You should be able to identify the business causes and implications of key items on the...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
You should be able to identify the business causes and implications of key items on the profit and loss account. Exercise 2 1513 Shown next are summary profit and loss accounts for three companies with comparative figures for last year shown alongside. Study these accounts and then answer the following questions: 1) Which company sold an investment in ABC Holdings Limited for £450,000 profit? 2) Which company sold its goods for less than it cost to make them) 3) Which company has shown he greatest percentage increase in sustainable core business profit? 4) Which company cut its gross margin percentage this year due to intense competition? 5) In which company would you most like to invest? Assume all investment income and interest payable relates to only one item per year ***** LUSS ALLOUNT Turnover Cost of Sales Gross Profit Distribution Costs Administration Expenses Operating Profit Investment Income Interest Payable Profit before Tax Tax on Profit Profit after Tax Company A 19XY £6,000,000 £5,000,000 15.000.000) (4.000.000) 1,000,000 1,000,000 (400,000) 1300.0001 ; 300,000 450,000 19XX 350,000 (100.000) (400.000) (100.000) €250.000 (350,000) 14.50.000 200,000 50,000 150,000 130.0001 £120.000 Company B 19XY 19XX (50,000) (50,000) (100,000) (100,000) (100.000) (100.0001 ES,000,000 £4,500,000 £7,000,000 £6,500,000 15.050.000) (4.550.000) (250,000) (250,000) 300,000 300,000 120.0001 140.000) 30,000 10,000 (10.000) £20.000 13.0001 Company C £7.000 19XY 19XX (5.900.000) (5.500.000) 1,100,000 1,000,000 (550,000) (450,000) 1400.0001 (400.000) 150,000 £250.000 150,000 200,000 150,000 (sh.0001 -L50.0001 4 300,000 250,000 120.000) (80.000) £170,000 You should be able to identify the business causes and implications of key items on the profit and loss account. Exercise 2 1513 Shown next are summary profit and loss accounts for three companies with comparative figures for last year shown alongside. Study these accounts and then answer the following questions: 1) Which company sold an investment in ABC Holdings Limited for £450,000 profit? 2) Which company sold its goods for less than it cost to make them) 3) Which company has shown he greatest percentage increase in sustainable core business profit? 4) Which company cut its gross margin percentage this year due to intense competition? 5) In which company would you most like to invest? Assume all investment income and interest payable relates to only one item per year ***** LUSS ALLOUNT Turnover Cost of Sales Gross Profit Distribution Costs Administration Expenses Operating Profit Investment Income Interest Payable Profit before Tax Tax on Profit Profit after Tax Company A 19XY £6,000,000 £5,000,000 15.000.000) (4.000.000) 1,000,000 1,000,000 (400,000) 1300.0001 ; 300,000 450,000 19XX 350,000 (100.000) (400.000) (100.000) €250.000 (350,000) 14.50.000 200,000 50,000 150,000 130.0001 £120.000 Company B 19XY 19XX (50,000) (50,000) (100,000) (100,000) (100.000) (100.0001 ES,000,000 £4,500,000 £7,000,000 £6,500,000 15.050.000) (4.550.000) (250,000) (250,000) 300,000 300,000 120.0001 140.000) 30,000 10,000 (10.000) £20.000 13.0001 Company C £7.000 19XY 19XX (5.900.000) (5.500.000) 1,100,000 1,000,000 (550,000) (450,000) 1400.0001 (400.000) 150,000 £250.000 150,000 200,000 150,000 (sh.0001 -L50.0001 4 300,000 250,000 120.000) (80.000) £170,000
Expert Answer:
Answer rating: 100% (QA)
1 Company A Explanation It is given that all investment income relates to one item per year Profit a... View the full answer
Related Book For
Using Financial Accounting Information The Alternative to Debits and Credits
ISBN: 978-1111534912
8th edition
Authors: Gary A. Porter, Curtis L. Norton
Posted Date:
Students also viewed these accounting questions
-
How does the balance in Allowance for Doubtful Accounts before adjustment affect the amount of the year-end adjustment under the percentage of sales method? Under the percentage of receivables method?
-
Companies can choose the fair value option for investments that otherwise would be accounted for under the equity method. If the fair value option is chosen, the investment is shown at fair value in...
-
From inception of operations to December 31, 2017, Headland Corporation provided for uncollectible accounts receivable under the allowance method. The provisions are recorded, based on analyses of...
-
Data Set 14 in Appendix B lists highway fuel consumption amounts (mi/gal) for cars categorized by size (small, midsize, large). If we use those highway fuel consumption amounts arranged into the...
-
A process produces batches of a chemical whose impurity concentrations follow a normal distribution with a variance of 1.75. A random sample of 20 of these batches is chosen. Find the probability...
-
The mode shapes of a uniform fixed-free bar are of the form \[ \phi_{n}(x)=\sin \left[\frac{(2 n-1) \pi x}{2 L} ight] \quad n=1,2,3, \ldots \] Use the assumed modes method with \(\phi_{1}(x),...
-
When the MACRS method is used, any salvage value is disregarded. (True/False)
-
Basilisk lizards can run across the top of a water surface (Figure). With each step, a hzard first slaps its foot against the water and then pushes it down into the water rapidly enough to form an...
-
Comparative financial statements for Weller Corporation, a merchandising company, for the year ending December 31 appear below. The company did not issue any new common stock during the year. A total...
-
A flight simulator is used to train pilots on how to recognize spatial disorientation. It has four degrees of freedom, and can rotate around a planetary axis as well as in yaw, pitch, and roll. The...
-
Which of the following statements is FALSE under accrual accounting? Net income = Revenues Expenses. Accrual accounting follows the revenue recognition principle. Revenue is equal to the cash...
-
Northampton City Tours (NCT) offers personalized historical and architectural tours in a large midwestern city and the local suburbs. NCT charges $372.00 per trip to or from the airport. The variable...
-
Find the equation of the line given the following conditions. 4. Slope = 2, passing through (3,5) 5. Slope, passing through (6,-2)
-
Crane Water Co. is a leading producer of greenhouse irrigation systems. Currently, the company manufactures the timer unit used in each of its systems. Based on an annual production of 51,500 timers,...
-
Multiproduct CVP Analysis (LO 3-4) Georgeland Cycles makes and sells two models of electric bicycles. The Commuter (a folding model) sells for $2,501.00 and the Tour-X (a fat-tire trail model) sells...
-
What have you learnt from the below article and summarize it? https://hbr.org/2019/02/why-great-innovation-needs-great-marketing
-
The transactions relating to the formation of Blue Co. Stores Inc., and its first month of operations follow. a. The firm was organized and the stockholders Invested cash of $9,000. b. The firm...
-
Medi-Exam Health Services, Inc. (MEHS), located in a major metropolitan area, provides annual physical screening examinations, including a routine physical, EKG, and blood and urine tests. MEUS's...
-
Kandel Company had the following data available for 2012 (before making any adjustments): Accounts receivable, 12/31/12................$320,100 Allowance for doubtful accounts.................2,600...
-
Shepard Company has not yet prepared a formal statement of cash flows for 2012. Comparativebalance sheets as of December 31, 2012 and 2011, and a statement of income and retained earnings for the...
-
On December 23, 2012, Miller Wholesalers ships merchandise to Michael Retailers with terms of FOB destination point. The merchandise arrives at Michael's warehouse on January 3, 2013. Required 1....
-
Guarantee Oil Companys internal land department incurred costs of $150,000 in acquiring leases. Of the 1 million acres of prospects, only 450,000 acres were leased. a. How much, if any, of the...
-
Given the following data for Float Energy: a. Give the entries to record the abandonment of both Lease A and Lease B. b. Give the entries assuming instead that both Lease A and Lease B were proved,...
-
Gusher Oil Corporation obtained shooting rights only for \($10,000\) on 5,000 acres owned by Mr. Q and shooting rights coupled with an option to lease for \($12,000\) on 4,000 acres owned by Mr. S....
Study smarter with the SolutionInn App