The following information relates to the business of Maria & Co for the year ended 31 Dec 2020. Particulars Debit Credit Rs.(000) Rs.(000) Capital account 1 Jan 2020 13,640 Building at cost 7,500 Furniture at cost 2,000 Motor cars at cost 6,300 Accumulated depreciation- Motors cars 2,370 Accumulated depreciation-Furniture 800 Accumulated depreciation –Building 450 Inventory 1 Jan 2020 6,740 Purchases 54,520 Sales 79,060 Salaries 8,760 Rates 1,170 Office expenses 3,950 Motor expenses 3,790 Drawings 4,800 Allowance for doubtful debts 600 Bank loan 4,000 Receivables 9,240 Payables 10,040 Bank balance 2.190 Total 110,960 110,960 Additional information is following Inventory at 31 Dec 2020 was Rs.7,330,000, Rates paid in advance at 31 Dec 2020 amounted to Rs.250,000, Allowance for doubtful debts is to be equal to 5% of receivables at 31 Dec 2020, Depreciation on building is 1%, Furniture is 10%, Motor cars is 20% using straight line method, Interest on loan at 5% has to be accrued. Prepare Statement of comprehensive income for the year ended 31 Dec 2020. Prepare Balance sheet as at 31 Dec 2020.
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 following information relates to the business of Maria & Co for the year ended 31 Dec 2020. Particulars Debit Credit Rs.(000) Rs.(000) Capital account 1 Jan 2020 13,640 Building at cost 7,500 Furniture at cost 2,000 Motor cars at cost 6,300 Accumulated depreciation-Furniture 800 Accumulated depreciation –Building 450 Inventory 1 Jan 2020 6,740 Purchases 54,520 Sales 79,060 Salaries 8,760 Rates 1,170 Office expenses 3,950 Motor expenses 3,790 Drawings 4,800 Allowance for doubtful debts 600 Bank loan 4,000 Receivables 9,240 Payables 10,040 Bank balance 2.190 Total 110,960 110,960
Additional information is following Inventory at 31 Dec 2020 was Rs.7,330,000, Rates paid in advance at 31 Dec 2020 amounted to Rs.250,000, Allowance for doubtful debts is to be equal to 5% of receivables at 31 Dec 2020, Depreciation on building is 1%, Furniture is 10%, Motor cars is 20% using
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