Financial Accounting Report

This report on financial accounting covers various aspects including journal entries, ledgers, trial balances, and financial statements for multiple clients. It emphasizes the importance of accurate accounting practices and provides detailed examples of profit and loss statements, balance sheets, and bank reconciliation statements. The report also discusses key accounting concepts such as depreciation and the significance of maintaining consistency in financial reporting.

Financial Accounting

Table of Contents
INTRODUCTION......................................................................................................................3
CLIENT 1...................................................................................................................................3
a. Doing Journal Entries in the books of Alex Study’s..........................................................3
b. Preparing ledgers account..................................................................................................5
c. Showing trial balance.........................................................................................................5
CLIENT 2...................................................................................................................................7
a. Preparing statement of profit and loss for Peter Piper........................................................7
b. Drafting statement of financial position for Peter Piper....................................................8
CLIENT 3...................................................................................................................................9
a. Showing profitability statement of Raintree Ltd..............................................................10
b. Preparing and presenting balance sheet of Raintree Ltd..................................................10
c. Defining the concept of consistency and prudent............................................................11
d. Stating the purpose of depreciation and illustrating two methods associated with it......12
CLIENT 4.................................................................................................................................13
a. Defining the purpose of bank reconciliation statement....................................................13
b. Presenting the reasons due to which balance of cash and pass book differs....................13
c. Preparing bank reconciliation statement..........................................................................13
CLIENT 5.................................................................................................................................14
a. Preparing purchase and sales ledger account for Henderson Ltd.....................................14
b. Defining the term of control account...............................................................................15
CLIENT 6.................................................................................................................................15
a. Presenting suspense account along with its main features...............................................15
b. Preparing trial balance by undertaking control a/c..........................................................15
c. Rectification of errors and journal entries based on it......................................................16
d. Stating the difference takes place between the suspense and clearing account...............17

CONCUSION..........................................................................................................................17
REFERENCES.........................................................................................................................19
APPENDIX..............................................................................................................................21
Appendix 1: Ledger account................................................................................................21

INTRODUCTION
Financial accounting is concerned with the preparation of highly appropriate
statement that furnishes information about the monetary position and performance.
Accounting tools and techniques are highly significant which in turn provides high level of
assistance to the business unit in preparing as well as presenting suitable view of monetary
performance. This report is drafted by addressing the different case situation which will shed
light on the manner through which adjusted profit& loss and balance sheet can be prepared.
Besides this, it will also develop understanding about the concepts of depreciation, suspense
and control account. Further, report will also highlight the way in which errors take place in
the accounting entries can be rectified. Thus, report will clearly present how trial balance
assists in preparing final accounts in an effectual way.
CLIENT 1
a. Doing Journal Entries in the books of Alex Study’s
Journal of Alex study for the month of May 2016
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
1450
1450
2. Purchase a/c Dr.
To D. Main a/c
2060
2060
2 Purchase a/c Dr.
To W. Tone a/c
960
960
2 Purchase a/c Dr.
To R. Foot a/c
1610
1610
3. J Wilson a/c Dr.
To sales a/c
1120
1120
3. T. Cole a/c Dr.
To sales a/c
1640
1640

3. F. Syme a/c Dr.
To sales a/c
2080
2080
3. J. Allen a/c Dr.
To sales a/c
910
910
3. P. White a/c Dr.
To sales a/c
2420
2420
3. F. Lane a/c Dr.
To sales a/c
770
770
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
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. 50

To purchase return a/c 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. Preparing ledgers account
Ledger accounts present the summary of accounting transactions pertaining to the
specified time frame. By doing posting of accounting records or transactions business entity
can prepare ledger accounts and thereby would become able to draft trial balance.
Ledgers are enclosed in Appendix.
c. Showing trial balance
Trial balance: It may be served as a summary statement of ledgers account which has
two sides such as debit and credit. Trial balance is highly effectual which provides high level
of assistance in preparing further financial statements. It is highly significant which in turn
helps in identifying the errors that take place in the journal entries. Debit side of trail balance

furnishes information regarding the assets, expenses incurred. In contrast to this, credit side
provides information about the revenue generated and liabilities. Thus, trial balance gives
input and thereby helps in preparing income and cash flow statement as well as balance sheet.
Thus, trial balance summarizes and presents information in a highly structured format.

CLIENT 2
On the basis of cited case situation, Peter Piper is sole trader which in turn lays high
level of emphasis on preparing income statement. Moreover, doing assessment of return over
the expenses is one of the main objectives of sole trader. In the sole proprietor firm, business
entity is highly concerned towards the sales revenue and profit margin generated in against to
the expenses. Along with this, sole trader also prepares balance sheet with the motive to get
information regarding the liabilities and assets (Kwinto and Voss, 2016). Both such
statements are highly significant which in turn provides assistance to the sole trader namely
Peter Piper in making evaluation of financial health and performance (Iatridis, 2016). This in
turn assists sole trader in developing highly effectual and competent financial framework for
the upcoming time period.
a. Preparing statement of profit and loss for Peter Piper
Income statement of Peter Piper for the year ended at 31st December 2016
Particulars Gross figure Net figure Amount (in £)
Sales revenue 1215000
Ending inventory 101640
1316640
Less
Opening inventory 82200
Purchase cost 778800
Wages and salaries 177500
Add: Outstanding salaries and
wages 1220 178720
1039720
Gross profit (GP) 276920
Less: Indirect expenditure

Motor expenditure 87400
Administration expenditure 17650
Heating and lighting expenses 4950
Advertising expenditure 13280
Less: prepaid expenditure 8470 4810
Depreciation on premises 5400
Depreciation on equipment 17250
Depreciation on motor vehicle 2800
Total indirect expenditure 140260
Net profit (NP) 136660
b. Drafting statement of financial position for Peter Piper
Balance sheet for the year of 2016
Particulars Amount (in £)
Current assets
Closing stock 101640
Prepaid advertising 8470
Bills receivables 106960
cash in hand 2440
Total current assets 219510
Fixed assets

Freehold premises 270000
Less: depreciation on
premises: 42900 227100
Equipment 172500
Less: Depreciation on
equipment 114750 57750
Motor Vehicles 28000
Less: Depreciation on motor
vehicles 16800 11200
Total fixed assets 296050
Total assets 515560
Liabilities
Current liabilities
Bills payables 76910
Outstanding salaries 1220
Bank overdraft 11290
Total current liabilities 89420
Capital 332120
Add: net profit 136660
Less: Drawing 42640 426140
Total liabilities 515560

CLIENT 3
a. Showing profitability statement of Raintree Ltd
Profitability statement of Raintree Ltd. 2016
Particulars Amount (in £)
Sales revenue 107000
Less: return inward 2000 105000
Closing inventory 18000
123000
Opening stock 17000
Purchases 32000
49000
Gross profit (GP) 74000
Depreciation on building 1000
Depreciation on plant and machinery 10000
Administration cost 28000
Distribution cost 22000
Less: Prepaid rent 3000
Add: Outstanding salaries 2000 21000
Corporation tax 4000
64000
Net profit (NP) 10000
b. Preparing and presenting balance sheet of Raintree Ltd
Balance sheet of Raintree Ltd for the year ended at 30th September 2016 is as follows:
Particulars Amount (in £)
Current assets
Trade receivables 24000
Prepaid rent 3000
Closing inventory 18000
45000
Fixed assets
Land and building 60000
Less: Depreciation on building 8000 52000
Plant and machinery 65000
Less: Depreciation @ 20% 25000 40000

92000
Total assets 137000
Liabilities
Current liabilities
Trade payables 14000
Outstanding salaries 2000
bank overdraft 15000
Corporation tax 4000
Total current liabilities 35000
Shareholders’ equity 50000
share premium 20000
Retained earnings 22000
Net profit 10000
Total shareholders’ equity 102000
Total liabilities 137000
c. Defining the concept of consistency and prudent
Consistency concept
This concept of accounting lays emphasis on the aspect that principles and rules that
are undertaken by the firm must be followed in the near future. Hence, it entails that in each
year and under similar situation business entity is required to employ as well as implement
the same method. In this way, by following the specific rules and regulations business unit
can ensure consistency in the accounts to a great extent. Concept or principle of consistency
is highly significant which in turn provides assistance in making comparison of final accounts
of one firm with another in an effectual way. Thus, it also enables investors to make
comparison of the final accounts of one year with another and thereby identifies the growth
level. In this way, by making evaluation of profitability, liquidity and solvency aspect
investors and management team of Raintree td can take suitable decision. This aspect shows
that consistency concept enables management to make assessment of growth or deviations by
comparing current performance with standard figures. Thus, it helps management to get
deeper insight about financial performance and thereby frames highly competent framework
for improvement (Consistency concept, 2017). By considering this, it can be stated that
concept of consistency provides high level of assistance to higher management team,
investors and other stakeholders in decision making. However, business unit can also