Financial Accounting Assignment: Conga, Sole Trader Financials

This assignment focuses on financial accounting principles and their application in a real-world scenario. It involves preparing accounting records, including journal entries for purchases, sales, expenses, and other transactions for Conga, a sole trader engaged in the retail toy business. The solution presents the creation of ledger accounts, a trial balance, and the preparation of financial statements. The assignment covers crucial accounting concepts such as accruals and prudence, and it emphasizes the importance of VAT. The provided solution demonstrates the step-by-step process of recording transactions, summarizing data, and creating financial statements, providing a comprehensive understanding of the accounting cycle.

Introduction
To
Financial Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
TASK 2..........................................................................................................................................11
TASK 3..........................................................................................................................................12
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Financial accounting is core and essential aspect of a business organisation. It is an on
going and continuous process in which accountants records transactions, summarise and post
them to ledgers, and prepare statement of financial position, income statement and cash flow
statement. It assist in defining actual performance and position of business organisation (Samkin,
Low and Taylor, 2012). It also provide comparative analysis of data of one or more period.
Financial records are prepared by accountants while considering accounting concepts under
financial accounting which enhance the reliability of financial data. Ultimate objective of
financial accounting is reporting of financial and profitability position of business organisation to
various stakeholder like investors, creditors, suppliers etc. This report exhibits various
accounting concepts such as prudence and accruals and their application in annual accounts
along with practical knowledge of preparation of accounting records and financial statements in
the context of Conga, a sole trader engaged in retail business of toys. This report also describes
importance and requirement of value added tax for Conga.
TASK 1
Preparation of accounting records and financial statements:
Journals:
 Credit and cash Purchase entries
S.NO. PARTICULARS DEBIT CREDIT
1 Purchase a/c 6000
To Olivia a/c 6000
2 Purchase a/c 7500
To Smithson a/c 7500
3 Purchase a/c 8750
To Wilma a/c 8750
4 Purchase a/c 3880
To Davidson a/c 3880
1

5 Purchase a/c 4070
To Jessica a/c 4070
 Expenses paid in cash
S.NO. PARTICULARS DEBIT CREDIT
1 Wages a/c 5720
To Cash a/c 5720
2 Advertising a/c 4250
To Cash a/c 4250
3 Refreshment Expense a/c 2040
To Cash a/c 2040
 Return outward
S.NO. PARTICULARS DEBIT CREDIT
1 Smithson a/c 1280
To Return outwards a/c 1280
2 Jessica a/c 2120
To Return outwards a/c 2120
 Payment to Trade Payables
S.NO. PARTICULARS DEBIT CREDIT
1 Olivia a/c 5200
To cash a/c 5200
2 Davidson a/c 2280
2

To cash a/c 2280
 Credit and Cash Sales
S.NO. PARTICULARS DEBIT CREDIT
1 Jackson a/c 5120
To sales a/c 5120
2 Kelvin a/c 4250
To sales a/c 4250
3 Nicolas a/c 3970
To sales a/c 3970
4 Duke a/c 4200
To sales a/c 4200
5 Thelma a/c 3510
To sales a/c 3510
S.NO. PARTICULARS DEBIT CREDIT
1 Cash a/c 3500
To Sales a/c 3500
2 Cash a/c 2700
To Sales a/c 2700
3 Cash a/c 2250
To Sales a/c 2250
 Return Inward Entries
3

S.NO. PARTICULARS DEBIT CREDIT
1 Return inward a/c 2110
To Duke a/c 2110
2 Return inward a/c 2980
To Kelvin a/c 2980
 Receipts from Trade Receivables
S.NO. PARTICULARS DEBIT CREDIT
1 Cash a/c 2640
To Jackson a/c 2640
2 Cash a/c 1990
To Thelma a/c 1990
 Discount Allowed and Received
S.NO. PARTICULARS DEBIT CREDIT
1 Discount Allowed a/c 750
To Kelvin a/c 750
2 Olivia a/c 100
To Discount received a/c 100
 £3,000 cash spent on electricity and £5,000 spent on rent.
S.NO. PARTICULARS DEBIT CREDIT
4

1 Electricity a/c 3000
To cash a/c 3000
2 Rent a/c 5000
To cash a/c 5000
 £45,000 capital provided by the owner.
S.NO. PARTICULARS DEBIT CREDIT
1 Cash a/c 45000
To capital a/c 45000
 Repayment of £20,000 of its loans
S.NO. PARTICULARS DEBIT CREDIT
1 Loan a/c 20000
To bank a/c 20000
 Accrued wages of £4,000.
S.NO. PARTICULARS DEBIT CREDIT
1 Wages a/c 4000
To Wages Payable a/c 4000
 Estimated depreciation for the year to 31 December 2018
S.NO. PARTICULARS DEBIT CREDIT
1 Profit and loss a/c 2000
To Depreciation A/c 2000
 Allowance for doubtful debts should be 3% of the year end receivables.
S.NO. PARTICULARS DEBIT CREDIT
1
Allowance for
doubtful debts a/c 1397.77
To Trade receivable a/c 1397.77
5

Ledger Accounts:
Purchase A/c
Date Description Dr Date Description Cr
To balance b/d` 135500
To Olivia a/c 6000
To Smithson a/c 7500
To Wilma a/c 8750
To Davidson a/c 3880
To Jessica a/c 4070 By balance c/d 165700
165700 165700
Sales A/c
Date Description Dr Date Description Cr
By balance b/d 390390
By Jackson a/c 5120
By Kelvin a/c 4250
By Nicolas a/c 3970
By Duke a/c 4200
By Thelma a/c 3510
By Cash 3500
By Cash 2700
To balance c/d 419890 By Cash 2250
6

419890 419890
Cash/Bank a/c
Date Description Dr Date Description Cr
To balance b/d 15410 By Wages a/c 5720
To Sales a/c 3500 By Advertising a/c 4250
To Sales a/c 2700
By Refreshment
Expense a/c 2040
To Sales a/c 2250 By Rent a/c 3000
To Capital a/c 45000 By Electricity a/c 5000
To Jackson a/c 2640 By Loan a/c 20000
To Thelma a/c 1990 By Olivia a/c 5200
By Davidson a/c 2280
By balance c/d 26000
73490 73490
Return outwards a/c
Date Description Dr Date Description Cr
To balance c/d 3400 Smithson a/c 1280
Jessica a/c 2120
3400 3400
Return inwards a/c
Date Description Dr Date Description Cr
To balance b/d 6200
To Duke a/c 2110
To Kelvin a/c 2980 By balance c/d 11290
7

11290 11290
Rent a/c
Date Description Dr Date Description Cr
To balance b/d 46400
To cash 5000 By balance c/d 51400
51400 51400
Refreshment a/c
Date Description Dr Date Description Cr
To cash 2040 By balance c/d 2040
2040 2040
Electricity a/c
Date Description Dr Date Description Cr
To balance b/d 22280
To cash 3000 By balance c/d 25280
25280 25280
Wages a/c
Date Description Dr Date Description Cr
To balance b/d 51000 By balance c/d 60720
To cash 5720
To wages payable
a/c 4000
60720 60720
Discount allowed a/c
8

Date Description Dr Date Description Cr
To Kelvin a/c 750 By balance c/d 750
750 750
Discount received a/c
Date Description Dr Date Description Cr
To balance c/d 100 By Olivia a/c 100
100 100
Capital a/c
Date Description Dr Date Description Cr
To balance c/d 195000 By balance b/d 150000
By cash 45000
195000 195000
Equipment A/c
Date Description Dr Date Description Cr
To balance b/d 280000 By Depreciation 28000
By profit and loss a/c 252000
280000 280000
Allowance for Bad debts a/c
Date Description Dr Date Description Cr
To Trade
Receivables 1397.77 By balance b/d 7300
To balance c/d 5902.23
7300 7300
Trade receivables A/c
9