UNIVERSITY OF HARGEISA

HARGEISA SCHOOL OF ECONOMICS

Department of Banking and Finance

FINANCIAL REPORTING - I COURSE

GROUP WORK BRIEF AND PROBLEMS
April 2019

Lecturer
Mr. Abdifatah Maygag

BBA in Accounting
MSc. in Applied Finance
Certified Islamic Banker (CIB)
Certificate Level, Chartered Institute of Public Finance and Accountancy (CIPFA)

Objective
This assignment is designed to provide students with a strong understanding and preparation of on
the key financial reporting in accordance with the International Financial Reporting Standards
(IFRS).

This coursework involves an in-depth study into the topics covered in the course and requires
applying and preparing a well-presented financial statement. This coursework will enable the
students to demonstrate their ability to prepare financial statement in Microsoft Excel for practical
use.

Group Study and Assignment Guidelines

Students will work in groups of not more than 3 students. This assignment will require the
group to conduct study on the required problem.

All work should be done in Microsoft Excel (2013 edition or later).

Coursework submitted must be attached with the Coursework Cover Sheet, including group number,
name and ID number.

Grade and Weightage

Grades & Weightage: The weightage of the group assignment is 15%. To obtain an excellent
grade, the submission will have to meet ALL requirements: (1) a well-presented and smooth
work; (2) good presentation of case study supported by high quality workings; and (3) a good
format.
Submission
Due date of submission: The Last Class of the Course

FINANCIAL REPORTING I GROUP ASSINGMENT 1

Plagiarism and collusion
All coursework submitted with references used must be cited appropriately to avoid plagiarism. All
work, unless explicitly labeled otherwise, must be organized and submitted as a group. Similar or
identical submissions will be investigated for collusion.

Assignment Problems
Problem 1: Preparation of Financial Statements

Presented below is the trial balance of Vivaldi Corporation at December 31, 2015.

Instructions

1. Prepare a Multiple Income Statement for the year ending on December 31, 2015.
(ignore income taxes)
2. Prepare Statement of Retained Earning for the year ending on December 31, 2015.
3. Prepare Statement of Changes in Equity for the year of 2015.
4. Prepare a classified Statement of Financial Position at December 31, 2015.

FINANCIAL REPORTING I GROUP ASSINGMENT 2

Problem 2: Financial Accounting Cycle of Merchandise Company

Palisade Creek Co. is a merchandising business. The account balances for Palisade Creek
Co. as of May 1, 2014 (unless otherwise indicated), are as follows:

During May, the last month of the fiscal year, the following transactions were completed:

FINANCIAL REPORTING I GROUP ASSINGMENT 3

 At the end of May, the following adjustment data were assembled. Analyze and make
adjusting entries.

Instructions:
1. Journalize each of the May transactions in a General Journal.
2. Post the journal entries to the ledger accounts.
3. Prepare an unadjusted trial balance.
4. Journalize and post the adjusting entries.
5. Prepare an adjusted trial balance for may
6. Prepare a multiple income statement, a statement of owner’s equity for May, and
a balance sheet at 31st May.
7. Prepare and post the closing entries.
8. Prepare a post-closing trial balance.

FINANCIAL REPORTING I GROUP ASSINGMENT 4

Problem 3: Preparation of Pro forma Statement of Financial Position

ABC Manufacturing’s 2012 actual and 2013 pro forma income statements, broken into
fixed and variable cost and expense components, follow:

A number of simplified approaches are available for preparing the pro forma balance
sheet. One involves estimating all balance sheet accounts as a strict percentage of sales. A
better and more popular approach is the judgmental approach, under which the firm
estimates the values of certain balance sheet accounts and uses its external financing as a
balancing, or “plug,” figure.

To apply the judgmental approach to prepare ABC Manufacturing’s 2013

pro forma balance sheet, a number of assumptions must be made about levels of
various balance sheet accounts:
1. A minimum cash balance of $6,000 is desired.
2. Marketable securities will remain unchanged from their current level of
$4,000.
3. Accounts receivable on average represent about 45 days of sales (about 1/8 of
a year). Because Vectra’s annual sales are projected to be $135,000, accounts
receivable should average $16,875 (1/8 $135,000).
4. The ending inventory should remain at a level of about $16,000, of which
25 percent (approximately $4,000) should be raw materials and the

FINANCIAL REPORTING I GROUP ASSINGMENT 5

 remaining 75 percent (approximately $12,000) should consist of finished
goods.
5. A new machine costing $20,000 will be purchased. Total depreciation for the
year is $8,000. Adding the $20,000 acquisition to the existing net fixed assets
of $51,000 and subtracting the depreciation of $8,000 yields net fixed assets of
$63,000.
6. Purchases will represent approximately 30 percent of annual sales, which in
this case is approximately $40,500 (0.30 $135,000). The firm estimates
that it can take 73 days on average to satisfy its accounts payable. Thus
accounts payable should equal one-fifth (73 days 365 days) of the firm’s
purchases, or $8,100 (1/5 $40,500).
7. Taxes payable will equal one-fourth of the current year’s tax liability, which
equals $455 (one-fourth of the tax liability of $1,823 shown in the pro forma
income statement)
8. Notes payable will remain unchanged from their current level of $8,300.
9. No change in other current liabilities is expected. They remain at the level of
the previous year: $3,400.
10. The firm’s long-term debt and its common stock will remain unchanged at $18,000
and $30,000, respectively; no issues, retirements, or repurchases of bonds or stocks
are planned.
11. Retained earnings will increase from the beginning level of $23,000 (from the
balance sheet dated December 31, 2012 to $29,327. The increase of $6,327
represents the amount of retained earnings calculated in the year-end 2013 pro
forma income statement.

Instructions

Prepare a classified statement of financial position for the Year of 2013. (A “plug” figure—
called the external financing required is needed to bring the statement into balance).

FINANCIAL REPORTING I GROUP ASSINGMENT 6