Financial Statements of a Company

Accounting

Table of Contents
QUESTION 1...................................................................................................................................3
1. Preparation of P&L a/c ..........................................................................................................3
2. Notes preparation for the below mentioned aspects ..............................................................3
3. Presenting or illustrating expenses .......................................................................................4
Part b: Preparation of statement of changes in equity ................................................................4
QUESTION 2...................................................................................................................................5
a. Preparing balance sheet ...........................................................................................................5
2. Preparation of notes according to Australian accounting standard Board ..............................7
QUESTION 3...................................................................................................................................7
a....................................................................................................................................................7
b. ..................................................................................................................................................8
QUESTION 4...................................................................................................................................8
a....................................................................................................................................................8
b....................................................................................................................................................9
c..................................................................................................................................................10
QUESTION 5.................................................................................................................................10

QUESTION 1
1. Preparation of P&L a/c
P&L for the year ended at 30 June 2016
Particulars Gross Amount (in AU$) Net Amount (in AU$)
Sales revenue 1055
Less: cost of sales 295
Gross profit (GP) 760
Add: Profit on reevaluation of
building
50
Commission received 50
Interest received 20 (50+50+20) = 120
Total operating income 880
Less: Operating or indirect
expense
Distribution expenses 195
Marketing expenses 85
Occupancy expenses 110
Administration expenses 150
Other expenses 48
Finance cost expenses 42
Total indirect expenses 630
Net profit before taxation Total operating income –
operating expenditure
250
Less: tax amount (250*30%) 75
Net profit after taxation 175
2. Notes preparation for the below mentioned aspects
 Profit: Net income after taxation which was generated by over the expenses amounted to
$175000. 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.
Graph of direct expenses
Graph of indirect or operating expenses
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
capita
l
Additional
paid in-
capital
Genera
l
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
reevaluation
profit 50000
Balance at 17350 50000 55000 203000 160000 2213000