The Following Trail Balance has been extracted from the books of ABC Company on December 31st, 2018: Descriptions Debit Descriptions Debit Rs. Rs. Cash 8,200 Notes Payable 3,200 Accounts Receivable 41,000 Accounts Payable 12,350 Notes Receivable 23,000 Taxes Payable 1,500 Material (1-1-2018) 31,800 Rent Payable 1,020 Work in Process (1-1-2018) 4,000 Dividend Payable 500 Finished Goods (1-1--2018) 11,700 Sales 35,000 Prepaid Insurance 200 Common Stock 10,000 Machinery & Equipment 93,500 Retained Earnings 34,570 Purchased of Material 16,000 Accumulated Depreciation 20,000 Carriage inward 520 Direct Labor 33,000 Indirect Material 8,520 Indirect Labor 5,580 Depreciation - Factory 5,400 Utility - Factory 6,500 Carriage outward 460 Advertising 175 Salesmen Salary 565 Foreman Salary 7,000 Administrative Cost 1,020 318,140 318,140 During the year 70,000 units have been produced. The Following Further information are also available: Inventories at December 31st, 2018 Rs. Material 3,520 Work in Process 2,500 Finished Goods 10,000 Note: The factory overhead cost applied at the rate of 100% of direct labor cost. The actual FOH cost incurred during the period Rs. 31,480. Required a) Statement of Cost of Goods Manufactured at December 31st, 2018. b) Statement of Profit or Loss for the year ended December 31st, 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.
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The Following Trail Balance has been extracted from the books of ABC Company on December 31st, 2018: |
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Descriptions |
Debit |
Descriptions |
Debit |
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Rs. |
Rs. |
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Cash |
8,200 |
Notes Payable |
3,200 |
|
|
41,000 |
Accounts Payable |
12,350 |
|
Notes Receivable |
23,000 |
Taxes Payable |
1,500 |
|
Material (1-1-2018) |
31,800 |
Rent Payable |
1,020 |
|
Work in Process (1-1-2018) |
4,000 |
Dividend Payable |
500 |
|
Finished Goods (1-1--2018) |
11,700 |
Sales |
35,000 |
|
Prepaid Insurance |
200 |
Common Stock |
10,000 |
|
Machinery & Equipment |
93,500 |
|
34,570 |
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Purchased of Material |
16,000 |
|
20,000 |
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Carriage inward |
520 |
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|
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Direct Labor |
33,000 |
|
|
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Indirect Material |
8,520 |
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|
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Indirect Labor |
5,580 |
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|
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Depreciation - Factory |
5,400 |
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Utility - Factory |
6,500 |
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Carriage outward |
460 |
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Advertising |
175 |
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Salesmen Salary |
565 |
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Foreman Salary |
7,000 |
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Administrative Cost |
1,020 |
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318,140 |
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318,140 |
During the year 70,000 units have been produced. The Following Further information are also available:
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Inventories at December 31st, 2018 |
Rs. |
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Material |
3,520 |
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Work in Process |
2,500 |
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Finished Goods |
10,000 |
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Note: The |
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The actual FOH cost incurred during the period Rs. 31,480. |
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Required |
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a) Statement of Cost of Goods Manufactured at December 31st, 2018. |
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b) Statement of Profit or Loss for the year ended December 31st, 2018. |
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