Financial Statement Analysis

Written report and analysis of the financial performance of one selected company
October 29, 2020
Micro Economics
October 29, 2020

Problem

The following is the trial balance extracted from the ledger of W Wright at 31 December.

Account Debit Credit
Capital

Drawings

Discount revenue

Interest on overdraft

Bills receivable

Advertising

Donations

Auditing fees

Discount expenses

Insurance

Rates and taxes

Maintenance

Carriage inwards

Purchases return

Wages and salaries

Delivery vehicles

Inventories (1 January – opening)

Premises

Sales (net)

Debtors

Creditors

Accumulated depreciation – vehicles

Petty cash (imprest)

Mortgage loan

Bank overdraft

purchases

9450

900

4680

5400

720

360

3600

1890

990

5040

610

32580

45000

135000

108000

90000

500

135000

581 720

240 408

4212

2790

216000

54000

9000

36000

19310

581 720

Adjustments:

Inventories 31 December (closing) 127 800

Insurance paid in advance 460

Provision to be created for doubtful debts of 21/2% of debtors balances

Depreciate delivery vehicles at 20% per annum on cost

Accrued wages and salaries 570

In classifying expenses, wages and salaries to be apportioned – selling 60% and

Office 40%

Required:

– Prepare a classified statement of financial performance

– Prepare a narrative statement of financial position

– Undertake any necessary reversing journal entries in the beginning of the

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