Prepare the Statement of Financial Position of Scampi Traders as at 28 February 2022. Note: The Statement of Comprehensive Income and the notes to the financial statement are not required. INFORMATION The information provided below was extracted from the accounting records of Scampi Traders on 28 February 2022, the end of the financial year. ADDITIONAL INFORMATION AND ADJUSTMENTS According to physical stocktaking on 28 February 2022, thefllowing were on hand: 1. 1.1 Trading inventory, R103 000 1.2 Consumable stores, R200. 2. Rent has been paid up to 31 March 2022. Note: The rental was increased by R350 per month with effect from 01 February 2022. 3. A debtor who owed R1 000 was declared insolvent. Forty percent (40%) of the amount owing was received from his insolvent estate on 27 February 2022 and recorded. The balance of his account must now be written off. 4. The provision for bad debts must be decreased by R300. 5. Provide for outstanding interest on the loan from Maxi Bank. Interest is not capitalised. The loan was obtained on 01 March 2021. Loan repayments (excluding interest) totalling R20 000 are expected to be made in the next financial year. 6. The telephone account for February 2022 was due to be paid on 03 March 2022, R800. 7. According to the bank statement, service fees of R200 were levied by the bank. This has not been recorded. Received an amount for R500 from H. Smit whose account was written off previously. No entry was made for this. 9. A debtor whose account of R4 000 was overdue for one month must be charged interest at a rate of 15% per annum. 10. Provide for depreciation as follows: 10.1 On equipment at 10% per annum on cost. 10.2 On vehicles, R19 650. The net profit for the year ended 28 February 2022, AFTER taking the above into account, was R102 050. 11.
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.
| Pre - Ajustment |
||
| Balance Sheet Accounts Section | Debit | Credit |
| Capital | 240 950 | |
| Drawings | 114 000 | |
| Vehicle at cost | 285 000 | |
| Equipment at cost | 165 000 | |
| 138 000 | ||
| Accumulated Depreciation on Equipment | 54 000 | |
| Trading Iventory | 105 000 | |
| Debotors Control | 48 000 |
| Provision for |
6 600 | |
| Bank | 35 850 | |
| Creditors Control | 61 500 | |
| Mortage Loan:Maxi Bank 16%pa | 105 000 | |
| Nominal Account Section | ||
| sales | 742 500 | |
| Cost of sales | 360 000 | |
| Sales Returns | 4 500 | |
| salaries and wages | 129 000 | |
| bad debts | 1500 |
| Consumable Stores | 2300 | |
| Rent exspenses | 34 500 | |
| Motor exspenses | 26 700 | |
| bad debt recovery | 1300 | |
| telephone | 9 300 | |
| electricity and water | 18 600 | |
| Bank charges | 3700 | |
| Insurance | 8100 | |
| Interest on mortage loan | 7800 | |
| comission income | 9000 |
| 1 358 850 | 1 358 850 |
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