This article provides an income statement and balance sheet for the period ended 30th June 2017, along with explanatory notes. It also includes references for further reading.
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Running head: PROJECT AND INNOVATION FINANCE AND ACCOUNTING Project and innovation finance and accounting Name of the student Name of the university Student ID Author note
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1PROJECT AND INNOVATION FINANCE AND ACCOUNTING Table of Contents Income statement for the period ended 30thJune 2017..............................................................2 Balance sheet as on 30thJune 2017............................................................................................3 Explanatory notes.......................................................................................................................4 Reference....................................................................................................................................6
2PROJECT AND INNOVATION FINANCE AND ACCOUNTING Income statement for the period ended 30thJune 2017 ParticularsAmount Incomes Sales$37,50,000.00 Sales discount$(15,000.00) Net revenue$37,35,000.00 Cost of goodssold$(21,65,100.00) Add: Freight in$(11,075.00) Total cost of goods sold$(21,76,175.00) Gross profit$15,58,825.00 Other income Rental revenue from sub-lease$12,000.00 Design services$1,85,000.00 Gain on sale of delivery vehicle$11,000.00 Operating income$17,66,825.00 Less: Expenses Advertising expenses$17,000.00 Bad debt expenses$25,000.00 Salaries - administrative staff$3,54,000.00 Sales commission - marketing staff$4,06,000.00 Sales staff vehicle expenses$38,000.00 Depreciation of motor vehicle$62,000.00 Depreciation of office furniture$33,000.00 Depreciation of retail store equipment$8,000.00 Depreciation of retail store$25,000.00 GST compliance fees$22,800.00 Insurance expenses$42,000.00 Interest expense$4,200.00 Rates expenses$15,000.00 Rent expense$36,200.00 Research and development costs$80,000.00 Freight out$22,000.00 Income tax expense$1,28,610.00 Amortisation of goodwill$7,000.00 Amortisation of R&D$10,000.00 Total expenses$13,35,810.00 Net income$4,31,015.00
3PROJECT AND INNOVATION FINANCE AND ACCOUNTING Balance sheet as on 30thJune 2017 ParticularsNoteAmountAmount Assets Current assets Cash at bank1$1,08,000.00 Accounts receivable2$2,92,000.00 Less: Allowance for doubtful debt$(32,000.00) Net receivables$2,60,000.00 Inventory$4,15,000.00 Prepaid insurance$8,500.00 Prepaid rent$6,500.00 Total current assets$7,98,000.00 Non-current assets Goodwill3$1,08,000.00 Less: Accumulated amortisation$- Carrying value of goodwill$1,08,000.00 Research and development4$80,000.00 Less: Accumulated amortisation$- Carrying value of research and development$80,000.00 Motor vehicle5$4,36,000.00 Less: accumulated depreciation$ (1,18,000.00) Carrying value of motor vehicle$3,18,000.00 Retail store equipment5$93,000.00 Less: accumulated depreciation$(19,000.00) Carrying value of retail store equipment$74,000.00 Furniture5$72,000.00 Less: accumulated depreciation$(5,000.00) Carrying value of furniture$67,000.00 Retail store5$9,25,000.00 Less: accumulated depreciation$- Carrying value of retail store$9,25,000.00 Land and building$3,00,000.00 Total non-current assets$ 18,72,000.00 Total assets$ 26,70,000.00 Liabilities Current liabilities Accounts payable$2,37,500.00 Income tax liability6$- Salaries payable$31,000.00 Interest payable$1,500.00
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4PROJECT AND INNOVATION FINANCE AND ACCOUNTING GST owing to ATO$28,800.00 Total current liabilities$2,98,800.00 Non-current liabilities Mortgage loan payable$2,02,500.00 Provisions for ordinary dividend$80,000.00 Provisions for preference dividend$40,000.00 Total non-current liabilities$3,22,500.00 Total Liabilities$6,21,300.00 Equities Share capital Preference share at $ 1 each$4,00,000.00 Issued capital at $ 1 each$4,00,000.00 Ordinary share at $ 2 each$7,00,000.00 $ 15,00,000.00 Suspense account$3,700.00 General reserve$2,75,000.00 Asset revaluation reserve$1,40,000.00 Retained income7$1,30,000.00$5,48,700.00 Total equity$ 20,48,700.00 Total liabilities and equity$ 26,70,000.00 Explanatory notes 1.Cash at bank = $ 135,000 Less: share issue cost = $ 27,000 Closing cash balance = $ 108,000 2.Allowance for doubtful debts will reduce the balance of account receivable and hence, reduced from the balance of account receivable (Kulikova, Garyncev and Goshunova 2015). 3.Amortisation of goodwill will reduce the balance of accumulated amortisation. As the accumulated amortisation and amortisation of goodwill amount is same that is $ 7,000 the net deduction amount from goodwill will be nil (Small, Yaseen and Schmidt 2016).
5PROJECT AND INNOVATION FINANCE AND ACCOUNTING 4.Amortisation of R&D will reduce the balance of accumulated amortisation. As the accumulated amortisation and amortisation of R&D amount is same that is $ 10,000 the net deduction amount from R&D will be nil (Small, Yaseen and Schmidt 2016). 5.Depreciation of motor vehicle, office furniture, retail store equipment and retail store will reduce the balance of accumulated depreciation. Therefore, the accumulated depreciation amount on the said items has been reduced by the amount of depreciation (Del Giudice, Manganelli and De Paola 2016). 6.Income tax expense reported in the income statement will reduce the balance of income tax liability reported in the balance sheet. As the income tax expense and income tax liability amount is same that is $ 128,610 the net amount reported as income tax liability is nil (Mullinova and Simonyants 2016). 7.As amount of retained income after paying off the dividends is $130,000, the same is reported in the balance sheet and the net income amount from income statement has not been considered.
6PROJECT AND INNOVATION FINANCE AND ACCOUNTING Reference Del Giudice, V., Manganelli, B. and De Paola, P., 2016, July. Depreciation methods for firm’s assets. InInternational Conference on Computational Science and Its Applications(pp. 214-227). Springer, Cham. Kulikova, L.I., Garyncev, A.G. and Goshunova, A.V., 2015. Doubtful debts allowance develoment:Stagesandmethodsofcalculation.MediterraneanJournalofSocial Sciences,6(1 S3), p.448. Mullinova, S. and Simonyants, N., 2016. Reflection of a deferred tax liability in the credit union reporting according to IFRS (IAS) 12" Income taxes".Modern European Researches, (1), pp.83-88. Small, R., Yaseen, Y. and Schmidt, L., 2016. Amortisation of intangible assets: accounting technical.Professional Accountant,2016(28), pp.16-17.