QUESTION CONTINUES ON NEXT PAGE UL22/0371 Page 3 of 6 v) Rates are paid in two instalments on September 1 and March 1 each year. Rates for the first half of the accounting period were paid on September 1, 2021. vi) All other expenses (e.g., staff wages, advertising and general expenses) are paid as they are incurred. vii) Non-current assets at September 1, 2021 were $384,000. viii) Non-current assets acquired on December 1, 2021 amounted to $192,000. ix) Depreciation of Non-current Assets is by the straight-line method, assuming nil salvage value and a useful life of 5 years. Depreciation is charged on a monthly basis beginning in the month on which the asset is acquired. x) Ziggy's pays its suppliers one month in arrears. xi) The company has no non-current liabilities but finances its working capital with a bank overdraft. xii) The credit segment of the business is showing a lot of promise. Ziggy's Bistro's largest clients are companies which pay on credit. Ziggy's has arranged a month's credit on all purchases with these customers. xiii) The company's Current Ratio is 84.878%. Required: (a) Prepare an income statement for the four months period September to December 2021 inclusive. You should present your income statement by month along with a total column for the 4 months from September 1 to December 31, 2021. List each item on the income statement and show all workings. (25 marks) (b) Prepare a balance sheet at December 31, 2021. Show workings clearly. (Note: you will have to use the ratios in the case to calculate total liabilities before you calculate capital. Round your figures to the nearest whole number). (15 marks) (c) Drawing on your calculations in (a) and (b) above, identify and explain how Don Ziggy might attempt to finance the shortfall of funding in his business without using the existing bank overdraft. (10 marks) Total: 50 marks UL22/0371 Page 4 of 6 UL22/0371 Page 2 of 6 SECTION (30 MARKS) Answer ALL questions from this section 2. Ziggy's Bistrot (Ziggy's) operates a small Moroccan style restaurant in Virginia Water, UK. The owner. Don Ziggy, has recruited you to help him in preparing his accounts for the first four months of the accounting period. Don Ziggy has provide you with the following information for the period from September 1, 2021 to December 31, 2021 Month Sales (5) Cash Credit September 43.387 96.000 October 35.511 112.000 November 96.000 120.000 December 82.747 192.000 Apart from the cost of sales, other expenses of operating the restaurant were as follows: September October November December S $ $ Staff wages 40,000 40,000 48,000 56,000 Rates (as located 1,600 1,600 1,000 Insurance as located 800 800 800 800 Advertising 1.200 1.200 1,360 1.440 Other general expenses 27,200 27.200 29,600 31,200 1.600 The following additional information is available relating to the busine: Gross profit margin was 60% of net sales revence # Sales returns were: September 243%: October 2.38% November and December 1% of total sales (Assume that monthly traderecvaties are not affected by sales reuma) On September 1, 2021 opening inventory was zero Closing inventory was constant from month to month at a cost value of $7.200 1) Insurance was paid one year in advance on 1 September, 2021 QUESTION CONTINUES ON NEXT PAGE UL22/0371 Page 3 of 6 1) Rates are paid in two instalments on September 1 and March 1 each year Rates the first half of the area intentarhart QUESTION CONTINUES ON NEXT PAGE UL22/0371 Page 3 of 6 v) Rates are paid in two instalments on September 1 and March 1 each year. Rates for the first half of the accounting period were paid on September 1, 2021. vi) All other expenses (e.g., staff wages, advertising and general expenses) are paid as they are incurred. vii) Non-current assets at September 1, 2021 were $384,000. viii) Non-current assets acquired on December 1, 2021 amounted to $192,000. ix) Depreciation of Non-current Assets is by the straight-line method, assuming nil salvage value and a useful life of 5 years. Depreciation is charged on a monthly basis beginning in the month on which the asset is acquired. x) Ziggy's pays its suppliers one month in arrears. xi) The company has no non-current liabilities but finances its working capital with a bank overdraft. xii) The credit segment of the business is showing a lot of promise. Ziggy's Bistro's largest clients are companies which pay on credit. Ziggy's has arranged a month's credit on all purchases with these customers. xiii) The company's Current Ratio is 84.878%. Required: (a) Prepare an income statement for the four months period September to December 2021 inclusive. You should present your income statement by month along with a total column for the 4 months from September 1 to December 31, 2021. List each item on the income statement and show all workings. (25 marks) (b) Prepare a balance sheet at December 31, 2021. Show workings clearly. (Note: you will have to use the ratios in the case to calculate total liabilities before you calculate capital. Round your figures to the nearest whole number). (15 marks) (c) Drawing on your calculations in (a) and (b) above, identify and explain how Don Ziggy might attempt to finance the shortfall of funding in his business without using the existing bank overdraft. (10 marks) Total: 50 marks UL22/0371 Page 4 of 6 UL22/0371 Page 2 of 6 SECTION (30 MARKS) Answer ALL questions from this section 2. Ziggy's Bistrot (Ziggy's) operates a small Moroccan style restaurant in Virginia Water, UK. The owner. Don Ziggy, has recruited you to help him in preparing his accounts for the first four months of the accounting period. Don Ziggy has provide you with the following information for the period from September 1, 2021 to December 31, 2021 Month Sales (5) Cash Credit September 43.387 96.000 October 35.511 112.000 November 96.000 120.000 December 82.747 192.000 Apart from the cost of sales, other expenses of operating the restaurant were as follows: September October November December S $ $ Staff wages 40,000 40,000 48,000 56,000 Rates (as located 1,600 1,600 1,000 Insurance as located 800 800 800 800 Advertising 1.200 1.200 1,360 1.440 Other general expenses 27,200 27.200 29,600 31,200 1.600 The following additional information is available relating to the busine: Gross profit margin was 60% of net sales revence # Sales returns were: September 243%: October 2.38% November and December 1% of total sales (Assume that monthly traderecvaties are not affected by sales reuma) On September 1, 2021 opening inventory was zero Closing inventory was constant from month to month at a cost value of $7.200 1) Insurance was paid one year in advance on 1 September, 2021 QUESTION CONTINUES ON NEXT PAGE UL22/0371 Page 3 of 6 1) Rates are paid in two instalments on September 1 and March 1 each year Rates the first half of the area intentarhart