Financial Accounting: Case Studies on Double Entry and Final Accounts

This financial accounting assignment provides a comprehensive overview of key accounting principles and practices. It begins with the application of the double-entry bookkeeping system, including recording journal entries and posting them to respective ledger accounts for a given case study. The assignment then progresses to the preparation of a trial balance, demonstrating the process of compiling and balancing debit and credit entries. Further, the assignment includes an analysis of sales and purchase transactions, culminating in the compilation of a trial balance. Finally, the assignment concludes with the preparation of final accounts, including income statements and balance sheets, for both sole trader and partnership business structures. This includes making necessary adjustments and producing accurate financial statements, providing a practical application of accounting concepts.

FINANCIAL ACCOUNTING

TABLE OF CONTENTS

P1. Applying double entry book keeping system and preparation of accounts (case 1)
Recording journal entries in the books of Norris
DATE PARTICULARS DEBIT (£) CREDIT (£)
1 Cash A/C Dr.
To, Sales A/C
160
160
2 Insurance Premium A/C Dr.
To, Bank A/c
4000
4000
3 Accounts Receivable A/C Dr.
To, Sales A/c
2500
2500
4 Petrol A/C Dr.
To Cash A/C
500
500
5 Purchase A/C Dr.
To, Accounts Payable A/C
1700
1700
6 Drawings A/C Dr.
To, Cash A/C
570
570
7 Purchase A/C Dr.
To, Cash A/C
400
400
8 Computer A/C Dr.
To, Cash A/C
8000
8000
Posting Journal entries to respected Ledger Accounts for Norris
Cash A/C
Date Particulars Amount (£) Date Particulars Amount (£)
1 To Sales A/C 160 4 By Petrol A/C 500

To balance c/d 9310 6 By Drawing A/C 570
7 By Purchase A/C 400
8 By Computer A/C 8000
TOTAL 9470 TOTAL 9470
Sales A/C
Date Particulars Amount (£) Date Particulars Amount (£)
To balance c/d 2660 1 By Cash A/C 160
3 By Accounts Receivable
A/C
2500
TOTAL 2660 TOTAL 2660
Purchase A/C
Date Particulars Amount (£) Date Particulars Amount (£)
5 To Accounts Payable A/C 1700 By balance c/d 2100
7 To Cash A/C 400
TOTAL 2100 TOTAL 2100
P2. Producing trial balance using balance off rule (case 2 question a)
Recording Journal entries in the books of Mathews
DATE PARTICULARS DEBIT (£) CREDIT (£)

1st January Bank A/C Dr.
To, Capital A/C
10000
10000
2nd January Supplies A/C Dr.
To, Bank A/C
4000
4000
3rd January Delivery Van a/C Dr.
To, Bank A/C
2000
2000
4th January Purchase A/C Dr.
To Creditors A/C
1000
1000
5th January Bank A/C Dr.
To, Sales A/C
1500
1500
6th January Debtors A/C Dr.
To Sales A/C
5000
5000
7th January Creditors A/C Dr.
To, Bank A/C
800
800
8th January Rent A/C Dr.
To, Bank A/C
200
200
9th January Drawing A/C Dr.
To, Bank A/C
100
100
Posting Journal entries to respected Ledger Accounts for Matthews
Bank A/C
Date Particulars Amount (£) Date Particulars Amount (£)
1 To Capital A/C 10000 2 By Supplies A/C 4000
5 To Sales A/C 1500 3 By Delivery Van 2000

7 By Accounts Payable 800
8 By Rent A/C 200
9 By Drawings A/C 100
By Balance c/d 4400
TOTAL 11500 TOTAL 11500
Capital A/C
Date Particulars Amount (£) Date Particulars Amount (£)
To balance c/d 10000 1 By Bank A/C 10000
TOTAL 10000 TOTAL 10000
Supplies A/C
Date Particulars Amount (£) Date Particulars Amount (£)
2 To, Bank A/C 4000 By balance c/d 4000
TOTAL 4000 TOTAL 4000
Delivery Van A/C
Date Particulars Amount (£) Date Particulars Amount (£)
3 To Bank A/C 2000 By balance c/d 2000

TOTAL 2000 TOTAL 2000
Purchase A/C
Date Particulars Amount (£) Date Particulars Amount (£)
4 To Accounts Payable A/C 1000 By balance c/d 1000
TOTAL 1000 TOTAL 1000
Accounts Payable A/C
Date Particulars Amount (£) Date Particulars Amount (£)
7 To Bank A/C 800 4 By Purchase A/C 1000
To balance c/d 200
TOTAL 1000 TOTAL 1000
Sales A/C
Date Particulars Amount (£) Date Particulars Amount (£)
To balance c/d 6500 5 By Bank A/C 1500
6 By Accounts receivable 5000
TOTAL 6500 TOTAL 6500
Accounts Receivable A/C
Date Particulars Amount (£) Date Particulars Amount (£)
6 To sales A/C 5000 By balance c/d 5000

TOTAL 5000 TOTAL 5000
Rent A/C
Date Particulars Amount (£) Date Particulars Amount (£)
8 To Bank 200 By balance c/d 200
TOTAL 200 TOTAL 200
Drawings A/C
Date Particulars Amount (£) Date Particulars Amount (£)
9 To Bank 100 By balance c/d 100
TOTAL 100 TOTAL 100
Preparation of Trial Balance for Matthews
S. No. Particulars L.F. Debit (£) Credit (£)
1 Capital 10000
2 Bank 4400
3 Supplies 4000
4 Delivery Van 2000
5 Purchase 1000
6 Creditors 200

7 Revenue (sales) 6500
8 Debtors 5000
9 Rent expense 200
10 Drawing 100
TOTAL 16700 16700
M1. Analysing sales and purchase transactions to compile trial balance (Case 2 question b)
Sales A/C
Date Particulars Amount (£) Date Particulars Amount (£)
To balance c/d 6500 5 By Bank A/C 1500
6 By Accounts receivable 5000
TOTAL 6500 TOTAL 6500
Purchase A/C
Date Particulars Amount (£) Date Particulars Amount (£)
4 To Accounts Payable A/C 1000 By balance c/d 1000
TOTAL 1000 TOTAL 1000
Above ledger accounts are prepared after analysing sales and purchase accounts of
Matthews. These transactions will be compiled in final trail balance for starting 9 days.

D1. Recording transactions correctly and producing accurate trial balance
Above Trail balance has been prepared for Matthews for starting period of 9 days i.e.
from 1st January to 9th January. It has been identified that both the balance of account i.e. debit
balance and credit balance are matching with each other. Hence, it can be said that trial balance
has been prepared accurately along with recording all the transactions correctly by applying all
accepted accounting principles.
P3. Preparing final accounts after making adjustments (Case 3)
Income Statement
Statement of profit and loss for Kevin Suri fir the year end 31st December 2005
Particulars Details Amount (£) Particulars Details Amount (£)
To Opening inventory 23340 By sales 365200 364000
To Purchase 266800 265200 Less: return inwards -1200
Less: return outwards -1600 By inventory at end 25680

To wages 46160
To GP (Bal. Fig.) 54980
Total 389680 Total 389680
To rent 13000 12000
By Gross profit
carried down 54980
less: Prepaid rent -1000 By discount received 1622
To Motor Expenses 3720
by surplus on
revaluation 150000
To Insurance 760
To Provision for bad
debts 178
To discount allowed 864
To light and heat 3074 3534
Add: accrual 460
To depreciation 11128
To net profit
(Balancing figure) 161418
Total 206602 Total 206602
Statement of financial Position
Balance Sheet for Kevin Suri as at 31st December 2005
Liabilities Details Amount (£) Assets Details Amount (£)

Capital 225600 366218 Bank 3416
less: drawings -20800 Land 250000
add: Net profit 161418 Furniture 28000 5600
Accrual light and heat 460 Less: Aggregate Dep. -16800
Accounts payables 23004
Current year
depreciation -5600
Provision for bad debts 516
Building 100000 92000
Less: Aggregate Dep. -6000
Current year
depreciation -2000
Motor car 24000 8232
Less: Aggregate Dep. -12240
Current year
depreciation -3528
Prepaid rent 1000
Accounts receivables 17330
Total 390198 Total 390198