Statement of Financial Position (Cambridge (CIE) AS Accounting): Revision Note
Exam code: 9706
Statements of financial position for limited companies
What is the layout of the statement of financial position of a limited company?
The statement of financial position for limited companies is mostly the same as that of a sole trader and a partnership
There is no change to the non-current assets, current assets and current liabilities sections
Any debentures are included in the non-current liabilities
The capital section of the statement of financial position is called the equity section
The equity section includes
The share capital
The share premium
The revaluation reserve
The general reserve
The retained earnings
The information for the equity section is obtained from the statement of changes in equity
Worked Example
Abrakadabra Limited prepares its financial statements to 31 March each year.
On 31 March 2024, the following balances were provided:
$ | |
Inventory | 7 080 |
Fittings at book value | 140 000 |
Trade receivables | 14 400 |
Other receivables | 1 800 |
Bank | 14 965 |
Trade payables | 8 415 |
Other payables | 6 390 |
4% Debentures (repayable 2034) | 46 000 |
Share capital (ordinary shares of $0.50 each) | 80 000 |
Retained earnings | 25 800 |
General reserve | 2 200 |
Additional information:
No additional shares were issued during the year
On 1 January 2024, dividends were paid on ordinary shares at $0.035 per share
The profit for the year ended 31 March 2024 was $15 040
Prepare the statement of financial position at 31 March 2024 for Abrakadabra Limited.
Answer:
Calculate the cost of the dividends payment
Calculate the number of shares
$80 000 ÷ $0.50 = 160 000 shares
Multiply by the payment per share
160 000 × $0.035 = $5 600
Find the updated retained earnings:
Add the profit for the year
Subtract the dividends paid
$25 800 + $15 040 - $5 600 = $35 240
Abrakadabra Limited Statement of Financial Position at 31 March 2024 | ||
$ | $ | |
Non-current assets | ||
Fittings at book value | 140 000 | |
Current assets | ||
Inventory | 7 080 | |
Trade receivables | 14 400 | |
Other receivables | 1 800 | |
Bank | 14 965 | 38 245 |
Total assets | 178 245 | |
Equity and liabilities | ||
Equity | ||
Share capital | 80 000 | |
General reserve | 2 200 | |
Retained earnings | 35 240 | |
117 440 | ||
Non-current liabilities | ||
4% Debentures (repayable 2034) | 46 000 | |
Current liabilities | ||
Trade payables | 8 415 | |
Other payables | 6 390 | 14 805 |
Total equity and liabilities | 178 245 | |
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