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Business Accounting
Applications were invited by the directors of Grobigg Ltd for 150,000 of its £1 ordinary shares at £1.15 per share payable as follows:Applications were received for 180,000 shares and it was
M Limited has an authorised share capital of £1,500,000 divided into 1,500,000 ordinary shares of £1 each. The issued share capital at 31 March 2017 was £500,000 which was fully paid, and had been
During the year to 30 September 2017, Kammer plc made a new offer of shares. The details of the offer were as follows:1100,000 ordinary shares of £1 each were issued payable in instalments as
Why do you think companies issue loan notes rather than making a new share issue?
A company’s statement of financial position appears as follows:Required:(a) If £19,200 of the ordinary shares were purchased at par, there being no new issue of shares for the purpose, show the
Loan notes of £48,000 are issued on 1 January 2017. Redemption is to take place, on equal terms, four years later. The company decides to put aside an equal amount to be invested at 6% which will
Some years ago M plc had issued £375,000 of 10% loan notes 2016/2020 at par. The terms of the issue allow the company the right to repurchase these loan notes for cancellation at or below par, with
The following information relates to White Rabbit Trading plc:On 1 February 2017 the company closed the list of applications for 400,000 ordinary shares at a premium of 50p. The shares were to be
During the year to 30 September 2016, Popham plc issued 100,000 £1 ordinary shares. The terms of the offer were as follows:Applications were received for 200,000 shares. The directors decided to
On 30 June 2017 Jones and Sons Ltd acquired all the assets, except the investments, of Spade Ltd. The following are the summaries of the statements of profit or loss of Spade Ltd for the years ending
CJK Ltd was incorporated on 15 December 2016 with an authorised capital of 200,000 ordinary shares of £0.20 each to acquire as at 31 December 2016 the business of CK, a sole proprietor, and RP Ltd,
The statement of financial position of Hubble Ltd as at 31 May 2017 is shown below.Hubble Ltd agreed to purchase at this date the freehold premises, plant and machinery and inventory of A Bubble at
From the following information you are required to prepare a statement apportioning the retained profit between the pre-incorporation and post incorporation periods, showing the basis of
Have a look at Exhibit 11.1: why do you think there is such an emphasis on the qualitative aspects of information in the Framework for the Preparation and Presentation of Financial Statements?
In preparing its accounts for the year to 31 May 2017, Whiting plc had been faced with a number of accounting problems, the details of which were as follows:(i) The company had closed down its entire
Why do you think many UK and Irish companies are switching voluntarily to international accounting standards?
The ledger balances of Timely Ltd at 31 March 2018 were as follows:A capital reduction scheme has been sanctioned under which the 450,000 preference shares are to be reduced to 60p each, fully paid;
The statement of financial position of Tatters Ltd on 31 December 2015 was as follows:The dividend on the preference shares is £12,000 in arrears. A scheme of reconstruction was accepted by all
On 31 March 2016, the following was the statement of financial position of Greenmantle Ltd:The following scheme of capital reduction was sanctioned by the Court and agreed by the shareholders:(a)
Deflation Ltd, which had experienced trading difficulties, decided to reorganise its finances. On 31 December 2016 a final trial balance extracted from the books showed the following
The Merton Manufacturing Co Ltd has been in business for many years making fitted furniture and chairs. During 2017 and 2018 substantial losses have been sustained on the manufacture of chairs and
An extract from the draft financial statements of Either Ltd at 30 November 2018 shows the following figures before allowing for any dividend which might be proposed:Additional information:(i) The
The following figures appeared in W Ltd’s statement of financial position at 31 March 2017:During the year ended 31 March 2018, W Ltd made a payment of £520,000 to Revenue and Customs in
Rowlock Ltd was incorporated on 1 October 2015 to acquire Rowlock’s mail order business, with effect from 1 June 2015.The purchase consideration was agreed at £35,000 to be satisfied by the issue
Joytan Ltd has a trading profit, before dealing with any of the undermentioned items, for the year ended 31 December 2017 of £500,000. Prepare the statement of profit or loss for the year.(a) The
Sunset Ltd has an operating profit for the year ended 31 December 2016, before dealing with the following items, of £150,000. Complete the statement of profit or loss.(a) The standard rate of income
The following information relates to Kemp plc for the year to 31 March 2016:Required:Write up the following accounts for the year to 31 March 2016, being careful to insert the appropriate date for
Corporation tax for the tax years 2014, 2015, and 2016 was 40% and income tax for each year was 20%.(A) Tilt Ltd’s draft statement of profit or loss for the year ending 31 December 2015 shows a net
Frank Jon Ltd has just finished its first year of trading to 31 December 2016. Corporation tax throughout was 40% and income tax 20%. You are given the following information:(i) Net trading profit,
(a) When would it be appropriate for an entity to adopt a financial concept of capital?(b) When would it be appropriate for an entity to adopt a physical concept of capital?
The directors are preparing the published accounts of Dorman plc for the year to 31 October 2018. The following information is provided for certain of the items which are to be included in the final
Oldfield Enterprises Limited was formed on 1 January 2018 to manufacture and sell a new type of lawn mower. The bookkeeping staff of the company have produced monthly figures for the first 10 months
F Gibb Ltd has a branch in Stirling at which a full set of books is kept. At the end of the year the following summary is compiled of the transactions between the branch and headquarters as recorded
A large bakery scrapped all its equipment and replaced it with new equipment purchased on hire purchase over a period of three years, paying £9,980 on 1 January 2016, and further annual payments of
On 1 January 2015 J McFarlane bought a computer (cash price £2,092) from Pear Ltd on the following hire purchase terms. McFarlane was to make an immediate payment of £600 and three annual payments
The following trial balance has been extracted from the books of Patt plc as at 31 March 2017:Additional information:1 Following the preparation of the above trial balance, the following additional
The following information has been extracted from the books of Quire plc as at 30 September 2018.The following additional information is to be taken into account:1 Inventory at 30 September 2018 was
You are presented with the following information relating to Plott plc for the year to 31 March 2018:Additional information:1 The above information has been obtained after the compilation of the
The trial balance of Jeremina plc as at 31 March 2016 is as follows:(i) Inventory of finished goods on 31 March 2016 £163,000.(ii) Motor expenses and depreciation on motors to be apportioned:
The following trial balance has been extracted from the books of Baganza plc as at 30 September 2017:Additional information:1 The inventory at 30 September 2017 was valued at £3,600,000.2
After the statement of profit or loss and statement of changes in equity have been prepared for the year ending 30 April 2017, the following balances remain in the books of Tree plc. Prepare a
Why do you think companies might ignore the requirements of International GAAP in this case?
The following balances remained in the books of AK Ltd on 31 March 2017, after the statement of profit or loss had been drawn up. You are to draft the statement of financial position as at 31 March
Why does the above list not split the liabilities into non-current and current?
Bunker plc is a trading company; it does not carry out any manufacturing operations. The following information has been extracted from the books of account for the year to 31 March 2017:Additional
The following balances have been extracted from the books of Mitchell plc on 31 July 2016. From them draw up (i) a detailed statement of profit or loss for internal use, for the year ending 31 July
From the following balances in the books of Breaker plc you are to draw up (i) a detailed statement of profit or loss for the year ending 31 March 2017 for internal use, and (ii) a statement of
From the following selected balances of Royal Oak plc as at 31 March 2018 draw up (i) a detailed statement of profit or loss for internal use, and (ii) a statement of profit or loss for
What do you think the advantages of companies having to follow set rules in this case may be?
With reference to IAS 10 Events after the reporting period and IAS 37 Provisions, contingent liabilities and contingent assets:(a) Define the following terms:(i) Events after the reporting period(ii)
The chief accountant of Uncertain Ltd is not sure of the appropriate accounting treatment for a number of events occurring during the year 2016/17.(i) A significant number of employees have been made
The accountant of Hook, Line and Sinker, a partnership of seven people, has asked your advice in dealing with the following items in the partnership accounts for the year to 31 May 2017.(a) (i)
Do you think that such a system of self-regulation is appropriate?
General information on the Lytax group of companies: Lytax Ltd is a company in the building construction industry.It has three regional offices, North Borders, Midlands and South Downs, which are
You are required to prepare the contract account for the year ended 31 December 2017, and show the calculation of the sum to be credited to profit and loss for that year.On 1 April 2017 MN Ltd
Cantilever Ltd was awarded a contract to build an office block in London and work commenced at the site on 1 May 2017.During the period to 28 February 2018, the expenditure on the contract was as
Bulwell Aggregates Ltd wish to expand their transport fleet and have purchased three heavy lorries with a list price of £18,000 each. Robert Bulwell has negotiated hire purchase finance to fund this
D Lane purchased two cars for his business under hire purchase agreements:Both agreements provided for payment to be made in 24 monthly instalments commencing on the last day of the month following
On 31 March 2014, D Biggs, who prepares his financial statements to 31 March, bought a lorry on hire purchase from Truck Fleet Ltd. The cash price of the lorry was £61,620. Under the terms of the
J Tocher started business on 1 April 2016 selling one model of digital cameras on hire purchase. During the year to 31 March 2017 he purchased 2,000 cameras at a uniform price of £110 and sold 1,900
RJ commenced business on 1 January 2018. He sells refrigerators, all of one standard type, on hire purchase terms. The total amount, including interest, payable for each refrigerator is £300.
Object Limited is a retail outlet selling word processing equipment both for cash and on hire purchase terms. The following information has been extracted from the books of account as at 31 August
On 1 January 2016, F Limited commenced business selling goods on hire purchase. Under the terms of the agreements, an initial deposit of 20% is payable on delivery, followed by four equal quarterly
On 1 January 2016, Carver bought a machine costing £20,000 on hire purchase. He paid a deposit of £6,000 on 1 January 2016 and he also agreed to pay two annual instalments of £5,828 on 31 December
The financial statements of Banaghan Ltd are made up to 31 March in each year. Work on Contract 32 started on 1 July 2016 and completed on 31 January 2018. The total contract price was £1,200,000
Stannard and Sykes Ltd are contractors for the construction of a pier for the Seafront Development Corporation. The value of the contract is £300,000, and payment is by engineer’s certificate
Dundas Limited purchased a machine under a hire purchase agreement on 1 January 2015. The agreement provided for an immediate payment of £2,000, followed by five equal instalments of £3,056, each
The authorised and issued share capital of Cosy Fires Ltd was £75,000 divided into 75,000 ordinary shares of £1 each, fully paid. On 2 January 2017, the authorised capital was increased by a
Jonny Ltd has a nominal share capital of £600,000 comprising 600,000 ordinary shares of £1 each. The whole of the capital was issued at par on the following terms:Applications were received for 1
Easy Heart Ltd has an authorised capital of £800,000 comprising ordinary shares of £1 each. The shares were issued at par, payments being made as follows:Applications were received for 1.08 million
Camden Lock Ltd has just finished its second year of trading to 31 December 20X7. Balances from Question 7.1 need to be brought forward into this question. Tax rates are the same as for 20X6.The
In preparing its accounts for the year to 31 May 20X7, Whiting plc had been faced with a number of accounting problems, the details of which were as follows:(i) The company had closed down its entire
From the following balances in the books of Breaker plc you are to draw up (i) A detailed trading and profit and loss account for the year ended 31 March 20X4 for internal use, and (ii) A profit
With reference to FRS 21: Events after the balance sheet date and FRS 12: Provisions, contingent liabilities and contingent assets:(a) Define the following terms:(i) Post-balance sheet events(ii)
What are the two rules of consolidation?
The following balance sheets were drawn up immediately after Pop Ltd had acquired control of Son Ltd. You are to draw up a consolidated balance sheet. Pop Balance Sheet Investment in Son Ltd: 1,600
Draw up a consolidated balance sheet from the balance sheets of Parental Ltd and Sibling Ltd that were drafted immediately after the shares in S Ltd were acquired by P Ltd. Parental Balance
Draw up a consolidated balance sheet from the following balance sheets which were drawn up as soon as Papai Ltd had acquired control of Sonny Jim Ltd. Papai Balance Sheet Investment in Sonny Jim Ltd:
Prepare a consolidated balance sheet from the following balance sheets of Pa Ltd and Sonny Ltd which were drawn up immediately after Pa Ltd had acquired the share capital of Sonny Ltd. Pa Balance
Papi Ltd acquired all the shares in Son and Sister Ltd and then the following balance sheets were drawn up. You are to prepare a consolidated balance sheet. Papi Balance Sheet Investment in Son and
Parent Ltd acquires 60 per cent of the shares in Siblings Together Ltd. Balance sheets are then drafted immediately. You are to draw up the consolidated balance sheet. Parent Balance Sheet Investment
Parents United Ltd acquires 95 per cent of the shares of Son and Friends Ltd. The following balance sheets are then drafted. You are to draw up the consolidated balance sheet. Parents United Balance
Papa and Mamae Ltd buys 662/3 per cent of the shares in Son and Daughter Ltd. You are to draw up the consolidated balance sheet from the following balance sheets constructed immediately control had
After Pop and Mum Ltd acquired 75 per cent of the shares of Sons and Cousins Ltd the following balance sheets are drawn up. You are to draw up the consolidated balance sheet. Pop and Mum Balance
Immediately after Pai and Family Ltd had acquired control of Son One Ltd and Son Two Ltd the following balance sheets were drawn up. You are to draw up a consolidated balance sheet. Pai and Family
Immediately after Parent Acquisition’s Ltd had acquired control of Sibling One Ltd and Sibling Two Ltd the following balance sheets were drawn up. You are to draw up a consolidated balance sheet.
Immediately after Pa, Ma and Co Ltd had achieved control of Sub 1 Ltd and Sub 2 Ltd the following balance sheets are drawn up. You are to draw up the consolidated balance sheet. Pa, Ma and Co Balance
The following balance sheets of Parents Forever Ltd, Sonny 1 Ltd and Sonny 2 Ltd were drawn up as soon as Parents Forever Ltd had acquired the shares in both subsidiaries. You are to draw up a
Pa Ltd buys 100 per cent of the shares of Son Ltd on 31 December 20X2. The balance sheets of the two companies on 31 December 20X3 are as shown. You are to draw up a consolidated balance sheet as at
Why do you think it would be a ‘bad’ thing to distribute as dividends the reserves acquired at the time of acquisition?
Pa and Ma Ltd bought 60 per cent of the shares of Son and Daughter Ltd on 31 March 20X4. The balance sheets of the two companies on 31 March 20X5 are as follows. You are to draw up a consolidated
Papai Ltd bought 51 per cent of the shares in Sons and Co Ltd on 31 October 20X7. From the following balance sheets you are to draw up the consolidated balance sheet as at 31 October 20X8. Papai
Parent Company Ltd buys shares in Subsidiary 1 and Subsidiary 2 on 31 December 20X7. You are to draft the consolidated balance sheet as at 31 December 20X8 from the following: Parent Company Balance
PLtd bought 40,000 shares in S1 Ltd and 27,000 shares in S2 Ltd on 31 December 20X2. The following balance sheets were drafted as at 31 December 20X3. You are to draw up a consolidated balance sheet
The following information relates to Heather Limited and its subsidiary, Thistle Limited.1. Heather LimitedRetained profits as at 31 March 20X8 £700,000.80,000 ordinary shares were purchased in
Prepare a consolidated balance sheet from the following details as at 31 March 20X6.During the year, Parent sold goods which had cost £1,100 to Subsidiary for £1,800. None of these goods had been
If the amount at which the stock is included in the balance sheet of each company is the amount the stock cost that company, why would the total derived not represent the total cost of the unsold
Why do you think this intra-group profit must be eliminated upon consolidation?
Draw up a consolidated balance sheet as at 31 December 20X7 from the following:At the balance sheet date, Sonny owes Pop and Mom £1,600.During the year Pop and Mom sold goods which had cost £3,000
What could be the benefit to a group if companies within the group were to sell goods to other companies in the group at below cost?
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