MANAGERIAL FINANCE GROUP ASSIGNMENT -

REQUIREMENTS OF THE GROUP ASSIGNMENT

You and two of your cousins have decided to start a career in the trading business by incorporating a private limited company in the United Kingdom. The paid-up share capital of the Company consists of 40,000 ordinary shares of £1 each issued at par whereby you contributed £18,000, one cousin contributed £12,000 and another cousin contributed £10,000.

You and a cousin are the executive directors while another cousin is the non-executive director of the Company. The Company further employed one employee to manage the business operations.

The Company was incorporated on 1 September 2016 and commenced operations on the same day. The Company involves in three (3) products whereby the sales and purchases include both cash and credit transactions.  The Company implements perpetual inventory system and applies the first-in, first-out cost flow assumption. The board of directors have decided to use Sage accounting software to keep the accounting records of the Company.

Complete the following tasks for each part, i.e. Part A, Part B and Part C.

PART A: BACKGROUND INFORMATION OF THE BUSINESS

Complete the following information of the Company in a tabular format as provided for in the Excel document file.

(1) What is the name of the Company?

(2) Where is the business of the Company situated? (To include address and contact.)

(3) What is the principal activity of the Company?

(4) Who is the target market of the Company?

(5) When is the first year end of the Company?

(6) Who are the shareholders of the Company?

(7) What is the percentage of shareholdings of each shareholder of the Company?  (To include name of individual shareholder and respective shareholding.)

(8) Who are the directors of the Company?

(9) What are the roles and responsibilities of each of the executive directors of the Company?  (To include the position held and the brief responsibilities of each executive director.)

(10) What are the products of the Company? (To include details of each product: product name; product code; expected purchase price; and expected selling price.)

(11) Who are the potential suppliers of the Company? (To include details of two potential suppliers: supplier name, address and contact; and terms of credit, i.e. credit period and credit limit.)

(12) Who are the potential customers of the Company? (To include details of two potential customers: customer name, address and contact; and terms of credit, i.e. credit period and credit limit.)

(13) Who is the banker of the Company? (To include details of the banker: bank name, address and contact; and account number.)

PART B: CREATION OF BUSINESS TRANSACTIONS INVOLVING DOUBLE ENTRY SYSTEM

It is assumed that the Company is a VAT registered business; however, for the purposes of this Group Assignment, apply VAT (i.e. at 20%) on transactions relating to sale and purchase of inventories only and ignore VAT in any other transactions (such as purchase of non-current assets and operating expenses).

Create the following 30 business transactions involving double entry system for the first month of the Company (All cash transactions are considered to be transactions from cash at bank). Record the 30 journal entries using the format provided for in the Excel document file.

Arrange the business transactions in a logical sequential manner by clearly indicating the date of each transaction.

(1) Initial issued and paid-up share capital for cash (one transaction).

(2) Purchase of non-current assets for cash and on credit (two transactions: one cash and one credit).

(3) Purchase of inventories for cash and on credit (six transactions: one cash and five credit).

(4) Sale of inventories for cash and on credit (six transactions: one cash and five credit).

(5) Return of inventories purchased on credit and still unpaid due to defect quality (one transaction: full returns).

(6) Payment of expenses (six transactions).

(7) Payment to a supplier relating to purchase of inventories on credit (one transaction).

(8) Receipt from a customer relating to sale of inventories on credit (one transaction).

(9) Balance day adjustments relating to at least three different types of adjustment taught in this module (six transactions).

PART C: PRODUCTION OF FINANCIAL STATEMENTS WITH COMMENTARY

Access the Sage software using the computer at the University and complete the following tasks: -

(1) Record the business transactions under Part B of the Group Assignment using the Sage software.

(2) Save the following reports generated by the Sage software into PDF format: -

(a) Transactions (i.e. Summary Audit Trail) for the month; 

(b) Trial balance for the month;

(c) Income Statement (i.e. Profit or Loss Statement) for the month in a fully and properly classified format; and

(d) Statement of Financial Position (i.e. Balance Sheet) as at the end of the month in a fully and properly classified format.

(3) Back-up and save your Sage records into a properly labelled and readable file under Sage format.

(4) Based on the Income Statement and Statement of Financial Position produced, prepare a concise report commenting on the financial performance and position of the Company together with a brief business plan for the next six months.

Attachment:- Assignment.rar