The trial balance of Manhawk Ltd as at 30 June 2010 disclosed: Cash at bank $ 13,000 Accounts receivable 67,200 Inventory (at cost) 52,100 Land & buildings (at director's valuations) 1,400,000 Fixtures & fittings (at cost) 212,000 Investments (at market value) 85,000 Goodwill (at cost) 50,000 Patents (at cost) 15,000 Deferred tax asset 9,000 Allowance for doubtful debts $ 3,100 Accounts payable 51,500 Accrued expenses 2,500 Accumulated depreciation - buildings 90,000 Accumulated depreciation - fixtures & fittings 82,500 Accumulated impairment - goodwill 20,000 Taxation payable 42,000 Deferred tax liability 5,200 Unsecured notes 250,000 Mortgage 500,000 Provision for long service leave 25,000 General reserve 100,000 Asset revaluation reserve 85,000 Share capital 600,000 Retained earnings 46,500 1,903,300 1,903,300 Required: ( a ) Prepare the Statement of Financial Position for Manhawk Ltd as at 30 June 2010.
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
|
Cash at bank |
$ 13,000 |
|
|
|
67,200 |
|
|
Inventory (at cost) |
52,100 |
|
|
Land & buildings (at director's valuations) |
1,400,000 |
|
|
Fixtures & fittings (at cost) |
212,000 |
|
|
Investments (at market value) |
85,000 |
|
|
Goodwill (at cost) |
50,000 |
|
|
Patents (at cost) |
15,000 |
|
|
|
9,000 |
|
|
Allowance for doubtful debts |
|
$ 3,100 |
|
Accounts payable |
|
51,500 |
|
Accrued expenses |
|
2,500 |
|
|
|
90,000 |
|
Accumulated depreciation - fixtures & fittings |
|
82,500 |
|
Accumulated impairment - goodwill |
|
20,000 |
|
|
|
42,000 |
|
|
|
5,200 |
|
Unsecured notes |
|
250,000 |
|
Mortgage |
|
500,000 |
|
Provision for long service leave |
|
25,000 |
|
General reserve |
|
100,000 |
|
Asset revaluation reserve |
|
85,000 |
|
Share capital |
|
600,000 |
|
|
|
46,500 |
|
|
1,903,300 |
1,903,300 |
Required:
( a ) Prepare the
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