Accounting Records and Financial Statements of Conga Toy Retailer

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INTRODUCTION TO FINANCIAL ACCOUNTING
1

Contents
Introduction......................................................................................................................................3
1) Prepare the accounting records and financial statements for Conga, a sole trader toy retailer
business, as explained overleaf........................................................................................................4
2) Explain the prudence concept and accruals (matching) concept, identifying the application of
these concepts by Conga in their annual reports for the year to 31 December 2018....................20
3) Conga does not add Value Added Tax (VAT) to its sales, however, in the future, the
government might require VAT to be added to its sales. Explain how VAT would be recorded in
Conga's accounting records and reports........................................................................................22
Conclusion.....................................................................................................................................24
References:....................................................................................................................................25
2

Introduction
The following report is based on the Conga which is running a sole trader toy retailer business.
The accounting reports and records are to be shown in the books of Conga with assuming some
fictitious amounts and events in understanding the financial position of it. Trial balance, income
statement, ledgers and balance sheet are to be provided properly by understanding the position of
Conga.
3

1) Prepare the accounting records and financial statements for Conga, a sole trader toy
retailer business, as explained overleaf.
Sales Day Book December 2018
Date
Custome
r Invoice No.
Amoun
t
2/12/2018 2,850
3/12/2018 2000
5/12/2018 5000
8/12/2019 300
10/12/2-18 1500
15/12/201
8 2400
18/12/201
8 1800
20/12/201
8 2300
Sales Return Day Book December 2018
Date Customer Invoice No.
Amoun
t
8/12/2018 300
12/12/2018 1500
Purchase Day Book December 2018
Date
Custome
r Invoice No.
Amoun
t
1/12/2018 3500
3/12/2018 2600
6/12/2018 1700
4

17/12/201
8 1800
19/12/201
8 2000
5

Purchase Returns Day Book December 2018
Date Customer Invoice No.
Amoun
t
4/12/2018 500
10/12/2018 200
6

Journal entries
Journal Entries of sales for the month of December 2018
Date Particular
L.
F
Amount
(Dr.)
Amount
(Cr.)
2/12/2018 Cash A/c dr. 2850
To Sales A/c. 2850
(Being sales made in cash)
3/12/2018
Sundry Debtors A/c
dr. 2000
To Sales A/c. 2000
(Being sales made on credit)
5/12/2018 Cash A/c dr. 5000
To Sales A/c. 5000
(Being sales made in cash)
8/12/2018
Sundry Debtors A/c
dr. 300
To Sales A/c. 300
(Being sales made on credit)
10/12/2-
18 Cash A/c dr. 1500
To Sales A/c. 1500
(Being sales made in cash)
15/12/201
8 Sundry Debtors A/c dr. 2400
7

To Sales A/c. 2400
(Being sales made on credit)
18/12/201
8 Sundry Debtors A/c dr. 1800
To Sales A/c. 1800
(Being sales made on credit)
20/12/201
8 Sundry Debtors A/c dr. 2300
Discount allowed A/c dr. 200
To Sales A/c. 2500
(Being sales made on credit)
8

Journal Entries of return inward for the month of December 2018
Date Particular
L.
F
Amount
(Dr.)
Amount
(Cr.)
8/12/2018 Sales Return A/c. Dr. 300
To Sundry Debtors A/c 300
(Being Sales inward
made)
12/12/201
8 Sales Return A/c. Dr. 1500
To Sundry Debtors A/c 1500
(Being Sales inward
made)
9

Journal Entries of Purchase for the month of December 2018
Date Particular
L.
F
Amount
(Dr.)
Amount
(Cr.)
1/12/2018 Purchase A/c dr. 3500
To Sundry Creditors A/c 3500
(Being goods purchased on
credit)
3/12/2018 Purchase A/c dr. 2600
To Sundry Creditors A/c 2600
(Being goods purchased on
credit)
6/12/2018 Purchase A/c dr. 1700
To Sundry Creditors A/c 1700
(Being goods purchased on
credit)
17/12/201
8 Purchase A/c dr. 1800
To Sundry Creditors A/c 1800
(Being goods purchased on
credit)
19/12/201
8 Purchase A/c dr. 2200
To Sundry Creditors A/c 2000
To discount received A/c 200
(Being goods purchased on
10

credit)
Journal Entries of Return outward for the month of December 2018
Date Particular
L.
F Amount (Dr.) Amount (Cr.)
4/12/2018 Sundry Creditors A/c dr. 500
To Purchase return A/c 500
(Being purchased return made)
10/12/2018 Sundry Creditors A/c dr. 200
To Purchase return A/c 200
(Being purchased return made)
Journal Entries of capital for the month of December 2018
Date Particular
L.
F Amount (Dr.) Amount (Cr.)
1/12/2018 Cash A/c dr. 45000
To Capital A/c 45000
(Being capital invested )
Journal Entries of loan for the month of December 2018
Date Particular
L.
F Amount (Dr.) Amount (Cr.)
31/12/2018 Loan A/c dr. 20,000
To cash A/c 20,000
(Being loan amount is repaid)
Journal Entries of Bad debts receivable for the month of December 2018
11

Date Particular
L.
F Amount (Dr.) Amount (Cr.)
31/12/2018 Cash A/c dr. 276
To Bad debts A/c 276
(Being Bad debts received)
Journal Entries of expenses a/c for the month of December 2018
Date Particular
L.
F Amount (Dr.) Amount (Cr.)
1/12/2018 Expenses A/c dr. 3300
To Cash A/c 300
(Being expenses paid in cash)
13/12/201
8 Expenses A/c dr. 130
To Cash A/c 130
(Being expenses paid in cash)
17/12/201
8 Expenses A/c dr. 1000
To Cash A/c 1000
(Being expenses paid in cash)
31/12/201
8 Electricity expenses A/c dr. 3000
Rent expenses A/c dr. 5000
To cash A/c 8000
(Being expenses paid in cash)
12