Assignment 1 The following is the Trial Balance of Sonia HR Enterprises, a dealer in HR Software, as at 31st December, 2021. GHS GHS Capital 240,000 Receivables and Payables 159,000 51,000 Inventory 99,000 Motor vehicles: (cost) 72,500 Accumulated depreciation (31 December 2020) 32,500 Office equipment: (cost) 90,000 Accumulated depreciation (31 December 2020) 30,000 Administrative expenses 26,000 Purchases and sales 243,750 490,500 Employee benefits 33,000 Selling expenses 20,000 Plant: (cost) 125,000 Accumulated depreciation (31 December 2020) 37,500 Discounts 7,500 12,500 Accruals 79,000 Investment income 27,500 Returns 12,000 17,500 Cash and cash equivalents 126,750 Allowance for doubtful debts 31 December 2020 14,000 Bad debts 17,500 Total 1,032,000 1,032,000 Additional information available is given below: i. The inventory sheets as at 31/12/2021 put the value of inventory at GHS129,500. ii. Allowance for doubtful debt is to be increased to GHS19,080 as at 31 December 2021. iii. An amount of GHS6,000 in respect of rent and rates is included in administrative expenses. This amount relates to 2022 financial year. iv. All items of property, plant and equipment are depreciated at the rate of 10% per annum on the straight line basis. v. An amount of GHS10,000 incurred in the repair of plant had been debited to the plant account. vi. Personal withdrawal of cash amounting to GHS25,000 was made by Miss Sonia, the proprietress. This has not been recorded in the financial records. Required: Prepare in a suitable form for publication, a. Income statement for the year ended 31st December, 2021. b. Statement of financial Position as at 31st December, 2021.
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
Assignment 1
The following is the
December, 2021.
| GHS | GHS | |
| Capital | 240,000 | |
| Receivables and Payables | 159,000 | 51,000 |
| Inventory | 99,000 | |
| Motor vehicles: (cost) | 72,500 | |
| 32,500 | ||
| Office equipment: (cost) | 90,000 | |
| Accumulated depreciation (31 December 2020) | 30,000 | |
| Administrative expenses | 26,000 | |
| Purchases and sales | 243,750 | 490,500 |
| Employee benefits | 33,000 | |
| Selling expenses | 20,000 | |
| Plant: (cost) | 125,000 | |
| Accumulated depreciation (31 December 2020) | 37,500 | |
| Discounts | 7,500 | 12,500 |
| Accruals | 79,000 | |
| Investment income | 27,500 | |
| Returns | 12,000 | 17,500 |
| Cash and cash equivalents | 126,750 | |
| Allowance for doubtful debts 31 December 2020 | 14,000 | |
| 17,500 | ||
| Total | 1,032,000 | 1,032,000 |
Additional information available is given below:
i. The inventory sheets as at 31/12/2021 put the value of inventory at GHS129,500.
ii. Allowance for doubtful debt is to be increased to GHS19,080 as at 31 December 2021.
iii. An amount of GHS6,000 in respect of rent and rates is included in administrative expenses.
This amount relates to 2022 financial year.
iv. All items of property, plant and equipment are
on the straight line basis.
v. An amount of GHS10,000 incurred in the repair of plant had been debited to the plant
account.
vi. Personal withdrawal of cash amounting to GHS25,000 was made by Miss Sonia, the
proprietress. This has not been recorded in the financial records.
Required: Prepare in a suitable form for publication,
a. Income statement for the year ended 31st December, 2021.
b.
Step by step
Solved in 2 steps
