Financial Accounting Assignment -
There are 3 questions in this assignment.
QUESTION 1 - Amy and Billy are in partnership sharing profits and losses in the ratio of 3:2 respectively. The following Trial Balance was extracted from the books at 31 December 2015 after the completion of the Income Statement:
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$000
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$000
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Capital Accounts - 1January 2015:
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Amy
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300
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Billy
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100
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Cash at Bank
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5
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Trade Receivables
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241
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Trade Payables
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166
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Drawings:
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Amy (all at 30 Jun 2015)
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40
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Billy (All at 31 Mar 2015)
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40
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Non-Current Assets
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Cost
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320
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Depreciation (to 31 December 2015)
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100
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Billy- Salary
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10
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Net Profit (for the year ended 31 December 2015)
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60
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Inventory
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70
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726
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726
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Additional information:
1) The partnership agreement allows Billy to receive a salary of $20 000 per annum and for interest of 5% per annum to be received on the partners' Capital Account balances as at 1 January in each year. Interest at a rate of 10% per annum is charged on the partners' drawings.
2) The partners decided to sell the business to GreenCorp Ltd on 31 December 2015. The purchase consideration was 400 000 $1 Ordinary shares in Norman at a premium of $0.25 per share. The shares were issued to the partners on 31 December 2015 and shared between them in their profit- sharing ratio.
3) The sale agreement allowed Amy to take over one of the business cars at an agreed valuation of $10 000. Apart from the car and bank balance, the company took over all the other partnership assets and liabilities at their book values at 31 December 2015.
Required: Write up the following accounts of the partnership showing its dissolution at 31 December 2015:
a) The Realisation Account.
b) The Capital Accounts of Amy and Billy, in columnar form, showing the entries required to reflect both the year-end appropriations of net profit and the dissolution of the partnership.
c) The Bank Account.
QUESTION 2 - The following information relates to the transactions of Dellars Ltd for the year ended 30 September 2016:
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$000
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Cash paid for expenses
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2330
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Cash paid to employees
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3000
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Increases in inventories
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350
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Decrease in trade receivables
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400
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Purchases
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4730
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Decrease in trade payables
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600
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Sales
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12800
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Operating Profit
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2580
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Depreciation of tangible non-current assets
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460
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Loss on sales of tangible non-current assets
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50
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Required: Calculate Dellars Ltd's net cash flow from operating activities for the company's Cash Flow Statement for the year ended 30 Sept 2016 using
(i) The direct method
(ii) The indirect method
QUESTION 3 - Mobile plc acquired 80% of the equity shares of Star Ltd on 1 January 2015. The following is an extract from the Statements of Financial Position of the two companies at 31 Mar 2016.
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Current Assets
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Mobile Plc
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Star Ltd
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Inventory
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100000
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60000
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Trade Receivable
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75000
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15000
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Dividend Receivable
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4800
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Current Liabilities
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Trade Payable
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38000
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37000
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Dividend Payable
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12000
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6000
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Additional information:
(1) The trade receivable of Mobile plc include $10000 owed by Star Ltd. Included in Star Ltd's trade payable is an amount of $10000 owed to Mobile plc.
(2) The dividend receivable are receivable from Star Ltd.
Required: Show the amounts that will be reported in the Consolidated Statement of Financial Position in respect of the following item:
(a) Inventory
(b) Trade Receivable
(c) Dividend Receivable
(d) Trade Payable
(e) Dividend Payable