Financial Accounting: Recording Business Transactions Report

This report provides a comprehensive analysis of recording business transactions. It begins with journal entries to record various transactions, followed by the creation of ledger accounts, and culminates in the preparation of a trial balance. The report then constructs the income statement and statement of financial position to assess the financial performance of Linda's business. Furthermore, the report delves into ratio analysis to evaluate the business's financial health and performance, comparing it with a competitor. The report also includes a letter to Linda summarizing key findings. The conclusion emphasizes the importance of accurate transaction recording and the utility of financial statements and ratio analysis in business performance evaluation. Finally, the report includes references to relevant academic sources.

Recording business
transactions
(Assessment 2)

Table of Contents
Table of Contents.............................................................................................................................2
INTRODUCTION...........................................................................................................................1
PART A...........................................................................................................................................1
a. Double entry to record transactions.........................................................................................1
b. Balance of accounts in ledger..................................................................................................2
c. Trial balance.............................................................................................................................6
d. Income statement.....................................................................................................................6
e. Statement of financial position................................................................................................6
f. Letter to Linda..........................................................................................................................7
PART B...........................................................................................................................................7
i. Calculation of Ratios for Linda................................................................................................7
ii. Comparison of Linda’s performance with competitor............................................................8
CONCLUSION................................................................................................................................9
REFRENCES.................................................................................................................................10

INTRODUCTION
Recording business transaction is the process of keeping track record of all the
transactions that are made by the organisation during the year. It is very important for all the
businesses to make sure that they are recording all their transactions as it can help to analyse
actual business position (Dai and Vasarhelyi, 2017). Present report is based upon Linda’s
business. This assignment covers various topics such as journals, ledgers, trial balance, final
accounts etc. Apart from this, different ratios are also calculated for the purpose of determining
actual position of business.
PART A
a. Double entry to record transactions
Journal Entries
S. NO Date Particulars L.F £ £
1 01/02/20 purchase return A/C Dr. 350
To Purchase A/c 350
( Being purchase return with full
settlement)
2 04/02/20 Bad debts A/c Dr. 85
To S. keys A/c 85
(being debt debt written off by S.
keys)
3 09/02/20 Machinery A/c DR. 2300
To Bank 200
To TS CO. 2100
( Being machinery purchase with
cash Rs. 200 and 2100 on credit)
4 13/02/20 Cash account 220
Bad debts A/c 50
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To S. hill Ltd. 270
( money owed by S. hill 270 and
paid only 220, Rs. 50 declare as
bad debts)
5 20/02/20 Drawing A/s Dr. 180
To Stock 180
6 26/02/20 Insurance A/c Dr. 85
To Cash A/c 85
( Business paid money for
private house insurance)
7 28/02/20
Machinery A/c
DR. 1050
To bank A/c 1050
(amount paid by TS CO. for half
amount credit on machinery)
Total 4320 4320
b. Balance of accounts in ledger
A. General ledger
Ledger Accounts
(Amounts in GBP)
Capital Account
Date Particulars Amt. Date Particulars Amt.
01/02/20 By Bank A/c 21500
01/02/20 By Van A/c 25000
01/02/20 By Office Fixture A/c 800
29/02/20 To Balance c/f 47300
Total 47300 Total 47300
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Bank Account
Date Particulars Amt. Date Particulars Amt.
03/02/20 By Cash A/c 1500 01/02/20 To Capital A/c 21500
04/02/20 By Van A/c 4800 02/02/20 To Loan A/c 2500
19/02/20 By Nissan Co. A/c 5200 25/02/20 To Cash A/c 350
28/02/20 By Office Fixture A/c 620
29/02/20 By Balance c/f 12230
Total 24350 Total 24350
Van Account
Date Particulars Amt. Date ParticularsAmt. Amt.
01/02/20 To Capital A/c 25000
04/02/20 To Bank A/c 4800
08/02/20 To Nissan Co. A/c 5200
29/02/20 By Balance c/f 35000
Total 35000 Total 35000
Quick Office Ltd Account
Date Particulars Amt. Date Particulars Amt.
05/02/20 By Office Fixture A/c 1100
29/02/20 To Balance c/f 1100
Total 1100 Total 1100
Cash Account
Date Particulars Amt. Date Particulars Amt.
15/02/20 By Office Fixture A/c 70 03/02/20 To Bank A/c 1500
25/02/20 By Bank A/c 350
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29/02/20 By Balance c/f 1080
Total 1500 Total 1500
Nissan Co. Account
Date Particulars Amt. Amt. Date Particulars Amt.
08/02/20 By Van A/c 5200 19/02/20 To Bank A/c 5200
Total 5200 Total 5200
Office Fixture Account
Date Particulars Amt. Date Particulars Amt.
01/02/20 To Capital A/c 800
05/02/20 To Quick Office Ltd A/c 1100
15/02/20 To Cash A/c 70
28/02/20 To Bank A/c 620
29/02/20 By Balance c/f 2590
Total 2590 Total 2590
Loan Account
Date Particulars Amt. Date Particulars Amt.
02/02/20 By Bank A/c 2500
29/02/20 By Balance c/f 2500
Total 2500 Total 2500
Trial Balance
(in the month ending 29/02/2020)
(Amounts in GBP)
Particulars Debit Credit
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Capital Account 47300
Bank Account 12230
Cash Account 1080
Van Account 35000
Quick Office Ltd. Account 1100
Office Fixture Account 2590
Loan Account 2500
Total 50900 50900
PART 4
Income statement for Airman co.:
Income statement in the year end 30th Sept. 2020
Profit & Loss Account
(In the year ending 30th Sept 20)
Particulars Amount Particulars Amount
Opening Stock 36000 Sales 80000
Purchases 150000 Less: Returns Inwards -2000 78000
Less: Returns Outwards -600 149400 Closing Stock 120000
Carriage Inwards 720
Gross Profit c/f 11880
Total 198000 Total 198000
Carriage Outwards 400 Gross Profit c/d 11880
Motor Expenses 1200
Rent 5000
Telephone Charges 620
Wages and Salaries 32000
Insurance 830
Office Expenses 600
Sundry Expenses 300
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Net profit / (loss) -29070
Total 11880 Total 11880
CONCLUSION
From the above project report it has been concluded that for all the businesses it is very
important to make sure that they are able to record all the business transactions in different books
in systematic manner. In order to analyse business performance final accounts as well as ratio
analysis could be used by entities.
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REFRENCES
Books and journals:
Dai, J. and Vasarhelyi, M. A., 2017. Toward blockchain-based accounting and
assurance. Journal of Information Systems. 31(3). pp.5-21.
De Kruijff, J. and Weigand, H., 2017, June. Understanding the blockchain using enterprise
ontology. In International Conference on Advanced Information Systems
Engineering (pp. 29-43). Springer, Cham.
Flak, O., 2020. The system of organizational terms used for recording managerial activities in the
field of team motivation.
Ospina Romero, S., 2019. Recording Studios on Tour: The Expeditions of the Victor Talking
Machine Company through Latin America. 1903-1926.
Pitt, I. L., 2020. Life cycle effects of technology on revenue in the music recording industry
1973–2017. SN Business & Economics. 1(1). pp.1-29.
Wang, J., Hua, Y. and Zhu, Z., 2019. A 10-bit reconfigurable ADC with SAR/SS mode for
neural recording. Analog Integrated Circuits and Signal Processing. 101(2). pp.297-
305.
Wang, Y. and Kogan, A., 2018. Designing confidentiality-preserving Blockchain-based
transaction processing systems. International Journal of Accounting Information
Systems. 30. pp.1-18.
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