Practice Problem on Financial Statements
Practice Problem – 1:
The following trial balance was extracted from the books of Meridian Holdings Ltd. as at
December 31, 2024:
Particulars
Cash and cash equivalents
Accounts receivable
Inventory
Prepaid insurance
Office supplies
Short-term investments
Long-term investments
Freehold land
Freehold buildings
Motor vehicles
Plant and machinery
Salaries and wages expense
Rent expense
Utilities expense
Advertising expense
Sales commission expense
Administrative expenses
Depreciation expense
Interest expense
Income tax expense
Loss on lawsuit
Dividend declared and paid
Ordinary share capital
Retained earnings, January 1, 2024
Revenue from customers
Interest income
Rental income
Gain on disposal of equipment
Accounts payable
Accrued expenses
Interest payable
Notes payable
10% Bank loan
Bonds payable
Amount ($)
84,600
156,800
245,000
18,500
12,700
65,000
185,000
300,000
525,000
215,000
365,000
235,000
196,000
58,000
142,000
36,500
74,000
168,000
132,000
92,000
38,000
55,000
750,000
446,100
950,000
21,000
54,000
20,000
128,000
24,000
16,000
140,000
350,000
500,000
Requirements:
a) Prepare a Statement of profit or loss and other comprehensive income for Meridian
Holdings Ltd. for the period ended on 31 December 2024.
b) Prepare a Statement of Changes in Equity for Meridian Holdings Ltd. for the period ended
on 31 December 2024.
c) Prepare the Statement of the financial position of Meridian Holdings Ltd. on 31
December 2024.
Practice Problem – 2:
The following trial balance was extracted from the books of Global Summit Corporation as of
December 31, 2025.
Particulars
Revenue from contracts with customers
Cash and cash equivalents
Accounts receivable
Office supplies
Inventory
Investments (70% Long term)
Land
Buildings
Motor vehicles
Equipment
Salaries expense
Accrued salaries
Rent expense
Prepaid rent
Utilities expense
Advertising expense
Selling and distribution expense
Depreciation expense
Interest expense
Accrued interest
Loss on litigation
Income tax expense
Dividend paid
Ordinary share capital
Retained earnings, January 1, 2025
Interest income
Dividend income
Loss on disposal of motor vehicle
Gain on investment
Accounts payable
Amount ($)
997,500
142,500
225,000
16,000
310,000
300,000
450,000
725,000
325,000
480,000
315,000
42,000
120,000
25,000
86,000
72,000
65,000
105,000
58,000
22,000
25,000
125,000
70,000
590,000
375,000
35,000
18,000
30,000
15,000
185,000
Notes payable (2-year tenure)
Mortgage Payable
Bonds payable
Lease liability
250,000
600,000
700,000
180,000
Requirements:
a) Prepare a Statement of profit or loss and other comprehensive income for Global Summit
Corporation for the period ended on 31 December 2025.
b) Prepare a Statement of Changes in Equity for Global Summit Corporation for the period
ended on 31 December 2025.
c) Prepare the Statement of the financial position of Global Summit Corporation on 31
December 2025.