Table of Contents

Aims ............................................................................................................................................ 1

Description of Business ............................................................................................................... 2

Mission Statement ....................................................................................................................... 3

Transactions ................................................................................................................................ 4

Journals........................................................................................................................................ 6

Ledgers ........................................................................................................................................ 9

Trial Balance ............................................................................................................................. 17

Accounting Ratios ..................................................................................................................... 20

Performance of Business ........................................................................................................... 22

Interpretation of Data ................................................................................................................ 23

Recommendations ..................................................................................................................... 24

Comparisons .............................................................................................................................. 25

Conclusion................................................................................................................................. 26

Graphs and Charts ..................................................................................................................... 27

Bibliography ................................................................................................................................. 29

Appendix ................................................................................................................................... 30
 Aims

The aims of this Principles of Account School Based Assessment are:

 To gain greater knowledge of the Accounting sector.

 To demonstrate the financial records for the period May 1st –June 31st.
 To determine the overall performance of the business.

1
 Description of Business

Black Forest Pharmacy is a sole trader business that is owned by Brianna Alfonzo. Its
main objective is to provide essential medicine to the public at a reasonable price, whilst
still making a profit. Black Forest Pharmacy offers medicines such as antibiotics, health
supplements, etc. The business is located at #53 Main Street, Sangre Grande. The
financial period for Black Forest Pharmacy started on May 1st and ended on June 30th.
However, the financial statements have been prepared for the month of June 2015.

2
 Mission Statement

The mission statement of Black Forest Pharmacy is to:

 Provide employment for persons in the area.

 Provide essential medicines for the community and surrounding areas.
 Sell pharmaceutical goods at a reasonable price.

3
 Transactions

The transactions below shows each period of the business in 2015:

May:

1 Started business by depositing $60,000.00 ; Bank $36,000, Cash $20,000, Computer

$4,000.

2 Withdrew cash from bank for office use $5,000.00

6 Bought a cash register from E-tech Ltd. For $4,390.00

11 Bought a Display Case for $3,000.00 on credit from Furniture Plus

11 Received a purchases invoice from Ali & Sons $1,750.00

18 Bought goods on credit from Kia Ltd. $18,000.00 and was allowed 5% Trade
Discount.

22 Sold goods on credit to T&D Drugs $20,000.00

26 Cash sales $1,800

30 Goods returned to Kia Ltd for $1,000.00 due to water damage

31 Paid wages $3,200.

4
June:

1 Received a purchase invoice from Shannon Enterprise $20,000 less 10% Trade
Discount.
2 Sold goods to St Helena $6,000, less 5% trade discount.
4 Cash sales $14,590.00
5 Received a cheque from St Helena for $5,700.00
8 Paid Insurance $5,000.00
8 Paid Electricity $1,200.00
12 Deposited $5,000.00 cash in bank
19 Withdrew cash for personal use $2,000.00
28 Paid wages $3,200.00
29 Paid rent $2,500.00

Additional Information

 Accrued electricity $1, 210.00

 Prepaid Insurance $2, 500.00
 Stock on June 30th was $20, 250.00

5
 Journals

General Journal

Date Details Folio Debit Credit

May 1 Bank 60 000

Capital 60 000

6 Cash Register 4 390

Cash 4 390

11 Display Case 2 000

Furniture Plus 2 000

31 Wages 3 200

Bank 3 200

June 8 Insurance 5 000

Cash 5 000

8 Electricity 1 200

Cash 1 200

19 Drawings 2 000

Cash 2 000

28 Wages 3 200

Bank 3 200

30 Rent 2 500

Bank 2 500

Opening Entries 83 490 83 490

6
 Sales Journal

Date Details Invoice Folio Amount

May 12 T&D Drugs 0001 SL 1 20 000

June 24 St.Helena 0002 SL 2 5 700

June 30 Total credit sales to be transferred to the sales account 25 700

in the general ledger

Purchases Journal

Date Details Invoice Folio Amount

May 11 Ali & Sons 0003 PL 1 1 750

18 Kia Limited 0004 PL 2 17 100

June 1 Shannon Enterprise 0005 PL 3 18 000

June 30 Total credit purchases to be transferred to the purchases 36 850

account in the general ledger

7
 Purchase Returns Journal

Date Details Folio Amount

May 30 Kia Limited PL 4 1 000

June 30 Total purchase return to be transferred to the purchase 1 000

returns account in the general ledger

Cash Book

Date Details Folio Cash Bank Date Details Folio Cash Bank

May 2 Bank 5 000 May 2 Cash 5 000

Sales 1 800 June 5 St.Helena 5 700

26
June 2 Sales 14 590 Bank 5 000
12
Cash 5 000
12

Balance c/d 5 700 30 Balance c/d 16 390

30
21 390 10 700 21 390 10 700

Balance b/d 16 390 Balance b/d 5 700

8
 Ledgers

Capital Account
2015
May 1 Bank 36 000
Cash 20 000
Computer 4 000
60 000

Bank Account
2015 2015
May 1 Capital 36 000 May 2 Cash 5 000
31 Bal c/d 27 800
36 000 36 000
2015 2015
June 1 Bal b/d 21 800 June 3 Insurance 5 000
3 St.Helena 5 700 8 Electricity 2 500
6 Cash 5 000 19 Drawings 2 000
28 Wages 3 200
30 Rent 2 500
31 Bal c/d 23 300
38 500 38 500
Bal b/d 23 300

9
 Purchases Account

2015 2015
May 11 Ali & Sons 1 750 May 31 Bal c/d 18 850
18 Kia Limited 17 100
18 850
June 1 Bal b/d 18 850

Cash Account

2015 2015
May 1 Capital 20 May 6 Cash Register 4
000 390
31 Bank 5 000 31 Bal c/d 22 410
9 Sales 1 800 26 800
26 800 June 6 Bank 5
June 1 Bal c/d 22 000
410
2 Sales 14 590 30 Bal c/d 32 000
37 000 37 000
Bal b/d 32 000

10
 Sales Account
2015
May 8 T&D Drugs 20 000
2015 9 Cash 1 800
May 31 Bal c/d 21 800
21 800 21 800
June 1 Bal b/d 21 800
2 Cash 14 590
2015 8 St.Helena 5 700
June 31 Bal c/d 42 090 42 090

July 1 Bal b/d 42 090

Cash Register

2015 2015
May 6 Cash 4 390 May 31 Bal c/d 4 390
June 1 Bal b/d 4 390

11
 Display Case

2015 2015
May 11 Cash 3 000 May 31 Bal c/d 3 000
June 1 Bal b/d 3 000

Furniture Plus

2015 2015
May 31 Bal c/d 3 000 May 11 Cash 3 000
June 1 Bal b/d 3 000

Ali & Sons

2015 2015
May 31 Bal c/d 1 750 May 11 Purchases 1 750
June 1 Bal b/d 1 750

12
 Kia Limited

2015 2015
May 10 Return Outwards 1 000 May 18 Purchase 17 100
31 Bal c/d 16 100
17 100 17 100
June 1 Bal b/d 16 100

T&D Drugs

2015 2015
May 8 Sales 20 000 May 31 Bal c/d 20 000
June 1 Bal b/d 20 000

St.Helena
2015 2015
June 2 Sales 5 700 June 5 Bank 5 700

13
 Insurance Account
2015 2015
June 3 Bank 5 000 June 30 Bal c/d 5 000
July 1 Bal b/d 5 000

Electricity Account
2015 2015
June 3 Bank 2 500 June 30 Bal c/d 2 500
July 1 Bal b/d 2 500

Return Outwards
2015 2015
May 31 Bal c/d 1 000 May 10 Kia Limited 1 000
June 1 Bal b/d 1 000

Wages
2015 2015
May 10 Bank 3 200 May 31 Bal c/d 3 200
June 1 Bal b/d 3 200
9 Bank 3 200 June 30 Bal c/d 3 200
July 1 Bal b/d 3 200

14
 Kia Limited

2015 2015
June 1 Purchases 18 000
June 30 Bal c/d 18 000
18 000 18 000
July 1 Bal b/d 18 000

Rent
2015 2015
June 10 Bank 2 500 June 30 Bal c/d 2 500
July 1 Bal b/d 2 500

Purchase Account
2015 2015
June 1 Bal b/d 18 850 June 30 Bal c/d 36 850
Shannon Enterprise 18 000
36 850
July 1 Bal b/d 36 850

15
 Drawings
2015 2015
June 8 Bank 2 000 June 30 Bal c/d 2 000
July 1 Bal b/d 2 000

Computer
2015 2015
May 1 Capital 4 000 May 31 Bal c/d 4 000
June 1 Bal b/d 4 000

16
 Trial Balance
Details Debit Credit
Capital 60 000

Bank 23 300
Cash 32 000
Purchases 36 850

Sales 42 090
Cash Register 4 390
Display Case 3 000

Insurance 5 000
Electricity 2 500
Return Outwards 1 000

Wages 6 400
Rent 2 500
Drawings 2 000

Computer 4 000
Debtors 20 000
Creditors 38 850

141 940 141 940

17
 Trading and Profit and Loss

for the period ending June 30th 2015

$ $ $
Sales 42 090
Less Cost of Goods Sold:
Purchase 36 850
Purchase Return (1 000)
Net Purchases 35 850
Closing Stock (20 250)
Cost of Goods Available for Sale 15 600
Gross Profit 26 490
Less Expenses:
Wages 6 400
Electricity 2 500
Accrued Electricity 1 010
3 510
Rent 2 500
Insurance 5 000
Prepaid Insurance (2 500)
2500
14 910
Net Profit 11 580

18
 Balance Sheet
as at 30th June 2015

$ $ $
Cost Depreciation Net Book Value
Fixed Assets:
Cash Register 4 390 4 390
Display Case 3 000 3 000
Computer 4 000 4 000
11 390 11 390
Current Assets:
Stock 20 250
Debtors 20 000
Prepaid Insurance 2 500
Bank 23 300
Cash 32 000
98 050
Current Liabilities:
Creditors 38 850
Accrued electricity 1 010
Working Capital 39 860
58 190
69 580
Financed by:
Owner’s Equity:
Capital 60 000
Net Profit 11 580
71 580
Drawings (2 000)
69 580

19
 Accounting Ratios

1. Profitability Ratio
𝐺𝑟𝑜𝑠𝑠 𝑃𝑟𝑜𝑓𝑖𝑡
(i) Gross Profit Margin= * 100
𝑁𝑒𝑡 𝑆𝑎𝑙𝑒𝑠
26 490
= * 100
42 090

= 62.93% or 63%

𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡
(i) Net Profit Margin = * 100
𝑁𝑒𝑡 𝑆𝑎𝑙𝑒𝑠
11 580
= * 100
42 090

= 27.51% or 28%

2. Liquidity Ratio
𝑇𝑜𝑡𝑎𝑙 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠
(i) Current Ratio =
𝑇𝑜𝑡𝑎𝑙 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
98 050
=
39 860

= 2.46 times

𝑇𝑜𝑡𝑎𝑙 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠−𝐶𝑙𝑜𝑠𝑖𝑛𝑔 𝑆𝑡𝑜𝑐𝑘

(ii) Acid Test Ratio =
𝑇𝑜𝑡𝑎𝑙 𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠
98 050−20 250
=
39 860

= 1.95 times

20
3. Rate of Return on Capital
𝑁𝑒𝑡 𝑃𝑟𝑜𝑓𝑖𝑡
R.R.C = * 100
𝑂𝑝𝑒𝑛𝑖𝑛𝑔 𝐶𝑎𝑝𝑖𝑡𝑎𝑙

11 580
= * 100
60 000

= 19.3% or 19%

21
 Performance of Business

Black Forest Pharmacy for the month of June made a Gross Profit of $26 490 and Net Profit of
$11 580. However, the total expenses ($14 910) exceeded the amount of Net Profit made for the
month of June by $3 330.

22
 Interpretation of Data

The financial statement for the period May 1st – June 30th shows that the business made a
profit of eleven thousand, five hundred and eighty dollars ($11 580). The entire procedure of
collecting and analysing the financial records of the business was to determine the performance
of the business. The profitability of the business was tested using five ratios. They are the Gross
Profit Margin, Net Profit Margin, Current Ratio, Acid Test Ratio and Rate of Return on Capital.

Before the expenses were paid, the profit was 63% for every $1 the business received;
this is called the gross profit margin. However, after the expenses were deducted, the profit was
28% for every $1 received; this is called the net profit margin. The difference between the Gross
profit margin and Net Profit Margin represents the expenses, which amounted to 35%.

The current ratio shows that the business can cover its debts 2.46 times. This means that
the business can cover its current liabilities 2.46 times. The difference between the current ratio
and the acid ratio shows that the removal of the closing stock doesn’t make a massive impact on
the current assets of the business. The business can cover its debts 1.95 times excluding the
closing stock. The rate of return on capital is 19% for the month of June.

23
 Recommendations

It is recommended that Black Forest Pharmacy:

 Decrease expenses so that a higher net profit could be achieved
 Create advertisement to increase the sale of the business
 Introduce new pharmaceutical goods to the business

24
 Comparisons

The business started with $60 000 in capital, at the end of the financial
period the business had an increase in capital of $9 580 resulting in the total
amount of $69 580 closing capital.

Another comparison can be done on the current assets and the current
liabilities of the business. The current assets was $90 050 whilst the current
liabilities was $39 860. This means that the current liabilities of the business can
be paid off in a short period of time.

25
 Conclusion

After doing this School Based Assessment I have gained greater knowledge of Accounting.
Although this School Based Assessment has helped me a lot to understand accounting, it takes
time and has to be very precise or else it will result in an error. All in all, it was a great
experience.

26
 Graphs and Charts

Comparison between the Net Profit and Expenses

$16,000

$14,000

$12,000

$10,000

$8,000
$14,910

$6,000
$11,580

$4,000

$2,000

$0
Net Profit Expenses

27
 Comparison between the Currrent Assets and
Liabilities

$39,860
Current Assets
Current Liabilities
$98,050

Comparison between Sales and Purchases

$43,000

$42,000

$41,000

$40,000

$39,000

$38,000

$37,000 $42,090

$36,000

$35,000

$34,000 $35,850

$33,000

$32,000
Sales Purchases

28
Bibliography

Principles of Accounts, A Complete Course with S.B.A Guides, Caribbean Education Publishers

Ramlochan, David; Lalla, Chairmain (2002)

29
Appendix

30
31
From: Ali & Sons
INVOICE
Tony Bracket
#8 Penal Road, Penal
Trinidad and Tobago
Phone:687-2894 Email:[email protected] INVOICE #003
DATE: MAY 11, 2015

To: Black Forest Pharmacy

Brianna Alfonzo

#53 Main Street, Sangre Grande.

Trinidad and Tobago

Phone 739-485 Email: Black Forest [email protected]

QUANTITY DESCRIPTION UNIT PRICE TOTAL

10 bottles Medicine $10.00 $1 750

32