Super Sound Company as at 31 Dec, 2015 TITLE OF ACCOUNTS DEBIT CREDIT Cash 145,000 A/c receivable 75,000 Plant 325,000 Selling expenses 12,500 Prepaid Rent 8,500 Other expenses 6,000 Office supplies expense 3,500 Interest expense 16,000 Mds. Inventory-Beg 27,800 Purchases 275,000 Transportation-in 22,000 Sales return 12,000 Equipment 500,000 Acc. dep-equipment 75,000 Acc. dep- plant 100,000 All for bad debts 12,000 Salaries expenses 65,000 Marketable securities 45,000 Sales revenue 695,000 Purchases return 1,800 Purchases discount 4,500 Commission income 27,000 A/c payable 35,000 Capital 222,300 Short term loan 55,000 Long term loan 160,000 Bill payable 22,700 Retained earning 128,000 TOTAL 1,538,300 1,538,300 ADJUSTMENT DATA: Depreciation charged 5% on equipment and 2% on plant book value. Inventory on hand at the end of the year Rs.12,000. Tax rate 10% Required: Income Statement and Balance Sheet
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.
Super Sound Company as at 31 Dec, 2015
|
TITLE OF ACCOUNTS |
DEBIT |
CREDIT |
|
Cash |
145,000 |
|
|
A/c receivable |
75,000 |
|
|
Plant |
325,000 |
|
|
Selling expenses |
12,500 |
|
|
Prepaid Rent |
8,500 |
|
|
Other expenses |
6,000 |
|
|
Office supplies expense |
3,500 |
|
|
Interest expense |
16,000 |
|
|
Mds. Inventory-Beg |
27,800 |
|
|
Purchases |
275,000 |
|
|
Transportation-in |
22,000 |
|
|
Sales return |
12,000 |
|
|
Equipment |
500,000 |
|
|
Acc. dep-equipment |
|
75,000 |
|
Acc. dep- plant |
|
100,000 |
|
All for |
|
12,000 |
|
Salaries expenses |
65,000 |
|
|
Marketable securities |
45,000 |
|
|
Sales revenue |
|
695,000 |
|
Purchases return |
|
1,800 |
|
Purchases discount |
|
4,500 |
|
Commission income |
|
27,000 |
|
A/c payable |
|
35,000 |
|
Capital |
|
222,300 |
|
Short term loan |
|
55,000 |
|
Long term loan |
|
160,000 |
|
Bill payable |
|
22,700 |
|
|
|
128,000 |
|
TOTAL |
1,538,300 |
1,538,300 |
ADJUSTMENT DATA:
Depreciation charged 5% on equipment and 2% on plant book value.- Inventory on hand at the end of the year Rs.12,000.
- Tax rate 10%
Required: Income Statement and
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