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Final Accounts of a Company The following balances were extracted from the books of Slanwey Ltd as on 31/12/2013 - Leaving Cert Accounting - Question 1 - 2014
Question 1
Final Accounts of a Company The following balances were extracted from the books of Slanwey Ltd as on 31/12/2013. Share Capital Authorised - 800,000 Ordi... show full transcript
Worked Solution & Example Answer:Final Accounts of a Company The following balances were extracted from the books of Slanwey Ltd as on 31/12/2013 - Leaving Cert Accounting - Question 1 - 2014
Step 1
Prepare a Trading and Profit and Loss Account for the year ended 31/12/2013.
Answer
Trading Profit and Loss Account for Slanwey Ltd for the year ended 31/12/2013
Sales
- Total Sales: £748,000
Cost of Sales
- Opening Stock: £0
- Purchases: £493,200
- Less Purchases Returns: £15,800
- Closing Stock: £44,200
Calculation of Cost of Sales:
Cost of Sales = Opening Stock + Purchases - Purchases Returns - Closing Stock
Cost of Sales = £0 + £493,200 - £15,800 - £44,200 = £433,200
Gross Profit:
- Gross Profit = Sales - Cost of Sales
Gross Profit = £748,000 - £433,200 = £314,800
Add: Discount Received
- Discount Received: £2,000
Total Income:
- Total Income = Gross Profit + Discount Received
Total Income = £314,800 + £2,000 = £316,800
Less Expenses
-
Administration Expenses:
- Directors’ Fees: £17,000
- Insurance: £8,260
- Stationery: £2,700
- Wages & Salaries: £92,000
-
Depreciation:
- Buildings (10% of £700,000): £70,000
- Office Equipment (20% of £36,000): £7,200
- Delivery Vans (15% of £24,000): £3,600
-
Total Expenses:
Total Expenses = £17,000 + £8,260 + £2,700 + £92,000 + £70,000 + £7,200 + £3,600 = £200,760
Net Profit:
- Net Profit = Total Income - Total Expenses
Net Profit = £316,800 - £200,760 = £116,040
Profit and Loss Balance
- Profit and Loss Balance: £116,040
Step 2
Prepare a Balance Sheet as at 31/12/2013.
Answer
Balance Sheet of Slanwey as at 31/12/2013
Assets
Intangible Assets
- Patents: £43,000
Fixed Assets
- Buildings:
- Cost: £700,000
- Less Depreciation: £70,000
- Net Book Value: £630,000
- Office Equipment:
- Cost: £36,000
- Less Depreciation: £7,200
- Net Book Value: £28,800
- Delivery Vans:
- Cost: £24,000
- Less Depreciation: £3,600
- Net Book Value: £20,400
Current Assets
- Closing Stock: £44,200
- Debtors:
- Total Debtors: £139,000
- Less Provision for Bad Debts: £37,300
- Net Debtors: £101,700
- Stocks of stationery: £2,700
- Bank:
- Balance: £36,200
- Insurance Prepaid: £1,600
Total Assets:
- Total Assets = Intangible + Fixed + Current
Total Assets = £43,000 + £630,000 + £28,800 + £44,200 + £101,700 + £2,700 + £36,200 + £1,600 = £888,700
Liabilities
Creditors: Amounts Falling Due Within 1 Year
- Creditors: £31,000
- VAT: £5,300
- Debenture Interest Due: £6,000
- Corporation Tax: £9,800
- Advertising Due: £1,600
Total Current Liabilities:
= £53,700
Long-term Liabilities
- 6% Debentures: £120,000
Total Liabilities:
- Total Liabilities = Current + Long-term:
Total Liabilities = £53,700 + £120,000 = £173,700
Capital and Reserves
- Authorised Share Capital: £800,000
- Issued Share Capital: £600,000
- Profit and Loss Balance: £85,000
Total Capital and Reserves:
= £685,000
Balance Sheet Equation:
- Assets = Liabilities + Capital
£888,700 = £173,700 + £685,000