Financial Accounting Principles Assignment: Prime Book Entries

This financial accounting assignment solution comprehensively addresses several key concepts within the field. It begins with the creation of prime book entries, meticulously detailing journal entries for various transactions and calculating owner's capital. The solution progresses to preparing a trial balance, followed by the preparation of a profit and loss statement and a balance sheet. Furthermore, the assignment delves into advanced topics such as the accounting concepts of consistency and prudence, demonstrating different depreciation methods. It also explains the purpose of bank reconciliation statements and the reasons for discrepancies between bank and cash book records, including the preparation of bank reconciliation statements. Additionally, the solution covers control accounts, suspense accounts, and their practical applications. The solution includes detailed examples and calculations to illustrate these concepts, providing a thorough understanding of financial accounting principles.

Maria Elisabeta Udila

FINANCIAL ACCOUNTING
PRINCIPLES

Table of Contents
INTRODUCTION...........................................................................................................................1
CLIENT 1........................................................................................................................................1
a) Prime Book entry....................................................................................................................1
TASK 1............................................................................................................................................1
1. Drawing journal entries and calculation of owners capital ...................................................1
A. Preparing the books of Prime Entry .....................................................................................1
b) Complete double entry recording...........................................................................................3
Draw trial balance.....................................................................................................................13
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 Rain tree Ltd ..................................................................16
c. Explaining the accounting concept of consistency and prudence ........................................17
d. Illustrating two widely used methods of depreciation along with their appropriateness......18
CLIENT 4......................................................................................................................................18
a. Explaining the purpose of preparing bank reconciliation statement....................................18
b. Assessing the reasons due to which bank records vary from cash book...............................18
c.................................................................................................................................................19
Bank reconciliation statements as at 1 December 2016............................................................19
Prepare updated cash book........................................................................................................20
Bank reconciliation statements as at 31st December................................................................20
CLIENT 5......................................................................................................................................21
A) prepare and balance books of Henderson for May 2016.....................................................21
Sales ledger control account......................................................................................................21
Purchase ledger control account................................................................................................22
b) Explain the term control account and needs to prepare control account..............................22
TASK 6..........................................................................................................................................23
a. Describing suspense account along with its main features...................................................23

b. Drafting a trial balance by using control account as balancing figure .................................23
c.................................................................................................................................................23
d. Differentiating suspense and clearing account......................................................................24
CONCLUSION..............................................................................................................................24
REFERENCES..............................................................................................................................25

INTRODUCTION
Financial accounting emphasises on considering all kinds of information recorded in an
entity which will affect an entity's overall financial performance within a particular time period.
This report is all about recording all kinds of business transactions with the help of manual
accounting skills of accountant or electronically generation of output using software. This report
also stresses on considering facts and figures related to an entity in beating all the competitors by
showing its financial performance with the help of financial statements.
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 Entry in the books of Alex
for the month of May 2016
S.
No.
Particulars Jour
nal
Folio
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. 680
1

J. Fox a/c Dr.
To sales a/c
1310
11. Sales return a/c Dr.
To J. Wilson
To F. Syme a/c
680
270
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
2

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
Return inward 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
3

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
Return outward account
Date Particulars Amount Date Particulars Amount
31/05/16 By balance c/d 50 19/05/16 By R. Foot 50
Receipt account
4

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
5

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
6

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
7

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
8