Tiger Ltd. has an authorized capital of 700,000 $1 ordinary shares, of which 300,000 have been issued as fully paid. The following information was extracted from the accounts for the year ended September 30, 2019: Details/Accts. $ DR $ CR Motor Vehicle at cost 1,750,000 Acc. Depreciation Motor Vehicle 450,000 Freehold premises at cost 400,000 Carriage inwards 35,500 Sales 4,500,000 Stock, October 1, 2018 95,000 Administration (Wages and Salaries) 170,000 Distribution (Wages and Salaries) 250,000 Motor vehicle running costs 350,000 Purchases 935,000 Returns inward 32,000 Returns outward 51,000 Directors’ remuneration 865,000 Auditors’ fees 120,000 General administrative expenses 78,500 Discounts allowed 25,000 Retained earnings (1/10/2018) 320,000 Ordinary Shares 300,000 Interim Dividends paid 15,000 Cash 500,000 5,621,000 5,621,000 Additional Information: (i) The closing stock was valued at $300,000. (ii) The ordinary share dividends for the year were: Interim 5% already paid; Final 10% proposed. (iii) The directors decided to transfer $250,000 to General Reserve. (iv) Expenses in arrears at September 30, 2019 were: Motor vehicle running costs $80,000 and Salaries and wages: Distribution staff $70,000 (v) Expenses paid in advance were: General administrative costs $9,000 and Auditors’ fees $40,000 (vi) The liability for corporation tax for the year ended September 30, 2018 had been agreed at $580,000. (vii) The company depreciated freehold premises at 10% per annum on costs. (viii) The company depreciated Motor Vehicle at 10% per annum using the reducing balance method. (ix) The company’s motor vehicles were used by staff as follows: Distribution staff 500,000 miles per annum Administration staff 200,000 miles per annum As the accountant, teach me to do the The Appropriation Account
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.
Tiger Ltd. has an authorized capital of 700,000 $1 ordinary shares, of which 300,000 have been issued as fully paid. The following information was extracted from the accounts for the year ended September 30, 2019:
|
Details/Accts. |
$ DR |
$ CR |
|
Motor Vehicle at cost |
1,750,000 |
|
|
Acc. Depreciation Motor Vehicle |
|
450,000 |
|
Freehold premises at cost |
400,000 |
|
|
Carriage inwards |
35,500 |
|
|
Sales |
|
4,500,000 |
|
Stock, October 1, 2018 |
95,000 |
|
|
Administration (Wages and Salaries) |
170,000 |
|
|
Distribution (Wages and Salaries) |
250,000 |
|
|
Motor vehicle running costs |
350,000 |
|
|
Purchases |
935,000 |
|
|
Returns inward |
32,000 |
|
|
Returns outward |
|
51,000 |
|
Directors’ remuneration |
865,000 |
|
|
Auditors’ fees |
120,000 |
|
|
General administrative expenses |
78,500 |
|
|
Discounts allowed |
25,000 |
|
|
|
|
320,000 |
|
Ordinary Shares |
|
300,000 |
|
Interim Dividends paid |
15,000 |
|
|
Cash |
500,000 |
|
|
|
5,621,000 |
5,621,000 |
Additional Information:
(i) The closing stock was valued at $300,000.
(ii) The ordinary share dividends for the year were: Interim 5% already paid; Final 10% proposed.
(iii) The directors decided to transfer $250,000 to General Reserve.
(iv) Expenses in arrears at September 30, 2019 were:
Motor vehicle running costs $80,000 and Salaries and wages: Distribution staff $70,000
(v) Expenses paid in advance were: General administrative costs $9,000 and Auditors’ fees $40,000
(vi) The liability for corporation tax for the year ended September 30, 2018 had been agreed at $580,000.
(vii) The company
(viii) The company depreciated Motor Vehicle at 10% per annum using the
(ix) The company’s motor vehicles were used by staff as follows:
Distribution staff 500,000 miles per annum
Administration staff 200,000 miles per annum
As the accountant, teach me to do the The Appropriation Account
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