Accounting Assignment: Journal Entries, Trial Balance and Analysis

This management accounting assignment solution presents a comprehensive overview of accounting principles and practices. It begins with a series of journal entries, detailing various transactions with debit and credit entries, providing a clear understanding of how financial events are recorded. The assignment then progresses to the creation of a cash at bank, accounts receivable, shop fittings, computer, advertising payable, loan, drawings, capital, and sales. It also includes a trial balance, which summarizes the debit and credit balances of all accounts, ensuring the equality of the accounting equation. Furthermore, the assignment addresses specific accounting concepts, such as the business entity assumption and liabilities, offering explanations and examples to clarify these principles. The solution includes references to support the explanations. This assignment provides a practical application of accounting knowledge, covering key aspects of financial recording, reporting, and analysis.

MANAGEMENT ACCOUNTING
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Contents
Question 1:.................................................................................................................................3
Part A:.....................................................................................................................................3
Part B:.....................................................................................................................................5
Part C:.....................................................................................................................................8
Question 2:.................................................................................................................................9
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Question 1:
Part A:
Date Details Debit ($) Credit
($)
01-Nov Bank and Cash a/c 1,540.00
To Revenue a/c 1,540.00
(Being cash received form a student towards fee for
watch-making school)
02-Nov Drawings a/c 183.00
To Bank and Cash a/c 183.00
(Being spent by the proprietor towards personal expenses
towards physiotherapist charges)
04-Nov Bank and Cash a/c 2,016.00
Debtors for goods-Hilton Hotels a/c 8,064.00
To Revenue a/c 10,080.0
0
(Being sold to Hilton hotel partly in cash and partly in
credit)
13-Nov Laptop a/c 2,760.00
To Bank and Cash a/c 2,760.00
(Being laptop purchased in cash for business)
14-Nov Cleaning Expenses a/c 120.00
To Creditors for expense- Busy bee Cleaners 120.00
(Being invoiced raised by busy bee cleaners towards
cleaning expense- invoice ref 6435)
17-Nov Furniture a/c 6,272.00
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To Bank and Cash a/c 3,136.00
To Creditors for furniture a/c 3,136.00
(Being 7 adjustable purchased, partly in cash partly in
credit)
29-Nov Electricity Expenses a/c 1,376.00
To Bank and Cash a/c 1,376.00
(Being electricity expenses for the quarter paid)
30-Nov Bank and Cash a/c 8,064.00
To Debtors for goods-Hilton Hotels a/c 8,064.00
(Being Amount received form Hilton Hotels towards sale
made on 4th Nov)
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Part B:
Cash at Bank (CAB)
December 1 Balance 44668 December 1 Shop Fittings 15000
December 9 Capital 23500 December 4 Drawings 15
December 24 Sales 11980 December 18 Loan 15800
December 31 Balance 49333
80148 80148
Accounts Receivable (A/R)
December 1 Balance 8656 December 31 Balance 11856
December 24 Sales 3200
11856 11856
Shop Fittings
December 1 Balance 26850 December 31 Balance 80850
December 1 Cash and
Bank
15000
December 1 Loan 39000
80850 80850
Computer
5

December 9 Capital 1500 December 31 Balance 1500
1500 1500
Advertising Payable
December 31 Balance 1250 December 24 Advertising 1250
1250 1250
Loan
December 18 Cash and Bank 15800 December 1 Shop Fittings 39000
December 31 Balance 23200
39000 39000
Drawings
December 1 Balance 40 400 December 31 Balance 40415
December 4 Cash and Bank 15
40415 40415
Capital
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December 31 Balance 153708 December 1 Balance 128708
December 9 Cash and bank 23500
December 9 Computer 1500
153708 153708
Sales
December 31 Balance 170731 December 1 Balance 155551
December 24 Cash and Bank 11980
December 24 Account Receivables 3200
170731 170731
Advertising
December 26 Advertising Payable 1250 December 31 Balance 1250
1250 1250
Part C:
Classic Clocks - Trial Balance-31-Dec-18
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Debit
($)
Credit
($)
Electricity Expense 9,165
Telephone Expense 1,555
Motor Vehicle 31,150
Cash at Bank 49,333
Advertising Expense 1,250
Accounts Payable 1,250
Office Supplies Expense 1,713
Drawings – Cogsworth 40,415
Office Gas Expense 2,275
Water Expense 2,661
Capital – Cogsworth 1,53,708
Accounts Receivable 11,856
Loan 23,200
Accumulated Depreciation – Motor Vehicle 14,489
Stock / Clocks 65,256
Shop Fittings 80,850
Repairs and Maintenance Payable 4,913
Sales 1,70,731
Accumulated Depreciation – Cash Register and Scanning
Equipment 15,042
Cash Register and Scanning Equipment 22,542
Discount Allowed 919
Rent Expense 52,354
Repairs and Maintenance 3,637
Sales Returns & Allowances 473
Interest expense 4,429
Computer 1,500
Totals 3,83,333 3,83,333
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Question 2:
Dan Stevens
Managing Director
Mandeville Accounting Solutions Pty Ltd
1800 Adelaide Terrace
Adelaide, SA 5000
3rd December 2017
Dear Mr Stevens,
With respect to the journal entries passed in the books on 2nd of November and on 14th of
November the following explanation is being provided:
- 2nd November 2017: the accounting assumption used for this transaction is business
entity assumption, also popularly known as separate entity assumption. Under this
assumption it has been explained that the entity has a separate financial status and that it
is separate from its owners. To further explain this, we can say that the business entity is
to be treated as a separate person from its owners. Under this transaction, since the
expense is a personal expense of the proprietor, it has been charged to the drawings
account. It is not a business expense and has been deducted from the capital of the
proprietor. (Piper, 2015)
- 14th November 2017: the account credited in this journal is Creditors for expense- Busy
bee Cleaners account which is in the element of liability. The company has used the
services of Busy Bee Cleaners and is entitled to pay for the same. A liability is a sacrifice
of the economic benefits of the entity as a result of any past event which will be settled
by outflow of resources. Therefore, in the given case the past event is using the services
of Busy Bee Cleaners and sacrifice will be made by outflow of cash. (Siciliano, 2015)
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I hope that the above helps to clear the confusion regarding the transactions recorded. Kindly
let me know in case any future explanation is required.
Yours Sincerely
Claude Cogsworth
Classic Clocks
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