practice 1.

Credit sales
sales total sales in Q 25% Sales on account, collected next Q
Q1 10000*40 400000 100000
Q2 12000*45 540000 135000
Q3 15000*42 630000 157500
Q4 13000*47 611000 152750
Total Revenue 2181000
AR at the EOY 152750
Cash collected at EOY 2028250 (TOTAL SALES -AR of Q4)
If cash system followed (sales) 2028250

Assets
Transaction Value Cash land(PPE) Supplies
SW invested 50,000& issues CS as SH equity 50000
Purchases land and pay cash 40k -40000 40000

buys supplies on acc , to be paid within 30days 3700

earns 7k of service revenue 7000
performs 3k of service on account
pays 2700-> rent 1100, salary 1200,utility 400 -2700
PAYS 1900 towards account -1900
personal Exoense (NA)

For trans 5,collects 1k from customer on accnt 1000

Land sells 22k 22000 -22000
declares dividend and pays stockholder 2100
cash -2100
33300 18000 3700
A=56700

inventory = for sales

supplies = for internal consumption
Account Payable = Purchases done(cash to be paid later) Liabilty
Account Receivable = sales done(cash to be collected later) Asset
revenue/SALE of good/service = plus RE
Service on account= +AR, +RE
Payements = -RE

purchases : purchase of Inventory, purchase of supplies , purchase of PPE

 on account, collected next Q

ALES -AR of Q4)

ssets liabilty Stockholders' Equity

Accounts Receivable display equip AP truck loan Common stock Retained Earning
50000

3700
7000
3000 3000
-2700
-1900

-1000

2100
2000 1800 50000 9400
plus cash , plus CS
minus cash , plus land asset exchange(asset same)

plus supply, plus AP

plus cash , plus RE
plus AR, Plus RE
minus cash , minus RE
minus cash, minus AP
NA

plus cash , minus AR

plus cash , minus land

minus cash . Plus RE

Garden Store owner - mary jane
April 2021- march 2022
STATEMENT CASH PPE SUPPLY AR
MJ invested 80k in buss in exchange of 40,000 shares a 80000
bank provided loan of 32k over 4 years on 13% 32000
Truck of 12k purchased , 10k through loan 10000
truck of 12 purchased -12000 12000
display equipment of 6k -6000 6000
gardening equip of 4k -4000 4000
billing machine of 3600 -3600 3600
inventory of 260,000 -260000
Cash sales 340000 340000
Account sales 60,000 60000
cost of goods sold 200,000 (inventory sold)
expenses paid 98200 -98200
truck loan replayment 3332 -3332
Truck interest expense 700 -700
bank loan principal amount paid 8k -8000
bank loan interest -4160
depreciation on PPE -4600
taxes on profit (20%)

Total 62008 21000 60000

Assets: 62008
21000
60000
60000
203008
Liability 30668
Equity 80000
Profit is RE IF dividend is not there 73872
153872
Bank loan
value 32000
rate of interest 13% per annum always
tenure 4 yrs
Annual loan payment 8000
interest expense for year 1 4160 minus cash , minus RE

Truck Loan
Value 10000
rate of interets NA
tenure 3yrs
repayment model emi
emi (interest + loan payment) 336 monthly 3 years
total payement (336 *36) 12100 336*36 rounded off
total interest 2100 12100-10000
yearly interest 700 2100/3
total repayment in first year 4032 336*12
loan repayement in first year 3332 4032-700

Depreciation :
cost of asset 20000
useful life 5
salvage life 0
Depreciation : (cost - salvage)/useful life
depreciation expense (20000-0)/5 4000 minus asset , minus RE

Garden Place inc

Income statement
year ended 31-03-2022
Revenue/Topline 400000 A
Cost of goods sold 200000 B
gross profit 200000 C=A-B
operating expenses 98200 D
EBITDA 101800 E = C-D Earnigs before interst, taxe
Depreciation 4600 F
EBIT 97200 G=E-F Earning before interest and
Interest expense 4860 H
 Interest & Dividend income 0 I
gain on sale of asset 0 J
loass on sale of asset 0 K
EBT 92340 L=G-H+I+J+K Earnigs before taxes
Taxes(20% of ebt) 18468 M=L*taxrate
Net Income/bottomline/Netprofit 73872 N= L-M

No. of shares outstanding 40000 O

Earnings per share 1.8468 P=N/O

Garden Place Inc

Balance Sheet
31-03-2022
Current Assets
Cash 62008
inventory 60000
supplies 0
account receivable 60000
prepaid expenses 0
short term investments 0
ToTal current assets 182008

Non current assets non curent assets - depreciation

truck 10800
display 4500
gardening 3000
billing 2700
long term investment
land & property
total non current assets 21000
total assets 203008

Current liabilties
accounts payable 18468
accured expenses(outstanding) 0
short term borrowings 0
total current liabilties 18468

non current liabilty

bank loan 24000
truck loan 6668
total non current liabilty 30668
total liabilties 49136

common stock 80000

 retained earning 73872
stockholder's equity 153872

L+ E 203008
 L L E E

inventory Loan AP CS RE Column1

80000 plus cash , plus cs€
32000 plus cash , plus loan(L)
10000 plus cash , plus loan(L)
minus cash , plus truck ppe(A)
minus cash , plus equip ppe(A)
minus cash , plyus gardening equip ppe(A)
minus cash , plus billing machine ppe(A)
260000 minus cash , plus inventory (A)
340000 plus cash , plus RE
60000 Plus AR, Plus RE
-200000 -200000 minus inventory , minus RE(sales)
-98200 minus cash , minus RE (expenses)
-3332 minus cash , minus truck loan(L)
-700 minus cash , minus RE(interest expense)
-8000 minus cash , minus loan(L)
-4160 minus cash ,minus RE(Interest exp)
-4600 minus asset, minus RE

18468 -18468 plus ap, minus RE

60000 30668 80000 73872
 year loan (start) interest loan repaid loan end
1 32000 4160 8000 24000
2 24000 3120 8000 16000
3 16000 2080 8000 8000
4 8000 1040 8000 0

Asset cost usefullife salvage depreciation

truck 12000 10 0 1200
display 6000 4 0 1500
gardening 4000 4 0 1000
billing 3600 4 0 900
4600

Earnigs before interst, taxes, depreciation , amortization

Earning before interest and taxes

Earnigs before taxes

ts - depreciation
Purchase of Inventory on cash minus cash Plus inventory (A)
Purchase of Inventory on account plus inventory Plus AP(L)
Purchase of PPE on cash Minus cash plus PPE(A)
Purchase of PPE on account Plus PPE Plus AP(L)
Purchase of Supplies on cash minus cash Plus Supplies(A)
Purchase of Supplies on account Plus Supplies Plus AP(L)

Inventory (for sale for the purpose of bussiness)

Inventory sold -> cost of goods sold (expense) minus RE
Any consumption in bussiness is expense minus RE
Interest expense minus RE
Any profit reduction minus RE
Total sales (cash +credit ) = revenue
Profit is RE IF dividend is not there
each asset has depreciation except land
depreciation on fixed assets
consumables -> supplies
Inventory -> meant for sales
Practice 1
Pacilio
income statement CASH LAND LOAN CS RE
6k from issue of CS 6000 6000
5K from small buss 5000 5000
service of 9k 9000 9000
salary 3k -3000 -3000
land 4k -4000 4000
Operating expense of 2k -2000 -2000
dividend of 2500 -2500 -2500
8500 4000 5000 6000 1500

revenue -cogs = gross profit

gross profit -opertaing exp = net income
grossprofit%tosales=grossprofit/netsales*100
netprofitmargin=netincome/netsales*100

question 2:
credit sales 280000
cash sales 100000
discount 5000
returns 11000
net sales 364000
cogs 218400
gross profit 145600
operating expense 25000
net income 120600

question 9
beginneing invntory 150 70 1000
purchases 1620 1060 6500
purchases returns&allowance 40 30 290
net purchases 1580 1620-40 1030 6210
fright in (opex) 110 250 1730
costof goods purchased 1690 1580+110 1280 7940
cost of goods available for sales 1840 1690+150 1350 8940
ending inventory 310 120 1450
COGS 1530 1840-310 1230 7490
Question from class notes
FIFO/LIFO
weighted average
question3 question6:
sales revenue 510000 Revenue/sales 380000
returns 15000 returns&allowance 13000
net sales 495000 discounts 8000
cogs 330000 net sales 359000
gross profit 165000 cogs 212000
operating exp 110000 gross profit 147000
net income 55000 operating expense 7000
grossprofit%tosales 33.33% 6000
58000
32000
op ex 103000
net income 44000
grossprofit%tosales 0.409471
40.94708
netprofitmargin 0.122563 12.25%

6200
43590
2500
41090
2240
43330
49530
6230
43300
Gifford Company Assets
Income Statement Year 1 Cash AR
Jan 1 : acquired 20k cash by issueing CS 20000
Earned 18k revenue on account 18000
Mar 1: 36k cash for service in future 36000
paid cash 17k to operatig expense -17000
paid 2700 cash dividend -2700
31 dec , adjusted 36k unearned revenuw
15k received from AR 15000 -15000
Ending balavce y1 & beginning balance y2 51300 3000
Year 2
38k of cash revenue 38000
12k insurance paid -12000
colected 2k from AR 2000 -2000
Operating expense 21k -21000
5k dividend -5000
event 3 services remaining
adjusted Insurance amount on dec1
53300 1000
Op ex - minus cash , minus RE
dividend - minus cash , minus RE
Unearned revenue - minus L, plus RE
Insurance adjusted - minus insurance(A) , minus RE

Gifford Company
Income statement
year ended 31-12 year 1
Revenue/Topline 48000
Cost of goods sold 0
gross profit 48000
operating expenses 17000
EBITDA 31000
Depreciation 0
EBIT 31000
Interest expense 0
Interest & Dividend income 0
gain on sale of asset 0
loass on sale of asset 0
EBT 31000
Taxes(20% of ebt) 0
Net Income/bottomline/Netprofit 31000

No. of shares outstanding

Earnings per share
Assets Liabilty EquiTy
insurance Unearned revenue CS RE
20000 Plus cash , plus CS
18000 Plus AR, Plus RE
36000 Plus cash, Plus unearned revenue(L)
-17000 Minus cash , minus RE
-2700 minus cash , minus RE
-30000 30000 minus unerned revenue , plus RE
Plus cash, minus AR
6000 20000 28300

38000 Plus cash , plus RE

12000 Minus cash , plus insurance(A)
Plus cash , minus AR
-21000 minus cash , minusRE
-5000 Minus cash , minusRE
-6000 6000 minus unearned , plus RE
-9000 -9000 minus insurance , minus RE
3000 0 20000 37300

A
B
C=A-B
D
E = C-D
F
G=E-F
H
I
J
K
L=G-H+I+J+K
M=L*taxrate
N= L-M

O
P=N/O
Cash Flow Statements
Cash Inflows
Cash outflows
Net Cash flow = cash inflow - cash outflow

Practice 3: Assets Liabilty

Cash AR insurance Unearned revenue
1)40k cash from issue fo cs 40000
2)services on account for 82k 82000
3)divindend 6k to stock holders -6000
4)76k received of AR 76000 -76000
5)53K paid for other op ex -53000
6)services 19k on cash 19000
7)3500 accured utility expense 0 -3500

Inflow 135000
outflow -59000
change in cash 76000
beginning cash balance 0
ending cash balance 76000
 cash transaction (for cash, received, settled,paid)
No cash transaction(depreciation expense,accured

EquiTy revenue -cogs = gross profit

CS RE gross profit -opertaing exp = net income
40000 grossprofit%tosales=grossprofit/netsales*100
82000 netprofitmargin=netincome/netsales*100
-6000

-53000
19000
-3500 accured
38500
cash, received, settled,paid)
depreciation expense,accured,on acc, credit sales, credit purchase)

t/netsales*100
etsales*100
Formula list

Common Stock Issue Plus cash Plus CS

Land Purchase Minus Cash Plus Land
Buys supplies on cash Minus cash Plus supply
Buys supplies on account Plus supplies Plus AP
Receives cash by proving service Plus cash Plus RE
provides services on account Plus AR Plus RE
Paying expenses Minus cash Minus RE
Paying towards AP Minus Cash Minus AP
Collecting payments on account Plus Cash Minus AR
selling purchased land Plus Cash Minus Land
dividend Minus Cash Minus RE
Cash borrowing Plus cash Plus Liabilty
Earning revenue Plus Cash Plus RE
Purchase of inventory for cash Minus Cash Plus Inventory
Purchase of inventory on account Plus Inve Plus AP
Purchase of PPE for cash Minus Cash Plus PPE
Purchase of PPE on account Plus PPE Plus AP
Purchase of supplies for cash Minus Cash plus Supply
Purchase of supplies on account Plus Supply Plus AP
Loan from bank plus Cash Plus Loan
Op ex minus cash minus RE
Unearned revenue minus L plus RE
Insurance adjusted minus insurance(A) minus RE
paid for Insurance policy minus cash plus insurance(A)
cogs minus inventory minus RE
rent paid minus cash plus rent
rent adjusted minus rent minus RE
depreciation minus Asset minus RE
loan repayment minus cash(princpal+interest minus loan (principal)
Sales plus cash plus AR(account)
COGS(remainng inventory) minus inventory minus RE
Adj advance unearned rev minus unearned rev(L) Plus RE (period mentioned)
supllies consumed minus supplies minus RE
supplies left minus supplies (total -left) minus RE(total -left)
 Asset Liability Equity
Cash AP CS
Land Loan RE
Supplies unearned rev
PPE
Inventory
insurance
rent

opex
operating expense
rent
consumables
rent
salary
insuarance
Tax on EBT
netincome - dividend = RE
netincome - dividend = RE+ending of last year(2nd year)

minus RE
Plus RE(CASH +ON ACC)

given value
Sales Plus RE
Expenses Minus RE
Dividends Minus RE

profit = revenue -expenses