Accounting Fundamentals Assignment: Ledger, Trial Balance, Financials

This document presents a comprehensive solution to an accounting fundamentals assignment, covering various aspects of financial accounting. The solution begins with the creation of ledger accounts, trial balances, and financial statements (Profit & Loss and Balance Sheet) for three different entities: Maxim, Pendo, and Mafuta Ltd. Each task involves recording transactions, preparing trial balances, and generating financial statements for specific periods. The assignment also includes the analysis of sales, cost of goods sold, expenses, and the differentiation between revenue and capital expenditure with reference to International Accounting Standards (IFRS). The document provides detailed journal entries, account summaries, and financial reports to illustrate the accounting processes and principles. The final task examines the distinction between revenue and capital expenditures based on international accounting standards. This document is a valuable resource for students studying accounting fundamentals, providing practical examples and insights into financial statement preparation and analysis.

ACCOUNTING
FUNDAMENTALS

Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
(a) Ledger Accounts of Maxim for the period of April...............................................................1
(b) Trial Balance of Maxim at 30th April.....................................................................................3
(c)Financial statements of Maxim for the month ended 30th April.............................................4
TASK 2............................................................................................................................................5
(a) Ledger Accounts of Pendo for the period of January.............................................................5
(b)Trial Balance of Pendo at 30th April........................................................................................7
(c)Financial statements of Pendo for the month ended 31st Jan..................................................7
TASK 3............................................................................................................................................8
Sales A/c -........................................................................................................................................9
(b)Trial Balance of Mafuta at 31st Jan.......................................................................................13
(c) Financial Statements of Mafuta Ltd. For the year ended 31st Jan........................................13
TASK 4..........................................................................................................................................14
TASK 5..........................................................................................................................................21
(a)Demonstrate your research, differentiate between revenue expenditure and capital
expenditure................................................................................................................................21
with reference to International accounting standards................................................................21
CONCLUSION..............................................................................................................................22
REFERENCES..............................................................................................................................23

INTRODUCTION
Accounting is defined as the art and science of identifying, recording, classifying,
summarizing the transactions which are of financial nature and interpreting the results thereof.
These results are further communicated to the users of financial communication. Accounting is
concerned with evaluating the profit and loss for a stated financial period. The study is based on
fundamentals of accounting where the accounting entries are assessed to develop ledgers, closing
accounts, trial balance, income statements and balance sheets(O'Hanlon and Steele, 2000).
TASK 1
(a) Ledger Accounts of Maxim for the period of April
Date Journal Entry Debit Credit
5th April Cash A/c Dr. £300
To Capital A/c £300
7th April Purchase A/c Dr. £200
To Cash A/c £200
8th April Cash A/c Dr. £250
To Tatiana's Loan A/c £250
15th April Motor Van A/c Dr. £150
To Cash A/c £150
20th April Cash A/c Dr. £350
To Sales A/c £350
28th April Rent A/c Dr. £50
To Cash A/c £50
29th April Tatiana's Loan A/c Dr. £200
To Cash A/c £200
30th April Drawings A/c Dr. £60
To Cash A/c £60
Cash A/c -
Date Particulars Amount Date Particulars Amount
5th April To Capital A/c £300 7th April By Purchase A/c £200
1

8th April To Tatiana's
Loan A/c
£250 15th April By Motor Van A/c £150
20th April To Sales A/c £350 28th April By Rent A/c £50
29th April By Tatiana's Loan
A/c
£200
30th April By Drawings A/c £60
30th April By balance c/d £240
Total £900 Total £900
Capital A/c -
Date Particulars Amount Date Particulars Amount (£)
30th April To balance c/d £300 5th April By Cash A/c £300
Total £300 Total £300
Purchase A/c -
Date Particulars Amount Date Particulars Amount
7th April To Cash A/c £200 30th April By balance c/d £200
Total £200 Total £200
Tatiana's Loan A/c -
Date Particulars Amount Date Particulars Amount
29th April To Cash A/c £200.00 8th April By Cash A/c £250.00
30th April To balance c/d £50.00
Total £250.00 Total £250.00
Motor Van A/c -
Date Particulars Amount Date Particulars Amount
2

15th April To Cash A/c £150 30th April By balance c/d £150
Total £150 Total £150
Sales A/c -
Date Particulars Amount (£) Date Particulars Amount (£)
30th April To balance c/d 350 20th April By Cash A/c 350
Total 350 Total 350
Rent A/c -
Date Particulars Amount (£) Date Particulars Amount (£)
28th April To Cash A/c 50 30th April By balance c/d 50
Total £50 Total £50
Drawings A/c -
Date Particulars Amount (£) Date Particulars Amount (£)
30th April To Cash A/c 60 30th April By balance c/d 60
Total £60 Total £60
(b) Trial Balance of Maxim at 30th April
Account Debit (£) Credit (£)
Cash A/c £240
Purchase A/c £200
Tatiana's Loan A/c £50
Motor Van A/c £150
Capital A/c £300
Sales A/c £350
3

Drawings A/c £60
Rent A/c £50
Total £700.00 £700.00
(c)Financial statements of Maxim for the month ended 30th April
Statement of Profit & Loss for the month ended 30th April
Particulars Amount
Sales £350
Less: COGS £100
Gross Profit £250.00
Less : Rent £50
Less : Drawings £60
Operating Profit £140.00
Working Note :
Particulars Amount (£)
Opening Stock 0
Add: Purchases 200
Less: Closing Stock 100
Cost of goods sold (COGS) 100
Statement of financial position for the month ended 30th April
Assets Amount Liabilities Amount
Fixed assets Capital £300
Motor Van £150 Less : Drawings £60
Current Assets Add: Operating Profit £140
Inventory £100 £380.00
Cash £240 Tatiana's Loan £250
Less : Repaid Amount £200
£50.00
Total £490.00 Total £430.00
4

TASK 2
(a) Ledger Accounts of Pendo for the period of January
Journal Entries
Date Particulars Debit Credit
1st Jan Cash A/c Dr. £5000
To Capital A/c £5000
2nd Jan Motor Van A/c Dr. £600
To Cash A/c £600
3rd Jan Purchase A/c Dr. £1300
To Cash A/c £1300
4th Jan Cash A/c Dr. £1000
To Sergei's Loan A/c £1000
10th Jan Motor Van Expenses A/c Dr. £200
To Cash A/c £200
13th Jan Cash A/c Dr. £300
To Sales A/c £300
20th Jan Cash A/c Dr. £500
To Sales A/c £500
24th Jan Storage Expenses A/c Dr. £150
To Cash A/c £150
27th Jan Sergei's Loan A/c Dr. £350
To Cash A/c £350
30th Jan Drawings A/c Dr. £175
To Cash A/c £175
Cash A/c -
Date Particulars Amount (£) Date Particulars Amount (£)
1st Jan To Capital A/c £5000 2nd Jan By Motor Van A/c £600
4th Jan To Sergei's
Loan A/c £1000 3rd Jan By Purchases A/c £1300
13th Jan To Sales A/c £300 10th Jan By Motor Van
Expenses A/c £200
20th Jan To Sales A/c £500 24th Jan By Storage
Expenses A/c £150
27th Jan By Sergei's Loan
A/c £350
5

30th Jan By Drawings A/c £175
31st Jan By Balance c/d £4025
Total £6800 Total £6800
Capital A/c -
Date Particulars Amount Date Particulars Amount
1st Jan To Cash A/c £5000 31st Jan By balance c/d £5000
Total £5000 Total £5000
Motor Van A/c -
Date Particulars Amount Date Particulars Amount
2nd Jan To Cash A/c £600 31st Jan By balance c/d £600
Total £600 Total £600
Purchase A/c -
Date Particulars Amount Date Particulars Amount
3rd Jan To Cash A/c £1300 31st Jan By balance c/d £1300
Total £1300 Total £1300
Sergei's Loan A/c -
Date Particulars Amount Date Particulars Amount
27th Jan To Cash A/c £350 4th Jan By Cash A/c 1000
31st Jan To balance c/d £650
Total £1000 Total £1000
Motor Van Expenses A/c -
Date Particulars Amount Date Particulars Amount
10th Jan To Cash A/c £200 31st Jan By balance c/d £200
Total £200 Total £200
Sales A/c -
6

Date Particulars Amount (£) Date Particulars Amount (£)
31st Jan To balance c/d £800 13th Jan By Cash A/c £300
20th Jan By Cash A/c £500
Total £800 Total £800
Storage Expenses A/c -
Date Particulars Amount (£) Date Particulars Amount (£)
24th Jan To Cash A/c £150 31st Jan By balance c/d £150
Total £150 Total £150
Drawings A/c -
Date Particulars Amount Date Particulars Amount
30th Jan To Cash A/c £175 31st Jan By balance c/d £175
Total £175 Total £175
(b)Trial Balance of Pendo at 30th April
Account Debit Credit
Cash A/c 4025
Capital A/c 5000
Motor Van A/c 600
Purchase A/c 1300
Sergei's Loan A/c 650
Motor Van Expense A/c 200
Sales A/c 800
Storage Expense A/c 150
Drawings A/c 175
Total 6450 6450
(c)Financial statements of Pendo for the month ended 31st Jan
Statement of Profit & Loss of Pendo for the month ended 31st Jan
Sales 800
less: COGS 500
Gross Profit 300
7

less:operating expenses
motor van expenses 200
storage expenses 150
350
Loss -50
TASK 3
Journal Entries
Date Particulars Debit Credit
2nd Jan Harvey A/c Dr. £124
To Sales A/c £124
5th Jan Wages A/c Dr. £12
To Cash A/c £12
5th Jan Purchase A/c Dr. £150
To Rich A/c £150
7th Jan Cash A/c Dr. £18
To Smith A/c £18
9th Jan Max A/c Dr. £21
To Cash A/c £21
11th Jan Cash A/c Dr. £64
To Sales A/c £64
14th Jan Wages A/c Dr. £14
To Cash A/c £14
14th Jan Purchase A/c Dr. £75
To Cash A/c £75
15th Jan Rich A/c Dr. £162
To Cash A/c £162
20th Jan Office Desk A/c Dr. £32
To Cash A/c £32
8

21st Jan Wages A/c Dr. £17
To Cash A/c £17
21st Jan Cash A/c Dr. £110
To Sales A/c £110
23rd Jan Office Expenses A/c Dr. £3
To Cash A/c £3
23rd Jan Cash A/c Dr. £25
To Harvey A/c £25
28th Jan Cash A/c Dr. £84
To Sales A/c £84
28th Jan Wages A/c Dr. £15
To Cash A/c £15
31st Jan Cash A/c Dr. £30
To Sales A/c £30
Harvey A/c -
Date Particulars Amount Date Particulars Amount
1st Jan To balance b/d £39 23rd Jan By Cash £25
2nd Jan To Sales A/c £124
31st Jan By balance c/d £138
Total £163 Total £163
Sales A/c -
Date Particulars Amount Date Particulars Amount
31st Jan To balance c/d £412 2nd Jan By Harvey A/c £124
11th Jan By Cash A/c £64
21st Jan By Cash A/c £110
28th Jan By Cash A/c £84
31st Jan By Cash A/c £30
9

Total £412 Total £412
Wages A/c -
Date Particulars Amount Date Particulars Amount
5th Jan To Cash A/c £12 31st Jan By balance c/d £58
14th Jan To Cash A/c £14
21st Jan To Cash A/c £17
28th Jan To Cash A/c £15
Total £58 Total £58
Cash A/c -
Date Particulars Amount Date Particulars Amount
1st Jan To balance B/d £343 5th Jan By Wages £12
7th Jan To Smith £18 9th Jan By Max £21
11th Jan To Sales £64 14th Jan By Wages £14
21st Jan To Sales £110 15th Jan By Rich £162
23rd Jan To Harvey £25 20th Jan By Office Desk £32
28th Jan To Sales £84 21st Jan By Wages £17
Purchase A/c -
Date Particulars Amount Date Particulars Amount
05/01/18 To Rich 150 31 st Jan By balance c/d 225
14/01/18 To Cash 75
Total 225 Total 225
Rich A/c -
Date Particulars Amount Date Particulars Amount
15/01/18 To Cash 162 1st Jan By balance b/d 12
10