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Principles of Accounts School Based Assessment (CSEC)

Name: Marissa Green Registration Number: Centre Number: Territory: Jamaica Year of Submission: 2012

Table of Contents Title Page

Acknowledgement.....1 Aims of Project..2 Description and Overview of Business..3 Accounting Cycle..4 Transaction List5 Debtors and Creditors List7 Books of Original Entry Purchases Journal.8 Sales Journal9 Return Inwards Journal10 Return Outwards Journal.11 General Journal12 Ledger Accounts Purchases Ledger12 Sales Ledger13

Table of Contents Title Page

General Ledger.14 Final Accounts Bought and Sold Schedule18 Cash Book.19 Stock Valuation.20 Trial Balance.....21 Trading, Profit and Loss Account22 Balance Sheet23 Performance Evaluation and Interpretation of Results Statement of Performance.24 Ratios and Comparisons....25 Recommendations...29 Conclusion...30 Appendices..31

Acknowledgement Sincere gratitude is given to everyone who has made a significant contribution to the successful completion of this school based assessment.

Aims of Project The researcher would like to achieve the following aims of: Making a profit Providing service that is efficient Drawing up accurate financial statements for Cellular World for the year 2011 Acquiring a full understanding of the accounting concepts in order to develop a high level of competence in the financial sector.

Description and Overview of Business Cellular World is a developed retail company which provides cellular phones to most parishes in convenient locations. Cellular World is owned and operated by Marissa Green who is the sole proprietor. The company allows customers to purchase the cellular phones on credit. The business also purchases cellular phones on credit from its suppliers. The company employs fourteen staff members with Miss. Green as its chief executive officer. The staff includes three supervisors and eleven general workers including cashiers, assistance, security etc.

CEO

Supervisor

Supervisor

Supervisor

General Workers

Diagram illustrating the lines of authority within the business. The accounting records of Cellular World are kept on double entry principles with all the mandatory journals, ledgers, cash books etc of the business. The period under review is November 2011

Accounting Cycle Cellular World keeps records conforming to the standard form of double entry principles and the accounting cycle below:

Journalising /Books of Original Entry

Final Accounts

Posting to Ledgers

Adjustments and Closing Entries

Trial Balance

Transaction List 2011 November 1. Started business by depositing $20,000 into a bank account. November 2. Placed $5000 cheque into cash account. November 3. Bought display stands on credit from J. Owens, $3000. November 4. Bought office furniture on credit from J. McIntyre, $1500. November 5. Bought 20 phones on credit from M. McIntyre, $20000. November 6. Sold 1 phone for cash $1000. November 7. Sold 9 phones for cash $9000. November 8. Sold 3 phones on credit to K. McFarlane, $3000. November 9. Sold 5 phones on credit to G. Gordon, $5000. November 10. Bought 20 phones on credit from M. McIntyre, $2000. November 11. Sold 2 phones for cash $2000. November 12. G. Gordon returned 1 phone due to faults, $10. November 13. K. McFarlane returned 1 phone due to faults, $30. November 14. Sold 8 phones for cash $8000.

Transaction List 2011 November 15. Sold 5 phones for cash $5000. November 19. Sold 3 phones for cash $3000. November 21. Bought 20 phones on credit from M. McIntyre, $2000. November 24. Sold 1 phone for cash $1000. November 25. Paid insurance by cash $250 November 26. Paid rent by cash $1500. November 28. Paid sundry by cash $10. November 30. Withdrew $2500 from bank account. November 30. We returned 2 phones to M. McIntyre, $200.

Books of Original Entry

Purchases Ledger

Invoice Number 2011 November 3. J. Owens November 4. J. McIntyre November 5. M. McIntyre November 10. M. McIntyre November 21. M. McIntyre Transferred to Purchases account 9101 9102 9103 9104 9105 PL1 PL2 PL3 PL3 PL3 GL8 Folio

(page 50) Amount $ 3000 1500 2000 2000 2000 10500

Sales Journal

Invoice Number 2011 November 8. K. McFarlane November 9. G. Gordon Transferred to Sales account 1244 1245 SL5 SL6 GL10 Folio

(page 52) Amount $ 3000 5000 8000

Return Inwards Journal

Invoice Number 2011 November 12. G. Gordon November 13. K. McFarlane Transferred to Return Inwards account 1247 1244 SL6 SL5 GL13 Folio

(page 53) Amount $ 10 30 40

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Return Outwards Journal

Invoice Number 2011 November 20. M. McIntyre Transferred to Return Outwards account 1244 PL4 GL8 Folio

(page 53) Amount $ 200 200

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Ledger Accounts

Purchases Ledger

J. Owens a/c 2011 November 30 Bal. c/d $ 3000 2011 November 3 Purchases PJ 30

(pg.1) $ 3000

December 1

Bal. b/d

3000

J. McIntyre a/c 2011 November 30 Bal. c/d $ 1500 2011 November 4 Purchases PJ 30

(pg.2) $ 1500

December 1

Bal. b/d

1500

M. McIntyre a/c 2011 November 30 Return Outwards RO 13 November 30 Bal. c/d $ 200 5800 ____ 6000 December 1 Bal. b/d 2011 November 5 Purchases PJ 30 PJ 30 PJ 30

(pg.3) $ 2000 2000 2000 6000 5800

November 10 Purchases November 21 Purchases

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Sales Ledger

K. McFarlane a/c 2011 November 8 Sales SJ 10 $ 3000 ____ 3000 2011 November 12 Return Inwards RI 14 November 30 Bal. c/d

(pg.5) $ 10 2990 3000

December 1

Bal. b/d

2990

G. Gordon a/c 2011 November Sales SJ 10 $ 5000 ____ 5000 2011 November 13 Return Inwards November 30 Bal. c/d RI 14

(pg. 8) $ 30 4970 5000

December 1

Bal. b/d

4970

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General Ledger

Capital a/c 2011 November 30 Bal. c/d $ 20000 2011 November 1 Bank $ 20000

December 1

Bal. b/d

20000

Purchases a/c 2011 November 5 November 10 November 21 M. McIntyre M. McIntyre M. McIntyre $ 2000 2000 2000 6000 December 1 Bal. b/d 6000 ____ 6000 2011 November 30 Bal. c/d $ 6000

Display Stands a/c 2011 November 3 J. Owens $ 3000 2011 November 30 Bal. c/d $ 3000

December 1

Bal. b/d

3000

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General Ledger

Office Furniture a/c 2011 November 4 J. McIntyre $ 1500 2011 November 30 Bal. c/d $ 1500

December 1

Bal. b/d

1500

Sales a/c 2011 November 30 Bal. c/d $ 37000 2011 November 6 November 7 November 8 November 9 November 11 November 14 November 15 November 19 _____ 37000 November 24 Cash Cash K. McFarlane C. Jones Cash Cash Cash Cash Cash $ 1000 9000 3000 5000 2000 8000 5000 3000 1000 37000

December 1

Bal. b/d

37000

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General Ledger

Insurance a/c 2011 November 25 Cash $ 250 2011 November 30 Bal. c/d $ 250

December 1

Bal. b/d

250

Rent a/c 2011 November 26 Cash $ 1500 2011 November 30 Bal. c/d $ 1500

December 1

Bal. b/d

1500

Sundry a/c 2011 November 28 Cash $ 10 2011 November 30 Bal. c/d $ 10

December 1

Bal. b/d

10

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General Ledger

Drawings a/c 2011 November 30 Bank $ 2500 2011 November 30 Bal. c/d $ 2500

December 1

Bal. b/d

2500

Return Inwards a/c 2011 November 12 November 13 G. Gordon K. McFarlane $ 10 30 40 2011 November 30 Bal. c/d $ 40 __ 40

December 1

Bal. b/d

40

Return Outwards a/c 2011 November 30 Bal. c/d $ 200 2011 November 30 M. McIntyre $ 200

December 1

Bal. b/d

200

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Final Accounts

Bought and Sold Schedule

Date 2011 November 5 November 10 November 21

Bought $ 20 at $100 each 20 at $100 each 20 at $100 each 2000 2000 2000 2011

Date

Sold $ 1 at $1000 9 at $1000 each 3 at $1000 each 5 at $1000 each 2 at $1000 each 8 at $1000 each 5 at $1000 each 3 at $1000 each 1 at $1000 each 1000 9000 3000 5000 2000 8000 5000 3000 1000 _____ 37000

November 6 November 7 November 8 November 9 November 11 November 14 November 15 November 19 November 24

____ 6000

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The Cash Book

Cash Book Cash Date 2011 November 1 November 2 November 6 November 7 $ Capital Bank Sales Sales 5000 1000 9000 2000 8000 5000 3000 1000 34000 December 1 Bal. b/d 32240 _____ 20000 12500 _____ 34000 ______ 20000 Bank $ 20000 Date 2011 November 2 Cash November 25 Insurance November 26 Rent November 28 Sundry November 30 Drawing November 30 Bal. c/d 32240 Cash $ Bank $ 5000 250 1500 10 2500 12500

November 11 Sales November 14 Sales November 15 Sales November 19 Sales November 24 Sales

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Stock Valuation First In, First Out

Date 2011 November 5 November 6 November 7 November 8 November 9 November 10

Bought

Sold

Stock after each transaction $ $ 2000 1900 1000 700 200 200 2000 2200 2000 1200 700 400 400 2000 300 2000 2300 2400

20 at $100 each 1 at $100 each 9 at $100 each 3 at $100 each 5 at $100 each 20 at $100 each

20 at $100 each 19 at $100 each 10 at $100 each 7 at $100 each 2 at $100 each 2 at $100 each 20 at $100 each

November 11 November 14 November 15 November 19 November 21 20 at $100 each

2 at $100 each 8 at $100 each 5 at $100 each 3 at $100 each

20 at $100 each 12 at $100 each 7 at $100 each 4 at $100 each 4 at $100 each 20 at $100 each

November 24

1 at $100 each

3 at $100 each 20 at $100 each 23 at $100 each

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Trial Balance

Cellular World Trial Balance as at 30 November 2011 Dr. Capital Bank Cash Purchases J. Owens Display Stands J. McIntyre Office furniture M. McIntyre Sales K. McFarlane G. Gordon Return Inwards Return Outwards Insurance Rent Drawings Sundry 250 1500 2500 10__ 67500 _____ 67500 2970 4990 40 200 1500 5800 37000 3000 1500 12500 32240 6000 3000 Cr. 20000

Closing Stock $2300

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Trading, Profit and Loss Account

Cellular World _________ Trading, Profit and Loss Account as at 30 November 2011______________ $ Sales Less Returns Inwards Less Cost of goods sold Purchases Less Returns Outwards 6000 (200)_ 5800 Less Closing Stock Gross Profit Less Expenses Insurance Rent Sundry Net Profit 250 1500 10_ (1760)_ 31700 (2300)_ (3500) 33460 37000 (40)_ 36960 $

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Balance Sheet

Cellular World ________________________Balance Sheet as at 30 November 2011_____________________ Fixed Assets Display Stands Office Furniture Current Assets Stock Debtors Bank Cash 2300 7960 12500 32240 55000 Current Liabilities Creditors Other Creditors Working Capital 5800 4500 (10300) 44700 49200 Financed By: Capital Net Profit 20000 31700 51700 Less Drawings (2500) 49200 $ $ 3000 1500 4500 $

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Debtors and Creditors List

Debtors G. Gordon K. McFarlane 5000 3000

Creditors J. Owens J. McIntyre M. McIntyre 3000 1500 6000

Principles of Accounts School Based Assessment (CSEC)

Name: Marissa Green Registration Number: School: Manchester High Centre Number: Territory: Jamaica Teacher: Mrs. Black-Miller Year of Submission: 2012

Performance Evaluation and Interpretation of Results

Statement of Performance In preparing the financial statements for the business, the Trading, Profit and Loss account showed a net profit of thirty one thousand seven hundred dollars ($31700) during the month of November in the year 2011. At the end of the financial year there was an increase in capital. This indicated that the business was profitable as shown in the ratios calculated.

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Ratios and Comparisons 1. Gross Profit to Sales Ratio

Gross Profit = 33460 = 0.9 Sales 37000

Gross Profit as a percentage of sales Gross Profit * 100 = 33460 * 100 = 90% Sales 37000

This gives the amount of gross profit for every one hundred dollars ($100) of sales. This therefore means that for every one hundred dollars of sale ninety ($90) was made before any expense were paid.

Gross Profit to Sales

47% 53%
Gross Profit Sales

Diagram 2: Pie chart showing gross profit to sales during the financial year 25

Ratios and Comparisons 2. Net Profit to Sales Ratio

Net Profit = 31700 = 0.9 Sales 37000

Net Profit to Sales Ratio Percentage Net Profit *100 = 31700 * 100 = 90% Sales 37000

The calculation above shows how much net profit has been made for every one hundred dollar ($100) of sales. It can be seen that for every one hundred dollars of sales ninety dollars was made. This ratio brings the expenses into the calculation as opposed to the gross profit percentage.

Net Profit to Sales


46% 54% Net Profit Sales

Diagram 3: Pie Chart showing the net profit to sales in during the financial period. 26

Ratios and Comparisons 3. Return on Capital Employed Net Profit = Net Profit = 31700 = 0.6 Capital Employed Fixed Assets+ Current-Liabilities 49200

Return on Capital Employed Percentage Net Profit Capital Employed * 100 = 31700 * 100 = 60% 49200

Net Profit to Capital Employed

39% Net Profit Capital Employed

61%

Diagram 4 : Pie chart showing net profit to the capital employed during the financial year. This ratio illustrates how well the capital has been employed. Cellular world has achieved a return of sixty dollars ($60) for every one hundred dollars invested. 27

Ratios and Comparisons 4. Rate of Stock Turnover Cost of Goods Sold = 3500 = 1.5 Stock 2300

This equation illustrates how quickly the stick has been turned over.

5. Acid Test Current Assets- Stock = 55000-3000 = 5.1:1 Current Liabilities 10300

In order to bring about further aspects of liquidity this ratio is used. The current assets stock to current liabilities is 5.1 to 1.

6. Current Ratio Current Assets = 55000 = 5.3:1 Current Liabilities 10300

This ratio is used to measure current assets to current liabilities. This is basically comparing assets that will be turned into cash within the next twelve months with liabilities that will be paid within the same period. The current ratio for this financial period is 5.3 to 1. Alternatively this may be said to be 5.3 times.

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Recommendations In order to make Cellular World more successful excess money that is earned will be used to expand the business by opening another store and also introduce new phones into the business. Cellular World will also find cheaper suppliers that are able to meet the demand of the phones so that profitability will be greater.

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Conclusion It is clear that the aims of this project have been achieved in that the business had made a profit, the service provided was efficient, accurate financial statements were prepared and a full understanding of the accounting concepts was gained.

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