Corporate Accounting: Journal Entries, Income Statement, and Financial Position

This article includes journal entries, income statement, and financial position of Simrex Ltd. It also includes calculation of taxable income of Cradle Ltd, consolidated statement of Denver Ltd, and a report on corporate social responsibility of Pental Ltd.

Running head: CORPORATE ACCOUNTING
Corporate Accounting
Name of the Student:
Name of the University:
Author Note:

1CORPORATE ACCOUNTING
Answer to Question 1
Journal Entries in the books of Simrex Ltd for the year ended 30th June 2018
Date Particulars L/F Debit ($) Credit ($)
30.06.2018 Income Tax
Expense A/C
To Cash A/c
222250
222250
30.06.2018 Provision for
Doubtful
debts A/C
To Trade
Receivables
A/C
8000
8000
30.6.2018 Damage
Expenses A/C
To Accrued
liabilities A/C
150000
150000
30.06.2018 Land A/C
To
Revaluation
Surplus A/C
35000
35000

2CORPORATE ACCOUNTING
Income Statement of Simerx Ltd for the
year ended 30th June 2018
Particulars
Amou
nt $
Revenue
Sales Revenue 990000
Interest Revenue 98500
Total Revenue
108850
0
Cost of Goods Sold 290000
Gross Profit/Loss 798500
Expenses
Distribution Expenses 93000
Sales and Marketing Expenses 95000
Administration Expenses 55000
Depreciation 90000
Total expenses 333000
Operating Income 465500
less- operating expenses 150000
Less- Interest Expenses 55000
Profit Before Tax 260500
Less- Tax @ 30% 78150
Profit After Tax 182350
Other Comprehensive Income 0
Net Comprehensive Income 182350
Statement of Financial Position of Simrex Ltd
for the year ended 30th June 2017
Particular
Note
s
Amount
($)
ASSETS
Current Assets
Cash and cash equivalents 97000
Trade and other Receivables 1 184500
Inventories 123000
Total Current Assets 404500
Non-current assets
Land 5 120000

3CORPORATE ACCOUNTING
Building 3 324000
Motor Vehicles 6 286000
Term Deposit 7 269600
Goodwill 50000
Total Non-Current Asset 1049600
Total Assets 1454100
LIABILITIES
Current Liabilities
Trade and other payables 82000
Short term borrowings 2 104348
Provisions 4 33000
Total Current Liabilities 219348
Non-current liabilities
Deferred liability 10000
Contingent Liabilities 150000
Total non-current liabilities 160000
Total Liabilities 379348
Net Assets 1074752
Equity 629000

4CORPORATE ACCOUNTING
Notes to Accounts:
A) Depreciation:
Deprecation
$
Motor Vehicles
5400
0
Buildings
3600
0
Total
9000
0
B) Contingent liabilities due to dispute regarding Environment Protection Authority
amounted to $1,50,000
1. Trade Receivables
Trade Receivables
$
Trade Receivables 192500
less- PBDD 8000
total 184500
2. Short term Borrowings
Short term Borrowings
$
Secured
mortgage 240000
amount payable
till 30.6.18 104348
3. Buildings
Buildings
Cost 360000

5CORPORATE ACCOUNTING
depreciation 36000
Value 324000
4. Provision
Provisions
$
Doubtful debts 8000
warranty 25000
total 33000
5. Land
Land
$
Cost 85000
revaluation surplus 35000
total cost 120000
6. Motor Vehicles
Motor Vehicles
$
Cost 340000
Depreciation 54000
value 286000
7. Term Deposit
Term Deposit 337000
Deposit till 30.6.18 269600

6CORPORATE ACCOUNTING

7CORPORATE ACCOUNTING
Notes to Accounts complying with applicable accounting standards:
 The company is complying AASB 13 standard for revaluation of the land and measuring
it fair value.
 AASB 1021 and 116 for depreciation for the assets.
 AASB 137 in accordance to Contingent liabilities and assets. Company follows this
standard to take up the decision for investigating the damages caused.
 The currency of the statement is in accordance to AASB 121
 Deferred tax liability accordance to AASB 112.
 Tax rate is also applicable according to the rule set in AASB112.
AASB 107 is related to cash and cash equivalent presented in asset column of balance sheet.
 AASB 107 is followed for calculating the changes in equity.
 Cost of goods sold is calculated on the basis of AASB 102
 AASB 118 relates to the revenue generated from rendering services or selling of goods.
 AASB 123 deals in borrowing.
 AASB 116 deals in PPE
Intangible assets are related to AASB 138 (Guthrie and Pang 2013)

8CORPORATE ACCOUNTING
Answer to Question 2a
Calculation of Taxable Income of Cradle
Ltd
Particulars
Amount
$
Profit as per Accounts 325000
Add: Long service leave
Expenses 40000
Warranty Expenses 15000
Profit on revaluation 40000
420000
Less: Additional depreciation 35000
Profit attribute to tax 385000
Tax 30%
Tax Payable 115500
Answer to Question 2b
Taxation Worksheet in accordance to AASB112
Items
Carryi
ng
Amoun
t $
Tax
Bas
e $
Deduct
able
Tempor
ary
Differen
ce $
Taxable
Temporary
Difference
$
Income
Tax
Expens
e$
Revaluati
on
Surplus $
Tax
Payab
le $
ASSETS
Cash 82000
Inventory 158000
Receivables(net) 585000
Plant-net 315000
Land
160000
0 40000
Total Assets
274000
0
LIABILITIES
Payables 265000
Provision for long
service leave 40000
Provision for 15000

9CORPORATE ACCOUNTING
warranty
Loan payable 245000
Total Liabilities 565000
Net Assets
217500
0
Temporary
difference for year
Loss carried
forward
Movement for the
period
Tax effected at
30%
Taxable income 385000
11550
0
Income Tax
Adjustments
Answer to Question 2c
Journal Entries as on 30.06.2018
Income Tax A/C 115500
To Income Tax Payable A/C 115500

10CORPORATE ACCOUNTING
Answer to Question 3
Calculation of Gain on Bargain Purchase at 1st July 2017
Particulars
Carryin
g value
Amount
$
Fair
value
Amou
nt $
Differen
ce
Amount
$
Tax
Rate Taxabl
e
amount
$
Net
Amou
nt $30%
Patent 60000 72000 12000 3600 8400
Plant 40000 48000 8000 2400 5600
Total Gain on bargain purchase 14000
Consolidated Statement of
Denver Ltd
group of companies at 1 July
2017.
Particulars
Amoun
t $
ASSETS
Patents 12000
Plant 8000
TOTAL ASSETS 20000
LIABILITIES
Current Liabilities 0
Non- Current
Liabilities 0
TOTAL
LIABILITIES 0
NET ASSETS 20000
EQUITY 468400

11CORPORATE ACCOUNTING
Answer to Question 3b
The control exists in the hands of banks. In AASB10, paragraph B40 it is stated under rights
from other contractual arrangements that it gives the investor a right for directing the activities
that are relevant as it has rights specified in the contract, which is enough to direct the activities
related to fiancé and operations of the company. Therefore, if there is no other right is the present
pecuniary dependence of an investee on the investor concerning the relationship of a supplier and
major consumers do not principal to the investor having control over the investee.
Answer to Question 4
Introduction
Pental Ltd from its modest start had an aim to grow and include itself in a portfolio of prominent
brands these have become familiar in the houses of New Zealand and Australia. It had achieved
the name of pioneering merchandise leader with prime indigenous manufacturing of cube
firelighters, bar soaps and liquid bleach. Since sixty years, it is working hard for providing true
services to the citizen and culture of Australia. Maximum manufacturing is done at Shepparton
Victoria that is supplemented among third party agreement for the local merchandise in New
Zealand. Shepparton site has four different plants for production that are Firelighters, Soap plant,
Liquid plant and Bleach plant. The company has grown up over and done with an unremitting
commitment for quality, efficiency and innovation. This commitment has made the company
among the trusted makers of products of household and commercial. Pental has successfully
expanded it business from Australia, New Zealand to new Asian merchandise. The company has
decide to expand its business in commercial and industrial channels. Its products are available in
more than 300 petrol, 4000 supermarkets, and 700 pharmacies. The distribution of the product is
done through the warehouses of Christchurch and Auckland (New Zealand), the Shanghai and
Ningbo Free Trade Zones (China) and Shepparton (Victoria). (Pental.com 2018)
The report is constructed to recommend on the nature, extent of social, and environment
reporting and putting stress on company`s social responsibility and the benefit of reporting the
Corporate social responsibility.

12CORPORATE ACCOUNTING
Discussion:
A business`s wits to measure and take accountability for the company`s effects on the
atmosphere and social well-being. Corporate Social Responsibility is also known as corporate
citizenship that involve experiencing small-term costs as it does not gives immediate monetary
advantage to the company but it helps in promoting optimistic change in regard to social and
environment. Every listed company is bound to disclose its sustainability report regarding any
substantial revelation to environment, social and economically sustainability risks. Management
steps for those risks shall be stated I the company`s report. In the annual report, it was stated that
Pental actively observes the quantity of trade waste release from the site. In the recent years, the
company has pointedly changed its manufacturing apparatus and progression to minimize trade
waste. License of environment legislation are currently held with Goulbourn Valley of
Shepparton. For implementing sustainable solutions Pental continuously emphases on working
with Goulburn Valley Water. The company report its performance about environment to the Site
Management Group and the Board as per requirement. (Pental.com 2018)
Benefits of Corporate and Social Responsibility are as follow:
Brand building
CSR helps in creating trust and building goodwill. It brings transparency about non-monetary
presentation. This helps in reducing the risk of reputation, opening up discourse with investors,
customers, and communities.
Improving the system and processes
Internal organization and result-construction procedures can be inspected and better-quality,
principal to cost falls by calculating and checking such issues as vigor feasting, ingredients use,
and waste.
Vision and Strategy Progress
Comprehensive study of fortes and faintness, and the appointment with investors that is essential
for sustainability reporting, can central to more vigorous and extensive-ranging structural visions
and strategies. Prominently, corporations can make sustainability an essential part of their
approaches.

13CORPORATE ACCOUNTING
Reduction in compliance cost
Gauging sustainability recital can help corporations to meet governing necessities successfully,
evade costly holes, and pleat essential statistics in an additional effectual and price-actual way
(Ni and Wart 2015).
Conclusion:
Sustainability reporting is a dynamic stage on the way to attaining a sustainable worldwide
economy. Reporting improves businesses’ responsibility for their influences and consequently
boosts faith, simplifying the distribution of standards on which to shape an additional consistent
civilization. The obtainability of sustainability material can be used by administrations to
measure the impression and involvement of productions to the reduced and to appreciate which
Splayers are tackling issues. Extensive sustainability reporting performs, generating photograph,
can help marketplaces meaning more professionally and designate the fitness of the economy;
and assistance determination development by all establishments towards a keen, sustainable and
comprehensive growth. Organizations can use reporting to notify their risk analysis policies and
improve their corporate. A mounting quantity of establishments see sustainability reporting as a
means to determination better invention through their productions and merchandises to create a
modest benefit in the market. Administrations, businesses and investors all unswervingly benefit
from it, and the positive influence on communal, ecological and human rights issues is obvious.

14CORPORATE ACCOUNTING
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15CORPORATE ACCOUNTING
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