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Comprehensive Problem - Accountancy

ABC Bookstore needs assistance in finalizing its accounts for the end of the fiscal year, including recording transactions, updating ledger accounts, and preparing financial statements. Key transactions for August include inventory purchases, sales on credit, payments towards accounts payable, and cash expenses. The tasks involve preparing journal entries, a trial balance, and financial statements such as the Trading account, Profit and Loss account, and Balance Sheet.

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186 views2 pages

Comprehensive Problem - Accountancy

ABC Bookstore needs assistance in finalizing its accounts for the end of the fiscal year, including recording transactions, updating ledger accounts, and preparing financial statements. Key transactions for August include inventory purchases, sales on credit, payments towards accounts payable, and cash expenses. The tasks involve preparing journal entries, a trial balance, and financial statements such as the Trading account, Profit and Loss account, and Balance Sheet.

Uploaded by

air
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Synopsis

Comprehensive Problem: ABC Bookstore

Scenario:

ABC Bookstore has been operating for a few months and needs your help to
finalise its accounts for the end of the fiscal year. The following information is
provided:

Transactions for the Month of August:

1.​ Beginning Balances:


○​ Cash: ₹2,000
○​ Accounts Receivable: ₹1,500
○​ Inventory: ₹3,000
○​ Accounts Payable: ₹800
○​ Capital: ₹5,000
2.​ August Transactions:
○​ August 1: Purchased inventory worth ₹1,200 on credit.
○​ August 5: Sold books for ₹2,500 on credit. The cost of these
books was ₹1,000.
○​ August 10: Paid ₹300 towards accounts payable.
○​ August 15: Received ₹1,000 from customers for accounts
receivable.
○​ August 20: Paid rent of ₹500 in cash.
○​ August 25: Purchased office supplies for ₹200 in cash.
○​ August 28: Paid ₹150 for utility bills in cash.
○​ August 30: Received a loan of ₹500 from the bank.
3.​ Additional Information:
○​ Depreciation on office equipment for the month is ₹100.
○​ The owner withdrew ₹200 for personal use at the end of the
month.

Tasks:

1.​ Record the Transactions: Prepare the journal entries for the
transactions listed above.
2.​ Post to Ledger Accounts: Update the ledger accounts based on the
journal entries.
3.​ Prepare a Trial Balance: After posting to the ledger, prepare a trial
balance to ensure the books are balanced.
4.​ Prepare Financial Statements: a. Prepare the Trading account and
Profit and Loss account. b. Prepare the Balance Sheet as of August 31.

Meanings:
1.​ Journal: A journal is a book in which transactions are initially recorded
in the order in which they occur.
2.​ Ledger: A ledger is a book that contains different accounts where
records of transactions pertaining to each specific account are stored.
3.​ Trial Balance: A trial balance is a statement showing the balances, or
total of debits and credits, of all the accounts in the ledger with a view to
verify the arithmetical accuracy of posting into the ledger accounts.
4.​ Trading account: It is used to determine the gross profit that is earned
by the business.
5.​ Profit and Loss account: It is used to determine the net profit of the
business.
6.​ Balance Sheet: It is a statement prepared to ascertain values of assets
and liabilities of a business on a particular date.

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