Business Accounting: Journal Entries, Trial Balance & Reports

This business accounting assignment provides a comprehensive analysis of financial accounting principles. It begins with journal entries for adjusted transactions, including interest, supplies, insurance, and depreciation. The solution then presents a trial balance, followed by an adjusted trial balance, and a detailed income statement. Further, the assignment includes closing entries and a balance sheet. The document also explains key accounting concepts such as the purpose of trial balances, reasons for creating and recording them, and the differences between adjustment and closing entries. Finally, it provides a detailed explanation of various depreciation methods and their impact on financial statements, along with a list of references.

Running Head: BUSINESS ACCOUNTING 0
Business Accounting

BUSINESS ACCOUNTING 1
Table of Contents
Question-1..................................................................................................................................2
Question-2..................................................................................................................................3
Question-3..................................................................................................................................4
Question-4..................................................................................................................................6
Question-5..................................................................................................................................6
Question-6..................................................................................................................................7
Trial balance...........................................................................................................................7
Reason for Creation................................................................................................................7
Reason for recording..............................................................................................................8
Purpose of writing an adjusted trial balance...........................................................................8
Difference between the adjustment entries and closing journal entries.................................9
References................................................................................................................................10

BUSINESS ACCOUNTING 2
Question-1
Journalise the adjusted
transactions
Particulars Debit Credit
Interest Expense A/c Dr. 22520
To Interest Payable A/c 22520
(for interest accrued on the mortgage but not paid)
Supplies Expense A/c Dr. 562.5
To Supplies A/c 562.5
(for ending supplies in hand recorded)
Insurance expense A/c Dr. 3600
To Prepaid 3600
(for reversal of prepaid insurance)
4500
Prepaid Insurance 4500
To Insurance Expense
(for adjustment entry passed)
Insurance Dr. 3000
To Cash 3000
(for amount paid )
Depreciation Expense- Furniture 10000

BUSINESS ACCOUNTING 3
Depreciation Expense- office Equipment 22000
Depreciation Expense- Store Equipment 16000
Depreciation Expense- Automobile 22000
To Accumulated Depreciation 70000
(for depreciation adjusted )
Cash A/c Dr. 14075
To unearned Revenue 14075
Unearned Revenue Dr. 14075
To Revenue 14705

BUSINESS ACCOUNTING 4
Question-2
Paul services Trial Balance As At 30 June 2016
Accou
nt No Account Name Debit
Credi
t
Adjust
ments
Final
Trial
Debit Credit Debit Credit
101 Cash at Bank
12480
0.00 14075 3000
13587
5.00
105 Accounts Receivable
41600
.00
41600.
00 0.00
115 Supplies
2250.
00 562.5
1687.5
0
120 Prepaid Insurance
4500.
00 3600 900.00
135 Office Furniture
56300
.00
56300.
00 0.00
137 Acc. Depreciation. - Furniture 0.00 10000 0.00
10000
.00
140 Office Equipment
11260
0.00
11260
0.00 0.00
141 Acc. Depreciation - Equipment 0.00 22000 0.00
22000
.00
145 Store Equipment
16890
0.00
16890
0.00 0.00
146 Acc. Depreciation - Equipment 0.00 16000 0.00 16000

BUSINESS ACCOUNTING 5
.00
170 Automobile
22520
0.00
22520
0.00 0.00
171 Acc. Depreciation - Automobile 0.00 22000
22000
.00
201 Accounts Payable
83200
.00
83200
.00
201 Interest Payable
12480
0.00 22250
14705
0.00
201 Unearned revenue
28150
.00 14075 14075
28150
.00
201 Loan Payable
11260
.00
11260
.00
201 Mortgage Payable
22520
0.00
22520
0.00
201 Paul's Capital
59045
.00
59045
.00
201 Paul's Drawings
225.0
0 225.00
201 Revenue
22500
0.00 14075
23907
5.00
201 Advertising Expense
2500.
00
2500.0
0
201 Automobile Expense
5775.
00
5775.0
0

BUSINESS ACCOUNTING 6
201
Depreciation Expense -
Furniture 0.00 10000
10000.
00
201
Depreciation Expense -
Equipment 0.00 22000
22000.
00
201
Depreciation Expense -
Store Equipment 0.00 16000
16000.
00
201
Depreciation Expense -
Automobile 0.00 22000
22000.
00
201 Insurance Expense
2100.
00 6600
8700.0
0
201 Maintenance Expense
8750.
00
8750.0
0
201 Miscellaneous Expense
1155.
00
1155.0
0
201 Rent Expense 0.00 0.00
201 Supplies Expense 0.00 562.5 562.50
201 Utilities Expense 0.00 0.00
201 Interest Expense 0.00 22250
22250.
00
75665
5.00
75665
5.00
127562.
50
12756
2.50
86298
0.00
86298
0.00
Office Equipment after Depreciation
Office Equipment 112600
Residual value 2600

BUSINESS ACCOUNTING 7
Estimated useful life 5
Depreciation 22000
Closing Value 90600
Automobile after Depreciation
Office Furniture 225200
Residual value 5200
Estimated useful life 10
Depreciation 22000
Closing Value 203200
Office Furniture after Depreciation
Office Furniture 56300
Residual value 6300
Estimated useful life 5
Depreciation 10000
Closing Value 46300
Store Equipment after Depreciation
Store Equipment 168900
Residual value 8900
Estimated useful life 10
Depreciation 16000
Closing Value 152900

BUSINESS ACCOUNTING 8
Question-3
Income Statement
Particulars Amount
Revenue 239075.00
Expenses
Advertising Expense 2500.00
Automobile Expense 5775.00
Depreciation Expense - Furniture 10000.00
Depreciation Expense - Equipment 22000.00
Depreciation Expense - Store
Equipment 16000.00
Depreciation Expense - Automobile 22000.00
Insurance Expense 8700.00
Maintenance Expense 8750.00
Miscellaneous Expense 1155.00
Rent Expense 0.00
Supplies Expense 562.50
Utilities Expense 0.00
Interest Expense 22250.00
Profit/ loss 119382.50

BUSINESS ACCOUNTING 9
Question-4
Journalise the Closing
Entries
Date Particulars Debit Credit
Profit and Loss
A/c Dr.
119382.5
0
To General expenses
119382.5
0
(for all the expenses transferred)
Question-5
Balance Sheet
As on 30th June 2016
Particulars Amount
Paul's Capital 59045.00
Paul's Drawings 225.00
Add: Net Profits 119382.50
Total Capital 178202.50
Interest Payable 147050.00
Unearned revenue 28150.00
Loan Payable 11260.00

BUSINESS ACCOUNTING 10
Accounts Payable 83200.00
Mortgage Payable 225200.00
Total 673062.50
Cash at Bank 135875.00
Accounts Receivable 41600.00
Supplies 1687.50
Prepaid Insurance 900.00
Office Furniture 56300.00
Office Equipment 112600.00
Store Equipment 168900.00
Automobile 225200.00
Less: accumulated
Depreciation 70000.00 493000.00
Total 673062.50
Question-6
Trial balance
A trial balance is a book keeping or accounting report that lists the balances that lists the
balances in the general ledger accounts (Warren and Jones, 2018). The amounts of debit
nature are listed in debit column and the amounts of credit nature are listed under the heading
credit balances. The total of both the columns should be identical (Reid and Myddelton,

BUSINESS ACCOUNTING 11
2017). Under manual system a trial balance was prepared by the bookkeeper in order to
discover the mathematical errors if ever made. Despite the problem of the errors has been
solved by the bookkeeping and accounting software this does not mean that the trial balances
are of redundant nature.
Reason for Creation
The trial balances are helpful to find the transposition error. Sometime the figures are written
wrongly. Therefore trial balances are useful in detecting the error and the person responsible
for creation of such variances. Trial balances are used by the investors, auditors and
managers, to get a piece of information to arrive at the further calculations. Preparing a trial
balance of the company serves a complete in depth analysis. The errors that have occurred in
the double entry system can be detected using the trial balance easily and quickly (Ellerman,
2014).
Adjustment journal entry is used to adjust the used adjust the journal by dividing the overall
income balance (Warren and Jones, 2018). This journal is used to adjust the revenues and
total expenses regarding from when they occurred. Adjusting journal is very helpful as it
helps in knowing when the money changed did and also converts the real time accounting
entries into the entries that reflect the accrual accounting system. It is basically used before
the financial statements are prepared to cross- check all the account details. Adjusting journal
is necessary as it look at all the economic changes of the firm so that accounting cycles could
be managed (Kwok, 2017).
Reason for recording
It is important to record the adjustment journal entries as it helps in knowing the monthly
revenues so that budget could be adjusted accordingly. It also helps in finding out the wages