Celloscope Ltd. Balance Sheet 31-Dec-19 Current Assets Cash 18000 Accounts Receivable 20000 Inventory 12000 Prepaid Insurance 600 Sub total 50600 Non-current Assets Land 80000 Building 60000 Less: Accumulated Depreciation 10,000 50000 Sub total 130000 Total Assets 180600 Current Liabilities Accounts payable 50000 Taxes Payable 8000 Sub total 58000 Non-Current Liabilities Bonds Payable (10%) 40000 40000 Owners’ Equity Share Capital 60000 Retained Earning 22600 Sub total 82600 Total Liabilities and Owners’ Equity 180600 The following are expected in the next 3 months January February March Sales 200000 250000 350000 Purchase 100000 110000 150000 Expenses 15000 18000 25000 All sales are on credit and the collections have the following pattern 70% in the month of sale 25% in the subsequent month 5% uncollectible Half of the Purchases are paid in the same month, rest half paid month after the purchase. Payment for expenses are paid in the month that it has incurred. Depreciation is at the rate of 10% per annum. Insurance is paid for a year, and it will expire in June. Inventory level remains same Bond interest will be paid in march. Dividends to be declared and paid in February, from last years’ experience, projected dividend is going to be 5000. Salary expense is 4500 per month and paid at the end of every month. The company has access to credits, if needed they can get loan with 1% monthly interest. The company usually pays off the loan whenever they have the ability to pay off. Requirement: Make a projected Cash flow statement for January, February and March Make a projected Income statement for the quarter. 3) Make a projected Balance Sheet for the quarter.
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.
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Celloscope Ltd. |
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31-Dec-19 |
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Current Assets |
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Cash |
18000 |
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20000 |
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Inventory |
12000 |
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Prepaid Insurance |
600 |
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Sub total |
50600 |
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Non-current Assets |
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Land |
80000 |
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Building |
60000 |
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Less: |
10,000 |
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50000 |
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Sub total |
130000 |
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Total Assets |
180600 |
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Current Liabilities |
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Accounts payable |
50000 |
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Taxes Payable |
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8000 |
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Sub total |
58000 |
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Non-Current Liabilities |
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Bonds Payable (10%) |
40000 |
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40000 |
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Owners’ Equity |
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Share Capital |
60000 |
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22600 |
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Sub total |
82600 |
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Total Liabilities and Owners’ Equity |
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180600 |
The following are expected in the next 3 months
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January |
February |
March |
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Sales |
200000 |
250000 |
350000 |
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Purchase |
100000 |
110000 |
150000 |
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Expenses |
15000 |
18000 |
25000 |
- All sales are on credit and the collections have the following pattern
70% in the month of sale
25% in the subsequent month
5% uncollectible
- Half of the Purchases are paid in the same month, rest half paid month after the purchase.
- Payment for expenses are paid in the month that it has incurred.
- Depreciation is at the rate of 10% per annum.
- Insurance is paid for a year, and it will expire in June.
- Inventory level remains same
- Bond interest will be paid in march.
- Dividends to be declared and paid in February, from last years’ experience, projected dividend is going to be 5000.
- Salary expense is 4500 per month and paid at the end of every month.
- The company has access to credits, if needed they can get loan with 1% monthly interest. The company usually pays off the loan whenever they have the ability to pay off.
Requirement:
- Make a projected
Cash flow statement for January, February and March - Make a
projected Income statement for the quarter.
3) Make a projected Balance Sheet for the quarter.
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