Comprehensive Accounting Report: Business Transactions, Assessment 1

This report provides a comprehensive analysis of accounting for business transactions. It begins with an introduction to the recording of financial transactions and their organization in primary books of accounts. The report then explores the advantages and disadvantages of profit business structures and identifies the main users of accounting information, along with their respective uses. It includes detailed journal entries for R. Locke & Co. and S. Young, along with a trial balance for S. Young. Furthermore, the report constructs an income statement and a statement of financial position for F. Jones, offering a practical application of accounting principles. The conclusion summarizes the importance of accounting information in financial decision-making. The report covers the key elements of financial accounting in a practical way.

RECORDING BUSINESS
TRANSACTIONS- ASSESSMENT 1
ONLY

Table of Contents
INTRODUCTION...........................................................................................................................1
PART 1............................................................................................................................................1
a) Advantages and disadvantages for profit business structures.................................................1
b) Main users of accounting information and use of these information.....................................2
PART 2............................................................................................................................................2
Journal entries in the books of R. Locke & Co...........................................................................2
PART 3............................................................................................................................................3
a) Journal entries in the books of S. Young................................................................................3
b) Trial balance as at 30th June 2018..........................................................................................4
PART 4............................................................................................................................................6
a) Income statement for F. Jones for the year ending 30th September 2018..............................6
b) Construct a statements of financial position for F. Jones as at 30th September 2018............7
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Accounting of business transactions is a process of recording the transactions and records
in well organised manner in the primary books of accounts. These information are further
divined in various sections on the basis of nature. Transaction that are happened in the financial
form are only recognised in the books of accounts (Hall, 2012). This report defined the
advantages and disadvantages for profit business structures, the users of accounting information
and the use of accounting information. Journal entries, ledger posting and trial balance are
illustrated in the bais of practical based examples. Process of framing of income statement,
statement of financial position statements are considered in this report for the year 30th
September 2018.
PART 1
a) Advantages and disadvantages for profit business structures
Profit organisations: Entities that are established to generate profitability are considered
as profit making organisations (Simkin, Norman and Rose, 2014). These type of organisations
mainly associated with taking more risk to generate more profitability.
Advantages
 Business grow by taking risk and motivates entrepreneurs to lead the organisation with
more confidence and faith.
 Effective profit generation creates a sustainable base for organisation to attain future
aspects and targets on time.
 Ownership and control remain in single hands that helps in bound the actions and works
in single formation (Pros and cons of profit organisation, 2018).
Disadvantage
 Due to centralisation upon profitability organisation's moral image get impacted among
society and employees. It initiate unstructured use of available resources for running the
business.
 Organisation may be avoid the legal regulation and valid procedure due to following hih
earning perspective.
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 If an organisation having high profitability then amount of liquid assets are required to
attain by organisation. High liquidity may increase the current ration and reduce the long
term sustainability in longer run (Worrell, Di Gangi and Bush, 2013).
b) Main users of accounting information and use of these information
There are two type of users found in organisational context such as;
Internal users
This group remain associated with analysing the accounting information for business
growth and development. Senior authorities, directors, managers, employer and employees are
the main internal users of accounting information.
External users
Stakeholders, investors, creditors and government are the main external users considered
in this group. The information related to organisation's profitability and dividend distribution
share are the essential accounting information used by these external users (Mahdavi and
Funnell, 2012).
PART 2
Journal entries in the books of R. Locke & Co.
Date Particulars Debit amount (£) Debit amount (£)
1 June Van a/c 5392
To Smith auto garages 5392
(Being Van purchased)
3 June Bed-debts 100
To P. Jacobs 100
(Being bed debts written off)
8 June Timewas Ltd. 801
To Furniture 801
(Being furniture returned)
12 June Cash a/c 200
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Bed-debts a/c 120
To J head 320
(being cash received and bed debts
written off)
14 June Drawing 50
stock a/c 50
(Being drawing made)
28 June
Drawing
account 26
To bank 26
(Being drawing made)
28 June Machinery a/c 1260
To Saver electronic Ltd 1260
(Being Machinery acquired)
PART 3
a) Journal entries in the books of S. Young
Date Particulars
Debit amount
(£)
Debit amount
(£)
1 June Bank a/c 15000
To capital A/c 15000
(Being capital introduced)
2 June Van a/c 7400
To bank 7400
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(Being Van purchased)
5 June
Office
Fixtures 1900
To Pink Ltd 1900
(Being office fixtures acquired)
8 June Van a/c 7200
To Cart Cars a/c 7200
(Being van purchased on credit)
12 June Cash a/c 180
To bank a/c 180
(Being deposit made in to banks)
15 June
Office
Fixtures 120
To Cash a/c 120
(Being office fixtures acquired on
cash)
19 June Cartoon carts 7200
To bank a/c 7200
(Being cartoon carts paid with
bank)
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21 June Cash a/c 5100
To loan form B.
Herry 5100
(Being loan taken)
25 June Bank a/c 400
To Cash a/c 400
(Being cash deposited to bank)
30 June
Office
Fixtures 680
To bank 680
(Being office furniture acquired)
b) Trial balance as at 30th June 2018
Particulars Debit amount (£) Credit amount (£)
Bank A/c 60
Capital 15000
VAN 14600
Cash 4760
Office fixtures 2700
Pink Ltd 1900
Loan form B. Herry 5100
Suspense account 3800
Total 23960 23960
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Working notes
Ledger posting
1. Bank A/c
Date Particular Amount Date Particular Amount
1 June To capital 15000 2 June By van 7400
25 June To cash 400 12 June By Cash 180
19 June
By Cartoon
Cars 7200
30 June
By Office
fixtures 680
30 June Bank O/d 60
15460 15460
2. Capital account
Capital a/c
Date Particular Amount Date Particular Amount
30 June To Balance C/d 15000 1 June By Bank 15000
3. Van account
Van A/c
Date Particular Amount Date Particular Amount
2 June To bank 7400 30 June By Balance c/d 14600
8 June To Cart Cars 7200
14600 14600
4. Cartoon cars
Cartoon cars a/c
Date Particular Amount Date Particular Amount
8 June By Van A/c 7200
19 June To bank 7200
7200 7200
5. Cash a/c
Cash A/c
Date Particular Amount Date Particular Amount
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12 June To bank 180 15 June
By Office
fixtures 120
21 June
To Loan from B.
Herry 5100 25 June By Bank 400
30 June By Balance c/d 4760
5280 5280
6. Office Fixtures
Office Fixture a/c
Date Particular Amount Date Particular Amount
5 June To Pink Ltd 1900 30 June By Balance c/d 2700
15 June To Cash 120
30 June To bank 680
2700 2700
7. Pink Ltd
Pink Ltd
Date Particular Amount Date Particular Amount
30/06/18 To Balance C/d 1900 5 June
By Office
fixtures 1900
8. Loan form B. Herry
Loan form B.
Herry
Date Particular Amount Date Particular Amount
30/06/18 To Balance C/d 5100 21 June By Cash a/c 5100
PART 4
a) Income statement for F. Jones for the year ending 30th September 2018
Particulars Amount (£) Amount (£)
Sales 391400
Less: Return Inwards -2110 389290
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Less: Cost of sales
Opening inventory 72410
add Purchases – return outwards 254810
-1240 253570
Carriage inward 760
Wages and Salaries 39600
less closing stock -85404 -280936
GROSS PROFIT 108354
Less: Expenses
Carriage outwards 2850
Motor expenses 1490
Rent 8200
Telephone charges 680
Insurance 745
office expenses 392
Sundry expense 216 -14573
Net income 93781
b) Construct a statements of financial position for F. Jones as at 30th September 2018
ASSETS Amount
Non-current assets
Van 5650
Office equipments 7470
Total Non-current Assets 13120
Current Assets
Cash at bank 4420
Cash in hand 112
Account receivable 38100
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Inventories 85404
Total current assets 128036
TOTAL ASSETS 141156
EQUITY AND LIABILITIES
Capital 49675
Less: Drawings -28600
Add: Profit 93781
Net capital 114856
Current Liabilities
Account payables 26300
Total liability 141156
CONCLUSION
The above report summarises the vision and role of accounting information subject to
make financial. There are type of business informations are recorded in effective order and
proper manner to bifurcate the information to get proper results. Form the above report it is
concluded that primary reports are the essential element for preparing financial accounts and
decision making.
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