Preparation of Financial Records and Statements for Conga: Accounting

This assignment focuses on the financial accounting practices of Conga, a small UK-based toy sole trader. It provides a detailed analysis of the company's financial records, including journal entries and ledger postings. The assignment covers the preparation of financial statements, ensuring all transactions are accurately recorded. It also delves into the application of the prudence and accrual concepts within the context of Conga's financial activities. Furthermore, the report explains how Value Added Tax (VAT) is recorded in Conga's books and financial reports. The financial performance of the company is analyzed using various accounting tools and techniques. The report includes ledger accounts for purchase, sales, cash, return outward, return inward, salary, and other relevant accounts. The assignment aims to provide a comprehensive understanding of financial accounting principles and their practical application in a business setting, offering insights into financial analysis and decision-making.

Introduction to
Financial Accounting
Table of Contents
Table of Contents.............................................................................................................................2

INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Preparation of records and financial statement of Conga............................................................1
TASK 2..........................................................................................................................................14
Prudence and accrual concept and their application within Conga...........................................14
TASK 3..........................................................................................................................................15
The way in which VAT could be recorded in the books and reports of Conga........................15
CONCLUSION..............................................................................................................................16
REFERENCES..............................................................................................................................17

INTRODUCTION
Financial accounting can be defined as the process of formulating final accounts and then
analysing performance of the company with the help of different aspects such as profit, losses,
income, cash, expenditures etc. It is vital for all the business entities to conduct it on regular
basis so that actual financial status of business can be monitored and strategies decisions can be
formulated for future period (Chiang, Nouri and Samanta, 2014). This project report is based
upon Conga which is a small sole trader of toys and established in UK.
Various topics are being covered under this assignment which includes preparation of
accounting records and financial statement, explanation of prudence and accrual concept,
application of both of them etc. Explanation regarding recording of VAT is also being covered in
this report.
TASK 1
Preparation of records and financial statement of Conga
There are various types of tools that are used to analyse financial performance of a
company. All of them are as follows:
Journal entries: All the transactions are recorded in journals because it helps to make sure
that all the transactions are correct or not (De Waegenaere, Sansing and Wielhouwer, 2015). All
the entries for Conga are as follows:
Date Particulars L.F. Amount
Dr. Cr.
01/12/18 Purchase a/c Dr. 12000
To Crystal a/c 12000
01/12/18 Purchase a/c Dr. 14000
To Jim a/c 14000
02/12/18 Purchase a/c Dr. 16000
1

To Kia a/c 16000
03/12/18 Purchase a/c Dr. 20000
To Aeron a/c 20000
04/12/18 Purchase a/c Dr. 19500
To Emily a/c 19500
05/12/18 Salary a/c Dr. 40000
To Cash a/c 40000
05/12/18 Repair a/c Dr. 5500
To Cash a/c 5500
06/12/18 Insurance a/c Dr. 3500
To Cash a/c 3500
07/12/18 Aeron a/c Dr. 2000
To return outward 2000
08/12/18 Emily a/c Dr. 1000
To return outward a/c 1000
09/12/18 Emily a/c Dr. 18500
2

To Cash a/c 18500
10/12/18 Crystal a/c Dr. 12000
To cash a/c 12000
11/12/18 John a/c Dr. 25000
To sales a/c 25000
12/12/18 Henry a/c Dr. 18000
To sales a/c 18000
13/12/18 James a/c Dr. 16000
To sales a/c 16000
14/12/18 Ryan a/c Dr. 22000
To sales a/c 22000
15/12/18 Lisa a/c Dr. 17000
To sales a/c 17000
16/12/18 Cash a/c Dr. 12000
To sales a/c 12000
17/12/18 Cash a/c Dr. 8000
3

To sales a/c 8000
18/12/18 Cash a/c Dr. 14500
To sales a/c 14500
19/12/18 Return inward a/s Dr. 2500
To John a/c 2500
20/12/18 Return inward a/s Dr. 2000
To Ryan a/c 2000
21/12/18 Discount Allowed a/c Dr. 1000
Cash a/c Dr. 17000
To Henry a/c 18000
22/12/18 Aeron a/c Dr. 18000
To discount received a/c 500
To Cash a/c 17500
23/12/18 Electricity a/c Dr. 3000
Rent a/c Dr. 5000
To Cash a/c 8000
24/12/18 Cash a/c Dr. 45000
4

To capital a/c 45000
25/12/18 Loan a/c Dr. 20000
To Cash a/c 20000
26/12/18 Wages a/c Dr. 4000
To wages payable a/c 4000
27/12/18 P & L a/c Dr. 2000
To accumulated dep a/c 2000
28/12/18 Allowance for debts a/c Dr. 1998
To P & L A/c 1998
Ledgers: After journal ledger accounts are formulated to analyse that are recorded
amount is right of not (Gillett, 2016). Ledger posting of all the above transactions of Conga are
as follows:
Purchase account
Date Particular Amount Date Particular Amount
01-01-18 To balance b/d 135500 31-12-18 By balance c/d 217000
01-01-18 To Crystal 12000
01-01-18 To Jim 14000
02-12-18 To Kia 16000
03-12-18 To Aeron 20000
04-12-18 To Emily 19500
217000 217000
Sales account
Date Particular Amount Date Particular Amount
31-12-18 To balance c/d 497890 01-01-18 By balance b/d 390390
12-12-18 By Henry 18000
13-12-18 By James 16000
5

14-12-18 By Ryan 22000
15-12-18 By Lisa 17000
16-12-18 By cash 12000
17-12-18 By cash 8000
18-12-18 By cash 14500
497890 497890
Cash account
Date Particular Amount Date Particular Amount
16-12-18 To sales 12000 05-12-18 By salary 40000
17-12-18 To sales 8000 05-12-18 By repair 5500
18-12-18 To sales 14500 06-12-18 By insurance 3500
21-12-18 To Henry 17000 09-12-18 By Emily 18500
24-12-18 To capital 45000 10-12-18 By Crystal 12000
31-12-18 By Balance c/d 28500 22-12-18 By Aeron 17500
23-12-18 By Electricity 3000
23-12-18 By rent 5000
25-12-18 By Loan 20000
125000 125000
Return outward account
Date Particular Amount Date Particular Amount
31-12-18 To balance c/d 3000 07-12-18 By Aeron 2000
08-12-18 By Emily 1000
3000 3000
Return inward account
Date Particular Amount Date Particular Amount
01-01-
2018 To balance b/d 6200 31-12-18 By balance b/d 10700
19-12-18 To John 2500
20-12-18 To Ryan 2000
10700 10700
Salary account
Date Particular Amount Date Particular Amount
05-12-18 To cash 40000 31-12-18 By balance c/d 40000
40000 40000
6

Crystal account
Date Particular Amount Date Particular Amount
10-12-18 To cash 12000 01-01-18 By purchase 12000
12000 12000
Jim account
Date Particular Amount Date Particular Amount
31-12-18 To balance c/d 14000 01-01-18 By purchase 14000
14000 14000
Kia account
Date Particular Amount Date Particular Amount
31-12-18 To balance c/d 16000 02-12-18 By purchase 16000
16000 16000
Aeron account
Date Particular Amount Date Particular Amount
07-12-18 To return outward 2000 03-12-18 By purchase 20000
To discount
received 500
To cash 17500
20000 20000
Emily account
Date Particular Amount Date Particular Amount
08-12-18 To return outward 1000 04-12-18 By purchase 19500
To cash 18500
19500 19500
John account
Date Particular Amount Date Particular Amount
11-12-18 To sales 25000 19-12-18 By return inward 2500
31-12-18 By balance c/d 22500
25000 25000
Henry account
Date Particular Amount Date Particular Amount
7

11-12-18 To sales 18000 21-12-18
By discount
allowed 1000
21-12-18 By cash 17000
18000 18000
James account
Date Particular Amount Date Particular Amount
13-12-18 To sales 16000 31-12-18 By balance c/d 16000
16000 16000
Ryan account
Date Particular Amount Date Particular Amount
14-12-
2018 To sales 22000
20-12-
2018 By return inward 2000
30-12-
2018 By balance c/d 20000
22000 22000
Lisa account
Date Particular Amount Date Particular Amount
15-12-
2018 To sales 14000
31-12-
2018 By balance c/d 14000
14000 14000
Repair account
Date Particular Amount Date Particular Amount
05-12-18 To cash 5500 31-12-18 By balance c/d 5500
5500 5500
Insurance account
Date Particular Amount Date Particular Amount
06-12-18 To cash 3500 31-12-18 By balance c/d 3500
3500 3500
Discount allowed account
Date Particular Amount Date Particular Amount
21-12-
2018 To Henry 1000
31-12-
2018 By balance c/d 1000
8

1000 1000
Discount received account
Date Particular Amount Date Particular Amount
31-12-
2018 To balance c/d 500
22-12-
2018 By Aeron 500
500 500
Electricity account
Date Particular Amount Date Particular Amount
01-01-
2018 To balance b/d 22280
31-12-
2018 By balance c/d 25280
23-12-
2018 To cash 3000
25280 25280
Rent account
Date Particular Amount Date Particular Amount
01-01-
2018 To balance b/d 46400
31-12-
2018 By balance c/d 49400
23-12-
2018 To cash 5000
49400 49400
Capital account
Date Particular Amount Date Particular Amount
31-12-
2018 To balance c/d 195000
01-01-
2018 By balace b/d 150000
24-12-
2018 By cash 45000
195000 195000
Loan account
Date Particular Amount Date Particular Amount
25-12-
2018 To cash 20000
01-01-
2018 By balance b/d 60000
31/12/1/ To balance c/d 40000
60000 60000
9

Wages account
Date Particular Amount Date Particular Amount
01-01-
2018 To balance b/d 51000
31-12-
2018 By balance c/d 55000
26-12-
2018 To wages payable 4000
55000 55000
P & L account
Date Particular Amount Date Particular Amount
27-12-
2018 To acc dep 2000
28-12-
2018
By allowance for
debt 3275
31-12-
2018 By balance c/d 1275
3275 3275
Accumulated dep account
Date Particular Amount Date Particular Amount
31-12-
2018 To balance c/d 48000
01-01-
2018 By balance b/d 46000
27-12-
2018
By accumulated
dep 2000
48000 48000
Wages payable account
Date Particular Amount Date Particular Amount
31-12-
2018 To balance c/d 4000
26-12-
2018 To wages 4000
4000 4000
Allowance for receivable account
Date Particular Amount Date Particular Amount
28-12-
2018 To P & L a.c 3275
01-01-
2018 By balance b/d 7300
31-12-
2018 To balance c/d 4025
7300 7300
10