What is accounting?

Is the process of identifying, recording and summarizing financial events that took
place inside an organization during a certain period of time inorder to come up with financial statements
easily readable and understandable by all end users of financial statements

End users of financial statements

External Users

- Suppliers
- Banks
- Investor
- Tax Authority
- Regulatory Authority
- Customer
- Competitors

Internal Users

- Stock Holders
- Staff
- Different Departments (Marketing /R&D/ Finance)

Main Accounting Principles and Assumptions:

- Accrual Basis Vs Cash Basis (Earned- Transfer of ownership and Entitlement)

- Consistency Principle
- Going Concern Principle
- Economic Entity Unit Principle
- Matching Principle
- Monitory Unit Principle
- Conservatism Principle
- Historical Cost Principle
- Full disclosure Principle

Accounting Standards:

- US Generally Accepted Accounting Principles (GAAP)

- International Financial Reporting Standards (IFRS) / International Accounting Standards (IAS)
2002
Egyptian Accounting Standards (EAS)
 Types of Companies:

Propetorship:
- Single owner
- Small Size Companies/ entities
- Unlimited Liability

Partnership:

- Two –Three owners

- Medium size Company
- Partners (Unlimited partner)/ Partners (Limited Partner)

Corporation:

- More than 3 shareholder

- Large size
- Limited Partner

Benefits of being a corporation:

 Limited Liability
 Investment law
 Ease of transfer of ownership
 Ease of raising capital

Disadvantage of being corporation:

- Lose government support

- Corporate Governance
 Accounting Equation:

Assets= Liabilities +Owners equity

Assets:
- Economic resources that will generate cash in the future or prevent paying , using cash in the
future

Liabilities : Claims by outsiders over companies assets

Payables

Bank Debt / Long Term Debt

Owners equity: Claims by company’s owners over companies assets

Assets Liabilities

EGP 70
Owners Equity

EGP 100 EGP 30

Owners equity: Net assets

Owners equity = Assets –Liabilities

Double Entry system:

Dr.
Cr.
Simple Entry : Double entry involves two accounts only/ One debit and the other one is credit
Multiple Entry /Complex entry: Double entry involves more than two accounts

Debit accounts: Assets / Expenses

Credit account: Liabilities / Owners equity/ Revenue/ Income

1.1.2024 Beshoyco Capital 100,000

Assets = Liabilities +O.E.
Cash = Capital

Dr. Cash 100,000

Cr. Capital 100,000
- Supporting Documents
- Record an entry

Date of Briefing Acc. Debit Acc. Credit Amount Amount Serial

Transaction /summary for debit Credit
the transaction
1.1.2024 An increase in Dr. Cash 100,000 7373
capital by EGP
100
Cr. Capital 100,000 9191

General Journal

- Posting in related Ledger

Cash # 7373

Dr Cr.
1.1.2024 / (1) 100,000
An increase in capital
by EGP 100,000
2.1.2024 30,000
Purchase of r.m.

Balance 31.1.2024 Dr. 70,000

Capital #9191

Dr Cr.
1.1.2024 /(1) 100,000
An increase in paid in
capital

Balance 31.1.2024 100,000

General Ledger
- Purchase of Raw material on cash with EGP 30,000
Cash -30,000
Raw material +30,000

Date of Briefing Acc. Debit Acc. Credit Amount Amount Serial

Transaction /summary for debit Credit
the transaction
2.1.2024 Purchase raw Raw 30,000 6464
 material on Material
cash for 30,000
Cash 30,000 7373

Raw Material # 6464

Dr Cr.
2.1.2024/ (2)
Purchase of raw 30,000
material

Balance Raw Material Dr 30,000

- Preparing Trial Balance

Assets Dr. Cr.

Cash 70,000

Recievables
Inv. 30,000
Land
Building
Machine
Vehicles

Liabilities
Payables
Bank Debt
Owners equity
Capital 100,000
Total 100,000 100,000

- Financial Statement
- Purchase of Land with a total value of EGP 15,000 paid on cash

Cash -15,000

Land +15,000

Dr. Land 15,000

Cr. Cash 15,000

- Purchase of Machinery with a value of EGP 10,000 on credit

Machinery Payable
10,000 10,000

Dr. Machinery 10,000

Cr. Payable 10,000
- Purcahse machine with a value of EGP 10,000. On Cash 2,000 while on credit 8,000

Cash

-2,000

Machinery Payable

10,000+ 8,000+

Dr. Machinery 10,000

Cr. Cash 2,000

Cr. Payable 8,000

- Sold a product for 10,000 on cash basis

Revenue +10,000
Cash +10,000

Dr. Cash 10,000

Cr. Revenue 10,000
- Cost of goods sold 7000
Inv. -7000
Cost of good sold (Exp.) +7,000

Dr. Cost of Good Sold 7000

Cr. Inv. 7000
- Paying 6000 of existing payable
 Cash -6,000
Payable -6,000
Dr. Payable 6,000
Cr. Cash 6,000
Financial statements
-Income statement
- Balance sheet
-Cash Flow statement
-Owners equity statement

Financial statements for Bishoyco Company for the year 2024

Fiscal Year : any twelve consecutive month

Auditor report

Corporation
General Assembly

Board Of Directors

Managing Director
Head of Production
Head of palnning
Head of HR
CFO

External Auditor

Auditor Report
-Directed to company shareholders

Management responsibility:
Auditor scope of work
Opinion
- Unqualified
- Qualified
- Adverse
- Disclaimer

Company A

Assets
 Inv. 40,000

EGP 100,000

Company B

Assets

Inv. 500

EGP 100,000

2022: Aly Elsayed

2023: Tamer Abdelmaksod

2024: Ismail Ahmed

Income statement for the period from 1.1.2024 till 31.12.2024

 Revenues /Sales

Revenue Recognition:

- Earned (Transfer of ownership and entitlement)

- Cash/ Asset will converted
a- Sold 100 ton for 100,000 cash

Income stetment

Rev. 100,000+

Balance sheet

Cash +100,000

Dr. Cash 100,000

Cr. Rev. 100,000

b- Sold 100 ton for 100,000 on credit

Income statement

Rev. 100,000+

Balance sheet

Receivable +100,000

Dr. Recievable 100,000

Cr. Rev. 100,000

Upon collection of Recievables

Cash +100,000

AR-100,000

Dr. Cash 100,000

Cr. AR 100,000
- Upon selling on advance

1.4.2024

Collected 100,000 as an advance

Cash +100,000 Unearned Rev. +100,000

Dr. Cash 100,000

Cr. Unearned Rev. 100,000

1.12.2024

Upon transfer of ownership of the goods

Rev. +100,000

Unearned Rev. -100,000

Dr. Unearned Rev. 100,000

Cr. Revenue 100,000

2022 2023 2024

Rev. 100,000,000 120,000,000 160,000,000

2023: 20% increase in sales

Price Quantity
A- 10%+ 10%+
B- 20%+ ----
C- --- 20%+
D- 30%+ 10%-
E- -10% 30%+

 Cost of Good Sold (Raw Material, Operating Overhaeds, Direct Labor)

Revenues

(Cost of Goods Sold)

Gross Profit
Upon Purchase of Raw materials

a- Purchase of raw material EGP 80,000 on cash

Cash -80,000

Raw Material +80,000

Dr. Raw Material 80,000

Cr. Cash 80,000

b- Purchase of raw material EGP 80,000 on credit

1.4.2024

Raw Material 80,000+ Payable +80,000

Dr. Raw Material 80,000

Cr. Payable 80,000

1.6.2024

Cash -80,000 Payable -80,000

Dr. Payable 80,000

Cr. Cash 80,000

c- Purchase of raw materials for EGP 80,000 on advance

1.4.2024

Cash -80,000

Prepaid Espense/ Raw material / Advnace Payment to suppliers +80,000

Dr. Prepaid Exp. 80,000

Cr. Cash 80,000

1.6.2024

Raw Material +80,000

Prepaid Exp. -80,000

Dr. Raw Material 80,000

Cr. Prepaid Exp. 80,000

Upon selling

- Selling Goods for 100,000 on cash basis

Dr. Cash 100,000

Cr. Rev. 100,000

Expense (cost of goods sold ) 80,000+

Raw Material +80,000

Dr. Cost of Goods Sold 80,000

Cr. Raw Material 80,000

Income statement for the period from 1.1.2024 till 31.12.2024

Revenue/Sales 100,000

(Cost Of Goods Sold) (80,000)

Gross Profit 20,000

(Selling, General and Administrative Expense) (7,000)/ Marketing Campaign/ Indirect Labor/
Commissions/ Utilities/ Board of Directors Remuneration/ DHL/ Rent Expense

Rent 10,000/Month

1.1.2024 signed a rent contract

a- Paying on Cash Basis on Monthly basis

31.1.2024 – on a monthly basis

Income statement

- Rent Expense 10,000

Balance sheet

Cash -10,000

Dr. Rent Expense 10,000

Cr. Cash 10,000

b-Paying in advance for one year.

1.1.2024

120,000 in advance

Balance sheet

Asset

Cash -120,000

Prepaid Expense 120,000+

Dr. Prepaid Expense 120,000

Cr. Cash 120,000

31.1.2024

Income statement

Rent Exp. 10,000

Balance sheet

Prepaid Exp. -10,000

Dr. Rent Expense 10,000

Cr. Prepaid Rent 10,000

- Payment at the end of the period

1.1.2024 signed a contract

31.12.2024 Paying the whole year

1.1.2024- No entry

31.1.2024

Income statement

Rent Exp. 10,000

Balance sheet

Liabilities

Accrued Exp. 10,000

Dr. rent Expense 10,000

Cr. Accrued Exp. 10,000

28.2.2024

Income statement

Rent Expense 10,000

Liability

Accrued Exp. 10,000

31.12.2024- Pay the contract

Cash -120,000 Accrued Expense -120,000

Dr. Accrued Exp. 120,000

Cr. Cash 120,000

Summary

Selling

Sell in advance
10.1.2024 Received Cash in advance
Dr. Cash 100,000
Cr. Unearned Rev. 100,000
Balance sheet
Asset Liability
Cash +100,000 Unearned Rev. +100,000
1.3.2024
Income statement
Rev. 100,000

Balance sheet
Unearned Rev. -100,000
Dr. Unearned Rev. 100,000
Cr. Rev. 100,000

Selling On Cash basis

10.1.2024
Income statement
Sales 100,000
Balance sheet
Cash +100,000

Dr. Cash 100,000

Cr. Sales /Rev. 100,000
 Selling on Deffered Basis
10.1.2024
Income statement
Sales +100,000
Balance sheet
Asset
Recievables +100,000

Dr. Rec. 100,000

Cr. Sales 100,000

1.3.2024 Upon collection of check

Balance sheet
Assets
Cash +100,000
Rec. -100,000

Dr. Cash 100,000

Cr. Receivable 100,000

Purchases of raw material

Purchasing on advance
10.1.2024
Balance sheet
Cash -100,000
Advance Payment +100,000

Dr. Advance Payment 100,000

Cr. Cash 100,000

1.3.2024 Receiving Product

Balance sheet
Assets
RM/Inventory +100,000
Advance Payment -100,000

Dr. RM/Inventory 100,000

Cr. Advance Payment 100,000
 Purchasing RM on cash basis

10.1.2024
Cash -100,000
Inventory /RM +100,000

Dr. Inv. 100,000

Cr. Cash 100,000

Purchasing and paying latter (deferred)

10.1.2024
Balance sheet
Asset Liability
Inv. +100,000 Accounts payable +100,000
Dr. inv. 100,000
Cr. AP 100,000
1.3.2024 – Paying to suppliers
Balance sheet
Asset
Cash -100,000 Accounts Payable -100,000
Dr. AP 100,000
Cr. Cash 100,000

31.3.2024

Upon selling

Dr. Cash 120,000

Cr. Rev. 120,000

Recognize cost (incurred)

Dr. Cost of Goods sold 100,000

Cr. Inv./RM 100,000

31.3.2024

Income statement

Rev. 120,000

(Cost of goods sold) (100,000)

Gross Profit 20,000

Rendering a service

a- Paying on cash basis

Rented an office on 1.1.2024 where you will pay monthly at end of month

31.1.2024

Income statement

Rent Exp. 10,000

Balance sheet

Cash -10,000

Dr. Rent Exp. 10,000

Cr. Cash 10,000

b- Paying service in advance

Rented an office on 1.1.2024 where you will pay one year in advance

1.1.2024

Balance sheet

Cash -120,000

Prepaid Exp. +120,000

Dr. Prepaid Exp. 120,000

Cr. Cash 120,000

31.1.2024

Income statement

Rent Exp. 10,000

Balance sheet

Prepaid Exp. 10,000-

Dr. Rent Exp. 10,000

Cr. Prepaid Rent 10,000

c- Paying service deffered

1.1.2024 – No entry

31.1.2024

Income statement

Rent . exp. 10,000

Balance sheet

Assets Liability

Accrued Exp. 10,000

Dr. Rent Exp. 10,000

Cr. Accrued Exp. 10,000

31.12.2024

Balance sheet

Cash -120,000 Accrued Exp. -120,000

Dr. Accrued Exp. 120,000

Cr. Cash 120,000

Company A

Revenues/Sales 100,000

(Cost of Goods sold) (120,000)

Gross Loss (20,000)

Income statement For the period from 1.1.2024 till 31.12.2024

Revenues 100,000,000

(Cost Of Goods Sold) (75,000,000)

Gross Profit 25,000,000

(Selling, General, Administrative Expense)(3,000,000)

(Depreciation Expense)/(Amortization Expense) (1,000,000)

Net Operating Profit (NOP)/ Earnings before Interest and Tax (EBIT) 21,000,000

- Interest Expense (2,000,000)

+ Interest Income 1,000,000

- Bad Debt Exp. / Write off Exp.

- Provision
+ Collected Bad debt Exp.
Depreciation Expense: is the allocation of cost of the asset over its useful life

Fixed Asset / Long Lived Assets / Property, Plant and Equipment

 Land
 Building
 Machinery and Equipment
 Vehicles

Types of Depreciation Methods:

A- Straight Line Depreciation

1- Asset Cost
Production Line: 10,000,000 (Invoice)
1,000,000 (freight)
700,000 (Customs)
300,000 (inland freight)
Asset Cost /Production Line 12,000,000

Land : 100,000,000
3,000,000
10,000,000
4,000,000
Land 117,000,000

Vehicles: 10,000,000
2,000,000
1,000,000
2- Useful Life:
3- Salvage Value: 0
4- Depreciable Value : Asset Cost –Salvage Value= 10,000,000-0= 10,000,000

A- Straight Line Depreciation Method:

Asset Cost 10,000,000

Useful Life 10 Years

Salavage Value 1,000,000

Depreciable Value= Asset Cost –Salvage Value = 9,000,000

Depreciation Exp. = Depreciable Value / Useful Life = 9,000,000/10years= 900,000

 Year One

Income statement

Depreciation Exp. (900,000)

Balance sheet:

Production Line 10,000,000

(Accumulated Depr. ) (900,000)

Net Production Line 9,100,000

Dr. Dep. Exp. 900,000

Cr. Accumulated Dep. 900,000

Acc. Dep. No. 3134

Year one Cr. 900,000

Balance at end of year
one Cr. 900,000
Year Two
Cr. 900,000

Balance at end of year 1,800,000

two
Year Three
Cr. 900,000
Balance at the end of 2,700,000
year three
Cr. 900,000
Balance at the end of 3,600,000
year four
 Year Two

Income statement

-Dep. Exp. (900,000)

Balance sheet

Production Line 10,000,000

(Acc. Dep.) (1,800,000)

Net Production Line 8,200,000

Dr. Dep. Exp.900,000

Cr. Acc. Dep. 900,000

Year Three

Income statement

- Dep. Exp. 900,000

Balance sheet

Production Line 10,000,000

(Acc. Dep.) (2,700,000)

Net Production Line 7,300,000

Dr. Dep. Exp. 900,000

Cr. Acc. Dep. 900,000

Year Four

Dr. Dep. Exp. 900,000

Cr. Acc. Dep. 900,000

Income statement

-Dep. Exp. (900,000)

Balance sheet

Production Line 10,000,000

(Acc. Dep.) (3,600,000)

Net Production Line 6,400,000

At end of Year 10 (Last year in useful life)

Dr. Dep. Exp. 900,000

Cr. Acc. Dep. 900,000

Income Statement

-Dep. Exp. 900,000

Balance sheet

Production Line 10,000,000

(Acc. Dep.) (9,000,000)

Net Production Line 1,000,000

Year Eleven

No entry

Income statement – Nothing

Balance sheet

Assets

Cash 3,000,000

Inv. 4,000,000

Production Line 10,000,000

(Acc. Dep.) (9,000,000)

Net Production Line 1,000,000

Total Assets 8,000,000

 B- Units of Production /Units of Activity

Asset Cost = 10,000,000

Useful Life = 100,000KM

Slavage Value = 1,000,000

Depreciable value = Asset Cost –Salvage Value = 10,000,000-1,000,000= 9,000,000

Dep. Exp. Per unit = 9,000,000/100,000= 90$

Year One

30,000 Unit *90=2,700,000

Dep. Exp. (2,700,000)

Balance sheet

Production Line 10,000,000

(Acc. Dep. ) (2,700,000)

Net Production Line 7,300,000

Dr. Dep. Exp. 2,700,000

Cr. Acc. Dep. 2,700,000

At the End of useful Life

Balance sheet

Production Line 10,000,000

(Acc. Dep. ) (9,000,000)

Net Production Line 1,000,000

3- Declining Balance Method /Double Declining Balance Method

Asset Cost = 10,000,000

Useful Life= 10 years

Salvage Value = 1,000,000

Depreciable Value = Asset Cost –Salvage Value = 10,000,000-1,000,000= 9,000,000

Declining Balance Method Rate = 10%*2= 20%

Dep. Exp. Year One

Asset Cost * DDBMR= 10,000,000*20%= 2,000,000

Dr. Dep. Exp. 2,000,000

Cr. Acc. Dep. 2,000,000

Income statement for Year one

- Dep. Exp. 2,000,000

Balance sheet

Production Line 10,000,000

(Acc. Dep. ) ( 2,000,000)

Net Production Line 8,000,000

Year Two

Dep. Exp. Year two 8,000,000*20%= 1,600,000

Balance sheet

Production Line 10,000,000

(Acc. Dep. ) (3,600,000)

Net Production Line 6,400,000

Dr. Dep. Exp. 1,600,000

Cr. Acc. Dep. 1,600,000

Year Three

Dep. Exp. For Year Three 6,400,000*20%= 1,280,000

Dr. dep. Exp. 1,280,000

Cr. Acc. Dep. 1,280,000

Income Statement

-Dep. Exp. 1,280,000

Balance sheet

Production Line 10,000,000

(Acc. Dep.) (4,880,000)

Net Production Line 5,120,000

Year Four

Dep. Exp. 5,120,000*20%= 1.024.000

Dr. Dep. Exp. 1,024,000

Cr. Acc. Dep. 1,024,000

Income statement

-Dep. Exp. 1,024,000

Balance sheet

Production Line 10,000,000

(Acc. Dep. ) (5,904,000)

Net Production Line 4,096,000

Year Five

Dep. Exp. 4,096,000*20%= 819,200

Dr. Dep. Exp. 819,200

Cr. Acc. Dep. 819,200

Income statement

-Dep. Exp. 819,200

Balance sheet

Production Line 10,000,000

(Acc. Dep.) ( 6,723,200)

Net Production 3,276,800

Year Six

Dep. Exp. 3,276,800 *20%= 655,360

Dr. Dep. Exp. 655,360

Cr. Acc. Dep. 655,360

Income statement

-Dep. Exp. 655,360

Balance sheet

Production Line 10,000,000

(Acc. Dep.) (7,378,560)

Net Production 2,621,440

Year Seven

Dep. Exp. 2,621,440*20%= 524,288

Dr. Dep. Exp. 524,288

Cr. Acc. Dep. 524,288

Income statement

-Dep. Exp. 524,288

Balance sheet

Production Line 10,000,000

(Acc. Dep.) ( 7,902,848)

Net Production Line 2,097,152

Year Eight

Dep. Exp. 2,097,152*20% = 419,430

Dr. Dep. Exp. 419,430

Cr. Acc. Dep. 419,430

Income statement

- Dep. Exp. 419,430

Balance sheet

Production Line 10,000,000

(Acc. Dep.) (8,322,278)

Net Production Line 1,677,721

Year Nine

Dep. Exp. 1,677,721*20%= 335,544

Dr. Dep. Exp. 335,544

Cr. Acc. Dep. 335,544

Income statement

-Dep. Exp. 335,544

Balance sheet

Production Line 10,000,000

(Acc. Dep.) (8,657,822)

Net Production 1,342,177

Year Ten

Dep. Exp. 1,342,177*20%= 268,435

Dr. Dep. Exp. 268,435

Cr. Acc. Dep 268,435

Balance sheet

Production Line 10,000,000

(Acc. Dep.) (8,926,258)

Net Production Line 1,073,741

Year Ten

Dep Exp. 342,177

Dr. dep Exp. 342,177

Cr. Acc. Dep. 342,177

Income Statement

-Dep. Exp. 342,177

Balance Sheet

Production Line 10,000,000

(Acc. Dep.) (9,000,000)

Net Production Line 1,000,000

At end of year Straight Line Method Units of production Double Declining

Balance Method
Dep. Exp. (900,000) (2,700,000) (2,000,000)

Production Line 10,000,000 10,000,000 10,000,000

(Acc. Dep.) (900,000) (2,700,000) (2,000,000)
Net Production Line 9,100,000 7,300,000 8,000,000
2-Intangible assets (has no physical substance)

Copyright

Trademark

Patent

Goodwill

Peugeot VW

$1,000,000

$1,300,000

Balance sheet

Cash -1,300,000

Inv.

Rec.

Fixed assets

Total +1,000,000

Goodwill 300,000+
Asset

Straight Line Dep. Method

Asset 10,000,000

Useful Life 5 yrs

Salvage Value 1,000,000

Dep. Value 9,000,000

De. Exp./ Year = 9,000,000/5 years= 1,800,000

20% *2=40%

Useful Life :5 years

20% *2

Useful life : 3 years

33%*2

Useful Life:10 years

10%*2

Useful Life : 20 years

5%*2= 10
30.9.2024

Chinese Supplier 10,000,000

Will be paid as follows:

30.9.2024---- 2,000,000

Income statement ----No entry

Balance sheet

Cash -2,000,000

Advance Payment to suppliers +2,000,000

Dr. Advance Payment 2,000,000

Cr. Cash 2,000,000

30.11.2024----2,000,000

Income statement ----No entry

Balance sheet

Cash -2,000,000

Advance Payment to suppliers +2,000,000

Dr. Advance Payment 2,000,000

Cr. Cash 2,000,000

1.2.2025----2,000,000

Income statement ----No entry

Balance sheet

Cash -2,000,000

Advance Payment to suppliers +2,000,000

Dr. Advance Payment 2,000,000

Cr. Cash 2,000,000

1.3.2025------4,000,000

Income statement ----No entry

Balance sheet

Cash -4,000,000

Advance Payment to suppliers +4,000,000

Dr. Advance Payment 4,000,000

Cr. Cash 4,000,000

Balance sheet

Advance Payment to suppliers -10,000,000

Production Line +10,000,000

Dr. Production Line 10,000,000

Cr. Advance Payment to supllier10,000,000

Interest

Cash -1,000,000

Prepaid Interest +1,000,000

1.3.2025

Dr. Production Line 1,000,000

Cr. Prepaid Interest 1,000,000

Balance Sheet

Assets

Fixed Assets

Machinery / Production Line 20,000,000

Accounts Recievable and related provision

Upon selling on credit

1.4.2024

Dr. Ar 10,000

Cr. Rev. 10,000

1.9.2024

Upon collection of the check

Balance sheet

Cash +10,000

AR -10,000

Dr. Cash 10,000

Cr. AR 10,000

Write off Method :

Write off

Income statement

-Bad Debt Exp. 10,000

Balance sheet

AR-10,000

Dr. Bad Debt Exp. 10,000

Cr. AR 10,000

Upon collection of bad debt

+ Collection of bad debt income 10,000

Balance sheet

Cash +10,000

Dr. Cash 10,000

 Cr. Collection/Recovery of bad debt income 10,000

Provision for bad Debt:

a- Aging Schedule

31.12.2023

AR 100,000,000

Number 100 check

0-30 days 31-60 60<

Number of checks 10 check 60 check 30 check
Value of Checks 15,000,000 45,000,000 40,000,000
% of provision 1% 3% 10%
Value of Provision 150,000 1,350,000 4,000,000
Total Value of Provision 5,500,000

Income statement

-Provisions for Bad Debt 5,500,000

Balance sheet

AR 100,000,000

(Allowance for Bad Debt /AFDA) (5,500,000)

Net recievable 94,500,000

Dr. Provison for bad debt Exp. 5,500,000

Cr. AFDA 5,500,000

b- Percentage of Recievable

31.12.2023

100,000,000 3%

Dr. Provision for Bad debt 3,000,000

Cr. AFDA 3,000,000

 C- Percentage of sales

1-1-2023 till 31-12-2023 1,000,000,000 0.5%

Dr. Provision for bad debt exp.

Cr. AFDA
Income statement for the period from 1.1.2024 till 31.12.2024

Sales/revenue 100,000

(Cost of Goods Sold) (70,000)

Gross Profit 30,000

(Selling, General and Adminstartive Exp.) (4,000)

(Depreciation Exp.) (2,000)

Operating Profit /Earnings before interest and tax (EBIT) 24,000

-Interest Exp. (1,000)

+Interest income 1,000

-Bad Debt Expense (500)

-Provision for bad debt (1000)

Net income before tax 22,500

-Tax Expense (5,062)

Net Income after tax 17,438

31.12.2024

Dr. Tax Exp. 5062

Cr. Tax payable 5062

Balance sheet

Liability

Tax Payable 5062

30.4.2025

Cash -5062 Tax Payable -5062

Dr. Tax Payable 5062

Cr. Cash 5062

Balance sheet as at 31.12.2024

Assets Liabilities
Cash 10,000 Overdraft 5,000
Rec. 15,000 Payables 50,000
Inv. 20,000 Tax Payable 3,000
Long Lived assets Unearned Rev. 2,000
Land 15,000 Total Liabilities 60,000
Building 10,000 Owners equity
Machinery 20,000 Capital /Paid in capital
Copy right 10,000 Retained Earnings
Total Assets EGP 100MM Total Owners Equity 40,000

Assets

Current Assets

Long Term Assets

Liabilities

Current Liabilities

Long Term Liabilities

Cash #3346

Dr Cr
1.1.2024 10,000
10.1.2024 20,000
20.1.2024 5,000

Balance 31.12.2024 35,000

1.1.2025 5,000
20.1.2025 10,000
30.1.2025 10,000
Balance 31.12.2025 60,000
 Sales #7799

Dr Cr
1.1.2024 7,000
10.1.2024 10,000
30.1.2024 20,000

Balance as of 37,000
31.12.2024
31.12.2024 37,000
Balance as of 1.1.2025

Dr. sales 37,000

Cr. Retained Earnings 37,000

Or

Dr. sales 37,000

Cr. Income summary account 37,000

COGS #3143

Dr Cr
1.1.2024 4,000
10.1.2024 9,000
30.1.2024 16,000

Balance as 31.12.2024 29,000

Dr
31.12.2024 29,000

Dr. Reatained Earnings 29,000

Cr. COGS 29,000

Dr. Income summary account 29,000

Cr. COGS 29,000

Income summary account

31.12.2024 29,000 31.12.2024 37,000

Balance 31.,12.2024 8,000 credit
31.12.2024 8,000
Balance zero

Dr. Income summary account 8,000

Cr. R.E. 8,000

R.E # 3369

Dr Cr 8,000
Paid in Capital /Capital/Common stock

Properitorship : Capital

Partnership: Capital

Corporation: Common stock /Shares

Rights for shareholders:

- They have the right to vote

- Share earnings (dividends)
- Upon liquidation (share residual value)
- Limited Liability for all shareholders

Authorized Capital / Paid in Capital

1.1.2024

Assets

Cash +1,000

Owners equity

PIC +1,000

Dr. Cash 1,000

Cr. PIC 1,000

Authroised Capital 10,000,000

Paid in capital 1,000,000 distributed among 10,000 share. Accordingly each share for EGP 100 (Par
Value/Face Value )

Paid in capital to increase from 1,000,000 to 10,000,000 (+9,000,000)

Number of shares 10,000 share to 100,000 share (+90,000 share)

Valuation of share 1,000

Paid in capital to increase from 1,000,000 to 10,000,000 (+9,000,000)

Number of shares 10,000 share to 19,000 share (+9,000 share)

Dr. Cash 9,000,000

Cr. PIC 9000 *100= 900,000

Cr. Additional Paid in Capital 8,100,000 (9,000 share *900)

 - To increase Paid in capital through an asset

Assets

Cash + PIC+

Production Line + PIC+

Production Line

- 2024 stock exchange

New Valuation 3,000

- Par Value of EGP 100

Market Value in the stock exchgange EGP 10,000

Stock Split 1 Share /Par Value EGP 100

10 share /Par Value EGP 10 Market Value 1,000

Pre stock split

1 share /2,000

Par Vale 100

Market Value 10,000

Post stock split

1 share /20,000 share

Market Value 1000

Par Value 10

31.12.2023

Assets

Total Liabilities 40MM

Equity
PIC 10MM
APIC 30MM
EGP 100MM R.E. 20MM
31.12.2024

Assets
Cash 40MM
Liabilities EGP40MM
Equity
PIC 10MM
APIC 30MM
EGP 130MM R.E. 50MM

Dividends

Cash Distribution

10.3.2023

Declaration Date

Dividends Payable +40MM

R.E. -40MM

Dr. R.E 40MM

Cr. Dividends Payable 40MM

Specification Date 10.5.2023

Payment Date 10.6.2023

Cash -40MM Dividends Payable -40MM

Dr. Dividends Payable 40MM

Cr. Cash 40MM

Stock Distribution

Dr. PIC 40MM

Cr. R.E. 40MM

1000 share *100

5000 share *100

Preferred Shares

Equity

PIC- Common stock 100 par value /share

PIC- preffered stock 700 Par Value /share

APIC –Common stock

APIC- Preffered stock

R.E.

Features of preffered stock

- They don’t have the right vote

- Dividends /Fixed dividends
- Preffered upon liquidation