Accounting Fundamentals: Financial Reporting for Maxim, Pendo, Mafuta

This assignment delves into the core principles of accounting through the analysis of three businesses: Maxim, Pendo, and Mafuta. It begins with journal entries and ledger postings for each company, meticulously recording financial transactions. The assignment then progresses to the creation of trial balances, ensuring the accuracy of the recorded data. Following the trial balances, profit and loss statements and financial position statements are prepared for each business, providing a comprehensive view of their financial performance and position. The tasks cover various transactions, including capital contributions, purchases, sales, loan activities, and expense management, demonstrating a practical application of accounting concepts. The report also touches upon the difference between capital and revenue expenditures, reinforcing fundamental accounting knowledge. This assignment serves as a valuable resource for understanding financial reporting and analysis.

ACCOUNTING
FUNDAMENTALS

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
(a) Ledger accounts from accounting transactions of Maxim.....................................................1
b) Trial balance of Maxim...........................................................................................................3
c) Profit and loss statement and financial position statement of Maxim ...................................3
TASK 2............................................................................................................................................4
a) Ledger accounts with above transactions with dates and descriptions of Pendo ...................4
b) Trial balance at 31st January of Pendo...................................................................................6
c) Profit and loss statement and financial position statement of Pendo......................................6
TASK 3............................................................................................................................................7
a) Ledger accounts of Mafuta.....................................................................................................7
b) Trial balance at 31st January of Mafuta..................................................................................9
Profit and loss statement and financial position statement at 31st January of Mafuta.............10
TASK 4..........................................................................................................................................11
Ledger accounts and recording of transactions.........................................................................11
TASK 5..........................................................................................................................................13
CONCLUSION..............................................................................................................................15
REFERENCES..............................................................................................................................16

INTRODUCTION
Accounting fundamentals contains basic accounting concepts, principles, accounting
concepts, money measurement, monetary terms, dual aspects, going concern etc. Nature,
behaviour and purpose of cost accounting and cost accounting concepts illustrated with practical
problems (Zeff, 2016). Accounting treatments subject to business transactions with appropriate
principles and rules are provided in this report. Basic accounting principles of accounting
reviewed with implementation of appropriate online software. Financial statements are prepared
in the basis of initial data with both routine and non routine tacticians. An evaluation of financial
statements with confidence also presented in this report.
Structure of this report is base upon providing information related to defining the
accounting principles. There are five task given in this report. First four task are related to
treatment of transactions and recording them in primary books of accounts. There is a difference
between capital expenditure and revenue expenditure also defined in this report.
TASK 1
Journal entries: IT is a part of recording primary books of accounting that helps in
recording day to day business transaction with in organisation (Wright, 2017).
Ledger posting: this is one of the accounting procedure that mainly associated with
recording the information of initial business transactions (Dobija and Kurek, 2013).
(a) Ledger accounts from accounting transactions of Maxim
Date Particular
Debit
amount
Credit
amount
05/04/18 Cash a/c 300.00
To capital 300.00
07/04/18
Purchase
a/c 200.00
To cash a/c 200.00
1

08/04/18 Cash a/c 250.00
To loan
form
Tatiana 250.00
15/04/18
Motor car
a/c 150.00
To van a/c 150.00
20/04/18 Cash a/c 350.00
To sales 350.00
28/04/18 rent a/c 50.00
To cash a/c 50.00
29/04/18 Loan a/c 200.00
To cash a/c 200.00
30/04/18
Drawing
a/c 60.00
To cash a/c 60.00
Ledger posting
Cash account
Date Particular Amount Date Particular Amount
05/04/18 To capital 300.00 07/04/18 By purchase 200.00
2

a/c
08/04/18
To loan
form
Tatiana 250.00 15/04/18 By Motor van 150.00
20/04/18 To sales 350.00 28/04/18 By rent 50.00
29/04/18 By loan paid 200.00
30/04/18 by Drawing 60.00
30/04/18
By closing
balance 240.00
900.00 900.00
Capital a/c
Date Particular Amount Date Particular Amount
30/04/18 To drawing 60.00 05/04/18 By cash 300.00
30/04/18
To closing
balance 240.00
300.00 300.00
Purchase a/c
Date Particular Amount Date Particular Amount
07/04/18 To cash 200.00 30/04/18 By trading a/c 200.00
200.00 200.00
Loan a/c
Date Particular Amount Date Particular Amount
29/04/18 To cash 200.00 08/04/18 By cash 250.00
30/04/18
To closing
balance 50.00
3

250.00 250.00
Motor van
Date Particular Amount Date Particular Amount
15/04/16 To cash 150.00 30/04/16
By closing
balance 150.00
150.00 150.00
Sales a/c
Date Particular Amount Date Particular Amount
30/04/16
To Trading
a/c 350.00 20/04/18 By cash 350.00
350.00 350.00
Rent a/c
Date Particular Amount Date Particular Amount
28/04/18 To cash 50.00 20/04/18 By P&l ac 50.00
50.00 50.00
Drawing a/c
Date Particular Amount Date Particular Amount
30/04/18 To cash a/c 60.00 30/04/18 By capital a/c 60.00
60.00 60.00
b) Trial balance of Maxim
S.N. Particulars Debit amount Credit amount
1 Cash 240.00 0.00
2 Capital 0.00 300.00
3 Purchase 200.00 0.00
4 Loan a/c 0.00 50.00
4

5 Motor Van 150.00 0.00
6 Sales 0.00 350.00
7 Drawings 60.00 0.00
8 Rent 50.00 0.00
Total 700.00 700.00
c) Profit and loss statement and financial position statement of Maxim
Trading and P&L a/c Statement
Particular Amount
Sales 350.00
Less: Cost of sales -100.00
(Purchase-closing stock)
Gross profit 250.00
Rent paid 50.00
Net profit 200.00
Financial position statement
Assets Amount
Non Current assets
Motor van 150.00
Current assets
Cash 240.00
Closing stock 100.00
Total assets 490.00
Liabilities
Capital 240
add: profit 200 440.00
5

Loan 50.00
Total liabilities 490.00
TASK 2
a) Ledger accounts with above transactions with dates and descriptions of Pendo
Journal entries
Date Particulars Amount (£) Amount (£)
01/01/18 Cash a/c 5000.00
To capital a/c 5000.00
(Being capital introduced)
02/01/18 Motor van 600.00
To cash a/c 600.00
(Being Motor van acquired)
03/01/18 Purchase a/c 1300.00
To cash a/c 1300.00
(Being purchase made)
04/01/18 Cash a/c 1000.00
To loan form
Sergei a/c 1000.00
(Loan received from Sergie)
10/01/18 Motor expenses 200.00
To cash a/c 200.00
(Being motor expenses paid)
13/01/18 Cash a/c 300.00
To sales 300.00
6

(Sales made)
20/01/18 Cash a/c 500.00
To sales 500.00
(Being sales made)
24/01/18
Storage Expenses
a/c 150.00
To cash a/c 150.00
(Being expenses made)
27/01/18 Loan a/c 350.00
To cash a/c 350.00
(Repayment of loan)
30/01/18 Drawing a/c 175.00
Cash 175.00
(Drawings made)
Ledger accounts
Cash a/c
Date Particular Amount (£) Date Particular Amount (£)
01/01/18 To capital a/c 5000.00 02/01/18 By motor van 600.00
04/01/18
To loan form
sergri 1000.00 03/01/18 By Purchase 1300.00
13/01/18 To sales 300.00 10/01/18
By motor
expenses 200.00
20/01/18 To sales 500.00 24/01/18
By storage
expenses 150.00
27/01/18 By repayment 350.00
7

of loan
30/01/18 By drawing 175.00
31/01/18
By closing
balance 4025.00
6800.00 6800.00
Motor van a/c
Date Particular Amount (£) Date Particular Amount (£)
02/01/18 To Cash 600.00 31/01/18
By closing
balance 600.00
600.00 600.00
Purchase a/c
Date Particular Amount (£) Date Particular Amount (£)
03/01/18 To Cash 1300.00 31/01/18 By trading a/c 1300.00
1300.00 1300.00
Loan form Sergie a/c
Date Particular Amount (£) Date Particular Amount (£)
27/01/18 To Cash 350.00 04/01/18 By cash 1000.00
31/01/18 To balance c/d 650.00
1000.00 1000.00
Sales a/c
Date Particular Amount (£) Date Particular Amount (£)
31/01/18 To trading a/c 800.00 13/01/18 By cash 300.00
20/01/18 By cash 500.00
800.00 800
Storage expenses
Date Particular Amount (£) Date Particular Amount (£)
8

24/01/18 To Cash 150.00 31/01/18 By P&L a/c 150.00
150.00 150.00
Drawing a/c
Date Particular Amount (£) Date Particular Amount (£)
30/01/18 To Cash 175.00 31/01/18 By Capital a/c 175.00
175.00 175.00
Capital a/c
Date Particular Amount (£) Date Particular Amount (£)
31/01/18 To Drawing 175.00 01/01/18 By cash 5000.00
31/01/18 To balance c/d 4825.00
5000.00 5000.00
Motor expenses
Date Particular Amount (£) Date Particular Amount (£)
10/01/18 To Cash 200.00 31/01/18 By P&L a/c 200.00
200.00 200.00
b) Trial balance at 31st January of Pendo
Trial balance
Trial balance
S.N. Particulars Debit Amount (£) Credit Amount (£)
1 Cash 4025.00 -
2 Motor Van 600.00 -
3 Purchase 1300.00 -
4 Loan a/c - 650.00
5 Sales a/c - 800.00
9

6 Storage expenses 150.00 -
7 Capital - 5000.00
8 Motor expenses 200.00 -
9 Drawings 175.00 -
Total 6450.00 6450.00
c) Profit and loss statement and financial position statement of Pendo
Profit and loss statement
Particulates Amount (£)
Sales 800.00
Less: Cost of sales 500.00
(Purchase-closing stock)
Gross profit 300.00
Less: expenses
Storage expenses 150.00
Motor expenses 200.00
Net loss -50.00
Financial position statement
Non current assert Amount (£)
Motor van 600.00
Current assets
cash 4025.00
Stock 800.00
Total assets 5425.00
Equity
10

Capital 4825
Less: Net loss -50 4775.00
Current liability
Loan form Sergei 650.00
Total liabilities 5425.00
TASK 3
a) Ledger accounts of Mafuta
11

12

Payable to Max's a/c
Date Particular Amount (£) Date Particular Amount (£)
Jan, 9 To cash a/c 21.00 Jan, 1
By Balance
b/d 21.00
Payable to Rich's a/c
Date Particular Amount (£) Date Particular Amount (£)
Jan, 15 To cash a/c 162.00 Jan, 1
By Balance
b/d 12.00
Jan, 5
By purchase
a/c 150.00
162.00 162.00
Inventory a/c
13

Date Particular Amount (£) Date Particular Amount (£)
Jan, 1 To Balance b/d 458.00 Jan, 31
By Trading
a/c 458.00
Jan, 31 To Trading a/c 374.00 Jan, 31
By Balance
c/d 374.00
Feb, 1 To Balance b/d 374.00
b) Trial balance at 31st January of Mafuta
Trial Balance at 31 January
Trial Balance at 31 January
Particulars Debit (£) Credit (£)
Cash in hand a/c 323.00 -
Capital a/c - 1049.00
Fixtures and fittings a/c 230.00 -
Sales a/c - 412.00
Wages a/c 58.00 -
Purchase a/c 225.00 -
Office expenses a/c 3.00 -
Receivables a/c - -
Harvey 138.00 -
Moon 26.00 -
Inventory a/c 458.00 -
1461.00 1461.00
14

Profit and loss statement and financial position statement at 31st January of Mafuta
Statement of Profit and Loss
For the month ended 31 January
Particulars Amount (£)
Sales 412.00
Less- Cost of goods sold 309.00
Gross profit 103.00
Less – Expenses
Wages 58.00
Office Expenses 3.00 61.00
Net Profit 42.00
Statement of Financial position at 31 January
Particulars Amount (£)
Non current assets
Fixtures and fittings 230.00
Current assets
Inventory 374.00
Trade receivables (138+26) 164.00
Cash 323.00 861.00
Total Assets 1091.00
Capital account 1049.00
Add – Net Profit 42.00 1091.00
15

Total Liabilities 1091.00
Working Note:
Cost sale = Purchase + Opening inventories – Closing stock
= 458 + 225 – 374 = 309
TASK 4
Ledger accounts and recording of transactions
Date Particular
Debit
amount
Credit
amount
02/06/18 Claire a/c 8500.00
To sales a/c 8500.00
(Being sales are made)
13/06/18 Purchase a/c 12000.00
To Georgina 12000.00
(Being purchase are made)
14/06/18 Hywel a/c 8550.00
To sales a/c 8550.00
(Being sales are made)
20/06/18 Cash a/c 6000.00
To sales a/c 6000.00
(being sales are made)
21/06/18 Purchase a/c 4500.00
To Andrew 4500.00
(Being purchase are made)
22/06/18 Sales return a/c 1000.00
16

to Claire a/c 1000.00
(Being sales return are made)
24/06/18 Mandy a/c 5000.00
To sales a/c 5000.00
(Being sales are made)
24/06/18 Cash a/c 7125.00
Discount allowed a/c 375.00
to Claire a/c 7500.00
(Payment made by Claire)
25/06/18 Cash a/c 8550.00
To Hywel a/c 8550.00
(Payment made to Hywel a/c)
Georgina 12000.00
To Cash 11160.00
To discount received 840.00
(Payment made to Georgina)
27/06/18 Andrew a/c 4500.00
To discount received 90.00
To cash 4410.00
Ledger accounts
17

Sales a/c
Date Particular
Amount
(£) Date Particular Amount (£)
30/06/18 To Trading a/c 28050.00 02/06/18 By Claire 8500.00
14/06/18 By Hywel 8550.00
20/06/18 By cash 6000.00
24/06/18 By Mandy 5000.00
28050.00 28050.00
Purchase a/c
Date Particular Amount (£) Date Particular
Amount
(£)
13/06/18 To Georgina 12000.00 30/06/18 By Trading a/c 16500.00
21/06/18 To Andrew 4500.00
16500.00 16500.00
Claire a/c
Date Particular Amount Particular Amount
02/06/18 To sale 8500.00 By Cash 7125
By discount allowed 375
8500.00 8500
Georgina a/c
Date Particular
Amount
(£) Date Particular Amount (£)
25/06/18 To Cash 11160.00 13/06/16 By Purchase 12000.00
To Discount received 840.00
12000.00 12000.00
Hywel a/c
18

Date Particular Amount (£) Date Particular Amount (£)
14/06/18 To sales 8550.00 25/06/18 By cash a/c 8550.00
8550.00 8550.00
Andrew a/c
Date Particular Amount (£) Date Particular Amount (£)
27/06/18 To Cash 4410.00 21/06/18 By Purchase a/c 4500.00
To Discount received 90.00
4500.00 4500.00
Cash a/c
Date Particular Amount (£) Date Particular Amount (£)
20/06/18 To sales 6000.00 25/06/18 By Georgian 11160.00
14/06/18 To Hywel 8550.00 27/06/18 By Andrew 4410.00
24/06/18 To claire a/c 7125.00 30/06/18
By Balance
c/d 6105.00
21675.00 21675.00
Sales return a/c
Date Particular Amount (£) Date Particular Amount (£)
22/06/18 To claire a/c 1000.00 30/06/18 By Trading a/c 1000.00
1000.00 1000.00
Mandy a/c
Date Particular
Amount
(£) Date Particular Amount (£)
24/06/18 To sales 5000.00 30/06/18 By Balance c/d 5000.00
5000.00 5000.00
Discount allowed a/c
Date Particular Amount Date Particular Amount (£)
19

(£)
24/06/18 To Claire 375.00 30/06/18 By P&L a/c 375.00
375.00 375.00
Discount Received account.
Date Particular
Amount
(£) Date Particular Amount (£)
30/06/18 To P&L 930.00 25/06/18 By Georgina 840.00
27/06/18 By Andrew 90.00
930.00 930.00
Trial balance
Particular Debit amount Credit amount
Sales 28050.00
Purchase 16500.00
Cash a/c 6105.00
Discount received 930.00
Discount allowed 375.00
Sales return 1000.00
Mandy 5000.00
Total 28980.00 28980.00
TASK 5
Revenue expenditure
Revenue expenditure is the mainly associated with monthly or daily expenses. It is
analysed that a fixed plan is mainly associated with the revenues and expenditures with current
accounting period (Horomnea and Pașcu, 2012). These expenses happens every year and every
month. Service maintenance, repair expenses, administration expenses, stationary expenses are
20