KUHLHOF Ltd. is a service provider. The company offers accounting service to companies.

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Ashley Phillips
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1 Aufgabe 0.1: Exercise on Preparing Financial Statements KUHLHOF Ltd. is a service provider. The company offers accounting service to companies. Activity 1: KUHLHOF Ltd. is established on X5 by a share issue of ordinary shares 2.00 EUR each. Debit the amount into the ash/bank account. Activity 2: On X5 KUHLHOF Ltd. buys 26 laptop computers at cost of acquisition of EUR each. The costs of acquisition are the net amount. KUHLHOF Ltd. agrees to pay the amount for the laptop in 20X6. There is no depreciation to be considered. Activity 3: KUHLHOF Ltd. takes a bank loan from its house bank on X5. The amount is 250, EUR. The amount is put into KUHLHOF Ltd. s bank account on X5 in full. Activity 4: KUHLHOF Ltd. has to pay off 5 % of the bank loan s amount (of 250, EUR) every year. Activity 5: KUHLHOF Ltd. buys office furniture on X5. The price for the office furniture is 178, EUR. KUHLHOF Ltd. pays the amount immediately by bank transfer. Required: Prepare a balance sheet as at X5. In the next accounting period 20X6 KUHLHOF Ltd. starts to offer accounting and financial statement services. Activity A: KUHLHOF Ltd. rents an office in an office block. The annual rent amounts to 36, EUR per annum and is to be paid by bank transfer on the X6. Activity B: KUHLHOF Ltd. pays for labour 200, EUR. The amount is transferred directly into the employees bank accounts on X6 Activity : KUHLHOF Ltd. pays for the laptops by bank transfer on X6. Activity D: KUHLHOF Ltd. pays-off the bank loan on X6 by 5 % out of 250, EUR. 1

2 Activity E: KUHLHOF Ltd. writes off ¼ of the laptops cost of acquisition. Activity F: KUHLHOF Ltd. bills accounting services at 340, EUR on credit on X6. The amount is to be debited to receivables. Activity G: KUHLHOF Ltd. receives the amount due from customers on X6. Activity H: KUHLHOF Ltd. depreciates 10 % of the furniture on X6. Required: Write down the bookkeeping entries and make the entries in T-accounts. Prepare financial statements as balance sheet and income statement as at X5 and X6. 2

3 Solution: The bookkeeping entries during 20X5 are as below: (1) KUHLHOF Ltd. is established on X5 by a share issue of ordinary shares 2.00 EUR each. Debit the amount into the ash/bank account. DR ash/bank , EUR R Issued apital , EUR (2) On X5 KUHLHOF Ltd. buys 26 laptop computers at cost of acquisition of EUR each. The costs of acquisition are the net amount. KUHLHOF Ltd. agrees to pay the amount for the laptop in 20X6. There is no depreciation to be considered. DR Property, Plant, and Equipment... 11, EUR R Accounts Payables... 11, EUR (3) KUHLHOF Ltd. takes a bank loan from its house bank on X5. The amount is 250, EUR. The amount is put into KUHLHOF Ltd. s bank account on X5 in full. DR ash/bank , EUR R Interest Bearing Liabilities , EUR (4) KUHLHOF Ltd. has to pay off 5 % of the bank loan s amount (of 250, EUR) every year. The amount is 5% x 250,000 = 12, EUR. It is paid on X5. DR Interest Bearing Liabilities... 12, EUR R ash/bank... 12, EUR (5) KUHLHOF Ltd. buys office furniture on X5. The price for the office furniture is 178, EUR. KUHLHOF Ltd. pays the amount immediately by bank transfer. DR Property, Plant, and Equipment , EUR R ash/bank , EUR Observe the accounts for KUHLHOF Ltd. s during the first accounting period 20X5. 3

4 D ash/bank D Issued capital (1) 200, (4) 12, c/d 200, (1) 200, (3) 250, (5) 178, b/d 200, c/d 259, , , b/d 259, D Property, plant, and equipment D Accounts payables (2) 11, c/d 11, (2) 11, (5) 178, c/d 189, b/d 11, , , b/d 189, D Interest bearing liabilities (4) 12, (3) 250, c/d 237, , , b/d 237, Exhibit 1: KUHLHOF Ltd. s accounts The statement of financial position is displayed by exhibit 2: Kuhlhof Ltd.'s STATEMENT of FINANIAL POSITION as at X5 A Non-current assets [EUR] Owners' capital [EUR] P, P, E 189, Share capital 200, Intangibles Reserves Financial assets R/E, L urrent assets Liabilities Inventory Interest bear liab 237, A/R A/P 11, Prepaid expenses Provisions ash/bank 259, Tax liabilities 449, , Exhibit 2: KUHLHOF Ltd. s statement of financial position In the next accounting period 20X6 KUHLHOF Ltd. starts to offer accounting and financial statement services. (A) KUHLHOF Ltd. rents an office in an office block. The annual rent amounts to 36, EUR per annum and is to be paid by bank transfer on the X6. 4

5 DR Rent... 36, EUR R ash/bank... 36, EUR (B) KUHLHOF Ltd. pays for labour 200, EUR. The amount is transferred directly into the employees bank accounts on X6. DR Labour , EUR R ash/bank , EUR () KUHLHOF Ltd. pays for the laptops by bank transfer on X6. DR Accounts Payables... 11, EUR R ash/bank... 11, EUR (D) KUHLHOF Ltd. pays-off the bank loan on X6 by 5 % out of 250, EUR. DR Interest Bearing Liabilities... 12, EUR R ash/bank... 12, EUR (E) KUHLHOF Ltd. writes off ¼ of the laptops cost of acquisition. The amount is 11,700 / 4 = 2, EUR. DR Depreciation... R Property, Plant, and Equipment... 2, EUR 2, EUR (F) KUHLHOF Ltd. bills accounting services at 340, EUR on credit on X6. The amount is to be debited to receivables. DR Accounts Receivables , EUR R Sales , EUR (G) KUHLHOF Ltd. receives the amount due from customers on X6. DR ash/bank , EUR R Accounts Receivables , EUR (H) KUHLHOF Ltd. depreciates 10 % of the furniture on X6. DR Depreciation... 17, EUR R Property, Plant, and Equipment... 17, EUR Observe the accounts below: 5

6 D ash/bank D Issued capital (1) 200, (4) 12, c/d 200, (1) 200, (3) 250, (5) 178, b/d 200, c/d 259, , , b/d 259, (A) 36, (G) 340, (B) 200, () 11, (D) 12, c/d 339, , , b/d 339, D Property, plant, and equipment D Accounts payables (2) 11, c/d 11, (2) 11, (5) 178, c/d 189, () 11, b/d 11, , , b/d 189, (E) 2, (H) 17, c/d 168, , , b/d 168, D Interest bearing liabilities D Rent (4) 12, (3) 250, (A) 36, c/d 36, c/d 237, b/d 36, , , (D) 12, b/d 237, c/d 225, , , b/d 225, D Labour D Depreciation (B) 200, c/d 200, (E) 2, b/d 200, (H) 17, c/d 20, b/d 20, , , D Accounts receivables D Sales (F) 340, (G) 340, c/d 340, (F) 340, Exhibit 3: KUHLHOF Ltd. s accounts b/d 340, For the profit calculation KUHLHOF Ltd. prepares a Profit and Loss account. All nominal accounts are closed off to the Profit and Loss account. 6

7 DR Profit and Loss... 36, EUR R Rent... 36, EUR DR Profit and Loss , EUR R Labour , EUR DR Profit and Loss... 20, EUR R Depreciation... 20, EUR DR Sales , EUR R Profit and Loss , EUR The profit amounts to 340,000 36, ,000 20,725 = 83, EUR. The income taxes amount to 30% x 83,275 = 24, EUR. The annual surplus then is 83,275 24, = 58, EUR. DR Profit and Loss... 24, EUR R Income Tax Liabilities... 24, EUR DR Profit and Loss... 58, EUR R Retained Earnings... 58, EUR Observe the accounts after profit calculation in exhibit 4: 7

8 D ash/bank D Issued capital (1) 200, (4) 12, c/d 200, (1) 200, (3) 250, (5) 178, b/d 200, c/d 259, , , b/d 259, (A) 36, (G) 340, (B) 200, () 11, (D) 12, c/d 339, , , b/d 339, D Property, plant, and equipment D Accounts payables (2) 11, c/d 11, (2) 11, (5) 178, c/d 189, () 11, b/d 11, , , b/d 189, (E) 2, (H) 17, c/d 168, , , b/d 168, D Interest bearing liabilities D Rent (4) 12, (3) 250, (A) 36, c/d 36, c/d 237, b/d 36, P&L 36, , , (D) 12, b/d 237, c/d 225, , , b/d 225, D Labour D Depreciation (B) 200, c/d 200, (E) 2, b/d 200, P&L 200, (H) 17, c/d 20, , , b/d 20, P&L 20, D Accounts receivables D Sales (F) 340, (G) 340, c/d 340, (F) 340, P&L 340, b/d 340, Exhibit 4: KUHLHOF Ltd. s accounts 8

9 D Profit and Loss D Income tax liabilities Rent 36, Sales 340, c/d 24, P&L 24, Labour 200, b/d 24, Depr 20, EBT c/d 83, , , tax 24, b/d 83, R/E 58, , , D Retained Earnings c/d 58, P&L 58, b/d 58, The income statement is presented by exhibit 5: Exhibit 4: KUHLHOF Ltd. s accounts Kuhlhof Ltd.'s STATEMENT of OMPREHENSIVE INOME for the year ended X6 [EUR] Revenue 340, Other income 340, Materials Labour 200, Depreciation 20, Other expenses 36, Earnings before int and taxes (EBIT) 83, Interest Earnings before taxes (EBT) 83, Income tax expenses 24, Deferred taxes Earnings after taxes (EAT) 58, Exhibit 5: KUHLHOF Ltd. s income statement The statement of financial position is displayed by exhibit 6: 9

10 Kuhlhof Ltd.'s STATEMENT of FINANIAL POSITION as at X6 A Non-current assets [EUR] Owners' capital [EUR] P, P, E 168, Share capital 200, Intangibles Reserves Financial assets R/E 58,292.50, L urrent assets Liabilities Inventory Interest bear liab 225, A/R A/P 0.00 Prepaid expenses Provisions ash/bank 339, Tax liabilities 24, , , Exhibit 6: KUHLHOF Ltd. s statement of financial position 10

Exhibit 1: Trial balance. You are the accountant of GUGULETO Ltd. and have to make bookkeeping entries for the adjustments.

Exhibit 1: Trial balance. You are the accountant of GUGULETO Ltd. and have to make bookkeeping entries for the adjustments. Aufgabe 0.13: Trial Balance The pizza restaurant GUGULETO Ltd. was formed on 1.01.20X3 and records during the accounting period of 20X3 all bookkeeping entries. The business is a limited company and comes