Accounts

Published on February 2017 | Categories: Documents | Downloads: 20 | Comments: 0 | Views: 227
of 2
Download PDF   Embed   Report

Comments

Content

Accounting
Question 1 (60 marks) The following trial balance was extracted from the books of Nyman Ltd, an office furniture and stationery supplies business based in Corby, as at 31st December 2010: £ Share Capital (£1 ordinary shares) Freehold Shop at Cost Motor Vehicles at Cost Provision for Depreciation on Motor Vehicles at 1st January 2008 Receivables and Payables Purchases and Sales Rent and Rates Wages and Salaries General Expenses Bad Debts written off Provision for Doubtful Debts at 1st January 2010 Inventory at 1st January 2010 Bank Retained Profit at 1st January 2010 10% Debentures 2017 Debenture Interest, half-year to 30th June 2010 134,000 55,000 21,800 33,944 582,724 £ 260,000

52,960 378,546 16,000 119,378 19,482 1,896

2,152 85,236 131,916 36,794 60,000 997,414

3,000 997,414

Nyman Ltd owns a freehold shop in the town centre and rents a small warehouse in the local business park. The company offers a delivery service for local businesses. Additional information: (i) Inventory at 31st December 2010 was valued at £94,576, based on its historic cost using the FIFO method. This included slow-moving inventory which cost £35,000 but which was subsequently sold in January 2011 for £19,000. The freehold shop was purchased in 1997 for a low price during the previous economic downturn. At 31st December 2010, the freehold shop was revalued to £284,000 to reflect its current open market value. A member of staff was seriously injured in the warehouse when a large pile of poorly-stacked paper fell on top of him. Professional legal advice is that Nyman Ltd will probably have to pay £10,000 compensation for loss of earnings and pain and suffering caused. Rent and rates paid in advance at 31st December 2010 amounted to £1,200. Wages and salaries outstanding at 31st December 2010 amounted to £708.

(ii)

(iii)

(iv) (v)

(vi)

Depreciation on motor vehicles is to be charged at the rate of 20% per annum reducing balance. The freehold shop is not depreciated since it is kept in an excellent state of repair and is considered to have an infinite life.

(vii)

The provision for doubtful debts is to be increased to 5% of year-end receivables.

(viii) The 10% debentures were issued on 1st April 2007 and are due to be repaid on 31st March 2017. (ix) (x) A dividend of 4 pence per ordinary share is proposed for 2010. There is no taxation payable since Nyman Ltd is situated in a Special Enterprise Zone.

REQUIRED: Prepare the Income Statement of the company for the year ended 31st December 2010, together with a Balance Sheet as at that date, in a form suitable for presentation to the shareholders. Notes to the financial statements are not required but all workings must be clearly shown. Do not prepare a statement of accounting policies.

Question 2 (20 marks) Explain any FOUR of the following accounting concepts: Accruals Prudence Going Concern Consistency Duality Materiality

Question 3 (20 marks) Discuss how to make sure the acquisition accounts are in fair values. OR Discuss the essential differences of the following methods of consolidating the company concerned: The acquisition method The proportional consolidation The equity method

Sponsor Documents

Or use your account on DocShare.tips

Hide

Forgot your password?

Or register your new account on DocShare.tips

Hide

Lost your password? Please enter your email address. You will receive a link to create a new password.

Back to log-in

Close