Financial Accounting Analysis: Corr's Records and Statements

This assignment provides a comprehensive overview of financial accounting principles through a case study of Corr, a sole trader company. It begins with detailed journal entries for various transactions, including sales, purchases, returns, receipts, and payments. These entries are then used to create ledger accounts, which are summarized in an income statement and a statement of financial position. The assignment also includes a trial balance to ensure the accuracy of the accounting process. Furthermore, it explores the importance of asset reporting and the differences between cash flow and profit. The report concludes with an analysis of the financial data, providing insights into Corr's financial performance and position. The document covers various aspects of accounting like tangible and intangible assets, current and fixed assets. The assignment also explains the causes of differences in cash accounts and profit.

INTRODUCTION TO
FINANCIAL
ACCOUNTING

Table of Contents
INTRODUCTION...........................................................................................................................1
QUESTION 1...................................................................................................................................1
1. Accounting records and financial statements for Corr.:.....................................................1
Journal entries:........................................................................................................................1
Ledger accounts......................................................................................................................5
Corr Income Statement for the year ending 30 September 2019...........................................8
Statement of financial position...............................................................................................9
Trial Balance:.......................................................................................................................10
2. Reporting of assets is useful.............................................................................................11
3. Causes of difference in cash accounts and profit.............................................................12
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................15

INTRODUCTION
In accounting term, the method that is used by companies to collect, record and calculate
revenue, expenses and receivables is known as financial accounting (Bushman, 2014). It mainly
includes the formulation of effective financial documents which are used by stakeholders,
suppliers, employees, customer, business owner to make valuable decision. In this report Corr,
sole trader company is selected that help to better understand the concept of financial accounting.
In companies accounting personnels prepares financial statements which includes P&L Account,
balance sheet and trial balance which are ultimately used by management for managerial and
financial decision-making. The whole process of financial accounting begins with journal entries
and books and leaders which end with fictionalisation of balance sheet.
In this report accounting records and financial statements for Corr are being prepared,
reporting of assets is useful for making decision and Causes of holding cash is elaborated.
QUESTION 1
1. Accounting records and financial statements for Corr.:
Journal entries:
Following are key accounting entries for September month's transaction in books of Corr, as
follows:
Sales on credit
S. No. Particulars Debit Credit
1 Mr Otis a/c Dr.
To Sales a/c
15000
15000
2 Mr Jack a/c Dr.
To Sales a/c
35000
35000
3 Mr Joe a/c Dr.
To Sales a/c
50000
50000
4 Mr Sean a/c Dr.
To Sales a/c
10000
10000
5 Mr Kawin a/c Dr. 25000
1

To Sales a/c 25000
Sales on cash
S. No. Particulars Debit Credit
1 Cash a/c Dr.
To Sales a/c
50000
50000
2 Cash a/c Dr.
To Sales a/c
35000
35000
3 Cash a/c Dr.
To Sales a/c
45000
45000
Returns inward
S. No. Particulars Debit Credit
1 Sales Return a/c Dr.
To Mr Kawin a/c
8000
8000
2 Sales Return a/c Dr.
To Mr Joe a/c
15000
15000
Receipts from trade receivables
S. No. Particulars Debit Credit
1 Cash a/c Dr.
To Trade Receivables a/c
15000
15000
2 Cash a/c Dr.
To Trade Receivables a/c
10000
10000
Purchases on credit
S. No. Particulars Debit Credit
1 Purchase a/c Dr.
To Alex Ronald a/c
30000
30000
2 Purchase a/c Dr.
To Adam a/c
10000
10000
2

3 Purchase a/c Dr.
To Michael a/c
25000
25000
4 Purchase a/c Dr.
To William a/c
32000
32000
5 Purchase a/c Dr.
To Nick a/c
40000
40000
Expenses paid for in cash
S. No. Particulars Debit Credit
1 Rent Dr.
To Cash a/c
5000
5000
2 Office Expenses a/c
Dr.
To Cash a/c
7500
7500
3 Electricity expenses a/c Dr.
To Cash a/c
3000
3000
Return Outwards
S. No. Particulars Debit Credit
1 Michael a/c Dr.
To Purchase Return a/c
5000
5000
2 William a/c Dr.
To Purchase Return a/c
15000
15000
Payments to trade payables
S. No. Particulars Debit Credit
1 Trade Payables a/c Dr.
To Cash a/c
6000
6000
2 Trade Payables a/c Dr.
To Cash a/c
4000
4000
Discount received and allowed
3

S. No. Particulars Debit Credit
1 Cash a/c Dr.
Discount Allowed a/c Dr.
To Miss Sophie a/c
25000
5000
30000
2 Miss Jennifer a/c Dr.
To Discount Received a/c
To Cash a/c
40000
4000
36000
Drawing
S. No. Particulars Debit Credit
1 Drawing Dr.
To capital a/c
3000
3000
2 Capital Dr.
To cash a/c
3000
3000
Loan
S. No. Particulars Debit Credit
1 Loan a/c Dr.
To Bank a/c
20000
20000
Purchase of Equipment for £20,000
S. No. Particulars Debit Credit
1 Equipment a/c Dr.
To Bank a/c
20000
20000
Wages paid in cash of £4,000:
S. No. Particulars Debit Credit
1 Wages a/c Dr.
To Cash a/c
4000
4000
Ratification Entry:
S. No. Particulars Debit Credit
4

Electricity Expenses A/c Dr.
To Drawings
1000
1000
Wages accrued:
S. No. Particulars Debit Credit
Wages A/c Dr.
To Wages Outstanding
1000
1000
Prepaid Rent:
S. No. Particulars Debit Credit
Prepaid Rent A/c Dr.
To Cash
2500
2500
Depreciation Entry:
S. No. Particulars Debit Credit
Depreciation A/c Dr.
To Equipment A/c
2000
2000
Allowance for doubtful debts should be 8% of the year end receivables:
S. No. Particulars Debit Credit
Trade receivables A/c Dr.
To Allowance for doubtful debts
(155860 * 8% = 12468.8)
12468.8
12468.8
Ledger accounts
Purchase Account
Date Particular Dr Date Particulars Cr
2018 2018
01/12/01 To Alex Ronald a/c 30000 By balance c/d 137000
02/12/01 To Adam a/c 10000
5

03/12/01 To Michael a/c 25000
04/12/01 To William a/c 32000
05/12/01 To Nick a/c 40000
137000 137000
Sales Account
Date Particular Dr Date Particulars Cr
2018 2018
To Balance c/d 265000 01/12/02 By Otis a/c 15000
02/12/02 By Jack a/c 35000
03/12/02 By Joe a/c 50000
04/12/02 By Sean a/c 10000
05/12/02 By Kawin a/c 25000
06/12/02 By Cash a/c 50000
07/12/02 By Cash a/c 35000
08/12/02 By Cash a/c 45000
265000 265000
Cash a/c
Date Particular Dr Date Particulars Cr
2018 2018
To Sales a/c 50000 By Rent a/c 5000
To Sales a/c 35000 By Electricity a/c 3000
To Sales a/c 45000 By Salaries a/c 50000
To bills Receivable a/c 15000 By Bills payable a/c 15000
To bills Receivable a/c 10000 By Bills payable a/c 20000
To Sophie a/c 30000 By Jennifer a/c 36000
6

To Capital a/c 45000 By balance c/d 101000
230000 230000
Return Outwards a/c
Date Particular Dr Date Particulars Cr
2018 To Balance c/d 20000 2018 By Michael 5000
By William 15000
20000 20000
Return Inwards a/c
Date Particular Dr Date Particulars Cr
To Mr Kawin a/c 8000 By Balance c/d 23000
To Mr Joe a/c 15000
23000 23000
Rent a/c
Date Particular Dr Date Particulars Cr
To Cash a/c 5000 By balance c/d 5000
Office expenses a/c
Date Particular Dr Date Particulars Cr
To Cash a/c 7500 7500
Electricity a/c
Date Particular Dr Date Particulars Cr
To Cash a/c 3000 By balance c/d 3000
Discount Allowed a/c
7

Date Particular Dr Date Particulars Cr
To Sophie a/c 30000 By balance c/d 30000
Discount Received a/c
Date Particular Dr Date Particulars Cr
To balance c/d 40000 By Jennifer a/c 40000
Trade Receivables Account
Particular Dr Particular Dr
To Balance b/d 45860 By Sales Return 23000
To Credit Sales 135000 By Allowance for bad debts 10628.8
By Cash 25000
By Balance C/d 122231.2
180860 180860
Trade Payable
To Purchase Return 20000 By Balance b/d 25900
To Cash 10000
To Balance C/d 130900 By Credit Purchase 135000
Corr Income Statement for the year ending 30 September 2019.
Description Amount in (£)
Sales 542460
(-) Cogs -454590
Gross profit 87870
8

Add: other operating income
Discount received 4000 4000
Less: operating expenses
Rent 39380
Electricity 20100
Allowance for receivables 13628.8
Depreciation of equipment 2000
Discount Allowed 5000
Office Expenses 7500 -87608.8
Net profit 4261.2
Statement of financial position
Financial position statement
Details Amount
Equipment 170000
Add: Addition 20000
Less: Depreciation 36000 154000
Trade Receivables 122231.2
Prepaid Rent 2500
Inventory 62000
Bank 12880
Cash and Cash Equivalent 6550
360161.2
Capital 165000
Add: Net Profit 4261.2
9

Less: Drawings 8000
Add: Rectification in Drawing 1000 178261.2
Outstanding Wages 1000
Trade Payable 130900
Bank Loan 50000
Other
360161.2
Trial Balance:
Trial Balance
Dr. Cr.
Equipment 190000
Trade Receivables 122231.2
Prepaid Rent 2500
Inventory 62000
Bank 12880
Cash 6550
Bank Loan 50000
Trade Payable 130900
Outstanding Wages 1000
Capital 178261.2
Rent 41880
Prepaid Rent 2500
Electricity 20100
10