You are required to provide answers to the assessment questions below. Questions 1. Yippy and Co: Balance sheets as at 31 December 2015 2014 €'000 €'000 €'000 €'000 Non-current assets Land & buildings 940 762 Fixtures and fittings 125 128 1,065 890 Current assets Inventory 740 600 Receivables 420 490 Cash 80 57 1,240 1,147 Current liabilities Trade payables 230 440 Other 147 80 Company tax due 152 130 529 650 Course Name: SG1015 Financial Accounting (January 2021) Summative Assessment 2 Net current assets 711 497 Non-current assets + net current assets 1,776 1,387 Long-term liabilities 10% Debentures 500 400 1,276 987 Capital and reserves €0.50 Ordinary shares 671 609 Other reserves 80 131 Retained profits 525 247 1,276 987 Income statements Yippy and Co. for years ended 31st December 2015 2014 €'000 €'000 €'000 €'000 Sales 5,459 4,481 Less Cost of sales Opening inventory 600 482 Purchases 4,284 3,608 4,884 4,090 Less closing inventory 740 4,144 600 3,490 Gross profit 1,315 991 Wages and salaries 512 460 Interest payable 52 48 Other costs 174 132 738 640 Net profit before tax 577 351 Company tax 152 130 Net profit after tax 425 221 Add retained profits b/forward 247 106 672 327 Dividends paid 147 80
Microsoft Word - S2 - Financial Accounting.docx PATHWAY: International Year 1 ASSESSMENT METHOD: Individual Assignment WORD COUNT: Not applicable WEIGHTING: This assessment represents 50% of the module mark LEARNING OBJECTIVES: LO3, LO4, LO5, LO7, LO8 PLEASE READ AND UNDERSTAND THE FOLLOWING INSTRUCTIONS: You are required to provide answers to the assessment questions below. Questions 1. Yippy and Co: Balance sheets as at 31 December 2015 2014 €'000 €'000 €'000 €'000 Non-current assets Land & buildings 940 762 Fixtures and fittings 125 128 1,065 890 Current assets Inventory 740 600 Receivables 420 490 Cash 80 57 1,240 1,147 Current liabilities Trade payables 230 440 Other 147 80 Company tax due 152 130 529 650 Course Name: SG1015 Financial Accounting (January 2021) Summative Assessment 2 Net current assets 711 497 Non-current assets + net current assets 1,776 1,387 Long-term liabilities 10% Debentures 500 400 1,276 987 Capital and reserves €0.50 Ordinary shares 671 609 Other reserves 80 131 Retained profits 525 247 1,276 987 Income statements Yippy and Co. for years ended 31st December 2015 2014 €'000 €'000 €'000 €'000 Sales 5,459 4,481 Less Cost of sales Opening inventory 600 482 Purchases 4,284 3,608 4,884 4,090 Less closing inventory 740 4,144 600 3,490 Gross profit 1,315 991 Wages and salaries 512 460 Interest payable 52 48 Other costs 174 132 738 640 Net profit before tax 577 351 Company tax 152 130 Net profit after tax 425 221 Add retained profits b/forward 247 106 672 327 Dividends paid 147 80 Retained profit c/forward 525 247 All sales and purchases are made on credit. The market value of the shares of the company was €7 at 31st December 2015 and €5 at 31st December 2014. The issues of equity shares during 2015 was at the beginning of the year. Dividends of 6.6 pence per share were paid in 2014, and of 11 pence per share in 2015. a) Using six ratios, comment on the profitability (three ratios) and efficiency (three ratios) of the business. (15 marks) 2. Astra Limited manufactures nuts and bolts, which are sold to industrial users. The financial statements for 2016 and 2017 are as follows: Income statements for the year ended 31st December 2016 2017 £000 £000 Revenue 1,180 1,200 Cost of sales (680) (750) Gross profit 500 450 Operating expenses (200) (208) Depreciation (66) (75) Operating profit 234 167 Interest (-) (8) Profit before taxation 234 159 Taxation (80) (48) Profit for the year 154 111 Statements of financial position as at 31st December 2016 2017 £000 £000 ASSETS Non-current assets Property, plant and equipment 702 687 Current assets Inventories 148 236 Trade receivables 102 156 Cash 3 4 253 396 Total assets 955 1,083 EQUITY AND LIABILITIES Equity Ordinary share capital (£1 shares, fully paid) 500 500 Retained earnings 256 295 756 795 Non-current liabilities Borrowing - bank loan - 50 Current liabilities Trade payables 60 76 Other payables and accruals 18 16 Taxation 40 24 Short-term borrowings (all bank overdraft) 81 122 199 238 Total equity and liabilities 955 1,083 Dividends were paid on ordinary shares of £70,000 and £72,000 in respect of 2016 and 2017 respectively. • Where there is no Purchases, please use Cost of sales. a) Calculate the following ratios for both 2016 and 2017 (using year-end figures for statement of financial position items): • Return on capital employed (4 marks) • Operating profit margin (4 marks) • Gross profit margin (4 marks) • Current ratio (4 marks) • Acid test ratio (4 marks) • Settlement period for trade receivables (4 marks) • Settlement period for trade payables (4 marks) • Inventories turnover period (4 marks) (32 marks) b) Comment on the performance of Astra Limited from the viewpoint of a business considering supplying a substantial amount of goods to Astra Limited on usual trade credit terms. (3 marks) 3. ABC PLC’s income statement for the year ended 31 December 2016 and the statements of financial position as at 31 December 2015 and 2016 are as follows: Income statement for the year ended 31 December 2016 £m Revenue 623 Cost of sales (353) Gross profit 270 Distribution expenses (44) Administrative expenses (30) Operating profit 196 Interest payable (26) Profit before taxation 170 Taxation (36) Profit for the year 134 Statements of financial position at 31 December 2015 and 2016 2015 2016 £m £m ASSETS Non-current assets Property, plant and equipment Land and buildings 310 310 Plant and machinery 325 314 635 624 Current assets Inventories 41 35 Trade receivables 139 145 180 180 Total assets 815 804 EQUITY AND LIABILITIES Equity Called-up ordinary share capital 200 300 Share premium account 40 - Revaluation reserve 69 9 Retained earnings 123 197 432 506 Non-current liabilities Borrowings - loan notes 250 150 Current liabilities Borrowings (all bank overdraft) 56 89 Trade payables 54 41 Taxation 23 18 133 148 Total equity and liabilities 815 804 • During 2016, the business spent £67 million on additional plant and machinery. There were no other non-current asset acquisitions or disposals. • There was no share issue for cash during the year. The interest payable expense was equal in amount to the cash outflow. A dividend of £60 million was paid. a) Prepare the statement of cash flows for ABC PLC for the year ended 31 December 2016. (10 marks) 4. George has the following information in his records. £ Freehold shop 72,000 Capital (as at 1 Jan 2019) 36,000 Equipment 20,000 Drawings 26,800 Money due from clients 3,700 Motor vehicles 18,000 Stationery inventory (as at 31 Dec 2019) 1,400 Cash at bank 6,500 Bank loan (repayable 2025) 72,600 Trade payable 1,100 Capital introduced during the year 9,600 Profit for the year 27,800 Income taxation owing 1,300 a) You are required to produce a statement of financial position as at 31 December 2019. (10 marks) 5. William Hill is the owner of A Star Plumbing. Below is a list of his revenue and expenses. Revenue Expenses Sales $ 61,600.00 Advertising $ 1,120.50 Service $ 108,300.00 Bank Charges $ 1,450.00 Car Expense $ 6,296.00 Gas and Oil Expense $ 5,935.25 Utilities $ 5,320.12 Miscellaneous Expense $ 457.00 Telephone Expense $ 1,600.00 a) Produce his income statement for the year ended December 31, 2019. (10 marks) 6. Jerry’s Biscuit Company is a successful biscuit manufacturer. Since it was established five years ago it has gradually increased its range of plain and cheese biscuits. The sales director has now come to the board with a proposal to expand the range further into chocolate coated biscuits. This will involve the purchase of new machinery; the initial outlay will be £145 000. The finance director and the sales director meet to discuss sales projections for the new range of chocolate biscuits. They forecast the following net cash inflows over the five year period until the machinery will need to be replaced: £ Year 1 33,000 Year 2 44,000 Year 3 50,000 Year 4 51,000 Year 5 56,000 In addition to these inflows, it is expected that the machinery will be sold for scrap at the end of year five for £12 000. a) Calculate the payback period for the project. (5 marks) b) Calculate the accounting rate of return (ARR) for the project. (5 marks) c) Calculate the net present value (NPV) for the project, assuming 10% rate. (5 marks) d) Discuss the results and their potential impact on Jerry’s Biscuit Company (5 marks)