a)Prepare the income statement (trading and profit and loss account) for the year ended   29 February 2016. [13] b) Prepare the position statement (balance sheet) as at 29 February 2016. [12] c) Explain the principal features of the following sources of f

a)Prepare the income statement (trading and profit and loss account) for the year ended 29 February 2016. [13] b) Prepare the position statement (balance sheet) as at 29 February 2016. [12] c) Explain the principal features of the following sources of f

ACCOUNTING

Instructions to candidates:

a) Time allowed: Three hours (plus an extra ten minutes’ reading time at the start – do not write anything during this time)

b) Answer Question 1 and any THREE other questions

c) Question 1 carries 40% of the marks, all other questions carry 20% of the marks. Marks for each question are shown in [ ]

d) Non-programmable calculators are permitted in this examination

1. You work as the accountant of a company called SLR Ltd, and have just taken out the trial balance as at 29 February 2016:

 

£dr

£cr

£1 Ordinary share capital

 

100,000

Profit and loss account (01/03/15)

 

186,000

Long-term bank loan

 

180,000

Sales

 

1,830,000

Purchases

1,240,000

 

Inventory (01/03/15)

36,000

 

Accounts receivable

81,000

 

Prov. for doubtful debts (01/03/15)

 

2,000

Accounts payable

 

74,000

Business rates

44,000

 

Insurances

37,000

 

Energy costs

59,000

 

Communication expenses

33,000

 

Audit fee

10,000

 

Advertising

62,000

 

Loan interest paid

9,000

 

Payroll costs

182,000

 

Premises at cost

440,000

 

Equipment at cost

220,000

 

Equipment depreciation (01/03/15)

 

80,000

Bank

 

2,000

Cash

1,000

 

 

------------

------------

 

2,454,000

2,454,000

Notes at 29 February 2016:

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Inventory was valued at £39,000

Business rates prepaid amounted to £4,000

Advertising expenses owing amounted to £6,000

The directors have decided to adjust the provision for doubtful debts to £5,000

The equipment is to be depreciated by 20% on cost

The directors wish to provide £20,000 for taxation

The directors have declared a dividend of 12p per share

TASKS

a)     Prepare the income statement (trading and profit and loss account) for the year ended

 

29 February 2016.

[13]

b)

Prepare the position statement (balance sheet) as at 29 February 2016.

[12]

c)

Explain the principal features of the following sources of finance:

 

 

i

Ordinary shares

 

 

ii

Leasing

 

 

iii

Debentures

[5 each]

Continued overleaf

2. a)  The following information relates to the time sheet of Abdul Manof:

 

 

Basic time

Overtime

Monday

7 hours

1.0 hours

Tuesday

7 hours

2.0 hours

Wednesday

7 hours

2.0 hours

Thursday

7 hours

1.5 hours

Friday

 

7 hours

nil

Saturday

nil

4 hours

Abdul earns a basic rate of pay of £10 per hour and is paid overtime at time and a quarter.

Income tax is payable at the rate of 20% on gross earnings.

National Insurance is payable at the rate of 10% on gross earnings.

TASKS

 

 

Calculate:

 

 

i

Abdul’s gross pay.

[2]

ii

Abdul’s net pay.

[2]

b)    The budgeted data as regards a potential new product is as follows:

 

£

Proposed selling price per unit

70

Budgeted variable cost per unit

40

Fixed costs associated with the product

360,000

 

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Price: £ 40

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