Accounting Cycle: Preparation of Book and Analysis

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Aim of the Project

The aim of my project is for me to show the accounting cycle to a real life situation. To prepare books of original entry and to analyze the performance of the business.

Description and Overview

Supplies Minimart is a simulated entity owned by Mrs. A. Clarke on the compound of the Denbigh High School, 9 Jackson Street, May Pen Clarendon, who is a sole proprietor. Supplies Minimart is a developed entity which sold items such as pencils, sharpeners, rubbers, books and pens serving most of the students and teachers in the school.

The minimart employed six (6) staff along with Mrs. Clarke acting as owner/manager and a supervisor. There were four (4) general workers who acted as shelf stackers, cashier, janitor and security.

The lines of authority within the business are shown below:



Shelf Stacker Cashier Security Janitor
(General Workers)

The accounting records are kept on double entry principles, with all the necessary journals, ledgers and a cash book to record the cash transactions of the entity. Supplies Minimart allowed some of their customers to buy on credit and they also bought from retailers on credit.

The period of duration was for four (4) weeks beginning October 1 to October 31, 2011.

Accounting Procedures Used and Records Kept

Supplies Minimart kept records according to the standard form of the double entry principles and also kept with the accounting Cycle shown below.

The Accounting Cycle

1) Journalizing/Books of Original Entry
1) Journalizing/Books of Original Entry
2) Posting to Ledgers
2) Posting to Ledgers

3) Prepare Trial Balance
3) Prepare Trial Balance

4) Adjustments and Closing Entries
4) Adjustments and Closing Entries

5) Prepare Financial Statements
5) Prepare Financial Statements

Journals that were drawn up were as follows:
* Purchases Journal
* General Journal
* Sales Journal
* Returns Inwards Journal
* Returns Outwards Journal

The ledgers were as follows:
* Purchases Ledger
* Sales Ledger
* General Ledger

The cash book was also drawn up and at the end of the period the following were prepared: * Trial Balance
* Trading and Profit and Loss Account
* Balance Sheet

Source documents that were kept were:
* Invoice - Receipt * Debit Note - Cheque
* Credit Note (see appendix A-E)

List of Transactions for Supplies Minimart for October 2011
Date | Transactions|
October 3October 3October 4October 5 October 6 October 7 October 10 October 10October 11 October 11October 12October 13 October 14 October 14 October 18 October 18 October 19October 20 October 21October 24October 25October 25 October 26October 27 October 28October 31 | Started business with $30 000 cash in hand and $20 000 in the bank.Bought a filing cabinet on credit from Youngs Pharmacy for $3 000.Bought 10 dozen pencils for $1 200 cash.Bought 10 dozen sharpeners on credit from R. Morgan for $1 200.Bought 10 dozen rubbers for $1 200 cash.Bought 10 dozen books for $9 600 by cheque.Bought 10 dozen pens for $4 800 cash.Paid $200 cash for travelling.Sold 2 dozen pencils for $360 cash.Sold 3 dozen pencils and 2 dozen sharpeners for $900 cash.Sold 2 dozen rubbers, 2 dozen books and 3 dozen pencils for $3 780 cash.Sold 5 dozen rubbers for $900 by cheque.Sold 3 dozen pens and pencils to S. Richards on credit for $1 920.Banked $3 000 cash.We returned 4 pencils to M&M Ltd. For $40.Sold 4 dozen pencils, 5 dozen sharpeners, 3 dozen rubbers and 4 dozen books for $7 920 by cheque.S. Brown returned 2 books for $240.The owner...
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