Chrissy’s Stationary is located in Brown’s Town on the Brown’s Town High premises. Chrissy’s

Stationery will be engaged in a variety of school supplies- pen, pencil, rubber, sharpener, ruler,

exercise books etc; which aims to make learning more effective and comprehensible. These

products also aim to target students of all level and also teachers. This business will be operated

within the timeframe of one month, September 2012 and will be operated as a Sole

Proprietorship.

Books of Original Entry

Sales Journal

Date Particulars Folio AmountSeptember 6, 2012 C.Palmer SL $1800September 12, 2012 H.Spencer SL $3580September 12, 2012 C.Palmer SL $2780September 24, 2012 H.Spencer SL $4440

Transferred to Sales Account GL $12600

Purchases Journal

Date Particulars Folio AmountSeptember 7, 2012 P.Jones PL $3830September 17, 2012 D.Ellis PL $7800

Transferred to Purchases Account $11630

Returns Inwards Journal

Date Particulars Folio AmountSeptember 10, 2012 C.Palmer SL $300September 28, 2012 H.Spencer SL $300

Transferred to Return Inwards Account GL $680

Returns Outwards Journal

Date Particulars Folio AmountSeptember 25, 2012 D.Ellis PL $600

Transferred to Return Outwards Account GL $600

Ledgers

Sales Ledger

C.Palmer2012 $ 2012 $6-Sep Sales SJ 1800 10-Sep Return Inwards RIJ 30012-Sep Sales SJ 2780 11-Sep Bank CB 1000

30-Sep Balance c/d 32804580 4580

1-Oct Balance b/d 3280

H.Spencer2012 $ 2012 $12-Sep Sales SJ 3580 20-Sep Bank CB 214024-Sep Sales SJ 4440 28-Sep Cash CB 5400

28-Sep Return Inwards RIJ 380 28-Sep Discount Allowed CB 1008020 8020

Purchases Ledger

P.Jones2012 $ 2012 $

13-Sep Bank CB 3780 7-Sep Purchases PJ 383013-Sep Discount Received CB 50

3830 3830

D.Ellis2012 $ 2012 $

19-Sep Bank CB 2000 17-Sep Purchases PJ 780025-Sep Return Outwards ROJ 60027-Sep Cash CB 273030-Sep Balance c/d 2470

7800 7800 1-Oct Balance b/d 2470

General Ledger Capital

2012 $ 2012 $30-Sep Balance c/d 40000 3-Sep Cash CB 30000

3-Sep Bank CB 1000040000 40000

1-Oct Balance b/d 40000

Purchases2012 $ 2012 $

3-Sep CashCB 7500 30-Sep Trading Account

NL 24060

11-Sep CashCB 4930

30-Sep Credit purchases for the month PJ 11630

24060 24060

Rent2012 $ 2012 $4-Sep Cash CB 1500 30-Sep Balance c/d 15001-Oct Balance b/d 1500

Fixtures2012 $ 2012 $5-Sep Cash CB 1200 30-Sep Balance c/d 12001-Oct Balance b/d 1200

Advertising2012 $ 2012 $5-Sep Cash CB 450 30-Sep Balance c/d 4501-Oct Balance b/d 450

Sales2012 $ 2012 $

30-Sep Trading AccountNL 32450 5-Sep Cash

CB 3950

10-Sep CashCB 4970

14-Sep CashCB 4210

25-Sep CashCB 3170

30-Sep CashCB 3550

30-Sep Credit sales for SJ the month 12600

32450 32450

Wages2012 $ 2012 $

14-Sep Bank CB 1000 30-Sep Balance c/d 200030-Sep Cash CB 1000

2000 20001-Oct Balance b/d 2000

Transportation2012 $ 2012 $

17-Sep Cash CB 400 30-Sep Balance c/d 4001-Oct Balance b/d 400

Discount Allowed2012 $ 2012 $

30-Sep Profit and Loss a/c NL 100 28-Sep Totals for the CB 100 month

Discount Received2012 $ 2012 $

13-Sep Total for the CB 50 30-Sep Profit and Loss a/c NL 50month

Returns Inwards2012 $ 2012 $

30-Sep Returns for theRI 680 30-Sep Trading Account NL 680

month

Returns Outwards2012 $ 2012 $

30-Sep Trading Account NL 600 30-Sep Return for the RO 600 month

Chrissy's StationeryThree Column Cash Book as at September 2012

Date Details Folio

Discount

Allowed Cash Bank Date Details Folio

Discount Receive

d Cash Bank2012 $ $ $ 2012 $ $ $3-Sep Capital 30000 10000 3-Sep Purchases 7500 5-Sep Sales 3950 4-Sep Rent 1500

10-Sep Sales 4970 5-Sep Fixtures 1200 11-Sep C.Palmer 1000 5-Sep Advertising 450 12-Sep Cash 12000 12-Sep Bank 12000 14-Sep Sales 4210 9-Sep Purchases 4930 19-Sep Bank 6000 13-Sep P.Jones 50 3780

20-SepH.Spence

r 2140 14-Sep Wages 1000

25-Sep Sales 3170 17-SepTransportatio

n 400

28-SepH.Spence

r 100 5400 19-Sep D.Ellis 200030-Sep Sales 3550 19-Sep Cash 6000

27-Sep D.Ellis 2730 30-Sep Wages 1000 Balance c/d 29540 12360

100 61250 25140 50 61250 2514010ctobe

r Balance b/d 29540 12360

Trial Balance

Chrissy's StationaryTrial Balance as at September 30, 2012

DR CRC.Palmer 3280

D.Ellis 2470Capital 40000

Purchases 24060

Rent 1500 Fixtures 1200

Advertising 450 Sales 32450

Wages 2000 Transportation 400

Discount Allowed 100 Return Inwards 680

Return Outwards 600Cash 29540 Bank 12360

Discount Received 50 75570 75750

Income Statement

Chrissy's Stationery

Trading and Profit and Loss Account for the month ended September 30,2012

$ $ $

Sales 32450

Less Returns Inwards -680

Net Sales 31770

Less cost of goods sold:Purchases

24060

Add Transportation 400

24460

Less Returns Outwards -600

Net Purchases 23860

Cost of goods available 23860

Cost of goods sold 23860

Gross Profit 7910

Discount Received 50

Adjusted Gross Profit 7960

Less ExpensesRent

1500

Advertising 450

Wages 2000

Discount Allowed 100

Total Expenses 4050

Net Profit 3910

Balance Sheet

Chrissy's Stationery

Balance Sheet as at September 30,2012

Fixed Assets $ $ $

Fixtures 1200

Current AssetsDebtors

3280

Bank 12360

Cash 29540

Total Current Assets 45180

Less Current LiabilityCreditor

2470

Working Capital 42710

43910

Financed By:

Capital 40000

Add Net Profit 3910

43910

Accounting Ratios was used to interpret the various accounts which are drawn up.

Current Ratio:

Current Assets = 45180 = 18.29:1Current Liability 2470

Current Ratio equals 18.29:1 times. This means that Chrissy’s Stationery could pay off its debts,

creditors 18.29 times. Chrissy’s Stationery is doing well.

Gross Profit as Percentage of sales:

Gross Profit * 100 = 7910 * 100 = 24.9%Sales 1 31770 1

For every $100 of sales $24.90 gross profit was made before any expenses were paid.

Net Profit as Percentage of sales:

Net Profit * 100 = 3910 * 100 = 12.3%Sales 1 31770 1

For every $100 of sales $12.30 net profit was made before any expenses were paid.

Rate of Return of Net Profit on Capital Employed:

Opening Balance + Closing Balance = 40000 + 43910 = 41955 2 2

Net Profit____ * 100 = 3910 * 100 = 9.32%Capital Employed 1 41955 1

9.32% has been made for every $100 of capital employed during the one month period.

Figure 1. Line Graph depicting Purchases of Chrissy’s Stationery for the month of September.

Week 1 Week 2 Week 3 Week 40

5000

10000

15000

20000

25000

30000

11330

4930

7800

24060

Chrissy’s Stationery was compared with KD’S Stationery Supplies for the month of September,

both businesses are related in nature and sold similar products.

Figure 2: Bar Graph illustrating Net Profit as a percentage of Sales.

Chrissy's Stationery

KD'S Stationery Supplies

0 2 4 6 8 10 12 14

12.3

9.52

Net Profit Percentage

Net Profit as a percentage of Sales: KD’S Stationery Supplies = Net Profit\ Sales *100\1

= 3000/31500* 100/1

= 9.52%

Chrissy’s Stationery made $12.30 in every $100 of sales in Net Profit while KD’S Stationery

Supplies made $9.52 on every $100 made in Net Profit.

Gross profit as a percentage of Sales: KD’S Stationary Supplies = Gross Profit\ Sales *100\1

= 6800/31500 *100/1

= 21.5%

Chrissy’s Stationery made $29.50 in every $100 of sales made in Gross Profit while KD’S

Stationery Supplies made $21.50 on every $100 of sales made in Gross Profit.

Chrissy’s Stationery did greatly hence it is profitable. During the operation of the business

within the one month period, the business acquired a Gross Profit of $7960, $3910 Net Profit and

the total expenses was $4050. The business also had more than enough money to take care of its

debts. Chrissy’s Stationery sold all stock.

The following recommendations are suggested: