University of West London - BA30592E Recording Business Transactions

This assignment involves recording business transactions for a toy business, preparing financial statements, and conducting ratio analysis. The solution begins with double-entry bookkeeping for various transactions, followed by balancing accounts and extracting a trial balance. An income statement and a statement of financial position are prepared to assess the business's financial performance. The assignment also includes a letter explaining drawings to the business owner. Ratio calculations are performed to evaluate the company's financial health, comparing the results to industry averages. The analysis covers net profit margin, gross profit, current ratio, quick ratio, accounts receivable, and accounts payable. The assignment concludes with an overall assessment of the business's financial standing based on the provided financial statements and ratios.

Portfolio

INTRODUCTION
Recording business transactions is multi step procedure in record all the financial
transactions that occur in the business in particulars financial year. At the starting analysis all the
transactions after that decided which account credited and which account will be debited
(Mendling and et.al, 2018). An organisation use different formate to record all the business
transactions like journal entries, ledger, profit and loss account and financial position statement.
In this report consist of trial balance, ratio calculation and analysis the performance of
competitors.
PART A
(a) Write double entry record the transactions in T-accounts
Date particularss L.F
Debit
Amt.
Credit
Amt.
2020
01/10/20 Bank Account Dr 8000
Cash Account Dr 5200
Van Account Dr 3000
To Capital Account 16200
(Being business started)
02/10/20 Laptop Account Dr 1000
To Bank Account 1000
(Being laptop purchased)
04/10/20 Purchase Account Dr 2450
1

To Toy Ltd 2450
(Being purchase made)
05/10/20 Bank Account Dr 1500
To Sales Account 1500
(Being sales made)
12/10/20
…..Repairs Account.....
Dr 80
…..To Cash
Account..... 80
(Being cash paid for
repairs)
18/10/20 Toy Ltd Account Dr 100
To Purchase Return
Account 100
(Being purchase return
made)
21/10/20 Bank Account Dr 500
…...To Rent
Account...... 500
(Being rent received)
2

23/10/20 Cash Account Dr 1500
Fred Account Dr 400
To Sales Account 1900
(Being sales made)
23/10/20
…..Cash Account.....
Dr 500
….. To Sales
Account..... 500
(Being sales made)
24/10/20
…..Car Account …....
Dr 2500
…..To Bank
Account..... 2500
(Being car purchased)
26/10/20 Wages Account Dr 820
To Bank Account 820
(Being wages paid)
30/10/20 Rent Account Dr 1000
To Bank Account 1000
(Being rent paid)
3

31/10/20 Drawings Account Dr 1600
To Bank Account 1600
(Being drawings made)
b) balance the accounts and bring down an opening balance
Bank account
Date particulars
Jour
nal
folio Amt. Date particulars
Jou
rnal
foli
o Amt.
…...To capital 8000
…...To sales 1500 …....By laptop 1000
…...To rent
received 500 …...By Car 2500
…...By wages 820
…...By Rent 1000
…...By drawing 1600
….By balance c/d 3080
Total 10000 Total 10000
Rent received account
Date particulars
Jou
rnal
folio Amt. Date particulars
Journal
folio Amt.
…...By bank 500
4

500 500
Cash account
Date particulars
Jou
rnal
folio Amt. Date particulars
Journa
l folio Amt.
…...To capital 5200 …...By repair 80
…...To sales 1500
…...By balance
c/d 7120
To sales 500
7200 7200
Fred Account
Date particulars
Jou
rnal
folio Amt. Date particulars
Journ
al
folio Amt.
…...To sales 400
…...By balance
b/d 400
Purchase Account
Date particulars
Jou
rnal
folio Amt. Date particulars
Journ
al folio Amt.
…...To Toys
limited 2450
…...By balance
c/d 2450
Toys limited Account
5

Date particulars
Jou
rnal
folio Amt. Date particulars
Journal
folio Amt.
…...To purchase
return 100
…...By
purchase 2450
…...To balance
b/d 2350
2450 2450
Rent Account
Date particulars
Jou
rnal
folio Amt. Date particulars
Journal
folio Amt.
…...To Bank 1000
…...By
balance b/d 1000
Van Account
Date particulars
Journal
folio Amt. Date particulars
Journ
al
folio Amt.
…...To
capital 3000
…...By
balance b/d 3000
Capital Account
Date particulars
Jou
rnal
folio Amt. Date particulars
Journ
al
folio Amt.
…...To balance 16200 …...By bank 8000
6

b/d
…...By cash 5200
…...By van 3000
Sales Account
Date particulars
Jour
nal
folio Amt. Date particulars
Journa
l folio Amt.
…...To balance
b/d 3900 …...By bank 1500
…...By cash 1500
…...By Fred 400
…...By cash 500
Laptop Account
Date particulars
Journal
folio Amt. Date particulars
Jour
nal
folio Amt.
…...To bank 1000 …...By bal. b/d 1000
Car Account
Date
particular
s
Journal
folio Amt. Date particulars
Journ
al
folio Amt.
…...To
Bank 2500 …...By bal. b/d 2500
7

Drawing Account
Date
particular
s
Journal
folio Amt. Date particulars
Jou
rnal
folio Amt.
…...To
Bank 1600 …...By bal. b/d 1600
Wages Account
Date
particular
s
Journal
folio Amt. Date particulars
Jou
rnal
foli
o Amt.
…...To
Bank 820 …...By bal. b/d 820
Repair Account
Date
particular
s
Journal
folio Amt. Date particulars
Jou
rnal
folio Amt.
…...To
cash 80 …...By bal. b/d 80
c) Extract a Trial balance as at 31st October 2020
It is a list of all general ledger balances in which consist of revenues as well as capital of
business entity. All the balances categorised into two columns debit and credit with the name of
ledger accounts. The main objective of trial balance is that calculate total of debit and credit
balances to tally all the transactions because each transaction impact on dual side (Chong and
et.al, 2019).
8

Accounts Debit Credit
Bank 3080
Cash 7120
Van 3000
Laptop 1000
Toys limited 2350
Purchase 2450
Purchase return 100
Sales 3900
Rent received 500
Rent paid 1000
Wages 820
Drawing 1600
Capital 16200
Repairing
account 80
Fred account 400
Car account 2500
22550 22550
d) Prepare an Income Statement for the period ended 31st October 2020
9

particulars Amt.
Sales 3900......
Less : Cost of goods solds
Opening stocks Nil
Purchase 2450.......
Less: Carried outward 100........
Less: Closing stock 250........
Gross revenue 1800....
Less: Operating costs
Expenses for repairing 80.....
Wages 820.....
Rent expenses 1000...... 1900......
Add: Operating income
Rent income 500......
Net profits 400.....
e) Prepare a Statement of Financial Position as at 31st October 2020
particulars Amt. Total
Fixed assets
…...Car 2500
…...Van 3000
…...Laptop 1000 6500
Current Assets
…...Cash account 7120
10