| EC3076 Assignment 1 2013 | ||||
| Question 1 | ||||
| Brown’s Grocery Store | ||||
| Trial Balance as at 30 September 2012 | Dr | Cr | Adjustments | |
| £’000 | £’000 | 1. The building cost includes land valued at £150,000 | ||
| Acc Depreciation of Building | 80 | 2. Depreciation is to be provided at 25% reducing balance on equipment and 2% straight line on buildings | ||
| Acc. Depreciation of Equipment | 80 | 3. The owner took goods, for his own use, from inventory that cost £15000 no adjustment has been made | ||
| Bank Loan | 300 | 4. Insurance includes £8000 for the year to 31 March 2012 | ||
| Building | 390 | 5. An accrual for heat and light for September 2012 is needed | ||
| Capital | 286 | 6. Bank loan interest at 4% is to be provided for | ||
| Carriage inwards | 34 | 7. Inventory at 30 September 2012 is valued at cost at £120,000 | ||
| Cash at bank | 225 | 8. A bad debt of £5000 is to be written off and a provision set up for 2% of the remaining receivables | ||
| Discounts allowed | 12 | 9. The owner sold some equipment at the end of the year for £22,000 he has recorded the cash received but | ||
| Discounts received | 21 | nothing else. The equipment originally cost £50,000 4 years ago. | ||
| Drawings | 50 | 10. An invoice for a customer for £10,000 as been correctly recorded in sales but credited to payables. | ||
| Equipment | 260 | |||
| General expenses | 63 | You are required to : | ||
| Heat and Light | 121 | (a) Set up a suspense account and explain its uses | ||
| Insurance | 50 | (b) Record journal entries for all of the above adjustments and show that the suspense account is cleared | ||
| Payables | 60 | (c) Prepare an income statement and a balance sheet | ||
| Purchases | 300 | |||
| Receivables | 110 | |||
| Returns inwards | 45 | |||
| Returns outwards | 25 | |||
| Sales | 576 | |||
| Inventory at 1 October 2011 | 100 | |||
| Wages | 120 | |||
| 1655 | 1653 | |||
| Question 2 | ||||
| (a) On 1 January 2012 trade receivables were £15070 and on 31 December they were £40130. If £249800 has been received in the year from customers what is the value of credit sales | ||||
| for the year. | ||||
| (b) On 1 January 2012 trade receivables were £15070 and on 31 December they were £40130. If £249800 has been received in the year from customers after returns of £7500 and discounts | ||||
| allowed of £8500 what is the value of credit sales for the year. | ||||
| (c) A business achieves a constant mark up of 25%. If Sales are £480000 and inventory has risen by £6000 what were the purchases for the period. | ||||
| (d) A business achieves a constant margin of 25%. If Purchases were £480000 and Sales £560000 what has happened to inventory during the period? | ||||
| (e) Grace runs a clothing store. On 1 July 2012 her inventory at cost was £8200 and she owed her suppliers £7400. In the 6 months to 31 December her sales (all for cash)were £70,000 | ||||
| and she applies a constant mark up of 40%. On 31 December there was a fire and all of the inventory was destroyed. Grace has paid £42000 to her suppliers since 1 July and owed | ||||
| a further £9000. What was the value of the stock destroyed by the fire. | ||||
| (f) In the last question how would the destroyed stock be accounted for? Give answers for with and without insurance. | ||||
| Please submit a hard copy of your answers to reception before 12pm (noon) on Thursday 28th February | ||||
| Your work should clearly show which seminar group you attend (eg Monday 2pm) | ||||
| Feedback will be given in seminars in week 19 | ||||
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