Postage and stationery

Sales Quantity Forecast
November 7, 2019
Peter is a self employed music teacher
November 7, 2019

Postage and stationery

Part 1 – Financial Analysis
Peter is a self employed music teacher and has the following trial balance:

Trial Balance as at 30 June 2013

Debit Credit

£ £

Instruments

1,500

Furniture

400

Rent for room

2,400

Computer

1,000

Fees from tuition

10,500

General expenses

1,000

Capital

3,550

Bank

1,500

Postage and stationery

50

Electricity

300

Advertising

300

Creditors

150

Debtors

350

Telephone

400

Drawings

5000

14200

14200

Note: In this case, there are no trading purchases.

Required:

1) Prepare Peter Income Statement for the year ended 30 June 2013 and a Balance Sheet as at 30 June 2013.

(30 marks)

2) Briefly research and discuss the changes in international regulation for reporting financial statements. In particular the changes to the names of profit and loss account.

(20 marks)

Part 2 – Performance Evaluation

The comparative condensed income statements of SPENCER Corporation are shown below.

SPENCER CORPORATION

Comparative Condensed Income Statements

For the Years Ended December 31

2013 2012

Net sales $620,000 $500,000

Cost of goods sold 450,000 400,000

Gross profit 170,000 100,000

Operating expenses 54,000 40,000

Net income $116,000 $ 60,000

Instructions

(a) Prepare a horizontal analysis of the income statement data for SPENCER Corporation using 2013 as a base. (Show the amounts of increase or decrease.)

(b) Prepare a vertical analysis of the income statement data for SPENCER Corporation in columnar form for both years.

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