UGB 163 –. Introduction to Accounting and Finance

UGB 163 –
Introduction to Accounting and
Finance

Contents
Part A – Gravepals Plc....................................................................................................................2
1.Preparation of the Income Statement for the year ended 2017 for Gravepals Plc....................3
2.Preparation of the Statement of Financial Position as at 31 December 2017 for Gravepals
Plc................................................................................................................................................4
Part B – Cornpeace Ltd....................................................................................................................5
a) Estimation of contribution per unit..........................................................................................5
b) calculation of BEP and MOS..................................................................................................5
c) Calculation of profit for the firm if it produces and sells 48,000 units..................................6
d) Effectiveness of Increase in marketing and advertising costs and raising of unit price by
9% and volume by 17%...............................................................................................................6
e) Identification and explanation of assumptions of Break-even model including analysing
whether the model can successfully be utilised by a range of differing businesses....................7
Part C – Dane Jones Ltd..................................................................................................................8
a) Calculation of the PBP, ARR and NPV..................................................................................8
b) Produce a report that explains and analyses the key merits and limitations of the differing
investment appraisal techniques................................................................................................10
c) identification and explanation of the key benefits and limitations of budgets as a strategic
planning tool..............................................................................................................................12
Budget as a tool of strategic Planning...................................................................................12
Key benefits of Budget as a tool for Strategic planning........................................................12
Limitations of Budget as a tool for strategic planning..........................................................13

Part A – Gravepals Plc
1.Preparation of the Income Statement for the year ended 2017 for
Gravepals Plc.
Income statement of Gravepals Inc
as at December 2017
£ £
cash sales 129,000
credit sales 504,000
Total sales revenue 633,000
less:
cost of sales (54000+243000) 297000
Gross Profit 336,000
less: Operating Expenses
Wages paid 117,000
add: outstanding 2175
119,175
Van running expenses 33,600
Rent 112,500
less:
prepaid 22,500
90,000
Rates 5775
Depreciation on Delivery Van 9600
Electricity bills 5700
add: Outstanding 2025
7725
Bad debts 1500

Total Expenses 267,375
Net income 68,625
2.Preparation of the Statement of Financial Position as at 31 December
2017 for Gravepals Plc.
Statement of financial position of Gravepal’s Inc
as at December 2017
£ £
Current Assets:
cash 0
Accounts Receivables 64,500
Inventory 228,000
Prepaid Rent 22,500
prepaid Rates 1,125
Total current Assets 317,625
Non-current Assets:
Delivery Van 60,000
less: depreciation -9,600 50,400
Total assets 366,525
Current Liability:
bank overdraft 20,700
Accrued wages 2,175
Outstanding Electricity bills 2,025
Accounts payable 93,000
Total CL 117,900
Common stock 180,000
add: Net income 68,625