Financial Accounting Comprehensive Solution: Journal Entries and More

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Added on 2024/06/28

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This financial accounting assignment solution includes journal entries, ledger accounts, and a trial balance for a company's transactions in June 2019. It also presents trading and profit & loss accounts, along with a balance sheet as of December 31, 2017. Furthermore, the solution provides a bank reconciliation statement, definitions of financial terms, and journal entries for rectifying errors, accompanied by a suspense account. The document is a comprehensive guide to understanding and applying fundamental accounting principles and practices.

Financial Accounting
1

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Table of Contents
Scenario 1........................................................................................................................................3
Question 1.................................................................................................................................... 3
Question 2.................................................................................................................................... 9
Scenario - 2.................................................................................................................................... 11
Question 1.................................................................................................................................. 11
Question 2.................................................................................................................................. 13
References –...................................................................................................................................15
2

Scenario 1
Question 1
(i) Journal Entries in the Book
Date Particular
Amount in
£
Amount in
£
01.06.201
9 Cash A/c Dr. 65,000
To Capital A/c 65000
( Being Capital Introduced infirm)
02.06.201
9 Purchase A/c Dr. 8,000
To Accounts Payable A/c 8,000
( Being Goods Purchase on Credit )
07.06.201
9 Cash A/c Dr. 4,000
To Sales A/c 4,000
( Being Sold of Quarter of Inventory purchase of Cost 2,000)
08.06.201
9 Accounts Payable A/c Dr. 4,000
To Bank A/c 4,000
( Being Half of the Credit Purchase are paid through Cheque)
14.06.201
9 Insurance Expenses A/c Dr. 75
To Cash and Bank A/c 75
( Being Insurance Expenses are paid through Cheque)
15.06.201
9 Accounts Receivable A/c Dr. 12,000
To Sales A/c 12,000
( Being Remain inventory sold for the cost of 6,000)
3

16.06.201
9 Purchase A/c Dr. 10,000
To Accounts Payable A/c 10,000
( Being Goods Purchase on Credit )
18.06.201
9 Computer A/c Dr. 3,000
To Cash A/c 3,000
( Being computer equipment are purchased on cash )
20.06.201
9 Rent Expenses A/c Dr. 150
To Cash and Bank A/c 150
(Being Rent Paid through Cheque for the month )
21.06.201
9 Cash A/c Dr. 10,000
To Sales A/c 10,000
( Being half of the inventory of worth 5,000 sold on cash)
25.06.201
9 Petty Cash A/c Dr. 100
To Bank A/c 100
( Being Cash Withdrawn from the bank )
30.06.201
9 Stationary Expenses A/c Dr. 3,000
To Petty Cash A/c 2,800
(Being stationary Expenses are paid from Petty Cash of
Company)
4

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(ii) Ledger Accounts
Capital Account
Dr. Cr.
Date Particular Amount Date Particular Amount
30.06.2019 To Balance c/d 65,000 01.06.2019 By Cash A/c 65,000
65,000 65,000
Purchase Account
Dr. Cr.
Date Particular Amount Date Particular Amount
02.06.201
9
To Accounts Payable
A/c 8,000
07.06.201
9
By Balance
C/d 18,000
16.06.201
9
To Accounts Payable
A/c 10,000
15.06.201
9
21.06.201
9
30.06.201
9
18,000 18,000
Accounts Payable Account
Dr. Cr.
Date Particular Amount Date Particular Amount
08.06.2019
To Bank
Accounts 4,000 02.06.2019
By Purchase
A/c 8,000
30.06.2019 To Balance c/d 14,000 16.06.2019
By Purchase
A/c 10,000
18,000 18,000
Sales Accounts
Dr. Cr.
Date Particular Amount Date Particular Amount
30.06.201
To Balance
c/d 26,000 07.06.201
By Cash A/c
4,000
5

9 9
15.06.201
9
By Accounts
Receivables 12,000
21.06.201
9 By Cash A/c 10,000
26,000
Accounts Receivables
Dr. Cr.
Date Particular Amount Date Particular Amount
15.06.2019 To Sales Accounts 12,000 30.06.2019
To Balance
c/d 12,000
12,000 12,000
Insurance Expenses
Dr. Cr.
Date Particular Amount Date Particular Amount
14.06.2019 To Bank Accounts 75 30.06.2019 Balance C/d 75
75 75
Rent Expenses Accounts
Dr. Cr.
Date Particular Amount Date Particular Amount
20.06.2019 To Bank Accounts 150 30.06.2019 Balance C/d 150
150 150
6

Stationary Expenses
Dr. Cr.
Date Particular Amount Date Particular Amount
20.06.2019 To Petty Cash Book 30 30.06.2019
Balance
C/d 30
30 30
Computer Equipment
Dr. Cr.
Date Particular Amount Date Particular Amount
18.06.2019 To Cash Accounts 3,000 30.06.2019 Balance C/d 3,000
3,000 3,000
Cash Accounts
Dr. Cr.
Date Particular Amount Date Particular Amount
01.06.201
9
To Capital
Accounts 65,000
18.06.201
9
By Computer
Equipment 3,000
07.06.201
9
To Sales
Accounts 4,000
30.06.201
9 By Balance c/d 76,000
21.06.201
9
To Sales
Accounts 10,000
79,000 3,000
Bank Accounts
Dr. Cr.
Date Particular Amount Date Particular Amount
7

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30.06.201
9
By Balance
c/d 4,325
08.06.201
9 By Accounts Payable 4,000
14.06.201
9
By Insurance
Expenses 75
20.06.201
9 By Rent Expenses 150
25.06.201
9 By petty Cashbook 100
4,325 4,325
Petty Cash Book
Dr. Cr.
Date Particular Amount Date Particular Amount
25.06.201
9
By Bank
Accounts 100
30.06.201
9
By Stationary
Expenses 30
30.06.201
9 By Balance C/d 70
100 30
8

(iii) Trial Balance
Trial Balance for the company for the month of June
S.No. Particular Amount (Dr.) Amount (Cr.)
1 Capital Accounts - 65,000
2 Purchase Accounts 18,000 -
3 Accounts Payable - 14,000
4 Sales Accounts - 26,000
5 Accounts Receivable 12,000 -
6 Insurance Expenses 75 -
7 Rent Expenses Accounts 150 -
8 Stationary Expenses 30 -
9 Computer Equipment 3,000 -
10 Cash Accounts 76,000 -
11 Bank Accounts - 4,325
12 Petty Cash Book 70 -
Total 109,325 109,325
9

Question 2
Trading and Profit & Loss Accounts for the year ended on 31st December 2017
PARTICULAR Amount Amount PARTICULAR Amount Amount
To Opening stock
9
,500.00 By Sales 125,000
To Purchase 75,000.00
Less: Sales
return 1,000.00
12
4,000
Less : Purchase Return 1,500.00
73
,500.00
To Wages and Salaries
13
,200.00
To Gross Profit
28
,800.00
By Closing
Stock 1,000.00
125
,000
12
5,000
To Rent and Rates 1,500.00 By Gross profit
2
8,800.00
Add : Outstanding Rates 340.00
1
,840.00
To Postage 900.00
By Interest
Received 1,000.00
To Insurance 7,500.00
By Rental
Income 4,850.00
Less: Prepaid Insurance 411.00
7
,089.00
Less : Unearned
Rent 490.00 4,360.00
To Provision for
Doubtful debts 1,200.00 -
To Depreciation
5
,000.00
To Bad Debts 1,200.00
Add: Bad Debts Written
Off 650.00
1
,850.00
To Net Profit
17
,481.00
34
,160.00
3
4,160.00
10

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Balance sheet for the company as on 31st Decembers 2017
LIABILITIES Amount Amount ASSETS Amount Amount
Capital Fixed assets
Capital 120,800 Motor Van 25,000
Less: drawing 5,150
Less: Accumulated
depreciation 5,400
115,650 WDV 19,600
Add: Net Profit 17,481 133,131
Less : Depreciation
during the year 5,000 14,600
Financial Loan @
10% 100,000
Current liabilities Current Assets
Bank Account 10,594
Creditors 3,900 Cash Account 340
Outstanding Rates 340 Sundry Debtors 12,500
Unearned Rental
Income 490
Less: Provision for
Doubtful Debts 934
Less: Bad Debts
W/O 650 10,916
Prepaid Insurance 411
Closing Stock 1,000
Total 137,861 Total 137,861
11

Scenario - 2
Question 1
Reconciliation Statement for Party Supplies
Balance as per Cash Book 1,760.00
(Adjustment )
Cheque Not presented in the Bank 270.00
Mr. Patel Transfer directly to the Bank 1,070.00
Mr. Akram Withdrawn 105.00
Collection of Dividend 325.00
Outstanding Deposits - 1,770.00
(Adjustment )
Cheque recorded in Cashbook but not credit in Bank (186.00)
Bank Charges (25.00)
Talk Talk Monthly Bill (56.00)
Insurance against fire directly paid (170.00) (437.00)
Balance As per Bank Pass book 3,093.00
Dr.
Cash Book
Cr.
Particular
Amount
(£) Particular
Amount
(£)
Balance as per Cash Book 1,760.00
Cheque recorded in Cashbook but not
credit in Bank 186.00
Cheque Not presented in the
Bank 270.00 Bank Charges 25.00
Mr. Patel Transfer directly to
the Bank 1,070.00 Talk Talk Monthly Bill 56.00
Mr. Akram Withdrawn 105.00 Insurance against fire directly paid 170.00
Collection of Dividend 325.00 Balance as Per Passbook 3,093.00
12