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 up with the trial balance : TRIAL BALANCE Account Debit entries Credit entries Property, Plant, Equipment 100,000.00 Accumulated Depreciation 20,000.00 Purchase 175,000.00 Cash/Bank 4,000.00 Issued Capital 50,000.00 Accounts Payables A/P 105,000.00 VAT 13,000.00 Labour 117,000.00 Depreciation 20,000.00 Rent 12,000.00 Revenue 240,000.00 Total: 428,000.00 428,000.00 Exhibit 1: Trial balance You are the accountant of GUGULETO Ltd. and have to make bookkeeping entries for the adjustments. The stock count reveals that there is a closing stock of 25,000.00 EUR left. Furthermore you know that the payment of labour includes the January-20X4-salary already. Assume that GUGULETO pays all month the same amount of labour. Required: Prepare accounts with the balancing figures provided by the trial balance and record the adjustments. Prepare a Trading and a Profit and Loss account for the accounting period 20X3. Set up a statement of financial position and an income statement. Consider a VAT rate of 20%, VAT is refunded/paid in the next accounting period. GUGULETO Ltd. pays income taxes in the next accounting period to an extent of 30 % of the pretax profit. GUGULETO Ltd. also pays its owners a dividend of 20 % of the earnings after taxes. The remaining amount is carried forward to the next accounting period. Solution: (A) Credit prepaid labour of 117,000 / 13 = 9,000.00 EUR to the Prepaid Expenses account. 1
DR Prepaid expenses... CR Labour... 9,000.00 EUR 9,000.00 EUR (B) There is an amount of closing stock detected by applying a periodic inventory system. The closing stock is to be credited to the Trading account and the debit entry is to be made in the Inventory account. DR Inventory... 25,000.00 EUR CR Trading Account... 25,000.00 EUR (C, D) The Purchase account and the Revenue account get closed off to the Trading account. DR Revenue... 240,000.00 EUR CR Trading Account... 240,000.00 EUR DR Trading Account... 175,000.00 EUR CR Purchase... 175,000.00 EUR (E) The gross profit of 90,000.00 EUR is transferred to the Profit and Loss account. DR Trading Account... 90,000.00 EUR CR Profit and Loss... 90,000.00 EUR (F, G, H) The expense accounts will be closed off to the Profit and Loss account. DR Profit and Loss... 20,000.00 EUR CR Depreciation... 20,000.00 EUR DR Profit and Loss... 108,000.00 EUR CR Labour... 108,000.00 EUR DR Profit and Loss... 12,000.00 EUR CR Rent... 12,000.00 EUR Observe the accounts (the grey figures are not part of the solution): D Cash/Bank C D Issued capital C (1) 50,000.00 (2) 100,000.00 c/d 50,000.00 (1) 50,000.00 (7) 288,000.00 (4) 105,000.00 b/d 50,000.00 (5) 12,000.00 (6) 117,000.00 c/d 4,000.00 338,000.00 338,000.00 b/d 4,000.00 Exhibit 2: Accounts 2
D P, P, E C D Depr C (2) 100,000.00 c/d 100,000.00 (3) 20,000.00 c/d 20,000.00 b/d 100,000.00 b/d 20,000.00 P&L 20,000.00 D Acc depr C D Purchase C c/d 20,000.00 (3) 20,000.00 (4) 175,000.00 c/d 175,000.00 b/d 20,000.00 b/d 175,000.00 T/A 175,000.00 D VAT C D A/P C (4) 35,000.00 (7) 48,000.00 c/d 105,000.00 (4) 105,000.00 c/d 13,000.00 b/d 105,000.00 48,000.00 48,000.00 b/d 13,000.00 D Rent C D Labour C (5) 12,000.00 c/d 12,000.00 (6) 117,000.00 c/d 117,000.00 b/d 12,000.00 P&L 12,000.00 b/d 117,000.00 (A) 9,000.00 c/d 108,000.00 117,000.00 117,000.00 b/d 108,000.00 P&L 108,000.00 D Revenue C D Prepaid expenses C c/d 240,000.00 (7) 240,000.00 (A) 9,000.00 c/d 9,000.00 T/A 240,000.00 b/d 240,000.00 b/d 9,000.00 D Inventory C D Trading Account T/A C (B) 25,000.00 c/d 25,000.00 Purch 175,000.00 (B) 25,000.00 b/d 25,000.00 GPc/d 90,000.00 Rev 240,000.00 265,000.00 265,000.00 P&L 90,000.00 b/d 90,000.00 D Profit and Loss P&L C D Retained Earnings R/E C Depr 20,000.00 T/A 90,000.00 P&L 50,000.00 c/d 50,000.00 Labour 108,000.00 b/d 50,000.00 Rent 12,000.00 NLc/d 50,000.00 140,000.00 140,000.00 b/d 50,000.00 R/E 50,000.00 Exhibit 2: Accounts (continued) GUGULETO Ltd. made a loss of 50,000.00 EUR in the accounting period of 20X3. Accordingly, no income taxes and no dividend will be considered. The loss is carried forward to the next accounting period. The adjusted trial balance is prepared as displayed below: 3
ADJUSTED TRIAL BALANCE Account Debit entries Credit entries Property, Plant, Equipment 100,000.00 Accumulated Depreciation 20,000.00 Purchase 0.00 0.00 Cash/Bank 4,000.00 Issued Capital 50,000.00 Accounts Payables A/P 105,000.00 VAT 13,000.00 Labour 0.00 0.00 Depreciation 0.00 0.00 Rent 0.00 0.00 Revenue 0.00 0.00 Inventory 25,000.00 Retained Earnings R/E 50,000.00 Prepaid Expenses 9,000.00 Total: 188,000.00 188,000.00 Exhibit 3: Adjusted trial balance The financial statements are prepared and depicted below. Note that the item Accounts Payables A/P results from liabilities for supplies and output VAT: 105,000 + 13,000 = 118,000.00 EUR. STATEMENT of FINANCIAL POSITION A C, L Non-current assets [EUR] Owners' capital [EUR] P, P, E 80,000.00 Share capital 50,000.00 Intangibles Reserves Financial assets R/E (50,000.00) Current assets Liabilities Inventory 25,000.00 Interest bear liab 0.00 A/R 0.00 A/P 118,000.00 Prepaid expenses 9,000.00 Provisions Cash/Bank 4,000.00 Tax liabilities 0.00 118,000.00 118,000.00 Exhibit 4: Statement of financial position The next exhibit shows the income statement for GUGULETO Ltd. 4
STATEMENT of COMPREHENSIVE INCOME for the year ended 31.12.20X3 [EUR] Revenue 240,000.00 Other income 240,000.00 Materials 150,000.00 Labour 108,000.00 Depreciation 20,000.00 Other expenses 12,000.00 Earnings before int and taxes (EBIT) (50,000.00) Interest 0.00 Earnings before taxes (EBT) (50,000.00) Income tax expenses 0.00 Deferred taxes Earnings after taxes (EAT) (50,000.00) Exhibit 5: Statement of comprehensive income The amount of material expenses results from the purchase less the closing stock: 175,000 25,000 = 150,000.00 EUR. 5