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Double-Entry Accounting, Income Statement and Balance Sheet for Finnish Company

Understanding Double-Entry Accounting Principles

Why?  So that you will better see the interaction between double-entry accounting, the income statement and balance sheet! The third thing required is a cash flow statement, however not for small firms like this. 
Use the attached excel sheet and create an INCOME STATEMENT and a BALANCE SHEET! 
Your company is registered in Finland and follows Finnish laws! Your Fiscal year is from 1st of January to 31st of December 2021
Please enter the following transactions!
1.       10.11.2021 You and your partner Eriksson invest 10000 euro each or 20000 as Share Capital (aktiekapital, osakepääoma, equity)
2.       11.11.2021 You receive a 1000000 euro 5 year bullet Capital Investment Loan (kapitalinvesteringslån, pääomalaina) from your co-partner Alfons Hakans. The interest payment is yearly on the tenth of October. He wants you to work with him and he wants a 10% yearly interest rate. This capital loan can be counted as Equity according to Finnish law! And is recommended 2020-1 in Finland (instead of increased shares, aktiekapital, osakkeet) due to tax, ownership and repayment reasons.
3.       12.11.2021 You receive a 10 year bullet loan of 1000000 from Ålandsbanken, with an yearly interest rate of 1 year Euribor + 1,5% to be paid yearly after 1 year from lifting the loan. However, the interest rate to the reference rate is at least 0%. The bank charges you a 500 euro fee for lifting the loan! 
4.       13.11.2021 You buy a one year used ship from an Indian company for 1,6 million euro. No tax nor VAT!
5.       14.11.2021 You buy fuel in Turku for 100000 euro (on the receipt is a VAT of 24%). So you will in reality receive this back from the taxman (Minskatt). So in this bookkeeping programme you will have to book it among the balance sheet accounts!  In reality you would have to clear the VAT account before the 12th of January 2022. So that is what we will do! We will pay it first on the 12.1.2022!
6.       14.11.2021 You receive your first income on your bank account. It is 200000 euro! The invoice that you send had a VAT (moms, alv of 24%). In reality as note above you would have to "clear" the VAT first on the 12th of January 2022. 
7.       Now just have a look at you the VAT, when do you have to pay that?  And how much is it? Look at Thus just leave this "row" empty. However, recall that you have both VAT receivable and VAT to pay. This should be cleared at some point until that you consider the VAT as debt or receivable not affecting your result (Income statement)! Check how you have booked the VAT at point 5 and 6 above! First on the 12th of January 2022 you will pay the VAT from November 2021.   
8.       Also on 14th of November you pay your first salaries to yourself and your founding partner 5000 each = 10000 + social costs and pension fees! Use or to calculate your extra social costs. You will get that automatically from both calculators in this assignment or you can google it. To make it easier for you you can use 25% in the above. In the field (Muut pakolliset vakuutukset). Note that you have to both pay YEL and TyEL "insurances". And look at how much you receive in salary after social costs if your personal tax rate is 25% (yes you also pay for part of your pension 8,25% and 1,5% for your Finnish unemployment insurance. You are 35 years old. You pay this right away! In order to get this right you may note that Finland ratified the Maritime Labour Convention in 2013 and now about 2/3rds of the world's ships sail under this convention. For A good link in English can be found at 1 of the 4 pension providing funds in Finland Ilmarinen or Varma.  Assume that you plan to pay 60000 per year or 5000 per month for each entrepreneurs (-22% discount for the first 4 years). The calculators does not include the 25% income tax nor the pension cost 8,25% nor the 1,5% unemployment insurance! So subtract 25% + 8,25% + 1,5% from the salary paid out! We will have a look at this during the lecture.
9.       Make a 5% depreciation (avskrivning, poisto) on your Ship. This is not the max depreciation! However, close to what is used in the shipping industry i.e. a ship last for about 20-25 years? In a case with a potentially used ship (e.g. 1 year old) you probably could make higher. However, this time you do not want to do that! 
10.   Close the accounts (assume it is 31.12.2021) , i.e. calculate the operating profit before tax. Or the operating loss? See to get the right corporate tax rate! In 2021 it is 20% of the shown profit! Calculate how much you have to pay in tax for the year and book it as Tax debt. Close all accounts and make the income statement and balance sheet. This should be done automatically, however what happens if we show a loss? You might have to make changes in the excel sheet? 
Do note that tax rates are high in Finland!

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