QUESTION 1:
Part A
What are the main components of a set of Financial Statements and what are their respective purposes?
Part B
Trial balances of Hans Ltd on 30 June 2008 were as follows:
|
Debit Rs
|
Credit Rs
|
|
Capital (1 July 2007)
|
|
1,75,000
|
|
Motor vehicles (at cost)
|
1,50,000
|
|
|
Office equipment (at cost)
|
37,500
|
|
|
Stock (1 July 2007)
|
83,750
|
|
|
Debtors and creditors
|
22,500
|
25,250
|
|
Bank
|
33,750
|
|
|
Rent
|
22,750
|
|
|
Repairs and Maintenance
|
3,400
|
|
|
Carriage outwards
|
2,700
|
|
|
Carriage inwards
|
5,750
|
|
|
Purchase returns
|
|
5,250
|
|
Purchases and sales
|
1,08,000
|
2,26,500
|
|
Duty on purchases
|
10,800
|
|
|
Provision for doubtful debts
|
|
1,500
|
|
Sales returns
|
1,500
|
|
|
Discounts received
|
|
1,400
|
|
Bad debts
|
1,500
|
|
|
Commission
|
|
9,000
|
|
Provision for depreciation of motor vehicles
|
|
45,000
|
|
Drawings
|
5,000
|
|
|
4,88,900
|
4,88,900
|
|
|
|
The following additional information was available:
- The annual rates used for depreciation are 20% for motor vehicles and 10% for office equipment.
- Stock at 30 June 2008 was valued Rs 90,000 at cost and at Rs 100,000 at net realizable value.
- Rent included Rs 1,750 paid to the landlord as deposit.
- Carriage inwards owing amounted to Rs 3,000.
- Goods worth Rs 2,750 were removed from the stores for personal use and were not recorded.
- Provision for doubtful debts is to be adjusted to 5% of debtors
Required: (All workings should clearly be shown)
- The adjusted Trading Account for Hans Ltd for the year ended 30 June 2008
- The adjusted Profit and Loss Account of Hans Ltd for the year ended 30 June 2008.
- The adjusted Balance Sheet of Hans Ltd as at 30 June 2008.
QUESTION 2:
Part A
What are the advantages of using an account to control the Debtors' ledger?
Part B
Prepare a Debtors' ledger control account from the following information:
|
Rs
|
|
Total debtors' balances at 1 October 2008
|
44,000
|
|
Cash Sales for the month of October
|
2,84,000
|
|
Credit sales for October
|
1,72,000
|
|
Credit sales returned during October
|
840
|
|
Cash received from Debtors
|
1,74,420
|
|
Discount allowed to debtors
|
2,830
|
|
Bad debts written off
|
500
|
|
Doubtful debts provision created
|
440
|
Cheque for the amount of Rs 288 from a customer was not honoured by the bank. The customer has given the assurance that the cheque will be settled in August. A cash discount of Rs 32 was allowed to the customer. A customer has an account of Rs 170 in the creditors ledger and it was decided to settle the two by a transfer.
Part C
State where the information for each entry would be recorded in the account before being entered in the ledger.
QUESTION 3:
The summarized profit and loss accounts of Caffyn plc, at 30 April 2007 and 30 April 2008 are given below:
|
2007
Rs('000)
|
2008
Rs('000)
|
|
Sales
|
58,000
|
66,000
|
|
Cost of Sales
|
43,000
|
49,000
|
|
Gross Profit
|
15,000
|
17,000
|
|
Operating expenses
|
10,000
|
10,500
|
|
Profit from operations
|
5,000
|
6,500
|
|
Interest payable
|
1,400
|
2,800
|
|
Net profit for the period
|
3,600
|
3,700
|
The Balance Sheets of Caffyn plc, at 30 April 2007 and 30 April 2008 are given below:
|
Rs('000)
|
Rs('000)
|
Rs('000)
|
Rs('000)
|
|
Assets
|
|
|
|
|
|
Tangible Fixed Assets
|
|
|
|
|
|
Cost
|
51,000
|
|
63,000
|
|
|
Accumulated Depreciation
|
-12,500
|
38,500
|
-16,300
|
46,700
|
|
Current Assets
|
|
|
|
|
|
Stocks
|
16,400
|
|
18,400
|
|
|
Trade Debtors
|
19,100
|
|
20,600
|
|
|
Trade Receivables
|
3,100
|
|
4,000
|
|
|
Total Current Assets
|
38,600
|
|
43,000
|
|
|
Less Current Liabilities
|
|
|
|
|
|
Trade Creditors
|
11,400
|
|
8,400
|
|
|
Accruals
|
3,400
|
|
4,200
|
|
|
Bank Overdraft
|
13,700
|
|
4,800
|
|
|
28,500
|
|
17,400
|
|
|
Working Capital
|
|
10,100
|
|
25,600
|
|
|
48,600
|
|
72300
|
|
Financed By:
|
|
|
|
|
|
Called up Share Capital
|
10,000
|
|
10,000
|
|
|
Share Premium Account
|
5,000
|
|
5,000
|
|
|
Revaluation Reserve
|
5,000
|
|
5,000
|
|
|
Profit and Loss Account
|
8,600
|
|
12,300
|
|
|
7% Debentures (Rs 20m issued 1 May 2007)
|
20,000
|
48,600
|
40,000
|
72,300
|
Other Information:
All sales on credit.
Required:
(a) Calculate the following ratios for each of the two years:
- Gross Profit Margin
- Net Profit Margin
- Return on Capital employed
- Return on owners equity
- Current Ratio
- Quick Ratio
- Gearing Ratio
- Debtors Period
(b) Comment briefly on the movements in these ratios between the two years.
QUESTION 4:
Alphabet Limited manufactures product Z and in the year ended 31st March, 1680 units were made and sold. A statement of the sales, costs and profit for the product Z for the year was as follows:
|
Rs
|
Rs
|
|
Sales
|
|
1,34,400
|
|
Production cost of goods sold:
|
|
|
|
Direct material
|
38,140
|
|
|
Direct labour
|
23,620
|
|
|
Overhead: Variable
|
4,620
|
|
|
Fixed
|
29,700
|
96,080
|
|
Other costs:
|
|
|
|
Selling and distribution:
|
|
|
|
Variable
|
10,900
|
|
|
Fixed
|
7,200
|
|
|
Administration: Fixed
|
5,600
|
23,700
|
|
Total Costs
|
|
1,19,780
|
|
Profit
|
|
14,620
|
Required:
(a) Calculate the number of units to be sold to break-even.
(b) Produce a break even chart to graphically represent the break-even.
(c) State the profit or loss if 1,100 units were sold.
(d) Calculate the number of units to be sold to make a profit of Rs 27,200 per annum.
(e) What are the main limitations of breakeven charts?