Business Transactions: Financial Analysis of Anne York's Venture

This report provides a comprehensive financial analysis of Anne York's business transactions, covering journal entries, ledger accounts, income statements, trial balance, and balance sheet. It evaluates the impact of owner's drawings on the business and computes fiscal ratios such as gross profit mar...Read More

Business Transactions
Assessment 2

INTRODUCTION
The business transactions is defined as the financial transactions between the to or more
individual or the parties which includes the exchange of goods, services and money. In order to
engage in the business transactions, the business exchange must be rightly measured in form of
monetary value by which it can be recorded for the purpose of accounting(Petrillo and et.al.,
2018). It means that venture is being involves in the exchange of products and services with the
medium of exchange of money. These are the transactions that happen in the firm and basically
record in the book of accounts that is made up of journal entries, financial statement, ledgers and
many more. These are the entries of the business which are being recorded on the daily basis by
analysing the basic consideration of the work so that in an appropriate manner so that they can
rightly work in the given job role. This report is divided into PART A will evaluate the
transactions related to the Anne Yorks's business which is recording the journal entries, ledger
entities, income statement, trial balance and balance sheet. This also making the drawing is also
evaluated. Further in Part B, the fiscal ratios of Anne's business is being analysed and operated
on the basis of the overall performance of the firm. It also analyse the impact of the Covid-19
and also discuss the previous year's net profits and loss for the venture of Anne.

PART A
a) Record the journal entries.

b) Prepare the ledger accounts and bring down the opening balance.
Bank
Date Particulars Ref Amount Date Particulars Ref Amount
01/10/21 Capital 10000 04/10/21 Computer 800
21/10/21 Rent 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 850
31/10/21 Drawings 1200
31/10/21 Balance c/d 8030

13600 13600
01/11/21 Balance b/d 8030
Cash
Date Particulars Ref Amount Date Particulars Ref Amount
01/10/21 Capital 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
01/11/21 Balance b/d 7340
Flat
Date Particulars Ref Amount Date Particulars Ref Amount
01/10/21 Capital 45000 31/10/21 Balance c/d 45000
45000 45000
01/11/21 Balance b/d 45000
Car
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
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
Date Particulars Ref Amount Date Particulars Ref Amount
18/10/21 Home Ltd 5400 02/10/21 Home Ltd 250
31/10/21 Balance c/d 5150
5400 5400
01/11/21 Balance b/d 5150
Home Ltd
Date Particulars Ref Amount Date Particulars Ref Amount
02/10/21 Purchases 250 18/10/21 Purchases 5400
31/10/21 Balance c/d 5150
5400 5400
01/11/21 Balance b/d 5150
Computer
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
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
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
Date Particulars Ref Amount Date Particulars Ref Amount
21/10/21 Bank 850 30/10/21 Bank 800
31/10/21 Balance c/d 50
850 850
01/11/21 Balance b/d 50
Rayan
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

01/11/21 Balance b/d 150
Sales
Date Particulars Ref Amount Date Particulars Ref Amount
05/10/21 Bank 2800
23/10/21 Rayan 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
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
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
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) Prepare the trial balance as on 31st October 2021.
Particulars Debit Credit
Bank 8030
Cash 7340
Flat 45000
Car 12000
Capital 71800
Purchases 5150
Home Ltd 5150
Computer 800
Printer 200
Repair Expenses 110
Rent 50
Rayan 150
Laptop 1700
Wages 820
Drawings 1200
Sales 5600
TOTALS 82550 82550

d) Create an income statement.
e) Make the Balance Sheet.

.
f) Write a letter to Anne explaining that how the small business and concerned about the entries
of drawings.
Drawing in accounting is the term which shows the withdrawals taken by the owner of
the company. As this will impact the overall performance of the company by showing the fall
down in the assets to the total amount which is withdrawn(Del Pilar and et. al., 2020). It also
shows the decrease in the overall equity of the owner and majorly the cashing in on a small
things of the entitlement to the company. Drawing also shows the statement of cash flows as they
basically shows the type of financial task by which they can accurately recorded by the
company's account departments. The letter is being writing to the Anne that Linda has used the
amount of £250 so that they can book the hotel and flights for the Scotland. All the expenses and
the payments is being done through the business accounts & this is being treated as the expenses
of the company on larger segment in the business. A drawings act as the similarly to the wage
but it is being applied to the sole traders or the partners of the company. However, the drawing
do not only cover the cash withdraws. It also includes the certain goods and services which is
being withdrawn from the organisation for the personal use of the owner. So it is vital to keep the
drawings account that needed to be closed at the end of the financial year which ensures that the
book are not disrupted by this financial transactions during maintaining the clear record of all the
money or the any form of drawing transferred in the business. So it is to be taught to the Anne
that Linda have used the amount for their personal use and all the amount is being deducted form
the company's bank account or these all is being considered as the expenses of the company.

PART B
a) Compute the fiscal ratio for the business of Anne.
The ratios calculated are the following:
 Gross Profit Margin = (Gross Profit / Net Sales) * 100
= (770 / 5600) * 100 = 13.75%
 Net Profit Margin = (Net profit / Net Sales) * 100
= (-210 / 5600) * 100 = -3.75%
 Current Ratio = Current Assets / Current Liabilities
= 15480 / 5150 = 3.01
 Acid Test ratio = (Current Assets – Stock) / Current Liabilities
= (15480 – 320) / 5150 = 2.94
 Accounts Payable Payment Period = (Average Creditors / Net Purchases) * 365
= (5150 / 5150) * 365 = 365 Days
 Accounts Receivable Collection Period = (Average Debtors / Net Sales) * 365
= (150 / 5600) *365 = 9.78 Days
b) Write down the impact of the Covid -19 on the economic performance of Anne’s business on
the basis of ratios.
It is being determined from the above proportions that by examining the proportions of
the contender's normal. It is tend to be analysed that the Anne's company is not performing well
in the market as far as the advantages on the lookout. The competitors of the business are getting
huge advantages at an insignificant cost and there are various venture in the business who are
showing the major obligation as when appeared in different forms. When the business is working
in the different forms in context to the current resources of the company. This is the horrible
situation which understands the impacts of the liquidity position of the venture. Thus Anne's
business likes the major working capital that is important for them to meet the shortage as in the
short-term responsibility of the business.
There is the huge disturbance in the business operations due to the Covid-19 across the
world. There are various endeavours that is expected to close the business exercise as it is seen in
the results of no openness of the financial resources of the company. The business had seen
major incident de to the overall interest rate on the lookout. Comparing the overall impact were

analyse by Anne that they saw the major decline in the provision that thus reduces the
advantages. In order to recuperate the benefit lost during the pandemic. It is recommended to the
business to observe such capable ways that would help them to get back the interest of the
products and the lookout of the administration. Artificial intelligence must be zero on getting to
the amount which is equivalent and underlying venture post after the pandemic. When the
company is facing the interruption in the business which the amount dues. The business can
make new courses f action and the anticipated in the effective manner to stay aware about the
business after the period of coronavirus.
The analysis of proportion in context to Anne shows that the business is overseeing in
various misfortunes and the venture needs to zero in chopping down its functional costs. Thus, it
is suggested to the Anne must change the framework of their venture so that they can rightly
having the techniques while maintaining the commercial centre.
CONCLUSION
It is concluded from the above report that, recording the business transactions is the
important process for every business organisation. This helps in accessing the better working to
the company that also improves the strategies which needs to be changed and can be planned
accordingly in the business. In this assessment, it is also seen that the transaction is being
recorded for Anne's business is being suffered a loss of £210. Moreover, there are measures
which can be taken for the improvement in the overall fiscal performance and it is being
analysed on the basis of the previous year's profit statement that is further discussed.

REFERENCES
Books and Journals
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microbusinesses. Journal of Small Business and Enterprise Development.
Petrillo, A. and et.al., 2018. Building excellence through the Agile Reengineering Performance
Model (ARPM): A strategic business model for organizations. Business Process
Management Journal.
Ladd, T. and et.al., J., 2019. Entrepreneurial orientation, Waynesian self-efficacy for searching
and marshaling, and intention across gender and region of origin. Journal of Small
Business & Entrepreneurship. 31(5). pp.391-411.
Kokodey and et.al., 2018, October. Modeling the global business environment based on
polycyclic theory. In The International Science and Technology Conference"
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Marques and et.al., 2020. A system dynamics-based approach to determinants of family business
growth. Annals of Operations Research. pp.1-21.
Lee, J.Y., 2019. A decentralized token economy: How blockchain and cryptocurrency can
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Le, and et.al., 2019. Smart-building management system: An Internet-of-Things (IoT)
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