rlj;;!rr5:i.liDlilii: f;riri;il- :, iilri,iililS. ll)li3 llA!

t i-lfiis :b
{i!tiA*}'fIE 2
'rlJl

Thr Balance Shtt:: An Over';ieY,'

ia.\-
:i:l !
ASSE'I-S I t lllll.l l l*'\ illr B l.]
Si \\Il1.{Jt-ll'1

Currerrt aqsets: I.i::-ieiit jirrLiliries irlei:ti:

I:iiti * 1.:i, -l:',t
( la:1r A ttrr_:. :,,:l
t ):il- tr:r.. -ii.,r.i
\ I r::l:. t::i,.: 5a::i.i':iii 0 ii!t it.jr:'-'riill:ri:!
-.\ Jr'r;l:li.: t_iic-.:t,,.li)iL A
:i:.,i :,--":,',.,rr'
f!l.ril!:
Ji:..
'i-r.rirri cul-i-enl r'iei;i
Prrir:iti:rir::r,::' _9
-[r:tai current asse,is

Long*tei-m liairiiities irieiitj :

l-.:n:::r:li;::,tri
-,t,,::l;r.:r
lrtai loeg-teir:i {ieirt

Tbtal odrer agsets

:l

-r'{}T'_tL .{5SET S
riEll'l- tl-T} EQtl{l- Y

0f
.' .;

L.r-ti. : I''.i ,' -':- ::::: :: ' "--"r": l ''

iil!ii 1';r:lr .-:i-r:il;ir'll'l'l -i '
;
i::ii.: i::tr:t:iicLl t,t.,iit.r i,itl-'t i.:r.ili:.:i ilili" l'i:]'tilr::
i:r icrrsh tllll:r.l.1:11;1;r i :il; lli"lll'''i' fj-:: i::llirLll:r' "i :i:l r :llil tt'l't';lL: ;- ':e itl':'li:'t:l'
,,tr, r,r],i::i ,,irl rr;l,Jr,:t lr,riie-.. i-riri. :rls! i,, ii:: r.:':ii:i".,.:i.,iit:r'iri :-'::rl-L rali-"1' :i. '
:: lii|:lri\r il; -crali: rillir i:r)t;l
'l'!..:- l'r'i
-Lour,iurta r"ccfi..:i)le . i'li:t.. r ,,cc(,rLli1t! feceil eLnle il;:slrr-r li llri ll'''il.li'' /J:-r"ll,t i',! l,: l,-i:,, l'-lrri',:.,1'-i
ir"on-r iis aliji{rillal-i li];i, i:lll lil ciill:ili- ,-:r,,!,i., r';rirl :lt! il:Ilr Iil fl Li.lL
-ai. !-r'a'il. .ili ii lir t i,i tl lil
Itrvenlr.rtit 5. it::'-r-'ntcll'' (IiI\i"L' {rl il:c i :t i\ rlltaai:i i:. \i ri"f.. iI
jr { )

i:.i.i
1:rLir-i:-rt :,: i,r .. -',-1.1 j:li- i,,'ar-riiti:li sillc. i.1,:r.,i r-1ri,. r1,1i.. i,ril-t:: -i:ii,ill t-"'.
"
-1 r-irrIllillli ijllril ll.tlis ii, :)l :airita (!iit-r f'lirel:1.. i-t;i
!:1)ii1 t:r:ti.- '.':, II"' .,, l.i)11.'. .i^
Frepalderye:u** iirt;t ilr ti:ir'.1:r;i l::ll.
'ii:. itt:itr-.i:t,-:t :ri!'l l i r L: j :r : t.tr:-\-
jr,a rlttc ir,:il-rri i'ir\ ci iil:- i,,:gir::. (!i'!i:tli lllili.lllh\. irr i.ru
 rs.i*g$.iisi*i.,i

r,'{&r&S,ry,T* cn*'.&? t+*rymr*4g1us t.eN:iq.re*V$W.wtr*,X*&**

'i'lr lr,. l,,ii1 .,r<
i j ..i:.,1r..:il :t r\ r)iii .ri i jri;-]rl._
C:r.. .,.11..::.i:.-.r.
i)rlr iii-'r.rl. ('rlt j',1. .r:11
;t:.i iir;.r i,l.,r:ls i-r ,r;i ,i,a I
ir;':i,:l ii:;ii.i: li:: ic;l i,i:-ir-. i.:t(,:r,rr::i:j:.Lf.rlr:;;:tr:l::;r ".,..,rlil
ir,;il.]:i.r'rr'i -,:,rli:rili, ti::r:l:.'\i,ti:iiil'i i: l:i
Ll;;:i ia.r ii. ir, iL. Lrr
' : .- .: ',. ,r:., r.. r-
I:oric i;:r'il-:t nt.ji.r:i... r,l(. rii; ,.ri-jil ii.;..:tr._ :r.jril
._ 1-,...:r.
i-t, :arir-r cii. 'rt\'h11 i ,, 1, 1 ,_ rr.r .i j-., ._.r-r
! i;-rJ: I ir;y,_; r,;
.',,,i;,,-:i...' . . ,..,..
iirl-ilsai] :.,,!irl..a :lil!i: it-.ji: ,.,, ,- ,,, .,', ., t.-, I,r'.,.,-1,-..1..
.l::i ::':,.t: i.: -: .....,,. -.,..:r.:..;:i. ....., .... ...,.
I'll t;ll:r ;i u, lo tiri: ,i.,iir iqlr r: i.:,:t :hlr l::i::::.: ri. i r.,.,..;l,i
lt,:c :,.t:'i lr.-i ,::r : ..,.. .: , ,,, . . ..,
'.rllcircl i:lr-.r:-rr:l::c:;. l'j:c:. ,u r,;1.c ,1,,,,. ,,,.,,,, ,, , a,,
iil-rl 'rtrt|r l,r ii--r :;ll] ;:;r.:iiti;,,,. It i.:. ,.-. ,i, ",.
:f::ri 1::ia.:: ja!
.,;, .;1.- l',,'r;l,i;r.:,:. {,. ,,,, ,,,,., ..:.:-: I :.= ,l .,.:., ^.
1,
r,tiL,.'r.tl t,r,-rrt r-, . ta
lrr :h. r,,r-'ltiir,;i. I t::irir,.j trr i_::;,.1-.;11 r:::,:,-ti,,,:r.::l-:.
.'l,rr;.. s.1.., ....,-,. . .,.., i:
-. ,-,r.,,... .:: . .. ,. .:.
ilu.c. il-l'lrrr I ..:.r:-ilir i :r:i li(, iit::r .,-,,:1,:i .r,..,,,.,,
'-1i1.:gl I
tai i)r. l:iitr-a!r.j il r-i1 li.!-.,,r1 r;ft:t.l:;:;:,r-t:::.,...,,,.,,,,,,a,,,..r_
:"-;i ' :':,..-., i..,- . .. .-: .- .-.-..:-. ..
:. : . :-.,
.r:, ] , , -;:t t.'i., rr.,], ... tr -,:.:., . ::. ,: .. . ..
'-,i .:, i: . r. -1. .. ...i,i-, :.:--..,.. : . r..
trr i:'c.t 1_ t:rri: (,t:lt: tll,ti,3.iiiit ;,.:, _L:-,,,!.: ;ir r:,r
:ti-.t:,.
-,. : : . I r,,,ri ..,...
"-i::i]. '' .,-1, .. .,. ,., ...:: .:: -.
ai;lilsl!.ti:ti] *le:,.i f,:ii,t;l i.r., :.i-, .ir-- I : .-_,-i:rit,,,-il
::.!;..',- .. i, .",1,.- ., --,,.,,::: _. \ j:.i i
il:rr,ier-iir'.iri;r:;r ir, :r.,f i ..;,., i..-. .1. -r:-:-i .l .,.r,,i!.ira_
;,,1,;,.-r., j, t,...,,., :,, . i t,.:.:.,r :. iI -,.i.
-:,..a-,_,-.,

iB adrance'Thus, prepaid expe'nses Ere drcsr cash pa-vnr*,, recordd or:

lld
aaraEce sf,set as filrrent assets aad
rhe
rften slm*:n as an,erywr_lse im rl,e irc*me staten}ent
as r]]sl are aseA
 :I,TiIDEBSTANDISGFII*AHCIALSTATEffiET$T5"TAXES,AffiDCAs$iFLO'U'S3?

{$ sF Ftr**xslt*g llrht
1:,..-, side r;fl rhe halance str'leet'il'r F1gare ?-1, labeleal "tr-iahilities
.,r .i'.iii C,onsrsts of such sotrcrs
-as

,..111j i..;:,:ti,.' . :(
- _.:i
!-_
:,
leorv tr]:e .firrn lirE",irces jts ss$ets- Flnanci*g c*rnes crertrit eetendeq{ hy sqqlliert or
fil ar i-ll,ll: \r 'ill-l" J:: debr fiiahi{ides} and eqtrit-t- Bebt
is mon€}" rhat trras beerl hor- a nnrur frqrrn a tamk-

,,:'.,.i ir'- :-cl):l!,1 ;li !.):.111 prerletelxdneri F:q*in-. hor'e,-eq repr€serxts [h€
.:hil ,ll:.-i:i,i:l', i:: , :,. I ir''il-i:ll:i r-,-.,1-, i .i 1ilfri..i,,..' il),. iifi:rrti r!r illt
-...i :i: :r rl:.1 iir. ii:: r, tt]l'l;1,.' I|.l:i:
l- ,J: ir:- l :a'-!arll. iL lLr l-'il;1::l'::, ll:r lr'
, f,-.riir,:..1
-. i ...
''.',.j -
i:,. ii:ir,. ,ri i]:"'iiltrr::ri., t]-rt':1.
I}:i.i: clit;ir:.i " I :, :1.: 1 r.:: :-,: I ;;'r rr. l' : ;ri i,: .: -t. .::: ,:'. \. ':;r,.,,1 i:l i ,r,,.,,
t:tii i r, .-:1r;-1:.1. ,,, -: 1,'''.-11;--' .l--:r- aod {?} lcrg-tenn dabe Curreret -T-:--]t'., ':..
,-. in icne:- daat masr be repaid withi:n the
. ..-itt. ie i;t. or short-rter:vl .iiahrlities' ine!*gdes borroa-ertr fl i- r.rll.:tt;.
-
't:rrir;- i it:l;:.1,.. lr;i:ii,-: ,r'r i il:'iair,i
_: i:r:.r: ,i it;rt ii ;.,::-l:i:,::i:t
il_' i-ir :,:
-ilj]ll;ai.1? : r,ii,:i ., :t;riir
'rtlf -!.Lrx}u r;r; p:r', :r':.lic I i' l:"1'l; iI :. r.:_::r, !fia.'..4: r-. i '_r-:
i r.rrt:.
. .':- ir irtr i:l-iii:,iir.'i irr :--',1-' i:.:':'-,.'-l:-1" :"t:.' i',.',-q
rl ':i l,lr il::ri: hefore palirtg .fc,r irwerltol "t'
-;ilt-<
i:r:. ',.:'-: '.,: -113,--Er.-^.-Ei-d ii ) | {ix }L i'r

> :illa"t'-: : -r'.,:',r-

;,,rrii::'r,i lr.ri. :iillri:.i1.' trl

T,-, .r t..r";irrtl :n, !rirrf

-
'l{"' :;il.!: i!,r'.,1i,::: -i'",r r'r' i|;ri
. {,lt i:ii:r i irrt:
i-.r:rrt'r
:: !'i -

Tl--lllLliililrilT.,,,
l,r-r'.
-L ili:r. : ri p:tt.l tir
-'?ffiffi n*& L -r, n g-':t: :'1,-l dc i i:t.llrr:'i,i

b*rrow rllgil€Y lc ri:ir i: .

'r) rit i,,,. at-li:,ll:lll:li. r,.-l :-I i:. -r1('ir ii e.---'-"a--.

il-, ,,r'r'. rL ir
'|i' i''!,\-ii i

',:-:1 l-l a! ( I r!: i r-:rr.iil.,: ili,r-. r:tr ,ilt. rr iiil:rl

:nri I t
''t''
l;
r-'. *I}IT?
,: i rlrrt i.i:i;1,rri'- ::' t!:c fi:-*:"
\!rr;,at'\ !ir.!1 lririi I'tr,Jrgl i,rt-
ri,':1;' 1,-t,,, l, :;'r;;1',11'1

! : :1! ,
-
i.t L..ii)i:,'. ;:l,,rr-ti lilc ll:ll'
ii-i ril-illii \ii ia i.

:: iitc '',i'-,,'\tt."1'
:: ilCilj ij : );i ;I iI( i :l . i , , i: 1; . (-
, I : :: ir ;i :
'
--'-.!:"1..
' '

' ' :'- r ' '' i

ii:.:::i-. i,: iii. ,.t:t;:.

.: i't ITlJfr,r::: ; lr. :iri:r ; e'. :ir.'

'i ' ."' ".l ''' r' .' ' ' :
" " "'
l--:-" . :
:1.() i:r;'il-
i ira :t:l:] ! r:i;aa illir-r
- rz!\. ----'---:
il:: r:.
: i;r
,,,,,1 ll -f,i-iilclilliltlTi6i:" r: :rI

,..it 'llr i,!r' -:'i-- il.

is s{r<N*-n igr the balxnce lheer;x;: I 1:'i:
:j': .i'_:.:

r.r.rsniffi! eqsity = common stock (par value + paid-in capital - treasrrry soct) :, i.,,, ri,r,itl,tiit I,.r,ii:ti:!!!
ijl i.'
r ii:r irlr't:i]il.
.rrr:t'].t'.::r
*retahed ean:inry

ut su7 N /
'L rhla
| a
-:==:-
r
a
2.1.9 Basic structure of income statement and example of it

Falah Junior lncome Statement for the year Ended December 31,2011

Sales 700
-Cost of goods sold (COGs) 560
Gross profit 140
Operating expenses:
Selling expenses 20
Operating income from operating
General and administration expenses + 15
activities.
Depreciation expenses 30
Total operating expenses 65
Operating lncome (EBIT) r4o - 69 ,15
- lnterest expenses 1 5
-7r*15 = d6
Earnings before tax (EBT) 60 {
- lncome Taxes (30%) lnterest is a cost of debt financing 18 (-- Lo'/ Qo7)otY
Net lncome (EAT)
(Earning available to common stockholders)

lncome resulting from operating a

and fi nancing activities
Additional information :

Dividends paid to stockholder in 2011 '10

1
( 4z N.r lncone
Retained Earnings 32 ) ;-
Number of common shares outstanding 20
Earnings per share 42t2A 2.10
Dividend per share 10t20 0.50

,N

w
2.2.1 lncome statement
FALAH JUNIOR CORPORATION
2011 & 2012 lncome statement (RM000)
2011 2012
Net sales 2,700 3,200
- Cost of goods sold 2,347 2,816.2
- Depreciation 90 100

Earnings before interest taxes 263 283.8

(EBrr)
Less interest 60 88
Earnings before taxes (EBT) 203 195.8
Taxes (40%) 81.2 78.3

Net income 121.8 117.48

Dividends 30.45 29.37
Addition to retained earnings 91.35 88.11

Per share data

Common stock price 26 23
Earnings per share 2.44 2.35
Dividend per share 0.61 0.59
Book value per share 17.60 18.72

There are 50,000 unit shares of common stock outstanding for 2011 and 2012
tr-et income t]l'ro^to
Earning per share(2012)- =
common shares outstanding 50,000
= RM2.35

Dividend per sttare(2012)- Dit'idend poid ::::: Rlut0.59

common shares outstatding 50.000

Total c-.ommon eqttity 93610-0-0

:
Book varue per share - -
common shares outstanding 50.000
Rfurr8.7z

\ tr,vril- shcr€s
2.3 Balance sheet ldentity
Cash flow identity : Assets = Liabilities + Stockholders'Equity

,y
6
 2.2.2 Balance Sheet
FALAH JUNIOR CORPORATION
Balance sheet of December 31,2011 and 2012 (RM000)
Assets

Current assets 2011 2012

Cash BO 10

Accounts receivable 315 375

lnventory 315 515

Total Current Asset 710 900

Net plant and equipment 1 ,165 1,295

Total assets 1,875 2,195

Liabilities and Owner's equitY

Current liabilities
Account payable 320 350

Notes payable 175 235

Total Current Liabilities 495 585

Long term debt 500 674

Totaldebt 995 1,259

Owner's equity:
Common stock 170 372.85

Retained Earning 714 563.1 5

Totalcommon equitY 880 936

Total liabilities and owner's

equity 1,875 2,195

There are 50,000 unit shares of common stock outstanding ,for 201 1 and 2012hhe stock will sell at a price of
Rtvl23.
Cash flow per share is Rl\44.27 .Assume that there are 365 days in a year

,N
t,
fi^x
 Study Questions 28 (Part 1)

1. Preparing Financial statement

Base on the following information for AZRA corp. , you need to prepare an (a)income
statement for 2010 & 2011 and also balance sheet for 2010 and 2011. Use a 35% tax
rate throughout.
2010 2011
Sales RM4,300 RrM4,500 .9
Cost of good sold 2,000 2,500 ls
Depreciation 740 900 ]S
lnterest 100 190 s
Dividends 2A0 250 fs
Current Assets 2,205 2,429 Bs
Net fixed assets 7,344 7,650 ES
Current liabilities 1,003 1,255 t/9
Long term debt 3,1 06 2,085 ES

Study Questions 28 (Part 1)

1" Preparing Financial statement(Azra)
. a) Income Statement for 2010 & 201 1

20i 0 201 1

Sales 4.300.00 ,1.500.00

Cost of goods sold (2.000.00) (2,500.00)

Depreciation (700.00) (eoo.oo)

E,arn before interest & taxes C eE ir) 1,600.00 1,100.00

Interest ( r00.00) ( 1e0.00)

Taxable income

Taxes (35%)
(ro,) (!g 1,s00.00

(s2s.00)
910.00

(318.s0) A/
lto Guk)

Net income 975.00 591.50

Dividends 250
qrls 4l.so
Addition to retained eanrings 341 .5

o
 Azra Corp
20l0and20l1
Balance Slreet
20i0 201 I 2010 zAt1
Currerrt Assets 2205 2129 Current liabilities I r 003 1255
Net fixed assets 1344 7650 Long term dept 4tOl )( 3 106 2085 l 3,3*o
Equit-v" 5440 6739
Tt-rtal
Assets 9s49 r 0079 9549

q5+?-+to1= 5,44a
,oo+t _
i3io
= Ll Zf
2. During 2OO7,R&R Corp. had sales of RIV900,000. Cost of goods sold, administrative
and selling expenses and depreciation expenses were R1i4620,000, RtV120,000 and
R1V30,000, respectively. ln addition, the company had an interest expense of R1V5,000

and tax rate of 35%.

a) What is R&R's net income for 2OA7?

2. a) What is R&R's net income for 2007?

R & R Corp.
h'rcome
Staternent for
2001
RM

Sales 900.000

Cost of good sold (620.000)

Administrative and Sel ling
expenses ( r20.000)

Depreciation expenses (30.000)

E,arning before interest and
taxes 130,000

Interest expense (5,000)

Taxable income 125,000 xr.34.

Tax (35%) (43,1s0) {
Net incorne 81,250