Company Accounts Exercise Booklet by iarthur

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									Activity Sheet Number
Activity Sheet 1 Activity Sheet 2 Activity Sheet 3 Activity Sheet 4 Activity Sheet 5 Activity Sheet 6 Activity Sheet 7 Activity Sheet 8 Activity Sheet 9 Activity Sheet 10 Past Paper Task 1 Past Paper Task 2

Task Name
UK Ltd Appropriation Account Shields Motors Ltd Trevor’s Sweets Ltd Box Ltd Turnip Farms Ltd Penguin Publishers Ltd French Bread Ltd Theory Questions J Morrow Home Appliance Ltd

Check?

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UK Ltd has an authorised and issued share capital of 20,000 10% Preference Shares of £1 each and 40,000 Ordinary Shares of £1 each. Both classes of shares are fully paid. At the end of its accounting year on 31 December 2009 there is a trading profit of £12,350. The directors recommend that: (a) (b) (c) £3,000 should be transferred to General Reserve The Preference Share Dividend should be paid A Dividend of 12p per share be paid on Ordinary Reserves

You are required to prepare the Appropriation Account.

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The following Trial Balance was extracted from the books of Shields Motors Ltd at 31 December 2009, after the Profit and Loss Account had been prepared. £ £ 80,000

Authorised and Issued Share Capital 80,000 Ordinary Shares of £1

Share Premium Freehold Property (at cost) Furniture and Fittings (at cost) Stock in Trade at end of year Wages and Salaries due Provision for Depreciation on Furniture and Fittings Trade Debtors and Creditors Balance at Bank Debenture Interest due Rates in advance Profit and Loss Account Balance 1 January 2009 Net Profit for the Year

50,000 4,000 28,950

10,000

14,600 27,200 50

350 1,200 9,280 600 3,300 20,070 124,800

124,800

You are given the following information: (a) (b) The Directors propose to transfer £12,000 to General Reserve They propose a dividend of 10% on the Issued Capital

You are required to prepare an Appropriation Account for the year 2009 and a Balance Sheet as at that date.

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The following Trial Balance was extracted from the books of Trevor Ltd £ Share Capital (Authorised and Issued) 80,000 Ordinary Shares of £1 fully paid 20,000 7% Preference Shares of £1 fully paid £

80,000 20,000

Motor Vans at cost Freehold Property at cost General Reserve Premium on Preference Shares Account Provision for Depreciation on Motor Vans Stock in trade at 31 December Provision for Bad Debts at 31 December Profit and Loss Account Balance at 1 January Balance at Bank Trade Debtors and Creditors Rates and Insurance paid in advance Wages due Net Profit for the year

14,460 95,200

17,754

10,000 2,000 10,142 400 10,680 24,150 944 11,865 ---------170,181 ======

14,170 28,325 272

---------170,181 ======

You are told that the Directors propose (a) (b) (c) To place a further £5,000 to General Reserve account To pay the 7% preference dividend To pay a 10% dividend on the ordinary shares

You are required to draw up an Appropriation Account and a Balance Sheet as at 31 December 2009

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The following Trial Balance was extracted from the books of Box Ltd at 31 December 2009 £ Share Capital - authorised and issued 40,000 shares of £1 each £ 40,000

Stock in trade 1 January 2009 8% Debentures Share Premium Freehold Property at cost Furniture and Fittings (at cost) Bad Debts Wages and Salaries Purchases and Sales Provision for Bad Debts, 1 January Provision for Depreciation - Furniture and Fittings Insurance Office Expenses Balance at Bank Debenture Interest paid to 1 July Rates Profit and Loss Account balance at 1 January Trade Debtors and Creditors Rent received Directors' salaries General Expenses

13,428

50,000 3,000 601 9,820 90,620

20,000 10,000

693 1,142 14,294 800 210 16,923 6,000 1,246 --------£ 208,777 =====

121,498 250 750

2,900 12,989 390

--------£ 208,777 =====

You are given the following information: (a) (b) (c) Stock in trade on 31 December 2009 was £16,426 The provision for bad debts is to be increased to £300 £796 has been included in the wages and salaries account which represents the wage costs of extending the company's freehold property

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(d) (e) (f) (g) (h)

Rent receivable due at 31 December 2009 £130 Insurance paid in advance at 31 December amounted to £86 Depreciation of furniture and fittings is to be provided for at the rate of 5% per annum on cost The outstanding debenture interest is to be paid £7,000 is to be transferred to General Reserve and provision is to be made for a dividend of 10% on the issued capital

You are required to prepare a Trading and Profit and Loss Account for the year ended 31 December 2009 and a Balance Sheet as at that date.

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The following Trial Balance was extracted from the books of Turnip Farms Ltd as at 31 December, whose authorised capital is £80,000 Trial Balance as at 31 December 2009 £ £ 80,000 10,000 25,000

Share Capital - 80,000 Ordinary £1 shares 6% Debentures (issued 1 January) Share Premium Freehold Buildings at cost Plant at cost Motor vehicles at cost Provision for Depreciation on Plant at 1 January Provision on Motor Vehicles at 1 January Sales Purchases Returns In and Out Debtors and Creditors Bad Debts Advertising Provision for Doubtful Debts - 1 January Motor Expenses Rent and Rates Insurances Salaries General Administration Expenses Stock in trade 1 January Bank Balance Directors' Fees Profit and Loss Account as at 1 January Discounts Allowed and Received

70,000 40,000 4,000

97,468 621 13,099 427 360 1,127 1,850 160 11,206 10,426 23,486 10,641 5,000 1,461 --------£291,332 =====

18,000 1,500 134,720 417 8,698

621

11,469 907 --------£291,332 =====

You are given the following information: (a) (b) (c) (d) Stock in trade at 31 December 2009 £32,779 Rent owing at 31 December £550 Insurance in advance at 31 December £40 Provision for doubtful debts is to be increased to £685

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(e) (f) (g) (h)

Debenture Interest is payable annually on 1 January and the amount due is to be provided for Depreciation on plant is to be provided for at 10% of cost and on motor vehicles at 25% of cost £5,000 is to be transferred to General Reserve A dividend at the rate of 10% on the ordinary share capital is to be provided for

You are asked to prepare a Trading and Profit and Loss Account for 2009 and a Balance Sheet as at 31 December 2009.

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The following balances have been extracted from the books of Penguin Publishers Ltd at 31 December 2009: £ £ 60,000 30,000 10,000 20,000 28,000 60,000 45,000 15,000

Capital - authorised and issued: 60,000 Ordinary Shares of £1 each, fully paid 30,000 6% Preference Shares of £1 each, fully paid Share Premium Account General Reserve Profit and Loss Account balance at 1 January 5% Debentures (secured) Debtors and Creditors 40,000 Balance at bank Land and Buildings at cost 160,000 Plant and Machinery at cost 190,000 Stock 30,000 Cash 1,000 Provision for bad debts at 1 January Provision for depreciation at 1 January: Land and Buildings Plant and Machinery Gross Profit Discounts 1,000 Administrative expenses 45,000 Selling and Distribution Expenses 35,000 Debenture interest paid 2,000 504,000

2,000 40,000 70,000 120,000 4,000

504,000

Prepare in good form Profit and Loss Account for the year to 31 December, 2009 and a Balance Sheet at that date, taking into account the following information: a b c d e Provide depreciation of land and buildings at 2.5% per annum on cost. Provide depreciation of plant and machinery at 10% per annum on cost. The provision for bad debts is to be 2.5% of debtors. Rates accrued, £1,000. The Directors decide to: i transfer £10,000 to General Reserve; ii pay Preference Dividend for the year; iii recommend a Dividend of 10% on the Ordinary Shares.

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The French Bread Trading Co Ltd was formed on 1 April 2008 with an authorised capital of £100,000 divided into £1 shares. The whole of the capital was issued on the same day at a premium of 10p per share and fully paid up. In addition to any balances arising on the issue of shares, the following amounts appeared in the company’s ledger on 31 March 2009, after the Trading Account has been prepared. £ Eight per cent Debentures (issued 1.4.2009) Land and Buildings at cost Plant and Machinery at cost Provision for depreciation on plant and machinery Fixtures and Fittings at cost Stock at 31 March 2009 Debtors Bad Debts Creditors Discount Received General Expenses Directors’ Fees Salaries Insurance Rates Discount Allowed Debenture Interest (1/2 year to 20 Sept 20--) Bank Balance Interim dividend paid Gross Profit NOTES: a Provide for debenture interest outstanding. b Insurance prepaid at 31 March 20-1, £12. c Create a provision of £500 against future bad debts. d Write 10% off Fixture and Fittings and Plant and Machinery. e Transfer £5,000 to General Reserve. f Provide for a final dividend of 8%, making 10% for the year. Prepare the Profit and Loss Account and Appropriation Account for the year to 31 March 2009 and a Balance Sheet as at that date. 40,000 90,000 30,000 3,000 5,450 31,926 21,500 170 10,900 1,800 250 750 14,483 90 450 198 1,600 7,455 2,000 40,622

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1. What are the main characteristics of a Limited Liability Company? 2. What is the difference between ordinary shares and preference shares? 3. What is meant by: a) b) c) d) Authorised, Registered or Nominal Capital; Issued Capital; Called-up Capital; Paid-up Capital?

4. When are shares normally issued at a premium? 5. Write a brief note on: a) b) c) Goodwill Patents Trade marks.

6. Describe the usual make-up of Preliminary Expenses. 7. Outline the main contents of: a) Memorandum of Association;

b) Articles of Association.

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From the following information you are required to produce Trading and Profit and Loss Accounts for 2009 and Balance Sheet as at 31 December, 2009. J Morrow Ltd (nominal capital 100,000 Ordinary Shares of £1 each) has produced the following document from his books. Trial Balance as at 31 December 2009 £ Creditors Profit and Loss Account - balance brought forward Discounts Interim Dividend paid 16 July 2009 Purchases Freehold Premises Rent Issued Capital (20,000 Shares) Salaries Stock in trade at 1 January 2009 Insurance Telephone Calls in arrears Sales Carriage Inwards Rates Debenture Interest Debentures (4%) Debtors Bank Plant and Machinery General Expenses £ 1,600 300 200

100 796 16,000 15,000 150 1,500 1,000 60 25 100 200 75 200 2,000 10,794 4,000 100

20,000

20,000

10,000

£52,100 £52,100 Effect must be given to the following matters: a b c d e f Stock at 31 December 2009, £1,500. One quarter’s rent is due, £50. Insurance paid in advance, £20. Rates paid in advance, £15. Debenture interest due, £200. Plant to be depreciated, £100.

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The following trial balance was extracted from the books of Home Appliances Ltd a trading company, on 31 March 2009. £ Share Capital 50,000 Ordinary Shares of £1 each Share Premium Calls in arrears Cash and bank Motor vehicles at cost less depreciation to 31 March 2008 Rates Office and Administration Expenses Wages and Salaries Printing and Stationery Stock at 1 April 2008 Bad Debts written off Bad Debt Provision at 1 April 2008 Sundry Debtors General Reserve Sundry Creditors Purchases Sales Freehold properties at cost Repairs to buildings Directors’ Fees Delivery expenses Profit and Loss Account balance at 1 April 2008 £

50 13,800 7,400 750 6,570 11,450 330 12,000 570 19,800

50,000 5,000

250 10,000 11,600 158,000

120,000 40,000 2,380 1,000 4,950

6,200

£241,050 £241,050 You are required to prepare Trading and Profit and Loss Account for the year ended 31 March 2009, together with Balance Sheet at that date, incorporating the following additional information a Stock at 31 March, 2009 is valued at £14,000. b The motor vehicles were purchased on 1 April, 2005. Depreciation in the interval has been written off at 20% per annum on the straight line method. Depreciation is to be provided on the same basis for the year.

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c Wages and salaries accrued amount to £80. d Rates prepaid amount to £150. e The provision for Bad Debts to be increased to £300. f Stock of unused stationery at 31 March, 2009, £110. g Provide for a dividend of 10% on the paid-up capital, and transfer £1,000 to General Reserve.

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The following balance were taken from the ledger of Highland Ltd on 31 March 2006. TRIAL BALANCE AS AT 31 MARCH 2006 Dr £000 750,000 Ordinary Shares of £1 each 250,000 8% Preference Shares of £1 each 10% Debentures (2015-2018) General Reserve Profit and Loss Account Balance at 1 April 2005 Sales Purchases Stock at 1 April 2005 Wages Insurance Carriage In Carriage Out Rent Bad Debts Discount Received Debenture Interest Interim Dividend on Ordinary Shares Machinery at cost Vehicles at cost Debtors Creditors Investments (long term) VAT Bank Provision for Depreciation at 1 April 2005: Machinery Vehicles Provision for Doubtful Debts at 1 April 2005 Cr £000 750 250 200 120 17 2,377

1,278 160 434 45 5 4 30 47 10 40 1,130 550 155 200 67

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109 13

_____ £4,155 _____

214 90 3 _____ £4,155 _____

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NOTES 1 On 31 March 2006, dividends of £8,000 on the long term investments were owing to Highland Ltd. Provide for depreciation for the year as follows: (a) Machinery at 10% on cost; (b) Vehicles at 25% on the diminishing balance 3. Stock on 31 March 2006 was valued at £76,000. 4. On 31 March 2006, rent owing amounted to £5,000 and insurance of £4,000 was prepaid. 5. The Debentures were issued in 2000 - the final interest payment for the year has not yet been made. 6. The Provision for Doubtful Debts at 31 March 2006 is to be increased to £4,000. 7. Provide for Corporation Tax on profits at 25%. 8. The Directors propose to: (a) transfer £25,000 to General Reserve; (b) pay the Preference Dividend for the year; (c) pay a Final Dividend on the Ordinary Shares to make the total for the year 12%. You are required to prepare, from the Trial Balance and Notes: Trading and Profit and Loss Accounts (including appropriation of the available profits) for the year ended 31 March 2006, and a Balance Sheet as at that date.

2

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Kwik-Instalments plc fits bathroom units. The following is the Trial Balance as at 31 December Year 3. Sales Purchases Stock at 1 January Year 3 Selling Expenses Office Expenses Warehouse Expenses Wages VAT Provision for Doubtful Debts at 1 January Year 3 Debtors Creditors Interim Dividend on Ordinary Shares Investments Bank Goodwill 100,000 Ordinary Shares of £1 each 10% Debentures (Year 20) Premises (at cost) Showroom Fittings (at cost) Vehicles (at cost) Provisions for Depreciation at 1 January Year 3: Showroom Fittings Vehicles Share Premium Profit and Loss Account balance at 1 January Year 3 Preliminary Expenses

£000
126 24 20 35 50 71

£000
341

60 10 70 8 24

40 4 43

50 70 50

100 80

6 £674

20 10 30 6 £674

NOTES at 31 December Year 3: (1) The stock is valued at £22,000. (2) Accrued charges are: Carriage Inwards – £1,000.

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(3) Selling Expenses include a payment of £6,000 for a television advertisement which will be shown in the next financial year. (4) Provide for depreciation for the year as follows: (i) Showroom Fittings – 10% on cost; (ii) Vehicles – 20% of the reduced balance. (5) The Provision for Doubtful Debts is to be adjusted to 5% of Debtors. (6) Dividends of £4,000 are due from investments. (7) Corporation Tax is to be provided for at 25% of Net Profit. (8) During Year 3 a bonus issue of ordinary shares was made on the basis of one share for every five held. This issue was financed by a transfer from the Share Premium Account and is still to be recorded. (9) Premises are revalued at £60,000. (10) Write off the Preliminary Expenses by transfer from the Share Premium Account. (11) The Directors propose to: (i) write down Goodwill by £6,000; (ii) pay a final dividend of 5% of the Ordinary Shares, including the Bonus Shares. You are required to prepare, from the Trial Balance and Notes: Trading, Profit and Loss Accounts (including the appropriation of available profits) for the year ended 31 December Year 3 and a Balance Sheet as at that date. (50)

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From the following information you are required to produce Trading, Profit and Loss Accounts for 2009 and Balance Sheet as at 31 November, 2009. Perfect Pets Ltd has produced the following document from their books. Trial Balance as at 31 November 2009

£

£

Share Capital 50,000 Ordinary Shares of £1 each Bank General Expenses Profit and Loss Account - balance brought forward Discounts received Van Creditors Purchases Stock in trade at 1 December 2009 Insurance Telephone Premises Sales Rates Debenture Interest Salaries Debentures (5%) Debtors

12,000 250

50,000

6,000 59,444 4,000 85 121 75,000 100 500 11,200 7,000

2,500 200 4,000

109,000

10,000

£165,700 £165,700 Effect must be given to the following matters: a b c d e f Stock at 31 December 2009, £17,000. Insurance paid in advance, £35. Rates due, £300. Provide for depreciation for the year as follows: (a) Van at 10% on cost; Provide for Corporation Tax on profits at 10%. The Directors propose to: (a) Transfer £7,000 to General Reserve; (b) Propose a dividend of 10% on the Issued Capital

PTO

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2. What is meant by the term limited liability?

3. Give 3 differences between a Public Limited Company (plc) and a Private Limited Company (ltd)

4. List 2 different examples of shares

5. List 3 different ways that a Limited Company can raise capital

6. List the 2 documents that are submitted to the Registrar of companies when forming a plc

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