The assignment is for you, as the Finance Manager of XYZ, construct a balance sh

Question

The assignment is for you, as the Finance Manager of XYZ, construct a balance sheet and an income statement that incorporates those transactions. You are required to prepare both documents in proper format, which includes any headings, titles, dates etc. All the data you need is below Data:

1 - The 2 partners contributed $50,000 apiece as their equity contribution on January 1, 2015.

2 - They entered into a $500,000 bank loan on June 30, 2015. Interest on it was 0%. First payment isn't due until January 1, 2016.

3 - They did some consulting services for a company, and billed the client $250,000 in November. The amount wasn't collected until January 15, 2016, and excluded any consideration for bad debts or defaults.

4 - The two partners love their jobs so much that they didn't draw a salary. 5 - They're so good at what they do, they don't even need insurance.

1. Prepare the Balance Sheet 2. Prepare the Profit and Loss Statement

Explanation / Answer

Answer: 1. Prepare the Balance Sheet Balance Sheet of XYZ as on 31st December 2015 Liabilities Amount (in $) Assets Amount (in $) Capital 100000 Current assets: Net Profit 250000 Cash and Bank 600000 Liabilities: Debtors 250000 Bank Loan 500000 $850,000 $850,000 2. Prepare the Profit and Loss Statement Profit and Loss Account of XYZ for the year ending 31st December 2015 Particulars Amount (in $) Particulars Amount (in $) To Operating expenses - By Sales 250000 To Net Profit 250000 $250,000 $250,000

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