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MGT101 - Financial Accounting - I - Lecture Handout 44

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FINANCIAL STATEMENTS OF LISTED COMPANIES

Illustration:

Beta Ltd.
Trial Balance
For the Year June 30, 2002
  Debit (Rs.) Credit (Rs.)
Fixed Assets at Cost:    
Building 500,000  
Furniture and Fixture 85,000  
Vehicles 460,000  
Accumulated Dep:Building   190,500
Furniture and Fixture   43,500
Vehicles   210,000
Sundry Debtors 165,000  
Long Term investments 300,000  
Goodwill 100,000  
Cash in hand 33,000  
Cash at bank 146,000  
Purchases 755,000  
Stock July 01, 2001    
Raw Material 19,000  
Work in Process 14,500  
Finished Goods 35,000  
Salaries 125,000  
Misc. Expense 6,600  
Carriage inward 4,300  
Fuel & Power 15,400  
Wages 143,500  
Salaries Sales Staff 86,000  
Financial Charges 2,300  
Sundry Creditors   105,000
Share Premium Reserve   300,000
Provision for tax payable.   29,500
Accumulated Profit Brought Forward   93,300
Sales   1,363,800
Gain on sale of vehicle   30,000
Return on Investments   30,000
Loan from Bank (Long Term)   100,000
Issued Share Capital   500,000
Total 2,995,600 2,995,600

Additional Information:

  • The authorized capital of the company is Rs. 800,000 divided into 80,000 shares of Rs. 10 each.
  • During the year, a vehicle whose cost and accumulated depreciation were Rs. 150,000 and Rs. 80,000 respectively was sold for Rs. 100,000. The entry has already been recorded in the books
  • Depreciation is to be charged on Building 5%, Furniture and Fixture @ 10% and Vehicles 20% on written down value. Full year’s depreciation is charged in the year of purchase whilst no depreciation is charged in the year of disposal.
  • Stock on June 30, 2002
    o Raw Material 22,000
    o Work in Process 15,000
    o Finished Goods 40,000
  • Distribution of fuel and power:
    o Administrative Expenses 40%, Cost of Goods Sold 60%
  • The management of the company has decided to maintain a provision for doubtful debts at 5% of debtors from this year.
  • Long term loan of Rs. 25,000 is payable in the next financial year.
  • Provision for current year's tax Rs. 20,000.

You are required to prepare a set of financial statements for the year ended June 30, 2002.

Solution

Beta Ltd.
Balance Sheet
As at June 30, 2002.
    Note 2002 2001
Operating Fixed Assets 3 531,375 671,000
Investments   300,000 50,000
         
Intangible Assets      
  Goodwill   100,000 100,000
         
Current Assets      
  Sundry Debtors 4 156,750 175,000
  Stock in Trade 5 77,000 84,300
  Cash in hand   33,000 25,800
  Cash at bank   146,000 100,700
      412,750 385,800
Current Liabilities      
  Sundry Creditors   105,000 150,500
  Current Maturity of Long Term Loan   25,000 25,000
  Tax Payable 6 49,500 38,000
      179,500 213,500
Working Capital   233,250 172,300
       
Net Capital Employed   1,164,625 993,300
       
Financed by      
Share Capital and Reserves      
Authorized Capital      
80,000 share of Rs. 10 each   800,000 800,000
       
Share Capital   500,000 500,000
Share premium reserve   300,000 300,000
Un-appropriated Profit   289,625 93,300
Total Share holders Equity   1,089,625 893,300
       
Long Term Loans 7 75,000 100,000
Total   1,164,625 993,300

 

Beta Ltd.
Profit and Loss Account
For the year ended June 30, 2002.
  Note 2002 2001
    Rs. Rs.
Net Sales   1,363,800  
Less: Cost of Goods Sold   903,540  
Gross Profit   460,260  
Add: Other Income   60,000  
    520,260  
Less:      
Administrative Expenses   215,635  
Selling Expenses   86,000  
    301,635  
Operating Profit   218,625  
Less: Financial Charges   2,300  
Net Profit / (Loss) Before Tax   216,325  
Lees: Provision for Tax   20,000  
Net Profit / (Loss) After Tax   196,325  
Accumulated Profit / (Loss) Brought Forward   93,300  
Accumulated Profit / (Loss) Carried Forward   289,625  

 

Alfa Ltd.
Cash Flow Statement
For the year ended June 30, 2002
  Note 2002
     
Cash Flow From Operating Activities    
     
Profit / (Loss) Before Tax   216,325
Adjustment for:    
Depreciation   69,625
Provision for Doubtful Debts   8,250
Gain on Disposal of Fixed Asset   (30,000)
Operating Profit Before Working Capital changes   264,200
(Increase) / Decrease in C. Assets    
Sundry Debtors   10,000
Stock in Trade   7,300
    17,300
Increase / (Decrease) in C. Liabilities    
Sundry Creditors   (45,500)
    (45,500)
     
Cash Generated From Operations   236,000
Income Tax Paid   (8,500)
     
Net Cash Flow from Operations   227,500
     
Cash Flow From Investing Activities    
Vehicles   100,000
Investments (Long Term)   (250,000)
Net Cash Flow From Investing Activities   (150,000)
Cash Flow from financing Activities    
Long Term Loan Repaid   (25,000)
    (25,000)
Net Increase in Cash & Cash Equivalents   52,500
O/B of Cash and Cash Equivalents   126,500
C/B of Cash and Cash Equivalents   179,000

 

Beta Ltd
Statement of Changes in Equity
For the Year Ended June 30, 2002
Particulars        
Share Share
Premium
Un-app. Total
Capital Reserve Profit  
Balance as on June 30, 2000 x x x x
Profit after tax for the year     x x
Dividend     x x
Balance as on June 30, 2001 500,000 300,000 93,300 893,300
Shares Issued x     x
Profit after tax for the year     196,325 196,325
  750,000 250,000 289,625 1,089,625

Notes to the Accounts

  1. Company and its operations
    o The company is a public limited company incorporated in Pakistan and manufacture ------------
  2. Significant accounting policies
    o These accounts have been prepared in accordance with the requirements of the Companies Ordinance 1984 and International accounting standards as applicable in Pakistan.
    o Historical costs
    • Historical costs are used as a basis for valuing transactions.
    o Revenue Recognition
    • Sales are recorded upon delivery of goods to the customers.
    o Other Policies
    • Income from bank deposits, loans and advances are recognized on accrual basis.
    • Working of all figures and Fixed assets schedule are included in the notes to the accounts

Note # 3 Fixed Assets at WDV

Particulars Cost RATE Accumulated Depreciation WDV
Cost jul 1 2001 Add. Disposal. As On jun 30 2002 On jul 1 2001 On Disposal For The Year As On Jun 30 2002 As On Jun 30 2002
Building 500,000     500,000 5 190,500   15,475 205,975 294,025
Furniture
and Fixture
85,000     85,000 10 43,500   4,150 47,650 37,350
Vehicles 610,000   150,000 460,000 20 290,000 80,000 50,000 260,000 200,000
Total 2002 1,195,000   150,000 1,045,000   524,000 80,000 69,625 513,625 531,375
Total 2001       1,195,000         524,000 671,000

Note # 4 Sundry Debtors

  2002 2001
Debtors 165,000 175,000
Less: Provision for Doubtful Debts (8,250)  
  156,750 175,000

Note # 5 Stock in Trade

Raw Material 22,000 25,000
Work in Process 15,000 16,800
Finished Goods 40,000 42,500
  77,000 84,300

Note # 6 Tax Payable

Tax Payable as Per Trial Balance 29,500 20,000
Current Year's Provision 20,000 18,000
  49,500 38,000

Note # 7 Long Term Loans

Long Term Loan 100,000 125,000
Less: Current Maturity of Long Term Loan 25,000 25,000
  75,000 100,000

Note # 8 Cost of Goods Sold

Opening Stock - Raw Material

19,000
Add: Cost of Material Purchased
Purchases
755,000
Add: Carriage Inward
4,300
759,300
Less: Closing Stock - Raw Material
22,000
Raw Material Consumed
756,300
Wages
143,500
Fuel and Power
9,240
909,040
Add: Opening Stock - Work in Process
14,500
Less: Closing Stock - Work in Process
15,000
908,540
Add: Opening Stock - Finished Goods
35,000
Less: Closing Stock - Finished Goods
40,000
903,540

Note # 9 Other Income

Gain on sale of vehicle

30,000
Return on investments
30,000
60,000

Note # 10 Administrative Expenses

Salaries

125,000
Fuel and Power
6,160
Misc. Expense
6,600
Provision for Doubtful Debts
8,250
Depreciation
69,625
215,635

Note # 11 Selling Expenses

Salaries (Sales Staff)

86,000

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