Question 2: - The following is the trial balance of Falcon Manufacturing Company as at March 31, 2018 Particular Rs. Particular Rs. Cash at Bank 38, 100 Indirect Labor 18, 400 Acc Receivables (net) 9, 420 Sales 496, 000 Dir Material Inv – April 1 30, 000 Sales Returns 16, 000 Work-in-process April 1 35, 725 Purchases of Material 48, 000 Fin Goods Inv April 1 19, 430 Carriage on Purchases 5, 000 Machine – Factory 600, 000 Purchases Returns 3, 000 Salary Expense 40, 500 Purchases Discount 1, 500 Machine – Office 200, 000 Direct Labor 86, 450 Acc Dep – Office machine 143, 700 Electricity 200, 000 Salary Payable 15, 500 Rent 75, 000 Indirect Material 25, 600 Depreciation (machine) 45, 000 The inventories as at March 31, 2018 are as follows: - - Direct Material Inventory Rs. 6, 300 - Work-in-process Inventory Rs. 31, 800 - Finished goods Inventory 38, 180 Note: Use the following ratio to calculate “Electricity, Rent, and Depreciation expense” Ratios: Factory: Office = 4:3 Required - Prepare the following statements b. Income Statement
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.
Question 2: - The following is the
|
Particular |
Rs. |
Particular |
Rs. |
|
Cash at Bank |
38, 100 |
Indirect Labor |
18, 400 |
|
Acc Receivables (net) |
9, 420 |
Sales |
496, 000 |
|
Dir Material Inv – April 1 |
30, 000 |
Sales Returns |
16, 000 |
|
Work-in-process April 1 |
35, 725 |
Purchases of Material |
48, 000 |
|
Fin Goods Inv April 1 |
19, 430 |
Carriage on Purchases |
5, 000 |
|
Machine – Factory |
600, 000 |
Purchases Returns |
3, 000 |
|
Salary Expense |
40, 500 |
Purchases Discount |
1, 500 |
|
Machine – Office |
200, 000 |
Direct Labor |
86, 450 |
|
Acc Dep – Office machine |
143, 700 |
Electricity |
200, 000 |
|
Salary Payable |
15, 500 |
Rent |
75, 000 |
|
Indirect Material |
25, 600 |
|
45, 000 |
The inventories as at March 31, 2018 are as follows:
Note: Use the following ratio to calculate “Electricity, Rent, and Depreciation expense”
Ratios: Factory: Office = 4:3
Required - Prepare the following statements
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