C37FF ACCOUNTING AND FINANCE
TUTORIAL 2 STATEMENT OF FINANCIAL POSITION AND INCOME STATEMENT
Question 1
The statement of financial position of a business at the start of the week is as follows:
Non-current assets
Property
Furniture and fittings
Current Assets
Inventories
Trade receivables
£
145,000
63,000
208,000
28,000
33,000
61,000
Total assets
269,000
Equity
203,000
Current liabilities
Trade payables
Bank overdraft
Total equity and liabilities
23,000
43,000
66,000
269,000
During the week the following transactions take place:
a)
b)
c)
d)
e)
f)
g)
Inventories sold for £11,000 cash. These inventories had cost £8,000
Inventories sold for £23,000 on credit. These inventories had cost £17,000
Received cash from trade receivables £18,000
Owners of the business paid £100,000 of their own money into the business bank account
Owners transferred a van valued at £10,000 into the business
Bought inventories on credit for £14,000
Paid trade payables £13,000
Required:
Show the statement of financial position at the end of the week.
C37FF ACCOUNTING AND FINANCE
TUTORIAL 2 STATEMENT OF FINANCIAL POSITION AND INCOME STATEMENT
Answer 1
Statement of financial position at the end of the week:
Non-current assets
Property
Furniture and fittings
Motor van
Current Assets
Inventories (28,000 – 8,000 – 17,000 + 14,000)
Trade receivables (33,000 + 23,000 – 18,000)
Bank (43,000 – 11,000 – 18,000 – 100,000 + 13,000)
£
145,000
63,000
10,000
218,000
17,000
38,000
73,000
128,000
Total assets
346,000
Equity (note 2)
322,000
Current liabilities
Trade payables (23,000 + 14,000 – 13,000)
Total equity and liabilities
Note 1 Equity
£
Opening balance
203,000
Add: cash paid in
100,000
value of van
10,000
Profit on sale of inventories
(11,000 – 8,000) + (23,000 – 17,000)
9,000
Balance
322,000
24,000
346,000
C37FF ACCOUNTING AND FINANCE
TUTORIAL 2 STATEMENT OF FINANCIAL POSITION AND INCOME STATEMENT
Question 2
The following balances have been extracted from the books of Tigger Ltd at 31 March 2010:
Advertising costs
Cash in bank
Trade payables
Trade receivables
Furniture and fittings – cost
Furniture and fittings – depreciation at 31.3.09
Directors’ fees
Equity
Purchases of goods for sale
Rent and rates
Sales
Inventories at 31.3.09
Telephone and stationery expense
Interest paid
Delivery vehicles – cost
Delivery vehicles - depreciation at 31.3.09
Wages and salaries
€000
3
11
12
118
20
9
6
78
124
10
270
16
5
2
40
10
24
Additional information:
1. Inventories at 31 March 2010 were valued at €14,000
2. Furniture and fittings and the vehicles are to be depreciated at the rate of 15% and 25%
respectively, on cost
3. Tax based on the year’s profits is estimated at €25,000
Required:
Prepare an income statement and a statement of financial position for Tigger Ltd for the year
ended 31 March 2010.
C37FF ACCOUNTING AND FINANCE
TUTORIAL 2 STATEMENT OF FINANCIAL POSITION AND INCOME STATEMENT
Answer 2
Tigger Ltd
Income statement for the year ended 31 March 2010
Note
Revenue
Cost of sales
Gross profit
Selling and distribution costs
Administration expenses
Operating profit
Interest charges
(1)
(2)
(3)
Tax expense
Profit for the year
€000
270
(126)
144
(13)
(48)
83
(2)
(81)
(25)
56
Tigger Ltd
Statement of financial position at 31 March 2010
€000
Non-current assets
Delivery vehicles
Furniture and fittings
(4)
(4)
Current assets
Inventories
Trade receivables
Cash in bank
20
8
28
14
118
11
143
171
Total assets
Equity
Current liabilities
Trade payables
Taxation accrual
Total equity and liabilities
€000
(5)
134
12
25
37
171
C37FF ACCOUNTING AND FINANCE
TUTORIAL 2 STATEMENT OF FINANCIAL POSITION AND INCOME STATEMENT
Working Notes
(1) Cost of sales
Opening inventories
Purchases
16
124
140
(14)
126
Less closing inventories
(2) Selling and distribution costs
Advertising costs
Depreciation – delivery vehicles
3
10
13
25% x 40
(3) Administration Expenses
Directors’ fees
Rent and rates
Telephone and stationery
Wages and salaries
Depreciation – furniture and fittings 15% x 20
(4) Non-current assets
Vehicles
Furniture and fittings
(5) Equity
Balance at start of year
Profit for the year
6
10
5
24
3
48
Cost
40
20
60
78
56
134
Depreciation
20
12
32
Written-down value
20
8
28
C37FF ACCOUNTING AND FINANCE
TUTORIAL 2 STATEMENT OF FINANCIAL POSITION AND INCOME STATEMENT
Question 3
The following balances have been extracted from the books of Winnie Ltd at 31 October 2010:
Cash in bank
Retained earnings
Depreciation at 1 Nov 2009
Office equipment
Vehicles
Heating and lighting
Office expenses
Office equipment – cost
Rent
Revenue
Purchases
Inventories at 1 Nov 2009
Trade payables
Trade receivables
Vehicles at cost
Wages and salaries
€
700
85,000
14,000
4,000
15,300
27,000
35,000
12,000
350,000
240,000
20,000
21,000
61,000
16,000
47,000
Additional information:
Inventories at 31 October 2010 were valued at €26,000
Amount owing for electricity at 31 October 2010 was €1,500
At 31 October 2010, €2,000 had been paid in advance for rent
Office equipment and the vehicles are to be depreciated at the rate of 20% and 25%
respectively, on cost
5. Tax based on the year’s profits is estimated at €1,800
1.
2.
3.
4.
Required:
Prepare an income statement and statement of financial position for Winnie Ltd for the year
ended 31 October 2010.
C37FF ACCOUNTING AND FINANCE
TUTORIAL 2 STATEMENT OF FINANCIAL POSITION AND INCOME STATEMENT
Answer 3
Winnie Ltd
Income Statement for the year ended 31 October 2010
Note
Revenue
Cost of sales
Gross profit
Distribution costs
Administrative expenses
Operating profit
Tax expense
Profit for the year
(1)
(2)
(3)
€
350,000
(234,000)
116,000
(4,000)
(107,800)
4,200
(1,800)
2,400
Winnie Ltd
Statement of Financial Position at 31 October 2010
€000
Non-current assets
Office equipment
Furniture and fittings
(4)
14,000
8,000
22,000
Current assets
Inventories
Trade receivables
Prepayments
Cash in bank
26,000
61,000
2,000
700
89,700
111,700
Total assets
Equity
Current liabilities
Trade payables
Taxation accrual
Electricity accrual
Total equity and liabilities
€000
(5)
87,400
21,000
1,800
1,500
24,300
111,700
C37FF ACCOUNTING AND FINANCE
TUTORIAL 2 STATEMENT OF FINANCIAL POSITION AND INCOME STATEMENT
Working Notes
(1) Cost of sales
Opening inventories
Purchases
Less closing inventories
20,000
240,000
260,000
(26,000)
234,000
(2) Distribution costs
Depreciation – vehicles
(25% x 16,000)
(3) Administrative expenses
Depreciation – office equipment
(20% x 35,000)
Heating and lighting (15,300 + 1,500)
Office expenses
Rent (12,000 – 2,000)
Wages and salaries
(4) Non-current assets
Office equipment
Vehicles
(5) Equity
Balance at start of year
Profit for the year
4,000
7,000
16,800
27,000
10,000
47,000
107,800
Cost
35,000
16,000
51,000
85,000
2,400
87,400
Depreciation
21,000
8,000
29,000
Written-down value
14,000
8,000
22,000