Accounting for Business: Sales, Financial Viability, Break-Even Analysis

ACCOUNTING FOR
BUSINESS

Table of Contents
Section A..................................................................................................................................................3
Question 1............................................................................................................................................3
SECTON B..............................................................................................................................................4
Question 3............................................................................................................................................4
Question 4............................................................................................................................................6
REFERENCES......................................................................................................................................12

Section A
Question 1
Sales 20000
Less:
Cost of good sold
Opening stock 2000
Purchase 15200
Closing stock (2500) (14700)
Gross profit 5300
Less:
Selling expense 700
Administrative cost 300 (400 – 100)
Distribution expense 200
Audit fees 70
Salaries and wages 930 (900 + 30)
Directior remuneration 300
Interest paid 80 (60 + 20)
Interim dividend paid 50
Machinary depreciation 500 (2500 * 20%)
Depreciation on building 120 (2400 * 5%) (3250)
Less: 2050
Tax liability (200)
Net profit 1850
Statement of financial position
Asset Amount
Current asset
Closing stock 2500
Debtors 1370 (1400 – 30)

Cash 50
Bank 130
Advanced administrative
expense
100 4150
Long term asset
Freehold premises 6000
Building 2400
Machinary 3000 11400
15550
Liability Amount
Current liability
Creditors 1000
Accrue salary 30
Debenture interest accrue 20
Provision for tax liability 200 1250
Long term liability
Accumulated depreciation on
building
520
Accumulated depreciation on
machinery
1000
5% Debenture 1600 3120
£1 Ordinary shares 8000
Retained profit 1390
Current year profit 1850 11240
15610
SECTON B
Question 3
Payback period
Year Cash inflows Cumulative cash inflows