Financial Accounting: Double Entry, Trial Balance & Final Accounts

This financial accounting report provides a comprehensive overview of key accounting principles and techniques. It begins with an application of the double-entry bookkeeping system, recording sales and purchase transactions in a general ledger and extracting a trial balance. The report then progresses to preparing final accounts for sole proprietorships, partnerships, and limited companies, incorporating adjustments for accruals, depreciation, and prepayments. Furthermore, the report includes the preparation of a bank reconciliation statement and demonstrates the use of suspense accounts for reconciling discrepancies. The report showcases the application of these principles with journal entries, ledgers, trial balance, and final accounts preparation, providing a practical understanding of financial accounting concepts. Desklib offers a wealth of similar solved assignments and past papers for students seeking additional resources.

Financial Accounting
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Introduction:
The financial accounting report has been prepared in order to develop an understanding about the
financial accounting principles and techniques applied in the accounting work of business. The
same will help the users in prepari8ng the records related to final accounts of the company. The
users will use the information in preparation of accounts for sole traders and partnerships as well
as including the limited companies. The first part of the report will involve recording the
business transaction of company while utilizing double entry bookkeeping system and extracting
the trial balance from those accounts. The second part of the report will include preparing final
accounts for sole proprietorship, partnership and companies. The third part of the report will
include preparation of bank reconciliation of company and the last part of the report will help in
reconciling the accounts while using suspense accounts and demonstrating the use of the same.
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Task 1:
P1: Apply the double entry book-keeping system of debits and credits. Record sales and
purchases transactions in a general ledger.
Journal Entries:
Date Particular Debit (dr.) Credit
(Cr.)
Cash account
To Capital a/c
5000
5000
Car a/c
To Cash a/c
1000
1000
Purchase a/c
To cash a/c
500
500
Purchase a/c
To MR A. A/c
600
600
Rent expense a/c
To Cash a/c
200
200
Cash a/c 800
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To Sales a/c 800
MRS X. a/c
To sales a/c
900
900
MR. A a/c
To cash a/c
400
400
Cash a/c
To Mrs. X a/c
500
500
Drawing a/c
To Cash a/c
100
100
Ledgers:
Capital A/c
Date Particulars J.F £ Date Particulars J.F £
To bal c/d 5000 By Cash 5000
5000 5000
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Cash A/c
Date Particulars J.F £ Date Particulars J.F £
To Capital
To Mrs. X
To sales a/c
5000
500
800
By Car a/c
By purchases
By rent
By Mr. A
By drawings
By bal c/d
1000
500
200
400
100
4100
6300 6300
Car A/c
Date Particulars J.F £ Date Particulars J.F £
To Cash 1000 By bal c/d 1000
1000 1000
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Purchases A/c
Date Particulars J.F £ Date Particulars J.F £
To cash
To Mr. A
500
600
By bal c/d 1100
1100 1100
Mr. A a/c
Date Particulars J.F £ Date Particulars J.F £
To Cash
To bal c/d
400
200
By purchases 600
600 600
Rent a/c
Date Particulars J.F £ Date Particulars J.F £
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To Cash 200
200 200
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Sales A/c
Date Particulars J.F £ Date Particulars J.F £
To bal c/d 1700 By Cash
By Mrs. X
800
900
1700 1700
Mrs. X a/c
Date Particulars J.F £ Date Particulars J.F £
To sales 900 By Cash
By bal c/d
500
400
900 900
Drawings A/c
Date Particulars J.F £ Date Particulars J.F £
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To cash 100
100 100
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P2: Produce a trial balance applying the use of the balance off rule to complete the ledger
Trial Balance:
Trial balance
Particular Amount in £ (DR.) Particular Amount in £ (Cr.)
Cash 4100 Capital 5000
Car 1000 Creditor 200
Purchases 1100 Sales 1700
Rent 200
Debtors 400
Drawings 100
Total 6900 Total 6900
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P3: Prepare final accounts from given trial balance figures adjusting for accruals,
depreciation and prepayments.
Calculation of depreciation charge for the first three accounting periods:
Depreciation = (Cost of asset – Scrap Value)/ Number of years of use
Depreciation = (12000 – 2000) / 5 = 2000 per annum
Year Working Depreciation Amount (£)
2002 2000/12*9 1500
2003 2000
2004 2000
Extracts of profit and loss account:
Particular Amount (£) Amount (£) Amount (£)
31.12.2002 31.12.2003 31.12.2004
Depreciation expense 1500 2000 2000
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Extracts of statement of financial position:
Particular Amount (£) Amount (£) Amount (£)
31.12.2002 31.12.2003 31.12.2004
Non Current Assets:
Cost 12000 12000 12000
Accumulated Depreciation (1500) (3500) (3500)
WDV 10500 8500 6500
P4: Produce final accounts for a range of examples that include sole-traders, partnerships
or limited companies.
Final Accounts for the given trial balance of sole trader after adjustments:
Trading and profit and loss A/c:
Particular Workin
g
Amoun
t
Particular Workin
g
Amoun
t
Opening Stock 4600 Sales 208000
Purchases 150000 Less: Sales Returns 500 207500
Less: Purchase returns 600 149400 Closing Stock 52000
Wages 25000
Add: Outstanding wages 5000 30000
Gross Profit (C/f) 34100
Total 259500 Total 259500
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Trade Expenses 840 Bal b/f 34100
Painting, stationery &
adverti
1640 Commission
received
3300
Professional charges 280 Interest on deposit 200
Salaries 14000 Add: Accrued
interest
200 400
Discount 6300 Discount received 4600
Rent rates and insurance 4000
Less: Prepaid 200 3800
Interest on capital 5735
Depreciation on premises 1930
Depreciation on furniture 305
Net Profit 7570
Total 42400 Total 42400
Statement of financial position:
Amount
Assets
Current Assets
Bills receivables 3200
Closing Stock 52000
Cash in hand 3400
Bank 22660
Prepaid Insurance 200
Investments 4000
Accrued interest 200 4200
Debtors 36000
Provision for debtors 670 35330
Total Current Assets 120990
Fixed Assets
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Freehold premises 38600
Depreciation 1930 36670
Office furniture 3050
Depreciation 305 2745
Total Fixed Assets 39415
Total Assets 160405
Liabilities
Current Liabilities
Bills Payable 10000
Accrued Salary 5000
Sundry creditors 29000
Total Current Liabilities 44000
Long Term Liabilities Nil
Total Long Term Liabilities Nil
Total Liabilities 44000
Net Assets 116405
Owner Funds
Capital 114700
Net profit 7570
Interest on capital 5735
128005
Drawings 10000
Tax 1600 116405
Total owner Funds 116405
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