END OF YEAR 28 FEBRUARY 1998 Bale and Cowley Ltd Trial balance at 28 February Dr () Cr () 7 623 949 Sales Purchases Directors' fees Wages and salaries Directors salaries Heat and light Postage and stationery Telephone Advertising and promotion 5 266 910 22 000 687 420 95.000 25 506 16 455 12 943 52 562 Rates and insurance 32 859 Vehicle running expenses 33 759 Sundry expenses 11 980 Repairs to buildings 29 840 Interest paid 13 500 Repairs and renewals 8.564 Sale of van proceeds 5.000 - Accounting Interim dividend 12 000 5.000 VAT Stock at 1st March Bank current account Debtors control account Land and buildings - at cost - depreciation 563 927 14 087 24 453 863 105 1 077 500 32.500 Fixtures and fittings - at cost 97 121 - depreciation 29 136 Office equipment - at cost 93 477 - depreciation 35 054 Computer equipment - at cost 75 311 depreciation 21 324 Vehicles - at cost 142 895 depreciation 34 261 29 000 250 000 Provision for doubtful debts Ordinary 1 shares Share premium Cumulative redeemable 8% 1 preference shares Profit and loss account General reserve Debentures 9% Creditors control account 9 264 087 25 000 200 000 340 089 120 000 150 000 354 687 9 264 087 Note: Land and buildings include the value of the site at 265 000, the remaining balance relates to the buildings. List of debtor balances Adams supplies 223 126 Brooke and company 47 689 Carter and Son 113 546 Davids Plastics 167 600 Ebbots Ltd. 19 451 Frank Brothers 97 624 General Supplies Ltd Harry and Jarvis Total Balance per debtors control account List of supplier balances 83 667 110 402 863 105 863 105 Alan and Company Bank's Office Equipment Clement's Computers Davies Computers Edward's Ltd 123 402 47 621 34 702 86.354 62 608 Total 354 687 Balances per purchase ledger control 354 687 End of year adjustments At the 28 February there is an estimated amount of 587 outstanding for electricity and 353 outstanding for the telephone. The insurance includes prepayments of 500. Depreciation on fixed assets will need to be calculated according to the following rates on a straight line basis assuming no scrap value:

Buildings Fixtures and fittings Office equipment Computer equipment Vehicles 2% 10% 8% 25% 25% During the year a vehicle was sold for 5000 which had originally been purchased for 15000 although it had been depreciated by 7500. The only entry made for this was to debit the bank with the cash received and credit 'Sale of fixed asset' account. Looking at the age analysis of debts. Azina and John have agreed that the provision for doubtful debts needs to be increased to 45 000. In addition the debt due from Ebbots Ltd needs to be written off as a bad debt. A provision for corporation tax will need to be made estimated at 354 000. The dividend will need to be agreed but Azina thinks they should be in a position to pay a final dividend of 5p per share. In addition a transfer to general reserve is required amounting to 100 000. Closing stock has been counted for at 642 611. Finally a provision for Bill's audit fee of 4000 is needed.

Points of concern Adams Supplies have a credit limit of 220 000. Should Azina be concerned that their current balance is 223 126? What should she do next? A cheque to the value of 5500 received from Frank Brothers has been returned by the bank. A credit note for 12.300 has been posted to Carter and Son instead of Frank Brothers. Azina had received a very irate phone call from Simon Frank the managing director of Frank Brothers after he had received the monthly statement. Harry and Jarvis had also phoned querying the balance on their statement. They claimed they had sent a cheque to the value of 14 575 in December and wanted to know why it had not been posted against their account. Their bank statement showed that the cheque had not been presented. After exhaustive checks Azina phoned to inform them that it appeared that the cheque had been lost in the post. She advised them to cancel the cheque with their bank and requested from thema replacement cheque. During a visit from the VAT inspector three invoices were found to have been missed out when posting to the ledgers. Brooke and Company Davids Plastics General Supplies Net () 3 200.00 1 740.00 672.00 VAT () 560.00 304.50 117.60 This was quite worrying as John and Azina thought that their systems would not allow this to happen. What can they do to ensure that this does not happen in the future? A cheque sent to Alan and Company for 5675.00 had been posted to the account of Clements Computers. A credit note received from Davies Computers for &10 725 gross had been posted against Edwards Ltd.

In January a delivery of printers from Alan and Company were found to be damaged. Of the ten printers delivered four had been returned and Azina had requested a credit note for 3120.00. She now noted that although Alan and Company had agreed that the printers were damaged in transit, no credit note had been received. An electricity bill for 643 had been posted to the telephone account. Postage and stationery worth 184.34 had mistakenly been posted to advertising and promotion.