Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

UNT BALANCES COMPANY Z - Microsoft Word (Product Activation Failed) AaBbcc AaB CD AaBbc AaBbcc AaB AaBbce 1 Normal No Spaci... Heading 1 Heading 2

image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
UNT BALANCES COMPANY Z - Microsoft Word (Product Activation Failed) AaBbcc AaB CD AaBbc AaBbcc AaB AaBbce 1 Normal No Spaci... Heading 1 Heading 2 Title Subtitle Paragraph The following account balances were extracted from the books of Company Zon 31 December 2019 000 Administration costs 2,992 Cash and bank (Current Asset) 4,400 Debentures (10%) 8.000 Fixtures and fittings (accumulated depreciation) 2,176 Fixtures and fittings at cost 5,440 7,200 General expenses Heat and light 2.000 2,080 2.880 8,000 24,000 5,680 Inventory (stock) at 1" January 2019 Buildings (accumulated depreciation) Buildings at cost Land at cost other Poyables (creditors) Plant and machinery (accumulated depreciation) Plant and machinery at cost Purchases Retained profitat 1" Banuary 2019 Sales 1,920 13,600 8.000 9696 41 600 TOSHIBA General expenses 7,200 Heat and light 2,000 Inventory (stock) at 1st January 2019 2,080 Buildings (accumulated depreciation) 2,880 Buildings at cost 8,000 Land at cost 24,000 Other Payables (Creditors) 5,680 Plant and machinery (accumulated depreciation) 1,920 Plant and machinery at cost 13,600 Purchases 8,000 Retained profitat 1 January 2019 9,696 41,600 16,000 Sales Share capital (1 ordinary shares) Trade Payables (Creditors) Trade Receivables (Debtors) 1,680 1,680 3,720 Provision for Trade Receivables (Debtors) 360 Vehicle repairs and petrol Vehicle repairs and petrol 2 ,000 Wages and salaries 6,400 Warehouse rates 160 Additional information: 1) Closing Inventory (stock) as at 31st December 2019 is 2,400,000. 2) 2,000,000 of general expenses are pre-paid as at 31 December 2019. 3) An accrual is required for the audit fee estimated to be 560,000 4) Interest payable to debenture holders is outstanding and has yet to be recorded. 5) Depreciation for the year is to be calculated as follows: Buildings: 2% straight line Plant and machinery: 20% reducing balance Fixtures and fittings: 10% straight line. 6) Estimated tax due for the accounting period is 1,760,000. 7) Company Z requires a doubtful debt provision of 5% of trade receivables (debtors) as at 31st December 2019. Allocation of expenses: Warehouse rates relate 100% to distribution Depreciation expenses should be allocated as follows: Production 30%: Distribution 40%; Administration 30%. Wages and salaries expense should be allocated on the same basis as depreciation Vehicle repairs and petrol costs relate 100% to delivery vehicles and sales Plant and machinery: 20% reducing balance Fixtures and fittings: 10% straight line. 6) Estimated tax due for the accounting period is 1,760,000. 7) Company Z requires a doubtful debt provision of 5% of trade receivables (debtors) as at 31st December 2019. Allocation of expenses: Warehouse rates relate 100% to distribution. Depreciation expenses should be allocated as follows: Production 30%; Distribution 40%; Administration 30%. Wages and salaries expense should be allocated on the same basis as depreciation. Vehicle repairs and petrol costs relate 100% to delivery vehicles and sales representative cars. General expenses relate 100% to administration. Heat and light costs relate as follows: Production 50%; Distribution 20%; Administration 30%. D Question 2 10 pts Company Y has an item of Property Plant & Equipment that cost 60,000 at the start of year 1; it had a useful economic life of 10 years, a residual value of 12,000 and is being depreciated on a straight-line basis. At the beginning of year 2, the item was revalued upwards to 70,000 with a revised residual value of 12,400. At the beginning of Year 4, the useful economic life was revised with a remaining economic life of four years with no change in valuation from the beginning of year 2. Show all the accounting journal entries required to account for the above in the financial statements of Company Y. Upload Choose a file Question 3 10 pts At 1st January 2019, the Property. Plant & Equipment balance of Company X comprised the following (all figures 000): Land & Buildings cost 4,660 accumulated depreciation 476 Plant & Equipment cost 3,560 accumulated depreciation 1,780 Fixtures and Fittings cost 1,824 accumulated depreciation 404 Company X has adopted a policy to charge depreciation at the following rates. A full year's depreciation is charged in the year of acquisition (purchase) but none in the year of disposal (sale): Buildings 2% straight line: Plant & Equipment 5% straight line; Fixtures & Fittings 15% reducing balance. Of the original cost of land and buildings, 3,400,000 relates to buildings. The company purchased new plant & equipment during the year. It cost 200,000 and was financed partly by trading in old equipment and by paying 100,000 in cash. The old equipment was purchased several years ago at a cost of 160,000. The net book value of the old equipment on 1st January 2019 was 115,600. Second-hand equipment was modifying the equipment amounting to 20,000. Without the modification the equipment could not have been used. Prepare a schedule of Property Plant & Equipment (PPE) for inclusion in the notes to the financial statements of Company X as at 31st December 2019. Question 4 8 pts Discuss the potential problems for preparers of financial statements when accounting for provisions and contingent liabilities in accordance with UK and international accounting standards Upload Choose a file Question 5 12 pts (b) In the following situations explain the accounting treatment in relation to the preparation of financial statements as at 31st December 2019 for Company Win accordance with UK and international accounting standards: 1. Company W is a major retailer on the UK Highstreet. It offers a returns policy of 10 days where customers can return items purchased and receive a full refund if they change their mind. The estimated cost of annual returns is 6 million. There is no legal obligation for the company to accept returns and issue refunds in situations where items sold are fit for purpose but Company W has a widely published returns policy and reputation for doing so. 2. Company W's store in Princes Street in Edinburgh receives a major refurbishment every five years to ensure cutting edge design and decoration in line with the company image. It is estimated that the cost of refurbishment will be approximately 9 million. 3. Company W is involved in litigation with a customer concerning claims of providing multiple deliveries of faulty products. The company's legal advisors consider that it is probable that the company will lose the case and that the amount of damages would be at least 200,000 and possibly as high as 800,000. 4. Company W has decided to restructure and close down its London store. A detailed plan has been drawn up and communicated to customers and employees. In addition, an announcement has been made in the press and offers have been invited for the purchase of the London store. It is estimated the closure will cost 500,000 in redundancy costs and other direct costs of effecting the reorganisation Summary financial statements for Company Vare provided below. Income Statement for the year ending 31 December 2019 Em Operating Profit Interest paid Interest received Profit after interest Taxation Profit after tax Statements of Financial Position (Balance Sheets) as at 31 December 2019 Em 2018 Em Non-current assets Property plant and equipment at cost 130 Accumulated depreciation Net Book Value Investments Tntal nnn. Accumulated depreciation Net Book Value 116 Investments 100 Total non-current assets 216 Current assets Inventory (stock) Trade receivables (debtors) Cash and cash equivalents Total current assets Total current liabilities Long-term loans Net assets 246 Capital and reserves Share capital Share premium Retained earnings Additional information: 1. The Statement of Changes in Equity showed a dividend paid during 2019 of 31m. 2. During 2019 Company Vacquired Property, Plant & Equipment costing 90m 3. During 2019 Company v sold Property, Plant & Equipment which had an original cost of 25m and NBV of 13m at the time of sale. Sales proceeds were 20m 4. Depreciation expense for 2019 was 39m. 5. Interest received in 2019 was as shown in the summary income statement Required: UNT BALANCES COMPANY Z - Microsoft Word (Product Activation Failed) AaBbcc AaB CD AaBbc AaBbcc AaB AaBbce 1 Normal No Spaci... Heading 1 Heading 2 Title Subtitle Paragraph The following account balances were extracted from the books of Company Zon 31 December 2019 000 Administration costs 2,992 Cash and bank (Current Asset) 4,400 Debentures (10%) 8.000 Fixtures and fittings (accumulated depreciation) 2,176 Fixtures and fittings at cost 5,440 7,200 General expenses Heat and light 2.000 2,080 2.880 8,000 24,000 5,680 Inventory (stock) at 1" January 2019 Buildings (accumulated depreciation) Buildings at cost Land at cost other Poyables (creditors) Plant and machinery (accumulated depreciation) Plant and machinery at cost Purchases Retained profitat 1" Banuary 2019 Sales 1,920 13,600 8.000 9696 41 600 TOSHIBA General expenses 7,200 Heat and light 2,000 Inventory (stock) at 1st January 2019 2,080 Buildings (accumulated depreciation) 2,880 Buildings at cost 8,000 Land at cost 24,000 Other Payables (Creditors) 5,680 Plant and machinery (accumulated depreciation) 1,920 Plant and machinery at cost 13,600 Purchases 8,000 Retained profitat 1 January 2019 9,696 41,600 16,000 Sales Share capital (1 ordinary shares) Trade Payables (Creditors) Trade Receivables (Debtors) 1,680 1,680 3,720 Provision for Trade Receivables (Debtors) 360 Vehicle repairs and petrol Vehicle repairs and petrol 2 ,000 Wages and salaries 6,400 Warehouse rates 160 Additional information: 1) Closing Inventory (stock) as at 31st December 2019 is 2,400,000. 2) 2,000,000 of general expenses are pre-paid as at 31 December 2019. 3) An accrual is required for the audit fee estimated to be 560,000 4) Interest payable to debenture holders is outstanding and has yet to be recorded. 5) Depreciation for the year is to be calculated as follows: Buildings: 2% straight line Plant and machinery: 20% reducing balance Fixtures and fittings: 10% straight line. 6) Estimated tax due for the accounting period is 1,760,000. 7) Company Z requires a doubtful debt provision of 5% of trade receivables (debtors) as at 31st December 2019. Allocation of expenses: Warehouse rates relate 100% to distribution Depreciation expenses should be allocated as follows: Production 30%: Distribution 40%; Administration 30%. Wages and salaries expense should be allocated on the same basis as depreciation Vehicle repairs and petrol costs relate 100% to delivery vehicles and sales Plant and machinery: 20% reducing balance Fixtures and fittings: 10% straight line. 6) Estimated tax due for the accounting period is 1,760,000. 7) Company Z requires a doubtful debt provision of 5% of trade receivables (debtors) as at 31st December 2019. Allocation of expenses: Warehouse rates relate 100% to distribution. Depreciation expenses should be allocated as follows: Production 30%; Distribution 40%; Administration 30%. Wages and salaries expense should be allocated on the same basis as depreciation. Vehicle repairs and petrol costs relate 100% to delivery vehicles and sales representative cars. General expenses relate 100% to administration. Heat and light costs relate as follows: Production 50%; Distribution 20%; Administration 30%. D Question 2 10 pts Company Y has an item of Property Plant & Equipment that cost 60,000 at the start of year 1; it had a useful economic life of 10 years, a residual value of 12,000 and is being depreciated on a straight-line basis. At the beginning of year 2, the item was revalued upwards to 70,000 with a revised residual value of 12,400. At the beginning of Year 4, the useful economic life was revised with a remaining economic life of four years with no change in valuation from the beginning of year 2. Show all the accounting journal entries required to account for the above in the financial statements of Company Y. Upload Choose a file Question 3 10 pts At 1st January 2019, the Property. Plant & Equipment balance of Company X comprised the following (all figures 000): Land & Buildings cost 4,660 accumulated depreciation 476 Plant & Equipment cost 3,560 accumulated depreciation 1,780 Fixtures and Fittings cost 1,824 accumulated depreciation 404 Company X has adopted a policy to charge depreciation at the following rates. A full year's depreciation is charged in the year of acquisition (purchase) but none in the year of disposal (sale): Buildings 2% straight line: Plant & Equipment 5% straight line; Fixtures & Fittings 15% reducing balance. Of the original cost of land and buildings, 3,400,000 relates to buildings. The company purchased new plant & equipment during the year. It cost 200,000 and was financed partly by trading in old equipment and by paying 100,000 in cash. The old equipment was purchased several years ago at a cost of 160,000. The net book value of the old equipment on 1st January 2019 was 115,600. Second-hand equipment was modifying the equipment amounting to 20,000. Without the modification the equipment could not have been used. Prepare a schedule of Property Plant & Equipment (PPE) for inclusion in the notes to the financial statements of Company X as at 31st December 2019. Question 4 8 pts Discuss the potential problems for preparers of financial statements when accounting for provisions and contingent liabilities in accordance with UK and international accounting standards Upload Choose a file Question 5 12 pts (b) In the following situations explain the accounting treatment in relation to the preparation of financial statements as at 31st December 2019 for Company Win accordance with UK and international accounting standards: 1. Company W is a major retailer on the UK Highstreet. It offers a returns policy of 10 days where customers can return items purchased and receive a full refund if they change their mind. The estimated cost of annual returns is 6 million. There is no legal obligation for the company to accept returns and issue refunds in situations where items sold are fit for purpose but Company W has a widely published returns policy and reputation for doing so. 2. Company W's store in Princes Street in Edinburgh receives a major refurbishment every five years to ensure cutting edge design and decoration in line with the company image. It is estimated that the cost of refurbishment will be approximately 9 million. 3. Company W is involved in litigation with a customer concerning claims of providing multiple deliveries of faulty products. The company's legal advisors consider that it is probable that the company will lose the case and that the amount of damages would be at least 200,000 and possibly as high as 800,000. 4. Company W has decided to restructure and close down its London store. A detailed plan has been drawn up and communicated to customers and employees. In addition, an announcement has been made in the press and offers have been invited for the purchase of the London store. It is estimated the closure will cost 500,000 in redundancy costs and other direct costs of effecting the reorganisation Summary financial statements for Company Vare provided below. Income Statement for the year ending 31 December 2019 Em Operating Profit Interest paid Interest received Profit after interest Taxation Profit after tax Statements of Financial Position (Balance Sheets) as at 31 December 2019 Em 2018 Em Non-current assets Property plant and equipment at cost 130 Accumulated depreciation Net Book Value Investments Tntal nnn. Accumulated depreciation Net Book Value 116 Investments 100 Total non-current assets 216 Current assets Inventory (stock) Trade receivables (debtors) Cash and cash equivalents Total current assets Total current liabilities Long-term loans Net assets 246 Capital and reserves Share capital Share premium Retained earnings Additional information: 1. The Statement of Changes in Equity showed a dividend paid during 2019 of 31m. 2. During 2019 Company Vacquired Property, Plant & Equipment costing 90m 3. During 2019 Company v sold Property, Plant & Equipment which had an original cost of 25m and NBV of 13m at the time of sale. Sales proceeds were 20m 4. Depreciation expense for 2019 was 39m. 5. Interest received in 2019 was as shown in the summary income statement Required

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Essential Strategies For Financial Services Compliance

Authors: Annie Mills, Peter Haines

2nd Edition

1118906136, 978-1118906132

More Books

Students also viewed these Accounting questions

Question

Identify the major criticisms of neurofinance research.

Answered: 1 week ago