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Table of Content
Aims of project.............................................................................................
Bank reconciliation statement............................................................................................6...
Aims of Project
1. To get better acquainted with the operations of a soletradership.
2. To access the overall performance ...
1
Acknowledgement
Firstly and most importantly, I would love to thank Jesus Christ for giving me the strength
and patience...
Research Question
1. The researcher wishes to find out if the business is profitable or not.
2. What can be done to maximi...
3
Methology
The researcher uses source of document such as credit note, debit note, cheque, receipt, invoice
and purchases...
4
Limitation
This research depend on the accuracy in the recording process of the sales, purchases, return in
ward and out...
5
Description of business
Shaniker Anderson is the owner of tech Plus. The business is a sole trade, it is located at 10
M...
6
Accounting Procedures Used and Accounts Records Kept
The following sources of documents were used and records kept were ...
7
the arithmetic accuracy of the ledgers. From the trial balance the final account was prepared.
The
Trading and Profit an...
8
General Journal
General Journal
Da
te
Details Folio Debit Credit
May 1 Premises GL/2 2,000,000
May 1 Moto van GL/3 700,000...
Sales Journal
Date Details Folio Amount
May 2 R. Pointing SL/3 89,500
May 2 S. Smith SL/4 120,500
May 2 T. Tucker SL/5 38,...
11
Return Outward Journal
PURCHASES JOURNAL
Date Details Folio Amount
may 4 R. Tucker PL/1 120,000
may 4 J. Green PL/6 100...
REATURN- OUT- WARD
Date Details Folio Amount
May 21 G. Bravo PL/11 12,000
May 21 R. Tucker PL/1 18,000
May 21 J. Green PL/...
RETURN- IN-WARD
Date Details Folio Amount
May 18 J. Harris SL/1 20,000
May 18 S. Smith SL/4 25,000
May 18 B. Anderson SL/1...
13
Trial Balance
TRIAL BALANCE
DATE Details Debit Credit
June 1 Capital 3,695,500
June 1 Premises 2,000,000
June 1 Moto Van 1,300,000
June ...
58
Trading profit and loss A/C
TRADING PROFIT AND LOSS FOR THE YEAR
31-May
Details
Sales 1,812,000
Less Return In Ward 790...
Add Purchases 1,205,000
Add Carriage In 15000
1,220,000
Less Return Out Ward 60000
Goods Available For Resale 1160000
2,56...
3,800,000 243,000 3,557,000
Current Assets:
Stock 1,580,000
Debtors 645,000
Less prov For Bad Debt 32,250 612,750
Cash 686...
Bal b/d 95,500
Sales 1,477,000
1,572,500
Return In Ward 79,000
Bank 824,475
Discount Allow 24,025
Bal c/d 645,000
1,572,50...
Return out Ward 60,000
Bank 614,600
Bal b/d 30,000
Purchases 1,085,000
Discount received 20,400
Bal c/d 470,000
1,165,000 ...
Bal b/d 686875
Credit Transfer 135000
821,875
Bank Charges 6500
Standing Order 70,000
Balance c/d 745,375
821,875
19
Bank ...
Balance as per update cashbook 745,375
Add unpresented cheque 490,000
1,235,375
Less late lodgment 102,000
1,133,375
20
21
Calculation of Ratio
Profitability Ratio
Gross profit as a percentage of sales:
Gross Profit *100
Sales
Gross Profit 753,0...
582,275 * 100 = 33.6%
1,733,000
3. Return on capital employed ratio (ROCE):
ROCE = Net Profit *100
Capital Employed
Capita...
Liquidity Ratio
5. Current ratio:
Current Assets
Current Liabilities
Current Assets 2,904,625
Current Liabilities 810,000
...
8. Creditor to purchases:
Creditor * 12
Purchases
Creditor 470,000
Purchases 1,160,000
470,000 * 12= 4.9 months
1,160,000
Interpretation of Data
The whole purpose of the recording and classifying information about a business, and
communicating ...
Return on capital employed ratio illustrates that what is important is not simple how much profit
has been made but how we...
The debtors to sales ratio shows that the business gives its debtors 4.5 months to pay what they
owe to the business.
Acco...
SUGGESTION AND RECOMMENDATIONS
• The business could ensure publicity/public relations. It could give scholarships to
emplo...
78
Conclusion
From doing this project I have increase my knowledge on the preparation of the accounting books, and I
have ...
79
Performance of Business
The business is profitable because it did not make a loss.
At Shaneka’s auto supply most of the...
80
Organization chart
Shaneka Anderson
(Manager)
Supervisor Accounting clerk Sales clerk
Cashier
81
Bibliography
Robinson, K (2003). The Jamaica Observer, Principles of Business CXC Lecture
Series (Kingston, Jamaica, W....
82
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  1. 1. Table of Content Aims of project..................................................................................................................1 Acknowledgement ...........................................................................................................2 Research question............................................................................................................3 Methology.......................................................................................................................4 Limitation........................................................................................................................5 Description of business..................................................................................................6 Account procedure used kept .......................................................................................7-8 General Journal................................................................................................................9 Sales Journal..................................................................................................................10 Purchases Journal...........................................................................................................11 Return Outwards Journal................................................................................................12 Return Inwards Journal...................................................................................................13 General Ledger..............................................................................................................14-36 Sales Ledger...................................................................................................................37-46 Purchases Ledger...........................................................................................................47-56 Cash book........................................................................................................................57 Trial Balance....................................................................................................................58 Trading and Profit and Loss Account...............................................................................59 Balance Sheet...................................................................................................................60 Sales control account.......................................................................................................61 Purchases control account.................................................................................................62 Update Cash book...............................................................................................................63
  2. 2. Bank reconciliation statement............................................................................................64 Supporting Document • Debit note...............................................................................................................65 • Credit note..............................................................................................................66 • Cheque....................................................................................................................67 • Receipt.....................................................................................................................68 • Invoice.......................................................................................................................69 • Purchases order........................................................................................................70 Ratios..................................................................................................................................71-74 Interpretation of data.........................................................................................................75-77 Recommendation..................................................................................................................78 Conclusion..............................................................................................................................79 Performance of Business………………………………………………………………………………………………….80 Organization chart..................................................................................................................81 Bibliography...........................................................................................................................82
  3. 3. Aims of Project 1. To get better acquainted with the operations of a soletradership. 2. To access the overall performance of the business. 3. To interpret and analyse accounting information accurately. 4. To gain a better understanding on the preparation of accounting records.
  4. 4. 1 Acknowledgement Firstly and most importantly, I would love to thank Jesus Christ for giving me the strength and patience to finish as well as keep in touch with the aspect of this Assessment. Secondly, I would love to show gratitude to my wonderful Principles of Account teacher. Without their teachings and knowledge, I would not have completed my School Bases Assessment, better yet, not have started it. Last but not least, my next door neighbour, Mrs. Pantry, who played a huge role in getting this project done. Whenever certain aspects were not clear, she offered explanations and assistance which I can not leave unacknowledged. Sincerely, I show full appreciation and gratitude to the persons listed above. 2
  5. 5. Research Question 1. The researcher wishes to find out if the business is profitable or not. 2. What can be done to maximise profit made in the business. 3. To discover how effective sales is in an organization.
  6. 6. 3 Methology The researcher uses source of document such as credit note, debit note, cheque, receipt, invoice and purchases order to investigate and to do the recording process.
  7. 7. 4 Limitation This research depend on the accuracy in the recording process of the sales, purchases, return in ward and out ward journal, ledgers, cash book, trial balance, trading profit and loss and balance sheet, if any error have occur it would have significant effect on the financial statement therefore this research would have a wrongly interpretation.
  8. 8. 5 Description of business Shaniker Anderson is the owner of tech Plus. The business is a sole trade, it is located at 10 Main Street, Riversdale St.Catherine.The business trades in computer, printer, Televisions, papers, Speakers and stationeries. The opening and closing hours of the business are 8:30 am to 5:00 pm on Monday to Thursday and 9:30 am to 6:00pm on Friday and Saturday. The business is advertised in the Sunday Gleaner and on bulletin board. The business employs one Supervisor, a sale clerk, cashiers and one accounting clerk- a total of four persons (see organizational chart page 80). The business buys and sells on credit as well as cash.
  9. 9. 6 Accounting Procedures Used and Accounts Records Kept The following sources of documents were used and records kept were prepared: sales and purchases invoices, cash receipts, debit and credit note, so the ledgers and the other books could be prepared. The capital for May 2010 was obtained from the previous month of April 2010. This was the old capital plus the net profit, less the drawings. Some goods were purchased on credit; all goods that were bought on credit were recorded in the purchases journal. Some goods purchased were returned to the supplier. These were recorded in the return outwards journal which amounted to $60,000. Goods were sold which amounted to $1,477,000. Some goods were sold on credit while some were sold for cash or cheque. All credit sales were recorded in sales journal and all cash or cheque sales and payments made out were recorded in the cashbook. Some goods sold were returned to the business by our customers which were recorded in the return inwards journal which amounted to $ 79,000. The purchases and sales journal were totalled and posted to the purchases and sales ledger respectively. The return outwards and return inwards journal were totalled and posted to the purchases and sales ledger respectively. Return inwards was posted to the sales ledger while the return outwards were posted to the purchases ledger. All expenses which were incurred, revenues earned sales; purchases capital, fixed assets and drawings were recorded in the general ledger. All ledgers including the cashbook were balanced off and a trial balance was extracted to check
  10. 10. 7 the arithmetic accuracy of the ledgers. From the trial balance the final account was prepared. The Trading and Profit and Loss account was prepared to calculate the gross and net profit. The balance sheet was then constructed to show the financial position of the business.
  11. 11. 8
  12. 12. General Journal General Journal Da te Details Folio Debit Credit May 1 Premises GL/2 2,000,000 May 1 Moto van GL/3 700,000 May 1 Fixtures and Fittings GL/4 500,000 May 1 Stock GL/5 1,400,000 May 1 Debtor: R. Tucker SL/1 50,000 May 1 R. Pointing SL/2 45,000 May 1 Cash CB/1 85,000 May 1 Bank CB/2 890,000 May 1 Creditors: R. Harris PL/1 55,000 May 1 D. Kelly PL/2 25,000 May 1 Loan Scotia Bank GL/6 1,800,000 May 1 Prov For Dep: Moto van GL/7 70,000 May 1 Fixtures and Fittings GL/8 25,001 May 1 Capital GL/1 3,695,500 5,670,500 5,670,500 9 Sales Journal
  13. 13. Sales Journal Date Details Folio Amount May 2 R. Pointing SL/3 89,500 May 2 S. Smith SL/4 120,500 May 2 T. Tucker SL/5 38,500 May 2 V. Terrylong SL/6 80,000 May 2 K. Wilson SL/7 45,000 May 5 B. White SL/8 65,000 May 5 J. Harris SL/9 100,000 May 5 K. Brown SL/10 92,000 May 5 V. Terrylong SL/6 50,000 May 5 K. Wilson SL/7 80,000 May 10 B. White SL/8 36,000 May 10 J. Harris SL/9 78,000 May 10 K. Brown SL/10 54,000 May 10 B. Anderson SL/11 35,000 May 10 s. Walcott SL/12 75,000 May 16 R. Pointing SL/3 66,000 May 16 S. Smith SL/4 120,000 May 16 T.Turner SL/5 55,000 May 16 B. Anderson SL/11 87,000 May 16 s. Walcott SL/12 110,000 May 31 Total credit sales for the month transfer to the sales A/C GL 1,477,000 10 Purchases Journal
  14. 14. 11 Return Outward Journal PURCHASES JOURNAL Date Details Folio Amount may 4 R. Tucker PL/1 120,000 may 4 J. Green PL/6 100,000 may 4 D. Kelly PL/2 120,000 may 4 M. Webster PL/7 200,000 may 9 B. Spencer PL/8 50,000 may 9 R. Robinson PL/9 80,000 may 9 H. Thomas PL/10 48,000 may 9 G. Bravo PL/11 92,000 may 12 M. Miller PL/12 75,000 may 12 J. Green PL/6 50,000 may 12 D. Kelly PL/2 80,000 may 12 R. Tucker PL/1 70,000 may 31 Total purchases for the month transfer to the purchases A/C GL 1,085,000
  15. 15. REATURN- OUT- WARD Date Details Folio Amount May 21 G. Bravo PL/11 12,000 May 21 R. Tucker PL/1 18,000 May 21 J. Green PL/6 15,000 May 23 M. Miller PL/12 15,000 May 31 Total return out ward for the month transfer to the return out ward A/C GL/10 60,000 12 Return Inward Journal
  16. 16. RETURN- IN-WARD Date Details Folio Amount May 18 J. Harris SL/1 20,000 May 18 S. Smith SL/4 25,000 May 18 B. Anderson SL/11 12,000 May 20 K. Brown SL/1 0 12,000 May 20 V. Terrylong SL/6 10,000 May 31 Total return in ward for the month transfer to the return inward A/C GL/9 79,000
  17. 17. 13 Trial Balance
  18. 18. TRIAL BALANCE DATE Details Debit Credit June 1 Capital 3,695,500 June 1 Premises 2,000,000 June 1 Moto Van 1,300,000 June 1 Fixture and Fitting 500,000 June 1 Stock 1,400,000 June 1 Purchases 1,205,000 June 1 Sales 1,812,000 June 1 Return Out ward 60,000 June 1 Return In ward 79,000 June 1 Loan Scota Bank 1,800,000 June 1 Prov for Dep Moto Van 70,000 June 1 Prov for Dep Fixture and Fitting 25,000 June 1 Rent 120,000 June 1 Moto Sales and Services 300,000 June 1 Drawings 35,000 June 1 Utilities 40,000 June 1 Moto Expenses 30,000 June 1 Loan Interest 60,000 June 1 Discount Allow 24,025 June 1 Discount Receive 20,400 June 1 Carriage In Ward 15,000 June 1 Carriage Out Ward 23,000 June 1 Staff 70,000 June 1 Debtor 645,000 June 1 Creditor 470,000 June 1 Cash 20,000 June 1 Bank 686,875 8,252,900 8,252,900
  19. 19. 58 Trading profit and loss A/C TRADING PROFIT AND LOSS FOR THE YEAR 31-May Details Sales 1,812,000 Less Return In Ward 79000 Net Sales 1,733,000 Less Cost Of Sales: Opening Stock 1,400,000
  20. 20. Add Purchases 1,205,000 Add Carriage In 15000 1,220,000 Less Return Out Ward 60000 Goods Available For Resale 1160000 2,560,000 Less Closing Stock 1580000 9,80,000 Gross Profit 753,000 Add Discount Received 20400 773,400 Less Expenses: Carriage Out 23,000 Staff 70,000 Discount Allow 24,025 Utilities (4,000- 5,000) 35,000 Moto Expenses 30,000 Loan Interest (6,000₊30,000) 90,000 Rent (120,000+30,000) 130,000 Prov For Bad Debt 32,000 Depreciation Moto Van 123000 Fixtures And Fittings 25,000 582,275 Net Profit 191,125 59 Balance Sheet BALANCE SHEET FOR THE YEAR ENDED MAY31 Assets Cost Dep To Date NBV Moto Van 1,300,000 193,000 1,107,000 Fixtures And Fittings 500,000 50,000 450,000 Premises 2000000 - 2000000
  21. 21. 3,800,000 243,000 3,557,000 Current Assets: Stock 1,580,000 Debtors 645,000 Less prov For Bad Debt 32,250 612,750 Cash 686,875 Prepayment 5,000 Bank 20000 2,904,625 Less Current Liabilities: Creditor 470,000 Accruals (30,000+10,000) 40,000 Moto Sales And Services 300000 810,000 2,094,625 Less Long Term Liabilities: Loan Scota Bank 1800000 294,625 3,851,625 Financed by: Opening Capital 3,695,000 Add Net Profit 191,125 3,886,625 Less Drawings 35000 3,851,625 60 SALES LEDGER CONTROL A/C
  22. 22. Bal b/d 95,500 Sales 1,477,000 1,572,500 Return In Ward 79,000 Bank 824,475 Discount Allow 24,025 Bal c/d 645,000 1,572,500 17 PURCHASES LEDGER CONTROLE A/C
  23. 23. Return out Ward 60,000 Bank 614,600 Bal b/d 30,000 Purchases 1,085,000 Discount received 20,400 Bal c/d 470,000 1,165,000 1,165,000 470,000 18 UPDATE CASH BOOK AS AT MARCH 31
  24. 24. Bal b/d 686875 Credit Transfer 135000 821,875 Bank Charges 6500 Standing Order 70,000 Balance c/d 745,375 821,875 19 Bank Reconciliation Statement
  25. 25. Balance as per update cashbook 745,375 Add unpresented cheque 490,000 1,235,375 Less late lodgment 102,000 1,133,375 20
  26. 26. 21
  27. 27. Calculation of Ratio Profitability Ratio Gross profit as a percentage of sales: Gross Profit *100 Sales Gross Profit 753,000 Sales 1,733,000 753,000 * 100 = 43.5% 1,733,000 1. Net Profit as a percentage of sales: Net Profit *100 Sales Net Profit 171,125 Sales 1,733,000 171,125 * 100 = 9.9% 1,733,000 2. Expenses as a percentage of sales: Expenses * 100 Sales Expenses 582,275 Sales 1,733,000
  28. 28. 582,275 * 100 = 33.6% 1,733,000 3. Return on capital employed ratio (ROCE): ROCE = Net Profit *100 Capital Employed Capital Employ = Opening Capital + Closing Capital 2 Opening Capital 3,695,500 Closing Capital 3,851,625 Net Profit 191,125 Capital Employed: 3,695,500 + 3,851,625 = 7,547,125 = 3,773,562.5 2 2 Roce: 191,125 * 100 = 5.06% 3,773,562.5 4. Stock turnover ratio: Cost of goods sold Average stock Average Stock = Opening Stock + Closing Stock 2 Opening Stock 1,400,000 Closing Stock 1,580,000 Cost of Goods Sold 980,000 Average Stock: 1,400,000 + 1,580,000 = 2,980,000= 1,490,000 2 2 Stock turn over: 980,000 = 0.65 or 0.66 1,490,000
  29. 29. Liquidity Ratio 5. Current ratio: Current Assets Current Liabilities Current Assets 2,904,625 Current Liabilities 810,000 2,904,625 = 3.6: 1 810,000 6. Acid Test Ratio: Current assets – stock Current liabilities Current Assets 2,904,625 Stock 1,580,000 Current Liabilities 810,000 2,904,625 – 1,580,000 810,000 7. Debtors to sales ratio: Debtors *12 Sales Debtors 685,000 Sales 1,733,000 685,000 *12 = 4.5 months 1,733,000
  30. 30. 8. Creditor to purchases: Creditor * 12 Purchases Creditor 470,000 Purchases 1,160,000 470,000 * 12= 4.9 months 1,160,000
  31. 31. Interpretation of Data The whole purpose of the recording and classifying information about a business, and communicating this to the owner and manager in the form of the financial statement, is to assess the performance of the business. This information contained in the financial statement can be used to evaluate various aspect of the company by the use of accounting ratio. Five ratios were us to test the profitability of the business. The grass profit ratio was calculated the figure of sale and gross profit are found in the trading account. For every $100 of sales made in the business 43.5% of gross profit was obtained, before any expenses were paid. This ratio measures how effectively the business has controlled it cost of goods and sold them at the right price to give maximum gross profit. Again the figure of sales can be found in the trading account whilst the net profit can be obtained from the profit and loss account. The net profit/sales percentage take into account the expenses incurred and show the amount of profit remaining, for every $100 invested in the business 9.9% of net profit was gained. It is useful to compare the expenses/sales percentage with previous result. For every $100 of sales made in the business 33.3% of expenses were incurred therefore the business require further investigation by management, for expenses to minimise to ensure that a reasonable net profit is made. 75
  32. 32. Return on capital employed ratio illustrates that what is important is not simple how much profit has been made but how well the capital has been employed. The business has achieved a return of $5.06 net profit for every $100 invested. According to the stock turned over ratio the business less profitable as well as it is slow, the business make a turnover of 0.6 times for the year, this indicate that most of the profit was use to pay expenses which cause the business not to be more profitable. A business that satisfactory liquidity will have sufficient fund, normally referred to as working capital, to pay creditor at the required time. The ability to pay creditors on time is vital to ensure that good business relationships are maintained, four ratios are used to check the liquidity of the business. Alternatively the current ratio said to be 3.6 times, the business can cover its short term debts 3.6 times, this business may have too much closing stock of a large amount of money in the bank. The business will then need to make decision relative to employing their current assets better by reducing the stock level and or investing surplus money. To determine a further aspect of liquidity the liquid test ratio takes into account. This ratio show whether there are enough liquid asset to be able to pay current liabilities quickly. The business manages to pay its supplier 1.6:1 times. 76
  33. 33. The debtors to sales ratio shows that the business gives its debtors 4.5 months to pay what they owe to the business. According to the creditor to purchases the business get 4.9 months to pay its supplier taking longer pay supplier. 77
  34. 34. SUGGESTION AND RECOMMENDATIONS • The business could ensure publicity/public relations. It could give scholarships to employees, their relatives and customers and report this in the gleaner so that the public will hear and customers may increase hence more profit for the business. • Advertisement could be carried out in by other forms of media communication for example on the television, the internet and also on the radio; as a result a wide range of prospective customers would be attracted to the business which will increase sales, hence profit will increase. • Most of the money made in the business was use to pay expenses. The business could therefore reduce their expenses so that they can generate more profit, thus, increasing the net profit. • The business could have promotional events. They could give discounts, sales promotions such as ‘buy-one-get-one-free”
  35. 35. 78 Conclusion From doing this project I have increase my knowledge on the preparation of the accounting books, and I have also gain more knowledge on the accounting principle and procedures. In this project and taking account personnel, I have learnt how to analyse and interpret accounting data and information effectively for future use. This project has helped me in ways of preparing myself for the CXC and achieving a grade one in accounts.
  36. 36. 79 Performance of Business The business is profitable because it did not make a loss. At Shaneka’s auto supply most of the profit made in the business was use to pay expenses which result in less profit, therefore expenses need to minimise to ensued that a reasonable net profit is made. (See figure1 below). Comparison between net profit and Expenses Net Profit Expenses Figure 1 business made a Net Profit of $191,125, the total expenses for the business is $ 582,275. Therefore the business could have been more profitable if expenses minimise..
  37. 37. 80 Organization chart Shaneka Anderson (Manager) Supervisor Accounting clerk Sales clerk Cashier
  38. 38. 81 Bibliography Robinson, K (2003). The Jamaica Observer, Principles of Business CXC Lecture Series (Kingston, Jamaica, W.I.). Sheila Robinson, Frank Wood, S (2001). CXC Principles of Account (Carlong Publishers, Kingston, Jamaica).
  39. 39. 82

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