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Preparation of Income Statement and Balance sheet for Fort Road Foxtrot

   

Added on  2021-01-01

15 Pages3508 Words337 Views
Accounting Skills
Preparation of Income Statement and Balance sheet for Fort Road Foxtrot_1
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1QUESTION 1...................................................................................................................................1A) Preparation of Income Statement and Balance sheet for Fort Road Foxtrot.....................1B) Differences between financial and management accounting............................................2QUESTION 2 (A)............................................................................................................................3A) Calculations of CVP Analysis...........................................................................................3QUESTION 2 (B) ...........................................................................................................................4A) Decision-making and commenting on manager's argument for Sparks Ltd ....................4B) Make or buy decision for Thunder company....................................................................4QUESTION 3...................................................................................................................................5A) Calculation of financial ratios and interpretation for J. P. Robard Mfg. Company..........5B) Producing report to Gulf Banks PLC regarding recommendation for loan sanction. ......6C) Ratio interpretation regarding the investment in the company and recommendation toinvestors..................................................................................................................................7QUESTION 4...................................................................................................................................8A) Preparing the cash budget of ABACUS Inc......................................................................8B) Explaining benefits and limitations of budgeting..............................................................8QUESTION 5...................................................................................................................................91. A) Calculation of various variances...................................................................................9B) Calculation of variable overhead spending variance.......................................................11C) Computation of variable overhead efficiency variance...................................................112. Describing variance analysis............................................................................................12CONCLUSION..............................................................................................................................12REFERENCES..............................................................................................................................13
Preparation of Income Statement and Balance sheet for Fort Road Foxtrot_2
INTRODUCTIONAccounting is an integral part of the company directing towards assessing businessoperations in financial terms so that proper records could be kept and financial statements maybe prepared. Present report deals with various scenarios where financials are produced fromadjusted trial balance. CVP analysis is conducted, financial ratios have been calculated.Moreover, cash budget is prepared and advantages and limitations of budgeting is done.Furthermore, variance analysis is devised and accounting is done.QUESTION 1A) Preparation of Income Statement and Balance sheet for Fort Road FoxtrotIncome StatementParticularsFiguresNet sales12,800Less: Cost of goods sold5,750Gross profit7,050Less: Operating expenses1,350Less: depreciation expense1,200Operating profit4,500Less: interest expense900Earnings after interest and beforetaxation3600Less: Taxes1440Earnings after taxation or netprofit2160Balance sheetParticularsFigures (In $)Inventory$6,500Cash16,550Accounts receivable9,600Total current assets$32,650Buildings and equipment122,000Less: Accumulated depreciation34,0001
Preparation of Income Statement and Balance sheet for Fort Road Foxtrot_3
Net fixed assets88,000Total assets$120,650LiabilitiesCurrent LiabilitiesNotes payable600Accounts payable4,800Total current liabilities5,400Long-term debt55,000Capital45000Retained earnings15,250Add: net profit2160Total shareholders equity62,410Total liabilities122,810B) Differences between financial and management accountingBasis of differentiationFinancial AccountingManagement AccountingUsers of accountinginformationExternal and internal users arebenefited as from financialaccounting, various financialstatements are prepared whichare used to assess profitabilityposition of company (Bragg.2017).Only internal users such as topmanagement are provided withinformation which helps tomake decisions forstrengtheninginternaloperations.Time of preparationThere is fixed time periodusually, it is prepared at theend of accounting period be itcalendar year or financial year.Managerial reports areprepared without followingany particular year and areproduced frequently whenmanagement deems fit for thesame. Valuation principle Financial accounting quiteHowever, no valuation is made2
Preparation of Income Statement and Balance sheet for Fort Road Foxtrot_4

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