PART 1 CREATION OF ACCOUNTING STATEMENTS.

Anita Clodhopper been trading as a retailer of foot care products for many years. The following details have been made available to you to prepare her accounts for the year ended 31 March 2022

		Note
Buildings (original cost)	60,000	1
Motor vehicle (original cost)	16,000	2
Inventory at 31 March 2022	20,000	3
Accounts receivable	2.000
Cash	1,000
Accounts payable	25,000
Drawings	12,000
Sales	75,000
Inventory at 1 April 2021	24,000	5
Purchases of inventory for resale	35,000
Net profit for the year	10,000

NOTES

1) Original purchase price when acquired on 1 April 2019. Depreciation of 4% per annum (on a straight line basis) is provided. In your Statement of Financial Position (SFP) you are required to show (in separate columns) the original cost, the accumulated depreciation to 31 March 2022, and the net book value at 31 March 2022.

2) Original purchase price when acquired on 1 April 2020. Depreciation of 25% per annum (on a reducing balance basis) is provided. In your Statement of Financial Position (SFP) you are required to show (in separate columns) the original cost, the accumulated depreciation to 31 March 2022, and the net book value at 31 March 2022.

3) Original cost of inventory. Note that 5% of the value of this inventory must be written down to zero because of deterioration.

4) Given that you have drawings for the year, and net profit, and liabilities, you have enough details to work out her closing capital at 31 March 2022. You will first have to work out the figure for Assets and use the accounting equation A = C + L.

5) No adjustment needs to be made to the inventory value on 1 April 2021.

6) On 1 April 2021, she switched to a new insurer. Her insurance premium, of 4,800, provides cover for a 15-month period ending on 30 June 2022.

REQUIRED

a) Prepare a Statement of Financial Position for the year ended 31 March 2022

b) Calculate gross profit for the year ended 31 March 2022

c) Calculate i) gross profit margin and ii) quick ratio for the year ended 31 March 2022.

d) Briefly discuss (no more than 150 words) the possible long-term implications of Anitas drawings consistently exceeding her net profit.