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Trail Balance | Income Statement | Balance Sheet | Cash Flow Statement

Arjun EP

Published on: June 27, 2021

Trial Balance to Cash Flow Statement | Adjusted Trial Balance to Cash Flow Statement | Work Sheet

Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = ₦ = Birr = Currency of your country

PROBLEM: 1C TU Model

An unadjusted trial balance of ABC Company as on 31^st March 2021 is given below:

Particulars	Amount Dr	Particulars	Amount Cr
Cash	3,00,000	Capital	600,000
Bank	3,50,000	Creditors	45,000
Furniture and equipment	2,00,000	Discount received	10,000
Debtors	80,000	Sales	500,000
Purchase	2,00,000	12% Bank loan	100,000
Discount allowed	6,000
Interest on loan	7,000
Salary	60,000
Rent	52,000
	12,55,000		12,55,000

Additional information:

(a) Closing stock valued $50,000

(b) Prepaid rent was $4,000

(d) Depreciation on furniture at 25% per annum

Required: (i) Adjusted trial balance; (ii) Statement of P&L as per NFRS;

(iii) Statement of Financial Position as per NFRS; (iv) Statement of Cash Flow Statement as per NFRS

[Answer: ATB = $13,10,000; NIAT = 184,000; B/S = $934,000

*TNCA = $150,000; TCA = $784,000;

TE = $784,000; TNCL = $100,000; TCL = $50,000

CFS: NCOA = $150,000; NCIA = ($200,000); NCFA = $700,000

*Dividend paid = Nil

SOLUTION:

Journal Entries for Adjustments

Date	Particulars		LF	Amount $	Amount $
a.	Closing stock account	Dr		50,000
	To Statement of P&L				50,000
	(Being: closing stock recorded)

b.	Prepaid rent account	Dr		4,000
	To Rent account				4,000
	(Being: prepaid rend adjusted)

c.	Interest account	Dr		5,000
	To Outstanding account				5,000
	(Being: interest payable on loan)

d.	Depreciation account	Dr		50,000
	To Furniture and equipment				50,000
	(Being: depreciation charged on 200,000 x 25%)

Ten Columns Worksheet

Particulars	Part 1		Part 2		Part 3		Part 4		Part 5
	Trial balance		Adjustments		Adjusted TB		Statement of P&L		Financial Position
	Dr	Cr	Dr	Cr	Dr	Cr	Dr	Cr	A	L
Cash	3,00,000				3,00,000				300,000
Bank	3,50,000				3,50,000				350,000
Furniture and equip.	2,00,000			50,000^d	1,50,000				150,000
Debtors	80,000				80,000				80,000
Purchase	2,00,000				2,00,000		200,000
Discount allowed	6,000				6,000		6,000
Interest on loan	7,000		5,000		12,000		12,000
Salary	60,000				60,000		60,000
Rent	52,000			4,000	48,000		48,000
Capital		600,000				600,000				600,000
Creditors		45,000				45,000				45,000
Discount received		10,000				10,000		10,000
Sales		500,000				500,000		5,00,000
12% Loan		100,000				100,000				100,000
	12,55,000	12,55,000
Closing stock			50,000	50,000	50,000	50,000		50,000	50,000
Prepaid rent			4,000		4,000				4,000
Outstanding interest				5,000		5,000				5,000
Depn on furniture			50,000		50,000		50,000
Net profit (b/f)							184,000			184,000
Total			109,000	109,000	13,10,000	13,10,000	560,000	560,000	934,00	934,000

Profit or Loss Statement under NFRS

ABC Company

As on 31^st March 2021

Particulars		Notes	Amount $	Amount $
Net sales revenue				500,000
Less:	Cost of goods sold*			(150,000)
	Gross profit			350,000
Add:	Other income (discount received)			10,000
Less:	Operating expenses:
	Discount allowed		6,000
	Salaries		60,000
	Rent expenses		48,000
	Depreciation expenses		50,000	(164,000)
	Profit from operation			196,000
Less:	Financial expenses:
	Interest expenses			(12,000)
	Profit before tax			184,000
Less:	Income tax expenses			Nil
	Profit from continuing operations			184,000
Add:	Profit from discontinued operation after tax			Nil
	Net profit after tax			184,000

Cost of goods sold

= Opening stock + Purchase – Closing stock

= Nil + 200,000 – 50,000

= 150,000

Statement of Financial Position as per NFRS

ABC Company

As on 31^st March 2021

Particulars		Notes	Year 2021
ASSETS
Non-Current Assets:
	Furniture and equipment		150,000
	Less: Accumulated depreciation		Nil
	Intangible assets		Nil
	Total non-current assets (A)		150,000
Current Assets:
	Cash		300,000
	Bank		350,000
	Debtors		80,000
	Closing stock		50,000
	Prepaid rent		4,000
	Other current assets		Nil
	Total current assets (B)		784,000
	TOTAL ASSETS (A+B)		934,000
EQUITY
	Capital		6,00,000
	Additional paid in capital		Nil
	Retained earnings (net profit)		184,000
	Total Equity		784,000
LIABILITIES
Non-Current Liabilities:
	12% Loan		100,000
	Other non-current liabilities		Nil
	Total non-current liabilities (a)		100,000
Current Liabilities:
	Creditors		45,000
	Interest payable		5,000
	Other current liabilities		Nil
	Total current liabilities (b)		50,000
	Total Liabilities (a+b)		1,50,000
	TOTAL EQUITY AND LIABILITIES		934,000

Keep in Mind

For cash flow statement from ONE year’s financial data:

If financial data are given only for one year; it means all assets and liabilities are increased

Increase in assets means cash outflow; write them in negative viz (12345)

Increase in liabilities means cash inflow; write them in positive viz 12345

Write original value of fixed assets and investment (Do NOT deduct depreciation)

Write the value of intangible asset also.

Write retained earnings, general reserve and capital reserve of trial balance.

Given and working note:

A.	Operating Activities:		3.	Cash paid to operating expenses
1.	Cash collection form sales and customers			Salaries	(60,000)
	Sales revenue	500,000		Rent	(48,000)
	Less: Increase in debtors	(80,000)		Add: Increase in prepaid rent	(4,000)
	Less: Discount allowed	(6,000)			(112,000)
		414,000
			4.	Interest and insurance
2.	Cash paid to suppliers			Interest on loan	(12,000)
	Cost of goods sold (COGS)	(150,000)		Less: Increase in O/s interest	5,000
	Add: Increase in stock	(50,000)			(7,000)
	Less: increase in creditors	45,000
	Less: Discount received	10,000	5.	Tax paid	Nil
		(145,000)

Statement of Cash Flow under NFRS

ABC Company Ltd

Particulars		Notes	Amount
Cash from operating activities:
	Cash collection from sales and customers	1	414,000
	Cash paid to suppliers	2	(145,000)
	Cash paid for operating expenses	3	(112,000)
	Interest and insurance paid	4	(7,000)
	Income tax paid	5	Nil
	Net cash from operating activities [A]		150,000
Cash from investing activities:
	Proceeds from sales of property, plant and equipment		Nil
	Interest received		Nil
	Dividend received		Nil
	Acquisition of furniture and equipment		(200,000)
	Acquisition of investment		Nil
	Net cash from investing activities [B]		(200,000)
Cash from financing activities:
	Proceeds from issue of common stocks (capital)		600,000
	Proceeds from non-current borrowing (loan)		100,000
	Increase in additional paid in capital (share premium)		Nil
	Dividend paid		Nil
	Net cash from financing activities [C]		700,000
Net change in cash and cash equivalent (cash + bank) [A+B+C]			650,000
Add: Beginning cash and cash equivalent			Nil
Exchange gain or loss			Nil
Ending cash and cash equivalent			650,000

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Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = ₦ = Birr = Currency of your country

PROBLEM: 1B [TU 2075]

An unadjusted trial balance of AM Company Ltd as on 31^st March 2021 is given below:

Particulars	Amount Dr	Particulars	Amount Cr
Cash and bank	1,00,000	Discount received	5,000
Furniture and equipment	2,00,000	Equity shares	10,00,000
Land	4,20,000	Account payable	75,000
Investment	6,00,000	Dividend received	20,000
Account receivable	2,00,000	Sales revenue	8,00,000
Purchase	4,00,000	10% Debentures	2,00,000
Salaries-office	82,900
Rent-warehouse	60,000
Interest on debenture	12,000
Discount allowed	8,000
Tax paid	17,100
	21,00,000		21,00,000

Additional information:

(a) Ending inventories valued $100,000

(b) Prepayment rent was $4,000

(d) Depreciation on furniture and equipment at 10% per annum.

(e) Appreciation on land $21,000.

Required: (i) Adjusted trial balance; (ii) Statement of P&L as per NFRS;

(iii) Statement of Financial Position as per NFRS; (iv) Statement of Cash Flow Statement as per NFRS

[Answer: ATB = $22,29,000; NIAT = S3,42,000; B/S = $16,25,000

*TNCA = $12,21,000; TCA = $4,04,000;

TE = $13,42,000; TNCL = $2,00,000; TCL = $83,000

CFS: NCOA = $100,000; NCIA = ($12,00,000); NCFA = $12,00,000

*Dividend paid = Nil

SOLUTION

Given and working note:

Journal Entries for Adjustments

Date	Particulars		LF	Amount $	Amount $
a.	Ending inventories account	Dr		100,000
	To Statement of P&L				100,000
	(Being: ending inventories or closing stock recorded)

b.	Prepayment rent account	Dr		4,000
	To Rent account				4,000
	(Being: advance or prepaid rend adjusted)

c.	Interest account	Dr		8,000
	To Interest payable account				8,000
	(Being: interest payable on debentures)

d.	Depreciation on furniture and equipment account	Dr		20,000
	To Furniture and equipment				20,000
	(Being: depreciation charged on 200,000 x 25%)

e.	Land account	Dr
	To Appreciation on land account			21,000
	(Being: appreciation on land recorded)				21,000

Ten Columns Worksheet

Particulars	Part 1		Part 2		Part 3		Part 4		Part 5
	Trial balance		Adjustments		Adjusted TB		Statement of P&L		Financial Position
	Dr	Cr	Dr	Cr	Dr	Cr	Dr	Cr	A	L
Cash and bank	1,00,000				1,00,000				1,00,000
Furniture and equip.	2,00,000			20,000	1,80,000				1,80,000
Land	4,20,000		21,000		4,41,000				4,41,000
Investment	6,00,000				6,00,000				6,00,000
Account receivable	2,00,000				2,00,000				2,00,000
Purchase	4,00,000				4,00,000		4,00,000
Salaries-office	82,900				1,00,000		1,00,000
Rent-warehouse	60,000			4,000	56,000		56,000
Interest on debenture	12,000		8,000		20,000		20,000
Discount allowed	8,000				8,000		8,000
Tax paid	17,100
Discount received		5,000				5,000		5,000
Equity shares		10,00,000				10,00,000				10,00,000
Account payable		75,000				75,000				75,000
Dividend received		20,000				20,000		20,000
Sales revenue		8,00,000				8,00,000		8,00,000
10% Debentures		2,00,000				2,00,000				200,000
	21,00,000	21,00,000

Ending inventories			1,00,000	1,00,000	1,00,000	1,00,000		1,00,000	1,00,000
Prepayment rent			4,000		4,000				4,000
Interest payable				8,000		8,000				8,000
Depn on furniture			20,000		20,000		20,000
Appn on land				21,000		21,000		21,000
Net income (b/f)							3,42,000			3,42,000
Total			1,53,000	1,53,000	22,29,000	22,29,000	9,46,000	9,46,000	16,25,000	16,25,000

Cost of goods sold

= Opening stock + Purchase – Closing stock

= Nil + 400,000 – 100,000

= $300,000

Profit or Loss Statement under NFRS

AM Company Ltd

As on 31^st March 2021

Particulars		Notes	Amount $	Amount $
Net service revenue				800,000
Less:	Cost of goods sold			(300,000)
	Gross profit			500,000
Add:	Other income
	Discount received		5,000
	Interest income		20,000
	Appreciation on land		21,000	46,000
Less:	Operating expenses:
	Salaries-office		82,900
	Rent-warehouse		56,000
	Discount allowed		8,000
	Depreciation		20,000	(166,900)
	Profit from operation			379,100
Less:	Financial expenses:
	Interest expenses			(20,000)
	Profit before tax			359,100
Less:	Income tax expenses			(17,100)
	Profit from continuing operations			342,000
Less:	Loss from discontinued operation after tax			Nil
	Net profit after tax			342,000

Retained earnings’ data is not given, so, no need to prepare

Statement of Financial Position as per NFRS

AM Company Ltd

As on 31^st March 2021

Particulars		Notes	Year 2021
ASSETS
Non-Current Assets:
	Furniture and equipment (net)		1,80,000
	Land		4,41,000
	Investment		6,00,000
	Intangible assets		Nil
	Total non-current assets (A)		12,21,000
Current Assets:
	Cash		100,000
	Account receivable		200,000
	Inventories		100,000
	Prepaid rent		4,000
	Other current assets		Nil
	Total current assets (B)		4,04,000
	TOTAL ASSETS (A+B)		16,25,000
EQUITY
	Common stocks		10,00,000
	Additional paid in capital (share premium)		Nil
	Retained earnings		3,42,000
	Total Equity		13,42,000
LIABILITIES
Non-Current Liabilities:
	10% Debenture		2,00,000
	Other non-current liabilities		Nil
	Total non-current liabilities (a)		2,00,000
Current Liabilities:
	Account payable		75,000
	Interest payable		8,000
	Other current liabilities		Nil
	Total current liabilities (b)		83,000
	Total Liabilities (a+b)		2,83,000
	TOTAL EQUITY AND LIABILITIES		16,25,000

Given and working note:

A.	Operating Activities:		3.	Cash paid to operating expenses
1.	Cash collection form sales and customers			Salaries	(82,900)
	Sales revenue	800,000		Rent	(56,000)
	Less: Increase in A/R	(200,000)		Add: Increase in prepaid rent	(4,000)
	Less: Discount allowed	(8,000)			(142,900)
		592,000

			4.	Interest and insurance
2.	Cash paid to suppliers			Interest expenses	(20,000)
	Cost of goods sold (COGS)	(300,000)		Less: Increase in O/s interest	8,000
	Add: Increase in inventories	(100,000)			(12,000)
	Less: increase in A/P	75,000
	Less: Discount received	5,000
		(320,000)	5.	Tax paid
				Tax paid or expired	(17,100)

Statement of Cash Flow under NFRS

AM Company Ltd

Particulars		Notes	Amount
Cash from operating activities:
	Cash collection from sales and customers	1	5,92,000
	Cash paid to suppliers	2	(3,20,000)
	Cash paid for operating expenses	3	(1,42,900)
	Interest and insurance paid	4	(12,000)
	Income tax paid	5	(17,100)
	Net cash from operating activities [A]		1,00,000
Cash from investing activities:
	Proceeds from sales of property, plant and equipment
	Interest received		Nil
	Dividend received		20,000
	Acquisition of furniture and equipment		(2,00,000)
	Acquisition of investment		(6,00,000)
	Acquisition of land		(4,20,000)
	Net cash from investing activities [B]		(12,00,000)
Cash from financing activities:
	Proceeds from issue of common stocks		10,00,000
	Increase in additional paid in capital (share premium)		Nil
	Proceeds from non-current borrowing (debentures)		2,00,000
	Dividend paid		Nil
	Net cash from financing activities [C]		12,00,000
Net change in cash and cash equivalent [A+B+C]			1,00,000
Add: Beginning cash and cash equivalent			Nil
Exchange gain or loss			Nil
Ending cash and cash equivalent			1,00,000

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Here, Amount = Rs = $ = £ = € = ₹ = Af = ৳ = Nu = Rf = රු = Br = P = ₦ = Birr = Currency of your country

PROBLEM: 1C

An unadjusted trial balance of CBM Company Ltd as on 31^st December 2020 is given below:

Particulars	Amount Dr	Particulars	Amount Cr
Cash and bank	2,00,000	Common stocks of $10 at par	5,00,000
Investment	3,00,000	Account payable	50,000
Franchise license (31 Dec)	54,000	Interest received	10,000
Furniture and equipment	1,20,000	Sales revenue	4,00,000
Purchase	2,00,000	10% Bonds payable (due in 2024)	1,00,000
Account receivable	85,000
Discount allowed	5,000
Interest on bonds	6,000
Salary-office	51,600
Rent-warehouse	16,400
Tax expenses	22,000
	10,60,000		10,60,000

Additional information:

(a) Ending inventories valued $50,000

(b) Advance rent paid $2,000

(d) Depreciation on furniture and equipment at 10% per annum

Required: (i) Adjusted trial balance; (ii) Statement of P&L as per NFRS;

(iii) Statement of Financial Position as per NFRS; (iv) Statement of Cash Flow Statement as per NFRS

[Answer: ATB = $11,14,000; NIAT = $1,45,000; B/S = $7,99,000

*TNCA = $4,62,000; TCA = $3,77,000;

TE = $6,45,000; TNCL = $1,00,000; TCL = $54,000

CFS: NCOA = $64,000; NCIA = ($464,000); NCFA = $6,00,000

*Dividend paid = Nil

SOLUTION

Given and working note:

Journal Entries for Adjustments

Date	Particulars		LF	Amount $	Amount $
a.	Ending inventories account	Dr		50,000
	To Statement of P&L				50,000
	(Being: ending inventories or closing stock recorded)

b.	Advance rent account	Dr		2,000
	To Rent-warehouse account				2,000
	(Being: advance or prepaid rend adjusted)

c.	Interest account	Dr		4,000
	To Interest payable account				4,000
	(Being: interest payable on loan)

d.	Depreciation on furniture and equipment account	Dr		12,000
	To Furniture and equipment				12,000
	(Being: depreciation charged on 200,000 x 25%)

Cost of goods sold

= Beginning inventories + Purchase – Ending inventories

= Nil + 200,000 – 50,000

= $150,000*

Ten Columns Worksheet

Particulars	Part 1		Part 2		Part 3		Part 4		Part 5
	Trial balance		Adjustments		Adjusted TB		Statement of P&L		Financial Position
	Dr	Cr	Dr	Cr	Dr	Cr	Dr	Cr	A	L
Cash and bank	2,00,000				2,00,000				200,000
Investment	3,00,000				3,00,000				300,000
Franchise	54,000				54,000				54,000
Furniture and equip.	1,20,000			12,000	1,08,000				108,000
Purchase	2,00,000				2,00,000		200,000
Account receivable	85,000				85,000				85,000
Discount allowed	5,000				5,000		5,000
Interest on bonds	6,000		4,000		10,000		10,000
Salary-office	51,600				51,600		51,600
Rent-warehouse	16,400			2,000	14,400		14,400
Tax expenses	22,000				22,000		22,000
Common stocks		5,00,000				5,00,000				500,000
Account payable		50,000				50,000				50,000
Interest received		10,000				10,000		10,000
Sales revenue		4,00,000				4,00,000		400,000
10% Bonds payable		1,00,000				1,00,000				100,000
	10,60,000	10,60,000
Ending inventories			50,000	50,000	50,000	50,000		50,000	50,000
Advance rent			2,000		2,000				2,000
Interest payable				4,000		4,000				4,000
Depn on F&E			12,000		12,000		12,000
Net profit (b/f)							145,000			145,000
Total			66,000	66,000	11,14,000	11,14,000	460,000	460,000	799,000	799,000

Profit or Loss Statement under NFRS

CBM Company Ltd

As on 31^st Dec 2020

Particulars		Notes	Amount $	Amount $
Net sales revenue				400,000
Less:	Cost of goods sold			(150,000*)
	Gross profit			250,000
Add:	Other income (interest received)			10,000
Less:	Operating expenses:
	Salaries-office		51,600
	Depreciation		12,000
	Discount allowed		5,000
	Rent-warehouse		14,400	(83,000)
	Profit from operation			177,000
Less:	Financial expenses:
	Interest expenses			(10,000)
	Profit before tax			167,000
Less:	Income tax expenses			(22,000)
	Profit from continuing operations			145,000
Less:	Loss from discontinued operation after tax			Nil
	Net profit after tax			145,000

Retained earnings’ data is not given, so, no need to prepare

Statement of Financial Position as per NFRS

CBM Company Ltd

As on 31^st Dec 2020

Particulars		Notes	Year 2021
ASSETS
Non-Current Assets:
	Furniture and equipment		108,000
	Investment		300,000
	Franchise license		54,000
	Total non-current assets (A)		462,000
Current Assets:
	Cash		200,000
	Account receivable		85,000
	Inventories		50,000
	Prepayment office rent		2,000
	Other current assets		Nil
	Total current assets (B)		337,000
	TOTAL ASSETS (A+B)		799,000
EQUITY
	Capital		500,000
	Additional paid in capital		Nil
	Retained earnings (NIAT)		145,000
	Total Equity		645,000
LIABILITIES
Non-Current Liabilities:
	10% Bonds payable		100,000
	Other non-current liabilities		Nil
	Total non-current liabilities (a)		100,000
Current Liabilities:
	Account payable		50,000
	Interest payable		4,000
	Other current liabilities		Nil
	Total current liabilities (b)		54,000
	Total Liabilities (a+b)
	TOTAL EQUITY AND LIABILITIES