Accounting for Small Business: Edith's Organic Fruit Question and Answers

Introduction - Managing Receivables and Payables Ledger for Business

This report calculates the four questions that are related to financial calculation. Here is a small business managed by Edith that sells organic fruits and vegetable boxes in high street cafes. Edith sells on the credit at 30 days credit terms. Edith is to manage all the aspects of the business like delivering the boxes from one place to another place, maintaining their accounts on a daily and posting the transactions on a regular basis, and ordering fruits and vegetables in its business. Here prepare the general ledger accounts for 1 September for the business account maintenance. Here provide the debit balance on the receivables ledger accounts on 1st September, these accounts help to identify the business debit balance. This report demonstrates the balance on the receivable control account that agrees with the total balance on the personal account in the ledger of receivable by the business. Here show all the details for all T-accounts. In question D, present the trial balance on 1st October of the business. An overall introduction is essential to calculate the business's daily posted transactions.

Question a. Receivables and payables ledger accounts of Edith’s

General ledger accounts, payable ledger accounts, and receivable ledger account at 1st September of the business.

Table 1: General ledger account, payable and receivable ledger account

The above table reflected the “general ledger account, payable control and receivable control general ledger account” (Biørn-Hansen et al. 2020). Through this table know the business fruits and vegetable boxes opening balance. The meaning of the “Balance b/d” means carried forward from the accounting period of the previous year or month. This can be used to identify the opening balance of each item. And the “Balance c/d” means in the accounting, carried down which means the closing balance of the accounting in the year or month. This can be written on the debit side and credit side. “Closing balance” is a real account and personal account in the “balance c/d”. This is carried down in the next period of the accounting. Here the capital account on the 1st of September is £73000, van account is on the 1st of September £40000. This business bank balance on the 1st of September has £1500 (Martins et al. 2019). Receivable control and payable control biotin accounts opening balance have £72000 and £40500. Here provided vegetables are “Sage”, “Parsley” and Dill in the debit balance of the business, and apples and pears in the credit balance of the business (Osadchy et al. 2018). That means their fruit invoices are received from the suppliers. So in this question prepare the ledgers of each item that are related to the business.

Figure 1: 3 types of a financial plan

Question b. continuing on, post to the relevant accounts the eight transactions

Here posting the relevant accounts of the business's eight transactions in the month of September and in this month posting the daily basis transactions of each item of the business.

<td15-Sep

The above table demonstrate the eight transactions in the month of September. This eight transactions are posted on a daily basis for the month of September (Brigham and Daves, 2018). Here Edith paid the business rent on the date of 3 September and this ate paid the rent by the personal bank account and pay rent of 2500 in September month. On 5 September Edith received the payment from their consumers of Sage in the partial settlement of the amount. On 8 September business sells the goods to their consumers of Parsley with the amount of 6000 on the 30 days credit terms (Deuflhard et al. 2019). On 15th September business owner receive the payment from their Dill customers in the full settlement of the amounts and the owner receive the payment with the amount of 23,750. In the month of September 25, the owner pays by bank transfer in the full amount on the account of the pear supplier, and on this date, the owner pays by bank transfer with the amount of 29389 (Fridson and Alvarez, 2022). At the end of September month, business owners sell their goods to Sage consumers on 30 days credit terms. In the receivable account posting in the ledger of the 8 September sales and in the 30 September sales with the amount of 6000 and 10000.

Figure 2: 3 source of financing

Question c. Demonstrate that the balance on the receivables control account and payable account

In question c, “Balance off” the receivables and the payables ledger accounts, and the general ledger accounts (Prihartono and Asandimitra, 2018). Here demonstrate the balance on the “receivables control” account that is agreed with the total balance on the personal accounts in the “receivable ledger”. As methods use of the payables control account. Here are all the relevant details in the T-format (Li, 2020). Here in the capital account add the business rent amount then get the total balance of the capital of 75500. And this amount is an opening balance for the next month. And after the written-off of the business bank account then get the next month's opening balance of 1861. After “written off” the receivable control accounts get the next month's opening balance is 55750 this amount gets by subtracting the sold goods to Parsley consumers on 30 days credit terms and also sales goods to the Sage customers on 30 days credit terms. And the “payables control account” balance off getting the next month's opening balance of 18111, in the 1st of September “payables control account” balance has 40500, and add the goods purchased from the Apple supplier on 30 days credit terms. In the ledger posting, the 21 and 25 September owner pays the Apple supplier by bank transfer in the partial settlement of the amount subtracted from the September opening balance and purchase amount.

Question d. Trial balance at 1 October

A trial balance, which is a list of credit and debit entries, is used by businesses to assess the internal performance of their double-entry accounting systems (Russ, 2021). To make sure that the sum of all debits and credits equals one another and to check for any entries made in the erroneous account.

Table 3: Trial balance

Question e (i). comment favorably on Edith’s cash management

Here discuss the comment favorably on business cash management in the month of September. When demonstrating the business of Edith's payables and receivables, this is noticeable the account of receivable is a larger sum as compared to the “payable account” of the business. Here discuss the business Edith minimizes their account payables funds like the “receivable accounts” that demonstrate the funds are coming into the business.

Question e ii) Comment critically on Edith’s management of receivables

Here comment critically on the business management of the receivable and give advice on improving their credit control (Sezer and Ozbayoglu, 2018). Here demonstrated the customer's credit periods, that it seems the business owner needs to do some management of debt and payment chasing to ensure amounts that are received within time.

Reference list

Journals

Biørn-Hansen, A., Barendregt, W. and Andersson, D., 2020, June. Introducing Financial Data and Groups in a Carbon Calculator: Issues With Trust and Opportunities for Social Interaction. In Proceedings of the 7th International Conference on ICT for Sustainability (pp. 11-17).

Brigham, E.F. and Daves, P.R., 2018. Intermediate financial management. Cengage Learning.

Deuflhard, F., Georgarakos, D. and Inderst, R., 2019. Financial literacy and savings account returns. Journal of the European Economic Association, 17(1), pp.131-164.

Fridson, M.S. and Alvarez, F., 2022. Financial statement analysis: a practitioner's guide. John Wiley & Sons.

Li, Z., 2020, October. Research on the Parallel Calculation Method of Real-time Financial Index Market Based on Computer FPGA. In Journal of Physics: Conference Series (Vol. 1648, No. 4, p. 042015). IOP Publishing.

Martins, T.L. and de Assis Olgin, C., 2019. A Didactic Engineering for the development of the Amortization System theme using the HP 12C Calculator Emulator. Acta Scientiae, 21(6), pp.173-191.

use my discount

Osadchy, E.A., Akhmetshin, E.M., Amirova, E.F., Bochkareva, T.N., Gazizyanova, Y. and Yumashev, A.V., 2018. Financial statements of a company as an information base for decision-making in a transforming economy.

Prihartono, M.R.D. and Asandimitra, N., 2018. Analysis factors influencing financial management behaviour. International Journal of Academic Research in Business and Social Sciences, 8(8), pp.308-326.

Russ, D., 2021. Deciphering economic futures: Electricity, calculation, and the power economy, 1880–1930. Centaurus, 63(4), pp.631-650.

Sezer, O.B. and Ozbayoglu, A.M., 2018. Algorithmic financial trading with deep convolutional neural networks: Time series to image conversion approach. Applied Soft Computing, 70, pp.525-538.