attached

2

Part 1 – Financial Analysis

Todd is a self employed music teacher and has the following trial balance:

Trial Balance as at 30 June 2011 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 really no purchases as such.

Required: 1) Prepare Henrys 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)

3

Part 2 – Performance Evaluation

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

MARKS 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 Marks Corporation

using 2013 as a base. (Show the amounts of increase or decrease.)

(b) Prepare a vertical analysis of the income statement data for Marks Corporation in

columnar form for both years.