Financial Statements Analysis Example

This assignment provides a case study analyzing financial statements using various accounting concepts and ratios. It includes a breakdown of key accounts like salaries & wages payable, income tax expense, and the purchase/sale of non-current assets. The analysis also covers commission income received in cash. The goal is to demonstrate an understanding of financial statement interpretation and its application.

Running head: PREPARE FINANCIAL REPORTS FOR CORPORATE ENTITIES
Prepare Financial Reports for Corporate Entities
Name of the Student:
Name of the University:
Author’s Note:

1PREPARE FINANCIAL REPORTS FOR CORPORATE ENTITIES
Table of Contents
ASSESSMENT 1:......................................................................................................................2
Balance Sheet:........................................................................................................................2
Consolidation Worksheet:......................................................................................................3
Consolidation Worksheet Journal Entries:.............................................................................4
ASSESSMENT 2:......................................................................................................................5
Comprehensive Income Statement:........................................................................................5
Statement of Change in Equity:.............................................................................................5
Statement of Financial Position:............................................................................................6
Cash Flow Statement:............................................................................................................7
Workings:...............................................................................................................................8
Bibliography:............................................................................................................................12

2PREPARE FINANCIAL REPORTS FOR CORPORATE ENTITIES
ASSESSMENT 1:
Balance Sheet:
Particulars Group Company
Current Assets:
Inventory $66,700 $46,000
Other Current Assets $96,000 $64,000
Total Current Assets $1,62,700 $1,10,000
Non-Current Assets:
Other Non-Current Assets $2,36,300 $1,50,000
Shares in RDL Ltd. $1,10,000
Goodwill on Acquisition $30,000
Accumulated Impairment - Goodwill -$5,000
Total Non-Current Assets $2,61,300 $2,60,000
TOTAL ASSETS $4,24,000 $3,70,000
Current Liabilities:
Current Liabilities $77,000 $56,000
Non-Current Liabilities:
Non-Current Liabilities $18,000 $2,000
TOTAL LIABILITIES $95,000 $58,000
NET ASSETS $3,29,000 $3,12,000
Equity Capital:
Share Capital $2,00,000 $2,00,000
General Reserve $77,000 $72,000
Retained Earnings 30-6-2016 $52,000 $40,000
TOTAL EQUITY CAPITAL $3,29,000 $3,12,000
In the Books of TMH Ltd.
Balance Sheet
as on 30th June 2016

3PREPARE FINANCIAL REPORTS FOR CORPORATE ENTITIES
Consolidation Worksheet:
Consolidation worksheet 30 June 2016 TMH Ltd. RDL Elimination Column1
Consolidation
Statement
DR. CR.
$ $ $ $ $
Sales $3,30,000 $2,40,000 $20,000 $5,50,000
Inventory 1-7-2015 $30,000 $20,000 $1,000 $49,000
Purchase $1,80,000 $1,10,000 $20,000 $2,70,000
$2,10,000 $1,30,000 $3,19,000
Inventory 30-6-2016 $40,000 $20,000 $700 $60,700
Cost of goods sold $1,70,000 $1,10,000 $2,58,300
Gross Profit $1,60,000 $1,30,000 $2,91,700
Operating Expenses $1,13,000 $94,000 $5,000 $7,300 $2,04,700
$47,000 $36,000 $87,000
Add: Profit on sale of plant $4,000 $4,000 $0
Management fee received from RDL $7,000 $7,000 $0
Dividend received from RDL $4,000 $4,000 $0
Profit after Tax $58,000 $40,000 $87,000
Less: Income Tax Expenses $10,000 $18,000 $28,000
Profit $48,000 $22,000 $59,000
Retained Earnings 1-7-2015 $20,000 $16,000 $11,000 $25,000
Available for appropriation:
Interim Dividend Paid $8,000 $4,000 $4,000 $8,000
Declared final dividend $10,000 $6,000 $6,000 $10,000
General Reserve $10,000 $4,000 $14,000
Total Appropriation $28,000 $14,000 $32,000
Retained Earnings 30-6-2016 $40,000 $24,000 $52,000
Share Capital $2,00,000 $60,000 $60,000 $2,00,000
General Reserve $72,000 $15,000 $10,000 $77,000
Non-Current Liabilities $2,000 $16,000 $18,000
Current Liabilities $56,000 $27,000 $6,000 $77,000
$3,70,000 $1,42,000 $4,24,000
Share in RDL Ltd. $1,10,000 $1,10,000 $0
Other Non-Current Assets $1,50,000 $90,000 $300 $4,000 $2,36,300
Inventory $46,000 $20,000 $700 $66,700
Other Current Assets $64,000 $32,000 $96,000
Goodwill on Acquisition $30,000 $30,000
Accumulated Impairment - Goodwill $5,000 -$5,000
$3,70,000 $1,42,000 $1,58,700 $1,57,300 $4,24,000

4PREPARE FINANCIAL REPORTS FOR CORPORATE ENTITIES
Consolidation Worksheet Journal Entries:
In the books of TMH Ltd.
Journal Entries
Dr. Cr.
Dat
e Particulars Amount Amount
Share Capital A/c. Dr. $60,000
General Reserve A/c. Dr. $10,000
Retained Earnings A/c. Dr. $10,000
Goodwill on Consolidation A/c. Dr. $30,000
To, Share in RDL Ltd. A/c. $1,10,000
Sales A/c. Dr. $20,000
To, Purchase A/c. $20,000
Retained Earnings 1-7-2015 A/c. Dr. $1,000
To, Inventory 1-7-2015 A/c. $1,000
Inventory 30-6-2016 A/c. Dr. $700
To, Inventory A/c. $700
Profit on Sale of Plant A/c. Dr. $4,000
To, Other non-current assets-
Plant A/c. $4,000
Other non-current assets- Plant A/c. Dr. $300
To, Operating Expenses -
Depreciation on Plant A/c. $300
Operating Expenses - Impairment on
Goodwill A/c. Dr. $5,000
To, Accumulated Impairment -
Goodwill A/c. $5,000
Management fee received from RDL
A/c. Dr. $7,000
To, Operating Expenses -
Management Fee to TMH
A/c. $7,000
Dividend Received from RDL A/c. Dr. $4,000

5PREPARE FINANCIAL REPORTS FOR CORPORATE ENTITIES
To, Interim Dividend Paid A/c. $4,000
Current Liabilities A/c. Dr. $6,000
To, Declared Final Dividend
A/c. $6,000
ASSESSMENT 2:
Comprehensive Income Statement:
In the Books of Atlanta Company Limited
Comprehensive Income Statement
for the period ending 30th June 2016
Particulars
Note
s 2016
(in $)
Sales 7,59,220
Cost of Goods Sold 1 -3,86,790
Gross Profit 3,72,430
Other Revenue 3,030
Total Revenue 3,75,460
General & Administrative Expenses 2 -2,63,800
Selling & Marketing Expenses 3 -2,810
Net Profit before Tax 1,08,850
Income Tax Expenses -35,920
Net Profit for the period 72,930
Other Comprehensive Income:
Gain on Revaluation of Land & Building 4 50,000
Net Comprehensive Income 1,22,930
Statement of Change in Equity:
In the Books of Atlanta Company Limited
Statement of Change in Equity
as on 30th June 2016

6PREPARE FINANCIAL REPORTS FOR CORPORATE ENTITIES
Particulars
Share
Capital
Retained
Earnings
General
Reserve
Asset
Revaluation
Reserve TOTAL
Balance as on 30th June 2015 3,00,000 21,940 3,21,940
Issue of New Shares 1,00,000 1,00,000
Net Profit for the period 72,930 72,930
Gain on Revaluation of Assets 50,000 50,000
Dividend Payable for the
period -40,000 -40,000
Interim Dividend Paid 0
Transfer to General Reserve -5,487 5,487 0
Balance as on 30th June 2016 4,00,000 49,383 5,487 50,000 5,04,870
Statement of Financial Position:
In the Books of Atlanta Company Limited
Balance Sheet
as on 30th June 2016
Particulars
Amoun
t
Current Assets:
Cash at Bank
1,10,69
0
Call on Deposit
2,00,00
0
Accounts Receivable 91,590
Commission Income Accrued 600
Inventory 73,190
Total Current Assets
4,76,07
0
Non-Current Assets:
Land & Building
2,60,00
0
Accumulated Dep.- Building -19,400
Motor Vehicle 60,000
Accum. Dep.- Vehicle -20,800
Plant 40,000
Accum. Dep.- Plant -19,800
Total Non-Current Assets
3,00,00
0

7PREPARE FINANCIAL REPORTS FOR CORPORATE ENTITIES
TOTAL ASSETS
7,76,07
0
Current Liabilities:
Accounts Payable 59,440
Accrued Salaries & Wages 1,030
Taxation Payable 35,920
Dividend Payable 40,000
Total Current Liabilities
1,36,39
0
Non-Current Liabilities:
Debentures
1,00,00
0
Total Non-Current Liabilities
1,00,00
0
TOTAL LIABILITIES
2,36,39
0
NET ASSETS
5,39,68
0
Equity Capital:
Share Capital
4,00,00
0
Retained Earnings 49,383
General Reserve 5,487
Asset Revaluation Reserve 50,000
TOTAL EQUITY CAPITAL
5,04,87
0
Cash Flow Statement:
In the Books of Atlanta Company Limited
Cash Flow Statement
for the period ending 30th June 2016
Particulars
Not
e
Amoun
t
Cash Flow from Operating Activities:
Receipts from Cash Sales 86,000
Receipts from Customers 5 6,68,44

8PREPARE FINANCIAL REPORTS FOR CORPORATE ENTITIES
0
Commission Income Received 10 2,830
Cash Purchase of Inventory -34,500
Payment to Suppliers 6
-
3,44,38
0
Salaries & Wages Paid 7
-
1,97,56
0
Superannuation -7,900
Motor Vehicle Expenses -14,700
General Expenses -18,300
Advertising Expenses -500
Call on Deposit
-
2,00,00
0
Income Tax Paid 8 -21,300
Net Operating Cash Flow -81,870
Cash Flow from Investing Activities:
Proceedings from Sale of Building 9 40,000
Purchase of Motor Vehicle 9 -25,000
Proceedings from Sale of Plant 9 10,000
Net Investing Cash Flow 25,000
Cash Flow from Financing Activities:
Issue of Share Capital
1,00,00
0
Issue of Debentures
1,00,00
0
Dividend of Previous Year Paid -30,000
Interim Dividend Paid -20,000
Net Financing Cash Flow
1,50,00
0
Net Increase/Decrease in Cash Balance 93,130
Add: Cash Balance as on 30/06/2015 17,560
Cash Balance as on 30 June,2016
1,10,69
0
Workings:
Note 1: Other Revenue
Particulars 2016

9PREPARE FINANCIAL REPORTS FOR CORPORATE ENTITIES
(in $)
Commission Income Received 3,030
Other Revenue 3,030
Note 2: General & Administrative Expenses
Particulars 2016
(in $)
Salaries & Wages
1,97,80
0
Superannuation 7,900
Motor Vehicle Expenses 14,700
General Expenses 18,300
Depreciation-Building 5,400
Depreciation - Motor Vehicle 12,900
Depreciation - Plant 6,800
General & Administrative Expenses
2,63,80
0
Note 3: Selling & Marketing Expenses
Particulars 2016
(in $)
Advertising Expenses 500
Bad Debts 2,310
Selling & Administrative Expenses 2,810
Note 4:Gain on Revaluation of Land & Building
Particulars 2016
(in $)
Revised Value of Land & Building
2,60,00
0
Less: Book Value of Land & Building
2,10,00
0
Gain on Revaluation 50,000
Note 5: Receipts from Customers
Particulars 2016
(in $)

10PREPARE FINANCIAL REPORTS FOR CORPORATE ENTITIES
Opening Balance of Accounts
Receivable 86,810
Add: Credit Sales
6,73,22
0
7,60,03
0
Less: Closing Balance of Accounts
Receivable 91,590
Receipts from Customers
6,68,44
0
Note 6: Payment to Suppliers
Particulars 2016
(in $)
Opening Balance of Accounts Payables 55,860
Add: Credit Purchase
3,47,96
0
4,03,82
0
Less: Closing Balance of Accounts
Payables 59,440
Payment to Suppliers
3,44,38
0
Note 7: Payment for Salaries & Wages
Particulars 2016
(in $)
Opening Balance of Salaries & Wages
Payable 790
Add: Salaries & Wages for Curent Year
1,97,80
0
1,98,59
0
Less: Closing Balance of Salaries &
Wages Payable 1,030
Payment for Salaries & Wages
1,97,56
0
Note 8: Income Tax Paid
Particulars 2016
(in $)

11PREPARE FINANCIAL REPORTS FOR CORPORATE ENTITIES
Opening Balance of Taxation Payable 21,300
Add: Income Tax Expense for Current
Year 35,920
57,220
Less: Closing Balance of Taxation
Payable 35,920
Income Tax Paid 21,300
Note 9: Purchase & Sale of Non-Current Assets
Particulars Amount
(in $)
Opening Balance of Land & Building
2,50,00
0
Closing Balance of Land & Building
2,10,00
0
Proceedings from Sale of Land &
Building 40,000
Opening Balance of Motor Vehicle 35,000
Closing Balance of Motor Vehicle 60,000
Purchase of Motor Vehicle -25,000
Opening Balance of Plant 50,000
Closing Balance of Plant 40,000
Proceedings from Sale of Plant 10,000
Note 10: Commission Income Received in Cash
Particulars 2016
(in $)
Opening Balance of Commission
Income Accrued 400
Add: Commission Income Received for
Current Year 3,030
3,430
Less: Closing Balance of Commission
Income Accrued 600
Commission Received in Cash 2,830

12PREPARE FINANCIAL REPORTS FOR CORPORATE ENTITIES
Bibliography:
Deegan, C., 2013. Financial accounting theory. McGraw-Hill Education Australia
Henderson, S., Peirson, G., Herbohn, K. and Howieson, B., 2015. Issues in financial
accounting. Pearson Higher Education AU.
Horton, J., 2018. Advanced Financial Accounting and Reporting: Theory, Practice and
Evidence. Routledge.
Scott, W.R., 2015. Financial Accounting Theory 7thEdition. Canada: Pearson.
Williams, J., 2014. Financial accounting. McGraw-Hill Higher Education