Derivation of balance sheet Poseidon Company specialises in the leasing of holiday apartments with boating facilities in the Greek islands. It has asked for your help. It’s January year 3, and there’s been a serious fire in its administrative offices. Many records have been destroyed. The company wants you to reconstruct the balance sheet at 31 December year 2. The balance sheet at the start of year 2 is available, cash records for year 2 have escaped the fire and a copy of the year 2 income statement has been discovered in the briefcase belonging to the managing director’s husband. Information from these three items is set out in Exhibit 5.12.

Required Reconstruct Poseidon’s balance sheet at 31 December year 2.
Check figure:
Total assets, 31/12/year 2 726.AppenedixLO1

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Exhibit 5.12 Assets Cash and short-term investments Property Less: Accumulated Poseidon Company Extracts from year 2 accounts (amounts in 000) Balance sheet at 1 January year 2 32 828 Equities Rentals received in advance Utilities payable Income tax payable Current liabilities Long-term loan 4 560 ' ' depreciation -192 636 Share capital Retained eamings 198 40 37 Shareholders' equity 77 668 Total equities 668 Total assets Extracts from year 2 cash account Cash payments Cash receipts Holiday rentals received Dividend paid 4 93 Salaries paid 12 Interest received 2 Utilities paid 10 Increase in long-term loan 50 Interest paid 48 Purchase of property 75 Total receipts 145 Total payments 149 Income statement for year 2 Depreciation expense 14 Revenue from holiday rentals 96 Salaries expense 13 Interest income from short-term Utilities expense investments 3 Interest expense Income tax expense Net profit 51 99 99