The income statement for the year ended 31 December 2021 and the balance sheet as of 31 December 2020 and 2021 of Timah Berhad are as follows: TIMAH BERHAD Statement of Profit or Loss and Other Comprehensive Income for the year ended 31 December 2021 RM RM Sales 623,000 Cost of Sales 353,000 Gross Profit 270,000 Other Expenses (101,000) 169,000 Other Operating Income 13,000 182,000 Interest Revenue and Similar Income 4,000 186,000 Interest Expense and Similar Charges (16,000) 170,000 Tax on Profit (35,000) Profit after Taxation 135,000 Retained Profit b/f 53,000 188,000 Transfer to General Reserve (40,000) Dividend on Ordinary Shares (60,000) (100,000) Retained Profit c/f 88,000 TIMAH BERHAD Statement of Financial Position as of 31 December 2020 2021 RM RM Non-Current Assets Intangible assets: Patents and trademarks 37,000 32,000 Tangible assets: Land and buildings 310,000 310,000 Plant and machinery at NBV 125,000 102,000 Fixtures, fittings, tools, and equipment at cost 163,000 180,000 635,000 624,000 Current Assets Inventory 41,000 35,000 Debtors Trade debtors 123,000 132,000 Prepayments and accrued income 16,000 13,000 Cash at bank and in hand 17,000 5,000 197,000 185,000 Total Assets 832,000 809,000 Current Liabilities Bank overdraft 0 16,000 Trade creditors 39,000 30,000 Income tax payable 46,000 35,000 Dividend payable 50,000 60,000 Accrued expenses 15,000 11,000 150,000 152,000 Non-Current Liabilities Debenture loans 250,000 150,000 Shareholders’ Equity Paid-up share capital 240,000 300,000 Asset revaluation reserve 69,000 9,000 Reserves 70,000 110,000 Retained profits 53,000 88,000 432,000 507,000 Total liabilities and shareholders’ equity 832,000 809,000 Additional information: Depreciation of plant and machinery for the year 2021 is RM23,000, included in Other Expenses. No fixed assets were disposed throughout the year. The company paid all 2020’s dividends due to its shareholders. The company increased its paid-up share capital to RM300,000 by utilizing the asset revaluation reserve. Required: Prepare a statement of cash flows using the indirect method.
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
QUESTION 3
The income statement for the year ended 31 December 2021 and the balance sheet as of 31 December 2020 and 2021 of Timah Berhad are as follows:
TIMAH BERHAD
Statement of Profit or Loss and Other Comprehensive Income for the year ended 31 December 2021
|
|
RM |
RM |
|
Sales |
|
623,000 |
|
Cost of Sales |
|
353,000 |
|
Gross Profit |
|
270,000 |
|
Other Expenses |
|
(101,000) |
|
|
|
169,000 |
|
Other Operating Income |
|
13,000 |
|
|
|
182,000 |
|
Interest Revenue and Similar Income |
|
4,000 |
|
|
|
186,000 |
|
Interest Expense and Similar Charges |
|
(16,000) |
|
|
|
170,000 |
|
Tax on Profit |
|
(35,000) |
|
Profit after |
|
135,000 |
|
Retained Profit b/f |
|
53,000 |
|
|
|
188,000 |
|
Transfer to General Reserve |
(40,000) |
|
|
Dividend on Ordinary Shares |
(60,000) |
(100,000) |
|
Retained Profit c/f |
|
88,000 |
TIMAH BERHAD
|
|
2020 |
2021 |
|
|
RM |
RM |
|
Non-Current Assets |
|
|
|
Intangible assets: |
||
|
Patents and trademarks |
37,000 |
32,000 |
|
Tangible assets: |
||
|
Land and buildings |
310,000 |
310,000 |
|
Plant and machinery at NBV |
125,000 |
102,000 |
|
Fixtures, fittings, tools, and equipment at cost |
163,000 |
180,000 |
|
|
635,000 |
624,000 |
|
Current Assets |
|
|
|
Inventory |
41,000 |
35,000 |
|
Debtors |
|
|
|
Trade debtors |
123,000 |
132,000 |
|
Prepayments and accrued income |
16,000 |
13,000 |
|
Cash at bank and in hand |
17,000 |
5,000 |
|
197,000 |
185,000 |
|
|
Total Assets |
832,000 |
809,000 |
|
|
|
|
|
Current Liabilities |
|
|
|
Bank overdraft |
0 |
16,000 |
|
Trade creditors |
39,000 |
30,000 |
|
Income tax payable |
46,000 |
35,000 |
|
Dividend payable |
50,000 |
60,000 |
|
Accrued expenses |
15,000 |
11,000 |
|
|
150,000 |
152,000 |
|
Non-Current Liabilities |
|
|
|
Debenture loans |
250,000 |
150,000 |
|
Shareholders’ Equity |
|
|
|
Paid-up share capital |
240,000 |
300,000 |
|
Asset revaluation reserve |
69,000 |
9,000 |
|
Reserves |
70,000 |
110,000 |
|
Retained profits |
53,000 |
88,000 |
|
|
432,000 |
507,000 |
|
Total liabilities and shareholders’ equity |
832,000 |
809,000 |
|
|
|
|
Additional information:
- Depreciation of plant and machinery for the year 2021 is RM23,000, included in Other Expenses.
- No fixed assets were disposed throughout the year.
- The company paid all 2020’s dividends due to its shareholders.
- The company increased its paid-up share capital to RM300,000 by utilizing the asset revaluation reserve.
Required:
Prepare a statement of
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