Accounting Fundamentals Assignment: Ledger, Trial Balance, Statements

This document presents a comprehensive accounting assignment solution, covering various aspects of financial accounting. It includes detailed journal entries, ledger accounts, trial balances, income statements, and statements of financial position for four different traders: Maxim, Pendo, Mafuta, and Ricardo. The assignment also explores the differences between revenue and capital expenditures, providing a clear understanding of their accounting treatment. The solutions are presented with clear calculations and explanations, making it a valuable resource for students studying accounting fundamentals. The assignment includes all the relevant information, from the initial transactions to the final financial statements, and provides a complete overview of the accounting cycle for each trader. This resource is ideal for students seeking to understand the practical application of accounting principles and improve their problem-solving skills.

Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
(a) Ledger accounts of Maxim....................................................................................................2
(b) Trial balance of Maxim ........................................................................................................3
(c) Final Statements of maxim....................................................................................................3
TASK 2............................................................................................................................................3
(a) Ledgers accounts of Pendo....................................................................................................5
(b) Trial balance of Pendo...........................................................................................................6
(c) Income statement of Pendo....................................................................................................6
TASK 3............................................................................................................................................7
(a) Ledger accounts of Mafuta....................................................................................................7
(b) Trial balance of Mafuta.........................................................................................................9
(c) Financial position statement of Mafuta.................................................................................9
TASK 4..........................................................................................................................................10
(a) Ledger accounts of Ricardo.................................................................................................10
(b) Trial balance of Ricardo......................................................................................................12
TASK 5..........................................................................................................................................13
Differentiate between revenue expenditure and capital expenditure........................................13
CONCLUSION .............................................................................................................................15
REFERENCES .............................................................................................................................16

INTRODUCTION
Accounting is defined as the process of correctly recording, posting, communicating and
reviewing the overall information related with business financial transaction within a specific
time frame (Accounting, 2019). This include the preparation of valuable financial documents
such as income statements, balance sheet and cash flow statement which support in making
better decision for future profitability. Accounting is mainly depended upon the fundamental that
help in making a successful business by keeping authentic and reliable reports.
In this report, ledger accounts, statement of P&L, trail balance and statement of financial
position are prepared for different traders. In addition, difference between capital and revenue
expenditure are discussed in this report.
TASK 1
Journal entries
Date Particulars Debit (£) Credit (£)
April, 5 Cash A/c 300.00
To Capital a/c 300.00
April, 7 Purchase a/c 200.00
To cash a/c 200.00
April, 8 Cash a/c 250.00
To Loan from Tatiana 250.00
April, 15 Motor van a/c 150.00
To cash a/c 150.00
April, 20 Cash A/c 350.00
To sales a/c 350.00
April, 28 Rent a/c 50.00
To cash a/c 50.00
April, 29 Loan a/c 200.00
To Cash A/c 200
April, 30 Drawings a/c 60.00
To cash a/c 60.00
1

(a) Ledger accounts of Maxim
Rent a/c
Date Particular Amount (£) Date Particular Amount (£)
April,28 To cash a/c 50 April,30
By profit & loss
a/c 50
Drawings a/c
Date Particular Amount (£) Date Particular Amount (£)
April, 30 To Cash a/c 60
Sales a/c
Date Particular Amount (£) Date Particular Amount (£)
April,30 By Trading a/c 350 April,20 To cash a/c 350
2

(b) Trial balance of Maxim
Trail balances at April,30
Particulars Debit (£) Credit (£)
Cash A/c 240
Capital a/c 300
Purchase a/c 200
Loan a/c 50
Motor van a/c 150
Rent a/c 50
Sales a/c 350
Drawings a/c 60
Total 700 700
(c) Final Statements of maxim
Statement of profit & loss a/c
Particulars Amount
Sales a/c 350.00
Less – Cost of goods sold 100.00
Gross Profit 250.00
Less – Expenses
Rent a/c 50.00
Net Profit 200.00
Statement of Financial position as at April, 30
Amount
Non Current assets
Motor van 150.00
Current Assets
Cash A/c 240.00
Inventory 100.00 340.00
3

Total Assets 490.00
Capital a/c 300.00
Add – Net Profit 200.00
Less – Drawings 60.00 440.00
Current Liabilities
Short term loan 50.00
Total Liabilities 490.00
TASK 2
Journal entries
Date Particulars Debit (£) Credit (£)
January, 1 Cash a/c 5000.00
To capital a/c 5000.00
January, 2 Motor van a/c 600.00
To cash a/c 600.00
January, 3 Purchase a/c 1300.00
To cash a/c 1300
January, 4 Cash a/c 1000.00
To loan from Sergei 1000.00
January, 10 Motor van expenses a/c 200.00
To cash a/c 200.00
January, 13 Cash a/c 300.00
To sales a/c 300.00
January, 20 Cash a/c 500.00
To sales a/c 500.00
January, 24 Storage expenses a/c 150.00
To cash a/c 150.00
January, 27 Loan a/c 350.00
To Cash a/c 350.00
4

January, 30 Drawings a/c 175.00
To Cash a/c 175
(a) Ledgers accounts of Pendo
Loan from Sergei a/c
Date Particular Amount (£) Date Particular Amount (£)
Jan, 27 To cash a/c 350 Jan, 4 By cash a/c 1000
Jan, 31 To Balance c/d 650
1000 1000
Feb, 1 By Balance b/d 650
5

(b) Trial balance of Pendo
Trial Balance at 31 January
Particulars Debit (£) Credit (£)
Cash a/c 4025
Capital a/c 5000
Motor van a/c 600
Purchase a/c 1300
Loan from Sergei a/c 650
Motor van expenses a/c 200
Sales a/c 800
Storage expenses a/c 150
Drawings a/c 175
6450 6450
6

(c) Income statement of Pendo
Statement of Profit and Loss
for the month ended 31 January
Particulars Amount (£) Amount (£)
Sales a/c 800.00
Less – Cost of Goods sold 500.00
Gross Profit 300.00
Less- Expenses
Motor van expenses 200.00
Storage expenses 150.00 350.00
Net Loss 50.00
Statement of financial position at January, 31
Particulars Amount (£) Amount (£)
Non Current assets
Motor Van 600.00
Current assets
Cash 4025.00
Closing Stock 800.00 4825.00
Total assets 5425.00
Capital account 5000.00
Less- Net loss 50.00
Less – Drawings 175.00 4775.00
Current liabilities
Short term loan 650.00
Total Liabilities 5425.00
Working Notes: Cost Of goods sold = Purchase – Closing inventories
= 1300.00 – 800.00 = 500.00
7

TASK 3
(a) Ledger accounts of Mafuta
Cash a/c
Date Particular Amount (£) Date Particular Amount (£)
Jan, 1 To Balance b/d 343 Jan, 5 By Wages a/c 12
Jan, 7 To Smith's a/c 18 Jan, 9 By Max's a/c 21
Jan, 11 To Sales a/c 64 Jan, 14 By Wages a/c 14
Jan, 21 To Sales a/c 110 Jan, 14 By Purchases a/c 75
Jan, 23 To Harvey's a/c 25 Jan, 15 By Rich's a/c 162
Jan, 28 To Sales a/c 84 Jan, 20
By Fixtures and
fittings a/c 32
Jan, 31 To Sales a/c 31 Jan, 21 By Wages a/c 17
Jan, 23 By office expenses a/c 3
Jan, 28 By Wages a/c 15
Jan, 31 By Balance c/d 323
674 674
Feb, 1 To Balance b/d 323
Capital a/c
Date Particular Amount (£) Date Particular Amount (£)
Jan, 1 To Payables 33 Jan, 1 By Cash in hand a/c 343
Jan, 31 To balance c/d 1049 By Inventory 458
By Furniture and
fittings 198
By Receivables 83
1082 1082
Fixtures and fittings a/c
Date Particular Amount (£) Date Particular Amount (£)
Jan, 1 To Balance b/d 198 Jan, 31 By Balance c/d 230
Jan, 20 To cash a/c 32
230 230
8

Feb, 1 To Balance b/d 230
Sales a/c
Date Particular Amount (£) Date Particular Amount (£)
Jan, 31 To Trading a/c 412 Jan, 2 By Harvey's a/c 124
Jan, 11 By Cash a/c 64
Jan, 21 By Cash a/c 110
Jan, 28 By Cash a/c 84
Jan, 31 By Cash a/c 30
412 412
Wages a/c
Date Particular Amount (£) Date Particular Amount (£)
Jan, 5 To cash a/c 12 Jan, 31 Profit and loss a/c 58
Jan, 14 To cash a/c 14
Jan, 21 To cash a/c 17
Jan, 28 To cash a/c 15
58 58
Purchase a/c
Date Particular Amount (£) Date Particular Amount (£)
Jan, 5 To Rich's a/c 150 Jan, 31 By Trading a/c 225
Jan, 14 To cash a/c 75
225 225
Office Expenses a/c
Date Particular Amount (£) Date Particular Amount (£)
Jan, 23 To cash a/c 3 Jan, 31 Profit and loss a/c 3
Receivables from Smith's a/c
Date Particular Amount (£) Date Particular Amount (£)
Jan,1 To Balance b/d 18 Jan, 7 By Cash a/c 18
Receivables from Harvey's a/c
Date Particular Amount (£) Date Particular Amount (£)
Jan, 1 To Balance b/d 39 Jan, 23 By Cash a/c 25
Jan, 2 To Sales a/c 124 Jan, 31 By Balance c/d 138
9

163 163
Feb, 1 To Balance b/d 138
Receivables from Moon's a/c
Date Particular Amount (£) Date Particular Amount (£)
Jan, 1 To Balance b/d 26 Jan, 31 By Balance c/d 26
Feb, 1 To Balance b/d 26
Payable to Rich's a/c
Date Particular Amount (£) Date Particular Amount (£)
Jan, 15 To cash a/c 162 Jan, 1 By Balance b/d 12
Jan, 5 By purchase a/c 150
162 162
Payable to Max's a/c
Date Particular Amount (£) Date Particular Amount (£)
Jan, 9 To cash a/c 21 Jan, 1 By Balance b/d 21
Inventory a/c
Date Particular Amount (£) Date Particular Amount (£)
Jan, 1 To Balance b/d 458 Jan, 31 By Trading a/c 458
Jan, 31 To Trading a/c 374 Jan, 31 By Balance c/d 374
Feb, 1 To Balance b/d 374
(b) Trial balance of Mafuta
Trial Balance at 31 January
Particulars Debit (£) Credit (£)
Cash in hand a/c 323
Capital a/c 1049
Fixtures and fittings a/c 230
Sales a/c 412
Wages a/c 58
Purchase a/c 225
10