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Home > University > Business studies > sample exam question - FINANCIAL REPORTING FOR USERS sample exam question - FINANCIAL REPORTING FOR USERSYou can download this essay for free. All you need to do is register and submit at least one of your essays to us. Or you can purchase this essay for just $2 instantly without registering
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| Words: 1797 | Submitted: 09-Nov-2011 This is what the first 3 pages of the essay look like    Descriptionexam question templatePreviewQuestion 1Part (a) Primrose plc is engaged in operating a maintenance and refurbishment business for office and work premises. You have been employed to assist in the preparation of the financial statements for the year ended 31 December 2010. A trial balance together with additional relevant information is shown below. Primrose plc Trial Balance as at 31 December 2010 Debits Credits £’000 £’000 Revenue 848 Inventories at 31 December 2009 54 Purchases 400 General operating expenses 19 Insurance 3 Interest paid (debenture interest) 1 Motor vehicle expenses 12 Marketing and advertising expenses 7 Rent and rates 8 Wages and salaries 182 Directors’ remuneration 73 Goodwill 8 Freehold land – cost 200 Freehold buildings – cost 50 Freehold buildings-provision for depreciation at 31 December 2009 18 Office equipment – cost 72 Office equipment – provision for depreciation, 31 December 2009 15 Motor vehicles-cost 48 Motor vehicles-provision for depreciation at 31 December 2009 18 Provision for doubtful debts at 31 December 2009 3 Trade Receivables 50 Trade Payables 44 Bank and cash 8 Dividends paid (interim only) 18 Loan, repayable 2020 13 10% Debentures 10 Retained Earnings, 1 January 2009 120 Share capital (ordinary shares) 100 Share premium account ______ 24 1,213 1,213 Question 1 Continued Additional information: Inventories at 31 December 2010 were £82,000. An accrual should be made for staff bonuses of £25,000. An accrual should be made for General operating expenses of £12,000. Insurances of £1,000 have been prepaid at 31 December 2010. An impairment test has been carried out on goodwill and the value for the Statement of Financial Position should be adjusted to £6,000. Depreciation for the year should be charged at the following rates: Buildings - 2% on Cost. Office equipment, 10%, on Cost Motor vehicles, 20%, reducing balance . The provision for doubtful debts should be adjusted to 4% of Trade receivables at 31 December 2010. A provision should be made for Corporation Tax of £30,000. 9. The directors propose to pay a final dividend of £25,000 (inaddition to the interim dividend) Part (a) Using this Trial Balance and above notes, prepare the Statement of Comprehensive Income, Statement of Financial Position and Statement of Changes in Equity for the year ended 31 December 2010. Notes and comparative figures are not required. However, you must show all workings clearly. (28 marks) Statement of Changes in Equity for the year ended 31 December 2010 OSC Share Premium Retained Earnings TOTAL £'000 £'000 £'000 £'000 Balance B/FWD 1 Jan. 2010 100 24 120 244 NET PROFIT 90 90 Less DIVIDENDS Interim -18 Final -25 - 43 Balance C/FWD 31 Dec. 2010 100 24 167 291 Primrose plc Statement of Comprehensive Income for the year ended 31 December 2009 £'000 £'000 Revenue 848 less Cost of Sales - 372 Gross Profit 476 Less Operating expenses - 356 Net Profit before Tax 120 Less Taxation - 30 Net Profit (after Tax) 90 WORKINGS: COST OF SALES £'000 £'000 Opening Stock 54 Add Purchases 400 454 Less Closing Stock -82 Cost of Sales / Cost of Goods Sold 372 OPERATING EXPENSES : £'000 £'000 GENERAL Operating Expenses 19 INSURANCE 3 INTEREST PAID 1 MOTOR Expenses 12 Marketing and Advertising Expenses 7 RENT AND RATES 8 WAGES AND SALARIES 182 DIRECTORS REMUNERATION 73 305 ACCRUAL - Staff Bonus 25 *ACCRUAL - General Expenses 12 37 PREPAYMENT: Insurance -1 GOODWILL IMPAIRMENT 8 – 6 2 DEPRECIATION BUILDINGS 20% X 250 = 50 X 2% 1 OFFICE EQUIPMENT 10% X 72 7.2 VEHICLE 20% X (48 - 18) = 20% X 30 6 Provision for Doubtful Debts Balance B/F 3 Balance C/F 4% X 50 = 2 DECREASE - 1 356.2 Primrose plc STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2010 Assets : £'000 £'000 £'000 Non- Current Assets Property, Plant & Equipment SEE NOTE 305 GOODWILL 6 311 CURRENT ASSETS INVENTORY 82 TRADE RECEIVABLES (50 - 2) 48 PREPAYMENT 1 BANK AND CASH 8 139 TOTAL ASSETS 450 EQUITY AND LIABILITIES £'000 £'000 £'000 EQUITY ORDINARY SHARE CAPITAL 100 SHARE PREMIUM ACCOUNT 24 RETAINED EARNINGS 167 291 NON CURRENT LIABILITIES 10% DEBENTURES 10 LOAN - REPAYABLE 2020 13 23 CURRENT LIABILITIES TRADE PAYABLES 44 ACCRUED EXPENSES 37 ACCRUAL - CORPORATION TAX 30 ACCRUAL - FINAL DIVIDEND 25 136 TOTAL EQUITY AND LIABILITIES 450 PROPERTY PLANT AND EQUIPMENT LAND Buildings OFFICE Motor TOTAL Equipment Vehicles £'000 £'000 £'000 £'000 £'000 COST B/F 200 50 72 48 370 Provision for Depreciation B/F - 18 - 15 - 18 - 51 Depreciation for YEAR - 1 - 7.2 - 6 - 14.2 NBV C/FWD 200 31 49.8 24 304.8 Part (b) Primrose plc owns a large amount of freehold property (land). If the directors decide to revalue this to a current market value of £300,000, show how the financial statements should be revised. Do not re-write all of the financial statements, but show only those figures that would be changed. ... Download this essay in full now!Just upload at one of your essays to our database and instantly download your selection! Registration takes secondsOr you can download this essay for $2 immediately without registeringComments and reviewsReviews are written by members who have downloaded the essay No comments yet. If you download the essay you can review it afterwards. |
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