Lesson Notes By Weeks and Term - Senior Secondary 2

Term: 3^rd Term

Week: 10

Class: Senior Secondary School 2

Age: 16 years

Duration: 40 minutes of 2 periods each

Date:       

Subject:      Financial accounting

Topic:-       Company account II

SPECIFIC OBJECTIVES: At the end of the lesson, pupils should be able to

1. Define balance sheet
2. List the components of a balance sheet of a company
3. List items in the layout of balance sheet.
4. Prepare balance sheet

INSTRUCTIONAL TECHNIQUES: Identification, explanation, questions and answers, demonstration, videos from source

INSTRUCTIONAL MATERIALS: Videos, loud speaker, textbook, pictures

INSTRUCTIONAL PROCEDURES

PERIOD 1-2

NOTE

COMPANY ACCOUNT

Balance sheet can be defined as the statement that shows the financial position of a business for a given period. Balance sheet is also known as statement of financial position.

COMPONENTS OF THE BALANCE SHEET

The common features of a limited liability company balance sheet are as follows:

(A) Share Capital and the Liabilities Side: under the conventional format system, they are arranged at the left hand side of the balance sheet. Items in the share capital section includes;

I. Authorised Share Capital

II. Issued Share Capital.

III. Capital Reserves e.g. share premium, capital reserve, etc.

IV. Revenue Reserves e.g. retained profit, debenture premium, etc. On the liabilities section we have;

       i. Long-term liabilities e.g. Debentures, bankloan.

       ii. Current Liabilities e.g.Trade creditors, debenture interest, proposed dividend, accrued expenses, bills payable, etc.

(B) Assets Side. They are items at the right hand side of the balance sheet. Such items are majorly grouped into Fixed and Current Assets.

ILLUSTRATION

The following list of balances was extracted from the books of Zink Nigeria Limited as at 31st December, 1994.

                                                                                               777,666     777,666           

Additional information:

1. The authorized share capital of the company is N400,000 ordinary shares of N1 each and 100,000 8% preference shares of N1 each.
2. Stock on 31^st December, 1994 was N27,280
3. During the year, goods worth N6,500 were lost to theft. No entry had been made in the books to reflect this.
4. Insurance prepaid was N200.
5. During the year, a plant originally costing N50,000 and on which N30,000 depreciation had been provided was sold for N22,000. This transaction had been included as sales.
6. Depreciation has been and it is to be provided on plant and machinery at 10% on cost.
7. Provision for bad debt is to be maintained at N 2,500.
8. The directors wish to provide for:
9. a final preference dividend;
10. a final ordinary dividend of 5%.

You are required to prepare: balance sheet as at 31^st December, 1994

SOLUTION

ZINK NIGERIA LIMITED

Balance Sheet as at 31^st December,  1994

EVALUATION:            

1. What is balance sheet?
2. Mention four components of a balance sheet.
3. Mention six items in a balance sheet
4. The trial balance of Miba Nigeria Limited as at 31^st December 1995 is given below:

You are required to prepare the balance sheet as at 31^st December, 1995.

CLASSWORK: As in evaluation

CONCLUSION: The teacher commends the students positively