
thing evaluated is the share of goodwill within the company. this is necessary pertaining to the
fact that in case there will be difference between the book value and the purchase price paid.
Thus, this is being calculated in order to analyse the goodwill which X will get in order to
acquire the control in Y and Z. also, at time of acquisition the NCI is also being calculated and it
is necessary to be calculated. This NCI that is non- controlling interest is also known as the
minority interest is the ownership position, wherein the shareholder is having less than 50 % of
the outstanding shares and is not having any control within the decisions of the company
(Gavana, Gottardo and Moisello, 2020). further the NCI will be added in the liabilities side
within the consolidated financial statement of all the three companies. This is very important to
include all the working in better and effective manner within the acquisition of the project. This
is necessary for the reason that it will outline better and effective position of the combined
company.

REFERENCES
Books and Journals
Gavana, G., Gottardo, P. and Moisello, A.M., 2020. Did the switch to IFRS 11 for joint ventures
affect the value relevance of corporate consolidated financial statements? Evidence from
France and Italy. Journal of International Accounting, Auditing and Taxation. 38.
p.100300.
Kamburova, L., 2020. The Development of Practices for the Preparation of Consolidated
Financial Statements. Ikonomiceski i Sotsialni Alternativi. (1). pp.123-133.
Prodanova, N.A., and et.al., 2019. Methodology for assessing control in the formation of
financial statements of a consolidated business. International Journal of Recent
Technology and Engineering. 8(1). pp.2696-2702.
Santis, S., Grossi, G. and Bisogno, M., 2019. Drivers for the voluntary adoption of consolidated
financial statements in local governments. Public Money & Management. 39(8). pp.534-
543.