Prepare the Statement of Financial Position as at 29 February 2020. The notes to the financial statements are not
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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The |
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REQUIRED |
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Prepare the required. Show workings in brackets. |
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INFORMATION |
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DYSAN LIMITED
PRE-ADJUSTMENT TRIAL BALANCE AS AT 29 FEBRUARY 2020
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Debit (R) |
Credit (R) |
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Balance sheet accounts section |
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Ordinary share capital (100 000 shares) |
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200 000 |
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62 000 |
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Vehicles at cost |
180 000 |
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Equipment at cost |
120 000 |
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90 000 |
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Accumulated depreciation on equipment |
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38 000 |
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Trading inventory |
70 000 |
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Debtors control |
32 000 |
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Provision for |
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4 000 |
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Bank |
182 000 |
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Cash float |
2 000 |
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Creditors control |
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40 000 |
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South African Revenue Services: Company tax |
10 000 |
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Long-term loan: Aries Bank (16% p.a.) |
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80 000 |
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Nominal accounts section |
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Sales |
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485 000 |
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Cost of sales |
240 000 |
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Sales returns |
5 000 |
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Salaries and wages |
84 000 |
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Bad debts |
5 000 |
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Consumable stores |
2 000 |
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Rent expense |
28 000 |
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Motor expenses |
15 000 |
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Bad debts recovered |
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2 000 |
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Telephone |
7 000 |
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Electricity and water |
11 000 |
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Bank charges |
3 000 |
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Insurance |
4 000 |
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Interest on mortgage loan |
6 000 |
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Commission income |
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5 000 |
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1 006 000 |
1 006 000 |
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Adjustments and additional information |
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1. |
According to physical stocktaking done on 29 February 2020, trading inventory on hand amounted to R68 000. |
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2. |
Consumable stores unused according to stocktaking amounted to R200 on 29 February 2020. |
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3. |
No entry has been made for a commission of 10% earned but not received on 500 items that were sold for R60 each. |
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4. |
Received a cheque for R600 from an insolvent debtor, J. Marsh, who was only able to pay 30% of her debt. The balance of her account must now be written off. No entries were made for these transactions. |
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5. |
The provision for bad debts must be decreased to R1 500. |
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6. |
The telephone account for February 2020 was due to be paid on 02 March 2020, R700. |
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7. |
The rental agreements signed with the lessor (landlord) are as follows: R30 000 for the period 01 January 2019 to 31 December 2019, and R36 000 for the period 01 January 2020 to 31 December 2020. Make the necessary adjustment. |
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8. |
The loan from Aries Bank was obtained on 01 September 2019. Provide for the outstanding interest. (Interest is not capitalised.) Loan repayments (excluding interest) are expected to amount to R12 000 in the next financial year. |
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9. |
The insurance total includes an annual premium of R1 800 that was paid for the period 01 June 2019 to 31 May 2020. |
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10. |
The bank statement for February 2020 reflected bank charges of R180 that have not yet been recorded. |
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11. |
The electricity and water statement for February 2020 included an amount of R1 000 for a deposit required by the municipality. This was recorded in the water and electricity account. |
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12. |
Provide for depreciation as follows: |
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12.1 |
On equipment at 15% per annum on cost. |
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12.2 |
On vehicles at 25% per annum on the diminishing balance. |
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13. |
An 000, has not been recorded. |
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14. |
Company tax for the financial year amounted to R11 691. |
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15. |
The directors proposed a final dividend of 18 cents per share. |
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16. |
The profit after tax for the year ended 29 February 2020, after taking the above adjustments into account, was R27 279. |
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