cow-f04b-fr a1.docx
TRANSCRIPT
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Preparation of Financial Statements
A report on
Preparation of Financial
Statement
Prepared for: Ms. Kim Oanh Vu
Unit 10: Financial Accounting and eporting
!an"ing Academ#$ %anoi
!&'( %)* in !usiness +Finance,
-ord numer: /$2
Prepared #
Ph3m &h4# %5ng 6 (o7 6 F08!
egistration )o. 9&PF080;;
Sumission *ate: /
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Table of Contents'>'(U&9V' SUMMA?..........................................................................8
9)&O*U(&9O)....................................................................................;(%AP&' 1: F9)A)(9A@ 9)FOMA&9O).................................................
eport on dierent information needs of dierent user groups........
(%AP&' /: 'PO& &O A% !OO).......................................................2
Part 1: eport on Bnancial statements in a form suitale forpulication # a sole trader...............................................................2
1.1 CournaliDing transactions.............................................................2
1./ Preparing &accounts.................................................................1;
1.< Preparing &rial alance............................................................../<
1.8 Preparing 9ncome Statement...................................................../;
1.; Preparing Statement of Financial position................................./
Part /: eport on Bnancial statements in a form suitale forpulication # partnership............................................................../
1.1 CournaliDing transactions.........................................................../
1./ Preparing &accounts.................................................................
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1./ Preparing Bnancial statements of eGuit# changes..................82
1.< Preparing consolidated alance sheet for the #ear ended
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Preparation of Financial Statements
EXECUTIVE SUMMARY
Finance plays a crucial part in every business. It has a strong influence on every aspects
within company and be considered as a key for business performance. In this report,
some issues related to financial statments will be discuss based on scenarios of some
companies
The first scenario is about Ah Boon who is a civil engineering and building contractor
which was established as a sole proprietor specializes in drainage works repair of
vehicular bridges, road pavement construction sewerage system, tidal gate structures
etc. The way how to prepare financial statements in a form suitable for publication by a
sole trader will be shown in this company.
The second case is still about Ah Boon but he is now keen to e!pand his businesses to
become as a sole distribution agent for building materials. Ah Boon"s, on # $uly %&
decided to admit a new business partner, 'heung, to transform his sole proprietor
enterprise into a partnership. This part will discuss about financial statement made in a
form suitable for publication by partnership.
Another case, which is about Boon 'heung (imited company, will show the way how
to prepare financial statements in a form suitable for publication by limited company.
The last two companies are )arner (td and *ereira (td which consolidate. In this part,
the recording and reporting the activities of a group of companies will be pointed out.
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INTROUCTION
&his report aims to discuss aout Bnancial statements from completeor incomplete records as 7ell as Bnancial information in accepted
formats for pulication. 9n more particular$ se=eral follo7ing points
7ill e mentioned:
Preparing Bnancial statements for a =ariet# of usinesses from
trial alance$ ma"ing appropriate adHustments Preparing Bnancial statements from incomplete records
Preparing a consolidated alance sheet and proBt and lossaccount for a simple group of companies
'Iplaining ho7 the information needs of dierent user groups
=ar# Preparing Bnancial statements in a form suitale for pulication
# a sole trader$ partnership and limited compan#
+ot only provide the theory related to financial terms, this paper also provides relevant
analysis and e!planation in each area. oing this report, some information sources wereused -uch as Internet and books, some lectures, /ournal articles, and business
magazines were also use to utilize data related to the topic in the scenario.
0opefully, this report will be useful not only for business students but also for every
person who want to know and learn about finance, especially financial statements.
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Preparation of Financial Statements
C!APTER "# FINANCIA$ INFORMATION
Report on %i&erent information nee%s of %i&erent
'ser (ro'ps
Financial information is the heart of usiness management. 9t is
almost impossile to run a usiness eecti=el# 7ithout eing ale to
read$ understand$ and anal#De accounting reports and Bnancial
statements. +Valencia$ n.d.,
&here are man# dierent users for Bnancial information and the
nature of these uses =aries depending on its intended purpose. 9t is
the user of the Bnancial information 7ho determines ho7 it is to e
used. Accounting must meet the needs of the indi=idual users and
therefore must e JeIile enough to satisf# a =ariet# of purpose.
+Acs$ n.d.,
&he =arious user groups could e classiBed into t7o main groups:
internal users and eIternal users. O=erall$ the apparentl# di=ergent
needs of internal and eIternal users of accounting information ha=e
resulted in the de=elopment of t7o sudisciplines 7ithin the
discipline$ namel# Management Accounting and Financial Accounting.
+Pretoria$ n.d., *rur# +/000, said that Management Accounting is
concerned 7ith the pro=ision of information to people 7ithin the
organiDation$ 7hereas Financial Accounting is concerned 7ith the
pro=ision of information to sta"eholders outside the organiDation.
9n more particular$ there are some main users of each group and their
information needs 7ill e discussed elo7:
)ro'ps
'ser
Users P'rpose Information nee%s
Interna
l Users
O7ners
+sole
o7ners$
For anal#Ding the
=iailit# and
proBtailit# of their
&he# mainl# reGuire
information aout the
proBt made and the
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partners, in=estment and
determining an#
future course of
action. +AccoutingSimpliBed$ n.d.,
di=idend made. &he#
eIpect to recei=e a
di=idend pa#ment as their
share of the proBts. &he#are interested in the proBt
and loss statement.
+Alunct$ n.d., &he# can Bnd
those information in
income statement or
alance sheet.Managers
+(FOs$
('Os$
(OOs,
For anal#Ding the
organiDations
performance and
position and ta"ing
appropriate measures
to impro=e compan#
results. +Accouting
SimpliBed$ n.d.,
Managers reGuire
9nformation that 7ill assist
them in their decision
ma"ing and control
acti=ities. For eIample$
information is needed on
the estimated selling
prices$ costs$ demand$
competiti=e position and
proBtailit# of =arious
productsL ser=ice that are
pro=ided # the
organiDation. +eaich$
/01/,. -ith this t#pe of
users$ normall#$ the#
reGuire all Bnancial
statements to ha=e an
o=erall picture of
compan#s operating.'mplo#e
es
For assessing
compan#s proBtailit#
and its conseGuence
on their futureremuneration and Ho
'mplo#ees reGuire
information on the ailit#
of the Brm to meet 7age
demands and a=oidredundancies. +eaich$
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securit#. +Accouting
SimpliBed$ n.d.,
/01/, &hese information
are$ for eIamples: eGuit#$
proBt$ re=enue$ and so on
7hich can e sho7n inincome statement.
E*tern
al
Users
o=ernm
ent
oces
+(entral
Statistical
Oce$
%M
e=enue
N
(ustoms,
For assessing ta!,
preparation of various
statistics on productivity,
commerce, etc. and the
various returns re1uired by
law.
2overnment e1uires such
information as the details of sales
activity, profits, investments,
stocks, dividends paid, the
proportion of profits absorbed by
ta!ation and so on. 34eaich,
%%5. These information can be
found in income statement or
balance sheet.
(reditors 'oncern about the capacity
of a business to pay its
liabilities as they fall due for
payment.
'reditors re1uire information on a
firm6s ability to meet its financial
obligations.34eaich, %%5
(ompetit
ors
For otaining the
operating of the
compan#. Using that
information to predict
compan#s eha=ior
and gain an
ad=antage o=er the
compan#. +M!A$ n.d.,
(ompetitors reGuire
information on the relati=e
strengths and 7ea"nesses
of the organiDation.
-hereas the ao=e users
share in the 7ealth of the
compan#$ competitors
reGuire the information
mainl# for strategic
purpose. +Pretoria$ n.d.,.
&he# are interested
in an# area of the
compan# 7hich could e
used to gi=e them an
ad=antage and this
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includes the 7a# the
compan# is Bnanced$ ho7
much it pa#s in 7ages$
ho7 much it pa#sfor its parts$ ho7 much it
charges for its products$
and so on. +-ard$ /00
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C!APTER +# REPORT TO A! ,OON
Part "# Report on -nancial statements in a form
s'itable for p'blication b. a sole tra%er
A sole trader is a business that is owned by one person. This does not necessarily mean
that only one person works for the business. 0owever, a sole trader is directly involved
in the running of the business. All the capital of the company will belong to the only
person who starts up the business. 37ducation, %&&85
2enerally, sole trader has unlimited liability. Therefore, in its statement
• +et profit loss 9 'apital at the end of the period : rawings for the period ;
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Accumulated depreciation6
purchased tools N eGuipment+E, ebit
Cre%it
ebit
Cre%it
ebit
Cre%it
ebit
Cre%it
*isposal of old =ehicle account
Vehicle account
Accumulated depreciation 6
old =ehicle
*isposal of old =ehicle account
(ash in an"
*isposal of old =ehicle account
ProBt on sale of =ehicle
1$000
1
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+,Purchase of tools N eGuipmentSimilarl#$ the depreciation eIpense of purchased tools N
eGuipment 7ould e calculated as follo7s:
=
'ost #?,@&&
Depreciation for the year to 31 March 2011 (16,800
x 25%) 4,200
+E,Old =ehicle &he proBt +loss, from disposing of old =ehicle 7ould e
calculated as follo7s:
=
'ost of old vehicle #@,&&&
(ess accumulated depreciation #>,&&&
+et book value ,&&&
-ale price ?,&&&
*rofit on sale 1,000
+,)e7 =ehicle &he ne7 =ehicle purchased in 1 Octoer /010 is to e
depreciated at /; per annum on the straightline asis. &he
formula of this method is as follo7s: Acquistioncost − Residual value
Expected useful life of the asset
Esing this formula, the depreciation e!pense of new vehicle would be calculated
as follows
Depreciationof new vehicle=25,600×25 × 6
12=£3,200
+2,ent shop paid in ad=anceent of shop paid in ad=ance from
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4ent per month from # $uly %& 9 && ! #%& 9 =?&&
4ent from # $uly %& to ># Darch %# 3C months5 9 ?&& ! C 9 =,8&&
&otal rent eIpense for the #ear ending
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*lus closing balances of miscellaneous bill owing C@&
(ess opening balances of miscellaneous bill owing &
Discellaneous e!penses 3,540
+1;, 9n=entor# of materials &he in=entor# eIpense 7ould e calculated as follo7s:
=
%&
*lus purchased inventory #?C,%8&
(ess closing balance of inventory %8,>8&
Inventory e!penses 173,220
+1, SalesAt
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"/+ Preparin( T2acco'nts
Cah in han!
= =
?,8&&
-ales #&,%@& rawing #?,&&&
'ash withdraw from Bank C?,%& 'ash paid into bank 8@,&@&
%&%,%?& 'losing balance cd #,@&
%&%,%?&
"a#ance $! 1,780
Cah in $an& = =
,%& 'ash in hand C?,%&
'ash in hand 8@,&@& Trade payable #?,C@&
-ales >,?& 4ent shop in advance ,%&&
(oan %&,&&& Insurance in advance >,%&&
-ales old vehicle ?,&&& +ew Tool H 71uipment #?,@&&
Bank payable 8,%&& +ew ehicle %,?&&
*hone payable #,%&
7lectricity payable #,@&
Discellaneous payable %,?&rawing C,?&&
-ales @&&
'losing balance cd &
383,760 383,760
"a#ance $! 0
Dra'in accont
=
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'ash in hand
#?,&&
&
'ash in bank
C,?&
&
,?&&
*nrance expene
=
Insurance in
advance >,&&&
*nrance in a!+ance
= =
,&&&
*ayment insurance >,%&& 'losing balance cd #,?&&
8,?&& 8,?&&
"a#ance $! 1,600
#! too# - e.ip/ent
= =
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Accumulated depreciation of
old tools H e1uipment
>,8&
&
cc/#ate! !epreciation of o#! too# - e.ip/ent
= =
'losing balance cd
#,&&
& ,8&&
#,&&
& #,&&&
"a#ance $! 15,000
rchae! too# - e.ip/ent
= =
'ash in bank #?,@&& 'losing balance cd #?,@&&
#?,@&& #?,@&&
"a#ance $! 16,800
Depreciation expene of prchae too# - e.ip/ent
=
Accumulated depreciation of purchase
tools H e1uipment
8%&
&
cc/#ate! !epreciation of prchae! too# - e.ip/ent
= =
'losing balance cd 8%&& epreciation e!penses 8%&&
8%&& 8%&&
"a#ance $! 4200
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#! +ehic#e accont
= =
,&&& #>,&&&
"a#ance $! 0
Dipoa# of o#! +ehic#e accont
= =
,&&&*rofit on sale #,&&& 'ash paid into bank ?,&&&
#C,&&& #C,&&&
e' +ehic#e
'ash in bank %,?&& 'losing balance cd %,?&&
%,?&& %,?&&
"a#ance $! 25,600
Depreciation expene of ne' +ehic#e
=
Accumulated depreciation of
new vehicle >,%&&
cc/#ate! !epreciation of ne' +ehic#e
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Preparation of Financial Statements
'losing balance cd >,%&& epreciation e!penses >,%&&
>,%&& >,%&&
"a#ance $! 3,200
ent hop pai! in a!+ance
= =
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Preparation of Financial Statements
= =
*ayment from Bank #,%& ,8& >,8&
"a#ance $! 980
Mice##aneo expene
=
Discellaneous bill owing >,8&
"a! !e$t expene
=
Trade receivable %,?&
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Preparation of Financial Statements
ra!e recei+a$#e
= =
,?&
Bad debts %,?&
'losing balance cd #C,#?&
8%@,?& 8%@,?&
"a#ance $! 19,160
*n+entory
= =
%& Supplies expense
173,22
0
Trade payable #?C,%8& 'losing balance cd %8,>8&
#C,?& #C,?&
"a#ance $! 24,340
Cot of oo! o#!
=
-upplies e!penses
#>,%%
&
)age of repair staff
#>?,8&
&
>&C,?%
&
ra!e paya$#e
= =
*ayment to suppliers #?,C@&
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"/3 Preparin( Trial balance
First of all, capital at ># Darch %& needs to be calculated.
Based on the information of the scenario, it would be calculated as follows
TotalCapital=Totalasset −Totalliabilities
" D
tate/ent of financia# poition
As at 31 March 2010
= =
et
Tools and e1uipment cost %,%&&
epreciation to date ##,?&&
'arrying amount of tools H e1uipment to date #>,?&&ehicle cost #@,&&&
epreciation to date #>,&&&
'arrying amount of vehicle to date ,&&&
Inventories %@,>%&
Trade receivable #@,C@&
4ent paid in advance to >& $une %& #,&&
Insurance paid in advance to >& -eptember
%& #,8&&
Bank balance >,%&'ash in hand 8?&
ota# aet 72,980
ia$i#itie
Trade payable ?,C%&
*hone bill owing 8%&
7lectricity bill owing >?&
ota# #ia$i#itie ,&&
Capita# ?,%@&ota# capita# - #ia$i#itie 72,980
Total capital at 31 March 2010 equals to £65,280
A! ,OON SO$E TRAER
Trial ,alance
As at 31 March 2011 Account Debit Credit
R R(ash in hand 1$E0
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*nco/e tate/ent
For the year ended 31 March 2011
= =
a#e 8&@,C@&(ess cost of goods sold >&C,?%&
2ross profit CC,>?&
Add profit of sale vehicle #,&&&
#&&,>?&
e expene
Insurance >,&&&
-alaries #&,&&&
4ent of -hop ?,C&&
epreciation of new vehicle >,%&&
epreciation of old tools H e1uipment >,8&&epreciation of purchase tools H e1uipment 8,%&&
Telephone #,@&
7lectricity #,@?&
Discellaneous >,8&
Bad debts %,?&
Interest &&
8&,C8&
et profit 59,420
"/4 Preparin( Statement of Financial position
" D
tate/ent of inancia# oition
As at 31 March 2011
= =
on!current assets
+ew vehicle %,?&&
Accumulated depreciation of new vehicle >,%&&
'arrying amount of new vehicle %%,8&&
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Preparation of Financial Statements
Trade receivables #C,#?&
4ent paid in advance #,@&&
Insurance paid in advance #,?&&
Inventory %8,>8&
8@,?@&ota# aet 93,880
"apital
At ># Darch %& ?,%@&
Add profit for the year C,8%&
(ess rawing ,?&&
At ># Darch %# 8C,#&&
on!current lia#ilities
(oan payable %&,&&&
"urrent lia#ilities
Trade payables @,#@&
*hone bill owing 8@&
7lectricity bill owing 88&
Discellaneous bill owing C@&
Account payable #8,&&
%8,@&
ota# capita# an! #ia$i#itie 93,880
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Preparation of Financial Statements
Part +# Report on -nancial statements in a form
s'itable for p'blication b. partners8ip
*artnership, it is an agreement between two or more persons to engage in business in
common with a view to profit. It is desirable that partners have a written partnership
agreement outlining important points such as he agreed shares of capital contributions
and shares of profit, but there is nothing in law to say that any such written agreement is
re1uired. 37ducation, %&&85
"/" 0o'rnali1in( transactions
= =
+1, ebit
Cre%it
Agenc# commission due
(ommission
@@&
0+/, ebit
Cre%it
Stoc"
&rade pa#ale
@@,&&&
$000+
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Preparation of Financial Statements
, Cre%it
ebit
Cre%it
Accrued =ehicle eIpense
Accrued =ehicle eIpense
(ash in an"
1
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Preparation of Financial Statements
&he partnership commencement otained a gross proBt of 80
on all sales.
Sales 72,000
60 =1/0$000
+E,(ash recei=ed(ash recei=ed for the #ears to
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Preparation of Financial Statements
*epreciation of premises is ; on cost *epreciation eIpense 6 premises /0$000 I ; =1$000
+10, *epreciation of =ehicle*epreciation of =ehicle is /0 on cost
*epreciation eIpense 6 =ehicle 10$000 I /0 =/$000
+1
R R
Opening alance Lf $/0
&rade eIpenses
prepaid
18$E/
0
(ommission 00 Vehicle eIpenses
1
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Preparation of Financial Statements
A(enc. Commission %'e
R ROpening alance
Lf 00 !an" pa#ment 00
(ommission 0(losing alancecLd 0
180 180,alance b?% ==7
Tra%e pa.able
R R
*iscount recei=ed
/$80
0
Opening alance
Lf $800(ash paid to
suppliers
E$
00 Purchase
8800
0
(losing alance cLd1;/0
02$8
002$80
0
,alance b?%
"4+7
7
Stoc>
R ROpening alance
Lf
$80
0
(ost of goods sold and
losses
/$0
00
Purchases
88,0
00 (losing alance cLd1/80
0
28$8
0028$8
00
,alance b?%
"+5
77
)oo%s loss e*penses
R@oss from Jooding $000
@oss from /$000
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Preparation of Financial Statements
dampness
10$00
0
Cost of (oo%s sol%
R
Stoc" account
E/$0
00
isco'nt rerei:e% @ot8er income
R
&rade recei=ale
/$80
0
isco'nt alloBe% @e*penses
R
&rade recei=ale
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epreciation e*penses of :e8icle
RPro=ision for depreciation of
=ehicle
/00
0
Pro:ision for %epreciation of :e8icle
R R
(losing alance cLd $000 Opening alance Lf 8$000
*epreciation
eIpenses /000
$000 $000 ,alance b?%
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Preparation of Financial Statements
Opening alance
Lf /80 !penses 1",800
!an" pa#ment 18$E/0(losing alancecLd 10
18$20 18$20,alance b?% "
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A! ,OON PARTNERS!IP
Trial balance
As at 31 March 2011
Account Debit Credit
R R
(ash in !an" 2$/0 &rade recei=ale 1
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Preparation of Financial Statements
"/5 Preparin( Income Statement
A! ,OON PARTNERS!IP
Income statement
For the year ene 31 March 2011
R R
Sales
1/00
00
@ess (ost of goods sold
E/$00
0
)ross pro-t
5=67
77Add discount recei=ed /$800Add commission 0
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Preparation of Financial Statements
"/4 Preparin( Statement of Financial position
A! ,OON PARTNERS!IP
Statement of Financial position As at 31 March 2011
R R#on$current assets
Premises
/0$00
0Pro=ision for depreciation of
premises
1
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Preparation of Financial Statements
0
Accrual =ehicle eIpenses 1$001/
0
Total capital an% liabilities 5965
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Preparation of Financial Statements
"/" 0o'rnali1in( transactions
= =
+1, ebit
ebit
Cre%it
Preference di=idend
Final ordinar# shares di=idend
Pro=ision di=idend
,&&&
/0$000
/E$000+/, ebit
Cre%it
*eenture interest eIpense
Accrued interest eIpense
8,&&&
8$000+
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Preparation of Financial Statements
!ased on the information in (ompan#s oo"s$ the rates
eIpense 7ould e calculated as follo7s:
R
ates and insurance prepaid $;/0
@ess closing alance of rates paid in
ad=ance
;
/0
ates eIpenses
$00
0
+;,Appropriated proBt and general reser=e!ased on the information from compan#s oo"s )e7 =alue of eneral reser=e transferring 88$000 Q
10$000 R;8$000
+,Fittings and deli=er# =ehicles eIpense*epreciation to e pro=ided for Bttings and deli=er# =ehicles
for /010 at /0 per annum on cost. *epreciation eIpense of Bttings and deli=er# =ehicles
/$000 I /0 R1$800
"/+ Preparin( Trial balance
,OON C!EUN) $T
Trial balance
As at 31 !ece"#er 2010
Account Debit Credit
R ROrdinar# share capital /00$000Preference share capital 100$000(ash in an" E$/8(ash in hand /$20eneral reser=e ;8$000Furniture and deli=er# =ehicles at cost /$000Vehicle running costs +including depreciation, /8$E00Accumulated depreciation of furniture and
deli=er# Vehicles 82$/009n=entor# at
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Preparation of Financial Statements
-ages and salaries of emplo#ees ;8$800Pro=ision of di=idend /E$000
ates eIpenses $000ate and insurances +prepa#ments, ;/0
ross trading proBt for /010 18$809nterim ordinar# di=idend paid 1/$000!uilding at cost /88$0009n=estment at cost
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Preparation of Financial Statements
"/3 Preparin( Income Statement
,OON C!EUN) $TIncome Statement
For year ene 3 !ece"#er 2010
R
ross trading proBt for /010
18$
809ncome from in=estment /$800*istriution costs
Vehicle running costs +including
depreciation,
+/8$E0
0,Selling costs
Ad=ertising and sales promotions
+
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Preparation of Financial Statements
(o7F08!F A1 Page 8E
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Preparation of Financial Statements
"/5 Preparin( statement of retaine% earnin(
,OON C!EUN) $T
Statement of retaine% earnin(
As at 31 March 2010
R
)et proBt
/$/
Appropriations
&ransfer to general reser=e
10$0
00*i=idends
Preference di=idends
E$00
0Ordinar# di=idends
9nterim
1/$0
00
Final
/0$0
00
Retaine% earnin(s for t8e .ear
1
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Preparation of Financial Statements
"/4 Preparin( statement of Financial position
,OON C!EUN) $TStatement of Financial Position
As at 31 March 2010
R RAssets
#on$current assets
!uilding at cost
/88$0
00
Furniture and deli=er# =ehicles at cost
/$00
0Accumulated depreciation of furniture and
deli=er# =ehicles82$/0
0(arr#ing amount of furniture and deli=er#
=ehicles
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Preparation of Financial Statements
Ordinar# share capital
/00$0
00
Preference share capital
100$0
00
eneral reser=e
;8$00
0
etained earnings cLd/2$88
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Preparation of Financial Statements
C!APTER 5# REPORT ON DARNER COMPANY
AN PEREIRA COMPANY
Report on -nancial statements for (ro'p of compan.
"/" Preparin( consoli%ate% income statement for t8e .ear
en%e% 37 0'ne +7"7
DARNER $T
Consoli%ate% income statement
For the year ene 30 $une 2010RT
000
e=enue
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Preparation of Financial Statements
(o7F08!F A1 Page ;/
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Preparation of Financial Statements
&he di=idends recei=ed #
-arner @td on time of Post
acGuisition
8% ! %#%
*i=idends credited on
consolidated income
statement
8% ; > ;
&
"/+ Preparin( -nancial statements of e'it. c8an(es
DARNER $T
Statement of c8an(es in e'it.
etained earnings
RT
000!alance at 1 Cul# /002
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Preparation of Financial Statements
"/3 Preparin( consoli%ate% balance s8eet for t8e .ear en%e%
37 0'ne +7"7
DARNER $T
Consoli%ate% balance s8eet
As at 30 $une 2010
RT 000 RT 000#on$current assets /$/;0
Propert#$ plant and eGuipmentood7ill 12
/$8
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Preparation of Financial Statements
Notes:
&here 7ere no intercompan# transaction during the #ear so
there 7ill e no deduction from assets and liailities of -arner
@td and Pereira @td.
=" &&&
)oncurrent assets 1$E;0 Q ;00
%,%&
9n=entor# #& : 8&
?&&
ecei=ales %>@ : %#>
8#
(ash #@ : ##%
/22)oncurrent liailities #,&& : #
1$//;(urrent liailities 8&& : %&
;0
ood7ill-arner compan# accounts for preacGuisition di=idends #
treating them as a deduction from the cost of the in=estment.
As calculating ao=e$ a preacGuisition di=idend recei=ed #
-arner @td is =,&&&. Investment in *ereira 'ompany 9 @&&,&&& ; >,&&& 9 =?,&&&
According to the scenario$ the propert#$ plant and eGuipment of
Pereira (ompan# had open mar"et =alue 7as =&&,&&&. -ince no
depreciation ad/ustment will be made in the group accounts, the year end value
will be taken as the carrying value of the property, plant and e1uipment.
&he re=aluation reser=e created in eGuit# of consolidated
alance sheet is:&&,&&& G >&,&&& 9 =#&,&&&
ood7ill 7ill e calculated ased on the net assets 7hich
include retained earnings of preacGuisition.
(o7F08!F A1 Page ;;
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Preparation of Financial Statements
etained earnings for the #ear ended
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Preparation of Financial Statements
Postretained earning #? ! >& ! %#%
@
Fair =alue adHustment #& ! >&
8
)oncontrolling interest
+44
(o7F08!F A1 Page ;E
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Preparation of Financial Statements
CONC$USION
&hrough this report$ it can e seen that the 7a# to prepare Bnancialstatements from complete or incomplete records 7as sho7n clearl#
through three dierent companies. Also$ Bnancial information in
accepted formats for pulication 7ere presented in each case 7ith
clear eIplanation.
9 personall# thin" m# 7or" achie=es good Gualit# ecause 9 pro=ided
important theories$ anal#sis and applications aout e=er# aspects
mentioned in this report. !esides$ 9 also used reliale resources to get
information. %o7e=er$ ecause of 7ord limitation and some other
prolems 9 encountered +summariDing$ anal#Ding s"ills$ etc,$ some
parts in this report could e not thorough and anal#Ded deepl#.
(o7F08!F A1 Page ;
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Preparation of Financial Statements
REFERENCES
AccoutingSimpliBed$ n.d. Accoutin'$(i)pli*ed+co)+ OnlineA=ailale at: http:LLaccountingsimpliBed.comLBnancialLusersof
accountinginformation.html
Accessed 1 )o=emer /01/.
Acs$ n.d. Acs !ducation+ Online
A=ailale at: http:LL777.acs.edu.auLdo7nloadLsamplesLoo"1.pdf
Accessed 1 )o=emer /01/.
Alunct$ n.d. 7ho needs Bnancial statements. C(! Applied -usiness,
Volume /2$ p.
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Preparation of Financial Statements
eaich$ ).$ /01/. -ied+ Online
A=ailale at: http:LL777.iDed.co.u"LnotesL/01/L0ELintroductionusers
accounts
Accessed 12 )o=emer /01/.
Valencia$ n.d. alencia Colle'e+ Online
A=ailale at: http:LLfacult#.=alenciacollege.eduLsrussoLch1us.htm
Accessed 1E )o=emer /01/.
-ard$ A.$ /00