Financial and Managerial Accounting

Part 1 – Financial Analysis

Peter is a self employed music teacher and has the following trial balance:

 

Trial Balance as at 30 June 2013

                                                                                      Debit                                                 Credit

                                                                        £                                                          £

Instruments

1,500

 

Furniture

400

 

Rent for room

2,400

 

Computer

1,000

 

Fees from tuition

 

10,500

General expenses

1,000

 

Capital

 

3,550

Bank

1,500

 

Postage and stationery

50

 

Electricity

300

 

Advertising

300

 

Creditors

 

150

Debtors

350

 

Telephone

400

 

Drawings

5000

 

 

14200

14200

 

Note: In this case, there are no trading purchases.

 

Required:

1)    Prepare Peter Income Statement for the year ended 30 June 2013 and a Balance Sheet as at 30 June 2013.

(30 marks)

2)    Briefly research and discuss the changes in international regulation for reporting financial statements. In particular the changes to the names of profit and loss account.                                                                                                                 

(20 marks)

 

 

 

 

Part 2 – Performance Evaluation

 

The comparative condensed income statements of SPENCER Corporation are shown below.

SPENCER CORPORATION

Comparative Condensed Income Statements

For the Years Ended December 31

                                                                                                 2013                           2012             

Net sales                                                               $620,000                   $500,000

Cost of goods sold                                               450,000                      400,000

Gross profit                                                             170,000                      100,000

Operating expenses                                                54,000                        40,000

Net income                                                           $116,000                    $  60,000

 

Instructions

(a)   Prepare a horizontal analysis of the income statement data for SPENCER Corporation using 2013 as a base. (Show the amounts of increase or decrease.)

(b)   Prepare a vertical analysis of the income statement data for SPENCER Corporation in columnar form for both years.

 

 

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