Paxora Ltd: Double-Entry Bookkeeping for Accounts Case Study

Table of Contents

Paxora Ltd: Double-Entry Bookkeeping, Journal Entries to Control Accounts
Part 1: Double-Entry Bookkeeping and recording of transactions
a) Journal Entries
b) Ledger Accounts
c) Trial Balance
d) Importance of Bookkeeping and recording to maximise organisational efficiency and performance
Part 2: Bank Reconciliation Statement
a) Bank Reconciliation Statement as per Cash Book
b) Bank Reconciliation Statement as Per Pass Book
Part 3: Control and Suspense Accounts
a) Role of Control and Suspense Accounts
b) Difference between Control and Suspense Accounts
c) Control Account Reconciliation for Accounts Payable
d) Control Account Reconciliation for Accounts Receivable
e) Critical Evaluation of Different Types of Double Entry Bookkeeping System

Pages: 26 Words: 6383

Paxora Ltd: Double-Entry Bookkeeping, Journal Entries to Control Accounts

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Part 1: Double-Entry Bookkeeping and recording of transactions

a) Journal Entries

Journal Entries in the Books of Paxora Ltd
For the Month Ended 31st January, 2023
Date	Particulars	L.F.	Amount (Dr)	Amount (Cr)
1st January	Cash A/C Dr	1	£ 10,000.00
to Capital A/C	£ 10,000.00
(Started Business with Cash)
3rd January	Purchase A/C Dr	2	£ 290.00
to D James (Accounts Payable) A/C	£ 290.00
(Purchased Goods on Credit)
6th January	Fixtures and Fittings A/C Dr	3	£ 1,150.00
To Bank A/C	£ 1,150.00
(Bought Fixtured and Fittings)
09th January	Cash A/C Dr	4	£ 140.00
To Sales A/C	£ 140.00
(Sold Goods for Cash)
11th January	Purchase A/C Dr	5	£ 325.00
to C Monty (Accounts Payable) A/C	£ 325.00
(Purchased Goods on Credit)
15th January	Rent A/C Dr	6	£ 200.00
To Cash A/C	£ 200.00
(Rent Paid via Cash)
18th January	Stationary A/C Dr	7	£ 45.00
To Cash A/C	£ 45.00
(Stationary brough through Cash)
19th January	D James (Accounts Payable) A/C	8	£ 41.00
To Purchase Return A/C	£ 41.00
(Goods Returned to D James)
24th January	Cash A/C Dr	9	£ 25.00
To Rent Received A/C	£ 25.00
(Rent Received through Cash)
27th January	G Cross (Accounts Receivable) A/C Dr	10	£ 845.00
To Sales A/C	£ 845.00
(Goods Sold on Credit)
28th January	Van A/C Dr	11	£ 4,100.00
to Bank A/C	£ 4,100.00
(Van Purchased through cheque)
30th January	Wages A/C Dr	12	£ 360.00
to Bank A/C	£ 360.00
(Monthly Wages Paid)
31st January	Drawings A/C Dr	13	£ 80.00
to Bank A/C	£ 80.00
(Cash Withdrawn for Personal Use)
31st January	Cash A/C Dr	14	£ 2,000.00
To Sales A/C	£ 2,000.00
(Cash Sales Recorded)

Table 1: Journal Entries

b) Ledger Accounts

Ledger Accounts in the Books of Paxora Ltd
For the Month Ended 31st January, 2023
Cash A/C
Date	Particulars	Amount (Dr)	Date	Particulars	Amount (Cr)
1st January	To Capital A/C	£ 10,000.00	15th January	By Rent A/C	£ 200.00
09th January	To Sales A/C	£ 140.00	18th January	By Stationary A/C	£ 45.00
24th January	To Rent Received A/C	£ 25.00
31st January	To Sales A/C	£ 2,000.00
31st January	By Balance c/d	£ 11,920.00
£ 12,165.00	£ 12,165.00
Bank A/C
Date	Particulars	Amount (Dr)	Date	Particulars	Amount (Cr)
6th January	Fixtures and Fittings A/C	£ 1,150.00
28th January	Van A/C	£ 4,100.00
30th January	Wages A/C	£ 360.00
31st January	By Drawings A/C	£ 80.00
31st January	To Balance c/d	£ 5,690.00
£ 5,690.00	£ 5,690.00
Fixtures and Fittings A/C
Date	Particulars	Amount (Dr)	Date	Particulars	Amount (Cr)
6th January	To Bank A/C	£ 1,150.00	31st January	By Balance c/d	£ 1,150.00
£ 1,150.00	£ 1,150.00
Van A/C
Date	Particulars	Amount (Dr)	Date	Particulars	Amount (Cr)
28th January	To Bank A/C	£ 4,100.00	31st January	By Balance c/d	£ 4,100.00
£ 4,100.00	£ 4,100.00
Capital A/C
Date	Particulars	Amount (Dr)	Date	Particulars	Amount (Cr)
31st January	To Balance c/d	£ 10,000.00	1st January	By Cash A/C	£ 10,000.00
£ 10,000.00	£ 10,000.00
Purchase A/C
Date	Particulars	Amount (Dr)	Date	Particulars	Amount (Cr)
3rd January	To D James A/C	£ 290.00	31st January	By Balance c/d	£ 615.00
11th January	To C Monty A/C	£ 325.00
£ 615.00	£ 615.00
Sales A/C
Date	Particulars	Amount (Dr)	Date	Particulars	Amount (Cr)
9th January	By Cash A/C	£ 140.00
27th January	By G Cross A/C	£ 845.00
31st January	By Cash A/C	£ 2,000.00
31st January	To Balance c/d	£ 2,985.00
£ 2,985.00	£ 2,985.00
Purchase Return A/C
Date	Particulars	Amount (Dr)	Date	Particulars	Amount (Cr)
31st January	To Balance c/d	£ 41.00	19th January	By D James (Accounts Payable) A/C	£ 41.00
£ 41.00	£ 41.00
D James (Accounts Payable) A/C
Date	Particulars	Amount (Dr)	Date	Particulars	Amount (Cr)
19th January	To Purchase Return A/C	£ 41.00	3rd January	By Purchase A/C	£ 290.00
30-11-2020	To Balance c/d	£ 249.00
£ 290.00	£ 290.00
C Monty (Accounts Payable) A/C
Date	Particulars	Amount (Dr)	Date	Particulars	Amount (Cr)
31st January	To Balance c/d	£ 325.00	11th January	By Purchase A/C	£ 325.00
£ 325.00	£ 325.00
Stationary A/C
Date	Particulars	Amount (Dr)	Date	Particulars	Amount (Cr)
18th January	To Cash A/C	£ 45.00	31st January	By Balance c/d	£ 45.00
£ 45.00	£ 45.00
G Cross (Accounts Receivable) A/C
Date	Particulars	Amount (Dr)	Date	Particulars	Amount (Cr)
27th January	To Sales A/C	£ 845.00
31st January	By Balance c/d	£ 845.00
£ 845.00	£ 845.00
Rent Received A/C
Date	Particulars	Amount (Dr)	Date	Particulars	Amount (Cr)
31st January	To Balance c/d	£ 25.00	24th January	By Cash A/C	£ 25.00
£ 25.00	£ 25.00
Rent A/C
Date	Particulars	Amount (Dr)	Date	Particulars	Amount (Cr)
15th January	To Cash A/C	£ 200.00	31st January	By Balance c/d	£ 200.00
£ 200.00	£ 200.00
Wages A/C
Date	Particulars	Amount (Dr)	Date	Particulars	Amount (Cr)
30th January	To Bank A/C	£ 360.00	31st January	By Balance c/d	£ 360.00
£ 360.00	£ 360.00
Drawings A/C
Date	Particulars	Amount (Dr)	Date	Particulars	Amount (Cr)
31st January	To Bank A/C	£ 80.00	31st January	By Balance c/d	£ 80.00
£ 80.00	£ 80.00

Table 2: Ledger Accounts

c) Trial Balance

Trial Balance in the Books of Paxora Ltd
For the Month Ended 31st January, 2023
Accounts	Amount (Dr)	Amount (Cr)
Cash	£ 11,920.00
Bank Overdraft	£ 5,690.00
Fixtures and Fittings	£ 1,150.00
Van	£ 4,100.00
Capital	£ 10,000.00
Purchase	£ 615.00
Sales	£ 2,985.00
Stationary	£ 45.00
D James (Accounts Payable)	£ 249.00
Purchase Return	£ 41.00
C Monty (Accounts Payable)	£ 325.00
Rent Received	£ 200.00
Rent	£ 200.00
Wages	£ 360.00
Other Current Assets (Bal.Fig)	£ 1,020.00
Drawings	£ 80.00
Total	£ 19,490.00	£ 19,490.00

Table 3: Trial Balance

As per the above presented trial balance for the company concerned Paxora Ltd, it can be ascertained the total of debits and total of credits has been calculated as GBP 19,490.00. The deficiency in debit balances as per trial balance has been adjusted by addition other current assets as the additional item with a balance of GBP 1,020.00. As per opinions and illustrations of Albayati et al. (2020), the trial balance is considered to be an important proforma of bookkeeping which initially ascertains all account balances for an organisation and is further adjusted and rectified to prepare income statement and balance sheet.

d) Importance of Bookkeeping and recording to maximise organisational efficiency and performance

Bookkeeping is considered to be a highly substantial financial area which is needed to be contemplated by organisations to achieve higher efficiency and performance. Initial stages of bookkeeping and mainly considered to be associated with determining the nature of transactions that are needed to be recorded in primary books of entry. These books of entry under the double entry bookkeeping system mainly include journal entries as well as ledger accounts (Westermeier, 2020). The bookkeeping facility and the ability to record transactions is also deemed to be a necessary aspect of financial performance determination for Paxora Ltd as appropriate financial information can be relayed and communicated with involved stakeholders.

Part 2: Bank Reconciliation Statement

a) Bank Reconciliation Statement as per Cash Book

Bank Reconciliation Statement as per Cash Book
For Paxora Ltd in the month January, 2023
Date	Particulars	Amount Dr	Amount Cr
09 January	Debit Balance as per Cash Book	£ 160.00
12th January	Cheque withdrawal for cheque no 24621	£ 115.00
14th January	Cash deposit	£ 80.00
22nd January	Cheque withdrawal for cheque no 24622	£ 35.00
31st January	Bank Giro Credit	£ 24.00
31st January	Bank Charges	£ 40.00
31st January	Debit Balances as per Cash book for receipts	£ 282.00
(Tyrall+ Mccarthy+ Aisbitt)
31st January	Credit Balances as per Cash Book for Payments	£ 175.00
(V O'Connor, Francis and Barnes)
31st January	Reconciled Balance as Per Cash Book	£ 181.00

Table 4: Bank Reconciliation Statement as per Cash Book

As per the above bank reconciliation statement prepared for Paxora Ltd in the month of January 2023, primary impetus has been offered for considering reconciled balances as per cash book. Cheque withdrawal including cheque number 24621 and 24622 have been recorded in the credit side with respective amounts of GBP 115.00 and GBP 35.00. Cash deposit as well as Bank Giro credit has been recorded on the debit side with respective amounts of GBP 80 and 24 respectively. Bank charges and the original credit balances demonstrated in the cash book have been recorded in the credit side with respective amounts of GBP 40 and GBP 175 respectively.

Original Debit balances as demonstrated in the cash book has been recorded in the debit side with numerical expression of GBP 282. Total reconciled balance as per cash book has been calculated as GBP 181.00. As expressed and idealised by Barczak (2019), the bank reconciliation statement is considered to be an important document which ascertains similarity between bank balances recorded by the bank as well as the organisation.

b) Bank Reconciliation Statement as Per Pass Book

Bank Reconciliation Statement as per Pass Book
For Paxora Ltd in the month January, 2023
Date	Particulars	Amount Dr	Amount Cr
09 January	Credit Balance as per Pass Book	£ 160.00
12th January	Cheque withdrawal for cheque no 24621	£ 115.00
14th January	Cash deposit	£ 80.00
22nd January	Cheque withdrawal for cheque no 24622	£ 35.00
31st January	Bank Giro Credit	£ 24.00
31st January	Bank Charges	£ 40.00
31st January	Debit Balances as per Cash book for receipts	£ 282.00
(Tyrall+ Mccarthy+ Aisbitt)
31st January	Credit Balances as per Cash Book for Payments	£ 175.00
(V O'Connor, Francis and Barnes)
31st January	Reconciled Balance as Per Pass Book	£ 181.00

Table 5: Bank Reconciliation Statement as per Pass Book

The above bank reconciliation statement for Paxora Ltd. has been prepared for the month of January 2023 concerning balances demonstrated as per pass book. The opening balance as per passbook has been recorded in the credit side with an amount of GBP 160.00. Cheque withdrawal as well as Bank charges and original credit balances as per cash book have all been recorded in the debit side with respective balances of GBP 115, 35, 40 and GBP 175. Cash deposit, Bank Giro credit as well as original Debit balances demonstrated as per cash book has been recorded in the credit side of the pass book with respective balances of GBP 80,24 and 282 respectively.

The overall effect of reconciled bank balances as per pass book demonstrates a net balance of GBP 181. Therefore, it can be inferred that bank balances as per both cash book and pass book demonstrate equal values and are considered to be tallied. Ashraf et al. (2021), stated and viewed that a bank reconciliation statement is also considered to be beneficial for ensuring proper traceability of financial resources of an organisation.

Part 3: Control and Suspense Accounts

a) Role of Control and Suspense Accounts

Control Accounts

Control accounts applicable for an organisation are mainly considered to be associated with ensuring precise communication of account balances that have been incurred or borne during a particular financial year. Precision in balances presented and communicated further allows control accounts to reciprocate accurate recording of transactions in appropriate books which are further presented for obtaining financial clarification. As per illustrations and narrations of Cardenas and Kim (2020), the role of control accounts can be fundamentally determined on the basis of considering additional preparation of ledger accounts that are needed to be contemplated by an organisation. Perhaps, the control account is more lenient for considering preparation of ledger accounts that usually classify themselves under short-term Assets and liabilities. These accounts can be classified as accounts receivable and accounts payable which determine available operational sustainability facets. Control accounts also portray the role of facilitating prompt receipts and payments needed to be catered in favour of receivables and payables to accommodate a healthy statement of financial position (Sharma et al. 2019).

Suspense Accounts

In addition to control accounts, suspense accounts are also considered to be important determinants applicable for presenting a robust organisational financial accounting applicable for Paxora Ltd. As per illustrations and statements of Dávila (2023), suspense accounts usually do not comply with additional facilities to prepare ledger accounts and it is only prepared to detect differences in balances between debits and credits. Role of suspense account is fundamentally considered to be associated with facilitating initial tracking of differences achieved between debits and credits of an organisation. This is often established after preparation of the trial balance and necessary rectifications and adjustments are being contemplated further where the role of suspense account becomes significant. The presentation of suspense accounts applicable in the statement of financial position or balance sheet mainly demonstrates a preliminary expense account which is usually recorded in the current assets section of the balance sheet (Zhang, 2020).

b) Difference between Control and Suspense Accounts

Control Accounts

The control account applicable and presentable for Paxora Ltd. mainly ascertains current and intermediate financial recording propositions that are needed to be addressed. Elliott et al. (2019), stated and idealised that nature of control account is mainly associated with determining overall transactions that are needed to be recorded for the and require future settlement. Control account can also be considered as a final account where acquired balances are allocated to respective sub heads of the balance sheet. Errors of transaction and errors of omission are generally disregarded in the preparation and presentation of control accounts applicable for an organisation during a particular financial year (Parwada et al. 2022).

Suspense Accounts

Suspense accounts applicable and presentable for Paxora Ltd mainly considers rectification and post- trial balance adjustments that are needed to be accommodated in order to ascertain a healthy financial position. According to Karpoff (2021), the scope for facilitating full settlement of requisite accounts is generally neglected under suspense accounts. Moreover, suspense accounts are also considered to be beneficial for insurance better control and adjustments being made for mitigating differences between debit and credit balances. Overall, the influence of suspense accounts on the financial position of a company is considerably lower as opposed to control accounts prepared.

c) Control Account Reconciliation for Accounts Payable

Accounts Payables Control Account Reconciliation
For the Month Ended 31st January, 2023
Date	Particulars	Amount (Dr)	Date	Particulars	Amount (Cr)
31st January	Bank A/C	£ 63,030.00	1st January	Purchase Ledger Balance b/d	£ 13,960.00
31st January	Discount Received	£ 180.00	31st January	Credit Purchases	£ 64,300.00
31st January	Return Outward	£ 600.00	31st January	Sales Ledger Transfer	£ 440.00
31st January	Reconciled Balance	£ 14,890.00
£ 78,700.00	£ 78,700.00

Table 6: Control Account Reconciliation for Accounts Payable

As per the above table of control account reconciliation for accounts payable, it can be observed that the reconciled balance achieved is being measured as GBP 14,890.00. In order to measure reconcile accounts payable balances, purchase ledger balances have been incorporated and credit purchase, sales ledger transfer, discount received and cash payments have also been included under reconciliation.

d) Control Account Reconciliation for Accounts Receivable

Accounts Receivables Control Account Reconciliation
For the Month Ended 31st January, 2023
Date	Particulars	Amount (Dr)	Date	Particulars	Amount (Cr)
1st January	Sales Ledger Balance b/d	£ 6,340.00	31st January	Bank A/C	£ 1,39,570.00
31st January	Credit Sales	£ 1,40,100.00	31st January	Discount Allowed	£ 350.00
31st January	Purchase Ledger Transfer	£ 440.00	31st January	Return Inward	£ 900.00
31st January	Reconciled Balance	£ 6,060.00
£ 1,46,880.00	£ 1,46,880.00

Table 7: Control Account Reconciliation for Accounts Receivable

As per above table of control account reconciliation contemplated for accounts receivable, the reconciled balance that is achieved is numerically expressed as GBP 6,060.00. Priority on bringing forward sales ledger balances, credit sales, transferred to purchase ledger, discount allowed, return inward as well as cash received from customers have been thoroughly incorporated for calculations.

e) Critical Evaluation of Different Types of Double Entry Bookkeeping System

Different types of control and suspense accounts in the context of double-entry bookkeeping and mainly considered to be associated with inventory as well as bank control accounts. The different type of suspense accounts is further considered to be associated with an account that is being prepared to catapult adjustments in differences between debits and credits. Both control as well as suspense accounts are considered to be important and integral determinants of financial stability and control for an organisation which further fosters adequate abilities to frame decisions.

The role and purpose of control accounts concerning effectively collaborating financial management in an organisation is considered to be associated with identifying balances that need to be settled or carried forward in future. As per the explanations and statements of Elghaish et al. (2020), an inventory control account is considered to be a highly proactive measure where the actual value of inventory that needs to be recorded in necessary accounts should be prioritised. Subsequently, the inventory value achieved needs to be forwarded in the balance sheet to close out the statement of financial position in a cohesive manner. However, as per the critical views of Hasan et al. (2020), this is often neglected by organisations as checking and reviewing control accounts is usually considered to be a time-consuming process. Therefore, the credibility and feasibility of control accounts are generally deemed to be in limbo thereby demonstrating underbaked financial information for an organisation.

The role and purpose of suspense accounts associated with determining overall financial differences asserted between debit and credit balances is related with determining what necessary adjustments are needed to be contemplated in order to present a favourable financial position statement. The suspense account is considered to be a highly proactive statement or proforma which communicates discrepancies identified in recording and bookkeeping process for an organisation and ascertains necessary steps that need to be taken in order to rectify them in future. However as per critical illustrations of Janssens et al. (2021), the preparation of suspense accounts is generally not regulated which further maximises opportunities to capitalise upon potential financial loopholes in an organisation. Hence, the overall viability and reliability of suspense accounts is considered to be jeopardised and presents materialistic accounts and financial balances for an organisation during a particular financial year.

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