Financial

Accounti
ng 1
Transactions for the month of January of a Small Finishing
Retailer

Table of Contents
1. Accounting Cycle

2. Transactions for the month of January

3. Balance of All Account

4. Trail Balance 13
5. Advantage of Trail Balance 13
6. Financial statements
7. Reference

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1.Accounting Cycle :

The accounting cycle is having eight basic steps which is shown below: [1]

Fig 1: Accounting Cycle [1]

1.

Transactions
Financial transactions start here. Transactions include the sale or return of a product, the
purchase of supplies for business activities, or any other financial activity that involves the
exchange of the companys assets,

2.

Posting
The transactions are posted to the account that it impacts. These accounts are part of the
General Ledger, where you can find a summary of all the businesss accounts.
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3.

Trial balance
At the end of the accounting period (which may be a month, quarter, or year depending on a
businesss practices), you calculate a trial balance.

4.

Worksheet
Unfortunately, many times your first calculation of the trial balance shows that the books
arent in balance. If thats the case, you look for errors and make corrections
called adjustments, which are tracked on a worksheet.

5.
Adjusting journal entries
2. Transactions for the month of January
Post any corrections needed to the affected accounts once your trial balance shows the
accounts will be balanced once the adjustments needed are made to the accounts. need to
make adjustment until the trial balance process is completed and all needed corrections and
adjustments have been identified.
6.

Financial statements
You prepare the balance sheet and income statement using the corrected account balances.

7.

Closing the books

You close the books for the revenue and expense accounts and begin the entire cycle again with
zero balances in those accounts.

Journal Entries in the Books of Small Finishing Retailer as on Jan 2010

DATE

PARTICULARS

L.F NO

DR RM

CR RM

Jan-10
4

1 Cash A/C

1,05,000

To Capital A/C

1,05,000

(Started business)
2 Bank A/C

90,000

To Cash A/C

90,000

(cash deposited into

bank)
3 Purchase A/C

5,500

To Cash A/C

5,500

(Good purchased
for cash
4 Purchase A/C

2,400

To Eddy A/C

800

To Frankey A/C

930

To Smith A/C

160

To Liew A/C

510

(Purchase good on
credit )
5 Stationery A/C

89

To Bottons A/C

89

(Stationery on
credit )
6 Tomy A/C

170

Eric A/C

240

Malcom A/C

326

Tim A/C

204

To Sales A/C

940

(Sold good on
Credit )
8 Rent A/C

220

To bank A/C

220

(Rent paid by
5

cheque )
10 Fixtures A/C

610

To Chiefs Bhd A/C

610

(Fixture on credit )
11 Salaries

790

To cash A/C

790

(Salaried paid )
14 Franky A/C
Smith A/C

30
42

(Good return)
15 Van A/C

72
6500

To Bank A/C

6500

(Van purchase )
16 Bank account A/C

2000

To Loan A/C

2000

(Received Loan from

Barclay)
18 Tomy A/C
Malcom A/C

5
20

(Good return )
21 Cash A/C

25
145

To Sales A/C

145

(Cash sales )
24 Eric A/C

130

Tim A/C

410

Paul A/C

158

To Sales A/C

698

(Good sold on credit

26 Frankey A/C

900
6

Smith A/C

118

To Bank A/C

1018

(Emma paid the

amount by cheque )
29 Bank A/C

528

To Paul A/C

158

TO Eric A/C
(Received cheque )
3. Balance off all accounts:

370

30 Cash A/C

500

To loan A/C

500

(Received loan)
30 Cash A/C

614

To Tim A/C

614

(Cash received from

Tim)

CASH CCOUNT
DR
Date
particulars
2010 Jan To capita
1
a/c
To sales
21-Jan a/c

LF No

Amount

Date
2010
1,05,000 Jan 2

145

30-Jan To loan a/c

30-Jan To loan a/c

1-Feb To bal b/d

614
1,06,259
9969

particular
By bank
a/c

LF No

CR
Amount
90,000

By
3-Jan purchace

5,500

11-Jan By salary

790

31-Jan By Bal c/d

9969
1,06,259

BANK ACCOUNT
DR

CR

Date
2010 Jan
2

particulars
To cash
a/c

LF No

To loan
16-Jan a/c

Amount

Date
2010
90,000 Jan 8

2000

particulars

LF No

Amount

By

220

15-Jan By Van

6,500

29-Jan To Paul a/c

158

26-Jan By Franky

900

29-Jan To Eric a/c

370

26-Jan By Smith

118

31-Jan By Bal c/d

84,790

92,528
1-Feb To bal b/d

CAPTIAL ACCOUNT
DR
Date
particulars
2010-Jan 31

84,790

LF No

To bal c/d

Amount
1,05,00
0
1,05,00
0

PURCHASE ACCOUNT
DR
Date
particulars
2010 Jan 3

To cash a/c

92,528

LF No

Date
2010
Jan1

particulars
By Cash
a/c

LF No

1,05,000

1-Feb By bal b/d

Amount

Date
2010 Jan
5,500 31

4-Jan To Eddy

800

15-Jan

4-Jan To Franky

930

26-Jan

4-Jan To Smith

160

26-Jan

particulars
By Bal
c/d

CR
Amount

1,05,000

LF No

CR
Amount
7,900

31-Jan
4-Jan To liew

510
7,900
7,900

1-Feb To bal b/d

STATIONERY ACCOUNT
DR
Date
particulars
2010 Jan
5
To Buttons Ltd

LF No

Amount

Date
2010 Jan
89 5

1-Feb To bal b/d

particulars

LF No

CR
Amount

By Bal c/d

89

89

BUTTONS LTD ACCOUNTS

DR
Date
particulars
LF No

Date
2010 Jan
89 5
89

TOMMY ACCOUNT
DR
Date
particulars

LF No

2010-Jan 6 To Sales a/c

6-Jan To Purchase
(return)
1-Feb To bal b/d

89

Amount

1-Feb To Bal c/d

ERIC ACCOUNT
DR
Date
particulars
2010-Jan To Sales
6
a/c
To Sales
25-Jan a/c

7,900

particulars
By Bal
b/d

LF No

CR
Amount
89

1-Feb

Amount

Date
2010 Jan
170 31
5

89

particulars
By Bal
c/d

LF No

CR
Amount
175

175

LF No

Amount

Date
2010 Jan
240 29

175

particulars

LF No

CR
Amount

By Bal c/d

370

130

370

370
9

10

MALCOM ACCOUNT
DR
Date
particulars
2010-Jan
6
To Sales a/c
18-Jan To Purchased
(return)

LF No

1-Feb To bal b/d

TIM ACCOUNT
DR
Date
particulars
2010-Jan To Sales
6
a/c
To Sales
24-Jan a/c

Amount

Date
2010 Jan
326 31
20

particulars

LF No

CR
Amount

By Bal c/d

346

346

LF No

346

Amount

Date
2010 Jan
204 30

particulars
By Cash
a/c

LF No

CR
Amount
614

410

614

SALES ACCOUNT
DR
Date
particulars
2010 Jan
31
To Bal c/d

LF No

Amount

614

Date
2010 Jan
1,783 6
2010 Jan
6
2010 Jan
6
2010 Jan
6
21-Jan
24-Jan
24-Jan
24-Jan
1,783

particulars
By
Tommy

LF No

CR
Amount
170

By Erric
By
Malcom

240

By
By
By
By
By

204
145
130
410
158

326

Tim
Cash
Erric
Tim
Paul

1-Feb By bal b/d

1,783

11

FIXTURES ACCOUNT
DR
Date
2010-Jan
10

CR
LF
No

particulars
To Chiefs Bhd
a/c

1-Feb To bal b/d

RENT ACCOUNT
DR
Date
particulars
2010-Jan To Bank
8
a/c

Amount

Date
2010 Jan
610 30

LF No

Amount

By bal c/d

610

610

LF No

1-Feb To bal b/d

LOAN ACCOUNT
DR
Date
particulars
2010-Jan
31
To bal c/d

Date
2010 Jan
220 31

LF No

LF No

2010-Jan 14 To Purchase
(return)
26-Jan To Bank a/c

LF No

By bal c/d

220

Amount

220

Date
2010 Jan
2,500 16

particulars
By Bank
a/c
By Cash
30-Jan a/c

LF No

CR
Amount
2,000
500

1-Feb By bal b/d

Amount

Date
2010 Jan
30 31

particulars

2,500

LF No

CR
Amount

By Bal c/d

930

900

1-Feb To bal b/d

To Bal c/d

particulars

CR
Amount

220

FRANKY ACCOUNT
DR
Date
particulars

CHIEFS BHD ACCOUNT

DR
Date
particulars

610

Amount

2,500

2010-Jan 31

particulars

930

LF No

Amount

1-Feb

Date
2010 Jan
610 10

930

particulars
By
Fixtures

LF No

CR
Amount
610
12

610

SMITH ACCOUNT
DR
Date
particulars
2010-Jan
To
14
Purchase
(return)
To Bank
26-Jan a/c

LF No

Amount

Date
2010 Jan
42 31

particulars

610

LF No

CR
Amount

By Bal c/d

160

118

1-Feb To bal b/d

PAUL ACCOUNT
DR
Date
particulars
2010-Jan
To Sales
24
a/c

1-Feb To bal b/d

160

LF No

160

Amount

Date
2010 Jan
158 29

particulars

LF No

CR
Amount

By Bank

158

158

VAN ACCOUNT
DR
Date
particulars
2010-Jan
To Bank
15
a/c

LF No

1-Feb To bal b/d

PURCHASE ACCOUNT
DR
Date
particulars
2010-Jan 14

To Bal c/d

Amount

Date
2010 Jan
6,500 31
6,500

LF No

158

particulars

LF No

CR
Amount

By Bal c/d

6,500

1-Feb

Amount

Date
2010
94 14
2010
14
2010
18
2010
18

6,500

particulars

LF No

CR
Amount

Jan
By Franky

30

By Smith

42

Jan
Jan
Jan

By Tommy
By
Malcom

5
20

13

97

1-Feb By bal b/d

97

4.Trial balance:

Trail balance of Small Finishing Retailer as on JAN 2010

Particlars
Cash account
Bank account
Capital account
Purchaser account
Stationery account
Buttons Ltd account
Tommy account
Malcom account
Sales account
Fixtures account
Rent account
Loan account
Franky account
Smith account
Van account
Purchase return a/c
Suspense account

Debit RM

Credit RM
9969
84,790
105,000
7900
89
89
175
346
1783
610
220
2500
930
160
6500
97
1610

1,11,689

1,11,689

5.Advantages of Trial balance:[2]

1.

It ensures that the transactions recorded in the books of accounts have identical debit and

credit amount.
2. Balance of each ledger account has been computed correctly.
3. Balance of each and every ledger account has been transferred accurately and on the
correct side of the sheet on which trial balance has been prepared.
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4. The debit and the credit columns of trial balance have been added up correctly.
5. Preparation of final accounts is not possible without preparing trial balance first.
6. Agreed trial balance is a prima facie evidence of the arithmetical accuracy of the
accounting books maintained.
7. Errors which are revealed by preparing trial balance (listed below) are rectified even
before the preparation of final accounts.
6.Financial statements:

Trading, Profit and Loss account of the Small Finishing Retailers as of Jan 2010
DR
Particulars
To Purchases
Less :P.R
97

Amount RM
7900

Particulars
By sales

CR
Amount RM
1783

7803 By gross loss

Transfer to P & L a/c
7803

To Gross loss
To Stationary
To Rent

6020
7803

6020
89
220

6329

6329

6329

Balance Sheet of Small Finishing Retailer as of Jan 2010.

Liabilities
Capital
1,05,000
Less: Net loss
6329
Loans
Chief BHD
Buttons Ltd

Amount
RM

98671
2500
610
89

1,01,870

Assets

Amount RM

Cash in hand

9969

Cash in bank
Fixtures
Van
Suspense a/c

84,790
610
6500
1

1,01,870
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7.References :

[1] Lita Epstein ,(2005)The Eight Steps of The Accounting Cycle ,Bookkeeping For Dummies
[2] Anil Kumar Gupta ,((2007),Advantages Objectives of Trial Balance,Ezinearticles

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