Reference no: EM13836005
Accounting for Managers
ASSIGNMENT
On Page 3 following you will find an extract from the Academic Integrity Policy. You are reminded that you must be aware of the requirements under this policy.
The assignment in this topic is an individual assignment therefore it is not permissible to work with other students. It is also NOT ACCEPTABLE to share files (electronic or otherwise) of your assignment work with other students - to do so is to engage in academic dishonesty. See the following pages for additional advice regarding discussion of assignments with other students.
ASSIGNMENT DETAILS
Question 1
Closing balance sheet items are given below for Giveitago. Giveitago owns a retail business that sells Fitness and Gym Equipment. The balance sheet is prepared in the accounting equation format, as at 30 June 2014. Transactions for the month of July are also given.
Required:
1. Prepare worksheet entries for the business transactions for the month ended 31 July 2014. You will need additional columns to the table below for additional assets, expenses, liabilities, and owner's equity and revenue accounts.
2. Prepare an Income Statement for the period ending 31 July 2014.
3. Prepare a Classified Balance Sheet in the vertical format, as at 31 July 2014.
Giveitago Hard
Balance Sheet
as at 30th June 2014
Date
Cash at Bank Accounts Receivable Inventory = Accounts Payable Loan (due 31/7/2014) Capital June 30 120,000 47,000 nil 27,000 40,000 100,000 July
1 Paid $2,500 for office rent.
2 Paid $20,000 off accounts payable.
3 Received $25,000 against accounts receivable
4 Paid $15,000 off the loan balance outstanding
5 Paid $1,800 for advertising
6 Paid $2,900 for wages
7 Paid $8,500 for a new photo copier
8 Purchased inventory for $4,500 on credit (180 units at $25 each) Paid $1,500 off Giveitago's personal credit card
9 Recorded credit sales $4,500 (100 of the units purchased on the 8th were sold)
10 Recorded cash sales $2,200 (44 of the units purchased on the 8th were sold)
11 Recorded gas invoice received for $650
12 Paid $1,800 for sales commission
13 Purchased inventory for $8,400 cash (280 units at $30 each)
14 Paid $7,500 for a new office photocopier
15 Paid Giveitago $500 for drawings
16 Recorded cash sales $4,400 (36 units purchased on the 8th and 44 units purchased on the 18th were sold)
Question 2
Iamtrying Pty Ltd
Income Statements for the year ending 30th June 2012 2013 2014
Sales on Credit 100,000 150,000 175,000
Less Cost of goods sold 75,000 104,000 120,000
Gross Profit 25,000 46,000 55,000
Less expenses
Selling expenses 5,000 17,500 21,000
Admin expenses 4,500 10,000 11,000
Interest expense 1,500 1,500 ......................1,500
Total Expenses 11,000 29,000 33,500
Net Profit 14,000 17,000 21,500
Less Tax 5,500 6,000 7,500
Net Profit after tax 8,500 11,000 14,000
N.B. Credit Purchases 70,000 95,000 110,000
Iamtrying Pty Ltd
Balance Sheets
As at year ending 30th June
Assets 2012 2013 2014
Cash 5,000 7,500 12,500
Accounts Receivable 7,500 13,500 17,500
Inventory 2,000 4,000 7,500
Total Current Assets 14,500 25,000 37,500
Building 16,000 16,000 21,000
Fixtures & Fittings 10,000 12,500 12,500
Total N/C Assets 26,000 28,500 33,500
Total Assets 40,500 53,500 71,000
Liabilities
Accounts Payable 2,000 4,000 7,500
Total C/Liabilities 2,000 4,000 7,500
Loan 12,500 12,500 12,500
Total N/C Liabilities 12,500 12,500 12,500
Total Liabilities 14,500 16,500 20,000
NET ASSETS 26,000 37,000 51,000
Shareholders' Equity
Opening Share capital 15,000 15,000 15,000
Retained Earnings 11,000 22,000 36,000
General Reserve 0 0 0
Total Equity 26,000 37,000 51,000
Required
The management of Iamtrying Pty Ltd has approached you to discuss their financial performance. You are presented with their financial reports (above).
• 1. Give the formula for each of the following ratios and calculate the ratios for the 2013 and 2014 years.
• Return on Shareholders' Funds • Return on Total Assets • Gross profit margin
• Net Profit Margin • Inventory T/Over in days • A/C Receivable T/Over in days
• A/C Payable T/Over in days • Current Ratio • Acid Test Ratio
• Gearing Ratio • Interest Cover Ratio
• 2. Based on your interpretation of the ratios prepare a report to management addressing separately:-
? Profitability
? Efficiency
? Liquidity
? Gearing
NB. Your report should be no more than one page in length.