Scribd
Upload
11 views5 pages

CH 6 Answers-7ed

The document provides solutions to exercises in financial accounting, including extracts from financial statements for various companies. It includes details on the statement of financial position, profit or loss, changes in equity, and calculations for assets and liabilities. Key examples include the financial positions of 'Sun and Shine' and 'Home Moves' as well as the performance of 'Ian's Interiors' over specific periods.

Uploaded by

kagisoponzo7
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
11 views5 pages

CH 6 Answers-7ed

The document provides solutions to exercises in financial accounting, including extracts from financial statements for various companies. It includes details on the statement of financial position, profit or loss, changes in equity, and calculations for assets and liabilities. Key examples include the financial positions of 'Sun and Shine' and 'Home Moves' as well as the performance of 'Ian's Interiors' over specific periods.

Uploaded by

kagisoponzo7
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Solutions to Questions, Exercises & Problems in Financial Accounting: Chapter 6

A Concepts-Based Introduction

E6-1

a) Extract from statement of financial position

SUN AND SHINE


(EXTRACT FROM) STATEMENT OF FINANCIAL POSITION
AT 31 DECEMBER 20X4
C
Non-current liabilities
Non-current portion of loan 200 000
Current liabilities 120 000
Current portion of loan 100 000
Bank overdraft 20 000

b) Explanation

Of the total loan of C300 000


• the C100 000 due to be repaid on 31 June 20X5 be reported as a current liability
as it is due to be settled within twelve months of the reporting date.
• the remaining C200 000 due to be repaid on 30 June 20X6 and 30 June 20X7 will
be reported as a non-current liability

The overdraft is held primarily for the purposes of trading and is therefore reported
as a current liability.

th
© Kolitz 7 ed, 2023 Page 2 Preparation and Presentation of the
Financial Statements
Solutions to Questions, Exercises & Problems in Financial Accounting: Chapter 6
A Concepts-Based Introduction

E6-2

a) Statement of profit or loss

HOME MOVES
STATEMENT OF PROFIT OR LOSS
FOR THE YEAR ENDED 31 DECEMBER 20X6
C
Income
Removal fees 265 000
Operating expenses (133 000)
Salaries and wages (94 000 + 2 600) 96 600
Depreciation 11 800
Electricity (8 200 + 900) 9 100
Rent 9 000
Supplies used (4 600 - 1 700) 2 900
Insurance (3 200 – 1200) 2 000
General expenses 1 600

Profit for the period 132 000

b) Statement of changes in equity

HOME MOVES
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 20X6
Capital Retained
profit Total
C C C
Balance at 1 January 20X6 50 000 18 700 68 700
Profit for the period 132 000 132 000
Distributions (36 000) (36 000)
Balance at 31 December 20X6 50 000 114 700 164 700

th
© Kolitz 7 ed, 2023 Page 3 Preparation and Presentation of the
Financial Statements
Solutions to Questions, Exercises & Problems in Financial Accounting: Chapter 6
A Concepts-Based Introduction

E6-2 continued…

c) Statement of financial position

HOME MOVES
STATEMENT OF FINANCIAL POSITION
AT 31 DECEMBER 20X6
C
ASSETS
Non-current assets 155 800
Equipment (10 600 - 800) 9 800
Trucks (157 000 – 11 000) 146 000
Current assets 43 400
Supplies on hand 1 700
Accounts receivable 17 500
Insurance paid in advance 1 200
Bank 23 000

199 200
EQUITY AND LIABILITIES
Equity 164 700
Capital 50 000
Retained profit 114 700
Non-current liabilities
Loan 20 000
Current liabilities 14 500
Accounts payable (11 000 + 900) 11 900
Salaries and wages payable 2 600

199 200

th
© Kolitz 7 ed, 2023 Page 4 Preparation and Presentation of the
Financial Statements
Solutions to Questions, Exercises & Problems in Financial Accounting: Chapter 6
A Concepts-Based Introduction

E6-3

a) Balance of Ian Ming’s capital account at 30 April 20X4

Assets: 8 290
Fittings and equipment 1 800
Inventory 4 200
Accounts receivable 1 050
Cash 1 240
Liabilities: (1 050)
Trade accounts payable 970
Expenses payable 80
Capital 7 240

b) Statement of profit or loss

IAN’S INTERIORS
STATEMENT OF PROFIT OR LOSS
FOR THE YEAR ENDED 30 APRIL 20X5
C
Sales (W1) 19 860
Cost of sales (W2) 14 110
Gross profit 5750

Expenses (2 890)
General expenses (W3) 1 610
Depreciation (W4) 200
Rent (W5) 1 080

Profit for the period 2 860

Workings

1. 19 590 + (1 320 - 1 050)

2. 4 200 (o/i) + [13 700 + (1 080 - 970)] (purchases) - 3 900 (c/i)

3. 1 340 (cash) + (350 - 80)

4. 1800-1600

5. For business entity: 180 x 12 x ,5 = 1 080. In fact only 1 800 x ,5 has been paid; hence 180 in rent
owing by enterprise. (Proof : 1 800 - 900 + 180)

Dr Cr
Distributions 900
Rent expense 900

Rent expense 180


Rent payable 180

Distributions 180
Rent payable 180

th
© Kolitz 7 ed, 2023 Page 5 Preparation and Presentation of the
Financial Statements
Solutions to Questions, Exercises & Problems in Financial Accounting: Chapter 6
A Concepts-Based Introduction

E6-3 continued…

c) Statement of changes in equity

IAN’S INTERIORS
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 APRIL 20X5
Capital
C
Balance at 30 April 20X4 7 240
Profit for the period 2 860
Distributions (2 400 + 900 + 180) (3 480)
Balance at 30 April 20X5 6 620

e) Statement of financial position

IAN’S INTERIORS
STATEMENT OF FINANCIAL POSITION
AT 30 APRIL 20X5
C
ASSETS
Non-current assets
Fittings and equipment 1 600
Current assets 6 810
Inventory 3900
Accounts receivable 1 320
Bank 1 590

8 410
EQUITY AND
LIABILITIES
Equity 6 620
Capital
Current liabilities 1 790
Trade accounts payable 1 080
Expenses payable 350
Rent payable (W5) 360

8 410

th
© Kolitz 7 ed, 2023 Page 6 Preparation and Presentation of the
Financial Statements

You might also like