Finance Accounting Assignment Help

Introduction

Financial accounting helps to calculate the profit or loss of an organization and therefore, this tool is to be considered as necessary for the business firms in modern era. As stated by Weil et al. (2013), the financial accounting considers journals, ledgers and trial balance as the primary accounting techniques to ascertain the profit or loss through final accounts. This study would focus on the journal entry, ledger preparation, and preparation of final accounts by considering the different cases. Moreover, the researcher shall analyze the bank reconciliations and rectification of errors in accounting in the final part of the study.

Case 1

Journal entries

In the books of Norris
Journal entries
Particulars	Dr	Cr
Particulars	Amount (GBP)	Amount (GBP)
Cash A/c Dr	60
To Sales		60

Insurance premium A/c Dr.	400
To Bank		400

Customer A/c Dr.	250
To Sales		250
Travelling expenses A/c Dr.	50
To Bank		50
Purchase A/c Dr.	170
To Supplier's		170
Drawings A/c Dr.	57
To Bank		57
Purchase A/c Dr.	40
To Cash		40
Office equipment A/c Dr.	800
To Bank		800

Ledger accounts

Ledgers
Sales account
Dr			Cr
Particulars	Amount (GBP)	Particulars	Amount (GBP)
		By cash A/c	60
		By Customers' A/c	250
To balance c/d	310
	310		310


Insurance premium account
Dr			Cr
Particulars	Amount (GBP)	Particulars	Amount (GBP)
To bank A/c	400
		By balance c/d	400
	400		400


Bank account
Dr			Cr
Particulars	Amount (GBP)	Particulars	Amount (GBP)
		By insurance premium	400
		By traveling expenses	50
		By drawings A/c	57
To balance c/d	1307	By office equipment A/c	800
	1307		1307


Travelling account
Dr			Cr
Particulars	Amount (GBP)	Particulars	Amount (GBP)
To bank A/c	50
		By balance c/d	50
	50		50


Purchase account
Dr			Cr
Particulars	Amount (GBP)	Particulars	Amount (GBP)
To Suppliers' A/c	170
To cash A/c	40
		By balance c/d	210
	210		210


Drawings account
Dr			Cr
Particulars	Amount (GBP)	Particulars	Amount (GBP)
To bank A/c	57
		By balance c/d	57
	57		57


Cash account
Dr			Cr
Particulars	Amount (GBP)	Particulars	Amount (GBP)
To sales A/c	60	By purchase A/c	40
		By balance c/d	20
	60		60

				Office equipment account
Dr			Cr
Particulars	Amount (GBP)	Particulars	Amount (GBP)
To bank A/c	800
		By balance c/d	800
	800		800

				Customer's account
Dr			Cr
Particulars	Amount (GBP)	Particulars	Amount (GBP)
To sales	250
		By balance c/d	250
	250		250

				Supplier's account
Dr			Cr
Particulars	Amount (GBP)	Particulars	Amount (GBP)
		By purchase A/c	170
To balance c/d	170
	170		170

Trial balance

Trial balance as on …
Particulars	Amount (GBP)	Amount (GBP)
	Debit	Credit
	Sales account		310
Insurance premium account	400
Bank account (Overdraft)		1307
Travelling account	50
Purchase account	210
Drawings account	57
Cash account	20
Office equipment account	800
Customers' account	250
Suppliers' account		170
Suspense
	1787	1787

Case 2

a. Ledger

Ledgers
Capital account
Dr			Cr
Particulars	Amount (GBP)	Particulars	Amount (GBP)
		By bank	10000

To baalance c/d	10000
	10000		10000


Bank account
Dr			Cr
Particulars	Amount (GBP)	Particulars	Amount (GBP)
To capital A/c	10000	By purchase A/c	4000
To sales	1500	By delivery van A/c	2000
		By supplier's A/c	800
		By rent A/c	200
		By drawings A/c	100
		By balance c/d	4400
	11500		11500


Purchase account
Dr			Cr
Particulars	Amount (GBP)	Particulars	Amount (GBP)
To bank A/c	4000
To suppliers' A/c	1000
		By balance c/d	5000
	5000		5000


Delivery van account
Dr			Cr
Particulars	Amount (GBP)	Particulars	Amount (GBP)
To bank A/c	2000
		By balance c/d	2000
	2000		2000


Suppliers' account
Dr			Cr
Particulars	Amount (GBP)	Particulars	Amount (GBP)
To bank A/c	800	By purchase A/c	1000
To balance c/d	200
	1000		1000


Sales account
Dr			Cr
Particulars	Amount (GBP)	Particulars	Amount (GBP)
		By bank A/c	1500
		By cutomers' A/c	5000
To balance c/d	6500
	6500		6500


Rent account
Dr			Cr
Particulars	Amount (GBP)	Particulars	Amount (GBP)
To bank A/c	200
		By balance c/d	200
	200		200


Drawings account
Dr			Cr
Particulars	Amount (GBP)	Particulars	Amount (GBP)
To bank A/c	100
		By balance c/d	100
	100		100


Customer's account
Dr			Cr
Particulars	Amount (GBP)	Particulars	Amount (GBP)
To sales	5000
		By balance c/d	5000
	5000		5000

b. Trial balance

Trial balance as on 9th January
Particulars	Amount (GBP)	Amount (GBP)
Particulars	Dr	Cr
Capital		10000
Bank	4400
Purchase	5000
Delivery van	2000
Suppliers		200
Sales		6500
Rent	200
Drawings	100
Customers'	5000
Total	16700	16700

c. Income statement

Income statement for the first 9 days
Particulars	Amount (GBP)	Amount (GBP)
Sales revenue	6,500.00
Add. Other revenue	-
Total revenue from operations		6,500.00
Expenses
Purchase expenses	5,000.00
Rent	200.00
Total expenses		5,200.00
Net profit		1,300.00

d. Financial position statement

Financial position statement as on 9th January
Particulars	Amount (GBP)	Amount (GBP)
ASSETS
Non-current assets
Delivery van	2,000.00
Total Non-current assets		2,000.00
Current assets
Trade receivables
Customers'	5,000.00
Cash and cash equivalent
Bank balance	4,400.00
Total current assets		9,400.00
Total assets		11,400.00
CAPITAL AND LIABILITIES
Capital	10,000.00
Add. Net profit for the period	1,300.00
Less. Drawings	-£ 100.00
Total capital fund		11,200.00
Non-current liability		0
Current liability
Trade payables
Suppliers'	200
Total current liability		200.00
Total capital and liability		11,400.00

Case 3

Income statement

Income statement for the year ended 31 December 2005
Particulars	Amount (GBP)	Amount (GBP)
Revenue from operations	365200
Less. Return	-1200
Net sales revenue	364000
Other revenue	0
Total revenue		364000
Less. Expenses
Purchase Less return	265200
Changes in inventory	-2340
Wages	46160
Rent less advance (GBP13000- GBP 1000)	12000
Motor expenses	3720
Insurance	760
Irrecoverable Debts	120
Further bad debt	130
Allowance for receivable (Opening)	-588
Allowance for receivable (Closing) (Note 2)	516
Discounts allowed	864
Discount received	-1622
Depreciation and amortisation expenses (Note 1)	11128
Light and heat add outstanding (GBP 3074+ GBP 460)	3534
Bank overdraft interest	74
Appreciation of land	-150000
Total expenses		189656
Net profit before tax		174344

Financial position statement

Financial position statement as on 31 December 2005
ASSETS	Amount (GBP)	Amount (GBP)
Non-current assets
Land	250000
Building	92000
Motor vehicle	8232
Fixtures and fittings	5600
Total non-current assets		355832
Other non-current assets
Current assets
Receivable (Note 2)	16684
Inventory	25680
Cash and cash equivalent	3412
Prepaid rent	1000
Total current assets		46776
Total assets		402608
EQUITY AND LIABILITIES	Amount (GBP)	Amount (GBP)
Capital	225600
Add. Net profit after tax	174344
Less. Drawings	-20800
Net capital fund		379144
Non-current liabilities		0
Current liabilities
Trade payables	23004
Outstanding light and heat	460
Total current liabilities		23464
Total capital and liability		402608

Notes to accounts

Note 1
Calculation of total depreciation and amortisation expenses
Motor vehicle
Cost price	24,000.00
Less. Aggregate depreciation	12,240.00
Written down value	11,760.00
Depreciation @30 of reduced value		3,528.00
Fixture and fittings
Cost	28,000.00
Estimated life (years)	5
Depreciation		£ 5,600.00
Building
Cost	100,000.00
Depreciation @2% on cost price		2,000.00
Total depreciation and amortisation		11,128.00

Note 2
Calculation of allowance for receivables
Receivables	17,330.00
Less. Further bad debts	130.00
Net receivables	17,200.00
Allowance for receivables @3%	516.00
Closing receivable		16,684.00

Case 4

Bank reconciliation statement at December 1

Bank reconciliation statement at December 1
Particulars	Amount (GBP)	Amount (GBP)
Bank balance as per Bank Statement on December 1		17478
Add. Cheque received but not deposited		176
Less. Cheque issued but not encashed	426
Less. Cheque issued but not encashed	737
		1163
Bank balnce as per Cash book on December 1		16491

Cash book

Cash book
Date	Particulars	Amount (GBP)	Date	Particulars	Chq No.	Amount (GBP)
December			December
1	Balance b/f	16491	1	Alexander	782	857
2	Able	962	6	Burgess	783	221
	Baker	1103	14	Barry	784	511
10	Charlie	2312	17	Cook	785	97
14	Delta	419	24	Hay	786	343
21	Echo	327	29	Rent	787	260
23	Cash sales	529		Standing charges		47
30	Fred	119		Bank charges		137
			31	Balance		19789
		22262				22262

Bank reconciliation statement at December 31

Bank reconciliation statement at December 31
Particulars	Amount (GBP)	Amount (GBP)
Bank balance as per Bank statement on December 31		19738
Less. Cheque issued but not encashed	97
Less. Cheque issued for rent but not encashed	260
Add. Bank charges	47
Add. Rates	137
Add. Withdrawal	297
Add. Withdrawals	111
Bank balance as per cash book on December 31		19973

Case 5

Process of reconciliation of control accounts

In the reconciliation of control accounts, the errors of an accounting statement are rectified. According to Edwards (2013), the rectification entries depend upon the actual entries and the wrong entries, and therefore, the accountants are required to adjust the above stated entries to make rectification entries. In this context, it is to mention that the wrong entries are replaced by the correct entries to make the rectification of error journal entries (May, 2012). The accountants are to identify the errors initially to make the rectification. After that the correct entries are required to be applied to make the required corrections.

Different types of accounts and process of reconciliation

The rectification of errors could be made on the real account, nominal account and the personal accounts. First of all, the degree of errors is needed to be identified by the accountants in order to make the rectifications. In this context, Horngren et al. (2012) stated that the errors in accounting could take place by omissions. On the other hand, the errors could be single sided or double sided. In this regard, it is to mention that single sided errors and the errors or omissions are to be rectified by using the suspense account as these errors are generally found after preparing the trial balance.

In the books of …
Journal entries
Particulars	Dr	Cr
Particulars	Amount (GBP)	Amount (GBP)
Cash A/c Dr.	100
To sales A/c		100
(Being cash sales not entered in the accounting nooks, now rectified)
Rates expenses A/c Dr.	500
To Rent expenses		500
(Being rates expenses wrongly entered, now rectified)
Noncurrent assets A/c Dr.	1000
To Repairs		1000
(Being noncurrent assets purchased, wrongly entered in the repairs account, now rectified)
Suspense A/c Dr.	200
To Rent		200
(Being rent expenses wrongly accounted, now rectified)
Sales A/c Dr.	200
Suspense A/c		200
(Being sales account overcast, now adjusted)
Cash A/c Dr.	9
To sales		9
(Being cash sales wrongly entered in the books, now rectified)
Sales A/c Dr.	400
To Cash		400
(Being cash sales wrongly entered in the books, now rectified)

Suspense A/c
Dr.			Cr.
Particulars	Amount (GBP)	Particulars	Amount (GBP)
To Rent	200	By Sales	200
	200		200

Conclusions

This study focused on the tools of financial accounting. The researcher has found that the journal entries help to prepare ledgers and trial balances are prepared from the ledger accounts. Moreover, the researcher has also seen that the final accounts are prepared from the trial balances. Therefore, it can be said the financial accounting is a continuous process.

References

Edwards, J.R., (2013). A History of Financial Accounting (RLE Accounting) (Vol. 29). Routledge.

Horngren, C., Harrison, W., Oliver, S., Best, P., Fraser, D. and Tan, R., (2012). Financial accounting. Pearson Higher Education AU.

May, G.O., (2013). Financial accounting. Read Books Ltd.

Weil, R.L., Schipper, K. and Francis, J., (2013). Financial accounting: an introduction to concepts, methods and uses. Cengage Learning.

Important topics in finance

Capital Budgeting
Corporate finance
Finance Accounting
Financial Ratio Analysis
Financial Statement Analysis
Financial Risk
Investment management
International Business
Public finance
Banking terms
Cash Management
Cost of Capital
Derivatives
Economics and finance
Leverage
Risk and Return
Time Value Of Money
Valuation
Working Capital

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