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					Case Study – Tom’s Toboggans

Tom’s Toboggans manufactures sledges. Below is some information relating to the
finances of the company.


   1. Tom’s Toboggans purchased 140 sledges from their supplier at the start of
      the year at a price (incl VAT) of £9 each
   2. During the year Tom’s Toboggans sold 120 sledges at a price of £14 (incl
      VAT) each
   3. Their expenses during the year were as follows:
          £100 registration fee
          £10 fee for a stand at a local trade fair
          £9 marketing costs
   4. They issued 50 shares in the company to employees at a price of £1 per
      share.


The company must produce a Profit & Loss Account and a Balance Sheet at their
year end.

Listed on the next page in no particular order are the items which must appear in
these two accounts. See if you can identify where each must go in the accounts. If
the exercise has been completed correctly the balance sheet will balance once all
items have been taken account of. Corporation tax is assumed to be charged at 10%
and VAT at 20%.
Registration Fee £100              Closing Stock (excl VAT) £150


     Corporation Tax £38.10


                               Bank £351

Marketing £9

                                                  Trade Fair £10
                 Sales (excl VAT) £1400

VAT Due £70

                 Issued Share Capital £50

                                        Retained Profit £342.90

Purchases (excl VAT) £1050


     Gross Profit £500            Operating Profit £381


Net Profit after tax £342.90                      Net Assets £392.90
Profit & Loss Account of Tom’s Toboggans
                                               £       £
     Sales (ex VAT)
     Less cost of sales
     Purchases (ex VAT)
     Closing stock                         (       )


     Gross profit

     Less expenses
     Marketing
     Trade fair
     Registration fee


     Operating profit
     Less corporation tax
     Net profit after tax




YES Finance Statement Calculations:
Balance Sheet of Tom’s Toboggans
                               £   £
     Fixed assets

    Current assets
    Stock
    Cash in bank

    Less current
    liabilities
    Corporation tax
    VAT Owed To
    YE



    Net assets

    Financed By
    Share capital
    Retained profit

				
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posted:2/25/2013
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