The following balances were extracted from the books of Billion Precision for the year ended 31 December 2020. Dr (RM) Cr (RM) Land 500 000 Building 200 000 Motor Vehicles 120 000 Plant & machinery 70 000 Profit b/f as at 01.01.2020 237 650 Capital 438 000 Acc depreciation as at 1.1.2020 Building 60 000 Motor Vehicles 69 250 Plant & machinery 40 000 Returns 3 600 4 100 Revenue 800 000 Purchases 400 000 Discounts 5 000 Carriage inwards 7 700 Opening inventory 52 000 Provision for bad debts 2 000 Trade receivable / Trade payable 66 000 43 200 Advertising 18 000 Staff training cost 4 000 Bad debts 12 500 Motor expenses 27 000 Rental 90 000 Bank 7 600 Wages & Salaries 126 000 Grand Total 1 701 800 1 701 800 Additional information: i. The provision for bad debts should be 4% of trade receivables. ii. Depreciation is to be charged as follows: -Buildings 2% on cost. -Plant and machinery 20% on cost. -Vehicles 25% on cost. iii. The closing inventories is valued at RM57,000. Required: Prepare a 10-column worksheet based on information above. END OF QUESTION
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.
The following balances were extracted from the books of Billion Precision for the year ended 31 December 2020.
| Dr (RM) | Cr (RM) | |
| Land | 500 000 | |
| Building | 200 000 | |
| Motor Vehicles | 120 000 | |
| Plant & machinery | 70 000 | |
| Profit b/f as at 01.01.2020 | 237 650 | |
| Capital | 438 000 | |
| Acc |
||
| Building | 60 000 | |
| Motor Vehicles | 69 250 | |
| Plant & machinery | 40 000 | |
| Returns | 3 600 | 4 100 |
| Revenue | 800 000 | |
| Purchases | 400 000 | |
| Discounts | 5 000 | |
| Carriage inwards | 7 700 | |
| Opening inventory | 52 000 | |
| Provision for |
2 000 | |
| Trade receivable / Trade payable | 66 000 | 43 200 |
| Advertising | 18 000 | |
| Staff training cost | 4 000 | |
| Bad debts | 12 500 | |
| Motor expenses | 27 000 | |
| Rental | 90 000 | |
| Bank | 7 600 | |
| Wages & Salaries | 126 000 | |
| Grand Total | 1 701 800 | 1 701 800 |
Additional information:
i. The provision for bad debts should be 4% of trade receivables.
ii. Depreciation is to be charged as follows:
-Buildings 2% on cost.
-Plant and machinery 20% on cost.
-Vehicles 25% on cost.
iii. The closing inventories is valued at RM57,000.
Required:
Prepare a 10-column worksheet based on information above.
END OF QUESTION
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