Analyzing a trial balance

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Question 1:
The following is the trial balance of A. for the year ended 31.12.13
€ €
Commission Receivable 1,800
Carriage Outwards 1,975
Drawings 16,575
Maintenance 17,500
Insurance 8,000
Sales 795,000
Inventory (1st Jan 2013) 20,000
Delivery Vans (cost) 45,000
Equipment (cost) 50,000
Purchases 245,000
Wages/Salaries 129,000
Depreciation
Delivery Vans 14,000
Equipment 22,000
Receivables (Debtors) 62,000
Buildings 330,000
Light/Heat 7,000
Capital 37,500
Payables (Creditors) 52,500
Discount Allowed 1,100
Carriage Inwards 12,600
Bank 5,450
Rent/Rates 13,000
Discount Received 500
Loan taken out 01.06.13 30,000
€958,750 €958,750
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Additional Information @ 31.12.13

1. The Inventory at 31.12.13 was €21,000.
2. Provide for loan interest @ 8% per annum.
3. The insurance pre-paid was €1,250.
4. Depreciation is to be provided as follows:-
   i) Delivery vans 20% of cost ii) Equipment 12% of net book value.
5. The light/heat due was €2,500
6. Create a Bad Debt provision of 6% of receivables(Debtors)
   You are required to prepare:-
   a) The Income Statement for the year ended 31.12.2013 . (20 Marks)
   b) The Statement of Financial Position at 31.12.2013. (20 Marks)
   c) Explain the meaning of
   1) Carriage Inwards. 2) Net Book Value. 3) Discount Received. (10 Marks)
   (Total 50Marks)
   2
   Question Two
   PARROT has the following assets and liabilities and capital at 01.08.14.
   € €
   Assets
   Non Current Assets (Fixed assets) 77,000
   Inventory 28,000
   Receivables (Debtors) 26,000
   Cash 2,650
   Liabilities
   Payables (Creditors) 31,000
   Capital 67,500
   Loan 35,150

€133,650 €133,650
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The expected sales and purchases for the next 5 months are as follows:-
€ Aug Sept. Oct. Nov. Dec. Total
Sales 140,000 156,000 148,000 160,000 170,000 = €774,000
Purchases 110,000 130,000 110,000 140,000 115,000 = €605,000
• Interest Received will be €6,500 in October.
• Grant received in December will be €15,000
• All sales are on credit and are paid for one month after sale, except 15% of sales which are
for cash.
• All purchases are on credit except for cash purchases of €20,000 in October and are paid
for one month later.
• P Scanlon rents the premises for €30,000 per annum payable each month.
• Wages to be €6,500 per month.
• A van will be bought for €35,000 (Deposit €10,000 in August, the balance in November) .
• A tax refund €2,000 to be received in November.
• Depreciation €4,000 per month.
You are required to:
(a) Comment on the purpose of Management Accounting. (3 marks)
(b) Prepare a cash budget showing PARROT’s expected monthly Income and expenditure
for the period to 31.12.14. (22 marks)
[Total 25 Marks]
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Question Three.
The following figures were taken from the accounts of WOOF LTD for the year ended 31.12.13.
€
Purchases 330,000
Closing Inventory 60,000
Gross Profit 225,000
Credit Sales 600,000
Expenses 120,000
Non Current Assets 375,000
Current assets (including Receivables €45,000) 90,000
Current Liabilities 50,000
9% Debenture (2018) 70,000
Ordinary Shares (240,000 shares @ €1 each ) 240,000
You are required to:
(a) Calculate:
i) Gross Profit Percentage
ii) Interest Cover.
iii) Period of Credit given to receivables (Debtors.)
iv) Return on Capital Employed. (8 Marks)
(b) Explain the following:
i) 9% Debenture 2018.
ii) Payables(Creditors) Collection.
iii) Gearing. (6 Marks)
(c) Give your opinion on:
i) Liquidity
ii) Gearing
iii) Profitability
iv) Would you lend the company €250,000 for expansion? (11 Marks)
[Total 25 Marks]