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Published Accounts Gayle Ltd - Leaving Cert Accounting - Question 6 - 2005
Question 6
Published Accounts Gayle Ltd. has an Authorised Capital of €800,000 divided into 600,000 Ordinary Shares at €1 each and 200,000 9% Preference Shares at €1 each. The... show full transcript
Worked Solution & Example Answer:Published Accounts Gayle Ltd - Leaving Cert Accounting - Question 6 - 2005
Step 1
Prepare the published Profit and Loss account for the year 31/12/2004 and a Balance Sheet as at that date
Answer
Profit and Loss Account for the year ended 31/12/2004
Turnover: €1,880,000
Cost of Sales:
- Purchases and Sales: €1,150,000
- Opening Stock: €606,000
- Less: Closing Stock: €606,000
Cost of Sales Calculation:
egin{align*}
ext{Cost of Sales} &= 1,150,000 - 606,000 \
&= 1,137,000
ext{Gross Profit} & = 1,880,000 - 1,137,000 = 743,000
\end{align*}
Distribution Costs: €248,000
Administrative Expenses: €254,700
Operating Profit:
egin{align*} ext{Operating Profit} &= ext{Gross Profit} - ext{Distribution Costs} - ext{Administrative Expenses} \ &= 743,000 - 248,000 - 254,700 = 240,300 ext{Other Operating Income} & = €85,000 ext{Interest Payable} & = €16,000
Profit before Tax: €309,300
Taxation: €72,000
Profit for the Year: €237,300
Dividend Paid:
- Interim Dividends: €24,000
- Final Proposed Dividends: €22,000
Profit Carried Forward: €258,300
Balance Sheet as at 31/12/2004
Fixed Assets:
- Intangible Assets: €30,000
- Tangible Assets: €1,043,000
Current Assets:
- Stock: €606,000
- Debtors: €273,600
- Bank: €75,000
Total Assets: €1,324,100
Current Liabilities:
- Trade Creditors: €163,000
- Dividends due: €22,000
- Taxation: €85,000
Net Current Assets: €1,324,100 - (163,000 + 22,000 + 85,000) = €1,056,100
Notes:
- Depreciation methods and any relevant accounting policies should be detailed as required under both company and accounting standards.
Step 2
State the main items of information that must be included in a Directors' Report.
Answer
A Directors' Report must include the following items:
- Dividends Declared: Details of dividends recommended for payment.
- Changes in Company Structure: A report regarding any changes in the nature of the business during the year.
- Future Developments: An overview of the company's likely developments in the future.
- Directors’ Remuneration: Details of the remuneration of directors.
- Auditors: Any details concerning the appointment or audit of the financial statements.
- Research and Development: Any ongoing or planned projects in the realm of research and development.
Step 3
Explain the term 'exceptional item' and give an example.
Answer
'Exceptional item' refers to significant events or transactions that are infrequent or unusual in nature, which can distort the financial statements if included in regular profit calculations. An example would be a profit or loss arising from the sale of a fixed asset or an extraordinary event such as a natural disaster affecting company operations. These items are reported separately in the financial statements to give stakeholders a clearer view of the company's recurring performance.