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Difference between an income statement and a balance sheet  (Page 2/2)

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TRIAL BALANCE OF HENDRIKSE DEALERS AS AT 30 JUNE 2003

Dt. Cr.
Balance Sheet section
Capital B1 166 047
Withdrawals B2 6 320
Land and Buildings B3 140 000
Equipment B4 18 600
Trading inventory B5 8 860
Debtors control B6 11 224
Bank B7 7 621
Change B8 150
Petty cash B9 110
Creditors control B10 9 216
Nominal Accounts section
Sales N1 83 706
Selling costs N2 55 804
Rental income N3 3 200
Telephone N4 640
Water and Electricity N5 760
Salaries N6 8 900
Wages N7 1 100
Postage N8 120
Stationery N9 680
Packaging material N10 1 280
262 169 262 169

ACITVITY 3:

To draw up Balance Sheets for a service enterprise and a commercial enterprise respectively

[LO 3.1]

  • The following examples are Balance Sheets of a service enterprise and a commercial enterprise:

M. MuvaloTrading as Muvalo Hairdressing Salon Balance Sheet as at 28 February 2003

Assets
Non-current Assets
Fixed Assets 1 49 700
Current Assets 2 840
Total Assets 52 540
Equity and Liabilities
Ownership Interest 2 52 540
Current Liabilities −
Total Equity and Liabilities 52 540

M. MuvaloTrading as Muvalo Hairdressing Salon Notes to the financial statements for the year ended 28 February 2003

1. Fixed Assets
Vehicles 35 000
Equipment 14 700
49 700
2. Ownership Interest
Balance as at 28 February 2002/ last day of previous year 45 000
Net Profit for the year 18 140
Additional capital contributed −
Withdrawals (10 600)
Balance as at 28 February 2003/ last day of current year 52 540

F. Foxie Trading as Fox and Co. Balance Sheet as at 31 December 2003

Assets
Non-current Assets
Fixed Assets 1 158 600
Current Assets 27 965
Trading inventory 8 860
Debtors 11 224
Cash 2 7 881
Total Assets 186 565
Equities and Liabilities
Ownership Interest 3 177 349
Current Liabilities 9 216
Creditors 9 216
Total Equity and Liabilities 186 565

F. Foxie Trading as Fox and Co. Notes to the financial statements for the year ended 31 December 2003

1 . Fixed Assets
Land and Buildings 140 000
Equipment 18 600
158 600
2. Cash
Bank 7 621
Change 150
Petty cash 110
7 881
3. Ownership Interest
Balance as at 31 December 2002 166 047
Net Profit for the year 17 622
Withdrawals (6 320)
Balance as at 31 December 2003 177 349

ASSIGNMENT 1: Balance Sheet of a Service Enterprise

  • Use the information of Activity 1.2 and draw up the Balance Sheet of Fixit Plumbers. (Paper will be provided.)

ASSIGNMENT 2: Income Statement of a commercial enterprise

  • The financial year of Orange Dealers (Owner: O. Sitro) ends on the last day of February every year.
  • The Trial Balance below appeared on their books on 28 February 2003.
  • Draw up the Income Statement for the business for the relevant accounting period. (Paper will be provided.)

ASSIGNMENT 3 : Balance Sheet of a Commercial Enterprise

  • Draw up the Balance Sheet as at 28 February 2003. (Paper will be provided.)

TRIAL BALANCE OF ORANGE DEALERS AS AT 28 FEBRUARY 2003

Dt. Cr.
Balance Sheet section
Capital B1 200 000
Withdrawals B2 4 700
Land and Buildings B3 150 800
Vehicles B4 36 200
Equipment B5 29 000
Trading inventory B6 16 700
Debtors control B7 3 980
Bank B8 2 550
Change B9 660
Petty cash B10 110
Creditors Control B11 16 000
Nominal Accounts section
Sales N1 192 557
Selling costs N2 115 440
Rental Income N3 8 400
Rates and Taxes N4 2 720
Wages N5 9 600
Salaries N6 30 000
Repairs N7 2 416
Advertisements N8 819
Insurance N9 2 690
Water and Electricity N10 3 670
Telephone N11 4 902
416 957 416 957

Assessment

Learning Outcomes(LOs)
LO 3
MANAGERIAL, Consumer and Financial Knowledge and SkillsThe learner will be able to demonstrate knowledge and the ability to apply responsibly a range of managerial, consumer and financial skills.
Assessment Standards(ASs)
We know this if the learner :
3.1 completes a basic income statement and balance sheet for a service and retail business;
3.2 investigates the public relations, social responsibility and environmental responsibility strategies and actions of different businesses and organisations;
3.3 completes cash and credit transactions in the books of service and retail businesses;
3.4 uses keyboard skills and function keys in developing, storing, retrieving and editing business documentation;
3.5 analyses financial statements for decision-making at a basic level;
3.6 differentiates between the forms of credit purchases.

Memorandum

ACTIVITY 1

Difference between an income statement and a balance sheet. Accept the learners’ wording. The time aspect is important: over a period (income statement) and on a specific date (balance sheet).

ACTIVITY 2

ASSIGNMENT 1

ASSIGNMENT 2

ACTIVITY 2

ASSIGNMENT 1

ASSIGNMENT 2

ACTIVITY 3

ASSIGNMENT 1

F. Fix Trading as Fixit PlumbersBalance sheet as at 30 June 2003

Assets
Non-current assets
Fixed assets 1 140 740
Current assets 3 963
Cash 3 963
Total Assets 144 703
Equity and Liabilities
Ownership interest 2 144 703
Total Equity and Liabilities 144 703

F. Fix Trading as Fixit PlumbersNotes to the financial statements for the year ended 30 June 2003

1 Fixed Assets :
Land and Buildings 100 000
Vehicles 28 000
Equipment 12 740
140 740
2 Ownership interest
Balance as at 30 June 2002 138 629
Net Income for the year 21 874
Withdrawals (15 800)
Balance as at 30 June 2003 144 703

ASSIGNMENT 2

ASSIGNMENT 3

O. SitroTrading as Orange DealersNotes to the financial statements for the year ended 28 February 2003

1 Fixed Assets
Land and Buildings 150 800
Vehicles 36 200
Equipment 29 000
216 000
2 Cash
Bank 2 550
Petty cash 110
Change 660
3 320
3 Ownership interest
Balance as at 28 February 2003 200 000
Net Profit for the year 28 700
Withdrawals (4 700)
Balance as at 28 February 2003 224 000

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Source:  OpenStax, Economic and management sciences grade 9. OpenStax CNX. Sep 15, 2009 Download for free at http://cnx.org/content/col11074/1.1
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