SUBJECT: PRINCIPLES OF ACCOUNTS

SCHOOL: HARRISON COLLEGE

DATE: October 24, 2017
CENTRE NO: 030014
MEMBERS: KAIROS HAYNES
TRISTAN HOWARD
AJANI SEARLES
JAQUAN LUCAS
 TABLE OF CONTENTS

Acknowledgements 3

Aim 4

Description of Business 5

Accounting Procedures 6

Performance of the Business 23

Interpretation of Results 24

Comparisons 25

Recommendations 27

Conclusion 28

Appendix 29

2
 ACKNOWLEDGEMENTS

We would like to thank Ms. Harewood for guiding us and ensuring that the business ran smoothly

as possible which brought success to its operation.

We would also like to thank those who helped in the journalizing.

3
 AIMS

1. To present a study which shows the accounting records of a business.

2. To analyze the performance of the business using the appropriate tools of analysis.

3. To ensure the business secures a substantial profit.

4
 DESCRIPTION OF BUSINESS

The name of the business was ‘HC Sweet Treats’ and it operated as a sole proprietorship. It

consisted of one banker, three book-keepers, four buyers and 4 sellers. The stock of the business

consisted of confectionery items including: lollipops, puffs, nerds and other chewable sweets. They

were sold before, after and during school. The business was conducted over a period of nine days

starting on September 18, 2017 and ending on September 29, 2017.

5
 ACCOUNTING CYCLE

In the accounting cycle there are a set of procedures which are followed in the sequence in each

accounting period or trading period. The sequence of the accounting cycle is Journalizing, Posting

to the Ledger, Trial Balance, Adjustments and Closing entries and Final Accounts.

Journalizing is the recording of the transactions in the books of original entry. HC Sweet Treats

recorded their transactions when they submitted the money that was collected, then calculated how

much money was accumulated throughout the day.

Posting to the ledger is the transferring of all debit and credit entries from the books of original

entry to the ledger.

The trial balance is the making of a list of all of the debit and credit balances in the ledger.

Adjustments and closing entries are the corrections to certain accounts to allow for accruals,

prepayments before the final accounts are prepared.

Final Accounts is the preparation of the trading and profit and loss accounts and the balance sheet.

ACCOUNTING PROCEDURES AND RECORDS KEPT

Sweet treats followed the step of the accounting cycle which include:

General Journal - This is the book in which credit sales, and purchases are first recorded. This is

used to show the assets and liabilities at the beginning of the business.

6
Sales Journal - This is the book of original entry for credit sales.

Purchases Journal - This is the book of original entry for credit purchases.

Returns Inwards journal - This is the book of original entry for goods returned to suppliers.

General Ledger - This is the ledger for all the accounts other than those for customers and

suppliers.

Sales Ledger- This a ledger used to record the personal accounts of customers concerning credit

sales.

Purchases Ledger- This is a ledger used to record the personal accounts of customers concerning

credit purchases.

Cash Book- This is a book of original entry for cash and bank receipts and payments.

Debit note- This is a document sent to a supplier showing the allowance to be given for

unsatisfactory goods.

 Credit Notes- This is a document sent to a customer showing the allowance given by a

supplier in respect of unsatisfactory goods.

Purchases Invoice- This is a document received by a purchaser showing details of goods bought.

Sales Invoice- This is a document showing the details of goods sold and the prices of those goods.

Trial Balance- This is a list of the account titles and their balances in the ledgers on a specific

date.

7
SWEET TREATS LIST OF TRANSACTIONS

8
 BOOKS OF ORIGINAL ENTRY
Purchase Day Book
Date Details Invoice Folio Amt Amt
Sept 25, 2017 Index Ltd 001 PL $50.00

Sept 30, 2017 Total Credit Purchase transferred to

Purchase A/C in the General Ledger 002 GL $50.00

9
 BOOKS OF ORIGINAL ENTRY
Purchases Return Day Book
Date Details Credit Note Folio Amt Amt
Sept 25, 2017 Index Ltd 003 PL 1 $5.00

Sept 30, 2017 Total Purchases Returns transferred to

Purchases Returns A/C in the General Ledger 004 GL $5.00

10
 BOOKS OF ORIGINAL ENTRY
Sales Day Book
Date Details Credit Note Folio Amt Amt
Sept 20, 2017 K. Best 005 SL $3.00

Sept 30, 2017 Total Credit sales transferred to the Sales A/C
in the General Ledger 006 GL $3.00

11
 BOOKS OF ORIGINAL ENTRY
Sales Returns Day Book
Date Details Debit Note Folio Amt Amt
Sept 20, 2017 K. Best 007 SL $0.75

Sept 30, 2017 Total Sales Returns transferred to the Sales

Returns A/C in the General Ledger 008 GL $0.75

12
 CASH BOOK

Date Details Folio Discount Cash Bank Date Details Folio Discount Cash Bank
Sept Sept
$ $ $ $
2017 2017
18 Balance b/d $ 170.00 18 Purchases GL 2 $ 150.08
20 Sales GL 1 $ 247.80 20 Purchases GL 2 $ 40.00
20 Cash C $ 50.00 21 Purchases GL 2 $ 49.50
20 K. Best SL 2 $ 2.25 25 Purchases GL $ 100.95
21 Sales GL 1 $ 75.50 26 Index Ltd PL 1 $ 45.00
22 Sales GL 1 $ 68.50 26 Purchases GL 2 $ 127.14
26 Sales GL 1 $ 262.85 29 Cash C $ 50.00
26 Cash C $ 50.00 29 Wages GL 1 $ 200.00
27 Sales GL 1 $ 123.25 29 Expenses GL 2 $ 40.00
27 Cash C $ 75.00 29 Expenses GL 2 $ 10.00
28 Sales GL 1 $ 189.60
29 Sales GL 1 $ 11.00
29 Bank C $ 50.00
31 31 Balance c/d $ 263.08 $ 125.00
$ 1,200.75 $ 175.00 $ 1,200.75 $ 175.00

31 Balance b/d $ 263.08 $ 125.00

13
REVISED CASH BOOK

2017 $ 2017 $
Bank
Sept 30 Bal b/d $ 125.00 Sept 30 Charges $ 10.00
Credit
Sept 30 Transfer $ 20.00
Sept 30 Bal c/d $ 95.00

BANK RECONCILIATION STATEMENT

As at September 30, 2017
$
Revised Cash Book balance $ 95.00 DR
Bank Statement balance $ 95.00

14
GENERAL JOURNAL

Date Details Folio Debit Credit

Sept.18 Bank GL 1 $ 170.00
Capital $ 170.00
Sept.20 Cash $ 150.08
Bank $ 150.08
Sept.26 Cash $ 50.00
Bank $ 50.00
Sept.27 Cash $ 75.00
Bank $ 75.00
Sept.29 Cash $ 50.00
Bank $ 50.00

15
GENERAL LEDGER
Sales A/C
Date Details Folio Am
Sept 8 Cash CB $ 247.80
Cash CB $ 75.50
Cash CB $ 68.50
Cash CB $ 262.85
Cash CB $ 123.25
Cash CB $ 189.60
Cash CB $ 11.00
Total Credit Sales SJ $ 3.00

Sept 30 Bal c/d $ 981.50 $ 981.50

Bal b/d $ 981.50

Purchases A/C (Creditors)
Date Details Folio Am
Sept 8 Cash CB $ 150.00
Sept 20 Cash CB $ 40.00
Sept 21 Cash CB $ 49.50
Sept 25 Cash CB $ 100.95
Sept 26 Cash CB $ 127.14
Sept 30 Total credit PJ $ 50.00
purchases for
the month Sept 30 Bal c/d $ 517.59
$ 517.59 $ 517.59

Sept 30 Bal b/d $ 517.59

Sales Returns A/C

Sept 30 Sundry Debtors $0.75

$0.75 Sept 30 Bal c/d $0.75

Oct 1 Bal b/d $0.75

16
 Purchases Returns

Sept 30 Total Creditors $5.00

Sept 30 Bal c/d $5.00

$5.00 $5.00

Oct 1 Bal b/d $ 5.00

17
GENERAL LEDGER

Bank
Sept 18 GJ Capital $170.00 Sept 20 GJ Cash $150.00
Sept 26 GJ Cash $50.00
Sept 27 GJ Cash $75.00
Sept 29 GJ Cash $50.00
30-Sep Bal c/d
$325.00 $325.00

30-Sep Bal c/d $155.00

Cash
Sept 20 GJ Bank $150.08 29-Sep Wages CB $ 200.00
Sept 26 GJ Bank $50.00 29-Sep Expenses CB $ 40.00
Sept 27 GJ Bank $75.00 29-Sep Expenses CB $ 10.00
Sept 29 GJ Bank $50.00
30-Sep Bal c/d $ 75.00
$325.00 $325.00

oct 1 Bal b/d $ 75.00

Capital
Sept 18 GJ Bank $ 170.00

Sept 30 Bal c/d $ 170.00

$170.00 $ 170.00

Oct.1 Bal b/d $ 170.00

18
GENERAL LEDGER
Wages

Date Details Folio Am

Sept 29 Cash CB $ 200.00

Sept 30 Bal c/d $ 200.00

$ 200.00 $ 200.00

Oct 1 Bal b/d $ 200.00

General Expenses

Date Details Folio Am

Sept 29 Cash CB $ 10.00

$ 10.00 $ 10.00

Oct 1 Bal b/d $ 10.00

Departmental Expenses

Date Details Folio Am

Sept 29 Cash CB $ 40.00

Sept 30 Bal c/d $ 40.00

$ 40.00 $ 40.00

Oct 1 Bal b/d $ 40.00

19
PURCHASE LEDGER

Index Ltd
Date Details Folio Am Date Details Folio Am
Sept 25 Returns PRDB $100.95 Sept 25 Purchase PDB $50.00

Sept 30 Bal c/d $ 50.95

$ 100.95 $ 100.95
Oct 1 Bal b/d $ 50.95

SALES LEDGER

K. Best
Date Details Folio Am Date Details Folio Am
Sept 20 Sales SRDB $ 3.00 Sept 20 Returns SDB $ 0.75

Sept 30 Bal c/d $ 2.25

$ 3.00 $ 3.00
Oct.1 Bal b/d $ 2.25

20
TRADING AND PROFIT AND LOSS
For the Year Ended September 30, 2017
Details $ $ $
Sales $ 981.50
Returns In $ 0.75
Net sales $ 980.75

Purchases $ 517.67
Returns out $ 5.00
Net Purchases $ 512.67
Gross profit $ 468.08

Expenses
Wages $ 200.00
Departmental
Expenses $ 40.00
General Expenses $ 10.00
Bank charges $ 10.00
Total Expenses $ 260.00
Net Profit $ 208.08

BALANCE SHEET
As at September 30, 2017
$ $
Current Assets
Cash $ 263.08
Bank $ 95.00
Red Cross $ 20.00
Total Current Assets $ 378.08

Financed by
Capital at Start $ 170.00
Net Profit $ 208.08
$ 378.08

21
SWEET TREATS TRIAL BALANCE

DR CR
Cash $ 263.08
Bank $ 125.00
Sales $ 981.50
Purchases $ 517.67
Returns Out $ 5.00
Capital $ 170.00
Wages $ 200.00
Departmental Expenses $ 40.00
General Expenses $ 10.00
Returns In $ 0.75
$ 1,156.50 $ 1,156.50

SWEET TREATS ADJUSTED TRIAL BALANCE

DR CR
Cash $ 263.08
Bank $ 115.00
Sales $ 981.50
Purchases $ 517.67
Returns Out $ 5.00
Capital $ 170.00
Wages $ 200.00
Departmental Expenses $ 40.00
General Expenses $ 10.00
Bank Charges $ 10.00
Returns In $ 0.75
$ 1,156.50 $ 1,156.50

22
 PERFORMANCE OF THE BUSINESS

HC Sweet Treats started the business with $170.00 capital. After the business transactions, we

ended with a gross profit of $468.08. After expenses of $260.00 were deducted, it resulted in a

net profit of $208.08.

Given the aforementioned results of the business’ trading and profit and loss accounts, we can

deduce that HC Sweet Treats performed reasonably well.

23
 INTERPRETATION OF RESULTS

GROSS PROFIT PERCENTAGE

468.08 X 100 = 48%

480.75

NET PROFIT PERCENTAGE

208.08 X 100 = 21%

480.75

RETURN ON CAPITAL INVESTED

208.08 X 100 = 122%

170

24
 COMPARISONS
PURCHASES AND SALES

PURCHASES & SALES

1200

1000
Sales, 980.75
800

600

400 Purchases,
512.67
200

0
Purchases Sales

Series1

OPENING STOCK AND CLOSING STOCK

OPENING & CLOSING STOCK

170

Opening stock Closing Stock

25
COMPARISON OF EXPENSES

COMPARISON OF EXPENSES
250

200
200
150

100

50
40 10 10
0
Wages Departmental General Expenses Bank Charges
Expenses

26
 SUGGESTIONS/RECOMMENDATIONS

1. The Business could have invested in more stock to make a bigger profit.

2. There could have been more variety of stock to appeal to a wider target market.

3. The division of labour could have been better distributed. More buyers could have been

assigned.

27
 CONCLUSION

Overall, HC Sweet Treats performed fairly well as a business even though the profit was not as

substantial as anticipated. An efficient record keeping system was in place with accurate records

of the business’ trading and profit and loss; however, this aspect could have been more organized

and dealt with more promptly.

Finally, most of the business aims were accomplished in terms of record keeping and profit

making; therefore, HC Sweet Treats should be commended for their work and commitment to this

business initiative.

28
 APPENDIX
CASH RECEIPTS

Receipt #010 Date : 22nd November 2017

Received From Kristian Best

The Sum of Three Dollars $3.00

For payment of Account

Per HC Sweet Treats

Receipt #011 Date : 22nd November 2017

Received From HC Sweet Treats

The Sum of Forty Five Dollars $45.00

For Payment of Account

Per Index Limited

29
 Credit Note
HC SWEET TREATS 22nd November 2017
Crumpton Street
St. Michael, Barbados
(246)123456

Bill To:
Kristian Best

DESCRIPTION AMOUNT

Kristian Best $ 3.25

Total $ 3.25

Amount to be paid $ 2.25

Refunded Charge $1.00

THANK YOU FOR YOUR BUSINESS!

30
 Debit Note
HC Sweet Treats 22nd November 2017
Crumpton Street
St. Michael , Barbados
(246) 123456
HCSweetTreats@gmail.com

Bill To:
Kristian Best

DESCRIPTION AMOUNT

Jolly Ranchers $ 0.75

Subtotal $ 0.75

Total $ 3.00

Paid $ 0.75

Total Due $ 2.25

THANK YOU FOR YOUR BUSINESS!

31
DEPOSIT SLIP

Date: 22nd November 2017

Cash $50
Name : HC Sweet Treats $50
$75
Account Number : #11222017

THE REPUBLIC BANK OF BARBADOS

Total $175

WITHDRAWAL SLIP

Account Number #246040

22nd November
Date:
2017 Name: HC Sweet Treats

Signature: HC Sweet Treats

Amount: $50
THE REPUBLIC Bank
St. Michael

32
 Purchases Invoice
Index Limited (246) 841-6220 indexltd@gmail.com

Roebuck Street, St Michael, Barbados

Bill To: HC Sweet Treats Phone: (246) 123456 Invoice #: 01

Address: Invoice Date:
Crumpton Street, St. 11/21/17
Michael, Barbados
Email: Hcsweettreats@gmail.com

Invoice
For:

Item # Description Qty Price

1 Sweets 1 $ 150.08

2 Sweets 1 $ 40.00

3 Sweets 1 $ 49.50

4 Sweets 1 $ 100.95

5 Sweets 1 $ 50.00

6 Sweets 1 $ 127.14

Invoice
$ 517.67
Subtotal

TOTAL $ 517.67

33
Sales
Invoice
HC Sweet Treats (246)123456 hcsweettreats@gmail.com

Crumpton Street, St. Michael Website

Bill To: K. Best Phone: Invoice #:02

Fax: Invoice Date:11/21/17
Invoice
For:
Item
Description Qty Unit Price Price
#
1 JOLLY RANCHERS 3 $ 1.00 $ 3.00

Invoice Subtotal $ 3.00

TOTAL $ 3.00

34