FINACIAL REPORTS 1

Financial Analysis

By Name

Course

Tutor

University

City, State

Date
 FINACIAL REPORTS 2

Task 1.1
In definition, the asset register is the fixed asset register, or in simple words, it is a record that is

comprehensive and identifies all the capital which a business owns (Martin, 2016). The register is

an important document as it is a component for the firm to be able to assist the owner to make

immediate responses regarding the purchase of items which in general is descriptions as well as

dates of purchase and location of the assets (Christensen et.al, 2016). When the business has such

information, it makes it easy to communicate to other companies about its stock.

Task 1.2
Sample card to register assets would be as follows

Assets Name Purchase Date of Depreciation Salvage

number price Purchase Value

Task 1.3
Different methods have been deployed to make an enhancement on the fact to analyze

depreciation; each company makes some considerations of many facts when they are in need to

establish a primary core (Karwowski et.al, 2016). When a straight-line method is in use, then a

change in balance will sum up the entire unit of the activity. The process, in general, is quite easy

and always in preference by business managers.

 FINACIAL REPORTS 3

Task 1.4
ABC Ltd firm purchased the motor vehicles on 1st July 20x3 for $36,000 plus GST.

Given the depreciation rate as 37.5%, I am going to determine the amortization of ABC Limited

for four years by using the reducing balance method.

From the excel sheet, I compute the depreciation, book value and accumulated depreciation as

follows

Year Net Book Value Rate Depreciation Accumulated Depreciation

1 July 20x3 $36,000 37.50% $13,500.00 $13,500.00
1 July 20x4 $22,500.00 37.50% $8,437.50 $21,937.50
1 July 20x5 $14,062.50 37.50% $5,273.44 $27,210.94
1 July 20x6 $8,789.06 37.50% $3,295.90 $30,506.84

Task 1.5
Completing the asset register which will also include depreciation schedule, the rate of reduction
is 20%.

Date Asset Description Net Book Value Depreciation

2013 Jan 1 Machine purchased for cash $6,400 $1,280
2014 Jan 1 Value of the machine $5,120 $1,024
Sold the machine for $5,184

Task 1.6

Revenue from fees $16,000

Salaries & wages expense 8,400
Maintenance expense 2,500
Income tax expense 1,000

Net Income $4,100

Retained Earnings 20,000
Dividends 1,000
Retained Earnings end $23,100
 FINACIAL REPORTS 4

Task 2.1
Profitability ratios
Net Mar 31-Dec-11 31-Dec-12 31-Dec-13 31-Dec-14 31-Dec-15
Gross Margin % 70.3 70 68.6 68 79.4
Net Margin % 27.72 18.54 17.8 0.26 20.08
Return on Assets % 13.09 8.1 7.27 0.11 5.48
Return on Equity % 19.44 13.45 12.83 0.21 13.03
Return on Invested Capital % 17.02 11.23 10.71 0.14 8.62

Task 2.2
Nichol Ltd pays $1,200 for an insurance policy 30 September 2014. This system is expected to

cover period 1st October 2014 to 30 September 2015. The financial year ends on 31st December.

It entails recording the journal entry on the date 30 September 2014 and December 2014.

Date Particular Debit ($) Credit ($)

September 30, 2014 Payment of insurance $1,200
policy
Year Accounting $600
September 30, 2015 Expiring of the policy $600
Last figure

Task 2.3

Cash inflows $3,000

Expenses
Rent 750
Student loan payment 200
utilities 150
Food 300
Recreation 600
Car expenses 200
Clothing 150

Total cash outflow 2,350

Net Cash Flow $650

 FINACIAL REPORTS 5

Task 2.4
A. The General Journal required to write-off the bad debt

Dr. Cr.
Bad Debt Expense 400
Interest payable 400

B. Work

Dr. Cr.
Depreciation expense- equipment $840
Accumulated Depreciation $840

C. Ranking

Supplied on hand total = 850

Thus = 3,000 - 850 =2,150

Dr. Cr.
Supplies Expense 2,150
Supplies 2,150

Task 2.5

Dr. Cr.

Supplies Expense 2,150

Supplies 2,150
 FINACIAL REPORTS 6

Task 3
From the Trial, Balance below
Particulars Debit ($) Credit ($)
Cost of Goods Sold 348,583
Advertising products 13,045
Salaries - Sales Staff 44,929
Salaries -Office Staff 76,276
Insurance 8,053
Rates and Taxes 11,234
Light and Power 8,980
General expenses 13,434
Discount Allowed 4,040
Bank Charges and fees 892
Bad debts 2,315
Sales 732,600
Rent Income 8,000
Interest received 854
Stock 44,702
Accounts received 8,268
Bank 51,364
Accounts payable 14,555
GST Clearing 68,585
Land and Buildings 407,188
Plant and Machinery 94,000
Accumulated depreciation - buildings 5,700
Accumulated depreciation - plant & machinery 13,500
Drawings 17,151
Capital 310,660

1,154,454 1,154,454
 FINACIAL REPORTS 7

Task 3.1
Preparing journal entries to record balance day adjustments by requirement

1 Dr. Cr.
Cash 30,000
Common Stock 30,000

2 For the secretary hired to be paid monthly, there is no entry.

3 Dr. Cr.
Office Furniture 3,800
Accounts Payable 3,800

6 Dr. Cr.
Cash 10,800
Unearned Service Revenue 10,800

10 Dr. Cr.
Cash 140
Service Revenue 140

27 Dr. Cr.
Accounts Payable 700
Cash 700

30 Dr. Cr.
Wage Expense 3,000
Cash 3,000

E3 - 10
May-14
4 Dr. Cr.
Accounts Payable 700
Cash 700

7 Dr. Cr.
Accounts receivable 6,800
Service revenue 6,800
 FINACIAL REPORTS 8

8 Dr. Cr.
Supplies 850
Accounts Payable 850

9 Dr. Cr.
Equipment 1,000
Cash 1,000

17 Dr. Cr.
Salaries Expense 530
Cash 530

22 Dr. Cr.
Repairs expense 900
Accounts payable 900

29 Dr. Cr.
Prepaid Insurance 1,200
Cash 1,200
 FINACIAL REPORTS 9

Task 3.2
Preparing income statement (revenue statement) to reflect operating profit for the year ended 30
June 2014.

Whitworth Box
Income Statement
For the year ended 30 June 2014

Sales $732,600
Cost of goods sold 348,583
Gross Profit 384,017
Expenses
Advertising 13,045
Salaries (total) 121,205
Insurance 8,053
Depreciation 19,200
General Expenses 13,434
Taxes and Rates 11,234 186,171
Net Profit $197,846
 FINACIAL REPORTS 10

Task 3.3
Preparing balance sheet to reflect the financial position of Whitworth Box as at 30 June 2014

Whitworth Box
Balance Sheet Statement
As at 30 June 2014

Bank 119,411
Accounts Receivable 85,455
Inventory 41,600
Prepaid Expenses 14,500
Total Current Assets 260,966

Land 50,000
Buildings and Equipment 182,450
Accumulated Depreciation 78,900 103,550

Total Assets 414,516

Accounts Payable 62,525

Wages payable 4,500
Unearned Revenue 3,000
Current Portion of Long-Term Debt 50,000
Total Current Liabilities 120,025

Long-Term Debt 175,000

Common Stock, 3500 shares outstanding 35,000

Retained Earnings 84,491
Total Stockholders' Equity 119,491

Total Liabilities and Equity 414,516

 FINACIAL REPORTS 11

Task 3.4

Sales 191,400
Cost of sales 87,174
Gross Profit 104,226

Selling and Administrative expenses:

Selling expenses
Advertising $963
Sales salaries and commission 12,430
Deliveries of Pianos 3,480
Utilities 669
Depreciation of sales facilities 5,004

Total Selling Expenses $22,546

Administrative
Executive Salaries 13,494
Insurance 682
Clerical 2,485
Depreciation of office equipment 934

Total Administrative Expenses 17,595

81,680
 FINACIAL REPORTS 12

Task 4.
Cost Selling or
Behavior Administrative Product cost
Variable Fixed cost Direct Indirect
Direct labor $93,000 $93,000
Advertising $100,000 $100,000
Factory Supervision $66,000 $66,000
Property taxes, factory building $20,000 $20,000
Sales commission $56,000 $56,000
Insurance, Factory $5,000 $500
Depreciation, administrative office equipment $1,000 $1,000
Lease cost, factory equipment $12,000 $12,000
Indirect materials, factory $20,000 $20,000
Depreciation, factory building $107,000 $107,000
Administrative office supplies (billing) $5,000 $5,000
Administrative office salaries $108,000 $108,000
Direct materials used (wood, bolts, etc) $433,000 $433,000
Utilities, factory $43,000 $43,000
Total Costs $612,000 $457,000 $402,000 $642,000 $20,500
 FINACIAL REPORTS 13

Unadjusted Trial
Account Name Balance Adjustments Adjusted Trial Balance Income Statement balance sheet
Debit Credit Debit Credit Debit Credit Debit Credit Debit Credit

Cash 21,611 21,611 21,611

Accounts Receivable 12,233 12,233 12,233

Office Supplies 2,039 2,039 2,039

Prepaid Rent 3,466 3,466 3,466

Office Equipment 15,291 15,291 10,194

Accumulated Dep - Office Equipment 5,097 5,097 5,097 18,349

Accounts payable 18,349 18,349 9,175

Unearned Revenue 9,175 9,175

Income Tax Payable 1,019 1,019 1,019

Notes Payable Due
10/10/2019 17,330 131 17,461 17,461

Common Stock, $1 par value, 1223 shares 1,223 1,223 1,223

Retained Earnings 1,427 1,427 1,427

Dividends 1,019 1,019 -

Revenue 14,272 14,272 14,272 1908

Salaries Expense 8,767 510 10,937 510 510

Rent Expense 204 6,116 204 6,116

Utilities Expense 2,243 2,243 2,243

Income Taxes 1,019 1,019 1,019

Interest Expense

Other Supplies Expense 1,529 1,529 1,529

Depreciation - Office
Equipment 3,058 3,058 3,058
Wages Payable

67,892 67,892 74,649 74,649 (203) 49,543 49,543

 FINACIAL REPORTS 14

References
Christensen, H.B., Floyd, E., Liu, L.Y. and Maffett, M.G., 2016. The Real Effects of Mandated

Information on Social Responsibility in Financial Reports: Evidence from Mine-Safety Records.

Karwowski, M., 2016. The risk in using financial reports in the study of airline business

models. Journal of Air Transport Management, 55, pp.185-192.

Martin, G.W., Thomas, W.B. and Wieland, M.M., 2016. S&P 500 Membership and Managers

Supply of Conservative Financial Reports. Journal of Business Finance & Accounting.