Accounting Fundamentals: Journal, Ledger, Trial Balance, Analysis

This document presents a comprehensive solution to an accounting fundamentals assignment, meticulously detailing journal entries, ledger accounts, and trial balances across multiple tasks. The assignment encompasses various transactions, including cash, purchases, sales, and expenses, providing a practical understanding of accounting principles. It showcases the process of recording financial transactions, preparing ledgers, and constructing trial balances. Furthermore, the solution demonstrates the preparation of profit and loss accounts and balance sheets. The assignment also delves into the crucial distinction between revenue and capital expenditure. The solution provides a clear understanding of fundamental accounting concepts, essential for students studying financial accounting.

ACCOUNTING
FUNDAMENTALS

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
TASK 2............................................................................................................................................4
TASK 3............................................................................................................................................8
TASK 4..........................................................................................................................................12
TASK 5..........................................................................................................................................16
Difference between revenue expenditure and capital expenditure ...........................................16
CONCLUSION..............................................................................................................................18
REFERENCES..............................................................................................................................19

INTRODUCTION
Financial accounting refers to specialised accounting branch that keep record of financial
transaction of company. Transactions are recorded using standard guidelines in financial report
and financial statements like income statements or balance sheet. Financial accounting is
essential for generating financial statements & related disclosures appropriately reflecting
financial results and position of the organisation. They are prepared for company as well as
outside stakeholders like creditors, investors and lenders. There are various types of financial
accounting that are used by organisation for recording the transactions. Financial accounting is
helping organisations around the world. There are various standards, guiding principles and
reporting frameworks that are essential for making properly structured financial statements of the
organisations(Scott, 2015). The report will give brief understanding about the recording of
transactions in journals, ledgers and trial balance. It will also demonstrate the difference between
capital expenditure and revenue expenditure in reference with International Accounting
Standards.
TASK 1
Journal for the year ended
Date Particulars Debit Credit
05/04/19 Cash a/c Dr. £300.00
To capital a/c £300.00
07/04/19 Purchase a/c Dr. £200.00
To cash a/c £200.00
08/04/19 Cash a/c Dr. £250.00
To Tatiana £250.00
15/04/19 Motor van a/c Dr. £150.00
To cash a/c £150.00
20/04/19 Cash a/c Dr. £350.00
To sales a/c £350.00
28/04/19 Rent a/c Dr. £50.00
To cash a/c £50.00
29/04/19 Tatiana a/c Dr. £200.00
To cash a/c £200.00
30/04/19 Drawings a/c Dr. £60.00
To cash a/c £60.00
£1,560.00 £1,560.00
1

Ledgers
(Dr.) CASH A/C (Cr.)
Date Particulars Amount Date Particulars Amount
05/04/19 To capital £300.00 07/04/19 By purchase £200.00
08/04/19 To Tatiana £250.00 15/04/19 By motor van £150.00
20/04/19 To sales £350.00 28/04/19 By rent £50.00
29/04/19 By Tatiana £200.00
30/04/19 By drawings £60.00
30/04/19 By closing Bal. £240.00
£900.00 £900.00
(Dr.) CAPITAL A/C (Cr.)
Date Particulars Amount Date Particulars Amount
05/04/19 By cash a/c £300.00
30/04/19 To closing Bal. £300.00
£300.00 £300.00
(Dr.) PURCHASES A/C Dr. (Cr.)
Date Particulars Amount Date Particulars Amount
07/04/19 To cash a/c £200.00
30/04/19 By closing bal. £200.00
£200.00 £200.00
(Dr.) TATIANA A/C (Cr.)
Date Particulars Amount Date Particulars Amount
29/04/19 To cash a/c £200.00 08/04/19 By cash a/c £250.00
30/04/19 To Closing Bal. £50.00
£250.00 £250.00
(Dr.) MOTOR VAN A/C (Cr.)
Date Particulars Amount Date Particulars Amount
15/04/19 To cash a/c £150.00
30/04/19 By closing Bal. £150.00
£150.00 £150.00
(Dr.) SALES A/C (Cr.)
Date Particulars Amount Date Particulars Amount
2

20/04/19 By cash a/c £350.00
30/04/19 To closing bal. £350.00
£350.00 £350.00
(Dr.) RENT A/C (Cr.)
Date Particulars Amount Date Particulars Amount
28/04/19 To cash a/c £50.00
30/04/19 By closing Bal. £50.00
£50.00 £50.00
(Dr.) DRAWINGS A/C (Cr.)
Date Particulars Date Particulars Amount
30/04/19 To cash a/c £60.00
30/04/19 By closing Bal. £60.00
£60.00 £60.00
Trial balance
Particulars Debit Credit
Cash £240.00
Capital £300.00
Purchase £200.00
Sales £350.00
Tatiana £50.00
Drawings £60.00
Rent £50.00
Motor van £150.00
£700.00 £700.00
Profit and Loss a/c
Particulars Amount Total amount
Sales £350.00
cost of goods sold 100
Gross profit £250.00
Expenses £50.00
Net Profit £200.00
3

Balance sheet
Particulars Amount Total amount
Liabilities
Capital £300.00
Add: Profit £200.00
Less:drawings £60.00
£440.00
Current liabilities
Tatiana £50.00 £50.00
Total liabilities £490.00
Assets
Fixed assets £150.00
Current assets
Cash in hand £240.00
Closing stock £100.00 £340.00
Total assets £490.00
TASK 2
Pendo
Journal entries
Particulars Debit Credit
Cash a/c Dr. £5,000.00
To capital a/c £5,000.00
Motor van a/c Dr. £600.00
To cash a/c £600.00
Purchase a/c Dr. £1,300.00
To cash a/c £1,300.00
Cash a/c Dr. £1,000.00
To Sergei a/c £1,000.00
Expense a/c Dr. £200.00
To cash a/c £200.00
Cash a/c Dr. £300.00
TO Sales a/c £300.00
Cash a/c Dr. £500.00
TO Sales a/c £500.00
Storage Expense A/c Dr. £150.00
To cash a/c £150.00
Sergei a/c Dr. £350.00
To cash a/c £350.00
4

Drawings a/c Dr. £175.00
To cash a/c £175.00
£9,575.00 £9,575.00
Ledger a/c
(Dr.) CASH A/C (Cr.)
Date Particulars Amount Date
Particular
s Amount
01/01/19 To capital a/c £5,000.00 02/01/19
By Motor
van a/c £600.00
04/01/19 To Sergei a/c £1,000.00 03/01/19
By
purchase
a/c £1,300.00
13/01/19 TO Sales a/c £300.00 10/01/19
By
Expense
a/c £200.00
20/01/19 TO Sales a/c £500.00 24/01/19
By storage
Expenses
a/c £150.00
27/01/19
By Sergei
a/c £350.00
30/01/19
By
drawings
a/c £175.00
30/01/19
By Closing
Bal. £4,025.00
£6,800.00 £6,800.00
(Dr.) CAPITAL A/C (Cr.)
Date Particulars Amount Date
Particular
s Amount
01/01/19 By cash a/c £5,000.00
31/01/19 To Closing bal. £5,000.00
(Dr.) MOTOR VAN A/C (Cr.)
Date Particulars Amount Date
Particular
s Amount
02/01/19 To cash a/c £600.00
30/01/19
By Closing
Bal. £600.00
£600.00 £600.00
5

(Dr.) PURCHASES A/C Dr. (Cr.)
Date Particulars Amount Date
Particular
s Amount
03/01/19 To cash a/c £1,300.00
30/01/19
By closing
Bal. £1,300.00
£1,300.00 £1,300.00
(Dr.) SERGEI A/C (Cr.)
Date Particulars Amount Date
Particular
s Amount
04/01/19 By cash a/c £1,000.00
27/01/19 To cash a/c £350.00
30/01/19 To closing bal. £650.00
£1,000.00 £1,000.00
(Dr.) EXPENSE A/C (Cr.)
Date Particulars Amount Date
Particular
s Amount
10/01/19 To cash a/c £200.00
24/01/19 To cash a/c £150.00
30/01/19
By Closing
Bal. £350.00
£350.00 £350.00
(Dr.) SALES A/C (Cr.)
Date Particulars Amount Date
Particular
s Amount
13/01/19 By cash a/c £300.00
20/01/19 By cash a/c £500.00
30/01/19 To closing bal. £800.00
£800.00 £800.00
(Dr.) DRAWINGS A/C (Cr.)
Date Particulars Amount Date
Particular
s Amount
30/01/19 To cash a/c £175.00
30/01/19
By Closing
Bal. £175.00
£175.00 £175.00
6

TRIAL BALANCE
Particulars Debit Credit
Cash £4,025.00
Capital £5,000.00
Motor van £600.00
Purchases £1,300.00
Sergei £650.00
Expense £350.00
Sales £800.00
Drawings £175.00
£6,450.00 £6,450.00
Profit and loss a/c
Particulars Amount Total amount
Sales £800.00
Cost of goods sold £500.00
Gross profit £300.00
Less:Expenses £350.00
Net Profit -£50.00
Balance sheet
Particulars Amount Total amount
Assets
Fixed assets
Motor van £600.00
£600.00
Current assets
Cash in hand £4,025.00
Closing stock £800.00
£4,825.00
Total assets £5,425.00
Liabilities
capital £5,000.00
add:profits -£50.00
less:drawings £175.00
£4,775.00
Current liabilities
Sergei £650.00
Total liabilities £5,425.00
7

TASK 3
Mafuta
Journal entries
Date Particulars Debit (£) Credit(£)
02/01/19 Harvey a/c Dr. 124
To Sales a/c 124
05/01/19 Wages a/c Dr. 12
To cash a/c 12
Purchase a/c Dr. 150
To Rich a/c 150
07/01/19 Cash a/c Dr. 18
To smith a/c 18
09/01/19 Max a/c Dr. 21
To cash a/c 21
11/01/19 Cash a/c Dr. 64
To Sales a/c 64
14/01/19 Wages a/c Dr. 14
To cash a/c 14
Purchase a/c Dr. 75
To cash a/c 75
15/01/19 Rich a/c Dr. 162
To cash a/c 162
20/01/19 Office desk a/c Dr. 32
To cash a/c 32
21/01/19 Wages a/c Dr. 17
To cash a/c 17
Cash a/c Dr. 110
To Sales a/c 110
23/01/19 Office expenses a/c Dr. 3
To cash a/c 3
Cash a/c Dr. 25
To Harvey a/c 25
28/01/19 Cash a/c Dr. 84
To Sales a/c 84
Wages a/c Dr. 15
To cash a/c 15
31/01/19 Cash a/c Dr. 30
To Sales a/c 30
956 956
8

Ledgers
(Dr.) Cash a/c (Cr.)
Date Particulars Amount(£) Date Particulars Amount(£)
01/01/19
To opening
bal. 343 05/01/19 By wages a/c 12
07/01/19 To smith 18 09/01/19 By Max a/c 21
11/01/19 To Sales a/c 64 14/01/19 By wages a/c 14
21/01/19 To Sales a/c 110 15/01/19 By rich a/c 162
23/01/19 To Harvey a/c 25 20/01/19
By office desk
a/c 32
28/01/19 To Sales a/c 84 21/01/19 By wages a/c 17
31/01/19 To Sales a/c 30 23/01/19
By office
expenses a/c 3
28/01/19 By wages a/c 15
14/01/19
By purchase
a/c 75
31/01/19 By closing bal. 323
674 674
(Dr.) Office expense a/c (Cr.)
Date Particulars Amount(£) Date Particulars Amount(£)
23/01/19 To cash a/c 3
31/01/19 By closing bal. 3
3 3
(Dr.) Sales a/c (Cr.)
Date Particulars Amount(£) Date Particulars Amount(£)
02/01/19 By Harvey a/c 124
11/01/19 By cash a/c 64
21/01/19 By cash a/c 110
28/01/19 By cash a/c 84
31/01/19 By cash a/c 30
31/01/19 To closing bal. 412
412 412
(Dr.) Purchase a/c (Cr.)
Date Particulars Amount(£) Date Particulars Amount(£)
05/01/19 To Rich a/c 150
9

14/01/19 To cash a/c 75
31/01/19 By closing bal. 225
225 225
(Dr.) Harvey a/c (Cr.)
Date Particulars Amount(£) Date Particulars Amount(£)
01/01/19
To opening
bal. 39 23/01/19 By cash a/c 25
02/01/19 To Sales a/c 124
31/01/19 By closing bal. 138
163 163
(Dr.) Wages a/c (Cr.)
Date Particulars Amount(£) Date Particulars Amount(£)
05/01/19 To cash a/c 12
14/01/19 To cash a/c 14
21/01/19 To cash a/c 17
28/01/19 To cash a/c 15
31/01/19 By closing bal. 58
58 58
(Dr.) Rich a/c (Cr.)
Date Particulars Amount(£) Date Particulars Amount(£)
15/01/19 To cash a/c 162 01/01/19
By opening
bal. 12
05/01/19
By purchase
a/c 150
162 162
(Dr.) Smith a/c (Cr.)
Date Particulars Amount(£) Date Particulars Amount(£)
01/01/19
To Opening
bal. 18 07/01/19 By cash a/c 18
18 18
(Dr.) Max a/c (Cr.)
Date Particulars Amount(£) Date Particulars Amount(£)
01/01/19
By opening
bal. 21
10