P2 – Reconstructions

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October 8, 2015 at 11:42 am #275525
carinarodd
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Hi Mike,
For the reconstruction example given in chapter 17 of the notes, I’m struggling to understand how the Trade Payables, Retained Earnings, and Balance at Bank figures have been calculated in the SOFP – can you please explain?
Thanks,
Carina
October 8, 2015 at 1:13 pm #275532
MikeLittle
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Payables ….. 40c in the $ on $19,600 = $7,840
Balance at bank – page 145 Cash Account shows $4,000
Retained earnings – page 145 Reconstruction Account $2,760
OK?
October 8, 2015 at 3:34 pm #275549
carinarodd
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I understand Payables and Balance at bank, but don’t understand how to get to the retained earnings figure – in the reconstruction account it says RE is 30, and the c/d figure is 2.76 – is the c/d figure in this case RE?
October 8, 2015 at 4:35 pm #275562
MikeLittle
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Yes, the 30,000 brought down in the question is shown in the Reconstruction Account (debit side)
The 2,760 is the balance on that account after the directors’ plan has been accounted for
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