Creative Activities Pty Ltd: Balance Sheet 2007/2008
2007
2008
$
$
$
$
Current Assets
cash at bank
80,000
200,000
Debtors
637,000
591,000
Inventory- sports clothing
230,000
235,000
Inventory- sports equipment
325,000
298,000
1,272,000
1,324,000
Non-current assets
Office furniture
1,110,000
1,040,000
Less accumulated depreciation
149,000
961,000
180,000
860,000
Delivery Van
30,000
30,000
Less accumulated depreciation
10,000
20,000
15,000
15,000
Motor Vehicle
50,000
50,000
Less accumulated depreciation
12,000
38,000
16,000
34,000
1,019,000
909,000
Total Assets
2,291,000
2,233,000
Current Liabilities
Creditors
271,000
253,000
Overdraft
6,000
10,000
Taxes payable
48,000
60,000
325,000
323,000
Non-current liabilities
Term Loan
50,000
45,000
50,000
45,000
Total liabilities
375,000
368,000
Owners Equity
Capital
70,000
70,000
Retained Earnings
1,181,000
1,139,000
Add Profit
665,000
656,000
1,916,000
1,865,000
Total liabilities and Owners Equity
2,291,000
2,233,000
Creative Activities Pty Ltd: Income Statement 2007/2008
2007
2008
$
$
$
$
Sales- sports clothing
2,500,000
1,980,000
Sales- sports equipment
2,012,000
2,501,000
4,512,000
4,481,000
Less cost of sports clothing
1,100,000
1,096,000
Less cost of sports equipment
798,000
807,000
1,898,000
1,903,000
Gross Profit
2,614,000
2,578,000
Less Expenses:
Selling and Distribution
Advertising
170,000
150,000
Delivery expenses
15,000
18,000
Wages- sales staff
230,000
415,000
322,000
490,000
Administration and General
Wages- admin staff
200,000
210,000
Electricity
33,000
35,000
Rent expense
280,000
283,000
Insurance
120,000
150,000
Stationary expenses
15,000
20,000
Depreciated expense
25,000
673,000
25,000
723,000
Financial
Bad debts
101,000
80,000
Interest expense
7,000
108,000
7,000
87,000
Other
Other expenses
753,000
753,000
622,000
622,000
Total expenses
1,949,000
1,922,000
Net Profit
665,000
656,000
Mr. Craft,
In the below paragraphs I will briefly explain the nature of Accrual Accounting- which is
the principal used in the requested financial statements.
Accrual Accounting is a process in which the documenting of expenses is undertaken as
they are encountered and income as it is earned during an accounting period; irrespective
of whether the finances and/or spending have actually occurred. One of the foremost facets
of Accrual Accounting is that there is a far superior weight placed on the use and recording
of capital assets. (Connolly, Hyndman, 2006).
The items in the requested financial statements have been recognised and included as they
satisfy the respective definition of income or expense because their occurrence is probable
(more likely than less likely) and can be reliably measured. It is only possible for very
slight errors to be made in the estimates, if listed expenses are not expended and/or if any
income is not received by the end of the financial year; this can be corrected with small