Financial Accounting Comprehensive Assignment Solution: Balance Sheet

This document presents a solved assignment in Financial Accounting, featuring a comprehensive balance sheet and detailed solutions to various accounting problems. It includes calculations for cost of goods sold, administrative and distribution expenses, depreciation, debenture interest, and trade receivables. The assignment also incorporates working notes to explain the treatment of suspense accounts, energy expenses, rent, and other financial items. The final balance sheet provides a snapshot of the company's financial position, including non-current assets, current assets, non-current liabilities, current liabilities, and equity. This assignment serves as a valuable resource for students seeking to understand and master financial accounting principles, with Desklib offering additional support through similar past papers and solved examples.

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Question 1
(a) Gearing = Long term Liabilities / Total Assets
Question 2
(B) and (C) both are same option or right answer debit loan credit bank
Question 3
(c) Must comply with legal and regulatory requirement
Question 4
(a) Unregulated formats that allow both form and content to be determined by the management
of a business
Question 5
(c) Early settlement discount
Question 6
(b) Debit Receivables A/c- Kandy Ltd & Credit Sales A/c
Question 7
(b) £4,500
Question 8
(a) Debit Depreciation A/c & Credit Non-Current Asset A/c
Question 9
(b) Debit Drawings A/c & Credit Bank A/c
Question 10
(b) Loss of £5,300
Question 11
(d) £6,370

Question 12
(c) A new policy to reduce the level of inventory to reduce the associated costs of storage and
insurance
Question 13
(a) Both the ledger account and the control account
Question 14
(a) Dr suspense, Cr office equipment
Question 15
(a) All of the above is true
Question 16
(b) £72,200
Question 17
(a) Purchase price + import duties + storage costs + carriage in
Question 18
(d) £19,000
Question 19
(c) Dr Bank Cr Capital
Question 20
(a) A Remittance advice
Question 21
(b) £48,900
Question 22
(b) It ensures maximization of dividend yield

Question 23
(a) Unlike the Statements of Income and of Financial Position, the cash flow data reflected in the
SCF is not affected by accounting policies
Question 24
(b) Both current assets and current liabilities will be affected
Question 25
Option d
Question 26
Option a
Question 27
(a) The cost of new machinery
Question 28
(d) £12,000
Question 29
(a) £950
Question 30
(b) Capital introduced + profit in period – drawings
Question 31
(b) £13,200
Question 32
(a) £151,200
Question 33
(d) Loss £1,250

Question 34
(c) Changing from a reducing balance to a straight-line basis for computing depreciation on new
non-current assets.
Question 35
Option c = 72000
Question 36
Particulars Amount
Sales 2465000
Less: Cost of goods sold
Opening Inventory 367000
+ Purchases 1245000
- Closing inventory (375000) (1237000)
Gross Profit 1228000
Add: Other Operating Income 25000
Total Income 1253000
Less: expenses
Administrative expenses 198000
+ Salaries (80% of 412000) 329600
+ depreciation on computer equipment 63900
+ Energy expenses 11923
+Rent (25500 - 2833) 22667
Total administrative expenses 626090
Distribution expenses 75000
+ Salaries (20% of 412000) 82400
+ depreciation on motor vehicle 23800
+ Energy expenses 5110
Total Distribution expenses 186310
Other expenses

Marketing expenses 298200
Audit fee 8000
Debenture interest 3800
Allowance for trade receivables 11475
Total expenses (1133875)
Profit before tax 119125
Less: Corporation tax (27800)
Profit after tax 91325
Less: Interim dividend paid (13000)
Profit for the year 78325
Retained earnings as at 1st December 2020 210800
Retained earnings as at 30th November 2021 289125
Working Notes:
1. To write off suspense account balance from trial balance, the following journal entry would be
passed:
Computer equipment a/c 21000
To Suspense a/c 21000
Computer equipment at cost – Accumulated depreciation = 405000 – 230000 = 175000
Depreciation for the year ended 30th November 2021 = 405000 * 15% = 60750
Further purchase of equipment as at 1st July 2021 = 21000
Depreciation on further purchased equipment = 21000 * 15% = 3150
Total Depreciation on equipment = 3150 + 60750 = 63900
2. Treatment of energy expenses
Energy expense given = 15300
Expected Amount of next invoice for 3 months = 5200

Relevant to this period = 5200 / 3 = 1733
Total energy cost = 15300 + outstanding amount = 15300 + 1733 = 17033
Allocated to administrative expenses = 17033 * 70% = 11923
Allocated to Distribution expenses = 17033 * 30% = 5110
3. Treatment of Rent
Rent paid = 25500
Paid on 1st July 2021 = 17000
Relevant for this accounting period ended at 30Th November 2021 = 17000 / 6 * 5 = 14167
Prepaid rent = 17000 – 14167 = 2833
3. Depreciation on motor vehicle
Given
Cost of motor vehicle = 265000
Accumulated depreciation = 146000
Value of motor vehicle = 265000 – 146000 = 119000
Depreciation on motor vehicle for the year ended 30th November 2021 = 119000 * 20% = 23800
4. Debenture interest
= 76000 * 5% = 3800
5. Treatment of Trade receivables
Balance of Trade receivables = 388000
Allowance for receivables = 13000
Writing off Trade receivables = 5500
Therefore, balance of trade receivables = 388000 – 5500 = 382500
Balance of allowance for trade receivables = 13000 – 5500 = 7500

Further Allowance for irrecoverable trade receivables @3% can be made as,
382500 * 3% = 11475
Allowance for trade receivables = 7500 + 11475 = 18975
Balance Sheet as at 30th November 2021
Particulars Amount
Non – current assets
Computer equipment 426000
Motor Vehicles 265000
Non-current investments 26000
Current assets
Inventory 375000
Prepaid rent 2833
Receivables 382500
Cash and cash equivalents 250200
Total assets 1727533
Non – current liabilities
5% Debentures 76000
Current liabilities
Debenture interest 3800
Payables 252400
Allowance for receivables 18975
Outstanding energy expenses 1733
Accumulated depreciation on computer
equipment (63900 + 230000)
293900
Accumulated depreciation on motor vehicles
(146000 + 23800)
169800
Corporation tax liability 27800

Outstanding audit fee 8000
Equity
Ordinary £1 shares 560000
Share Premium 26000
Retained earnings 289125
Total equity and liabilities 1727533