Financial Accounting: Balance Sheet Management Essay

Question:

Describe about the Report for Financial Accounting of Balance Sheet Management.

Answer:

1. Statement of profit or loss and other comprehensive income

P and L a/c of Swish Ltd for 30th June 2016

Particulars

Amount

Amount

Sales revenue

3,245,000

Changes in clothing inventories

25,000

Purchases of clothing inventories

1,020,000

Shipping supplies

12,000

Delivery Charge - Freight Out

21,000

Cost of sales

1,078,000

Revenue from operations

2,167,000

Gain on revaluation of delivery vans

7,000

Assets revaluation surplus

7,000

Rental Revenue

73,000

Interest revenue

9,000

Gross profit

2,263,000

Expenses

Advertising expense

38,000

Administrative salaries

168,000

Amortisation expenses- Patent

5,000

Annual leave Expenses sales staff

4,000

Annual leave-Administrative staff

2,000

Depreciation - shop fittings

42,000

Electricity Expenses - administration office

4,000

Depreciation on administration office equipment

8,000

Long service leave expenses- administrative staff

2,000

Promotion Expenses

26,000

Depreciation on vehicles

6,000

Rent Expenses- retail store

189,000

Rent Expenses- administration office

18,000

Electricity Expenses - retail store

17,000

Long service leave expenses- sales staff

10,000

Goodwill impairment loss

20,000

Sundry expenses

4,000

Doubtful debts

63,000

Sales staff salaries

285,000

Income tax expense

450,000

Interest expense

19,000

Tax of revaluation of delivery vehicle

3,000

Annual leave expense

9,000

Long service leave expense

5,000

(1,397,000)

Net profit for the year

866,000

2. Statement of financial position

Balance Sheet of Swish Ltd for the year ended 30th June 2016

Liabilities

Amount

Amount

Equity and Liabilities

Shareholder’s Funds

Share Capital

500,000

Reserves and surplus

9,000

Retained earnings from 2016

866,000

Retained earnings from 2015

272,000

Non Current Liabilities/Long Term Liabilities

Bank loans

200,000

Provision for annual leave

37,000

Less Repayable in 1 year

9,000

Less annual leave expense (sales staff and admin staff)

6,000

22,000

Provision for long service leave

18,000

Less Repayable in 1 year (sales staff and admin staff)

5,000

Less long service leave expense

12,000

1,000

Current Liabilities & Provisions

Accumulated impairment losses - goodwill

20,000

Accumulated depreciation - office equipment

22,000

Less depreciation on office equipment

(8,000 )

14,000

Accumulated depreciation - sales equipment

96,000

Accumulated amortization - patent

10,000

Accumulated depreciation - delivery van

3,000

Accounts payable

63,000

Current tax liability

312,000

Deferred tax liabilities

3,000

Total Liabilities

2,391,000

Assets

Non Current Assets/Fixed Assets

Amount

Amount

Shop fittings - at cost

614,000

Less Depreciation shop fittings

(42,000)

Administration office equipment

46,000

Vehicles delivery van - at fair value

70,000

less depreciation vehicle

(6,000)

Patent

50,000

Trade mark - at cost

35,000

Goodwill

50,000

Non Current Investments

Investment property

954,000

Current Assets

Inventories

98,000

Accounts receivable

545,000

less allowance for doubtful debts

(83,000)

Cash on hand

17,000

Prepaid Rent - retail sore

20,000

Deferred tax asset

23,000

Total Assets

2,391,000

Reference and Bibliography:

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Carpenter, S. B., Ihrig, J. E., Klee, E. C., Quinn, D. W., & Boote, A. H. (2013). The Federal Reserve's balance sheet and earnings: a primer and projections (pp. 2013-03). Division of Research & Statistics and Monetary Affairs, Federal Reserve Board.

Del Negro, M., & Sims, C. A. (2015). When does a central bank?? s balance sheet require fiscal support?. Journal of Monetary Economics, 73, 1-19.

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Goldsmith, R. W., Lipsey, R. E., & Mendelson, M. (2015). Studies in the national balance sheet of the United States (Vol. 1). Princeton University Press.

Jim?nez, G., & Ongena, S. (2012). Credit supply and monetary policy: Identifying the bank balance-sheet channel with loan applications. The American Economic Review, 102(5), 2301-2326.

Paci, E. (2012). Summary of the evidence of breast cancer service screening outcomes in Europe and first estimate of the benefit and harm balance sheet. Journal of medical screening, 19(suppl 1), 5-13.

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Reis, R. (2013). The mystique surrounding the central bank's balance sheet, applied to the European crisis. The American Economic Review, 103(3), 135-140.

Reis, R. (2015). Comment on:“When does a central bank’s balance sheet require fiscal support?” by Marco Del Negro and Christopher A. Sims.Journal of Monetary Economics, 73, 20-25.

Sims, C., & Del Negro, M. (2014). When does a central bank's balance sheet require fiscal support?. In 2014 Meeting Papers (No. 763). Society for Economic Dynamics.

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