Recording Business transaction

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Recording Business Transactions BA30592E
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UNIVERSITY OF WEST LONDON
The Claude Littner Business School
Recording Business transaction
Assignment A1
Submission Deadline: 5 February 2021 at 11:59 pm.
Assessment 1: part 1.
Accounting has been described as ‘.. a system of recording information about a business. It
involves recording , analysing and summarising the transactions of an entity to provide information
for decision making ‘
Required
a. Identify who are the decision makers referred to in the above definition and explain their need
for accounting information. (your answer should concentrate on a large company listed on the
stock exchange). (12 marks)
b. Accounting has been partly described above as ‘…a system of recording information about a
business……’ Identify and explain the advantages and disadvantages of any two for profit
business structures which an accountant may encounter. (13 marks)
Part 2
David Wise is setting up a new business in January 2020 before COVID-19 outbreak was started. He is
unclear about Journal entries for some transactions in February 2020 as follows:
Feb 1:
Office Fixtures originally bought for £350 was returned to the supplier Asma Ltd, as it was
unsuitable. Full allowance will be given for this.
Feb 4: A debt of £85 owing from S. Keyes was written off as a bad debt
Feb 9: Bought a Machinery from TS Co. to use in the company. The total purchasing value of the
machine is £2,300. The owner paid only £200 by issuing a cheque and rest of the
purchasing value would remain as credit.
Feb 13:
The business is owed £270 by S. Hill. He is declared bankrupt and we received £220 in full
settlement of the debt.
Feb 20:
The owner takes goods costing £180 out of the business inventory for personal use without
paying for them.
Recording Business Transactions BA30592E
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Feb 26: In Jan 2020, the owner paid an insurance bill thinking that it was in respect of the business.
We now discover that £85of the amount paid was in fact insurance of our private house.
Feb 28 The owner paid half of the machinery debt to TS Co.by issuing a cheque.
Required:
You are required to show the Journal entries (only) (with narrative) necessary to record the
following items which occur in Feb 2020: (Total 25 marks)
Part 3
Pearce & Sons started Business in Feb 2020. They have the following transactions at for the month of
Feb 2020.
2020
Feb 1 Started business with; £21,500 in the bank account, a van £25,000 and office fixtures £800
2 A loan of £2,500 was received from Lloyds Bank.
3 The amount of £1500 was transferred from Bank Account to Cash in hand account.
4 Bought Van paying by cheque £4,800
5 Bought office fixtures £1100 on credit from Quick Office Ltd
8 Bought a new van on credit from Nissan Co. £5,200
15 Bought office fixtures paying by cash £70
19 Paid Nissan Co. a cheque for whole amount of debt
25 Paid £350 of the cash in hand into the bank account
28 Bought new office fixtures paying via bank account £620
Required:
a. Write up the transactions in the general ledger (T Accounts) of Pearce & Sons (12 marks)
b. Balance up the accounts and extract a Trial Balance as at 28 Feb 2019. (13 marks)
(Total 25 Marks)
Recording Business Transactions BA30592E
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Part 4
Balance off the accounts and extract a trial balance for sole trader Airman Co. as at 30 September
2020:
DR
CR
£
£
Capital
306,070
Drawings
26,500
Cash at bank
20,000
Cash in hand
8,500
Accounts receivable (Debtors)
70,000
Accounts payable (Creditors)
16,000
Inventory (Stock): 30 September 2019
36,000
Van
16,000
Fixtures and Fittings
32,000
Sales
80,000
Purchases
150,000
Return inwards (Sales Returns)
2,000
Carriage inwards
720
Returns outwards (Purchase Returns)
600
Carriage outwards
400
Motor expenses
1,200
Rent
5,000
Telephone charges
620
Wages and salaries
32,000
Insurance
830
Office expenses
600
Sundry expenses
300
402,670
402,670
Inventory as at 30 September 2020 was £120,000.
Required
a. Draft an Income Statement for Airman Co. for the year ending 30th September 2020
(12 marks)
Recording Business Transactions BA30592E
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b. The records show that the Airman Co. has been profitable during 10 years since 2009. Due to COVID-19
outbreak, explain the possible impact of COVID-19 on company Income statement items.
(13 mark)
(Total 25 marks)
(Total 100 Marks)
IMPORTANT IN FORMATION
Pass mark and weighting of the assignment
To pass the assignment you need a mark of at least 40%. The assignment carries a 40 %
weighting towards your final mark for the module.
Hand in date
All assignments must be submitted on Turnitin by the due date. Any late submissions will be
subject to the penalties laid out below.
Work handed in up to 7 days late will be awarded a maximum of 40 %. Work handed in after
that will be given zero.
Student support
At the end of each seminar, there will be five minutes free to discuss any problems or
ambiguities in the assignment with the group.
Plagiarism
The software checks assignments against other assignments as well as articles and internet
sources so your assignment must not be too similar to other students’ assignments as well
as not being too closely extracted from articles and on-line sources.
Important tip: You can submit drafts through Turnitin and view the “originality report” which
will indicate the similarity your assignment has with other sources.
Word count
The assignment must not exceed 2,000 words.

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