These local businesses do not make use of contemporary software to support its book keeping and accounting function. Your supervisor, one of the firms Key Account Managers, has asked you to compile the year-end financial statements ready for submission and provide, for each client, some detailed analysis of the figures produced, which will be presented in the form of an accompanying letter. Specifically, you will undertake the following: 1. From the data provided, you are required to prepare the year-end financial statements, taking into consideration accounting principles, conventions and standards. You will need to make and show appropriate adjustments to both the income statement and the balance sheet. 2. Write an accompanying letter to the client that will be sent with the completed financial statements. The letter needs to include: calculation of relevant profitably, liquidity, asset usage and investment ratios critical evaluation of the performance to the business year on year (making reference to data you have calculated and data provided from the previous year), with reference to relevant benchmarks as well as any limitations of using financial ratios as performance measures an outline of the benefits of contemporary accounting software packages, with examples of products on the market justified conclusions and recommendations for your client.

The following information is relevant:

These local businesses do not make use of contemporary software to support its book keeping and accounting function. Your supervisor, one of the firms Key Account Managers, has asked you to compile the year-end financial statements ready for submission and provide, for each client, some detailed analysis of the figures produced, which will be presented in the form of an accompanying letter. Specifically, you will undertake the following: 1. From the data provided, you are required to prepare the year-end financial statements, taking into consideration accounting principles, conventions and standards. You will need to make and show appropriate adjustments to both the income statement and the balance sheet. 2. Write an accompanying letter to the client that will be sent with the completed financial statements. The letter needs to include: calculation of relevant profitably, liquidity, asset usage and investment ratios critical evaluation of the performance to the business year on year (making reference to data you have calculated and data provided from the previous year), with reference to relevant benchmarks as well as any limitations of using financial ratios as performance measures an outline of the benefits of contemporary accounting software packages, with examples of products on the market justified conclusions and recommendations for your client.

The following information is relevant:

Statement of profit or loss for the year ended 31 December:

Total liabilities	18,750	19,785
Total equity and liabilities	45,550	47,485

Part A: You are initially working with a selection of these small businesses that have been trading for three years and which now need annual trading statements to be compiled and submitted in line with government requirements. You have been given an extended trial balance for each business, including accruals, prepayments and figures for bad debts and depreciation as following: Accounts Final trial balance Debit Credit Adjustments Debit Credit '000 2,000 2,000 '000 '000 '000 12,000 2,500 30 6,435 ABC Fooding Ltd Company The extended trial balance as at 31 December 2021 Initial trial balance Debit Credit '000 '000 10,000 4,500 6,405 29,000 6,135 9,500 5,550 7,355 327 12,250 6,331 13,200 650 29,000 300 6,435 9,500 800 6,350 50 7,305 10 337 12,250 30 Ordinary share capital (1 shares) Share premium Trade payables Land and buildings - cost Land and buildings - accumulated depreciation Plant and equipment -cost Plant and equipment - accumulated depreciation Trade receivables Accruals 8% bank loan repayable Cash at bank Retained earnings Financial Expense Revenue Cost of Sales Distribution costs Administrative expenses Inventories Dividends paid Tax expense Tax payable Prepayment Interest payable 6,361 13,200 450 1,100 23,020 23,020 650 20 10,292 5,675 3,850 8,409 325 10,292 6,305 4,360 8,409 510 325 350 350 350 350 20 20 450 450 81,387 81,387 4,010 4,010 83,327 83,327 IT 1 11 Revenue Cost of Sales Gross profit Administrative expenses Distribution costs Finance costs Profit before tax Tax expense Profit for the period 2019 '000 26,000 10,800 15,200 4,600 6,100 600 3,900 900 3,000 2020 f'000 24,000 10,500 13,500 4,550 6,450 700 1,800 450 1,350 Statement of financial position as at 31 December 2019 2020 f'000 f'000 22,000 5,000 23,750 3,950 8,000 7,000 50 3,500 45,550 9,000 6,000 70 4,715 47,485 Non-current assets Land and buildings Plant and equipment Current assets Inventories Trade receivables Prepayments Cash at bank Total assets Equity and liabilities Equity Ordinary share capital (1 shares) Share premium Retained earnings Total equity Non-current liabilities Borrowings Current liabilities Trade payables Accruals Tax payable Interest payable 10,000 4,500 12,300 26,800 9,000 9,000 9,750 8,200 750 10,000 4,500 13,200 27,700 11,000 11,000 8,785 7,300 555 450 500 350 430 Part A: You are initially working with a selection of these small businesses that have been trading for three years and which now need annual trading statements to be compiled and submitted in line with government requirements. You have been given an extended trial balance for each business, including accruals, prepayments and figures for bad debts and depreciation as following: Accounts Final trial balance Debit Credit Adjustments Debit Credit '000 2,000 2,000 '000 '000 '000 12,000 2,500 30 6,435 ABC Fooding Ltd Company The extended trial balance as at 31 December 2021 Initial trial balance Debit Credit '000 '000 10,000 4,500 6,405 29,000 6,135 9,500 5,550 7,355 327 12,250 6,331 13,200 650 29,000 300 6,435 9,500 800 6,350 50 7,305 10 337 12,250 30 Ordinary share capital (1 shares) Share premium Trade payables Land and buildings - cost Land and buildings - accumulated depreciation Plant and equipment -cost Plant and equipment - accumulated depreciation Trade receivables Accruals 8% bank loan repayable Cash at bank Retained earnings Financial Expense Revenue Cost of Sales Distribution costs Administrative expenses Inventories Dividends paid Tax expense Tax payable Prepayment Interest payable 6,361 13,200 450 1,100 23,020 23,020 650 20 10,292 5,675 3,850 8,409 325 10,292 6,305 4,360 8,409 510 325 350 350 350 350 20 20 450 450 81,387 81,387 4,010 4,010 83,327 83,327 IT 1 11 Revenue Cost of Sales Gross profit Administrative expenses Distribution costs Finance costs Profit before tax Tax expense Profit for the period 2019 '000 26,000 10,800 15,200 4,600 6,100 600 3,900 900 3,000 2020 f'000 24,000 10,500 13,500 4,550 6,450 700 1,800 450 1,350 Statement of financial position as at 31 December 2019 2020 f'000 f'000 22,000 5,000 23,750 3,950 8,000 7,000 50 3,500 45,550 9,000 6,000 70 4,715 47,485 Non-current assets Land and buildings Plant and equipment Current assets Inventories Trade receivables Prepayments Cash at bank Total assets Equity and liabilities Equity Ordinary share capital (1 shares) Share premium Retained earnings Total equity Non-current liabilities Borrowings Current liabilities Trade payables Accruals Tax payable Interest payable 10,000 4,500 12,300 26,800 9,000 9,000 9,750 8,200 750 10,000 4,500 13,200 27,700 11,000 11,000 8,785 7,300 555 450 500 350 430