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Its BUS021 09-10 Coursework, School of Business and Management, Queen Mary University. You can use this for practice. I can review your solution for you.
SCHOOL OF BUSINESS AND MANAGEMENT BUS021 FINANCIAL ACCOUNTING 2009/2010 SEMESTER A COURSEWORK ASSIGNMENT FOR ASSESSMENT INTRODUCTION This assignment carries 40% of the total of 100% for this Course (the final Examination carries 60%). This assignment is an INDIVIDUAL assignment and is NOT a group-based assignment. The Assignment covers the construction of financial statements (income statement, balance sheet and published cash flow statement) of one particular company, and the preparation of a published cash flow for another company, and analysis of the financial performance and financial health of that other company via financial ratios. Your submitted coursework MUST be prepared using Microsoft Word and/or Microsoft Excel and/or any other appropriate software package. This Assignment has been set by Alan Parkinson on behalf of the BUS021 Course Team. Your submitted Coursework will be assessed by Alan Parkinson. Coursework is subject to double marking. All results when first published are provisional until confirmed by the External Examiner, in June 2010. SUBMITTING YOUR ASSIGNMENT The assignment MUST be submitted in EACH of TWO ways: • • Please submit your hardcopy BUS021 Course Work to FB4.22, SBM Student Support Reception Desk: HARD COPY DUE IN BY TUESDAY 12 JANUARY 2010 BY 4PM You must also submit an electronic copy to Blackboard by 4PM TUESDAY 12 JANUARY 2010 THERE ARE PENALTIES FOR LATE SUBMISSION BASED ON A DAILY 10% MARKS REDUCTION OF THE MARK YOU ACHIEVE WHEN THE ASSIGNMENT IS FIRST MARKED. THIS PENALTY APPLIES TO ANY SUBMISSIONS RECEIVED AFTER THE DEADLINE (4PM/1600 HOURS ON TUESDAY 12 JANUARY 2010) FOR BOTH ELECTRONIC AND HARD COPY VERSIONS. BUS021 09-10 COURSEWORK ISSUED ON BEHALF OF THE COURSE TEAM BY ALAN 1 PARKINSON final final – December 2009 Instructions to follow for submission to Blackboard: • Log into Blackboard http://www.elearning.qmul.ac.uk/webct/entryPageIns.dowebct • Select your Module BUS021 • Click icon ‘list assignment work’ • Select ‘SINGLE UPLOAD’ • Select ‘YOUR NAME’ • Your file name must be ‘BUS021_student cin no.doc’ • Browse for your file (in Word.doc) • Click UPLOAD • Click SUBMIT • You will see your work in a preview text box • Click SUBMIT again • You will see a tick at the top of the screen saying ‘You have successfully submitted your paper’ Should you have any difficulties, please come to the Student Support Reception Desk in Francis Bancroft Building room 4.22 IF YOU ARE AWAY FROM QUEEN MARY AT THE SPECIFIED TIME OF SUBMISSION OF PRINTED COPY IN SUCH A CASE THE ELECTRONIC SUBMISSION SHOULD NOT PROVE TO BE A CHALLENGE AND SHOULD BE SUBMITTED TO THE DESIGNATED EMAIL ADDRESS BY THE STATED TIME/DATE. IF YOU ARE AWAY FROM QUEEN MARY AT THE SPECIFIED TIME OF PRINTED COPY SUBMISSION, IT IS YOUR RESPONSIBILITY TO ENSURE THAT THE ASSIGNMENT REACHES THE SCHOOL OFFICE BY THE SPECIFIED TIME/DATE. IF YOU ARE OUTSIDE OF THE UK YOU MAY WISH TO CONSIDER USING A REPUTABLE/ESTABLISHED COURIER COMPANY. IDENTIFICATION PROCESS FOR IDENTIFICATION PURPOSES YOU MUST: A) PRINT OFF AND COMPLETE THE ID FORM (ON PAGE 5 OF THIS DOCUMENT) ENTERING YOUR NAME, STUDENT ID AND EXAM NUMBER IN THE RELEVANT BOXES, AND ATTACH THE ID FORM TO THE FRONT OF THE PRINTED COPY OF THE COURSEWORK YOU SUBMIT TO THE SCHOOL OFFICE B) ALSO INSERT THE COMPLETED ID FORM AT THE FRONT OF YOUR ELECTRONIC COURSEWORK SUBMISSION C) ENSURE THAT YOU ENTER YOUR NAME AND STUDENT ID NUMBER ON EACH PAGE OF YOUR SUBMITTED COURSEWORK IN BUS021 09-10 COURSEWORK ISSUED ON BEHALF OF THE COURSE TEAM BY ALAN 2 PARKINSON final final – December 2009 THE TOP RIGHT HAND CORNER (IN THE HEADER) ON BOTH THE PRINTED AND ELECTRONIC SUBMISSIONS. EXTENUATING CIRCUMSTANCES PLEASE NOTE NO EXTENSIONS ARE GIVEN EXCEPT IN THE CASE OF EXCEPTIONAL CIRCUMSTANCES. EXAMPLES OF SUCH CIRCUMSTANCES INCLUDE SICKNESS/ILLNESS (ONLY WHERE SUPPORTED BY A VALID, ORIGINAL MEDICAL CERTIFICATE), AND CRITICAL ILLNESS OF A CLOSE RELATIVE (SUPPORTED BY EVIDENCE). ANY REQUESTS FOR EXTENSIONS MUST BE DIRECTED TO SBM SCHOOL OFFICE, ROOM 4.22, BANCROFT BUILDING, SUPPORTED BY RELEVANT DOCUMENTATION AS APPROPRIATE. NON-SUBMISSION OF WORK – IMPORTANT DETAILS IF YOU DO NOT SUBMIT AT ALL YOU WILL RECEIVE ZERO MARKS UNLESS THERE ARE APPROVED EXTENUATING CIRCUMSTANCES. PLEASE NOTE THAT IF, FOR WHATEVER REASON, YOU HAVE NOT SUBMITTED BY THE END OF WEEK 2 IN SEMESTER B YOU WILL NOT BE ALLOWED TO SUBMIT THIS ASSIGNMENT. INSTEAD YOU WILL BE SET AN ALTERNATIVE ASSIGNMENT. DETAILS CONCERNING COMMUNICATION OF MARKS AND FEEDBACK YOUR ASSIGNMENT MARK WILL BE AVAILABLE AT THE END OF WEEK 6 IN SEMESTER B. IT WILL BE PUBLISHED ON BLACKBOARD. YOUR SCRIPT WITH THE RECORDED MARK WILL BE AVAILABLE IN THE SCHOOL OFFICE (School of Business and Management, Room 4.22, Bancroft Building) AT THE BEGINNING OF WEEK 7 IN SEMESTER B. THE BREAKDOWN OF MARKS WILL BE CLEARLY SHOWN ON THE MARKED ASSIGNMENT. FEEDBACK IS SUPPLIED USING SPECIMEN ANSWERS/RESPONSES. THESE WILL BE PUBLISHED IN ELECTRONIC FORM AND PLACED ON BLACKBOARD AT THE END OF WEEK 2 IN SEMESTER B. YOU SHOULD ACCESS BLACKBOARD AND DOWNLOAD AND/OR PRINT THEM OFF AND COMPARE WITH YOUR OWN COPY OF YOUR SUBMITTED ASSIGNMENT. AGAIN, REMEMBER THAT IF, FOR WHATEVER REASON, YOU HAVE NOT SUBMITTED BY THE END OF WEEK 2 IN SEMESTER B YOU WILL NOT BE BUS021 09-10 COURSEWORK ISSUED ON BEHALF OF THE COURSE TEAM BY ALAN 3 PARKINSON final final – December 2009 ALLOWED TO SUBMIT THIS ASSIGNMENT. INSTEAD YOU WILL BE SET AN ALTERNATIVE ASSIGNMENT. BUS021 09-10 COURSEWORK ISSUED ON BEHALF OF THE COURSE TEAM BY ALAN 4 PARKINSON final final – December 2009 SCHOOL OF BUSINESS AND MANAGEMENT BUS021 FINANCIAL ACCOUNTING 2008/2009 SEMESTER A COURSEWORK ASSIGNMENT FOR ASSESSMENT This form should be completed and attached to the front of your assignment in both printed and electronic formats. Ensure that you enter your name and student ID number on each page of your submitted coursework in the top right hand corner (in the header). STUDENT SURNAME/ FAMILY NAME (IN CAPITALS) STUDENT FIRST/ GIVEN NAME (IN CAPITALS) STUDENT ID NUMBER STUDENT EXAM NUMBER SCORE (for use by marker) BUS021 09-10 COURSEWORK ISSUED ON BEHALF OF THE COURSE TEAM BY ALAN 5 PARKINSON final final – December 2009 CASE SCENARIO FOR COURSEWORK PART A (carries 40 marks of the 100 marks for this Coursework) Wooly Wear Limited prepared by Alan Parkinson on behalf of the BUS021 Course Team Al Paca, Linsy Lamb and Shawn Sheep are all great fans of wool clothing: jumpers, cardigans, hats, socks – in fact any clothing made of wool. They recently decided to create a new limited liability company called Wooly Wear Limited. The details of activities and transactions for the first year are shown below. 1. On 30 November 2008 the company was created with authorised ordinary share capital of £500,000 made up of 250,000 ordinary shares, and authorised 5% preference share capital of £100,000 made up of 200,000 preference shares. 2. On 1st December 2008 the company issued 100,000 ordinary shares at a premium of £1 above the nominal value, and 100,000 preference shares at nominal value. 3. During the financial year credit sales totalled £500,000. The credit customers paid £450,000 during the year. Two credit customers went bankrupt during the year, each owing £5,000 and their debts were written off. On the last day of the financial year the company decided to create a provision for bad debts equivalent to 10% of the year end trade receivables. 4. On 1st December 2008 £72,000 was paid for rent for the period 1st December 2008 to 31st May 2010. 5. On 1st December 2008 equipment costing £25,000 was purchased for cash, with an anticipated useful life of 5 years, using straight line depreciation. 6. On 1st December 2008 a vehicle costing £20,000 was purchased for cash, with an anticipated useful life of 4 years, using reducing balance depreciation (at twice the straight line rate). 7. During the financial year wool clothing costing £100,000 was purchased on credit. At the end of the financial year, trade payables were still owed £20,000, and the unsold clothing remaining had a cost value of £20,000. BUS021 09-10 COURSEWORK ISSUED ON BEHALF OF THE COURSE TEAM BY ALAN 6 PARKINSON final final – December 2009 8. Salaries expense for the financial year totalled £200,000 and this amount was paid. 9. Various operating expenses for the financial year totalled £60,000 of which £50,000 had been paid in cash by the end of the financial year. 10. In November 2009 the company received a letter from a lawyer on behalf of one of the company’s customers. The letter claimed that the customer had suffered skin irritation because of an allergy to wool. The directors are worried that any court case could result in damages of £10,000 being awarded against the company. Any court case would be heard in January 2010. 11. During the financial year an interim dividend of 1p per ordinary share had been paid in cash. 12. On the last day of the financial year, the vehicle was sold for £11,000 cash. Depreciation is charged in the year of disposal even if it is the same year as acquisition. 13. The corporation tax bill for the financial year was estimated as being £20,000, half which had already been paid in cash. 14. The preference dividend for the year was paid in cash on the last day of the financial year. 15. No agreement could be reached with the ordinary shareholders regarding final dividends. Required: Using the information detailed above, prepare and present: i) an Income Statement (also known as a Profit Statement or Profit and Loss Account) for the financial year ended 30 November 2009 (18 marks out of 40 marks), and ii) a Cash Flow Statement in a format suitable for publication (using the Direct Method of preparation) (12 marks out of 40 marks) iii) a Balance Sheet in vertical format as at 30 November 2009 (10 marks out of 40 marks). BUS021 09-10 COURSEWORK ISSUED ON BEHALF OF THE COURSE TEAM BY ALAN 7 PARKINSON final final – December 2009 CASE SCENARIO FOR COURSEWORK PART B (carries 60 marks of the 100 marks for this Coursework) Fab Footwear Limited originally prepared by John R Dyson, adapted by Alan Parkinson on behalf of the BUS021 Course Team. Location: Fab Footwear Limited: the Chairman’s Office People in office: Sir Alan Bigfoot, Chairman Lindsay Legg FCA: Chief Accountant Synopsis ‘I don’t understand it’, said Sir Alan Bigfoot, the part-time Chairman of Fab Footwear Limited, after he had just been advised of his company’s grave liquidity crisis. ‘Here we are, just three months into the new financial year and you tell me that we might have to go into liquidation. Good gracious! It was only the other month that we were announcing record profits. Why, if we weren’t’? ‘Well, as I tried to warn you all through last year’, parried Lindsay Legg, the Chief Accountant, ‘we are borrowing a great deal of money. We have, of course, to pay a high rate of interest on it and at some time or other; it’s got to be paid back. Also at the end of each of the last three financial years we have shown a dividend payable on the balance sheet which has been increasing year by year’. ‘Yes, yes – I know all that’, said Sir Alan somewhat sharply. ‘But that does not explain why profits suddenly turn into losses’. ‘They haven’t’, said Lindsay, ‘and what happened did not happen suddenly’. ‘Don’t play word games with me’, snapped Sir Alan. ‘Either we have made a profit or we haven’t. We can’t possibly have made a profit and a loss at the same time’. Lindsay realized that she had to interrupt the Chairman’s tirade. ‘That’s quite true, Sir Alan’, she said (the Chairman loved being addressed in this way). ‘But you see profit just does not sit in the bank waiting to be paid out. Profit differs from cash. And what cash we have we usually invest some of it in such things as fixed assets and stocks’. Indeed, Fab Footwear appeared to be a highly successful company. It manufactured plastic components for the home market and business had boomed over the last five years. The company had to move into new premises and a large amount of extra plant and machinery had been purchased. The Board of Directors had also supported a high level of research and development expenditure but this had proved expensive to finance. Although turnover had increased substantially, customers were slow to pay and by contrast, the company’s suppliers demanded almost instant payment. All of this had BUS021 09-10 COURSEWORK ISSUED ON BEHALF OF THE COURSE TEAM BY ALAN 8 PARKINSON final final – December 2009 meant that more and more money had to be borrowed via overdraft during a period when interest rates were beginning to rise. On top of that the debenture loan liability had been reduced through repayments in recent years. Lindsay was, of course, well aware of what was going on. However, the Board appeared mesmerized by the company’s extremely healthy order book and its apparent profitability. It appeared deaf to her pleading to do something about tackling the company’s developing cash flow problem. The crisis had taken longer to break than Lindsay had anticipated but now the bank had told her that the company must reduce its overdraft. As she looked across at the Chairman, Lindsay could see that the seriousness of the situation was slowly beginning to dawn on him. ‘It’s madness’, he puffed. ‘Here we are: we’ve got a very successful company with a full and growing order book. We’ve got products that are in demand and we’ve got orders in the pipeline. We’ve been reporting higher profits in each year for the last five years and yet you tell me that we might be out of business next week’. He did not know what else to say, so for good measure he decided to repeat his first point. ‘It’s madness’, he said, ‘madness’. ‘I don’t pretend to understand all that you are trying to tell me’, Sir Alan went on, ‘but obviously all you accountants are to blame. Fancy telling us we were all right when we weren’t’. Lindsay felt that he had gone too far. ‘Oh no, Sir Alan, she interjected, ‘I don’t accept that. Some time, no doubt, we could have a discussion about the inadequacies of the accountancy profession but not now. The matter in hand is too serious for that type of argument. What I want to emphasize is that the Board must take full responsibility for the position that the company is now in’. Lindsay allowed her voice to rise. ‘May I also remind you, Sir Alan, that I have supplied all the Directors regularly with a summary of the company’s financial position? The impending crisis was clearly apparent if Board members had read it’. ‘I – I haven’t received any such thing, young lady’, blustered the Chairman. ‘Yes you have, Sir Alan. ‘You have had a copy of the company’ cash flow statement every month and more recently every week since you became Chairman’, insisted Lindsay. ‘The what’? queried Sir Alan. ‘The cash flow statement’, responded Lindsay as she pointed to a copy in her file. ‘Oh that thing’, retorted the Chairman. ‘I never understood it. What good was that drivel? It never told us what we needed to know’. ‘Yes it did’, insisted Lindsay with some force. ‘I feel it is time I took my outstanding annual leave’. And with that she turned and left, and drove directly to the airport where she caught an airplane to an exotic location, a location well suited to soothing her nerves. BUS021 09-10 COURSEWORK ISSUED ON BEHALF OF THE COURSE TEAM BY ALAN 9 PARKINSON final final – December 2009 Sir Alan realized Lindsay was probably making an excellent point. He now feels he should improve his financial knowledge and understanding. Accordingly, Sir Alan has asked you to look at the company’s recent financial statements and respond to two specific tasks. Required: Task 1) Using the information contained in Appendix 1, prepare a Cash Flow Statement using the Indirect Method for each of the two years to 31 March 2008 and 2009 respectively in accordance with FRS 1 (Cash Flow Statements in a form suitable for publication). This task carries 20 marks out of 60 marks. Task 2) Prepare a brief report for the examining the profitability and liquidity of the Company over the period of the financial years 2007-08 and 200809. Your report should incorporate not only any appropriate cash flow information but also any financial ratios which will assist you in your explanation. (You should decide which ratios to use.) For the ratios, as appropriate, use year end rather than average figures. Your Report should be organized and presented in accordance with the template shown immediately below. DO NOT USE ANY OTHER LAYOUT/FORMAT TEMPLATE. This task carries 40 marks out of 60 marks. COMMENTS ON CASH FLOW INFORMATION REVEALED BY CASH FLOW STATEMENTS CASH FLOW COMMENTS HERE: maximum of 250 words NAME OF RATIO (ENTER AS MANY RATIOS AS YOU FEEL APPROPRIATE) Ratio a Ratio b Ratio c CALCULATION RATIO FOR 2008 RATIO FOR 2009 COMMENT ON EACH RATIO BUS021 09-10 COURSEWORK ISSUED ON BEHALF OF THE COURSE TEAM BY ALAN 10 PARKINSON final final – December 2009 APPENDIX 1 FINANCIAL STATEMENTS OF FAB FOOTWEAR LIMITED BUS021 09-10 COURSEWORK ISSUED ON BEHALF OF THE COURSE TEAM BY ALAN 11 PARKINSON final final – December 2009 BUS021 09-10 COURSEWORK ISSUED ON BEHALF OF THE COURSE TEAM BY ALAN 12 PARKINSON final final – December 2009
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