Fly by Night Delivery Company

invest 10000
car 8000
petrol 1000 800
office sales 3000
advace payment 1000
received cash 8000
billed customer 6200
office rent 4000

ASSETS
CASH Car office supplies trade recievable
10000
2000 8000
1200 8000
2200 8000
2200 8000
2200 8000 3000
10200 8000 3000
10200 8000 3000 6200
6200 8000 3000 6200
6000 8000 3000 6200
10900 8000 3000 1300
10900 8000 3000 1300

BALANCE SHEET INCOME STATEMENT

ASSETS AMT REVENUE
CASH 10900 REVENUE FR SALES
CAR 8000 CASH
OFFICE SUPPLY 3000 CREDIT
TRADERECEIVABLE 1300 Advance payment UNEARNED REVENUE
TOTAL 23200 TOTAL REVENUE

LIAB AND EQUITY EXPENSES

EQUITY 20200 FUEL EXPENSE
TRADEPAYABLE 3000 RENT EXPENSE
TOTAL 23200
PROFIT
c paid

d provided services

g collected

conservation principrealization principle

LIAB EQUITY
petrol expense advance payment trade payable
10000
10000
200 9000
200 1000 9000
200 1000 9000
200 1000 3000 9000
200 1000 3000 17000
200 1000 3000 23200
200 1000 3000 19200
1000 3000 19200
1000 3000 19200
3000 20200

CASH FLOW STATEMENT

AMT AMT OPERATING ACTIVITIES AMT
CASH COLLECTION 13900
8000 FUEL EXPENSES -1000
6200 RENT PAYMENT -4000
1000 8900
15200 15200 INVESTING ACTIVITIES
PURCHASE OF CAR -8000

1000 FINANCING ACTIVITIES

4000 ISSUE OF SHARE CAPITAL 10000
5000 5000 CASH AND CASH EQUIVALENT
10200

STATEMENT OF CHANGES IN EQUITY

BEGINNING CAPITAL
PROFIT FOR THE YEAR
SHORT INVESTMENT ND EASILY LIQUIDATED - CASH EQUIVALENT
 OPERATING INVESTING AND FINANCING
AMT

8900

-8000

10000
10900

10000
10200
20200
AJAY DEPOSIT 50000 5000SHARES
JEEVAN DEPOSIT 50000 5000SHARES
INTEREST FREE LOAN 20000
RENT 5000 PER MONTH
DEPOSIT 70000 REFUNDABLE
COMPUTER LEASED 6000 PER COMPUTER FOR 1 YEAR
FINANCIAL DATABASE SUBSCRIPTION 11000 PER MONTH
SECRETARY SALARY 9000 PER MONTH
ASSISTANT 5000 PER MONTH
SERVICES PROVIDED 70800

ASSETS
CASH DEPOSIT TRADE RECINTEREST
100000
120000
50000 70000
50000 70000
50000 70000
50000 70000
50000 70000
50000 70000 70800
74100 70000 70800
83100 70000 70800
92100 70000 70800 460
90300 70000 70800 460
88500 70000 46700 460
83500 70001 46700 460
72500 70002 46700 460
58500 70003 46700 460
52500 70004 46700 460

171464
 ASSETS
CASH DEPOSIT TRADE RECEIVABLE
100000
120000
50000 70000
50000 70000
50000 70000
50000 70000
50000 70000
59000 70000
59000 70000 70800
59000 70000 70800
57200 70000 70800
52200 70000 70800
41200 70000 70800
27200 70000 70800
15200 70000 70800
39300 70000 46700

BALANCE SHEET
ASSETS AMT
CASH 39300

DEPOSIT 70000
OFFICE SUPPLY 46700

INTEREST 460

OFFICE SUPPLY 1800

TOTAL 158260

LIAB AND EQUITY

EQUITY 129260
ADVANCE 9000
LOAN 20000
TOTAL 158260
AJAY DEPOSIT 50000 5000SHARES
JEEVAN DEPOSIT 50000 5000SHARES
INTEREST FREE LOAN 20000
RENT 5000 PER MONTH
DEPOSIT 70000 REFUNDABLE
COMPUTER LEASED 6000 PER COMPUTER FOR 1 YEAR
FINANCIAL DATABASE SUBSCRIPTION 11000 PER MONTH
SECRETARY SALARY 9000 PER MONTH
ASSISTANT 5000 PER MONTH
SERVICES PROVIDED 70800

UNEARNED REVENU 9000

INCOME STATEMENT
REVENUE AMT AMT
REVENUE FR SALES

70800
INTEREST 460

EXPENSES
RENT EXPENSE 5000
COMPUTER 6000
SALARY 14000
DATABASE 11000
36000 36000
PROFIT 34800
END
X 15 CUSTOMERS COULD PAY BY END 62100
BEGINNING X 2 CUSTOMERS HAD TO PAY IMMEDIATELY 8700
BEGINNING X PAID RENT,DATABASEFEE,OFFICERENT,SALARIES
X RECEIVED MONEY 24100
X SUPPLIES PAID 1800
X RECEIVED FOR SERVICES TO BE PROVIDED 9000
X EARNED INTEREST 460

LIABILITIES
SUPPLIES LOAN RENT DATABASE SALARY COMPUTER

20000
20000
20000 5000
20000 5000 11000
20000 5000 11000 14000
20000 5000 11000 14000 6000
20000 5000 11000 14000 6000
20000 5000 11000 14000 6000
20000 5000 11000 14000 6000
20000 5000 11000 14000 6000
1800 20000 5000 11000 14000 6000
1800 20000 5000 11000 14000 6000
1800 20000 11000 14000 6000
1800 20000 14000 6000
1800 20000 6000
1800 20000

193060
 LIABILITIES
INTEREST SUPPLIES LOAN RENT DATABASE SALARY

20000
20000
20000 5000
20000 5000 11000
20000 5000 11000 14000
20000 5000 11000 14000
20000 5000 11000 14000
20000 5000 11000 14000
460 20000 5000 11000 14000
460 1800 20000 5000 11000 14000
460 1800 20000 11000 14000
460 1800 20000 14000
460 1800 20000
460 1800 20000
460 1800 20000

INCOME STATEMENT CASH FLOW STATEMENT

REVENUE AMT AMT OPERATING ACTIVITIES AMT AMT
CASH 8700 CASH COLLECTION 24100
ADVANCE 9000
CREDIT 62100 COMPUTER EXPENSES -12000
TOTAL REV 70800 DATABASE EXPENSE -11000
SALARY -14000
DEPOSIT -70000
TOTAL REV 71260 71260 RENT PAYMENT -5000
OFFICE -1800
-80700 -80700
EXPENSES INVESTING ACTIVITIES
RENT EXPE 5000 INTEREST 460 460
COMPUTE 12000
SALARY 14000 FINANCING ACTIVITIES
DATABASE 11000 ISSUE OF SHARE CAPITAL 100000
42000 42000 ISSUE OF LOAN 20000
PROFIT 29260 120000 120000
CASH AND CASH EQUIVALENT 39760
END
X 15 CUSTOMERS COULD PAY BY END 62100
BEGINNING X 2 CUSTOMERS HAD TO PAY IMMEDIATELY 8700
BEGINNING PAID RENT,DATABASEFEE,OFFICERENT,SALARIES
RECEIVED MONEY 24100
SUPPLIES PAID 1800
RECEIVED FOR SERVICES TO BE PROVIDED 9000
EARNED INTEREST 460
 15400 FROM EARLY PAYEE
NOT USED

EQUITY
ADVANCE
100000
100000
100000
95000
84000
70000
64000
134800
158900
9000 149900
9000 150360
9000 152160
9000 128060
9000 133060
9000 144060
9000 158060
9000 164060
 EQUITY
COMPUTERADVANCE
100000
100000
100000
95000
84000
70000
12000 64000
12000 9000 64000
12000 9000 134800
12000 9000 135260
12000 9000 135260
12000 9000 135260
12000 9000 135260
12000 9000 135260
9000 135260
9000 129260

STATEMENT OF CHANGES IN EQUITY

BEGINNING CAPITAL 100000

PROFIT FOR THE YEA 29260

129260

lessorp
lessm
15400 FROM EARLY PAYEE
NOT USED
 BALANCE SHEET AS AT
ASSETS
*LONG TERM TANGIBLE ASSETS NON CURRENT ASSETS
*LONG TERM TANGIBLE ASSETS NO DEPRICIATION LAND
*LONG TERM TANGIBLE ASSETS PPE BUILDING
*LONG TERM TANGIBLE ASSETS DEPRICIATION PLANT
*LONG TERM TANGIBLE ASSETS DEPRICIATION MACHINERY
*LONG TERM TANGIBLE ASSETS DEPRICIATION VEHICLES
*LONG TERM TANGIBLE ASSETS LOAN LONG TERM INVEFINANCIAL ASSETS
*LONG TERM TANGIBLE ASSETS NO DEPRICIATION; SHO CAPITAL WORK IN PROGRESS
INTANGIBLE ASSETS GOODWILL
INTANGIBLE ASSETS TECHNICAL KNOWHOW
INTANGIBLE ASSETS LICENSE
INTANGIBLE ASSETS PATTENT
ONLY IF THIS IS THER DEFERRED TAX ASSET

CURRENT ASSET
CASH
INVENTORY
TRADE RECIEVABLE
LOAN
FINANCIAL ASSETS
CASH STORED THAT CA OTHER CURRENT ASSETS

LIABILITIES AND EQUITY

SHARE CAPITAL
OTHER EQUITY
REVENUE RESERVE ANDRESERVES AND SURPLUS

LONG TERM* NON CURRENT LIABILITIES

LONG TERM BORROWING
DEBENTURE
BONDS
LOANS
FINANCIAL LIABILITIES

CURRENT LIABILITIES
TRADE PAYABLE
PROVISIONN FOR TAX
ACCOUNTS PAYABLE
FINANCIAL LIABILITIES
SHORT TERM BORROWING
AMT

PROPERTY PLANT EQUIPMENT

GROSS BLOCK PPE
LESS; ACCUMULAATED DEPRICIATION
BOOK VALUE/DEPRICIATED VALUE
NET BLOCK

INVENTORY
AT LOWER OF COST AND NET REALISSABLE VALUE

TRADE RECIEVABLE
LESS: CREDIT LOSSES

SHARES
STAYS IN NOT MANDATORY TOEQUITY SHARE RISK PROVIDERS/JOINT OWNERS
IF DIVIDE EVEN WHEN NO PROFI
PREFERENCE SHAPREFERENTIAL RIGHTS OVER EQUITY SHARE HOLDERS
RIGHTS OF PREFERENCIAL SHARE HOLDERS-

DIVIDEND TYPES
CUMMULATIVE KEEPS ACCUMULATING
NON CUMULATIVNO OBLIGATION TO PAY PAST DIVIDENDDS
PARTICIPATING CAN PARTICIPATE IN THE PROFITS
NON PARTICIPATI CANT PARTICIPATE IN THE PROFITS
 DEPRICIATION TANGIBLE
X AMMORTIZATION INTANGIBLE
X
X LICENSE 10L
LESS AMMORTIZATIO1L
9L

ACCEPTOR OF BILL ONCE SIGNED

WRITER OF BILL
X LTD XLTD SENDS BILL TO Y LTD
TRADE RECIEVABLE 10000 BILL OF PAYMENT

TRADE RECIEVABLE 8000

BILLS RECIEVABLE 2000

equity represents funds contributed by the owners (stockholders) plus retained earnings or minus the accumulated losses
SO THEY HAVE RESIDUAL INTEREST
HARE HOLDERS
TO RECEIVE DIVIDENDS, REPAYMENT IN EVENT OF LIQUIDATION

SURPLUS- REMAINING RESERVE AFTER PAYMENT OF DIVIDENDS

ONCE SIGNED

Y LTD PAYS WITH INTEREST

IF Y LTD DOESN’T PAY THEN XLTD GOES TO BANK WHICH PAYS 1900 AND COLLECTS 2000 FROM Y LTD
SO BANK GAINS 100 AND XLTD LOSES 100

BUY ASSET FOR 10000

minus the accumulated losses
2000 FROM Y LTD
 cost of asset 100000
residual valu nil
life 5 years
management decides to sell asset in 4th year
sale consideration
1 40000
2 65000
3 23000
the organization is following SLM

ebit operating income

4.13 pg164

income statement for month ending

revenue amt amt
revenue from services 18490

building office supply

15000 12000
life 10 4
depriciation per anum 1500 3000 expenses
deprication per month 125 250 supplies consumed 1170
total deprication for the 375 rent expenses 600
salary expense 6200
electricity expense 380
telephone expense 480
depriciation expense 375
 9205 9205
PBT 9285
tax 0
PAT 9285
dividend 1000
surplus 8285

balance sheet as at an 31
assets amt amt
non current assets
building 15000
less:accumulated depriciatio 125 14875
Equipment 12000
less:accumulated depriciatio 250 11750

current assets
office supplies 970
cash 630
trade receivable 2540
prepaid rent 3000
7140 7140
ASSETS 33765

liabilities and equity

share capital 20000
other equity or surplus 8285 28285

non current liabilities

trade payable 1020
unearned revenue 880
salary payable 3100
telephone charge payable 480
5480 5480
LIABILITIES AND EQUITY 33765
cost of asset-residual value
depriciation 20000

YEAR COST DEPRICIATACCUMULA BALANCE

1 100000 20000 20000 80000
2 100000 20000 40000 60000
3 100000 20000 60000 40000

cost 100000
less: accimulated de 60000
book value 40000
Situation-1Situation-2Situation-3
sale consideration 40000 65000 23000
book value 40000 40000 40000
loss/gain 0 25000 -17000

income statement
revenue amt
revenue from sales x
situation1 gain on sale of asset 25000

situation2 expenses
LOSS ON sale of asse -17000

revenue from services 16870

add: Credit sales 900
sales from unearned revenue 720
18490

office supplies 2140

supplies left after consumption 970
supplies consumed 1170

6 months rent paid in advance

prepaid rent 3600
payment for 1 month 600
salary expenses 3100
add:outstanding or salary pay 3100
actual salary expenses 6200

services of 900 given

trade recievable 1640

unearned revenue 1600

advance payment of 720
unearned revenue -advance paymen

midterm
questions based on discusssion
balance sheet
income statement
depriciation
 6.15
pg 256
pl statement
aircraft cost 100000000
rv 4000000
depr.amt 96000000
life 50000
rate of depr. 1920
completed 30000h
Acc. Depriciation 57600000
carrying amt. 42400000

y4 modify cost 8000000

revised carrying a 50400000
est. rv 7500000
revised dep. 42900000
flyhrs 30000
dep. Per hr 1430
flown for 8000
dep. For 4 years 11440000

6.2

slm
cost 1500000 depr. Per year 47000
rv 90000 depr. For 4 yrs 188000
useful life 30
after 4 years-WDV

cost of asset all expenses added as cost of asset

purchase price
less discount
rebate
transport/freight
transit insurance
installation
construction work
consulatation fee
trial run expenses
admin expenses
 wdv
rate 9.8
value revised 1312000
depr. For y5 128576
final bal. 1183424

cost of ass 5000000

loan for e 5000000
rate of int 10%
 COST 100000
RESIDUAL 10000
LIFE 5

SLM STRAIGHT LINE METHOD

DEPRICIAT 18000 TAKEN IN BALANCE SHEET
COST LESS ACCUMULATED DEPRICIATION
YEAR COST DEPRICIATACCUMULAT BALANCE
1 100000 18000 18000 82000
2 100000 18000 36000 64000
3 100000 18000 54000 46000
4 100000 18000 72000 28000
5 100000 18000 90000 10000

WDVM TAKEN INTO P&L STATEMENT

YEAR COST DEPRICIATACCUMULAT BALANCE
LET 1 100000 25000 25000 75000
RATE OF DEPRICIAT 0.25 2 100000 18750 43750 56250
3 100000 14062.5 57812.5 42187.5
4 100000 10546.88 68359.38 31640.63
5 100000 7910.156 76269.53 23730.47

pg 253
6.3

cost 34000
rc 2000
life 5
for 5 years 6400
for 9months 4800
 6.8
cost 600000 cash revenue 3000000
rv 40000 cash expense 2000000
year 7 depriciation rate- 25%
income tax rate 30%

depriciation 80000
 YEAR 1
YEAR 1 BALANCE SHEET
INCOME S AMT ASSETS
REVENUE NON CURRENT ASSET FOR INDIVIDUAL ASSETS
EQUIPMEN 100000 FOR SAME KIND- BLOCK T
EXP LESS;ACCU 18000 GROSS BLOCK
DEPRICIAT 18000
LATED DEPRICIATION YEAR 2 YEAR 2
INCOME S AMT BALANCE SHEET
REVENUE ASSETS
NON CURRENT ASSET
EXP EQUIPMEN 100000
DEPRICIAT 18000 LESS;ACCU 36000

YEAR 1 BALANCE SHEET

INCOME S AMT ASSETS
REVENUE NON CURRENT ASSET
EQUIPMEN 100000
EXP LESS;ACCU 25000
DEPRICIAT 25000 BALANCE 75000
YEAR 2 YEAR 2
INCOME S AMT BALANCE SHEET
REVENUE ASSETS
NON CURRENT ASSET
EXP EQUIPMEN 100000
DEPRICIAT 18750 LESS;ACCU 43750
BALANCE 56250
P&L Statement
REVENUE AMT WDVM (for income tax)
revenue sales 3000000 pbdt 1000000
expenses 2000000 depriciatio 150000
profit before depriciation 1000000 pbt 850000
depriciation 80000
pbt 920000
provision for tax 255000
profti after tax 665000
FOR INDIVIDUAL ASSETS
FOR SAME KIND- BLOCK THEM TOGETHER
GROSS BLOCK

income tax180+ full year

less- then for half year
sales 500000
Opening in 10000
purchases 100000
closing inv 30000
operating 25000

Income Statement
Revenue AMT AMT
Sales 500000
COGS
Op Invento 10000
purhases 100000
Mat for sal 110000
cl inventor 30000
80000 80000
gross profit 420000
operating expense 25000
net profit 395000

1
2
 17-Nov
20-Nov
28-Nov

17-Nov
20-Nov
28-Nov

(weightd cost)
 per unit
raw matrial 10
direct labour 5
direct exp 2
manufacting overhead 500000
normal capacity 20000 units
actual production
25000
15000
admin overheads 800000
end of year unsold units 4000 units

direct material 10 direct material 10

Direct labour 5 Direct labour 5
direct expense 2 direct expense 2
prime cost 17 prime cost 17
allocation of fixed overhead per uni 20 allocation of fixed overhea 25
value of each unit 37 value of each unit 42
closing invetory 4000 closing invetory 4000
value of closing inventory 148000 value of closing inventory 168000

op inv 100 2
purch 150 5
purch 200 6
purch 150 7
total 600

units unsold at end of year 2000

company uses FIFO

op inv 100 2 200

purch 150 5 750
purch 200 6 1200
purch 150 7 1050
total 600 3200

50 units @ Rs 6 300
150 units @ Rs 7 1050
1350

WAC 5.333333
inv value 1066.667
 13.3
pg-483 cash flow statement

Sales 72900
opening ba 4500
closing bal 7400 -2900 increase in inventory

trade recievable
2005 2004
8300 8900
provision 1400 300
Gross 9700 9200
400 increase of 500 from 9200 to 9700
8800 then add bad debt of 400
increase f 900 so increase of 900

provision for bad debt income tax

ob 300 op bal 3300
cb 1500 provision f 6700
1800 total tax p 10000
written ofbad debt 400 cl.bal 4800
1400 tax paid 5200

Direct Method
trade receivable op bal
2005 2004 sales
8300 8900 total
cl bal
cash collected

13.4
pg 483 gain interest income subtracted
Indirect Method int exp add
cash flow statements loss on sales
Operating amt amt
profit befo 17200
adjustment
depreciati 6700 tax 8300
loss on sal 800
interest e 1100
interest i 900
gain 1200
 not considered
dividend income, payment
interest income, payment

Indirect Method

cash flow statement

operating amt amt
Profit before Tsx 13000
adjustment
depreciation 3100
interest 2700
provision for bad debts 1500
cash generated from operatio 20300
from 9200 to 9700 increase in inventory -2900
increase in trade receivable -900
decrease in prepaid expense 800
decrease I trade payable -5100
cash generated before tax 12200
income tax paid 5200
prepaid expense cash flow from operations 7000
op bal 2100
cl bal 2900
800

Cashflow Statement amt amt

8800 inflows
72900 cash collected 72000 72000
81700 outlow
9700 selling and admin expense 4100
72000 cogs 48500
prepaid expense -800
increase in inventory 2900
decrease in tr payable 5100
expenses 59800 59800
cash flow for ops before it 12200
it paid 5200
cash from operating 7000

come subtracted
trade receivable
6600 5700
not considered tax provisi book adjustment and not cash payment
dividend income, payment
interest income, payment
 40 units @ Rs 70 2800
80 units @ Rs 71 5680
8480
ex- 5.8
pg 207

1 beg inventory 40 @ 70
3 purchase 80 @ 71
8 sales 90
10 sales 10
15 purchase 40 @ 73
17 sales 50
21 purhcase 30 @ 74
26 purchase 30 @ 76 purchase
28 sales 20 particularsqty
1-Nov op inv
3-Nov purchase 80

8-Nov sales

10-Nov
15-Nov purchase 40

17-Nov

21-Nov purchase 30

26-Nov purchase 30

28-Nov sale

ex-5.6
pg 207

sold 90 chair @ 1600 each

beg. Inv 20 chair @ 1000 each

opening inv 20 @ 1000 20000 FIFO

mar 20 c @1100 22000 sale 20 1000
jun 10 c @ 1200 12000 20 1100
aug 30 c @ 1300 39000 10 1200
nov 20 c @ 1400 28000 30 1300
121000 10 1400
less: closing inv of 10 unti 14000
cogs of 90 units 107000
WAC 1210
cogs inv value 108900
sale 144000
operating 16000

NET Realisable Value (NRV)

Item cost NRV Value

A 100 105 100
B 80 82 80
C 207 200 200
D 195 252 195

NRV should take into acont the purpose for which inventory is held

Retail Method Objective of retail method -find c

cost retail
Opening in 1000 3500
purchase 5000 9500
purchase r 200 350
sales 5000
sale return 500

cost retail
Opening in 1000 3500
purchase ( 4800 9150
5800 12650
cost to retail ratio 0.458498
net sales 4500
inventory value at ret 8150
value of inventory at 3736.759
 FIFO

issue balance
rt amt qty rt amt qty rt amt
40 70 2800
71 5680 40 70 2800 WAC
80 71 5680 wac
40 70 2800
50 71 3550 30 71 2130 inv value
10 71 710 20 71 1420
73 2920 20 71 1420 wac
40 73 2920
20 71 1420 inv value
30 73 2190 10 73 730
74 2220 10 73 730
30 74 2220
76 2280 10 73 730
30 74 2220
30 76 2280 wac
10 73 730
10 74 740 20 74 1480 inv value
30 76 2280

income statement FIFO

re venue amt
 20000 sales 144000
22000 cogs 107000
12000 gross prof 37000
39000 operating 16000
14000 net proft 21000
107000

income statement WAC

re venue amt
sales 144000
cogs 108900
gross prof 35100
operating 16000
net proft 19100

of retail method -find cost to retail ratio

70.66667

7066.667

72.33333

3616.667

74.71429

1494.286 COGS