FINANCE FOR LEISURE & TOURISM

Finance for Leisure and Tourism



Finance for Leisure and Tourism

Part A)

1. Financial statements of Lazarus Ltd for the year ended 30th June 2010

Lazarus Ltd Income Statement

For the year ended 30th June 2010

Sales

 

4235000

less: cost of Goods sold

 

 

Merchandise inventory opening

194000

 

Add: Purchases

3052000

 

Less merchandise inventory

190000

 

Cost of goods sold

3056000

 

Gross profit

 

1179000

Less Operating Expenses

 

 

Wages and salaries

179000

 

Directors salaries

127000

 

Advertising

45000

 

Depreciation: Motor

20000

 

Depreciation: Furni & fix

50000

 

Rent Expense

106500

 

Electricity

42000

 

Insurance

28000

 

Office expenses

76000

 

Rates

31000

 

 

 

 

Total Operating Expenses

 

704500

Net operating income

 

474500

Less other expenses

 

 

Interest expenses

 

7000

Tax

 

107000

Net income/ loss

 

360500

Lazarus Ltd

Balance Sheet

30th June 2010

Assets

 

Liabilities and Equity

Current Assets

 

 

Current liabilities

 

Cash at Bank

 

294000

Creditors

82000

Accounts receivable (net)

 

455000

Bank Loan

70000

Inventories

 

190000

tax

107000

Insurance

 

28000

interest payable

7000

prepaid expense

 

4500

 

 

Mis Expenses

 

70000

share capital

300000

 

 

 

 

 

Fixed Assets

Owner's Equity

Property, Plant, and Equipment

 

 

 

 

motor

160000

 

 

 

Dep

100000

60000

Retained Earning

275000

Buildings

500000

 

net profit

360500

Dep

400000

100000

 

 

 

 

 

 

 

Total Assets

 

1201500

Total Liabilities

1201500

3. Explanations and application of the accounting concepts

The following are the concept that has been used in making the financial statements of the Lazarus Ltd:

Income Statements

Profit and loss account shows the company's ability to generate profits and cash flow. This report is the statement of revenue streams in the unit from the sale of products and services or goods in the course of commercial activity and revenue generated by the conduct of financial operations (Eversull E., & Rotan B., 1997, pp. 5).

Net sales are revenues from sales of products, services and goods which are net of VAT. The costs of sales of products include the cost of their production, mainly can include: materials and energy, wages (only related to the production staff), depreciation, external services (e.g., partial processing of products by another entity), social security and other (mostly animal group accounts). After deducting the cost from the revenue we get the result of gross sales.

The results of gross sales are then adjusted for costs not directly related to the principal business unit, but are necessary for its conduct. That is:

General and administrative expenses (administrative) - consist mainly of administrative staff salaries, office supplies, but also the cost subscriptions to periodicals such as, advertising, etc.

Selling costs - costs associated with the sale of finished products shall be borne by the entity such as unloading, transport, insurance, transportation, etc.

In this way the result of net sales shows the actual profit / loss of core business units. The unit can also receive income and incur expenses not related to core business. To their accounting records used to account:

760 Other operating income

761 Other operating expenses

A classic example of such costs might be, for example, fines, asset liquidation, etc. Examples of income may be barred liability, the subsidies. After adding the income and deduction of expenses from net sales as a result we get the profit / loss on ordinary activities.

In addition to these revenues and costs, an entity may conduct financial activities that are recorded through account 750 financial income and 751 the financial costs (Foster, 2011

pp. 261).

Financial income is mainly all types of interest (e.g., from funds in bank accounts, loans), pay such bills discounting of foreign interest for late payment. Once they are included in the profit and loss is obtained gain / loss on business. The next step in determining the financial result to take account of events which could not be foreseen, ...