David Green is going to set up a sole trader business as a Decorator. He knows that he would be personally responsible for his business’s debts. He also would have some accounting responsibilities; however, he does not know about the steps for starting a business. As your area of studying is related to Business, he wants you to consult him in this matter.
Accounting involves recording, analyzing, and summarising the transactions of an entity to provide information for decision making.
F Polk, after being in the Bakery business for some years without keeping proper records, now decides to keep a double-entry set of books. On 1 September 2021 he establishes that his assets and liabilities are as follows: Assets: Van £5,700, Fixtures £2,800, Stock £5,200, Debtors – P Mullen £105, M Abel £311, Bank £1060, Cash £85. Liabilities: Creditors – Syme Ltd £229, A Hill £80.
He is not sure about Journal entries for the following transactions in September 2021 as follows:
Sep 1: A debt of £105 owing from P Mullen was written off as a bad debt
Sep 5: Office Fixtures originally bought by credit for £150 was returned to the supplier Syme Ltd., as it was unsuitable. The full allowance will be given for this.
Recording Business Transactions BA30592E
Step 10: The business is owed £311 by M. Abel. He is declared bankrupt and we only received £180 cash in full settlement of the debt.
Sep 18: Bought a Machinery from Brown Ltd. to use in the company. The total purchasing value of the machine is £1,800. The owner paid £100 cash, £500 by issuing a cheque, and the rest of the purchasing value would remain as credit.
Sep 26 The owner paid half of the machinery debt to Brown Ltd. by issuing a cheque.
Sep 28: The owner paid £130 an insurance bill via cheque thinking that it was in respect of the business. We now discover that £70 of the amount paid was in fact insurance of our private house.
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On 1 August 2021, the owners of the ABC Enterprise, Maurice & brothers, decided that they will boldly go and keep their records on a double-entry system. Their assets and liabilities at that date were. Their assets and liabilities at that date were: office fixtures £1200, a van £32,000, and £36,800 in the bank account. They have no liabilities at the 1st of August 2021
Their transactions during August 2021 were as follows
Aug 2 Maurice & brothers received a loan of £12,400 from Santander Bank and they deposited it in their bank account.
Aug 3 The amount of £2800 was transferred from the Bank Account to the Cash and hand account.
Aug 4 Bought a second-hand Van paying by cheque £6,200
Aug 5 Bought office fixtures £3400 from Sharp Office Ltd. They paid £1000 by issuing a cheque and the rest of the value of the fixtures would remain as credit.
Aug 8 Bought a new van on credit from Toyota Co. £8,700
Aug 15 Bought office fixtures paying by cash £110
Aug 19 Paid Toyota Co. a cheque for the whole amount of debt
Aug 25 Paid £430 of the cash in hand into the bank account
Aug 28 Bought new office fixtures paying via bank account £750
Then balance off the accounts and extract a trial balance for sole trader B Moore. as of 30 September 2021:
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