Lecture 15

Comprehensive example (60 minutes!):

Balance sheet at the beginning of the time period:

Assets Amount Equity & Liabilities Amount

Non-current assets 88000 Equity 60000
Property, plant and equipment 54000 Share capital 30000
Accumulated depreciation to Reserve capital 20000
PPE (12000) Profit brought forward 10000
Intangible Assets 32000
Accumulated depreciation to IA (8000)
Assets under construction 7000
Long-term financial assets 11000
Long-term receivables 4000

Current Assets 56000 Liabilities (short-term) 84000

Raw materials 6000 Financial liabilities (to
Finished goods 14000 bank) 35000
Work in progress 2000 Trade payables 39000
Trade receivables 8500 Provisions 10000
Tax receivables (VAT) 1500
Short-term financial assets 16000
Cash and cash equivalent 3000
Accruals 5000
Total 144000 144000

Task 1: open the relevant accounts (2 points)

Solution: Assets accounts, Equity &l liabilities accounts

Property, Plant & Equipment Accumulated depreciation to

(Fixed Assets) PPE/ FA
Debit Credit Debit Credit
OB 54000 OB 12000
 Intangible Assets Accumulated depreciation to IA
Debit Credit Debit Credit
OB 32000 OB 8000
.

Asset under construction Long-term financial assets

Debit Credit Debit Credit
OB 7000 OB 11000

Raw materials
Long-term receivables Debit Credit
Debit Credit OB 6000
OB 4000

Finished goods Work in progress

Debit Credit Debit Credit
OB 14000 OB 2000

Trade receivables Tax receivables (VAT)

Debit Credit Debit Credit
OB 8500 OB 1500

Cash & cash equivalent

Short-term financial assets
Debit Credit
Debit Credit
OB 3000
OB 16000

Accruals
Debit Credit
OB 5000
 Share capital Reserve capital
Debit Credit Debit Credit
OB 30000 OB 20000

Profit brought forward Financial liabilities

Debit Credit Debit Credit
OB 10000 OB 35000

Trade payables Provisions

Debit Credit Debit Credit
OB 39000 OB 10000
Task 2: book/post/record the operations (10 points) – 20 operations, each for 2 points

Solution:
1) Raw materials were purchased, raw materials and invoice was received: 2000 + VAT
(23%) = 2000 + 460 = 2460
2) Finished goods were sold (2000 units, 5 cost; price 7) + VAT (23%):
cost = 2000 x 5 = 10000
revenue = 2000 x 7 = 14000
VAT = 0.23 x 14000 = 3220
Total = 14000 + 3220 = 17220
3) Company paid for raw materials from 1) by cash: 2460
4) The 50% of all raw materials were used for production:
6000 (OB) + 2000 (1) = 8000; 0.5 x 8000 = 4000
5) Depreciation was charged for the month for:
Production machineries 500;
Production licence: 300;
Office equipment: 200
6) A company received an invoice for design services in a newly constructed building:
1000 + VAT (8%): 1000 + 80 = 1080
7) One shareholder provided a production machine in exchange for shares in the
company. The value of the machine is 5000;
8) A new production licence was purchased 2400 + VAT (23%): 2400 + 552 = 2952
9) All raw materials were lost in the fire: 4000 (check books)
10) Information was received about the compensation (from insurance company) for
the burned materials 3500;
11) The compensation was paid;
12) A renovation of the factory was planned. It was estimated to cost 9000 and it was
decided to write off this renovation over a period of 10 months. The first write-down
was made: 9000/10 = 900
13) The annual insurance premium for the production plant was paid 1200. The first
month was settled.
14) Bank loan instalment was paid 1400 (including interest 400);
15) Salaries and wages (for production employees) and benefits (20%) were calculated
(1000 + 200);
16) Social charges (insurance, tax) paid by the employer were booked (180);
17) Shares for reselling were sold (original value 500, selling price 700);
18) A part of provision was released 2000;
19) Received finished products into stock 6000; the rest of production costs were
settled: 6900 – 6000 = 900
20) Profit was calculated.

result accounts; other accounts cost by type

 Property, Plant & Equipment Accumulated depreciation to
(Fixed Assets) PPE/ FA
Debit Credit Debit Credit
OB 54000 OB 12000
7. 5000 5. 700

Intangible Assets Accumulated depreciation to IA

Debit Credit Debit Credit
OB 32000 OB 8000
8. 2400 5.. 300

Asset under construction Long-term financial assets

Debit Credit Debit Credit
OB 7000 OB 11000
6. 1000

Raw materials
Long-term receivables Debit Credit
Debit Credit OB 6000
OB 4000 1. 2000
4. 4000
9. 4000

Finished goods Work in progress

Debit Credit Debit Credit
OB 14000 OB 2000
2. 10000 19. 900
19. 6000
Tax receivables (VAT)
Trade receivables Debit Credit
Debit Credit OB 1500
OB 8500 1. 460
2. 17220 6. 80
8. 552
 Cash & cash equivalent
Short-term financial assets
Debit Credit
Debit Credit
OB 3000
OB 16000
3. 2460
17. 500
11. 3500
13. 1200
14. 1400
Accruals 17. 700
Debit Credit
OB 5000
13. 1200 100

Share capital Reserve capital

Debit Credit Debit Credit
OB 30000 OB 20000
7. 5000

Profit brought forward Financial liabilities

Debit Credit Debit Credit
OB 10000 OB 35000
14. 1000

Trade payables
Debit Credit
OB 39000
1. 2460 Provisions
3. 2460 Debit Credit
6. 1080 OB 10000
8. 2952 18. 2000

Purchase settlement
Debit Credit
1. 2460 2000 COGS
460 Debit Credit
6. 1080 1000 2. 10000
6. 80 20. 10000
8. 2952 2400
8. 552
 Sale revenue Tax payables (VAT)
Debit Credit Debit Credit
2. 14000 2. 3220
20. 14000

Cost settlement
Consumption of materials
Debit Credit
Debit Credit
4. 4000
4. 4000
5. 1000
13. 1200
15. 1200
16. 180

Production
Debit Credit
4. 4000
5. 800
12. 900
15. 1200
19. 6000
19. 900

Depreciation & amortisation General & administration

Debit Credit
Debit Credit
5. 1000
5 200
13. 100
20. 300

Extraordinary loss Other receivables

Debit Credit Debit Credit
9. 4000 10. 3500
20. 4000 11. 3500

Extraordinary income/gain Accruals

Debit Credit Debit Credit
10. 3500 12. 900
20. 3500
 Other costs by type Financial cost
Debit Credit Debit Credit
13. 1200 14. 400
17. 500
20. 900

Salaries & wages

Social insurance & other
Debit Credit
benefits
15. 1000
Debit Credit
15. 200
16. 180

Employee liabilities
Debit Credit Public liabilities
15. 1000 Debit Credit
16. 180 15. 200
16. 180

Financial income Other operating income

Debit Credit Debit Credit
17. 700 18. 2000
20 700 20. 2000

Profit
Debit Credit
20. 14000
20. 10000
20. 300
20. 2000
20. 700
20. 900
20. 3500
20. 4000
Task 3: close the accounts and calculate closing balances (3 points)

Solution:

Property, Plant & Equipment Accumulated depreciation to

(Fixed Assets) PPE/ FA
Debit Credit Debit Credit
OB 54000 OB 12000
7. 5000 5. 700
c/d 59000 c/d 12700

Intangible Assets Accumulated depreciation to IA

Debit Credit Debit Credit
OB 32000 OB 8000
8. 2400 5. 300
c/d 34400 c/d 8300

Asset under construction Long-term financial assets

Debit Credit Debit Credit
OB 7000 OB 11000
6. 1000 c/d 11000
c/d 8000
Raw materials
Debit Credit
Long-term receivables OB 6000
Debit Credit 1. 2000
OB 4000 4. 4000
c/d 4000 9. 4000
c/d -
Finished goods
Debit Credit Work in progress
OB 14000 Debit Credit
2. 10000 OB 2000
19. 6000 20. 900
c/d 10000 c/d 2900
 Tax receivables (VAT)
Trade receivables Debit Credit
Debit Credit OB 1500
OB 8500 1. 460
2. 17220 6. 80
c/d 25720 8. 552
c/d 2592

Short-term financial assets

Debit Credit
Cash & cash equivalent
OB 16000
Debit Credit
17. 500
OB 3000
c/d 15500
3. 2460
11. 3500
Accruals 13. 1200
Debit Credit 14. 1400
OB 5000 17. 700
13. 1200 100 c/d 2140
c/d 6100

Share capital Reserve capital

Debit Credit Debit Credit
OB 30000 OB 20000
7. 5000 c/d 20000
c/d 35000

Profit brought forward Financial liabilities

Debit Credit Debit Credit
OB 10000 OB 35000
c/d 10000 14. 1000
c/d 34000
 Trade payables
Debit Credit
OB 39000
1. 2460 Provisions
3. 2460 Debit Credit
6. 1080 OB 10000
8. 2952 18. 2000
c/d 43032 c/d 8000

Purchase settlement
Tax payables (VAT)
Debit Credit Debit Credit
1. 2460 2000
2. 3220
460
c/d 3220
6. 1080 1000
6. 80
8. 2952 2400
8. 552

Cost settlement
Consumption of materials
Debit Credit
Debit Credit
4. 4000
4. 4000
5. 1000
4000
13. 1200
15. 1200
4000
Depreciation & amortisation
1000
Debit Credit
1000
5. 1000
200
1000
1200

Other receivables
Debit Credit
10. 3500
11. 3500
c/d -
 Accruals Other costs by type
Debit Credit Debit Credit
12. 900 13. 1200
1200
c/d 900

Social insurance & other

Salaries & wages benefits
Debit Credit Debit Credit
15. 1000 15. 200
1000 380

Employee liabilities
Debit Credit Public liabilities
15. 1000 Debit Credit
16. 180 15. 200
c/d 820 16. 180
c/d 380

Profit
Debit Credit
20. 14000
20. 10000
20. 300
20. 2000
20. 700
20. 900
20. 3500
20. 4000
c/d 5000
Task 4: prepare trial balance (1 point)

Solution:

Trial balance:

Account Debit Credit

Property, plant & equipment 59000
Accumulated depreciation to PPE (12700)
Intangible Assets 34400
Accumulated depreciation to IA (8300)
Asset under construction 8000
Long-term financial assets 11000
Long-term receivables 4000
Finished goods 10000
Work in progress 2900
Short-term financial assets 15500
Trade receivables 25720
Tax receivables 2592
Cash & cash equivalent 2140
Accruals 6100
Share capital 35000
Reserve capitals 20000
Profit brought forward 10000
Profit 5000
Financial liabilities 34000
Trade payables 43032
Employee liabilities 820
Public liabilities 380
Tax payables 3220
Provisions 8000
Accruals 900
Total 160352 160352
Task 5: prepare balance sheet (2 points)

Solution:

Assets Amount Equity & Liabilities Amount

Non-current assets 95400 Equity 70000
Property, plant and equipment 59000 Share capital 35000
Accumulated depreciation to (12700) Reserve capitals 20000
PPE Profit brought forward 10000
Intangible Assets 34400 Profit 5000
Accumulated depreciation to IA (8300)
Assets under construction 8000
Long-term financial assets 11000
Long-term receivables 4000

Current Assets 64952 Liabilities (short-term) 90352

Finished goods 10000 Financial liabilities 34000
Work in progress 2900 Trade payables 43032
Short-term financial assets 15500 Employee liabilities 820
Trade receivables 25720 Public liabilities 380
Tax receivables 2592 Tax payables 3220
Cash & cash equivalent 2140 Provisions 8000
Accruals 6100 Accruals 900
Total 160352 160352

Task 6: prepare income statement (2 points)

Solution:

Income statement:

Component Amount
Sale revenue 14000
COGS (10000)
Administration (300)
Operating income 3700
Other operating income 2000
EBIT 5700
Financial income 700
Financial costs (900)
Extraordinary income 3500
Extraordinary loss (4000)
Profit 5000