The following is a Trial Balance for Ocean Fresh PLC as at 31 December 2018: Debit Credit $ $ Sales 954,000 Provision for doubtful debts 1,000 Purchases 540,500 Returns Inward 29,990 Carriage Inwards 550 Salaries 150,000 Rent and Business Rates 25,440 Rent Received 1,500 Discounts Allowed 3,915 Director's Remuneration 75,560 Provision for Depreciaton: Machinery 38,000 Motor Vehicles 26,400 Bank 15,960 Computer repairs 15,696 Motor vehicles at cost 78,500 Machinery at cost 240,000 Loan note interest 6,000 Discounts Received 5,637 Retained earnings as at 31st Dec 2017 30,000 General Reserve 21,850 Non-current Asset replacement reserve 40,200 15% Loan note 60,000 Accounts payable 50,508 Accounts receivable 200,000 Inventory at 1st January 2018 96,984 Share capital:Issued 250,000 1,479,095 1,479,095 Additional Information: Inventory at 31 December 2018 $365,410 Accrued Business rates: $900, Salaries $2,000 Prepaid Director’s remuneration $1,000 Provision for doubtful debts should be decreased to $900 Loan note interest outstanding at 31 December 2018 Depreciation on cost-Machinery 25%, Motor vehicles 20% Transfer to reserves: General $12,000; Non-current asset replacement $140,000 A dividend of 20% of share capital was proposed by the board of directors of Ocean Fresh PLC Required: Given the following information above, prepare the following statements in good style for Ocean Fresh PLC: The Statement of profit and loss for the year ended 31st December 2018 ii) The Statement of changes in equity for the year ended 31st December 201 iii) The Statement of Financial Position as at 31st December 2018
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.
The following is a
|
|
Debit |
Credit |
|
$ |
$ |
|
|
Sales |
954,000 |
|
|
Provision for doubtful debts |
1,000 |
|
|
Purchases |
540,500 |
|
|
Returns Inward |
29,990 |
|
|
Carriage Inwards |
550 |
|
|
Salaries |
150,000 |
|
|
Rent and Business Rates |
25,440 |
|
|
Rent Received |
1,500 |
|
|
Discounts Allowed |
3,915 |
|
|
Director's Remuneration |
75,560 |
|
|
Provision for Depreciaton: |
||
|
Machinery |
38,000 |
|
|
Motor Vehicles |
26,400 |
|
|
Bank |
15,960 |
|
|
Computer repairs |
15,696 |
|
|
Motor vehicles at cost |
78,500 |
|
|
Machinery at cost |
240,000 |
|
|
Loan note interest |
6,000 |
|
|
Discounts Received |
5,637 |
|
|
|
30,000 |
|
|
General Reserve |
21,850 |
|
|
Non-current Asset replacement reserve |
40,200 |
|
|
15% Loan note |
60,000 |
|
|
Accounts payable |
50,508 |
|
|
|
200,000 |
|
|
Inventory at 1st January 2018 |
96,984 |
|
|
Share capital:Issued |
250,000 |
|
|
1,479,095 |
1,479,095 |
Additional Information:
- Inventory at 31 December 2018 $365,410
- Accrued Business rates: $900, Salaries $2,000
- Prepaid Director’s remuneration $1,000
- Provision for doubtful debts should be decreased to $900
- Loan note interest outstanding at 31 December 2018
Depreciation on cost-Machinery 25%, Motor vehicles 20%- Transfer to reserves: General $12,000; Non-current asset replacement $140,000
- A dividend of 20% of share capital was proposed by the board of directors of Ocean Fresh PLC
Required:
Given the following information above, prepare the following statements in good style for Ocean Fresh PLC:
- The Statement of
profit and loss for the year ended 31st December 2018 - ii) The Statement of changes in equity for the year ended 31st December 201
iii) The Statement of Financial Position as at 31st December 2018
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