Gulf Company Balance sheet Statement For the year ended 2019 2019 SAR Note NO. 2018 SAR 7 Assets 8 INon current Assets 9 Net book value of PP & E 10 Spare Parts 11 Land 12 Total non current assets 8b 10,959,102 390,595 4,736,000 16,085,697 8,301,309 402,693 4,736,000 13,440,002 10,383,964 298,638 14 Current assets 15 Cash and cash equivalent 16 Account receivables-net 17 Inventory 18 Receivables from related parties 19 prepaid expenses 20 Total current assets 21 Total assets 22 23 Equity and Liabilities 24 Equity 25 Share Capital 26 Statutory Reserve 27 Retained earning 28 Total Equity 332,128 10,644,378 297,437 1,302 346,616 11,621,861 25,061,863 68,609 11,418,893 27,504,590 12 13 6,000,000 3,000,000 3,815,673 12,815,673 6,000,000 3,000,000 3,440,137 12,440,137 30 Non current liabilities 31 Long term loan 32 Warranty Provision 33 Provision for end of service benefits 34 Total non current Liabilities 1,180,963 250,000 1,049,951 2,480,914 250,000 1,118,754 1,368,754 35 36 Current liabilities 37 Current portion of long term loan 38 Account payable 39 Payables to related parties 40 other current payables and provisions 41 Total current liabilities 42 Total Liabilities 43 Total Equity and Liabilities 1,805,595 8,490,708 234,504 1,677,196 12,208,003 14,688,917 27,504,590 688,320 8,563,197 89,369 1,912,086 11,252,972 12,621,726 25,061,863 Gulf Company Income Statement For the year ended 2019 Gulf Company Income Statement For the year ended 2019 Note No. Revenues Cost of Sales Grose Profit 2019 SAR 45,979,810 (39,273,895) 6,705,915 2018 SAR 44,118,635 (37,819,990) 6,298,645 14 15 (2,013,191) 4,285,454 General Administration expenses Income from Operation Other income Finance cost/expenses Net Income (2,305,934) 4,399,981 41,000 (75,530) 4,365,451 16101 (61,842) 4,223,612 Gulf Company Changes in Equity Statements For the year ended 2019 Statutory Reserve 6,000,000 3,000,000 Capital Balance 1/1/2018 Distributed earnings Net income Reserve Balance 31/12/2018 Dividend Paid Net income Reserve Balance 31/1/2019 Retained Earning 2,953,212 (2,953,212) 4,223,612 (783,475) 3,440,137 (3,440,137) 4,365,451 (549,778) 3,815,673 Total 11,953,212 (2,953,212) 4,223,612 (783,475) 12,440,137 (3,440,137) 4,365,451 (549,778) 12,815,673 6,000,000 3,000,000 6,000,000 3,000,000 malam Gulf Company Cash flow statements For the year ended 2019 2019 SAR 2018 SAR 4,365,451 4,223,612 2,092,915 791,676 178,397 (41,000) 1,869,028 995,731 174,493 Cash flow from Operation 5 Net income 5 Adjust for: Depreciation for Fixed Assets 3 Used Spare parts Provision of end of service benefits Gain from selling Fixed Assets 1 Changes in 2 Account receivables 3 Inventory Account receivables from related parties 5 Prepaid expenses 5 Account payable 7 Payables to related parties 3 other current payables and provisions e Paid end of service benefit O Net cash generated from operating activities 260,414 (1,201) 1,302 278,007 (72,489) 145,135 (784,668) (247,200) 6,966,739 (1,078,756) (52,964) 4,586 (263,700) 1,248,170 (5,118) (721,579) (41,982) 6,351,521 2 Cash flow from Investing Activities 3 Addition to Fixed Assets 4 Addition to Spare parts 5 Proceeds from selling Fixed assts 6 Net Cash Used in Investing Activities (1,994,609) (1,007,983) (4,750,708) (779,578) 41,000 (5,489,286) (3,002,592) 8 Cash flow from Financing Activities 9 Loans 0 Dividend Paid 1 Net Cash Used in Financing Activities 2 Net change in Cash and Cash Equivalents 3 Beginning Cash and Cash equivalent 4 Ending Cash and Cash Equivalent 2,298,238 (3,440,137) (1,141,899) 335,554 332,128 667,682 (1,619,960) (2,953,212) (4,573,172) (1,224,243) 1,556,371 332,128 8 Note to the Financial Statements: The Gulf Limited partnership company established in 2013 in Riyadh, KSA, by two partners, who are: 1- Salem Al sadi (Saudi citizen) 2- Lasros Beckham Company (London, UK). Gulf company produce Concrete for buildings and constructions Significant Accounting policy: A. N/A B. Cash and Cash Equivalent: Includes all Cash available for use C. Account Receivables: the amount of all the account receivables in balance sheet are net of doubtful debt. Doubtful debt amount has been estimated based on aging schedule and evaluation of each receivable. D. Account for Inventory: the method used is First in First out. Ending balance of inventory is presented at cost or market which ever is lower. E. Depreciation of Fixed Assets: The amount of fixed assets is net of accumulated depreciation. Depreciation is calculated based on the following fixed rate: Building and construction: 3-10% Tools and Equipment: 10%-25% Cars 15%-25% Trucks 10%-25% Furnitures and office equipment 12%-25% Cash and cash equivalent: Cash on hand Cash available for use in bank account Total 2019 57,449 610,233 667,682 2018 87,109 245,019 332,128 Account receivables Total account receivables Provision for doubtful Debt Net Account receivables 2019 12,306,348 (1,922,384) 10,383,964 2018 12,331,422 (1,687,044) 10,644,378 Inventory Raw Material office supplies Total 2019 282,074 16,564 298,638 2018 281,167 16,270 297,437 2018 1,302 1,302 Accounts receivable from /payable to related parties: This summarize all the related parties transactions that are not considered arm-length transactions A. Account receivables from related parties Customer Name 2019 SUNY office Total B. Payables to related parties: Supplier Name 2019 Western Company 27,864 Zagol Company 197,759 Lasros Company 8,881 Total 234,504 2018 43,651 23,628 22,090 89,369 Prepaid expenses Prepaid rent Other prepaid expenditures Insurance other payable 2019 4,000 30,078 10,000 24,531 2018 7,050 9,494 10,000 320,072 346,616 68,609 Property planet and equipment A. Net book value and accumulated depreciation Buildings Equipment & and constructions Tools Trucks Furnitures and office equipment Total 1,043,442 389,561 4,171,503 275,101 4,196,582 1,790,213 (28,000) 5,958,795 24,643,283 2,685,394 (632,838) 26,695,839 34,444,371 4,750,708 (660,838) 38,534,241 4,446,604 1,043,442 389,561 Cost Balance 1/1/2019 Addition during the year Disposable during the year Balance 31/12/2019 Less: Accumulated depreciation Balance. 1/1/2018 Depreciation during the year Disposable during the year Balance 31/12/2019 Net book value at 31/12/2019 Net book value at 1/1/2019 3,243,927 284,171 17,968,561 1,440,214 (632,838) 815,064 85,989 3,758,915 276,541 (28,000) 4,007,456 356,595 6,000 26,143,062 2,092,915 (660,838) 27,575,139 3,528,098 18,775,937 901,053 362,595 918.506 - 1.951,339 7,919,902 142,389 26.966 10.959.102 927576 437667 6674722 228378 32966 - 8.301.309 B. the lands of the Buildings and constrictions are registered under the Saudi partner's name as he is considered a representative of the company Bank Loans: All loans granted from local bank. 2019 2018 2,308,280 Beginning Balance Granted Loans during the year Paid Loans during the year Ending Balance Current portion of long term loans Long term loans as in Balance sheet 688,320 3,611,205 (1,312,967) 2,986,558 (1,805,595) 1,180,963 (1,619,960) 688,320 (688,320) Other current payables and provisions Accrued Salaries Vacation allowance Accrued travel expenses other accrued expenses Accrued miscellaneous expenses other provisions Total 2019 145,423 97,121 153,435 407,336 324,103 575,971 1,703,389 2018 152,325 83,024 138,842 406,833 347,587 783,475 1,912,086 Provision for End of service benefit Beginning Balance Paid during the year Recorded during the year Total 2019 1,118,754 (247,200) 178,397 1,049,951 2018 986,243 (41,982) 174,493 1,118,754 Share capital Share capital of SAR 6,000,000 is split equally between two partners: Salem Al sadi-Saudi Partner- Share percentage 50% Lasros Beckham- British company-Share percentage 50% Cost of Sales: This includes the following Raw material Water gas and oil Tires Labor salaries Insurance Maintenance for factory building tools rent other expenses Depreciation Total 2019 32,282,210 175,955 919,124 299,886 3,037,529 267,416 2018 31,026,382 143,746 909,359 262,166 3,007,395 399,913 123,074 126,730 29,672 2,012,299 39,273,895 135,556 116,430 34,483 1,784,560 37,819,990 General Administration expenses: This includes the following Salaries and wages School expenses Entertainment Expenses Insurance 2019 1,105,594 54,200 58,804 9,744 2018 1,106,627 35,790 45,434 26,146 Maintenance expenses for building 58,790 43,941 Utilities expenses 99,162 99,689 Office and Printing 38,405 40,894 Depreciation 80,616 84,468 oil and gas 130,963 126,708 Advertising 42,919 49,001 Payment to Partners 170,000 180,000 Allowance for doubtful Debt 278,340 End of service benefit 178,397 174,493 Total 2,305,934 2,013,191 The school expensese are paid to a private indian schools located in India The company submitted Withholding tax report for the year 2019. The report show the following details Vendor Vendor Type of Amount Paid name Address Service (SAR) IT consultation Tyson Co. Italy service 2,050,000 Recruitment JTC International Philippines service 55,000 Additional Information 1 Additional Information 2 The Company submitted the 2019 tax declaration (return) on March 30, 2020 Requirements: Log in the course ACCT 325 in Schoologhy. Under ASSIGNMENT folder, find the excel file named Gulf Company Case. Use the annual report provided in file to answer and complete the followings: 1- Is Gulf Company required to pay Zakat or tax for the fiscal year 2019, explain the reasons (4 marks). 2- Calculate the zakat amount due for the year 2019 (if applicable) (20 marks). 3- Calculate the Tax amount due for the year 2019 (if applicable)( 16 marks). 4- Is Gulf Company required to pay advance payments of tax during the fiscal year 2019? Explain (5 marks) 5- Are there any penalties that Gulf Company must pay to GAZT related to the fiscal year 2019? Calculate the penalties if applicable (5 marks) Gulf Company Balance sheet Statement For the year ended 2019 2019 SAR Note NO. 2018 SAR 7 Assets 8 INon current Assets 9 Net book value of PP & E 10 Spare Parts 11 Land 12 Total non current assets 8b 10,959,102 390,595 4,736,000 16,085,697 8,301,309 402,693 4,736,000 13,440,002 10,383,964 298,638 14 Current assets 15 Cash and cash equivalent 16 Account receivables-net 17 Inventory 18 Receivables from related parties 19 prepaid expenses 20 Total current assets 21 Total assets 22 23 Equity and Liabilities 24 Equity 25 Share Capital 26 Statutory Reserve 27 Retained earning 28 Total Equity 332,128 10,644,378 297,437 1,302 346,616 11,621,861 25,061,863 68,609 11,418,893 27,504,590 12 13 6,000,000 3,000,000 3,815,673 12,815,673 6,000,000 3,000,000 3,440,137 12,440,137 30 Non current liabilities 31 Long term loan 32 Warranty Provision 33 Provision for end of service benefits 34 Total non current Liabilities 1,180,963 250,000 1,049,951 2,480,914 250,000 1,118,754 1,368,754 35 36 Current liabilities 37 Current portion of long term loan 38 Account payable 39 Payables to related parties 40 other current payables and provisions 41 Total current liabilities 42 Total Liabilities 43 Total Equity and Liabilities 1,805,595 8,490,708 234,504 1,677,196 12,208,003 14,688,917 27,504,590 688,320 8,563,197 89,369 1,912,086 11,252,972 12,621,726 25,061,863 Gulf Company Income Statement For the year ended 2019 Gulf Company Income Statement For the year ended 2019 Note No. Revenues Cost of Sales Grose Profit 2019 SAR 45,979,810 (39,273,895) 6,705,915 2018 SAR 44,118,635 (37,819,990) 6,298,645 14 15 (2,013,191) 4,285,454 General Administration expenses Income from Operation Other income Finance cost/expenses Net Income (2,305,934) 4,399,981 41,000 (75,530) 4,365,451 16101 (61,842) 4,223,612 Gulf Company Changes in Equity Statements For the year ended 2019 Statutory Reserve 6,000,000 3,000,000 Capital Balance 1/1/2018 Distributed earnings Net income Reserve Balance 31/12/2018 Dividend Paid Net income Reserve Balance 31/1/2019 Retained Earning 2,953,212 (2,953,212) 4,223,612 (783,475) 3,440,137 (3,440,137) 4,365,451 (549,778) 3,815,673 Total 11,953,212 (2,953,212) 4,223,612 (783,475) 12,440,137 (3,440,137) 4,365,451 (549,778) 12,815,673 6,000,000 3,000,000 6,000,000 3,000,000 malam Gulf Company Cash flow statements For the year ended 2019 2019 SAR 2018 SAR 4,365,451 4,223,612 2,092,915 791,676 178,397 (41,000) 1,869,028 995,731 174,493 Cash flow from Operation 5 Net income 5 Adjust for: Depreciation for Fixed Assets 3 Used Spare parts Provision of end of service benefits Gain from selling Fixed Assets 1 Changes in 2 Account receivables 3 Inventory Account receivables from related parties 5 Prepaid expenses 5 Account payable 7 Payables to related parties 3 other current payables and provisions e Paid end of service benefit O Net cash generated from operating activities 260,414 (1,201) 1,302 278,007 (72,489) 145,135 (784,668) (247,200) 6,966,739 (1,078,756) (52,964) 4,586 (263,700) 1,248,170 (5,118) (721,579) (41,982) 6,351,521 2 Cash flow from Investing Activities 3 Addition to Fixed Assets 4 Addition to Spare parts 5 Proceeds from selling Fixed assts 6 Net Cash Used in Investing Activities (1,994,609) (1,007,983) (4,750,708) (779,578) 41,000 (5,489,286) (3,002,592) 8 Cash flow from Financing Activities 9 Loans 0 Dividend Paid 1 Net Cash Used in Financing Activities 2 Net change in Cash and Cash Equivalents 3 Beginning Cash and Cash equivalent 4 Ending Cash and Cash Equivalent 2,298,238 (3,440,137) (1,141,899) 335,554 332,128 667,682 (1,619,960) (2,953,212) (4,573,172) (1,224,243) 1,556,371 332,128 8 Note to the Financial Statements: The Gulf Limited partnership company established in 2013 in Riyadh, KSA, by two partners, who are: 1- Salem Al sadi (Saudi citizen) 2- Lasros Beckham Company (London, UK). Gulf company produce Concrete for buildings and constructions Significant Accounting policy: A. N/A B. Cash and Cash Equivalent: Includes all Cash available for use C. Account Receivables: the amount of all the account receivables in balance sheet are net of doubtful debt. Doubtful debt amount has been estimated based on aging schedule and evaluation of each receivable. D. Account for Inventory: the method used is First in First out. Ending balance of inventory is presented at cost or market which ever is lower. E. Depreciation of Fixed Assets: The amount of fixed assets is net of accumulated depreciation. Depreciation is calculated based on the following fixed rate: Building and construction: 3-10% Tools and Equipment: 10%-25% Cars 15%-25% Trucks 10%-25% Furnitures and office equipment 12%-25% Cash and cash equivalent: Cash on hand Cash available for use in bank account Total 2019 57,449 610,233 667,682 2018 87,109 245,019 332,128 Account receivables Total account receivables Provision for doubtful Debt Net Account receivables 2019 12,306,348 (1,922,384) 10,383,964 2018 12,331,422 (1,687,044) 10,644,378 Inventory Raw Material office supplies Total 2019 282,074 16,564 298,638 2018 281,167 16,270 297,437 2018 1,302 1,302 Accounts receivable from /payable to related parties: This summarize all the related parties transactions that are not considered arm-length transactions A. Account receivables from related parties Customer Name 2019 SUNY office Total B. Payables to related parties: Supplier Name 2019 Western Company 27,864 Zagol Company 197,759 Lasros Company 8,881 Total 234,504 2018 43,651 23,628 22,090 89,369 Prepaid expenses Prepaid rent Other prepaid expenditures Insurance other payable 2019 4,000 30,078 10,000 24,531 2018 7,050 9,494 10,000 320,072 346,616 68,609 Property planet and equipment A. Net book value and accumulated depreciation Buildings Equipment & and constructions Tools Trucks Furnitures and office equipment Total 1,043,442 389,561 4,171,503 275,101 4,196,582 1,790,213 (28,000) 5,958,795 24,643,283 2,685,394 (632,838) 26,695,839 34,444,371 4,750,708 (660,838) 38,534,241 4,446,604 1,043,442 389,561 Cost Balance 1/1/2019 Addition during the year Disposable during the year Balance 31/12/2019 Less: Accumulated depreciation Balance. 1/1/2018 Depreciation during the year Disposable during the year Balance 31/12/2019 Net book value at 31/12/2019 Net book value at 1/1/2019 3,243,927 284,171 17,968,561 1,440,214 (632,838) 815,064 85,989 3,758,915 276,541 (28,000) 4,007,456 356,595 6,000 26,143,062 2,092,915 (660,838) 27,575,139 3,528,098 18,775,937 901,053 362,595 918.506 - 1.951,339 7,919,902 142,389 26.966 10.959.102 927576 437667 6674722 228378 32966 - 8.301.309 B. the lands of the Buildings and constrictions are registered under the Saudi partner's name as he is considered a representative of the company Bank Loans: All loans granted from local bank. 2019 2018 2,308,280 Beginning Balance Granted Loans during the year Paid Loans during the year Ending Balance Current portion of long term loans Long term loans as in Balance sheet 688,320 3,611,205 (1,312,967) 2,986,558 (1,805,595) 1,180,963 (1,619,960) 688,320 (688,320) Other current payables and provisions Accrued Salaries Vacation allowance Accrued travel expenses other accrued expenses Accrued miscellaneous expenses other provisions Total 2019 145,423 97,121 153,435 407,336 324,103 575,971 1,703,389 2018 152,325 83,024 138,842 406,833 347,587 783,475 1,912,086 Provision for End of service benefit Beginning Balance Paid during the year Recorded during the year Total 2019 1,118,754 (247,200) 178,397 1,049,951 2018 986,243 (41,982) 174,493 1,118,754 Share capital Share capital of SAR 6,000,000 is split equally between two partners: Salem Al sadi-Saudi Partner- Share percentage 50% Lasros Beckham- British company-Share percentage 50% Cost of Sales: This includes the following Raw material Water gas and oil Tires Labor salaries Insurance Maintenance for factory building tools rent other expenses Depreciation Total 2019 32,282,210 175,955 919,124 299,886 3,037,529 267,416 2018 31,026,382 143,746 909,359 262,166 3,007,395 399,913 123,074 126,730 29,672 2,012,299 39,273,895 135,556 116,430 34,483 1,784,560 37,819,990 General Administration expenses: This includes the following Salaries and wages School expenses Entertainment Expenses Insurance 2019 1,105,594 54,200 58,804 9,744 2018 1,106,627 35,790 45,434 26,146 Maintenance expenses for building 58,790 43,941 Utilities expenses 99,162 99,689 Office and Printing 38,405 40,894 Depreciation 80,616 84,468 oil and gas 130,963 126,708 Advertising 42,919 49,001 Payment to Partners 170,000 180,000 Allowance for doubtful Debt 278,340 End of service benefit 178,397 174,493 Total 2,305,934 2,013,191 The school expensese are paid to a private indian schools located in India The company submitted Withholding tax report for the year 2019. The report show the following details Vendor Vendor Type of Amount Paid name Address Service (SAR) IT consultation Tyson Co. Italy service 2,050,000 Recruitment JTC International Philippines service 55,000 Additional Information 1 Additional Information 2 The Company submitted the 2019 tax declaration (return) on March 30, 2020 Requirements: Log in the course ACCT 325 in Schoologhy. Under ASSIGNMENT folder, find the excel file named Gulf Company Case. Use the annual report provided in file to answer and complete the followings: 1- Is Gulf Company required to pay Zakat or tax for the fiscal year 2019, explain the reasons (4 marks). 2- Calculate the zakat amount due for the year 2019 (if applicable) (20 marks). 3- Calculate the Tax amount due for the year 2019 (if applicable)( 16 marks). 4- Is Gulf Company required to pay advance payments of tax during the fiscal year 2019? Explain (5 marks) 5- Are there any penalties that Gulf Company must pay to GAZT related to the fiscal year 2019? Calculate the penalties if applicable