Accounting Assignment: Recording Business Transactions and Analysis

This assignment solution covers the recording of business transactions, including journal entries, ledger accounts, and the preparation of a trial balance and income statement. The solution begins with an analysis of decision-makers who use accounting information, differentiating between internal and external users. It includes journal entries for David Wise, ledger accounts for S. Keyes, and a trial balance. The solution also presents an income statement for Airman Co. and analyzes the company's financial performance. Furthermore, the solution analyzes the impact of the COVID-19 pandemic on businesses using a PESTLE analysis, examining political, economic, social, technological, legal, and environmental factors. The references section lists the sources used in the assignment.

Recording Business
Transactions

TABLE OF CONTENTS
ASSESSMENT 1.....................................................................................................................3
PART 1......................................................................................................................................3
PART 2......................................................................................................................................4
PART 3......................................................................................................................................4
PART 4......................................................................................................................................7
REFERENCES.........................................................................................................................10

ASSESSMENT 1
PART 1
a.
As given in the accounting information, the decision makers are mainly the users of
the accounting information of the organization. In an organization like Asda, the decision
makers are both who are internal and external to the organization. The internal users are
majorly the employees, top management like CEO, CFO etc. The internal management team
makes use of these information in respect to preparing different types of management and
financial reports which helps in providing useful insight to the management based on the
performance and productivity of the company (Ouda and Klischewski, 2019). This
information is further utilized by the management in respect to undertake meaningful
business-related decisions. On account of the external users of the information, it includes
the investors, financial institutes, banks, government, lenders, suppliers and so forth
(Gullberg, 2016). All these users make use of the accounting information in terms of the
understanding the current financial performance and position of the organization (Asda) in
comparison with its previous year performance which helps in taking decision whether to
provide funds to the company or not. The government makes use of such information in
order to ensure that the company is complying with the required regulations otherwise, it
might result into government intervention resulting into negatively affecting the reputation of
the organization.
b.
The two business organizations like Asda and Unilever are a large organization
carrying out huge number of transactions on a daily basis. But there are certain advantages
and disadvantages of this to the accountant while carrying out the accounting activities. In
terms of merits, the accounting system helps in recording the transactions like credit sales
which will be received next year and such situation comes across most of the time by the
accountant. Thus, with the help of accounting entry recording the same with the right journal
entry will help in effectively meeting up with the issue thus, presenting the true and fair view
of the accounting statements. Along with that, accounting helps the accountants of big
organizations like Asda and Unilever in effectually sharing of information among its users.
This form of accounting is mainly helpful for the profit business structures. But in
contradiction to that, there are times when the accountant comes across certain situation
which might be considered as the disadvantage of the accounting system. Sometimes
accountant is provided with the limited information pertaining to the transactions in the view
of not recording the complete information. This leads to misrepresentation of the accounting
information leading to wrong decision making. This is mainly done by the way of providing
inaccurate vouchers to the accountant or the wrong information. Another disadvantage being

faced by the accountant is that most of the items being recorded based upon an estimation
which may not be right. For instance, cases like the value of the inventory is recorded at the
lower of market value or cost. Another example is the method of depreciation which is being
decided by the management in respect to which method to be used. Thus, this consequently
leads to affecting the actual position of the company like Asda and Unilever. Therefore,
these are the merits and demerits that most commonly comes across an accountant in
regard to the big profit busies structures.
PART 2
Journal of David Wise for the month February 2020
Date Details Fol DT CT
Feb 1 Cash a/c 350
To office fixtures a/c 350
(Being office furniture returned back to the
supplier)
Feb 4 Bad debt a/c 85
To S. Keyes a/c 85
(Being bad debts written off)
Feb 9 Machinery a/c 2300
To Bank a/c 200
To TS. Co a/c 2100
(Being machinery purchased on cash and
credit.)
Feb. 13 Cash a/c 220
Bad Debts a/c 50
To S. Hill 270
(Being S. Hill declared bankrupt amount
received for full and final settlement)
Feb 20 Drawings a/c 180
To stock a/c 180
(Being goods taken out f the business for
personal use)
Feb 26 Drawings a/c 85
To Cash a/c 85
(Being amount paid for personal insurance
from the business)
Feb 28 TS. Co a/c 1050
To Bank a/c 1050
(Being half of the machinery debt paid
through cheque.)

PART 3
Date Details Fol Debit Credit
Feb 1 Bank a/c
Van a/c
Office fixtures
To capital
21500
25000
800
47300
Feb 2 Cash a/c
To loan from bank
2500
2500
Feb 3 Cash in hand a/c
To Bank a/c
1500
1500
Feb 4 Van a/c
To Bank a/c
4800
4800
Feb 5 Office fixture a/c
To Quick office ltd
1100
1100
Feb 8 Van a/c
To Nissan co.
5200
5200
Feb 15 Office fixture a/c
To Cash a/c
70
70
Feb 19 Nissan co.
To Bank a/c
5200
5200
Feb 25 Bank a/c
To Cash a/c
350
350
Feb 28 Office fixture a/c
To Bank a/c
620
620
Ledger accounts
LEDGER OF S. KEYES FOR THE MONTH OF FEB 2019
Van a/c
Date Details Fo
l
Amount Date Details Fol Amount
Feb 1 To capital 25000
Feb 4 To bank 4800
Feb 8 To Nissan co. 5200 By bal. c/f 35000
Total 35000 Total 35000

Capital a/c
Date Details Fo
l
Amount Date Details Fo
l
Amount
Feb 1 By bank 21500
By van 25000
To bal c/f 47300 By office fixture 200
Total 47300 Total 47300
Cash a/c
Date Details Fo
l
Amount Date Details Fo
l
Amount
Feb 2 To loan from bank 2500 Feb
15
By offices fixtures 70
Feb 3 To bank 1500 Feb
25
By bank 350
By bal c/f 3580
Total 4000 Total 4000
Bank a/c
Date Particulars JF Amount Date Particular JF Amount
Feb 1 To capital 21500 Feb 3 By cash in hand 1500
Feb 25 To cash a/c 350 Feb 4 By van a/c 4800
Feb
19
By Nissan 5200
Feb
28
By office furniture 620
By bal c/f 9730
Total 21850 Total 21850
Loan from bank
Date Details Fo
l
Amount Date Details Fo
l
Amount
By bal. c/f 2500 Feb 2 By cash 2500

Total 2500 Total 2500
Nissan co
Date Details Fo
l
Amount Date Details Fo
l
Amount
Feb
19
To bank a/c 5200 Feb 8 By van 5200
Total 5200 Total 5200
Office fixtures a/c
Date Details Fo
l
Amount Date Details Fo
l
Amount
Feb 1 To capital a/c 800
Feb 5 To quick office ltd 1100
Feb
15
To cash 70
Feb
28
To bank 620 By bal. c/f 2590
Total 2590 Total 2590
Quick office ltd
Date Details Fo
l
Amount Date Details Fo
l
Amount
By bal c/f 1100 Feb 5 By office fixtures 1100
Total 1100 Total 1100
Trial balance
Trial Balance of S. Keyes as at 30 Feb 2019
Details Debit Credit
Van a/c 35000

Capital a/c 47300
Cash a/c 3580
Bank a/c 9730
Loan from bank 2500
Office fixtures a/c 2590
Quick office ltd 1100
Total 50900 50900
PART 4
a.
Income Statement of Airman Co. for the year 30th September 2019
Details Amount
Sales 80000
Less: sales return 2000
Net sales 78000
Less: cost of goods sold 66120
opening stock 36000
Add: purchases
(150000-
600) 149400
Add: carriage inward 720
Less: closing stock 120000
Gross profit 11880
Expenses:
Motor expenses 1200
Carriage outward 400
Rent 5000
Telephone charges 620
Wages and salaries 32000
Insurance 830
Office expenses 600
Sundry expenses 300
Total expenses 40950
Net profit/loss -29070

The company had a loss which is because of the reason that it had incurred huge
amount of expenses which exceeds its gross profit. Most of the expense occurred on
account of wages and salaries.
b.
With the help of Pestle analysis model, the impact of coronavirus over the income
statement of the business is being discussed. In terms of political factors, the government’s
slow response to the coronavirus outbreak has resulted into highly impacting businesses of
the organization. This has consequently led to widespread political dissatisfaction among the
citizens (Bartik and et.al., 2020). Along with that, there is change in the trade as well, which
ahs made countries realized the dependence of supply chain on others. Thus, supply chain
has been disrupted which caused decline in the business. On the economic front, the
emergence of pandemic has resulted into poor market performance all across the world.
This has resulted into making investors pulling out their money from the financial instruments
to protect themselves for the market volatility. Along with that, as more the workers falling ill,
this has resulted into temporary lack of workers. On account of the social factors, the
pandemic has resulted in panic at different levels. This will consequently lead to disruption in
the entire supply chain and individuals undertaking anticipatory measures (Seetharaman,
2020). Technological factor, coronavirus has resulted into advancement in the virology
providing valuable information to the scientists. This will provide world with the many news
ways to handle such pandemic. Legal factor, the businesses and the individuals are now
required to follow the laws and standards set by the government under such situation and
non-compliance of it will lead to imposition of penalty. Environmental factor, outbreak of
coronavirus has causes travel fear and remote working condition which has resulted into
reduction in the air pollution as people are moving less from place to another. Thus, in this
way coronavirus has impacted the business.

REFERENCES
Books and Journals
Ouda, H. A. and Klischewski, R., 2019. Accounting and politicians: a theory of accounting
information usefulness. Journal of Public Budgeting, Accounting & Financial
Management.
Bartik, A. W. and et.al., 2020. The impact of COVID-19 on small business outcomes and
expectations. Proceedings of the National Academy of Sciences. 117(30).
pp.17656-17666.
Seetharaman, P., 2020. Business models shifts: Impact of Covid-19. International Journal of
Information Management. 54. p.102173.
Gullberg, C., 2016. What makes accounting information timely?. Qualitative Research in
Accounting & Management.
Online
Merits and Demerits of Accounting. 2020. [Online]. Available Through:<
https://www.toppr.com/guides/accounting-and-auditing/theoretical-framework-of-
accounting/merits-and-demerits-of-accounting/ >.