Balance Sheet (April) Income Statement Cash flow statement

Capital 105000 Equip 45000 Sales 12000 8640 Inflows Capital 100000
NP -62250 LT 12000 Mat consumed 2500 Loan 75000
Loan 75000 Oven 35000 Gross Profit 9500 Sales 12000
Crs - Eq 45000 Van 40000 0.208333 Adv 20000
Salary Paya 35000 Inventory 45500 Rent 15000 0.174074 207000
Adv/UR 20000 Deposit 40000 Salary - Archie 10000 Outflows Deposit -40000
Crs - mat 40000 Cash 40250 Utility 6000 Oven -35000
Interest 750 Rent -15000
257750 257750 Reg Exp 5000 Inventory -8000
Salary - Vishy 35000 Salary - Archie -10000
Net Profit -62250 Interest -750
(Net income,Earnings) same as net profits Van+LT -52000
Op Position 0 Utility -6000
Earnings for the perio -62250 -166750
Appropriation 0 Closing Balance 40250
Cl Position -62250
Balance Sheet (May) Income Statement Cash flow statement
Capital 105000 Equip 45000 Sales 145340.4 Opening Balance 40250
NP -17959.57 LT 12000 Mat consumed 25300 Inflows Sales 135000
Loan 75000 Oven 35000 Gross Profit 120040.4 175250
Crs - Eq 0 Van 40000
Salary - sel 35000 Inventory 20200 Rent 15000 Outflows Rent -15000
Adv 9659.574 Deposit 40000 Salary - Archie 10000 Utilities -15000
Crs - mat 0 Cash 14500 Utility 15000 Interest -750
Interest 750 Salary - Archie -10000
206700 206700 Salary - self (for May) 35000 sal (Vishy) -35000
Net Profit 44290.43 Crs - Eq -45000
Existing Acc Profit -62250 Crs - Mat -40000
Closing Balance 14500
Retained Earnings -17959.57
 Assets Liabilities Equity
Sr Transaction Cash Other CurrentNon-Curr Current Non-Curr Capital
0 End of Last period 0
1 Reg 5000
2 Cap 100000 100000
3 Loan 75000 75000
4 Deposit -40000 40000
4 Adv Rent -15000 15000
5 Oven -35000 35000
6 Loose Tools -12000 12000
7 Inventory -8000 8000
8 Office Equip 45000 45000
9 Hiring Archie
10 Hiring Vishy
11 Delivary Van -40000 40000
12 Sales/Revenue 12000
12 Inv Consumed -2500
13 Adv from Cust 20000 20000
14 Inventory 40000 40000
15 Utilities -6000
15 Salary - Archie -10000
15 Salary - Vishy 35000
15 Interest -750
15 Rent -15000
Total 40250 45500 172000 140000 75000 105000

Capital 105000 NC Assets 172000

RE -62250 42750
NC Liab 75000 Curr Assets 45500
Curr Liab 140000 Cash 40250
257750 257750

Overstating Assets and Equity by 5000

Any Expenditure - Default interpretation (Expense); Evidence (Asset)
 Check Check Check Check
Income Expense Assets Liabilities Equity Overall
0
5000 0 0 0 0
100000 0 100000 0
75000 75000 0 0
0 0 0 0
0 0 0 0
0 0 0 0
0 0 0 0
0 0 0 0
45000 45000 0 0
0 0 0 0
0 0 0 0
0 0 0 0
12000 12000 0 12000 0
2500 -2500 0 -2500 0
20000 20000 0 0
40000 40000 0 0
6000 -6000 0 -6000 0
10000 -10000 0 -10000 0
35000 0 35000 -35000 0
750 -750 0 -750 0
15000 -15000 0 -15000 0
12000 74250

ense); Evidence (Asset)

 Assets Liabilities Equity
Sr Transaction Cash Other CurrentNon-Curr Current Non-Curr Capital
0 End of Last period 40250 45500 172000 140000 75000 105000
1 Rent -15000 15000
2 Sales/Revenue 135000
3 Inv consumed -23500
4 TAPMI Event -10340.43
4 Inv consumed -1800
5 Rent -15000
6 Interest -750
7 Archie's Salary -10000
8 Vishy's Salary April -35000 -35000
9 Vishy's Salary May* 35000
10 Utilities -15000
11 Office Equipment -45000 -45000
12 Inventory -40000 -40000
12
13
14
15
15
15
15
15
Total 14500 20200 172000 44659.57 75000 105000

Capital 105000 NC Assets 172000

RE -17959.57 87040.43
NC Liab 75000 Curr Assets 20200
Curr Liab 44659.57 Cash 14500
206700 206700

Overstating Assets and Equity by 5000

Any Expenditure - Default interpretation (Expense); Evidence (Asset)
 Check Check Check Check
Income Expense Assets Liabilities Equity Overall
12000 74250 -148500
0 0 0 0
135000 135000 0 135000 0
23500 -23500 0 -23500 0
10340.43 0 -10340.43 10340.43 0
1800 -1800 0 -1800 0
15000 -15000 0 -15000 0
750 -750 0 -750 0
10000 -10000 0 -10000 0
-35000 -35000 0 0
35000 0 35000 -35000 0
15000 -15000 0 -15000 0
-45000 -45000 0 0
-40000 -40000 0 0
0 0 0 0
0 0 0 0
0 0 0 0
0 0 0 0
0 0 0 0
0 0 0 0
0 0 0 0
0 0 0 0
157340.4 175300

175300
Revenue 145340.4
101050
44290.43

ense); Evidence (Asset)

 Page No.: 66
EXHIBIT I Account Balances
Jun-01 Jun-30
Accounts payable 8517 21,315
Accounts receivable 21,798 26,505
Accrued wages payable 1,974 2,202
Accumulated depreciation on building 156,000 157,950
Accumulated depreciation on equipment 5,304 5,928
Bank notes payable 8,385 29,250
finate life Building 585,000 585,000
Capital stock 390,000 390,000
Cash 34,983 66,660
Equipment (at cost) 13,260 36,660
life of land unlimited Land 89,700 89,700
Trading business Merchandise inventory 29,835 26,520
Note receivable, Diane Maynard 11,700 0
Other noncurrent assets 4,857 5,265
Other noncurrent liabilities 2,451 2,451
Prepaid insurance 3,150 2,826
Retained earnings 221,511 229,446
Supplies on hand 5,559 6,630
Taxes payable 5,700 7,224

Assume no
 Page NO.:88
EXHIBIT 1
Categorization
Current Liabilities -21,315.00 Cash sales
Current Assets Credit customers
Current Liabilities 5,888 3686 Diane Maynard
-1,950 Bank loan
-624 Total receipts
Current Liabilities
Non Current Asset 429,000 427,050
Equity
Current Asset
Non Current Asset 7,956 30,732
Non Current Asset
Current Asset
Current Asset
Other noncurrent assets
Other noncurrent liabilities
Current Asset ( Prepaid Expenditure) 324 9.722222222
Equity 7,935 19,635
Current Asset 600
Current Liabilities 1,524

Merchandise inventory Payables Cycle

Op Stock 29,835 Op Payables 8517
Pur-Cash 14,715 Paid - Cash 8,517
Pur-Cr 21,315 Cl Payables 21,315
Total merchandise available fr sale 65,865 Pur-Cr(period) 21,315
Cl Inv 26,520
Inventory sold during the period (COGS 39,345

Accounts payables are recognised when

Merchandise Inventory is purchased on cash.

Accounts receivable Accrued wages payable

Op Rec 21,798 Op WP 1,974
Received Cash 21,798 W Paid 5,660
Cl Rec 26,505 Cl WP 2,202
Net-Rec(period) 26,505 Net Wages(period) 5,888

Bank notes payable Sales

Op WP 1974 Cash sales 44,420
W Paid 5660 Op rec 21,798
Cl WP 2202 Collection 21,798
Net Wages(period) 5888 Cl Rec 44,420
 Cash Receipts and Disbursements Month of June

Cash Receipts Cash Disbursements

44,420 Equipment purchased
t customers 21,798 Other assets purchased
11,700 Payments on accounts payable
20,865 Cash purchases of merchandise
98,783 Cash purchase of supplies
Dividends
Wages paid
Utilities paid
Miscellaneous payments
Reconciliation: Total disbursements
Cash balance, June 1 34,983
Receipts 98,783
Subtotal 133,766
Disbursements 67,106
Cash balance, June 30 66,660

Payable cycle Op payables + credit purchases - Payments during period = Cl Payables

Receivables Cycle Op Receivables + Credit sales - collection during the period = Cl Receivables
Inventory Cycle Op Stock + Purchases - Inventory Sold during the period = Cl Stock

66,218
 23,400
408
8,517
14,715
1,671
11,700 a
5,660
900
135
67,106

Cl Receivables
assumed no loss of goods
 Balance Sheet (June 1)
Accounts payable 8517 Accounts receivable 21,798
Accrued wages payable 1,974 Accumulated depreciation on building -156,000
Bank notes payable 8,385 Accumulated depreciation on equipment -5,304
Capital stock 390,000 Building 585,000
Other noncurrent liabilities 2,451 Cash 34,983
Retained earnings 221,511 Equipment (at cost) 13,260
Taxes payable 5,700 Land 89,700
Merchandise inventory 29,835
Note receivable, Diane Maynard 11,700
Other noncurrent assets 4,857
Prepaid insurance 3,150
Supplies on hand 5,559

638538 638,538

Balance Sheet (June 30)

Accounts payable 21,315 Accounts receivable 26,505
Accrued wages payable 2,202 Accumulated depreciation on building -157,950
Bank notes payable 29,250 Accumulated depreciation on equipment -5,928
Capital stock 390,000 Building 585,000
Other noncurrent liabilities 2,451 Cash 66,660
Retained earnings 229,446 Equipment (at cost) 36,660
Taxes payable 7,224 Land 89,700
Merchandise inventory 26,520
Note receivable, Diane Maynard 0
Other noncurrent assets 5,265
Prepaid insurance 2,826
Supplies on hand 6,630

681888 681,888
 Income Statement
Cash sales 44,420
Credit Sale 26,505 70,925

Cash Purch 16,386

Cr Purchas 21,315 37,701

Wages 900

Gross Profit 33,224

Net profit 21,524
Rent
Salary - Archie
Utility 900
Miscellaneous payme 135
Insurance 324

Interest 750
Reg Exp 5000
Salary - Vishy 35000
Net Profit -30409
(Net income,Earnings) same as net profits
Op Position 0
Earnings for the perio -30409
Appropriation 0
Cl Position -30409
Income Statement
Sales 145340.4
Mat consumed 25300
Gross Profit 120040.4

Rent 15000
Salary - Archie 10000
Utility 15000
Interest 750
Salary - self (for May) 35000
Net Profit 44290.43
Existing Acc Profit 1974

Retained Earnings 46264.43

 Cash flow statement
Op Balance
Inflows Capital 100000
Loan 75000
Sales 12000
Adv 20000
207000
Outflows Deposit -40000
Oven -35000

Rent -15000
Inventory -8000
Salary - Archie -10000
Interest -750
Van+LT -52000
Utility -6000
-166750
Closing Balance 40250

Cash flow statement

Opening Balance 40250
Inflows Sales 135000
175250
s) same as net profits
Outflows Rent -15000
Utilities -15000
Interest -750
Salary - Archie -10000
sal (Vishy) -35000
Crs - Eq -45000
Crs - Mat -40000
Closing Balance 14500
In return for signing his patent over to the new company, which was to be called Dispensers of California, Inc., Hynes would receive 60 perc
Incorporationcosts,$2,500.
Equipment to be used in assembling the paint spray dispensers, $85,000.
Out-of-pocket labor and development costs to re- design the paint spray dispenser to facilitate more efficient assembling, $25,000.
Component part purchases, $212,100.
Short-term loan from local bank, $30,000. (Loan to be repaid before the end of the year with $500 interest.)
Manufacturing payroll, $145,000.
Othermanufacturingcosts(excludingcomponent part costs), $62,000.
Selling, general, and administration costs, $63,000.
Ending component parts inventory cost, $15,100.
Sales,$598,500(allreceivedincash.)
All incorporation and product redesign costs ex- pensed as incurred.
Depreciation, $8,500. (Hynes estimated the useful life of the equipment was 10 years, with no sal- vage value.)
Patent cost charged to income over a six-year pe- riod (Hynes anticipated technology developments incorporating digital flow controls would
Noinventoryofunsoldorpartiallycompleteddis- pensers at year end.
Cash dividends, $5,000.
Incometaxexpense,$22,500(duetobepaiddur- ing the next year).
Allamountsduetoemployees,suppliers,andoth- ers, except for income taxes, paid in cash. (Hynes made this assumption because he wanted to
fornia, Inc., Hynes would receive 60 percent of the company’s capital stock. For their part, the investors would contribute $80,000 cash for a 40 percent in

efficient assembling, $25,000.

s incorporating digital flow controls would signifi- cantly reduce the current products sales in about six years’ time.)

ade this assumption because he wanted to present a “conservative” balance sheet to the investors.)
contribute $80,000 cash for a 40 percent interest in the company.
 Assets Liabilities Equity
Sr Transaction Cash Other CurrentNon-Curr Current Non-Curr Capital
0 End of Last period
1 Patent as Peter Hyne's Equity 120000 120000
2 Hyne's Friends Equity 80000 80000
3 Incorporation Expense -2500
4 Purchase of Equipment -85000 85000
4 Labour and Development -25000
5 Comonent part -212100 212100
6 Loan from local bank 30000 30000
7 Payment of loan -30000 -30000
8 Interest -500
9 Manufacturing payroll -145000
10 Other Manufacturing -62000
11 Selling general admin expense -63000
12 Component parts
12 Sales Revenue 598500
13 Equipment Depritiation  -8500
14 Patent Amortization -20000
15 Cash Dividend -5000
16 Income Tax expense 22500
17 Consumed Invetory -197000
18

Total 78400 0 191600 22500 0 200000

Capital 200000 NC Assets 191600

RE 47500 247500
NC Liab 0 Curr Assets 0
Curr Liab 22500 Cash 78400
270000 270000

Overstating Assets and Equity by 5000

Any Expenditure - Default interpretation (Expense); Evidence (Asset)
 Check Check Check Check
Income Expense Assets Liabilities Equity Overall
0
120000 0 120000 0
0 0 80000 -80000
2500 0 0 -2500 2500
85000 0 0 85000
25000 0 0 -25000 25000
212100 0 0 212100
0 30000 0 -30000
0 -30000 0 30000
500 0 0 -500 500
145000 0 0 -145000 145000
62000 0 0 -62000 62000
63000 0 0 -63000 63000
0 0 0 0
598500 0 0 598500 -598500
8500 -8500 0 -8500 0
20000 -20000 0 -20000 0
5000 0 0 -5000 5000
22500 0 22500 -22500 0
197000 -197000 0 -197000 0
0 0 0 0
0 0 0 0
598500 551000

235000
Revenue 0
234500
-234500

ense); Evidence (Asset)

 Assets Liabilities
Sr Transaction Cash Other CurrentNon-Curr Current Non-Curr
0 Patent 125,000
1 Investment 375,000
2 Incorporation costs (7,500)
3 machinary (62,500) 62,500
4 Inventory (75,000) 75,000
4 consulting engineering (23,750)
5 Sales 685,000 69,500
6 Inventory(july-dec) (175,000) 175,000
7 Advertising (22,500)
8 direct expense (350,000)
9 Salaries (80,000)
10 Machinery(July) (150,000) 150,000
11 Loan 50,000 50,000
12 Repaid loan (50,000) (50,000)
12 Interest (750)
13 Machinary Depriciation (10,625)
14 Patent Amortisation (25,000)
15 Inventory used (195,000)
16
17
18

Total 113,000 124,500 301,875 - -

Capital 500,000 NC Assets

RE 39,375 539,375
NC Liab - Curr Assets
Curr Liab - Cash
539,375

Overstating Assets and Equity by 5000

Any Expenditure - Default interpretation (Expense); Evidence (Asset)
 Equity Check Check Check Check
Capital Income Expense Assets Liabilities Equity Overall
125,000 - Legal life 20 years, tech
375,000 - - 375,000 (375,000)
7,500 - - (7,500) 7,500
62,500 - - 62,500
- - - -
23,750 - - (23,750) 23,750 check once again
754,500 - - 754,500 (754,500)
- - - -
22,500 - - (22,500) 22,500
350,000 - - (350,000) 350,000
80,000 - - (80,000) 80,000
150,000 - - 150,000
- 50,000 - (50,000)
- (50,000) - 50,000
750 - - (750) 750
10,625 (10,625) - (10,625) -
25,000 (25,000) - (25,000) -
195,000 - - (195,000) 195,000
- - - -
- - - -
- - - -
- - - -
500,000 754,500 715,125

301,875
483,750
124,500 Revenue 754,500
113,000 126,250
539,375 (126,250)

xpense); Evidence (Asset)

Legal life 20 years, technical life 5 years

21,250 212,500 201,875

10,625
check once again

26% 90,000
23,260
 Balance Sheet (April) Income Statement
Capital 500,000 Cash 113,000 Sales 754,500
Retained profi 39,375 intagible asset 125,000 Mat consumed 195,000
Machinery 212,500 Gross Profit 559,500
Accumalated -10,625
Inventory 55,000
Accounts rec 69,500 Inc Costs 7,500
Accmlated Amo -25,000 Conslt Engineering 23,750
Advertising 22,500
539,375 539,375 Interest 750
Depreciation 10,625
Amortization 25,000
Direct expense 350,000
Salaries 80,000
Net Profit 39,375
(Net income,Earnings) same as net profits
Op Position 0
Earnings for the period 39,375
Appropriation 0
Cl Position 39,375
 Cash flow statement
Inflows Capital 375,000
Loan 50,000
Sales 685,000
1,110,000

Outflows Incorporation costs (7,500)

machinary (62,500)
Inventory (75,000)
consulting engineering (23,750)
Inventory(july-dec) (175,000)
Advertising (22,500)
direct expense (350,000)
Salaries (80,000)
Machinery(July) (150,000)
Repaid loan (50,000)
Interest (750)
-997,000
Closing Balance 113,000
Cash with the Bank 3.06 CA
Fixed Deposit with the Bank (maturing within 3 months) 2.64 CA
Fixed Deposit with the Bank (maturing within 9 months) 1.01 CA
Book debts older than 1 year(Account Recevables) 4.46
Book debts below 6 months(Account Receivables) 36.01 CA
Stock of raw materials 28.22 CA
Stock in process 1.01 CA
Finished Goods 20.48 CA
Advance given to Suppliers 25.08 CA 117.51
Advances to Associates(Not Operating cycle) 12.01
Outstanding Overdraft (HYP) 21.07 CL
Outstanding Overdraft (Book Debts) 14.01 CL
Advances received from buyers 6.97 CL
Sundry creditors for goods 12.51 CL
Other Creditors 16.63 CL
Interest accrued but not due for payment 4.85 CL
Provision for dividend 2.81 CL
Other short term liabilities 1.29 CL 80.14
Current Assets

Current Liabilities
METHOD 1
AUDITED AUDITED PROVISIONAL PROJECTED
TCA 51639 47578 46340 49700
BB 7680 6700 13000 13000
OCL 34054 39300 21870 24270
NWCG 17585 8278 24470 25430
TCL 41734 46000 34870 37270
WCG 43959 40878 33340 36700
25%NWCG 4396.25 2069.5 6117.5 6357.5
NWC 9905 1578 11470 12430

(3-4) 13188.75 6208.5 18352.5 19072.5

(3-5) 7680 6700 13000 13000
MPBF 7680 6208.5 13000 13000
ACTUAL BORR 7680 6700 13000 13000
EXCESS BORR 0 491.5 0 0
CURRENT RATI 1.237336464 1.034304348 1.328936048 1.333512208
METHOD 2
AUDITED AUDITED PROVISIONAL PROJECTED
TCA 51639 47578 46340 49700
BB 7680 6700 13000 13000
OCL 34054 39300 21870 24270
NWCG 17585 8278 24470 25430
TCL 41734 46000 34870 37270
WCG 43959 40878 33340 36700
25%TCA 12909.75 11894.5 11585 12425
NWC 9905 1578 11470 12430

4675.25 -3616.5 12885 13005

7680 6700 13000 13000
4675.25 -3616.5 12885 13000
7680 6700 13000 13000
3004.75 10316.5 115 0
1.237336464 1.034304348 1.328936048 1.333512208