Accounting Reports 1.66

The trial balance tells us the story of what has already happened

The notes tell us what changes needs to be made

Payable: You owe this amount

- (A) Increase expenses (income statement)

- (B) Show value as current liability (SFP)

Receivable: We own this amount

- (A) Decrease expense (income statement)

- (B) Show value as current asset (SFP)

Tax is shown as a note, confirming that an ammount needs to be paid in the appropriation account, it must also be a current liability in the SFP

Income Statement

Income statement
Sales	60,000
Sales Returns	10,000
Net Sales			50,000

LESS COST OF SALES
Open Inv		10,000
Add purchases	5,000
Less purchase Returns1000
Net purchases		4,000
Add Carriage inwards		2,000
Cost of goods available for sale		16,000
Less Closing Inv		1,000
Cost of goods sold		15,000
Add other trading expenses - eg Rent for warehouse		1,000

COST OF SALES			16,000
GROSS Profit			34,000
Less expenses
Wages		5,000
Rent(Offices)		11,250
Depreciation of equipment		3,000
Total Expenses			19,250
Gross profit minus expenses			14,750
Add Any other income
discount recieved		5,000
rent received		1,250

Total any other income			6,250
Profit for the year			21,000

Appropriation account
Profit for the year		30,000
Add unappropriated profit at start of the yr		3,000
		33,000
Less
Interim ordinary dividend	1,000
Final ordinary dividend	5,000
Preference dividend	2,000
Transfer to gen reserve	10,000	18,000
Total unappropriated profit at the end of the year		15,000