Mohammed Tawsif Salam, ID: 1223697

SESSION TASK
You are running your own trading business. At the end of financial year 2011, you have following financial data maintained by your accountant. If you want to know the financial position of your business and incomes generated by the business during this year. What will you do? Cash Utility Expense Owners Capital Supplies Interest Expense Bonds Payable Salaries Expense Inventories Income Tax Rate 4,000 8,000 45,000 4,000 5,000 40,000 16,000 45,000 30% Sales Buildings Accounts Payable Cost of Goods Sold Additional Paid in Capital Supplies Expense Accounts Receivable Owner drawings 100,000 65,000 12,000 58,000 20,000 3,000 10,000 1000

1. Classify the accounts as assets, liabilities, equity, revenue or expenses. 2. Prepare the Income Statement. 3. Prepare the Balance Sheet.

Solution to 1:
First the items have been classified into account/information types, Revenue | Expenses | Assets | Liabilities | Equities
Cash Utility Expense Owners Capital Supplies Interest Expense Bonds Payable Salaries Expense Inventories Income Tax Rate 4,000 8,000 45,000 4,000 5,000 40,000 16,000 45,000 30% Sales Buildings Accounts Payable Cost of Goods Sold Additional Paid in Capital Supplies Expense Accounts Receivable Owner drawings 100,000 65,000 12,000 58,000 20,000 3,000 10,000 1000

Mohammed Tawsif Salam, ID: 1223697

Solution to 2:

Income Statement
Sales Revenue - Cost of Goods sold Gross Profit - Operating Expenses Utility Expense Salaries Expense Supplies Expense Income from Operations Non-operating - Interest Expense Income before taxes - Income taxes (30%) 10,000 3,000 100,000 58,000 42,000 8,000 16,000 3,000 15,000

5,000

Net Income
Solution to 3:

7,000

Balance Sheet
Assets
Current Assets Cash Account Receivable Inventories Supplies Total Current Assets Non-current Assets Buildings Total Non-current Assets 4,000 10,000 45,000 4,000 63,000 65,000 65,000

Total Assets

128,000

Liabilities and Equities

Current Liabilities Accounts Payable Tax (30%) Total Current Liabilities Long Term Liabilities Bonds Payable Total Long Term Liabilities Owners Equity Opening Capital Additional Investment Owner Drawings Net Income Ending or closing Balance 73,000 12,000 3,000 15,000

40,000 40,000 45,000 20,000 1,000 7,000

Total L & E

128,000