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MODULE 6

Financial Plan
FINANCIAL MANAGEMENT
How to gather, organize, coordinate and record
the money or financial resources of an
enterprises.
FINANCIAL RECORDS AND REPORTS

Bookkeeping the recording of business


transactions.
Book of Accounts the records
1. Income Statement summarized report of
your financial position
2. Balance Sheet Statement financial status of
the firm.
3. Cash Flow Statement flow of cash in and
out of the enterprise.
ACCOUNTING

The system of recording and interpreting


the results of the business transactions.
The system is the accounting system
The outputs are accounting records
PROCESS OF RECORDING BUSINESS TRANSACTIONS

Support Daily Transactions


Receipts
Vouchers
Petty Cash
Cash Invoices
Deliver Receipts, etc.
Record these forms in the proper journals
Post summary totals to the ledger on a
monthly basis.
BOOK OF ACCOUNTS
BOOK OF ACCOUNTS

Journal chronological record of all the business


transactions of the enterprise.
Cash and Check Disbursement record the transaction
made by cash or checks
Cash Receipts Books all transaction involving receipt
of cash are recorded.
Sales Book record of the sales of each product with
the OR number.
General Journal Book when transaction does not fall
in any category
General Ledger where you transfer and post figures
from the journal for summarization
GENERAL JOURNAL
CHART OF ACCOUNTS

A list of accounts and their references.


FINANCIAL STATEMENTS

Financial Accounting general financial records


and reports based on the firms documents.

Management Accounting assist management in


assessing the status of the company and in finding
ways of improving its profitability and
performance.
JOURNAL ENTRIES
ACCOUNT DEBIT CREDIT
ASSETS + -
LIABILITIES - +
OWNERS EQUITY - +
INCOME* - +
EXPENSES + -

* Income can also be referred to as sales/revenues

Remember that every account has a dual but self-balancing


effect on the accounting equation.
BALANCE SHEET ACCOUNTS
ASSETS
Cash
Accounts Receivable
Supplies
Prepaid Expenses
Machines/Equipment/Furniture/Fixtures
Depreciation of specific account

LIABILITIES
Accounts Payable (Specific Payables)
Unearned Revenues

OWNERS EQUITY
Name of Owner, Capital
Name of Owner, Withdrawal
INCOME STATEMENT ACCOUNTS
INCOME
Revenues/Sales

EXPENSES
Specific Expenses
Rent Expense, Salaries Expense, Depreciation
Expense, etc.

Note that income and expenses are all under the


Owners Equity in the balance sheet.
SOLIS LANDSCAPING BUSINESS
Ms. Magdalena Solis invests 450,000.00 to open the
business on November 1.

Date Accounts Ref DEBIT CREDIT


Nov. 1 Cash (A) 450,000.00
Solis, Capital (OE) 450,000.00

Paid 3 months rent in advance of 21,000.00.


Date Accounts Ref DEBIT CREDIT
Nov. 1 Prepaid Rent (A) 21,000.00
Cash 21,000.00
SOLIS LANDSCAPING BUSINESS
Purchased a 300,000.00 truck by paying 200,000
in cash and signing a note of 100,000.00 on Nov.
2
Date Accounts Ref DEBIT CREDIT
Nov. 2 Vehicle (A) 300,000.00
Cash (A) 200,000.00
Notes Payable (L) 100,000.00

Solis purchases lawn mowers for 54,000.00 cash


on Nov. 3
Date Accounts Ref DEBIT CREDIT
Nov. 3 Equipment (A) 54,000.00
Cash (A) 54,000.00
SOLIS LANDSCAPING BUSINESS
Nov. 4, Solis bought 1,500.00 gasoline

Date Accounts Ref DEBIT CREDIT


Nov. 4 Gas Expense (OE, EX) 1,500.00
Cash (A) 1,500.00

Nov. 5 Solis pays 24,000.00 for one year


insurance from Nov 1 to Oct 31 next year.
Date Accounts Ref DEBIT CREDIT
Nov. 5 Prepaid Insurance 24,000.00
Cash 24,000.00
SOLIS LANDSCAPING BUSINESS
Nov. 8, Solis bought 1,000.00 worth of office
supplies and signed a credit.

Date Accounts Ref DEBIT CREDIT


Nov. 8 Supplies (A) 1,000.00
Accounts Payable (L) 1,000.00

Nov. 14 Solis cuts grass for seven customers


receiving 2,500.00 each
Date Accounts Ref DEBIT CREDIT
Nov. 14 Cash 17.500.00
Revenues (Lawn Cutting) 17.500.00
SOLIS LANDSCAPING BUSINESS
Nov. 20, Solis receives 13,500.00 from a customer
for size future maintenance visits

Date Accounts Ref DEBIT CREDIT


Nov. 20 Cash 13,500.00
Unearned Revenues (L) 13,500.00

Nov. 22 Solis cuts grass for eight customers


receiving 2,500.00 each but received no cash
Date Accounts Ref DEBIT CREDIT
Nov. 22 Accounts Receivable 20.000.00
Revenues 20.000.00
SOLIS LANDSCAPING BUSINESS
Nov. 26, Solis pays 4,000.00 in salaries to part
time employees

Date Accounts Ref DEBIT CREDIT


Nov. 26 Salaries Expense 4,000.00
Cash 4,000.00

Nov. 28 Solis pays 1,750.00 to print advertising


fliers.
Date Accounts Ref DEBIT CREDIT
Nov. 28 Marketing Expense 1,750.00
Cash 1,750.00
SOLIS LANDSCAPING BUSINESS
Nov. 29, Solis withdraws 5,000.00 for personal
use.

Date Accounts Ref DEBIT CREDIT


Nov. 29 Solis, Withdrawals 5,000.00
Cash 5,000.00

Nov. 30 Five out of eight customers billed last


Nov. 22 paid 2,500.00 each.
Date Accounts Ref DEBIT CREDIT
Nov. 30 Cash 12,500.00
Accounts Receivable 12,500.00
T ACCOUNT
ACCOUNT NAME

DEBIT SIDE CREDIT SIDE


SOLIS LANDSCAPING BUSINESS

CASH

450,000.00 21,00.00
17,500.00 200,000.00
13,500.00 54,000.00
12,500.00 1,500.00
493,500.00 24,000.00
4,000.00
1,750.00
5,000.00
311,250.00
BALANCE: 182,250.00
WHY DONT YOU TRY FOR THE OTHER ACCOUNTS?

BALANCE
Accounts Receivable 7,500.00
Supplies 1,000.00
Prepaid Rent 21,000.00
Prepaid Insurance 24,000.00
Vehicles 300,000.00
Equipment 54,000.00

ASSETS
WHY DONT YOU TRY FOR THE OTHER ACCOUNTS?

BALANCE

Notes Payable 100,000.00


Accounts Payable 1,000.00
Unearned Revenues 13,500.00

Solis, Capital 450,000.00


Solis, Withdrawals 5,000.00
Revenues 37,500.00
Expenses 7,250.00

Liabilities and Owners Equity


CREATE A BALANCE SHEET
ASSETS = LIABILITIES + OWNERS EQUITY
ASSETS = DEBIT
LIABILITIES + OWNERS EQUITY = CREDIT
ASSETS DEBIT CREDIT
Current Assets XXX
Long-Term Assets XXX
Other Assets XXX
LIABILITIES
Current Liabilities XXX
Long Term Liabilities XXX
OWNERS EQUITY
Owners, Capital* XXX
TOTAL BALANCE XXX XXX

OE = Investment + Revenues Expenses-Withdrawals


Solis Landscaping Business
Balance Sheet Statement
November 30, 2015
ASSETS

Current Assets
Cash 182,250.00
Accounts Receivable 7,500.00
Supplies 1,000.00
Prepaid Rent 21,000.00
Prepaid Insurance 24,000.00
Fixed Assets
Vehicles 300,000.00
Equipment 54,000.00
Less: Depreciation (Vehicles & Equipment) (0.00)

LIABILITIES
Current Liabilities
Notes Payable 100,000.00
Accounts Payable 1,000.00
Unearned Revenues 13,500.00
OWNERS EQUITY *Investment + Revenues Expenses-Withdrawals
Solis, Capital 475,250.00

589,750.00 589,750.00
CREATE AN INCOME STATEMENT

SALES EXPENSES = PROFIT


REVENUES

Revenues XXX
Cost of Goods Sold (XXX)
GROSS PROFIT XXX
EXPENSES

Expense XXX
Expense XXX (XXX)
NET PROFIT BEFORE TAXES XXX
Taxes (12%) XXX

Interest Expense XXX (XXX)

NET PROFIT XXX


Solis Landscaping Business
Income Statement
November 30, 2015

REVENUES

Lawn Cutting Revenues 37,500.00


Cost of Goods Sold -
GROSS PROFIT 37,500.00
EXPENSES

Gas Expense 1,500.00


Salary Expense 4,000.00
Marketing Expense 1,750.00 (7,250.00)
NET PROFIT BEFORE TAXES 30,250.00
Taxes (12%) 3,630.00

Interest Expense - (3,630.00)

NET PROFIT 26,620.00


Solis Landscaping Business
Income Statement
November 30, 2015

REVENUES

Lawn Cutting Revenues 37,500.00


Cost of Goods Sold -
GROSS PROFIT 37,500.00
EXPENSES

Gas Expense 1,500.00


Salary Expense 4,000.00
Marketing Expense 1,750.00
Rent Expense 7,000.00
Insurance Expense 2,000.00 (16,250.00)
NET PROFIT BEFORE TAXES 21,250.00
Taxes (12%) 2,550.00

Interest Expense - (2,550.00)

NET PROFIT 18,700.00


PRACTICE: PERSIA SICATS ACCOUNTING FIRM
On December 2015
DATE

1 Sicat invested cash in the business, 200,000.00

3 Paid rent for the month, 10,000.00

4 Received 25,000.00 from client 1 for services rendered.

7 Received 25,000.00 from client 2 for services rendered.

12 Paid gasoline purchases 600.00

14 Paid cash to Manpower services for secretarial services for 2 weeks, 6,000.00

17 Bought office supplies, on account/credit 2,800.00

20 Paid telephone bills, 1,000.00

21 Sicat withdraw cash for personal use, 11,000.00

24 Donated cash to Red Cross, 1,000.00

27 Received 20,000.00 from client 3 for services rendered

28 Paid cash to Manpower services for secretarial services for 2 weeks, 6,000.00

28 Paid electric bill, 750.00

29 Made partial payment on supplies purchased of 1,000.00


ACTIVITY!
Using your business plan teams
Create a journal entry

Then create a balance sheet statement.

Create a income statement.

Submit them in a short bondpaper.

You may use excel or you can hand write it.

Final submission is on November 10, 2015


SUBMISSION DEADLINE!
Financial Plan: August 25, 2016