Preparation of P&L a/c, Statement of Changes in Equity, Balance Sheet, Cash Flow Statements, Consolidation Worksheet

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Accounting

Table of Contents
QUESTION 1..................................................................................................................................3
1. Preparation of P&L a/c............................................................................................................3
2. Notes preparation for the below mentioned aspects...............................................................4
3. Presenting or illustrating expenses.........................................................................................4
Part b: Preparation of statement of changes in equity.................................................................5
QUESTION 2..................................................................................................................................5
a. Preparing balance sheet \.........................................................................................................5
2. Preparation of notes according to Australian accounting standard Board...............................6
QUESTION 3..................................................................................................................................6
a....................................................................................................................................................6
b...................................................................................................................................................7
QUESTION 4..................................................................................................................................7
a....................................................................................................................................................7
b...................................................................................................................................................9
c....................................................................................................................................................9
QUESTION 5..................................................................................................................................9

QUESTION 1
1. Preparation of P&L a/c
P&L for the year ended at 30 June 2016
Particulars
Amoun
t (in £) Particulars
Amoun
t (in £)
Cost of sales 295
Sales
revenue 1055
Gross profit 760
Distribution
expenses 195 Gross profit 760
Marketing
expenses 85
Commission
received 50
Occupancy
expenses 110
Interest
received 20
Administration
expenses 150
Other expenses 48
Finance cost
expenses 42
Profit on asset
reevaluation 50
Interim dividend 60

Proposed
dividend 85
Net profit before
taxation (5*.30) 5
Tax amount 1.5
NP after tax 3.5
830 830
2. Notes preparation for the below mentioned aspects
 Profit: Net income after taxation which was generated by over the expenses amounted to
£35000. Hence, such amount is used by the business unit for offering dividend to the
shareholders.
Net profit = Total income – operating expenses
 Dividend
Interim dividend: 1500000 * 0.04 = 60000
Proposed dividend = 1700000 *0.05 = 85000
Interim dividend is considered by an accountant while preparing statement of changes in
equity.
 Dividend franking credit: Value of franking credit is $0.02 which in turn allows
company
3. Presenting or illustrating expenses
In the above mentioned illustration direct and indirect expenses are separately included
by the firm. Direct expenditure includes which are associated with production such as COGS. On
the other side, indirect expenses contain information about dividend paid, administration
expenses etc.

Part b: Preparation of statement of changes in equity
Statement of changes in equity for the year ended at 30 June 2016
Particulars
Amou
nt (in
$)
Share
capit
al
Additional
paid in-
capital
Gener
al
reserve
Retain
ed
profit
Asset
revaluation
reserve
Total
Amount
(in $)
Balance at
1 June 2015
15000
00 30000 288000 110000 1928000
issue of
new shares
20000
0 50000 250000
Net income 35000 35000
Transfer to
capital
reserve 25000 -25000
dividend -60000
reevaluatio
n profit 50000
Balance at
30 June
2016
17350
00 50000 55000 203000 160000 2213000
QUESTION 2
a. Preparing balance sheet \
Statement of financial position of Matisse Ltd for the year ended at 30 June 2016
Liabilities
Amount (in
$) Assets
Amount (in
$)
Fixed assets
Share capital 2550000
Net profit 174000 P&M
96900
0
General reserve 127500 Depreciation
19125
0 777750
Asset revaluation reserve 114750 Investment 459000
Retained earnings 831555 Contingent assets 150000
Goodwill
16575
0
Accrued expenses 16320 Impairment 51000 114750
Bills payable 106080 Deferred tax assets 18360
Taxation 70125 Trademark 63750

Deferred tax liabilities 6885 Land and building 3570000
Mortgage 1530000 Current assets
Provision for long service
lease 33900 Cast at bank 55080
Petty cash 1275
Bills receivable
22057
5
Provision for bad
debt 6375 214200
stock 124950
Prepaid expenses 12000
5561115 5561115
2. Preparation of notes according to Australian accounting standard Board
AASB 101 has followed by the accountant of business unit while preparing the final
accounts or statement of financial position. Such standard contains rules and information
regarding the preparation and publishing aspect of final accounts.
QUESTION 3
a.
Cash Flow Statements of Turner Ltd for the year ended 30th June 2016
Cash flow from operating activities
Receipts from receivables $755,440.00
Cash sales $117,600.00
Commission received $15,120.00
Interest income $7,952.00 $896,112.00
Less: payments
Salaries & wages $604,800.00
Taxes paid $124,320.00
Petty cash payments $1,000.00
Other operatonal payments $228,480.00 $958,600.00
-$62,488.00
Less: decrease In accounts payable $243,600.00
Less: Increase in inventory $95,200.00
Less: Decrease in provision for annual leave $23,640.00
Less: Decrease in dividend payable $67,200.00
Net Cash Outflow from operating activities [A] -$492,128.00

Cash flow from investing activities
Furniture sold $44,000.00
Furniture purchased $50,400.00
Motor vehicle sold $45,600.00
Net Cash Inflow Frm investing activities [B] $39,200.00
Cash flow from financing activities
Issue of share capital $448,000.00
Deposits at call $67,200.00 $515,200.00
Net Cash Inflow From Financing Activities [C] $515,200.00
Net Cash flow (A+B+C) $62,272.00
Add: Opening balance of cash $48,048.00
Closing balance of cash $110,320.00
b.
Cash flows from operating activities for the year ended 30 June 2016
Items Amount
Net profit for the year $863,520.00
Add: non-cash expenditures
Depreciation $146,160.00
Loss on sale of motor vehicles $13,440.00 $159,600.00
Total $1,023,120.00
Add: Increase in current liabilities/Decrease in current assets
Accounts payable $13,440.00
Provisions for dividend $8,400.00
Accounts receivables $23,520.00 $45,360.00
Less: decrease in current liabilities/Increase in current assets
Inventory $6,720.00
Provisions for taxation $15,120.00
Provisions for annual leave $3,360.00 $25,200.00
Net cash flow from operating activities $1,043,280.00
QUESTION 4
a.
Consolidated worksheet Leonardo Davicini
Eliminations
Dr. Cr.
Consolidat
ed

Retained profits
$178,125.0
0
$43,200.0
0
$43,200.0
0
$178,125.0
0
Share capital
$1,125,000.
00
$540,000.
00
$540,000.
00
$1,125,000.
00
reserves
$140,625.0
0
$54,000.0
0
$54,000.0
0
$140,625.0
0
Capital reserves $0.00
provision for proposed
dividend $56,250.00
$18,000.0
0 $74,250.00
Other current liabilities $93,750.00
$117,000.
00
$210,750.0
0
Non-current liabilities
$271,875.0
0
$162,000.
00
$433,875.0
0
Total assets
$1,865,625.
00
$934,200.
00
$2,162,625.
00
Shares in Davinici Ltd
$630,000.0
0
$630,000.
00 $0.00
Other non-current assets
$981,562.0
0
$579,600.
00
$1,561,162.
00
Inventory $75,938.00
$129,600.
00
$205,538.0
0
Accounts receivables
$105,000.0
0
$176,400.
00
$281,400.0
0
Cash at Bank $73,125.00
$48,600.0
0
$20,000.0
0
$101,725.0
0
Goodwill/gain on
consolidation
$12,800.0
0 $12,800.00
$1,865,625.
00
$934,200.
00
$2,162,625.
00
Calculation of Goodwill
Acquisition value $650,000.00
Total assets $934,200.00
Current liabilities $135,000.00
Non-current liabilities $162,000.00
Total liabilities $297,000.00
Net assets $637,200.00
Goodwill (acquisition value - net assets) $12,800.00
b.
Common stock a/c
Dr. $540,000.00

Retained profits a/c Dr. $43,200.00
Reserves a/c
Dr. $54,000.00
Goodwill a/c (B/F)
Dr. $12,800.00
To business purchase a/c 650000
Business purchase a/c Dr. $650,000.00
To shares in Davinici ltd a/c 630000
To cash (B/F) $20,000.00
c.
Yes,
QUESTION 5
Consolidation
Worksheet 30
June 2016
Gauguin
Ltd
Degas Ltd Combine Eliminations Consolidate
d Accounts
Dr Cr
Sales 1,517,85
0
663,750
2,181,600
30375 2,151,225
Less Cost of
Sales
0
Inventory
1.7.2015
81,000 34,875
115,875
12375 103,500
Purchases 586,125 315,000
901,125
901,125
667,125 349,875 1,017,000 1,004,625
Inventory
30.6.2016
76,500 39,375
115,875
8325 124,200
Cost of Goods
Sold
590,625 310,500
901,125
880,425
Gross Profit 927,225 353,250
1,280,475
1,270,800

Administratio
n fees
received
— 67,500
67,500
67500 Nil
Gain on sale
of equipment
— 4,500
4,500
4500 Nil
Dividends
received
67,500 —
67,500
67,50
0
Nil
Interest
received from
Degas Ltd
4,500 —
4,500
4500 9000
999,225 425,250 1,424,475 1,279,800
Less:
Expenses -
selling
expenses
95,625 33,750
129,375
129,375
- Admin
expenses
556,875 194,625
751,500
900 750,600
- Financial
expenses
103,725 28,125
131,850
131,850
dividend paid 45,000
45,000
45,000
756,225 301,500 1,057,725 1,056,825
Operating
profit before
tax
243,000 168,750
411,750
222,975
Less tax
expense
70,875 56,250
127,125
127,125
Profit after tax 172,125 112,500
284,625
95,850
Retained 428,625 245,250 673,875 673,875

earnings
1.7.2015 0
Available for
appropriation
600,750 357,750
958,500
958,500
Appropriation
s 0
Interim
dividend paid
56,250 22,500
78,750
78,750
Final dividend
declared
67,500 39,375
106,875
106,875
Total
appropriations
123,750 61,875
185,625
Retained
earnings
30.6.2016
477,000 295,875
772,875
772,875
Share capital 1,125,00
0
843,750
1,968,750
1,968,750
General
reserve
112,500 56,250
168,750
13500
0
303,750
9%
Debentures
— 45,000
45,000
45,000
Accounts
payable
87,750 32,625
120,375
120,375
Dividends
payable
67,500 39,375
106,875
106,875
Final
dividend paid
45,000
45,000
45,000
Taxation
Payable
32,625 23,625
56,250
56,250
1,902,37
5
1,336,500
3,238,875

office
equipments
Property,
plant &
equipment
(net)
436,500 877,500
1,314,000
4500 1,309,500
Shares in
Degas Ltd
1,102,50
0
—
1,102,500
1,102,500
9%
Debentures in
Degas Ltd
45,000 —
45,000
45,000
Other non-
current assets
151,875 349,875
501,750
501,750
Inventory 76,500 39,375 115,875 8325 107,550
Other current
assets
90,000 69,750
159,750
159,750
Goodwill on
consolidation
—
#VALUE!
67500 24750 42750
1,902,37
5
1,336,500
3,238,875