Financial Accounting Principles Homework: Client Solutions Analysis

This document presents a detailed solution to a financial accounting assignment. It begins with journal entries, including calculations for owner's capital and preparing prime entry books. The assignment progresses through double-entry recording, trial balance preparation, and the creation of profit and loss statements and balance sheets. It further explores accounting concepts like consistency and prudence, alongside depreciation methods. Additional topics include bank reconciliation statements, control accounts, suspense accounts, and sales/purchase ledger control accounts, offering a complete overview of financial accounting principles and practices. The solution covers various clients and scenarios, providing comprehensive insights into the application of accounting concepts.

Financial accounting
Principles

Table of Contents
INTRODUCTION...........................................................................................................................4
CLIENT 1........................................................................................................................................4
a) Prime Book entry.....................................................................................................................4
TASK 1............................................................................................................................................4
1. Drawing journal entries and calculation of owners capital.....................................................4
A. Preparing the books of Prime Entry........................................................................................4
b) Complete double entry recording............................................................................................5
Draw trial balance......................................................................................................................12
TASK 2..........................................................................................................................................13
a. Preparing statement of profit and loss....................................................................................13
b. Preparation of balance sheet..................................................................................................14
TASK 3..........................................................................................................................................15
a. Framing profit and loss a/c for Raintree Ltd..........................................................................15
b. Statement of financial position of Raintree Ltd.....................................................................15
c. Explaining the accounting concept of consistency and prudence..........................................16
d. Illustrating two widely used methods of depreciation along with their appropriateness.......17
CLIENT 4......................................................................................................................................17
a. Explaining the purpose of preparing bank reconciliation statement......................................17
b. Assessing the reasons due to which bank records vary from cash book...............................17
c..................................................................................................................................................17
Bank reconciliation statements as at 1 December 2016............................................................17
Prepare updated cash book........................................................................................................18
Bank reconciliation statements as at 31st December..................................................................18
CLIENT 5......................................................................................................................................18
A) prepare and balance books of Henderson for May 2016......................................................18
Sales ledger control account......................................................................................................18
Purchase ledger control account................................................................................................19
b) Explain the term control account and needs to prepare control account...............................19
TASK 6..........................................................................................................................................19
a. Describing suspense account along with its main features....................................................19

b. Drafting a trial balance by using control account as balancing figure...................................20
c..................................................................................................................................................20
d. Differentiating suspense and clearing account......................................................................21
CONCLUSION..............................................................................................................................21
REFERENCES..............................................................................................................................22

INTRODUCTION
Finance is regarded as integral role in the business in uplifting the current conditions of
an entity which needs to be managed with the passage of time that imposes external burden on an
entity to handle all the external market complexities faced by an entity in the business. Role of
business gets increases with the time as their desired aim is to fulfill all kinds of responsibilities
imposes on an entity. This is report is all about reflecting true image of an entity by considering
all the external market factors.
CLIENT 1
a) Prime Book entry
TASK 1
1. Drawing journal entries and calculation of owners capital
A. Preparing the books of Prime Entry
Journal of Alex Study’s for the month of May 2016
S. No. Particulars Debit Credit
1. Storage expenses a/c Dr.
To bank a/c
400
400
2. Purchase a/c Dr.
To S. Hood a/c
To D. Main a/c
To W. Tone a/c
To R. Foot a/c
6080
1450
2060
960
1610
3. J Wilson a/c Dr.
T. Cole a/c Dr.
F. Syme a/c Dr.
J. Allen a/c Dr.
P. White a/c Dr.
F. Lane a/c Dr.
To sales a/c
1120
1640
2080
910
2420
770
8940
4. Motor car expenses a/c Dr.
To cash a/c
470
470
7. Drawing a/c Dr.
To cash a/c
1500
1500
9. T. Cole a/c Dr.
J. Fox a/c Dr.
To sales a/c
680
1310
11. Sales return a/c Dr.
To J. Wilson
680
270

To F. Syme a/c 410
14 Van a/c Dr.
To Abel Motors Ltd
28500
28500
16 (a). Bank a/c Dr.
Discount allowed a/c Dr.
To P Mullen
(b)
Bank a/c Dr.
Discount allowed a/c Dr.
To F. Lane
(c)
Bank a/c Dr.
Discount allowed a/c Dr.
To J. Wilson
(d)
Bank a/c Dr.
Discount allowed a/c Dr.
To F. Syme
1330
70
2945
155
807.5
42.5
1586.5
83.5
1400
3100
850
1670
19 R. Foot a/c Dr.
To purchase return a/c
50
50
22 Purchase a/c Dr.
To L. Mole a/c
To W. Wright a/c
3740
1830
1910
24 a.
S. wood a/c Dr.
To Bank a/c
To Discount receive a/c
b.
J. Brown a/c Dr.
To Bank a/c
To Discount receive a/c
c.
R. Foot a/c Dr.
To Bank a/c
To Discount receive a/c
3600
4600
1400
3240
360
4140
460
140
1260
27 Salaries a/c Dr.
To bank a/c
4800
4800
30 Business rates a/c Dr
To bank a/c
1320
1320
31 Abel motors Ltd. a/c Dr.
To bank a/c
20500
20500

b) Complete double entry recording
Sales Journal account
Date Particulars Amount Date Particulars Amount
31/05/16 To balance C/d 1310 03/05/16 BY J. Wilson 1120
03/05/16 By T. Cole 1640
03/05/16 By F. Syme 2080
03/05/16 By J. Allen 910
03/05/16 By P. White 2420
03/05/16 By F. Lane 770
09/05/16 T. Cole 680
09/05/16 J. Fox 1310
1310 1310
Sales Return Journal account
Date Particulars Amount Date Particulars Amount
11/05/17
To J.
Wilson 270 31/05/16
By Balance
c/d 680
11/05/17 To F. Syme 410
680
Purchase Journal account
Date Particulars Amount Date Particulars Amount
02/05/16 To S. Hood 1450 31/05/16
By Balance
c/d 38320
02/05/16 To D. Main 2060
02/05/16 To W. Tone 960
02/05/16 To R. Foot 1610
14/05/16
To Abel
Motors Ltd 28500
22/05/16 To L. Mole 1830
22/05/16
To W.
Wright 1910
38320
Purchase Return Journal account
Date Particulars Amount Date Particulars Amount
31/05/16
By balance
c/d 50 19/05/16 By R. Foot 50

Receipt account
Date Particulars Amount Date Particulars Amount
16/05/16
To P.
Mullen 1330 31/05/16
To balance
C/d 7020
16/05/16
To Discount
allowed 70
16/05/16 To F. Lane 2945
16/05/16
To Discount
allowed 155
16/05/16
To J.
Wilson 807
16/05/16
To Discount
allowed 43
16/05/16 To F. Syme 1586
16/05/16
To Discount
allowed 84
7020 7020
Payment account
Date Particulars Amount Date Particulars Amount
31/05/16
To balance
C/d 30100 24/05/16 By s. Hood 3240
24/05/16
By discount
received 360
24/05/16 By J. Brown 4140
24/05/16
By discount
received 460
24/05/16 By R. Foot 1260
24/05/16
By discount
received 140
31/05/16
By Abel
motors 20500
30100 30100
Discount received account
Date Particulars Amount Date Particulars Amount
31/05/16 To S. Hood 360 31/05/16
By Balance
c/d 960
31/05/16 To J. Brown 460
31/05/16 To R. Foot 140
960

Discount allowed account
Date Particulars Amount Date Particulars Amount
31/05/16
To balance
C/d 352 31/05/16
By P.
Mullen 70
By F. Lane 155
BY J.
Wilson 43
By F. Syme 84
R. Foot account
Date Particulars Amount Date Particulars Amount
19/05/16
To purchase
return 50 02/05/16 By purchase 1610
31/05/16
To balance
C/d 1560 24/05/16
By discount
received 140
1610
Purchase
Return
Journal
account 1610
J. Wilson account
Date Particulars Amount Date Particulars Amount
03/05/16 To sales 1120 11/05/16
By sales
return 270
16/05/16 By bank 807
16/05/16
By discount
allowed 43
1120 1120
T. Cole account
Date Particulars Amount Date Particulars Amount
03/05/16 To sales 1640 S. Hood
By Balance
c/d 2320
09/05/16 To sales 680
2320 2320
F. Syme account
Date S. Hood Amount Date Particulars Amount
03/05/16
By Balance
c/d 2080 11/05/16
By sales
return 410

By bank 1586
By discount
allowed 84
2080 2080
J Allen account
Date Particulars Amount Date Particulars Amount
03/05/16 To sales 910 31/05/16
By Balance
c/d 910
P. White account
Date Particulars Amount Date Particulars Amount
03/05/16 To sales 2420 31/05/16
By Balance
c/d 2420
F. Lane account
Date Particulars Amount Date Particulars Amount
01/05/16
By balance
B/d 3100 16/05/16 By bank 2945
03/05/16 To sales 770 16/05/16
By discount
allowed 155
31/05/16
By Balance
c/d 770
3870 3870
S. Hood account
Date Particulars Amount Date Particulars Amount
24/05/16 To Bank 3240 01/05/16
By balance
B/d 2150
24/05/16
To discount
received 360 01/05/16 By purchase 1450
3600 3600
J. Brown account
Date Particulars Amount Date Particulars Amount
24/05/16 To J. Brown 4140 01/05/16
By balance
B/d 4600

24/05/16
To discount
received 460
4600 4600
J. Fox account
Date Particulars Amount Date Particulars Amount
09/05/16 To sales 1310 31/05/16
By Balance
c/d 1310
By Balance
c/d
P. Mullen account
Date Particulars Amount Date Particulars Amount
01/05/16
By balance
B/d 1400 16/05/16
By P.
Mullen 1330
16/05/16
By discount
allowed 70
1400 1400
L. Mole account
Date Particulars Amount Date Particulars Amount
31/05/16
To balance
C/d 1830 22/05/16 By purchase 1830
1830 1830
W. Wright account
Date Particulars Amount Date Particulars Amount
31/05/17
To balance
C/d 1910 22/05/16 By purchase 1910
1910 1910
D Main account
Date Particulars Amount Date Particulars Amount
31/05/16
To balance
C/d 2060 02/05/16 By purchase 2060
2060 2060
W. Tone account
Date Particulars Amount Date Particulars Amount

31/05/16
To balance
C/d 960 02/05/16 By purchase 960
960 960
Abel motors account
Date Particulars Amount Date Particulars Amount
31/05/16 To Bank 20500 14/05/16 By van 28500
31/05/16
To balance
C/d 8000
28500 28500
Bank account
Date Particulars Amount Date Particulars Amount
01/05/16
To balance
B/d 62400 01/05/16
By storage
costs 400
27/05/16 By salaries 4800
By Balance
c/d 31/05/16
By Abel
motors 20500
31/05/16
By Balance
c/d 36700
62400 62400
Cash account
Date Particulars Amount Date Particulars Amount
01/05/16
To balance
B/d 5600 04/05/17
By motor
expenses 470
07/05/16 By drawings 1500
31/05/16
By Balance
c/d 3630
5600 5600
Motor expenses account
Date Particulars Amount Date Particulars Amount
04/05/16 To cash 470 31/05/16
By Balance
c/d 470
Drawing account
Date Particulars Amount Date Particulars Amount
07/05/16 To cash 1500 31/05/16
By Balance
c/d 1500

Van account
Date Particulars Amount Date Particulars Amount
01/05/16
To balance
B/d 51250 31/05/16
By Balance
c/d 79750
14/05/16 To van 28500
79750 79750
Storage costs account
Date Particulars Amount Date Particulars Amount
01/05/16 To Bank 400 31/05/16
By Balance
c/d 400
Owner's capital
Particulars Amount
Assets
Premises 340000
Van 51250
Fixtures 8100
Inventory 63900
Receivables 4500
Cash at bank 62400
Cash in hand 5600
Total 535750
Liabilities
Payable 6750
Owner's capital 529000
Draw trial balance
Particulars Debit Credit
Capital 529000
Premises 340000
Van 51250
Fixtures 8100