Patience has mislaid her final accounts for the year ended 31 December 2004 but has found the report, which her accountant has prepared, based on those accounts. She has decided to reconstruct the accounts from the information contained in the report. 

The accountant's report contained the following data.

Required 

(a) Prepare, in as much detail as possible, Patience's Trading and Profit and Loss Account for the year ended 31 December 2004 and the Balance Sheet at that date. Make all calculations to the nearest $. 

Virtue carries on a similar business to that of Patience and has the following data for the year ended 31 December 2004.

(b) Compare Virtue's performance with that of Patience and indicate the ratios that show which business is the more efficient. 

You should write your answer in sentence form and include supporting figures.

Transcribed Image Text:

At 31 December 2004 Stock $54 000. (This was 20% more than the stock at 1 January 2004.) For the year ended 31 December 2004 Stockturn 10 times 35% 22% 4 times 34 (based on 365 days in the year) 42 (based on 365 days in the year) 2.5:1 Gross profit margin Net profit margin Fixed asset turnover Debtors' days Creditors' days Current ratio The current assets consist of stock, trade debtors and bank balance. All sales and purchases were made on credit. Patience drew $140 000 from the business during the year.