DERBY LIMITED The Company works in the Tourism industry in Mauritius. It started operations on 1 January 2018 and the following ledger balances appear in the books of accounts after the closing of the Final Accounts as at 31 December 2018. LEDGER BALANCES AS AT 31 DECEMBER 2018 Trade Debtors Share Capital Motor Vehicles (At Cost) Property (at Cost) 10% Debentures Plant & Machinery (At Cost) Share Premium Trade Creditors Inventory Income Tax Payable Plant & Machinery (Agg. Depreciation) Retained Earnings Furniture & Fittings (At Cost) Other Receivables Furniture & Fittings (Agg Depreciation) General Reserve Motor Vehicles (Agg Depreciation) Bank Other Creditors RS 000'S RS 000'S 2,500 3,500 1,500 5,000 4,000 2,500 500 3,000 1,500 70 475 1,000 500 45 100 300 600 100 100 13,645 13,645 During the year to 31 December 2019, the summary of transactions is as follows: REMARKS Issue of Shares Payment to Debenture Holders Interest paid on Debenture Property Revalued at Received from Trade Debtors Payment to Trade Creditors Expenses Income Tax paid Sales Purchases Dividend Paid Bank Credit Rs Rs 1,000,000 Paid on 31 400,000 March 2019 Paid on 31 400,000 March 2019 6,500,000 7,300,000 5,000,000 2,230,000 70,000 1,500,000 8,500,000 1,450,000 8,000,000 100,000 Additional Information 1 The Debentures were raised in April 2018 and the repayment is in 10 equal yearly instalments. The first instalment and the payment of Interest to them were made on 31 March 2019 2 The depreciation policy of the company is as follows: Plant & Machinery 10% on Diminishing Balance Method Furniture & Fittings 10% on Straight Line Method Motor Vehicles 20% on Straight Line Method The Company charges a full year depreciation in the year of purchase and none in the year of disposal 3 Included in the purchases is the acquistion of an imported second-hand vehicle on 1 April 2019 for Rs 450,000 that was settled by cheque 4 Included in the Sales is the dispoal of furniture for Rs 50,000 that was settled by cheque 5 The cost of the furniture disposed was Rs 100,000 and its aggregate depreciation was Rs 20,000 6 The Expenses paid during the year are made up of the following: Rs 1,200,000 Administrative Salaries Rent, Rates & Taxes 300,000 Electricity & Telephone 150,000 Printing & Stationary 50,000 Licenses & Insurances 25,000 Motor Vehicle Expenses 150,000 Salesmen Salaries 240,000 Salesmen Commission 35,000 Carriage Outwards 30,000 Audit fees 50,000 2,230,000 7 The Motor Vehicles were exclusively used by the Salesmen 8 Closing Stock is valued at Rs 3,800,000 at Cost using the FIFO method and its Net Realisable Value is Rs 3,500,000 9 Included in the Insurances is a Motor Insurance policy for Rs 12,000 for the period 1 April 2019 to 31 March 2020 10 Included in Debtors at 31 December 2018 is a Provision for Bad & Doubtful Debts of Rs100,000 11 Included in Carriage Outwards is an amount of Rs 10,000 paid for transporting goods from the supplier to the company's warehouse 12 Make a Provision of 5% on Debtors for Bad & Doubtful Debts at 31 December 2019 13 The following bills were due but unpaid at 31 December 2019: Rs Electricity & Telephone 30,000 Rent 20,000 14 A Provision of Rs 60,000 is to be made for Corporate Taxation and Rs 75,000 for Audit fees lowed of Rs 15,000 were not recorded 15 Discount received of Rs 10,000 from Suppliers and Discount in the books of accounts 16 Dividend Proposed Rs 150,000 Marks Required: Using an Excel spreadsheet prepare an Extended Trial balance at 31 1 December 2019 in the following sequence: a. Opening Trial Balance at 01 January 2019 b. Cash & Banking Transactions during the year c. Credit Transactions during the year N N N 6 d. Correction of Errors e. Closing Trial Balance at 31 December 2019 3 4 5 5 f. Year End Adjustments g. Profit & Loss Account h. Balance Sheet Using the Excel spreadsheet for the Extended Trial balance at 31 December 2 2019, prepare the following in IAS 1 format a.Statement of Profit & Loss Account & Other Comprehensive Income for the year ended 31 December 2019 b. Statement of Changes in Equity for the year ended 31 December 2019 3 N c. Statement of Financial Position at 31 December 2019 with comparative figures for 2018 6 8 d. Statement of Cash Flows for the year ended 31 December 2019 using the Indirect Method Calculate the following ratios for both 2018 and 2019 and comment on the 3 same 4 a. Working Capital Ratio b. Acid Test Ratio 4 c. Debts Ratio 4 4 d. Gearing Ratio 4 Calculate the following ratios for 2019 only and comment on the same a. Receivables Collection Period 2 b. Payables Collection Period 2 2 2 5 5 c. Inventory Turnover Period d. Return on Capital Employed (ROCE) 5 Explain why Profit is not equivalent to Cash using examples 6 Explain why Cash Flow is important in business In light of Covid 19,the Wakashio effect and the uncertainty of the opening of 7 the Mauritius frontiers to Tourists, what are the implications for the company? Prepare the Notes to the Financial Statements for the year ended 31 8 December 2019 10 8 Total 100 DERBY LIMITED The Company works in the Tourism industry in Mauritius. It started operations on 1 January 2018 and the following ledger balances appear in the books of accounts after the closing of the Final Accounts as at 31 December 2018. LEDGER BALANCES AS AT 31 DECEMBER 2018 Trade Debtors Share Capital Motor Vehicles (At Cost) Property (at Cost) 10% Debentures Plant & Machinery (At Cost) Share Premium Trade Creditors Inventory Income Tax Payable Plant & Machinery (Agg. Depreciation) Retained Earnings Furniture & Fittings (At Cost) Other Receivables Furniture & Fittings (Agg Depreciation) General Reserve Motor Vehicles (Agg Depreciation) Bank Other Creditors RS 000'S RS 000'S 2,500 3,500 1,500 5,000 4,000 2,500 500 3,000 1,500 70 475 1,000 500 45 100 300 600 100 100 13,645 13,645 During the year to 31 December 2019, the summary of transactions is as follows: REMARKS Issue of Shares Payment to Debenture Holders Interest paid on Debenture Property Revalued at Received from Trade Debtors Payment to Trade Creditors Expenses Income Tax paid Sales Purchases Dividend Paid Bank Credit Rs Rs 1,000,000 Paid on 31 400,000 March 2019 Paid on 31 400,000 March 2019 6,500,000 7,300,000 5,000,000 2,230,000 70,000 1,500,000 8,500,000 1,450,000 8,000,000 100,000 Additional Information 1 The Debentures were raised in April 2018 and the repayment is in 10 equal yearly instalments. The first instalment and the payment of Interest to them were made on 31 March 2019 2 The depreciation policy of the company is as follows: Plant & Machinery 10% on Diminishing Balance Method Furniture & Fittings 10% on Straight Line Method Motor Vehicles 20% on Straight Line Method The Company charges a full year depreciation in the year of purchase and none in the year of disposal 3 Included in the purchases is the acquistion of an imported second-hand vehicle on 1 April 2019 for Rs 450,000 that was settled by cheque 4 Included in the Sales is the dispoal of furniture for Rs 50,000 that was settled by cheque 5 The cost of the furniture disposed was Rs 100,000 and its aggregate depreciation was Rs 20,000 6 The Expenses paid during the year are made up of the following: Rs 1,200,000 Administrative Salaries Rent, Rates & Taxes 300,000 Electricity & Telephone 150,000 Printing & Stationary 50,000 Licenses & Insurances 25,000 Motor Vehicle Expenses 150,000 Salesmen Salaries 240,000 Salesmen Commission 35,000 Carriage Outwards 30,000 Audit fees 50,000 2,230,000 7 The Motor Vehicles were exclusively used by the Salesmen 8 Closing Stock is valued at Rs 3,800,000 at Cost using the FIFO method and its Net Realisable Value is Rs 3,500,000 9 Included in the Insurances is a Motor Insurance policy for Rs 12,000 for the period 1 April 2019 to 31 March 2020 10 Included in Debtors at 31 December 2018 is a Provision for Bad & Doubtful Debts of Rs100,000 11 Included in Carriage Outwards is an amount of Rs 10,000 paid for transporting goods from the supplier to the company's warehouse 12 Make a Provision of 5% on Debtors for Bad & Doubtful Debts at 31 December 2019 13 The following bills were due but unpaid at 31 December 2019: Rs Electricity & Telephone 30,000 Rent 20,000 14 A Provision of Rs 60,000 is to be made for Corporate Taxation and Rs 75,000 for Audit fees lowed of Rs 15,000 were not recorded 15 Discount received of Rs 10,000 from Suppliers and Discount in the books of accounts 16 Dividend Proposed Rs 150,000 Marks Required: Using an Excel spreadsheet prepare an Extended Trial balance at 31 1 December 2019 in the following sequence: a. Opening Trial Balance at 01 January 2019 b. Cash & Banking Transactions during the year c. Credit Transactions during the year N N N 6 d. Correction of Errors e. Closing Trial Balance at 31 December 2019 3 4 5 5 f. Year End Adjustments g. Profit & Loss Account h. Balance Sheet Using the Excel spreadsheet for the Extended Trial balance at 31 December 2 2019, prepare the following in IAS 1 format a.Statement of Profit & Loss Account & Other Comprehensive Income for the year ended 31 December 2019 b. Statement of Changes in Equity for the year ended 31 December 2019 3 N c. Statement of Financial Position at 31 December 2019 with comparative figures for 2018 6 8 d. Statement of Cash Flows for the year ended 31 December 2019 using the Indirect Method Calculate the following ratios for both 2018 and 2019 and comment on the 3 same 4 a. Working Capital Ratio b. Acid Test Ratio 4 c. Debts Ratio 4 4 d. Gearing Ratio 4 Calculate the following ratios for 2019 only and comment on the same a. Receivables Collection Period 2 b. Payables Collection Period 2 2 2 5 5 c. Inventory Turnover Period d. Return on Capital Employed (ROCE) 5 Explain why Profit is not equivalent to Cash using examples 6 Explain why Cash Flow is important in business In light of Covid 19,the Wakashio effect and the uncertainty of the opening of 7 the Mauritius frontiers to Tourists, what are the implications for the company? Prepare the Notes to the Financial Statements for the year ended 31 8 December 2019 10 8 Total 100