ACCOUNTING ANALYSIS

Accounting Analysis

Accounting Analysis

Financial Reporting

Worksheet

Worksheet of Manson's shoe retail and repair store, for the year ended December, 31 2007 is as follows:

MANSON'S, END OF PERIOD WORKSHEET - YEAR ENDED 31 DECEMBER 2007

 

Trial Balance Unadjusted Adjustments

Trial Balance Adjusted

Income Statement

Balance Sheet

Account Name

Dr

Cr

Dr

Cr

Dr

Cr

Dr

Cr

Dr

Cr

Cash

$ 22,000

 

$ 500

$ 200

$ 22300

 

 

 

$ 22300

 

Accounts Receivable

$ 62,500

 

 

$ 625

$ 61875

 

 

 

$ 61875

 

Inventory (31 December 2007)

$ 136,000

 

 

$ 1000

$ 135000

 

 

 

$ 135000

 

Prepaid Rent

$ 4,800

 

 

$ 2400

$ 2400

 

 

 

$ 2400

 

Tools and Equipment

$ 60,000

 

 

 

$ 60000

 

 

 

$ 60000

 

Accumulated Dep. Tools & Equip.

 

$ 32,000

 

$ 4000

 

$ 36000

 

 

 

$ 36000

Shop Fittings

$ 42,000

 

 

 

$ 42000

 

 

 

$ 42000

 

Accumulated Dep. Shop Fittings

 

$ 27,000

 

$ 8000

 

$ 35000

 

 

 

$ 35000

Investments (mature February 2009)

$ 25,000

 

 

 

$ 25000

 

 

 

$ 25000

 

Accounts Payable

 

$ 54,000

 

 

 

$ 54000

 

 

 

$ 54000

D Manson, Capital (1 January 2007)

 

$ 140,950

 

 

 

$ 140950

 

 

 

$140950

D Manson, Drawings

$ 36,000

 

 

 

$ 36000

 

 

 

$ 36000

 

Sales

 

$ 680,000

$ 200

 

 

$ 679800

 

$ 679800

 

 

Sales Returns & Allowances

$ 3,200

 

 

 

$ 3200

 

$ 3200

 

 

 

Discount Received

 

$ 2,400

 

 

 

$ 2400

 

$ 2400

 

 

Interest Income

 

$ 750

 

$ 500

 

$ 1250

 

$ 1250

 

 

Cost of Sales

$ 374,000

 

$1000

 

375000

 

$ 375000

 

 

 

Advertising Expense

$ 12,000

 

 

 

$ 12000

 

$ 12000

 

 

 

Council Rates Expense

$ 2,200

 

 

 

$ 2200

 

$ 2200

 

 

 

Discount Allowed

$ 2,400

 

 

 

$ 2400

 

$ 2400

 

 

 

Insurance Expense

$ 21,000

 

 

 

$ 21000

 

$ 21000

 

 

 

Shop Rent Expense

$ 12,000

 

$ 2400

 

$ 14400

 

$ 14400

 

 

 

Office Staff Wages Expense

$ 42,000

 

 

 

$ 42000

 

$ 42000

 

 

 

Sales Staff Wages Expense

$ 80,000

 

 

 

$ 80000

 

$ 80000

 

 

 

Bad Debt Expenses

 

 

$ 625

 

$ 625

 

$ 625

 

 

 

Depreciation Expenses

 

 

$ 12000

 

$ 12000

 

$ 12000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit Adjustment

 

 

 

 

 

 

$ 118625

 

 

$118625

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$ 937,100

$ 937,100

$ 16725

$ 16725

$ 949400

$ 949400

$ 683450

$683450

$384575

$384575

Profit/Loss

 

 

 

 

 

 

$ 118625

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income Statement

Income Statement of Manson's shoe retail and repair store, for the year ended December, 31 2007 is as follows:

INCOME STATEMENT

Manson's

YEAR ENDED 31 DECEMBER 2007

 

Revenue

 

 

 

 

$

$

 

 

Gross Sales

 

 

 

679800

 

 

 

Less: Sales Returns

 

 

 

3200

 

 

 

Net Sales

 

 

 

 

676600

 

 

 

 

 

 

 

 

 

Cost of Goods Sold

 

 

 

 

 

 

 

Cost of Sales

 

 

 

 

375000

 

 

 

 

 

 

 

 

 

 

Gross Profit (Loss)

 

 

 

 

301600

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

Advertising Expense

 

 

 

12000

 

 

 

Council Rates Expense

 

 

 

2200

 

 

 

Discount Allowed

 

 

 

2400

 

 

 

Insurance Expense

 

 

 

21000

 

 

 

Shop Rent Expense

 

 

 

14400

 

 

 

Office Staff Wages Expense

 

 

 

42000

 

 

 

Sales Staff Wages Expense

 

 

 

80000

 

 

 

Bad Debt Expenses

 

 

 

625

 

 

 

Depreciation Expenses

 

 

 

12000

 

 

 

Total Expenses

 

 

 

 

186625 Net Operating Income

 

 

 

 

114975

 

 

 

 

 

 

 

 

 

Other Income

 

 

 

 

 

 

Discount Received

 

 

 

2400

 

 

 

Interest Income

 

 

 

1250

 

 

 

Total Other Income

 

 

 

 

3650 Net Income (Loss)

 

 

 

 

118625

Statement of Changes in Equity

Statement of Changes of Equity of Manson's shoe retail and repair store, for the year ended December, 31 2007 mber is as follows:

Statement of Change in Equity

2007

 

 

 

 

Capital

Total

Opening balance

$140950

$140,950

Drawings

$-36000

$ ($36,000)

Net income (net loss)

$118625

$$118,625

Closing balance

$223,575

$$223,575

Balance Sheet

Balance Sheet of Manson's shoe retail and repair store, as at year ended December, 31 2007 is as follows:

MANSON'S

BALANCE SHEET

 

 

Assets

2007

Current Assets

$

 

Cash

22300

 

Accounts Receivable

61875

 

Inventory (31 December 2007)

135000

 

Prepaid Rent

2400

Total current assets

221,575

Non- Current Assets

 

 

Tools and Equipment

60000

 

Accumulated Dep. Tools & Equip.

-36000

 

Shop Fittings

42000

 

Accumulated Dep. Shop Fittings

-35000

 

Investments (mature February 2009)

25000

Total fixed assets

56,000

Total Assets

277,575

 

 

 

Liabilities and Owner's Equity

 

Current Liabilities

 

 

Accounts payable

54000

Total current liabilities

54,000

Owner's Equity

 

 

D Manson, Capital (1 January 2007)

140950

 

D Manson, Drawings

-36000

 

Profit for the year

118625

Total equity of Owner's

223,575

 

 

 

Total Liabilities and Equity

277,575

 

 

 

Common Financial Ratios

 

Debt Ratio

0.19

Current Ratio

4.10

Working Capital 167,575

Assets-to-Equity Ratio

1.24

Debt-to-Equity Ratio

0.24

Debt Ratio is a division of Total Liabilities over Total Assets

Current Ratio is a division of Current Assets over Current Liabilities

Working Capital is a difference between Current Assets and Current Liabilities

Assets-to-Equity Ratio is a ratio of total assets over equity of owners

Debt- to-equity is a ratio of total liabilities over equity of owners

Accounting Theory

Megan and Jennifer should not be regarded as assets of David Jones & Myer Ltd. Employee are not assets as tangible fixed assets such as furniture. Employee cannot be owned. They even also do not depreciate. It is a rule that for an asset in meeting recognition criteria it should meet following criteria:

It must ...