STEP 9

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Cash sales (GST exclusive) of goods for 11/09/2019 to various customers at $100,000

Sales construction (GST exclusive) for 09/09/2019 at $50,000.

Charges the customer a fee of $40,000 for rental equipment at 08/09/2019 exclusive of GST.

Because Fleetwood is a company that focuses primarily on construction and sales equipment, the company’s main income comes from selling products, construction and rental equipment.

Receive bank deposit interest of $10,000 in 11/09/2019.

As a publicly traded company, Fleetwood will deposit some of its funds in banks for management, and banks will issue interest on a regular basis based on the amount deposited. These interest rates will also bring a certain income to Fleetwood.

Paid material fees to raw material company (for the period 01/09/2019) of $20,000 exclusive of GST.

As a construction company, Fleetwood consumes a lot of raw materials every year to build buildings and tools. Fleetwood’s income statement has clear material expenditure data. In 2018, the company’s material expenses were $100,738,000, so I chose to add material expense items to my transaction.

Paid expenses as sub contract costs for other construction companies of $40,000 exclusive of GST in 02/09/2019.

When Fleetwood’s human resources are not enough to support all projects, it will contract some of the projects to others, which is why I chose sub-contract cost as a transaction detail. Moreover, there is also a sub-contract cost project in the enterprise’s income statement. In 2018, Fleetwood’s sub-contract cost is $822.3 million.

Paid equipment owner for equipment and plant rent of $40,000 on 3th September.

According to the main business of Fleetwood I mentioned above, it can be concluded that corporation need to rent some equipment to produce goods, and of course they need to rent a certain amount of plants to store these equipment and goods.. In Fleetwood’s notes of balance sheet, there is a description of rent plant and equipment.

Fleetwood corporation paid monthly owner $50,000 (GST exclusive) to all employees in 04/09/2019.

Employee salaries are an essential expense for every company that has employees. In 2018 Fleetwood’s employee benefits expenditure was $39,11,000, so I chose employee salary as a transaction item.

Paid $70,000 for some rental products to product owner in 01/09/2019 without GST.

In the actual operation of the company, a certain number of operating lease relationships, such as personnel, funds, equipment, etc., will be generated. In 2018, Fleetwood’s operating lease expenses were $6,934,000. So I chose to operating lease expenses as one of my transaction journals.

Paid $100,000 at 02/09/2019 to upgrade the product exclusive of GST.

According to Note 1.19 in the Fleetwood Annual Report, expenditures for research activities are recognized as expenses during the production period. Fleetwood will use certain funds for product development, and the ultimate goal of product development is to increase the sales revenue of new products. I chose product development cost as one project for the transaction.

Fleetwood’s real financial statement

First, I found some interesting projects in Fleetwood’s balance sheet. Through experience, I know that Non-current assets held for sales to the above project is current assets, below is Non-current assets. The amount of Non-current assets is greater than current assets. This shows that companies use most of their assets to purchase intangible assets such as factories, equipment and goodwill. Noncurrent assets are capitalized rather than expensed, meaning that the company allocates the cost of the asset over the number of years for which the asset will be in use instead of allocating the entire cost to the accounting year in which the asset was purchased. Because Fleetwood is a construction company in a broad sense, this situation is normal. Because of the special nature of the company, there are many fixed assets.

Secondly, from the company’s income statement, Fleetwood corporation’s income items are relatively small, and mostly from sales revenue. Probably because Fleetwood is a company with construction, sales and rental equipment as its main business, the source of income is relatively simple. Fleetwood’s expense items are relatively abundant. The largest amount of expenditure is the materials used, which is related to the nature of the company. Material is required for both construction and equipment. Of all the projects in the expenses, the most special one is loss from discontinued operations. An explanation of this can be found in Fleetwood’s corporate annual report in 2018: Fleetwood sells its loss-making business to Australian company Aeroklas.

Fleetwood’s hypothetical financial statement

It can be clearly seen from Fleetwood’s financial statements that during this time, the company is losing money. The overall reason is that spending is greater than income. Because it is hypothetical data, it cannot be said that the company is also losing money in actual situations. But in terms of data analysis, in most cases, construction companies are losing money before they receive full construction revenue. Let’s take a look at the income statement, which has a product development cost. Because Fleetwood’s revenue is also related to sales of products, product development is also a must for companies. But the problem is that Fleetwood sells some low-tech products, so the frequency of product development is relatively high, which adds some expenses to the company.