Contents

Income statement, balance sheet and statement of cash flows.................................................................8

Unpresented cheques:..........................................................................................................................10
Bank lodgments not yet credited:.........................................................................................................11
Standing order.......................................................................................................................................11
Direct debits..........................................................................................................................................11
Dishonored cheques:.............................................................................................................................11
Errors.........................................................................................................................................................11
Trail balance After correction Errors..........................................................................................................12
Sales ledger control accounts....................................................................................................................13
Purchase Ledger control Accounts............................................................................................................13
Sales ledger control account.....................................................................................................................14
References.................................................................................................................................................14

Task 1
Every transaction or equation in accounting has two impacts on the final statement and bank statement,
which is referred to as the double entry system, which is used to record transactions and equations. One
is concerned with the debit aspect, while the other is concerned with the credit side. The term "debit"
refers to the introduction of something value into the firm, whereas the term "credit" refers to the
removal of something valuable from the organisation. In the case of a product sale, a corporation will
keep track of the money debited, the value supplied, and the sales credit against the product that has
just been delivered to the buyer at the moment of the sale. On the other hand, he invested something in
the form of a consumer asset, and as a result, he would debit the product while paying money against it,
and as a result, money would be credited when the product left the company. As a consequence, the
terms debit and credit have varied meanings for different businesses; it all depends on the perspective
of the company (Adam, 2018). All of these transactions took place in compliance with the criteria of the
accounting system. Consider the following scenario: you operate a wheat firm and sell $1000 worth of
wheat. Because money is debit and transactions are credit, you'll need to change your organisational
structure. There are three sorts of transactions: cash sales, credit sales, and credit sales with a credit
facility. Money deals are transactions in which the consumer pays in instalments at the time of purchase
rather than in one lump sum at the time of purchase. Credit Sales is a word that refers to the selling of
items to customers on credit. Customers who pay in instalments will be considered to be making a
deferred payment arrangement (DBA). If the toy store has a resurgence in business, the passage will be
seen as a change from a return account debit to a money credit. This holds true for rice purchases as
well; rice purchases are always debited, while money is always credited. If purchases are returned to the
provider via the rice store, the money is deducted from the account and the purchase is credited to the
account in this fashion. A cash buy occurs as a consequence of this when a substance purchases
products or performs services and then pays for those items or services with money. Purchases made on
credit are subject to payment in instalments over time by the person who made the purchase (or
service). Although the funds have not yet been paid to the supplier, substance must still keep track of
the transaction in this instance (Averkap, 2019).

Mr. Tom has launched a new company and has engaged me to keep track of his finances
using a double-entry accounting method. Create a trial balance based on the following
transactions for the month ending January 31st: Mr. Tom began his firm on January 10th with
£180,000 in the bank.

Mr. Tom Ledgers

Date Particulars Debit £ Credit £
Jan 10th Bank 180,000
Capital 180,000
11th Furniture 25,000
Delta ltd 25,000
12th Purchases 12,000
Bank 12,000
13th Purchases 15,000
Ben.Sen&Co 15,000
14th Rent Expense 7,000
Bank 7,000
15th Cash 17,000
Sales 17,000
17th Slat ionary 2,000
X.stationary 2,000
18th Cris 12,000
Sales 12,000
19th Machinery 4,000
Bank 4,000
20th Sales Return 4,000
Cris 4,000
21th B.sen & Co 5,000
Cash 5,000
22th Drawings 3,000
Bank 3,000
23th Interest deposit 2,000
Bank 2,000
24th Cash 10,000
Bank 10,000
26th Cash 5,000
Cris 5,000
27th Electricity 500
 expense
Cash 500
29th Cash 6,000
Sales 6,000
30th Bank 5,000
Commission 5,000
received

Capital Account

Date Particulars Debit £ Date Particulars Credit

£

31TH JAN Balance CID 180000 10th JAN Capital

180000 180000

Balance OD 180,000

Bank Account

Date Particulars Debit £ Date Particulars Credit £

10th JAN Capital 180,00 12' Jan Purchases 12,000

0

Commission 5,000 14" Jan Rent 7,000

19th JAN Fixtures & 25,000

Fitting

22' Jan Drawings 3,000

23rd Jan Interest paid 2,000

24" Jan Office expense 10,000

19' Jan Machinery 4,000

 3I"Jan Balance CID 122,000

185,00 185,000
0

Balance B/D
122,000

Fixture & Fitting

14TH Jan Bank 25000 31TH JAN Blance C/D 25000

25000 25000

Blance B/D 25000

Machinery Account

Date Particulars Debit £ Date Particulars Credit

£

19TH Jan Bank 4000 31TH JAN Blance C/D 4000

4000 4000

Blance B/D 4000

Drawings

Date Particulars Debit £ Date Particulars Credit

£

22th Jan Bank 3000 31th jan Blance C/D 3000

Balance B/D 3,000

Interest Expense

Date Particulars Debit £ Date Particulars Credit

£

23th Jan Interest period 2000 31th jan Blance C/D 2000
 Balance B/D 2,000

Office Expense

Date Particulars Debit £ Date Particulars Credit

£

24th Jan Bank 10000 31TH JAN Blance C/D 10000

10000 10000

Blance B/D 10000

Electricity Bill

Date Particulars Debit £ Date Particulars Credit

£

27th Jan Cash 500 31TH JAN Blance C/D 500

500 500

Blance B/D 500

Commission

Date Particulars Debit £ Date Particulars Credit

£

31th Jan Blance C/D 5000 31TH JAN Blance C/D 5000

5000 5000

Blance B/D 5000

Sales Returns

Date Particulars Debit £ Date Particulars Credit

£

20th Jan Cris 4000 31TH JAN Blance C/D 4000

4000 4000

Blance B/D 4000

Trial Balance of Mr. Tom

Details Debit £ Credit £

Bank 122,00
0

Capital 180,000

Purchases 27,000

Reni 7,000

Fixture & Fitting 25,000

Sales 35,000

Cash 20,500

Stationary 2,000

Cris A/R 3,000

B.Sen& CO AT 10.000

Machinery 4,000

Drawings 3,000

Electricity 500

like Expense 10,000

Interest 2,000

Sales Return 4,000

Commission 5.000

Total 230,00 230,000

0

Task 2
I worked as the accountant for a client named Mary and have just taken out the trial balance as at 30
September 2011:
 Mary
Profit and loss Statement

For the year ended 30 September 2011

£ £

Sales 2,235,000

Less cost of goods sold

Opening inventory 74,000

Purchases 1,520,000

Closing stock 77 0005 1577000

Gross profit 718,000

Less Operating Expenses

Marketing expenses (24,000-2,000) 22,000

Business rates 43,000

Insurance 49,000

Energy cost( 57,000+2,000 ) 59,000

Motor expenses 39,000

Wages & Salaries ( 298,000+10,000) 308,000

Vehicle Depreciation( 70,000 x 0.15 ) 10,500

Bad debts 4,000

I Increase in provision for bad debts 2000 -536500

Profit before interest and tax 181,500

(Less loan interest -3000

'Profit for the year 178,500

Mary
Balance Sheet
As at 30th September 2011
 £ £

Non-current assest

Building 500,000 529500

Vehicles 29,500

Current Asset

Inventory 77,000

Accounts receivable ( 84,000- 4,000) 80,000

Less provision for bad debts -3,000

Prepayment 2,000

Bank 2,000

Cash 1000 159,000

Total assets 6.88,500

Capital 402,000

Profit and loss account 178,500

Less drawing -25,000

Long term loan 60,000

A/C payable 61,000

Accruals 12,000

Total assets 688,500

I worked as an accountant for Verso Ltd and trial balance as at 31st December, 2018 is as follows :

Verso Ltd
Balance sheet
As at 3 I" December 2018

£ £

Sales 2860000
Less: Cost of Good Sold 12,500

Purchases 120,000

Closing inventory -135,000 1,190,000

Gross Profit 1,670,000

Less: Operating expenses

Salaries & wages (140,000+10,000 ) 150,000

Advertising (220000+20000) 240,000

Insurance 7,000

Rates (16,000 - 2000) 14,000

General expenses 22,000

Light, heat, water 5,000

Communication on cost (16,000- 12,000

4,000)

Professional fee 12,000

Audit fee 6,000

increase in provision for doubtful 4,000

debts

Equipment depreciation 78,000 -468000

(780,000X10%)

Profit before interest and tax 1,120,000

Less interest paid -15,000

Less: Taxation -140,000

Profit after tax 965,000

Less: dividends paid -180,000

Profit of the year 785,000

Opening balance of profit and loss 1,298,000

Total 2,083,000

Verso Ltd
 Statement Of Financial
Position
As at 31th December 2018

Nan-Current Assets £ £ £

Free-hold building 2268000

Equipment at cost 780000

Less depreciation -468000

Net book value 234000 2502000

Current Assets

Inventory 135000

Accounts receivable 376000

Less provision for doubtful

debts 14000 362000

prepayments 6000

Bank 68900 571000

Total assets 3073000

Equity and Liabilities

Liabilities

Current liabilities

Accounts payable 220000

Accruals 30

Taxation 140000

Long term liabilities 450000

Total liabilities 840000

Ordinary share capital 150000

Profit and loss account 2083 2233

Total Equity+Liabilitics 3073000

Income statement, balance sheet and statement of cash flows
Salary articulation, asset report, and explanation of earnings are three main financial summaries that are
used to define the organization's condition.

A salary proclamation is one of the most important budget summaries for describing an organization's
financial performance during a certain accounting period. The pay articulation, also known as the benefit
and misfortune explanation or the announcement of income and cost, focuses on the organization's
earnings and expenses during a specified time period. One of the three primary budget summaries, the
monetary record is essential for both financial presenting and accounting. The financial record displays
the organization's total assets and how these assets are funded, either via obligation or value. It may
also be referred to as a statement of total assets or a statement of financial situation. The monetary
record is determined by the following main condition: Liabilities + Equity Equals Assets. Income (CF) is
the increase or decrease in the amount of money a company, organisation, or person possesses. The
phrase is used in accounting to describe the amount of money (cash) that is created or spent over a
period of time. There are several types of CF, each with its own set of important applications for running
a company and undertaking financial analysis (Bragg, 2022).

According to Mary's budget reports, her gross profit in excess is roughly 2,235,000 after expenses of
products sold, and the balance of the money she receives is 718,000. Then, because we need to know
our net profit, we subtract the amount that the company is after all charges, which is 539,000. (actual
profit). We identified our advantages, liabilities, and capital using the accounting report. Creditor
liabilities increased by 61,000, which isn't a good thing for a company because the client expects cash,
and collection increased by 12,000, which isn't a good thing for a business since cash is anticipated by
the client. Verso Ltd. has sales of 2,860,000 and a gross profit of 1,670,000, which is also above average.
At that time, subtract all of the costs associated with the firm, and the net profit is $2,044,000 (debitoor,
2020).

Verso LTD is the superior of the two firms. If we're talking about gross benefit, it's larger than Mary's
since the verso deal is higher. Mary's expenses are lower than Verso ltd's as a consequence of her
business transaction. By examining both financial records, we can determine the financial position of the
two firms and apply the asset condition= equatives + labiality Financial records are excellent in
comparison to Mary's because their record receivables are higher than Mary's, which is beneficial to the
organisation; however, their 220,000 verso payable, which is also higher than Mary's, poses no problem
if verso debt claims exceed the records payable and they anticipate that they will be paid before the
records payable are due. Given that these accounts payable are due within one year, it might cause
some liquidity difficulties. If we look at Mary as a lone proprietor and a friend's perceptive company, I
believe she is doing a wonderful job since she is the only one who runs the business, she makes 539,000
every year, and her accounts receivable is 80,000, which is a lot for a solitary proprietor. In the lone
owner dynamic, there is a casting ballot right that allows you to choose any option. Setting up a Sole
Proprietorship firm is straightforward since no complicated procedures are necessary, but you must
enrol each archive that is required in the organisation. When compared to an organisation, raising funds
for a firm is relatively difficult and more perplexing. The government also provides greater financial
assistance to a small firm than it does to a single proprietorship (Direct, 2022).

Every day business is governed by GAAP (Generally Accepted Accounting Principles). The acronym GAAP
stands for Generally Accepted Accounting Principles. These standards are used in the United States for
money-related disclosure that is used to manage the accounting calling. Many organisations' budgetary
records are set up in the same way as every other corporation that uses GAAP methodologies, resulting
in financial reports that are straightforward to understand by everyone, including directors, investors,
brokers, and potential financial experts. GAAP is a comprehensive accounting standard that includes
both principles and methods. The International Financial Reporting Standards (FRIS) are followed by a
large portion of the rest of the globe, although they are mostly implemented without the procedural
substance that GAAP provides. However, since the frameworks are flawless, most businesses that follow
GAAP will also follow IFRS. We carefully prepare Assets, liabilities, and owner value for preparing pay
explanation Revenue, Expense, Gains or Benefits, Mistakes, and in accounting report (Hellman, 2008).

Task 3
Reconcitation of cash book to bank Account

Balance as per bank book 204

Adjustment

Deposit in transit by Aston 72

Outstanding check 25

Adjusted/corrected balance per bank 251

Balance per books on 31st December 267

Add: Parkinson’s deposit collected by bank 24

Less: bank charges 40

Adjusted/corrected balance per bank 251

Adjustment 1:

Account receivable

Date Account name Debit £ Credit £

30th December A. Parkinson 24

Cash 24
Adjustment 2:

Bank charge

Date Account name Debit £ Credit £

31st December Bank charges 40

Cash 40

Adjustment 3:

Bank charge

Date Account name Debit £ Credit £

31st December Barnes 25

Cash 25

Adjustment 4:

Bank charge

Date Account name Debit £ Credit £

31st December Aston 72

Cash 72

Unpresented cheques:
Unpresented checks are those that have not yet been cleared by the banking system. It's a word used to
describe the process of preparing a bank compromise announcement. For example, if a company writes
a check, it will deposit it in its money book the same day and then transfer it to its supplier. Days later,
the provider will get the cheque and deliver it to its bank. The check is then passed through the financial
system, and a few days later, it is handled by the business's bank and presented for payment (Jyoti
Singh, 2018).

Bank lodgments not yet credited:

Checks that have not yet passed the financial framework are referred to as unpresented checks. It's a
word used while putting together a bank compromise announcement. If a company writes a check, for
example, it will display it on the same day in its cash book and then transmit it to its supplier. The
cheque will arrive in the provider's bank several days later. The check is then processed through the
financial system, and a few days later, it is submitted for payment by the business's bank (lexicobiz,
2019).

Standing order
A standing order instructs the bank to transfer assets from one account to another on a regular basis on
a certain date. For example, XYZ and CO has submitted a monthly request to its bank to transfer $5000
as security costs to a security firm on the last day of the month. Although the money book balance is
$25,000, the bank statement indicates a parity of $20,000 on December 31, 2010. The difference refers
to the amount of instalments made via a standing request that ABC Co. LTD has not yet recorded
(Michalowicz, 2013).

Direct debits
Direct Debit is a request to the bank to shift assets from one record to another on a regular basis.
Despite the fact that the payer must first authorize the record where the assets will be transferred, the
payment is begun by the payee himself.

On the 30th of December 2010, TM and co. pay a $1000 office lease by direct debit. The lease payment
has not been recorded in the company's records. The money book's equalization indicates a parity of
$19,000 (Thakur, 2019).

Dishonored cheques:
The bank will not pay a sham cheque since there isn't enough cash in the account to cover it. If the bank
refuses to pay the amount due to the payee, the check is meant to be humiliated. As a result, disrespect
of check refers to a situation in which a bank refuses to pay the payee the amount of the check
(Wallstreet, 2018).

Task4
Errors

Correct Wrongly posted Correction

Creditors £75 ? Creditors £75

Cash £75 Cash £75 suspense account £75

Bank £56 Bank £56 Suspense account £6

Debtors £56 Debtors £560 Debtors £6

3

Error of principle Fitting £120

Purchase £120

Discount Allowed £38

Suspense account £38

Sales c/f £564 Sales c/f £564 Suspense account 108

Difference 108 sales 108

Error omission Cash 500

Sales 500

Error omission Business expense 100

Light & heat bill 100

Suspense account

Description Amount in Pounds Description Amounts in pounds

Debtors 6 Opening balance 1

Sales 108 Creditors 75

Discounts 38

Total 114 Total 114

Trail balance After correction Errors

Debit £ Credit £

Capital 5000

Drawing 2800

Stocks 2567

Debtors (2130-6) 2124

Furniture and fitting (1750+120) 1870

Cash in hand 1520

Creditors (2735 -75) 2660

Sales (7430 +108 +500) 8038

Return inwards 85

Discounts received 46

Business expense (950-100) 850

Purchase (4380-120) 4260

Discount 38

Light and heat bill 100

Total 16.244 16.244

Sales ledger control accounts

Description Amount Description Amount

£ £

Balance B/d 51,400 Bad debts written off 420

Return inwards 1480

Cheque received from debtors 47360

 Contra between S/L and P/L 800

Discount allowed 1840

Balance C/f 74540

1st march balance b/d 74,540

Purchase Ledger control Accounts

Description Amount Description Amount

£ £

Return outwards 510 1st February balance b/d 26,100

Cheque paid to creditors 24.27 Credit purchases 37.59

Contra between S/L and P/L 800

Discount received 960

Balance C/f 37,150

Total 63,690 63,690

1st march balance b/d 37150

Sales ledger control account

Description Amount Description Amount

£ £

Balance b/d 74800 Discount allowed 1400

Credit sales 86600 Return inward 1300

contra 1700

Bad debts debtors written 400

Receipts from debtors 76400

Total 161,400 Balance c/f 161,400

Balance b/d 80,200

References
Reference list

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[online] AccountingCoach.com. Available at: https://www.accountingcoach.com/debits-and-credits-
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https://www.accountingtools.com/articles/what-is-an-unpresented-check.html [Accessed 2 Jan. 2022].

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Hellman, N. (2008). Accounting Conservatism under IFRS. Accounting in Europe, 5(2), pp.71–100.

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