Accounting Fundamentals: Financial Performance and Position of Chocco plc

ACCOUNTING FUNDAMENTALS

Question 1
(a) Income statement and balance sheet:
Income statement:
Balance sheet
Assets:
Current assets 513625
Stock 330600
Debtors 170125
Cash and bank 12900
Particulars
Amoun
t
Sales (Less: return £980) 825670
Less: cost of goods sold 578650
Gross profit 247020
Less: Operational expenses
Ordinary dividend paid 20000
Preference dividend paid 30000
Administrative expenses 30000
Sales man commission 3000
Directors remuneration 5000
Distribution costs 28000
4% debenture 4000
Profit before interest and tax 127020
Less: Interest 2000
Profit after interest before tax 125020
Less: Tax 68000
Net profit 57020

Fixed assets
Plant and equipment 632730
Total assets
114635
5
Equity and liabilities
£1 ordinary shares 310000
10% £1 preference shares 300000
4% Debentures 100000
Retained profits 132000
Net profit 57020
Current liabilities
Trade creditors 171355
O/s expense 3000
Deferred tax 68000
O/S interest 4000
O/S payment 980
Total equity and liabilities 1146355
(b) Explain why the statement of financial position balances.
The assets mostly on balance sheet comprise about the corporation owns or will earn in
the potential time that are easy to measure. Liabilities, like taxes, accounts payable, wages, as
well as loans, are how a corporation owes. The equity portion of the investors shows the cash
reserves of the corporation and the money that stakeholders invested. Net assets must be
proportional to the combined of shareholders’ equity also for accounting records to manage.