Sammy Ltd Accounting Assignment: Adjustments, Statements, and Analysis

This assignment solution focuses on preparing financial statements for Sammy Ltd. It begins with the necessary balance day adjustments, detailing debit and credit entries for various accounts like interest, prepaid rates, rent, accrued commission, and depreciation. Following the adjustments, the solution presents an income statement for the year ending December 31, 2015, showcasing revenue, cost of sales, gross profit, operating income, operating expenses, and net profit calculations. A statement of changes in equity is then prepared, outlining opening equity, capital contributed, profit, drawings, and the resulting balance at the end of the period. Finally, a balance sheet is provided, detailing current assets, fixed assets, liabilities (current and long-term), and owner's equity, providing a comprehensive overview of Sammy Ltd's financial position at the end of the year.

Accounting Questions

Table of Contents
3.1 Preparing the necessary balance day adjustments for Sammy Ltd........................................3
3.2 Preparing an income statement..............................................................................................3
3.3 Preparation of statement of changes of equity.......................................................................4
3.4 Preparation of statement of financial position.......................................................................4

3.1 Preparing the necessary balance day adjustments for Sammy Ltd
Balance day adjustments For Sammy Ltd
S. No. Particulars Debit (in $) Credit (in $)
1. Interest of loan a/c Dr.
To Accrued loan a/c
1420
1420
2. Prepaid Rates a/c Dr.
To rates a/c
1000
1000
3. Rent received a/c Dr.
To Unearned rent a/c
500
500
4. Accrued commission
a/c Dr.
To commission
received a/c
800
800
5. Depreciation on plant
a/c Dr.
Accumulated
depreciation a/c
8210.4
8210.4
6. Depreciation on plant
a/c Dr.
Accumulated
depreciation a/c
5000
5000
7. Salary a/c Dr.
To Outstanding salary
a/c
3440
3440
3.2 Preparing an income statement
Income Statement of Sammy Ltd for the year ended at 31st December 2015
Particulars
2015
(in $)
Revenue 179520

cost of sales 88960
Gross profit 90560
Commission received 810
Accrued commission 800 1610
Rent received 3690
Unearned rent 500 3190
Total operating income 95360
Advertising expenses 1200
Interest expenses 1330
Outstanding interest on loan 1420 2750
Insurance expenses 510
Rates expenses 2600
Prepaid rates 1000 1600
Salaries expenses 50120
Outstanding salaries 3440 53560
Depreciation on plant 8210.4
Depreciation on building 5000
Total operating expenses
72830.
4
Net profit
22529.
6
3.3 Preparation of statement of changes of equity
Statement of changes in equity
Particulars Amount
Opening equity 0
Capital contributed 79000
Profit 22530
Drawings 1300
Balance at end of period 100230
3.4 Preparation of statement of financial position
Balance Sheet of Sammy Ltd for the year ended at 31st December 2015
Particulars 2015 (in $)

Current Assets
bank 8,300
Accounts receivable 2,500
Inventory 24,870
Prepaid expenses if rates 1,000
Unearned commission 800
Total current assets 37,470
Fixed (Long-Term) Assets
Building 67,370
Plant 60,210
Total fixed assets
1
27,580
Other Assets
Total Other Assets -
Total Assets 165,050
Liabilities and Owner's Equity
Current Liabilities
Accounts payable 9,460

Outstanding loan 1,420
Outstanding salaries 3,440
Unearned rent 500
Total current liabilities 14,820
Long-Term Liabilities
Long-term debt 50,000
Total long-term liabilities 50,000
Owner's Equity
Owner's investment 79,000
Profit 22,530
Drawings (1,300)
Total owner's equity
1
00,230
Total Liabilities and Owner's Equity 165,050