Question

Question one: 100 marks (25 each): The financial statement columns of the worksheet for The Kunafah Spoonat December 31, 2017, are as follows: Income Statement Financial Position Accounts Debit Credit Debit Credit Cash 20,000 Accounts Receivable 14,000 Supplies 8,000 Prepaid Insurance 12.000 Equipment 438,000 Accumulated Depreciation-Equipment 58,000 Accounts Payable 39.000 Note Payable (Long term) 120.000 Salaries and Wages Payable 25,000 Share Capital-Ordinary 100.000 Retained Earnings 124,000 Dividends 18.000 Service Revenue 246,000 Advertising Expense 42,000 Depreciation Expanse 24.000 Insurance Expense 8,000 Rent Expense 34,000 Salaries and Wages Expense 84,000 Supplies Expense 12.000 Totals 202,000 246,000 510,000 466,000 Net Income 44.000 44.000 122.000 123.000 255.000 255.000 Instructions: Answer the following questions Show your calculations: Question & Calculations 1. Briefly discuss the difference between "Temporary Accounts" and "Permanent Accounts". Final answer Question & Calculations 2. Calculate the retained earnings balance that would appear on a Statement of financial position at December 31, 2017 3. What is the anount that will would appear on the statement of financial position at December 31, 2017 for Property, plant, and equipment 4. What is the anount that will would appear on the statement of financial position at December 31, 2017 for the total of Current assets

Answer 1

Answer -1 : Temporary accounts are company accounts whose balances are not carried over from one accounting period to another, but are closed, or transferred, to a permanent account, for example all nominal accounts (Wages, salaries, rent & commision paid or received). Permanent accounts are not tranferred & found on the balance sheet and are categorized as asset, liability, and owner's equity accounts, for example all real & personal accounts (Land, Debtors, Cash & Creditors & loans etc.)

Answer -2 : First of all we would understand that what is retained earning hence , retained earnings are the profits that a company has earned to date, less any dividends or other distributions paid to investors. This amount is adjusted whenever there is an entry to the accounting records that impacts a revenue or expense account. So

Particulars	Amount
So retained earning upto previous year is	124,000
(-) Divident	(18,000)
Net retained earning to be shown in Financial Statement	106,000

Answer -3 : Amount of tangible assest ( like Property, Plant & equipement) is shown on net value in financial statement, hence

Note: The term 'Accumulated' is used to indicate all the depreciation value since the incorporation of the company

Gross value of Equipement is 438,000

Accumulated depreciation on Eqipement is 58,000

Net value = Gross Value –Accumulated Depreciation.

Net Value = 438,000 - 58,000

=   380,000

(Value of Property, Plant & equipement to be shown in Finanacial Statement) = 380,000

Answer -4 Current assets refers to all the assets of a company that are expected to be conveniently sold, consumed, used, or exhausted through standard business operations with one year, hence it includes as follows :

List of Current Assets	Amounts
Cash	20,000
Accounts Receivable	14,000
Supplies	8,000
Prepaid Insurance	12,000
Total Current Assest to be shown in Financial Statement	54,000