The following is the trail Balance of X and Y Co. as on March 31, 2021. The partners sharing profits and losses in the ratio 2:1. Prepare the Income Statement, Profit & Loss Appropriation A/c, Partners' Capital A/c and the Balance Sheet. Particulars Dr. Particulars Cr. Land and Buildings 787500 X Capital A/c 236250 Y Capital A/c 262500 Plant and Machinery 157500 Wages 105000 Sundry creditors 131250 Opening Stock of Finished Goods 210000 Sales (net) 1706250 Opening Stock of Raw material 105000 Discount 13125 Opening Stock of Work in Progress 94500 Provision for bad debts 7875 Sundry debtors 262500 Commission 52500 Carriage inwards 7875 Y's Loan A/c 157500 Carriage outwards 4725 Factory Expenses 39375 Royalties Purchase of Raw material (net) 7875 393750 Factory rent & taxes 34125 Discount 15225 Office rent 21000 Insurance 10500 Bad debts 7875 Office Expenses 39375 Salaries of works manager 63000 Cash at bank 43050 2488500 2488500 The following additional information is to be taken into consideration: Closing Stock: Finished Goods 262500 Raw Materials 157500 Work in Progress 131250 Outstanding Liabilities: Wages 26250 Office Salaries 31500 Office Rent 10500 Partnership Salary: 31500 Y 15750 Insurance Premium paid in advance 2625 Provision for bad debts to be created @ 2.5% on debtors Depreciate Land and Buildings by 2.5% and Plant and Machinery by 5%. The loan account of Y was raised in the books before the beginning of the year. ol olololelelololol ololo
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.
Prepare income statement for this question
Step by step
Solved in 4 steps
