Answer this question in detailed
1. The following is the trial balance of Isatou at 31 August 2019: EDr Ecr Sales 670000 Purchases 220000 Communication expenses 41000 Insurance 27000 Miscellaneous expenses 7000 Marketing expenses 28000 Staff bonuses paid 32000 Payroll costs 160000 Business rates 83000 Energy costs 48000 Inventory (stock) at 01 09 18 10000 Interest on loan 4000 Long-term loan 80000 Balance at bank 300 Cash 1000 Drawings 38000 Land and buildings 400000 Equipment 120000 Capital (01 09 18) 432000 Accounts receivable (debtors) 44000 Accounts payable (creditors) 39000 Totals 1221000 1221000 Notes at 31 August 2019: The value of inventory was f12000 Insurance expenses prepaid amounted to $2000 Payroll costs owing amounted to $4000 Ignore depreciation (a) Prepare the income statement (trading and profit and loss account) for the year ended 31 August 2019. [13 marks] (b) Prepare the position statement (balance sheet) as at 31 August 2019. [12 marks]5. On 1 October 2019 a business made the following forecasts of the next three months' receipts and payments: E E E October November December Cash sales 9000 11000 15000 Cash purchases 2900 5200 1500 Wages payments 1400 1400 1250 Purchase of equipment 12000 Annual insurance payment 3800 Other expenses 2900 3100 3800 The budgeted bank and cash balance as at 1 October 2019 is expected to be E8200. (a) From the above data, prepare a cash flow forecast for the period 1 October to 31 December 2019 inclusive. [17 marks] (b) Comment on the anticipated financial performance of the business. [8 marks]4. (a) The following data applies to a business: Year ended 31 December 2016. Total capital employed f120000. Year ended 31 December 2017. Total capital employed f150000. Year ended 31 December 2018. Total capital employed f190000. Net profit for the year ended 31/12/16 was f20000. Net profit for the year ended 31/12/17 was $30000. Net profit for the year ended 31/12/18 was f40000. (i) For each of the three years calculate the return on capital employed (ROCE). [6 marks] (ii) Outline the trend revealed by these calculations. [2 marks] (b) Explain the process of applying for a large business loan. [8 marks] (c) Outline the benefits of a business setting up direct debits for regular payments from their bank. [4 marks] (d) There are two partners in a partnership (X and Y). Their agreed profit sharing ratio is X 60% and Y 40%. In their last year their total sales revenue was f110000 and their total expenses were $50000. (i) Calculate the partnership profit. [1 mark] (ii) Calculate each partner's share of the profit. [4 marks]3. The following are the summarised final accounts of a trader: Profit and loss account (income statement); EOOO Sales 1950 Cost of sales (1000) Gross profit 950 Expenses 490) Net profit 460 Balance sheet (position statement): Fixed assets (non-current assets) 540 Inventory (stock] 150 Accounts receivable (debtors) 130 Cash and bank 10 Accounts payable (creditors) 360) Total capital 470 Note: the value of the opening stock (inventory) was E120000. (a) Calculate the following ratios: (i) Gross profit to sales percentage [3 marks] (1i) Net profit to sales percentage [3 marks] (iii) The rate of stock (inventory) turnover [3 marks] (iv) The expenses to sales percentage [3 marks] (v) The current ratio [3 marks] (vi) The acid test [3 marks] (b) Comment briefly on the financial performance of the business. [7 marks] For information the equivalent ratios for the previous year were: gross profit percentage 50%; net profit percentage 22%; the rate of stock turnover 5; current ratio 2:1; acid test 1:1
