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

PRESENTATION	TEACHER’S ACTIVITY	STUDENT’S ACTIVITY
STEP 1 INTRODUCTION	The teacher reviews the previous lesson on company account	Students pay attention
STEP 2 EXPLANATION	She defines and lists the components of a balance sheet of a company	Students pay attention and participates
STEP 3 DEMONSTRATION	She lists items in the layout of a balance sheet and prepares a balance sheet	Students pay attention and participate
STEP 4 NOTE TAKING	The teacher writes a summarized note on the board	The students copy the note in their books

 

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.

 

	N	N
200,000 Ordinary shares of N1 each		200,000
50,0008% preference shares of N1 each		50,000
10% debentures		50,000
Share premium		8,000
General reserve		10,000
Profit and Loss Account 1/1/94		2,500
Free hold premises	150,000
Plant and machinery (costN300,000)	180,000
Stock 1st January, 1994	23,800
Purchases and Sales	281,600	409,641
Returns inwards and outwards	10,300	17,350
Discounts allowed and received	6,450	9,250
Debtors and creditors	30,030	20,020
Provision for bad debt 1/1/94		905
Wages and Salaries	21,400
Postages and telephone	5,800
Directors fees	15,600
Insurance expenses	2,000
Interim dividends: Preference	3,000
Ordinary	5,000
Cash and Bank balances	39,686

                                                                                               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