Financial Accounting Assignment -

Unit Learning Outcomes -

1. Record business transactions using double entry book keeping, and be able to extract a trial balance.

2. Prepare final accounts for sole-traders, partnerships and limited companies in accordance with appropriate principles, conventions and standards.

3. Perform bank reconciliations to ensure company and bank records are correct.

4. Reconcile control accounts and shift recorded transactions from the suspense accounts to the right accounts.

TASKS -

Task 1: Record business transactions using double entry book-keeping, and be able to extract a trial balance.

Scenario 1 - Catherine Horton is trading as a sole trader. You are required to record the accounting information and the business transactions in her book using double-entry principles in the books of Catherine.

At 31^st of December 2018, the following balances were provided:

Task 1.1: You are required to prepare a trial balance at 31^st December 2018 and calculate the Owner's Capital at 31^st December 2018 using the balancing figure.

Task 1.2: Continuing from information provided in the Trial Balance, you should record the following business transactions for January 2019 given below in Catherine's books:

i. Apply the double entry system recording the transactions in the accounts within the relevant ledgers.

ii. Use the balance off rule to close each account and produce the trial balance at 31^st January 2019 to check the arithmetical accuracy of the double entry system.

iii. Analyse the transactions before recording them in the accounts to show the progression from the trial balance at 31^st December 2018 to the trial balance at 31 January 2019.

Task 1.3: Apply the trial balance figures and show in which statement of financial accounts they will end up.

Transactions for the month of January 2019 are given (see attached file).

Task 2: Prepare final accounts for sole-traders, partnerships and limited companies in accordance with appropriate principles, conventions and standards.

Task 2.1: Describe the financial accounting statements prepared by a business entity. Discuss the type of information presented through each statement. (In this part compare the essential features of each statement, to analyse the differences between them in terms of purpose, structure and content).

Task 2.2: Prepare the Statement of Profit or Loss in accordance with International Accounting Standards (IAS).

Task 2.3: Prepare the Statement of Financial Position in accordance with International Accounting Standards (IAS).

Task 2.4: Calculate the following ratios from your answers in tasks 2.2 and 2.3 above.

a) Return on Capital Employed

b) Gross Profit Margin

c) Net Profit Margin

d) Debtors (receivables) Turnover period

e) Gearing Ratio

Task 3: Perform bank reconciliations to ensure company and bank records are correct.

Task 3.1: Bank reconciliation:

Explain what is meant by bank reconciliation and why it is required.

Describe how this is achieved.

Who would be interested in the outcome of a bank reconciliation?

Report (400 words)

Task 3.2: The Bank column in the cash book of Evans Traders for the month of April 2019 is given (see attached file).

Task 3.2: Update the Cash book to show the corrected balance.

Task 3.3: Prepare a bank reconciliation statement applying the bank reconciliation process for Gemini Traders at 30th April 2019 using the information in Task 3.2. Apply appropriate tools and techniques to check general accounts and statement of financial position.

Task 3.4: Demonstrate the use of a) deposit in transit b) outstanding cheques and c) Not Sufficient Funds check when applying the reconciliation process.

Task 4 - Use the following information for Tasks 4.1 and 4.2.

Super Chem Industries maintain a debtor's control account outside their double entry system for control purposes only. On 31 March 2019, the Debtors control Account of the company showed a debit balance of £346,800 and a credit balance of £16200. The totals in the Sales Ledger differ from these balances. Further inquiries produced the following information.

i) A sale £12,400 has been posted as £21,400 in the customer's account in the Sales Ledger.

ii) A delivery payment of £160 to the delivery service has been posted erroneously in both the customer's account (in the Sales Ledger) AND the debtors control account.

iii) On 6 Mar 2019 total of the Sales Day Book has been added as £116,400 instead of 114,800.

iv) A debt of £7200 previously written off as bad debt in last year's account has been posted as a credit entry in the debtors control account. A cheque from a customer for £6800 was dishonored by the bank. While the transaction has been correctly posted in the Debtors Control Account, it had been posted as a credit entry in the customer's account in the Sales Ledger.

v) £8200 has been set off in the customer's account in the Sales Ledger as contra against the same customer's account (who is also a supplier to Pascal Traders) in the Purchase Ledger. No entry has been posted in either of the two Control Accounts.

Task 4.1: Using the information above in LO 4, Calculate the Total of the Debtors' balances at 31 March 2019 as it was extracted from the Sales Ledger. (Note: Complete this before attempting any reconciliation).

Task 4.2: Prepare a Statement of Reconciliation of the Totals of the customers' balances in the Sales Ledger with the balances in the Debtors Control Account.

Task 4.3: An inexperienced book keeper has prepared the Trial Balance at 31.3.2019.

As the Trial Balance does not tally, the book keeper has sought your help. Redraft the Trial Balance properly and tally it by creating a Suspense Account with the balancing figure.

Task 4.4: Using the information given below show the journal entries to correct the errors and clear the Suspense Account balance. Demonstrate your understanding of the different types of accounts and how and why are they reconciled. Produce accurate accounts that have been reconciled applying the appropriate methods.

1. Discount allowed has been under cast by £200.

2. A credit sale to James Owen on 10 March 2019 for £1500 has been correctly posted to Sales A/c but has been completely omitted in the customer's account.

3. Goods purchased from John Steel on 20 March 2019 for £1000 on credit have been erroneously posted as £2000. The entry in the Purchase A/c was for the correct amount.

4. The Capital account balance has been incorrectly brought forward as £6000 on the ledger folio. The correct figure was £5000.

Note - For all required details and information please see attached file.

Attachment:- Financial Accounting Assignment File.rar