BA30592E: Analyzing Business Transactions, Financial Statements

This report provides a detailed analysis of business transactions, starting with journal entries recorded in T-accounts, followed by the creation of general ledgers and a trial balance to ensure accuracy. It then prepares an income statement for the period ending October 31, 2021, and a balance sheet to present the financial position of the business. The report also includes an explanation of drawings and their impact on the company's capital. Furthermore, accounting ratios are computed and evaluated to assess the company's performance, considering the impact of the Covid-19 pandemic on the business. The conclusion summarizes the challenges faced by the business and suggests strategies for maintaining sustainability and improving financial performance, emphasizing the importance of financial statements in understanding the company's position in the market.

BA30592E Recording
Business Transactions

Contents
INTRODUCTION...........................................................................................................................3
PART A...........................................................................................................................................3
a) Record the Journal entry in T- accounts.............................................................................3
b) General Ledgers.................................................................................................................5
c) TRIAL BALANCE..........................................................................................................10
d) Prepare Income Statement ending on 31 October 2021...................................................11
e) Balance Sheet...................................................................................................................12
f) Explanation regarding drawings.......................................................................................13
PART B..........................................................................................................................................14
a) Accounting Ratios............................................................................................................14
b) Evaluate the performance of the ratio computed above...................................................14
CONCLUSION..............................................................................................................................15
REFERENCES..............................................................................................................................16

INTRODUCTION
The business transactions depict the actions which can be recorded in the type of cash and
can be esteemed. These exchanges recognize the liquidity, benefit and project of business (Ali,
Ally and Dwivedi, 2020). This report comprises journal entries and their presentation on
particular records. For checking exactness preliminary equilibrium is likewise recorded in which
every one of the records having charge or credit adjusts are shown. Thereafter, the benefit and
loss account is ready to know the costs and pay off the business and with the assistance of all
assertions monetary record is ready to be aware of the genuine resources and liabilities of the
given association. Finally, proportions are additionally deciphered for its examination with
different contenders.
PART A
a) Record the Journal entry in T- accounts.
JOURNAL ENTRIES
Date Particulars Debit Credit
01/10/21 Bank
Cash
Flat
Car
Capital
(Business being started with cash, flat and a car)
10000
4800
45000
12000
71800
02/10/21 Purchases
Home Ltd
(goods of the firm i.e., furniture being purchased on
credit from Home ltd.)
5400
5400
04/10/21 Computer
Printer
Bank
(Computer and printer being bought for cash)
800
200
1000

05/10/21 Bank
Sales
(Goods worth 2800 being sold)
2800
2800
12/10/21 Repair Expense
Cash
(repair expenses incurred for repairs done in the
printer)
110
110
18/10/21 Home Ltd.
Purchases Return
(Furniture of wroth 250 being returned to home ltd.)
250
250
21/10/21 Bank
Rent Income
(Rent being received by the organisation)
800
800
23/10/21 Rayan
Cash
Sales
(sold goods to Rayan worth 2100, out of which,
1800 have been received by the business)
300
1800
2100
23/10/21 Cash
Sales
(sold goods to David for cash)
700 700
24/10/21 Laptop
Bank
(A new laptop has been bought for official use.
1700
1700
26/10/21 Wages
Bank
(shopkeeper has been paid monthly wages)
820
820
30/10/21 Rent Expenses 850

Bank
(a place being rented by the business and paid
expenses for same)
850
31/10/21 Drawings
Bank
(Money being paid by the business for a personal
expense of the owner)
1200
1200
31/10/21 Cash
Rayan
(Rayan, the debtor of the business paid for the debt)
150
150
b) General Ledgers.
Bank Account
Date Particulars Ref Amount Date Particulars Ref Amount
01/10/21 Capital 10000 04/10/21 Computer 800
21/10/21 Rent Income 800 04/10/21 Printer 200
05/10/21 Sales 2800 24/10/21 Laptop 1700
26/10/21 Wages 820
30/10/21 Rent Expenses 850
31/10/21 Drawings 1200
31/10/21 Balance c/d 8030
13600 13600
1/11/21 Balance b/d 8030
Cash Account
Date Particulars Ref Amount Date Particulars Ref Amount

01/10/21 Opening Balance 4800 12/10/21 Repair 110
23/10/21 Sales 1800
23/10/21 Sales 700
31/10/21 Rayan 150 31/10/21 Balance c/d 7340
7450 7450
1/11/21 Balance b/d 7340
Flat Account
Date Particulars Ref Amount Date Particulars Ref Amount
01/10/21 Opening Balance 45000
31/10/21 Balance c/d 45000
45000 45000
1/11/21 Balance b/d 45000
Car Account
Date Particulars Ref Amount Date Particulars Ref Amount
01/10/21 Capital 12000 31/10/21 Balance c/d 12000
12000 12000
01/11/21 Balance b/d 12000
Capital Account
Date Particulars Ref Amount Date Particulars Ref Amount
01/10/21 Bank 10000
01/10/21 Cash 4800
01/10/21 Flat 45000

31/10/21 Balance c/d 71800 01/10/21 Car 12000
71800 71800
01/11/21 Balance b/d 71800
Purchases Account
Date Particulars Ref Amount Date Particulars Ref Amount
18/10/21 Home Ltd 5400
31/10/21 Balance c/d 5400
5400 5400
01/11/21 Balance b/d 5400
Purchase Return Account
Date Particulars Ref Amount Date Particulars Ref Amount
31/10/21 Balance c/d 250 02/10/21 Home Ltd 250
250 250
01/11/21 Balance b/d 250
Home Ltd Account
Date Particulars Ref Amount Date Particulars Ref Amount
02/10/21 Purchases return 250 18/10/21 Purchases 5400
31/10/21 Balance c/d 5150
5400 5400
01/11/21 Balance b/d 5150
s
Computer Account
Date Particulars Ref Amount Date Particulars Ref Amount

04/10/21 Bank 800 31/10/21 Balance c/d 800
800 800
01/11/21 Balance b/d 800
Printer Account
Date Particulars Ref Amount Date Particulars Ref Amount
04/10/21 Bank 200 31/10/21 Balance c/d 200
200 200
01/11/21 Balance b/d 200
Repair Expenses Account
Date Particulars Ref Amount Date Particulars Ref Amount
12/10/21 Cash 110 31/10/21 Balance c/d 110
110 110
01/11/21 Balance b/d 110
Rent Income Account
Date Particulars Ref Amount Date Particulars Ref Amount
21/10/21 Bank 800
31/10/21 Balance c/d 800
800 800
01/11/21 Balance b/d 800
Rent Expense Account
Date Particulars Ref Amount Date Particulars Ref Amount
31/10/21 Bank 850

31/10/21 Balance c/d 850
850 850
01/11/21 Balance b/d 850
Rayan Account
Date Particulars Ref Amount Date Particulars Ref Amount
23/10/21 Sales 300 31/10/21 Cash 150
31/10/21 Balance c/d 150
300 300
Sales Account
Date Particulars Ref Amount Date Particulars Ref Amount
05/10/21 Bank 2800
23/10/21 Accounts Receivable 300
31/10/21 Balance C/d 5600 23/10/21 Cash 1800
23/10/21 Cash 700
5600 5600
01/11/21 Balance b/d 5600
Laptop Account
Date Particulars Ref Amount Date Particulars Ref Amount
24/10/21 Bank 1700 31/10/21 Balance c/d 1700
1700 1700

01/11/21 Balance b/d 1700
Wages Account
Date Particulars Ref Amount Date Particulars Ref Amount
26/10/21 Bank 820 31/10/21 Balance c/d 820
820 820
01/11/21 Balance b/d 820
Drawings Account
Date Particulars Ref Amount Date Particulars Ref Amount
31/10/21 Bank 1200 31/10/21 Balance c/d 1200
1200 1200
01/11/21 Balance b/d 1200
c) TRIAL BALANCE
Particulars Debit Credit
Bank 8030
Cash 7340
Flat 45000
Car 12000
Capital 71800
Purchases 5400
Purchases Return 250
Home Ltd 5150

Computer 800
Printer 200
Repair Expenses 110
Rent Expense 850
Rent Income 800
Rayan 150
Laptop 1700
Wages 820
Drawings 1200
Sales 5600
TOTALS 82800 82800
d) Prepare Income Statement ending on 31 October 2021.
INCOME STATEMENT
Particulars Amount (£) Amount (£)
Net Sales 5600
Less: Cost of Goods Sold 4830
Purchases 5400
Closing Stock -320
Purchase Return -250
Gross Profit 770
Less: Operating Expenses 980
Repair Expenses 110
Rent 50
Wages 820

Net Loss 210
e) Balance Sheet
Particulars Amount (£ )
ASSETS
Current Assets
Stock 320
Bank 8030
Cash 7340
Debtor (Rayan) 150
Total Current Assets 15840
Fixed Assets
Flat 45000
Car 12000
Computer 800
Printer 200
Laptop 1700
Total Fixed Assets 59700
Total ASSETS 75540
EQUITY AND LIABILITIES
Liabilities
Current Liabilities
Creditors (Home Ltd.) 5150
Total Current Liabilities 5150