Question 5 The following is the Trial Balance of Maple Unlon Berhad at 31 December 2020. DR CR RM RM Machinery at cost Accumulated depreciation as of 1 January 2020- machinery 60,000 10,000 Motor vehicles at cost Accumulated depreciation as of 1 January 2020- motor vehicles Furniture & equipment at cost Accumulated depreciation as of 1 January 2020- furniture & equipment Long term loan (repayable on 30 November 2022) 50,000 I8,000 25,000 5,000 30,000 Ordinary share capital 9% preference share capital Trade receivables & payables Allowance for doubtful debts Sales & purchases Salaries & wages 50,000 30,000 21,000 38,000 400 190,000 24,000 34,500 303,600 Bank Bad debts 600 2,100 1,600 1,500 4,000 16,000 Returns 1,950 1,850 Discounts Loan interest Telephone expenses Rent, rates and insurance Inventory as of 1 January 2020 Retained earnings as of 1 January 2020 4,500 10,000 461.800 461.800
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.
Required:
Prepare:
a. the Statement of Comprehensive Income for the year ended 31 December
2020.
b. the Statement of Financial Position as at 31 December 2020.
Step by step
Solved in 4 steps with 4 images
