Financial Accounting Report: Transactions, Statements, and Analysis

This financial accounting report provides a comprehensive overview of various accounting principles and practices. The report begins with an introduction to financial accounting, emphasizing its role in tracking financial transactions and evaluating company performance. It then delves into Task 1, which includes detailed journal entries for various transactions, followed by the creation of ledger accounts and a trial balance. Task 2 focuses on the profit and loss account, illustrating the calculation of gross profit and net profit. Task 3 covers the bank reconciliation account, explaining the process of reconciling cash book and bank statement balances. It also defines key accounting terms. Finally, Task 4 presents journal entries for additional transactions and demonstrates how to rectify a suspense account. The report concludes with a summary of the key findings and references relevant resources. This report is a valuable resource for students studying financial accounting, offering practical examples and explanations of essential accounting concepts.

Financial Accounting

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
1. The journal entries for each transaction .................................................................................3
2. The ledger account .................................................................................................................4
3. Trial balance............................................................................................................................6
TASK 2............................................................................................................................................7
1. Profit and loss account ...........................................................................................................7
TASK 3............................................................................................................................................8
1. Bank reconciliation account....................................................................................................8
2. Explanation of different term..................................................................................................9
TASK 4............................................................................................................................................9
1. Journals entries .......................................................................................................................9
2. Rectify suspense a/c..............................................................................................................10
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Financial accounting refers to track the record of the financial transactions with different
techniques like trial balance, profit and loss account, balance sheet, bank reconciliation statement
etc. It helps the organization to evaluate the performance of the company and get the proper
knowledge about the financial position like the cash balance, assets, liabilities and the net profit.
The report highlights the journal entries, ledger account and the trial balance. It explain the
trading, profit and loss account and the balance sheet of the particular year.
TASK 1
1. The journal entries for each transaction
Date Particulars L.F. Debit Credit
01/06/16 Cash A/C Dr.
To Muhammad Capital A/C
65000 65000
02/06/16 Purchase A/C Dr.
To Creditors A/C
8000 8000
07/06/16 Cash A/ac Dr.
To Sales A/C
4000 4000
08/06/16 Creditors A/C Dr.
To Bank/ Cheque A/C
4000 4000
14/06/16 Insurance A/C Dr.
To Bank / Cheque A/C
75 75
15/06/16 Debtor A/C Dr.
To Sales A/C
12000 12000
16/06/16 Purchase A/C Dr.
To Creditors A/C
10000 10000

18/06/16 Computer Equipment A/C Dr.
To Cash A/C
3000 3000
20/06/16 Rent A/C Dr.
To Bank /Cheque A/C
150 150
21/06/16 Cash A/C Dr.
To Sales A/C
10000 10000
25/06/16 Petty Cash A/C Dr.
To Bank A/C
100 100
30/06/16 Stationary A/C Dr.
To Petty Cash A/C
30 30
Total 116355 116355
2. The ledger account
Cash Account
Date Particulars J.F Amount Date particulars J.F. Amount
01/06/16
07/06/16
21/06/16
To Muhammad
Capital A/C
To Sales A/C
To Sales A/C
65000
4000
10000
Balance c/d 79000
79000 79000
Purchase Account
Date Particular J.F Amount Date Particulars J.F Amount
2/06/16
16/06/16
To Creditors A/C
To Creditors A/C
8000
10000
Balance c/d 18000

18000 18000
Creditors Account
Date Particular J.F Amount Date Particulars J.F Amount
8/16/16 To Bank/Cheque A/C
Balance b/d
4000
14000
02/06/16
16/06/16
Purchase A/C
purchase A/C
8000
10000
18000 18000
Sales A/C
Date Particular J.F Amount Date Particulars J.F Amount
Balance c/d 26000 7/6/16
15/6/15
21/6/16
Cash A/C
Debtor A/C
Cash A/C
4000
12000
10000
26000 26000
Bank account
Date Particular J.F Amount Date Particulars J.F Amount
Balance c/d 4325 08/06/16
14/06/16
20/16/16
25/06/16
Creditors A/C
Insurance A/C
Rent A/C
Petty Cash A/C
4000
75
150
100
4325 4325
Capital A/C
Date Particular J.F Amount Date Particulars J.F Amount
Balance c/d 65000 01/06/16 Cash A/C 65000
65000 65000

Insurance Account
Date Particular J.F Amount Date Particulars J.F Amount
14/06/16 To Bank A/C 75 Balance c/d 75
75 75
Debtor A/C
Date Particular J.F Amount Date Particulars J.F Amount
15/06/16 To Sales A/C 12000 Balance c/d 12000
12000 12000
Computer equipment A/C
Date Particular J.F Amount Date Particulars J.F Amount
18/06/16 To Cash A/C 3000 Balance c/d 3000
3000 3000
Rent A/C
Date Particular J.F Amount Date Particulars J.F Amount
20/06/16 To Bank A/C 150 Balance c/d 150
150 150
Petty Cash A/C
Date Particular J.F Amount Date Particulars J.F Amount
25/06/16 To Bank A/C 100 30/06/16 Stationary A/C
Balance c/d
30
70
100 100
Stationary A/C

Date Particular J.F Amount Date Particulars J.F Amount
30/06/16 To Petty Cash A/C 30 Balance c/d 30
30 30
3. Trial balance
Particulars Debit Credit
Cash Account 79000
Purchase Account 18000
Creditors Account 14000
Sales A/C 26000
Bank account 4325
Capital A/C 65000
Insurance Account 75
Debtor A/C 12000
Computer equipment A/C 3000
Rent A/C 150
Petty Cash A/C 70
Stationary A/C 30
Suspense A/C 3000
Total 112325 112325
TASK 2
1. Profit and loss account
Trading account
Particulars Amount Particulars Amount
To Purchase a/c 75000 By Sales a/c 125000
To Sales return 1500 By purchase return 1000
To wages and salaries a/c 13200 By closing stock 1000

To Opening stock 9500
To gross profit a/c 27800
127000 127000
Income statement of profit and loss account
Particulars Amount Particulars Amount
To Interest on loan @ 10 % 10000 By Gross profit 27800
To accumulated Depreciation
5400
less : Depreciation 5000
400 By Rent received 4850
less : advance rent 490
4360
To provision for bed debts 934 By interest received 1000
To rent and rates 1500
add : outstanding expense 340
1840 By interest received on loan 10000
To Postage 900
To Insurance 7500
less : prepaid Insurance 411
7911
Bad debts 1200
less : bad debts written off 650
550
Net profit 20625
43160 43160
Balance sheet as on 31 December 2017
Liabilities Amount Assets Amount
Capital 120800
less : Drawings 5150
115650 Bank 10594

Creditors 3900 Cash 340
Outstanding rates 340 Debtors 12500
add: prov. for Bad debts 934
add : Bad debts 1200
less : bad debt written off 650
13984
Rent received in advance 490 Motor van 25000
less : Depreciation 5000
add : accumulate dep. 400
20400
Net profit 20625 Inventory 1000
Prepaid insurance 411
Loan given @ 10% 100000
141005 146729
TASK 3
1. Bank reconciliation account
Particulars Debit Credit
Balance as per cash book
add : D park cheque
transfer from Mr patel
Bank collected
less : insurance against fire
talk talk monthly bill
withdraw from bank by Akram
bank charges
balance
1760
270
1070
325
170
50
105
25
3095
3425 3425

2. Explanation of different term
Bank charges : bank charges are the expenses cut by the bank as a security amount or the facility
provided by the bank like current a/c, ATM etc. the bank charge £ 25 as a bank cahrge in the
above case.
Dis- hounor cheque : the cheque is dis- honer when there is mis balance in the account or
insufficient balance. Cheque also dishonor when the account holder does any fraud with the third
party.
TASK 4
1. Journals entries
Date Particulars L.F Debit Credit
Purchase a/c Dr.
To A Musa a/c
2000 2000
Bank a/c Dr.
To cash a/c
670 670
Sale a/c Dr.
To G Tahir a/c
650 650
Bill a/c Dr.
To cash a/c
790 790
Motor vehicle expense a/c Dr.
To profit and loss a/c
500 500
Sales day book a/c Dr.
To sale a/c
To suspense a/c
1300
1030
270
Discount received a/c dr.
To Discount allowed a/c
190 190
Bank a/c Dr.
To D Jones a/c
D Jones a/c Dr.
384
384
384
384

To sales a/c
5184 5184
2. Rectify suspense a/c
Suspense account
Date Particular J.F Amount Date Particulars J.F Amount
Balance c/d 270 By sales day book
a/c
270
270 270
CONCLUSION
The above report conclude the various statement in the company for getting the correct
information about the financial condition of the company or organization. The company use
different statement for this purpose like balance sheet, profit and loss account, trial balance and
bank reconciliation statement to check the error in the accounts and rectify the error to match the
cash balance.