Essay on Finance Project

Finance Project 2

TABLE OF CONTENTS
QUESTION 1..................................................................................................................................3
a. Preparing income statement for Sheila’s Kitchen for the period ended 30 June 20X6...........3
b. Prepare the balance sheet for Sheila’s Kitchen as at 30 June 20X6........................................3
QUESTION 2..................................................................................................................................5
a. Manufacturing or trading account............................................................................................5
b. Income statement.....................................................................................................................6
c. Difference between prime and conversion cost.......................................................................7
QUESTION 3..................................................................................................................................7
a. Calculating selling price, variable cost and contribution per unit for 20X2............................7
b. Computation of break-even point............................................................................................8
c. Contribution analysis...............................................................................................................8
d. Analyzing outcome with the help of break-even chart............................................................9
e. Calculating the number of screen protectors needed to be sold for earning a profit of
£100,000......................................................................................................................................9
f. Calculating margin of safety for Smart Screen for 20X2.........................................................9
QUESTION 4..................................................................................................................................9

QUESTION 1
a. Preparing income statement for Sheila’s Kitchen for the period ended 30 June 20X6.
Profitability statement for Sheila’s Kitchen for the period ended 30 June 20X6.
Income statement
Particulars Figures (in £) Figures (in £) Figures (in £)
Sales 375,000
375,000
Less: COGS 134,800
Carriage inward 7000 141,800
Gross profit (GP) 233,200
Income from franchise 14,000
Profit on the sale of equipment 7,000
Total operating income 254,200
Rent 44,000
Less: Prepaid rent 1,600 42,400
Advertising expense 5,700
Less: Prepaid expenses 1,300 4,400
Heating and lighting 25,000
Add: Outstanding expenses 3,500 28,500
Motoring expenses 7,000
Wages 17,000
Discounts allowed 3,500
Carriage outward 2,500
Depreciation on the motor
vehicle 12,000
Depreciation on the equipment 19,200
Bad debts 1600
add: allowances for receivables 576
Less: old provision 1200 976
Interest on loan 1200
Total operating expense 138,676
Net profit (NP) 115,524
b. Prepare the balance sheet for Sheila’s Kitchen as at 30 June 20X6
Statement of Financial Position