I will thank later please

6. The following are extracts from the accounts of XYZ Ltd for the year ended 31 December 2012. Account Corporation tax owing 68,000 Motor vehicles 70,000 Cash 2,000 Provision for depreciation of motor vehicles 20,000 Authorised and issued share capital (E1 shares) 150,000 Stock as at 31 December 2012 16,000 Prepaid rates 600 Debtors 25,000 Share premium 80,000 Proposed dividends 30,000 8% debenture (interest already paid) 50,000 Premises 265,000 Provision for bad debts 3,500 Creditors 18,000 Retained profit 80,000 Revenue reserves 70,000 Bank TASK a) Present a balance sheet in appropriate format from the figures above. (18 marks) b) Calculate the bank balance as the missing figure on the balance sheet. (2 marks) Total 20 marks5. a) Explain the importance of budgeting to an organisation. (8 marks) b) From the following information for Mike and Ian Ltd, prepare a cash budget for the period January to March 2013: Sales E Purchases E Wages E Var O/H E November 2012 20,000 20,000 20,000 5,000 December 2012 30,000 25,000 20,000 10,000 January 2013 40,000 30,000 30,000 5,000 February 2013 60,000 45,000 20,000 8,000 March 2013 60,000 50,000 20,000 6,000 The bank balance on 1 January 2013 is E25,000 . Fixed overheads are E2,000 per month, payable in the same month. The $2,000 included E100 depreciation . Receipts for sales follow this pattern: 50% during the month of sale 25% during the following month 25% during the next following month . It is the policy of the firm to pay trade creditors as follows: one-fifth in the month of purchase two-fifths in the following months two-fifths paid in the next following month. . Wages are paid 50% in the month earned and 50% in the following month . Variable overheads are incurred and paid in the same month Mike is to receive a legacy of $40,000 on 1 February 2013 which he intends to put into the business . Fixed assets of $30,000 are paid for on 1 March 2013. (12 marks) Total 20 marks4. a) Describe four errors that will not be disclosed by a trial balance and provide an example of each. (8 marks) b) Carol Eaton's accountant has prepared her trial balance which did not balance (below). Dr Cr Returns 2,500 2,710 Capital 45,000 Sales 30,000 Purchases 25,000 Drawings 8,220 Rent/Rates 7,000 Motor vehicles 8,000 Discounts 800 600 Debtors and creditors 32,900 5,000 84,420 83,310 Realising that this did not balance, the following errors were discovered by Mike the internal auditor. i) A credit note for E2,850 was entered on the customer account of P Scott but no entry was made in the returns account. ii) The sales account was overcast by $4,800 iii) E2,970 of goods withdrawn for Carol's personal use was entered into the drawings account but no other entries were made iv) A discount allowed of E2,520 was credited in error to the discount received account v) Cash sales of E19,780 had not been entered into the sales account vi) A bad debt of E6,300 had been entered in the customer's account but not the bad debt account vii) The purchases account had been under cast by E2,650.3. Paula Scott is a trade supplier who has been approached by KMF Builders who are requesting credit terms for the first time. Their managing director has provided Paula with the following extracts from the final accounts for the past two years and Paula has approached you for advice. 2011 E 2012 E Sales turnover 600,000 650,000 Opening stock 268,000 148,000 Closing stock 148,000 126,000 Purchases 225,000 268,000 Operating expenses 190,000 250,000 Ordinary share capital 300,000 300,000 Long term loan 40,000 70,000 Retained earnings 175,000 240,000 Bank (30,000) 15,000 Debtors 28,000 48,000 Creditors 85,000 90,000 TASK a) Calculate the following ratios for both years: i) Gross profit margin (2 marks) ii) Net profit (operating) margin (1 marks) iii) Return on capital employed (2 marks) v) Current ratio (2 marks) v) Debtor days (1 marks) vi) Gearing ratio (2 marks) b) Given the calculations in a) offer advice to Paula with regards to the viability of engaging in a credit relationship with KLF. (10 marks) Total 20 marks2. Phil Wall is a sole trader who has provided his accountant with the following account balance as at 31 December 2012: Account Balance E Sales 2,500.00 Bank 3,750.00 Purchases 1,700.00 C Evans (customer) 790.00 T Agale (supplier) 950.00 Discount allowed 70.00 Discount received 90.00 VAT owing to HMRC 1340.75 The following transactions took place during January 2013. VAT is levied at 20% January 2 Sales to C Evans on credit E600.00 plus VAT January 3 Purchases from T Agale E400.00 plus VAT January 8 A credit note was sent to C Evans for goods returned of $150.00 plus VAT January 9 A credit note was received from T Agale for E100.00 inclusive of VAT January 14 C Evans pays Phil E1,250.00 by cheque in full settlement of her account; the remainder being treated as a discount January 19 Phil pays T Agale by cheque E1,300.00 in full settlement of his account with anything remaining to be treated as a discount January 26 Phil takes E200.00 out of the bank account for his own personal use. January 31 Phil pays HM Revenue and Customs for the amount owing as at 31 January 2013. TASK a) Open the ledger balances as at 1 January with the opening balances. (4 marks) Record all the transactions for January in the relevant ledger accounts, opening new accounts where necessary. All credit balances should be shown in brackets or noted 'Cr'. (13 marks) b) Briefly explain the difference between a liability and an asset. (3 marks) Total 20 marks1. a) The trial balance of UK Kneads, a sole trader, as at 31 December 2012 was as follows: Debit Credit E E Capital 69,585 Land and buildings 60,000 Office equipment at cost 13,000 Motor vehicles at cost 18,000 Drawings 10,100 Sales and purchase returns 1,250 1,000 Carriage in 750 Carriage out 1,125 Stock as at 1.1.2012 9,000 Bank 1,200 Sales and purchases 101,000 142,360 Motor expenses 2,400 Provision for doubtful debt 240 Provision for depreciation: Land and buildings 2,400 Office equipment 1,300 Motor vehicles 3,600 Sundry expenses 2,760 Wages and salaries 12,500 Debtors and creditors 10,200 10,000 Telephone and insurance 2,200 Bank loan 15,000 245,485 245,485 You are given the following additional information: Closing stock, as at 31.12.2012, E10,200 . Depreciation is to be charged as follows: Land and buildings 1% straight-line method Office equipment 10% straight-line method Motor vehicles 20% reducing balance method Wages owing E1,200 Insurance paid in advance $200 . Provision for doubtful debts is to be maintained at 5% of debtors. TASK a) Prepare the Trading & Profit & Loss Account for UK Kneads for the year ended 31 December 2012 taking into account the notes to the trial balance. (15 marks) b) Describe the merits and limitations of using a bank overdraft to finance working capital arrangements. (5 marks) Total 20 marks