Question
Case: Show Accounting Expertise as Mid-Manager The key areas of interest to the financial accountant of the business unit are the capital structure which is
Case: Show Accounting Expertise as Mid-Manager
The key areas of interest to the financial accountant of the business unit are the capital structure which is an indicator of the business survival in the long run. The issue of shares to raise funds is usually done with befitting effort. One other option is to consider cash management The finance of a company can be classified according to a number of factors including time, repayability, rights among others. In Uganda the securities market is quite shallow and not very popular among the population. Individuals may opt to form partnerships; while partnerships may graduate to companies. On completion of your studies, you are offered a job at FAM Ltd Records of this company as at 30 June 2021 are summarized as follows:
Shs. (000)
Fleet of delivery vehicles, after deducting depreciation 70,000
Furniture and fittings, after deducting depreciation 40,000
Trade receivables 60,000
Bank deposit 130,000
Creditors 10,000
Ordinary Share Capital 190,000
10% Debentures 80,000
Bank Loans 20,000
On 1st May 2021 management of the company issued additional 10,000 ordinary shares of Shs. 1,000; and 20,000 10% Debenture of Shs. 1,000 each and received all the cash duly banked. The manager of FAM Ltd has a personal business named Gag Ent. where he is suspecting that the in-charge officer is stealing her money and provides you with the data below:
Balances Brought Forward (Shs. 000) | |||
Motor Vehicles | 90,000 | Cash Balance | 100,000 |
Furniture and fittings, | 110,000 | Capital | ? |
Trade receivables | 30,000 | Additional Capital | 150,000 |
Bank Balance | 50,000 | Prepaid Insurance | 40,000 |
Inventory at Close | 4,000 | Umeme Bills Due | 24,000 |
Creditors | 70,000 | Unpaid Salaries | 20,000 |
Motor Vehicles | 110,000 | Outstanding Rent | 10,000 |
Bank Loans | 130,000 | Machinery | 240,000 |
Transactions during the year (Shs. 000) | |||
Sales | 670,000 | Discount Received | 15,000 |
Purchases | 340,000 | Discount Allowed | 20,000 |
Transport on Purchases | 4,000 | Repairs | 2,000 |
General Office Expenses | 5,000 | Medical Costs | 18,000 |
Payment Trade Payables | 120,000 | Accountancy | 25,000 |
Receipts -Trade Receivables | 180,000 | Interest on Loan | 19,00 |
- Advise management of FAM Ltd on the importance of cash control.
- Prepare control accounts for the managers personal business- Gag Ent.
- Propose to FAM Ltd on how to manage surplus and deficit cash issue.
- Prepare FAM Ltd.s Profit or loss statement for the year to 30 June, Year 2021.
- Prepare Gag Ents Profit or loss statement for the year to 30 June, 2021.
- Explain four cash controls in Gag Ent.
- Explain the steps involved in the preparation of final accounts in single entry.
- Explain the accounting cycle of Gag Ent.
- Discuss the reasons for the dissolution of a partnership.
- Prepare the statement of Financial Position for FAM Ltd as on 30 June 2021.
- Distinguish between Joint Ventures and Partnership Accounting.
- Differentiate between Consignment Accounting and Branch Accounting.
- Explain four reasons why partnership business Revaluation Accounts.
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