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Calculate the company’s reserves on 1/1/2006: The total assets and liabilities of the Oak Health Centre are as follows: **Assets** - Buildings: €480,000 - Equipment: €49,200 - Furniture: €20,000 - Investments: €3,000 - Stock: €1,300 - Contract cleaning prepaid: €2,250 - Cash at bank: €2,250 **Liabilities** - Creditors for supplies: €4,300 - Customers advance deposits: €4,000 - Loan on interest due for 12 months at €400 per month: €4,800 The reserves can be calculated using the formula: $$Reserves = Total ext{ }Assets - Total ext{ }Liabilities$$ Now substituting values: Total Assets = €480,000 + €49,200 + €20,000 + €3,000 + €1,300 + €2,250 + €2,250 = €558,000 Total Liabilities = €4,300 + €4,000 + €4,800 = €13,100 So, $$Reserves = €558,000 - €13,100 = €544,900$$ --- Calculate the Profit/Loss from the shop for the year ended 31/12/2006: The Health Shop Profit and Loss Account is created: **Income** - Shop receipts: €65,000 **Less Expenses** - Cost of goods sold (including stock): €41,850 - Light and heat: €200 - Insurance: €340 - Telephone: €500 - Wages and salaries (70% of €8,400): €5,880 The Net Profit for the shop can be calculated: $$Net ext{ }Profit = Income - Expenses$$ Substituting the values: $$Net ext{ }Profit = €65,000 - (€41,850 + €200 + €340 + €500 + €5,880)$$ Which simplifies to: $$Net ext{ }Profit = €65,000 - €48,770 = €16,230$$ --- Prepare a Balance Sheet as at 31/12/2006: Utilizing the earlier calculated figures, the Balance Sheet would be set as follows: **Balance Sheet** - Fixed Assets: - Buildings: €680,000 - Equipment: €60,000 - Furniture: €5,000 **Total Fixed Assets = €805,000** - Current Assets: - Investments: €500 - Closing Stock: €1,600 - Cleaning prepaid: €300 - Customer's fees due: €7,370 **Total Current Assets = €811,300** Combining them yields: **Total Assets = €1,616,300** **Less Liabilities** - Electricity due: €270 - Customer's advance deposits: €3,000 **Total Liabilities = €3,270** Thus, $$Net ext{ }Assets = Total ext{ }Assets - Total ext{ }Liabilities = €1,616,300 - €3,270 = €1,613,030$$ - Leaving Cert Accounting - Question 6 - 2007
Question 6
Calculate the company’s reserves on 1/1/2006: The total assets and liabilities of the Oak Health Centre are as follows: **Assets** - Buildings: €480,000 - Equipmen... show full transcript
Worked Solution & Example Answer:Calculate the company’s reserves on 1/1/2006: The total assets and liabilities of the Oak Health Centre are as follows: **Assets** - Buildings: €480,000 - Equipment: €49,200 - Furniture: €20,000 - Investments: €3,000 - Stock: €1,300 - Contract cleaning prepaid: €2,250 - Cash at bank: €2,250 **Liabilities** - Creditors for supplies: €4,300 - Customers advance deposits: €4,000 - Loan on interest due for 12 months at €400 per month: €4,800 The reserves can be calculated using the formula: $$Reserves = Total ext{ }Assets - Total ext{ }Liabilities$$ Now substituting values: Total Assets = €480,000 + €49,200 + €20,000 + €3,000 + €1,300 + €2,250 + €2,250 = €558,000 Total Liabilities = €4,300 + €4,000 + €4,800 = €13,100 So, $$Reserves = €558,000 - €13,100 = €544,900$$ --- Calculate the Profit/Loss from the shop for the year ended 31/12/2006: The Health Shop Profit and Loss Account is created: **Income** - Shop receipts: €65,000 **Less Expenses** - Cost of goods sold (including stock): €41,850 - Light and heat: €200 - Insurance: €340 - Telephone: €500 - Wages and salaries (70% of €8,400): €5,880 The Net Profit for the shop can be calculated: $$Net ext{ }Profit = Income - Expenses$$ Substituting the values: $$Net ext{ }Profit = €65,000 - (€41,850 + €200 + €340 + €500 + €5,880)$$ Which simplifies to: $$Net ext{ }Profit = €65,000 - €48,770 = €16,230$$ --- Prepare a Balance Sheet as at 31/12/2006: Utilizing the earlier calculated figures, the Balance Sheet would be set as follows: **Balance Sheet** - Fixed Assets: - Buildings: €680,000 - Equipment: €60,000 - Furniture: €5,000 **Total Fixed Assets = €805,000** - Current Assets: - Investments: €500 - Closing Stock: €1,600 - Cleaning prepaid: €300 - Customer's fees due: €7,370 **Total Current Assets = €811,300** Combining them yields: **Total Assets = €1,616,300** **Less Liabilities** - Electricity due: €270 - Customer's advance deposits: €3,000 **Total Liabilities = €3,270** Thus, $$Net ext{ }Assets = Total ext{ }Assets - Total ext{ }Liabilities = €1,616,300 - €3,270 = €1,613,030$$ - Leaving Cert Accounting - Question 6 - 2007
Step 1
Calculate the company’s reserves on 1/1/2006
Answer
To calculate the reserves, you need to subtract the total liabilities from the total assets. The total assets consist of the values from buildings, equipment, furniture, investments, stock, contract cleaning prepaid, and cash at bank. Total liabilities include creditors for supplies, customers’ advance deposits, and outstanding loans. After performing the calculation:
Total Assets = €558,000, Total Liabilities = €13,100, thus Reserves = €558,000 - €13,100 = €544,900.
Step 2
Calculate the Profit/Loss from the shop for the year ended 31/12/2006
Answer
To derive the profit or loss from the shop, start with the shop receipts and subtract relevant expenses, including cost of goods sold, light and heat, insurance, telephone, and wages. The calculation yields:
Net Profit = Income - Expenses = €65,000 - €48,770 = €16,230.
Step 3
Prepare a Balance Sheet as at 31/12/2006
Answer
To prepare the Balance Sheet, list the fixed assets followed by current assets, factoring in all values computed previously. The net assets are derived by evaluating total assets and subtracting liabilities. Final calculations indicate Net Assets = €1,616,300 - €3,270 = €1,613,030.