Part 1 – Financial Analysis Peter is a self employed music teacher and has the following trial balance: Trial Balance as at 30 June 2013                                                                                       Debit                                                 Credit                                                                         £                                                          £ Instruments 1,500 Furniture 400 Rent for room 2,400 Computer 1,000 Fees from tuition 10,500 General expenses 1,000 Capital 3,550 Bank 1,500 Postage and stationery 50 Electricity 300 Advertising 300 Creditors 150 Debtors 350 Telephone 400 Drawings 5000 14200 14200 Note: In this case, there are no trading purchases. Required: 1) Prepare Peter Income Statement for the year ended 30 June 2013 and a Balance Sheet as at 30 June 2013. (30 marks) 2) Briefly research and discuss the changes in international regulation for reporting financial statements. In particular the changes to the names of profit and loss account.                                                                                                                  (20 marks) Part 2 – Performance Evaluation The comparative condensed income statements of SPENCER Corporation are shown below. SPENCER CORPORATION Comparative Condensed Income Statements For the Years Ended December 31     2013        2012    Net sales                                                               $620,000                   $500,000 Cost of goods sold                                               450,000   400,000 Gross profit                                                             170,000                      100,000 Operating expenses                                                54,000     40,000 Net income                                                           $116,000 $  60,000 Instructions (a)   Prepare a horizontal analysis of the income statement data for SPENCER Corporation using 2013 as a base. (Show the amounts of increase or decrease.) (b)   Prepare a vertical analysis of the income statement data for SPENCER Corporation in columnar form for both years. .

1. Part 1 – Financial Analysis
Peter is a self employed music teacher and has the following
trial balance:
Trial Balance as at 30 June 2013
Debit
Credit
£ £
Instruments
1,500
Furniture
400
Rent for room
2,400
Computer
1,000
Fees from tuition
10,500
General expenses
1,000
Capital
3,550
Bank
1,500
Postage and stationery
50

2. Electricity
300
Advertising
300
Creditors
150
Debtors
350
Telephone
400
Drawings
5000
14200
14200
Note: In this case, there are no trading purchases.
Required:
1)
Prepare Peter Income Statement for the year ended 30 June 2013
and a Balance Sheet as at 30 June 2013.
(30 marks)
2)
Briefly research and discuss the changes in international
regulation for reporting financial statements. In particular the
changes to the names of profit and loss

3. account.
(20 marks)
Part 2 – Performance Evaluation
The comparative condensed income statements of SPENCER
Corporation are shown below.
SPENCER CORPORATION
Comparative Condensed Income Statements
For the Years Ended December 31
2013
2012
Net sales
$620,000 $500,000
Cost of goods sold
450,000
400,000
Gross profit
170,000 100,000
Operating expenses
54,000
40,000
Net income
$116,000
$ 60,000

4. Instructions
(a) Prepare a horizontal analysis of the income statement data
for SPENCER Corporation using 2013 as a base. (Show the
amounts of increase or decrease.)
(b) Prepare a vertical analysis of the income statement data for
SPENCER Corporation in columnar form for both years.