Financial Statement - XYZ Imports, Australia

This report analyzes the financial statements of XYZ Imports, Australia for the year 2014. It includes a discussion and analysis of important values, revenue and asset accounting, and journals affected. The report also covers the classification of assets, equity categories, and dividend calculations.

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FINANCIAL STATEMENT – XYZ IMPORTS, Australia
FUNDAMENTALS OF
ACCOUNTING
ASSIGNMENT

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Contents
Background and Introduction..................................................................................... 2
Discussion and Analysis............................................................................................. 2
Part A...................................................................................................................... 2
Part B...................................................................................................................... 3
Part C...................................................................................................................... 5
Conclusion.................................................................................................................. 6
References................................................................................................................. 7
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Background and Introduction
A report has been prepared on one of the companies listed on Australian Stock Exchange, named as JB
Hi-Fi Ltd. The financial statements for the year 2014 has been reviewed and studied and the relevant
findings have been shown below. Part A mentions the total values of some of the important and critical
values in the financial statements (Belton, 2017). Part B answers few of the specific questions of revenue
and asset accounting by the company. Part C highlights the journals affected for the items mentioned in
the question like that of the elements from the cash flow statement and some of the items of incomes and
expenses.
Discussion and Analysis
Part A
1. The total value of the consolidated financial statements for each of the items as at the end of the
year are mentioned below in the table (Dichev, 2017).
Particulars 2014 2013
Amt. ('000 $) Amt. ('000 $)
Cash and cash equivalents 43,445 67,368
Inventories 458,625 426,000
Sales revenue 3,483,775 3,308,396
Other income 520 574
Plant and Equipment 181,564 181,098
Interest Expense (finance costs) -8845 -10156
Sales and marketing expense -355,694 -336,831
Occupancy expenses -148,969 -140,249
Trade and other payables 302,979 387,020
Borrowings (non-current) 179,653 124,331
2. The normal balance of each of the accounts listed above has been shown below in the table. The
table also highlights what side of the account will be impacted – debit or credit, in order to
decrease each of the items (Choy, 2018).
Particulars
Normal
Balanc
e
Which side of account affected - for decrease
(debit/credit)
Cash and cash equivalents Debit Debit side is impacted (decreases) when there is a decrease
Inventories Debit Debit side is impacted (decreases) when there is a decrease
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Sales revenue Credit
Credit side is impacted (decreases) when there is a
decrease
Other income Credit
Credit side is impacted (decreases) when there is a
decrease
Plant and Equipment Debit Debit side is impacted (decreases) when there is a decrease
Interest Expense (finance
costs) Debit Debit side is impacted (decreases) when there is a decrease
Sales and marketing expense Debit Debit side is impacted (decreases) when there is a decrease
Occupancy expenses Debit Debit side is impacted (decreases) when there is a decrease
Trade and other payables Credit
Credit side is impacted (decreases) when there is a
decrease
Borrowings (non-current) Credit
Credit side is impacted (decreases) when there is a
decrease
Part B
1. The different types of revenue being generated by the consolidated group are listed below:
a. Revenue from the sale of goods – retail: recognised on transfer of risk and reward
b. Revenue from subscription: Recognised on straight line basis
c. Commission revenue: Net commission recognised when the group acts in position of agent
rather than principal (Jefferson, 2017).
d. Rendering of services: Revenue from services is being recognised based on the completion
status of the service.
e. Interest income based on accrual basis.
f. Dividend income based on the right to receive.
2. The assets of the group are being classified as follows:
a. Current Assets: These are further classified into Cash and cash equivalents, trade and other
receivables, inventories, other current assets.
b. Non-Current Assets: It is further classified into Plant and Equipment, deferred tax assets,
intangible assets, other financial assets (Goldmann, 2016).
3. The major categories listed in the group’s equity includes contributed equity, reserves and
surplus, retained earnings and the non-controlling interests. There are few other items which form
part of the statement of changes in equity – profit for the year, cash flow hedges, exchange arte
difference on the foreign operation translation, dividend for the year, share based payments, issue
of shares under option plans, non-controlling interest on acquisition of any subsidiary (Alexander,
2016).
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The company had a total of 98947309 numbers of ordinary shares as at the end of 2014. The total
number of equity ordinary shareholders as at the end of financial year were 2015.
4. The group’s current liability for dividends to the ordinary shareholders is $ 28.695 Mn. The same
is evident from the screenshot below and pertains to the final dividend of 29 cents declared by the
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directors and will be paid in August 2014.
If 100 ordinary shares are owned, the final dividend would amount to $29 and the amount would
increase to $84 if the interim dividend is also included (Belton, 2017). The total amount of
dividend per share is $0.84 if the interim dividend is also added. The last year’s final dividend
being paid in the current year amounts to $ 21.973 Mn and on per share basis, it is $0.22.
5. The dividend per share compared to the earnings per share of the group (basis one) is shown
below. It forms 65% of the overall earnings per share of the group. The proportion which is paid
as ordinary dividend out of the profit for the year is 65% as shown below (Fay & Negangard,
2017).
Particulars in cents
Dividend per share 84.00
Earnings per share 128.39
Percentage 65%
Interim dividend 55210
Final Dividend 28695
Overall Dividend 83905
Profit for the year 128447
Percentage 65%
Part C
1. The journal or journal summaries in which the following transactions would be recorded are
mentioned below (Heminway, 2017):
Heads of Cash Flows Journals in which recorded
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Receipts from customers Cash A/C, Bank A/C, Sales/Revenue A/C, Debtors A/C
Payments to suppliers and employees
Cash A/C, Bank A/C, Purchases A/C, Creditors A/C,
Inventory A/C, Employees Compensation A/C or
salaries and wages A/C
Dividends paid to members of the parent entity Cash A/C, Bank A/C, Dividend payable A/C, Dividend
A/C
Payments for property, plant and equipment Cash A/C, Bank A/C, Property, plant and equipment
A/C
2. In relation to revenues and expenses shown below, the journal or the journal summaries which is
expected to be impacted on recording the transactions are shown below (Linden & Freeman,
2017):
Heads of Incomes and Expenses Journals in which recorded
Cost of Sales expense
Purchases A/C, Sales/Revenue A/C, Inventory, Purchase returns,
sales returns, sales rebate, discount of purchases, carriage/freight
inwards, custom and duties, Creditors A/C, Debtors A/C, Cash A/C,
Bank A/C,
Sales and Marketing expense Cash A/C, Bank A/C, Advertisement Expenses A/C, Publicity
Expenses A/C, Marketing Expenses A/C, Distribution Expenses A/C
Other income
Cash A/C, Bank A/C, Interest received from banks A/.C, Gain on
Hedges A/C, dividend received A/C, other miscellaneous income
A/C
Occupancy expense
Cash A/C, Bank A/C, rent A/C - office and warehouse rent,
Mortgage A/C, Taxes and insurance A/C, Utilities A/C, Repair and
Maintenance A/C, depreciation A/C, amortization A/C.
Conclusion
The report has been prepared indicating the debit/credit side being impacted by the change in the items of
consolidated financial statements and the journals which are impacted due to the incomes, expenses and
cash flow statement items. It also shows the different elements of revenue for the company and how the
assets are being classified in different categories. It highlights the calculation of dividend and the earnings
per share and what is the percentage of earnings which has been distributed as dividends.
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References
Alexander, F. (2016). The Changing Face of Accountability. The Journal of Higher
Education, 71(4), 411-431.
Arnott, D., Lizama, F., & Song, Y. (2017). Patterns of business intelligence systems
use in organizations. Decision Support Systems, 97, 58-68.
Belton, P. (2017). Competitive Strategy: Creating and Sustaining Superior
Performance (Vol. 2). London: Macat International ltd.
Choy, Y. K. (2018). Cost-benefit Analysis, Values, Wellbeing and Ethics: An
Indigenous Worldview Analysis. Ecological Economics, 3(1), 145.
doi:https://doi.org/10.1016/j.ecolecon.2017.08.005
Dichev, I. (2017). On the conceptual foundations of financial reporting. Accounting
and Business Research, 47(6), 617-632.
doi:https://doi.org/10.1080/00014788.2017.1299620
Fay, R., & Negangard, E. (2017). Manual journal entry testing : Data analytics and
the risk of fraud. Journal of Accounting Education, 38, 37-49.
Goldmann, K. (2016). Financial Liquidity and Profitability Management in Practice of
Polish Business. Financial Environment and Business Development, 4(3), 103-
112.
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Heminway, J. (2017). Shareholder Wealth Maximization as a Function of Statutes,
Decisional Law, and Organic Documents. SSRN, 1-35.
Jefferson, M. (2017). Energy, Complexity and Wealth Maximization, R. Ayres.
Springer, Switzerland . Technological Forecasting and Social Change, 353-
354.
Linden, B., & Freeman, R. (2017). Profit and Other Values: Thick Evaluation in
Decision Making. Business Ethics Quarterly, 27(3), 353-379. Retrieved from
https://doi.org/10.1017/beq.2017.1
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