The following information is relevant for the 12 months to 31 October 2020: 1. The company...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
The following information is relevant for the 12 months to 31 October 2020: 1. The company made sales of £65,000 and purchased materials costing £20,500, of which of the materials costing £1,750 remained at the end of the year. Included in this £1,750 were materials costing £550, which had been damaged during the year and were now worthless. 2. Monthly rent was £1,500 and was paid on the first day of each month. Exceptionally, the company paid the rent for November 2020 on the 31 October 2020. 3. Monthly wages were £1,200. On 31 October half of a month's salary was still owing to employees. 4. During the year, the company spent £1,100 on advertising and £700 on office administration. Monthly utility bills amounted to £200. 5. Property, plant, and equipment at the beginning of the year consists of a machine purchased for £20,000 on 1 November 2016 and a delivery van purchased on 1 May 2014 for £7,000. The machine was to be depreciated over five years to a salvage value of £5,000, and the van over six years to a residual value of £1,000. The company calculates depreciation on the straight-line basis starting from the date of acquisition. Assets Property, plant and equipment, net book value 11,500 Inventory 750 Cash at Bank 1,020 Liabilities Trade payables (1,024) Long-term loan (2,500) Net Assets 9,746 Equity Share capital of £1 each Retained earnings Total equity 6,000 3,746 9,746 On 30 April 2020, the delivery van reached the end of its useful life. The company found one buyer Mr. Lewis and disposed of the delivery van, with sale proceeds of £1,850. 6. The company sold the van, deciding to use a private delivery service, which cost £800 for the rest of FY2020. 7. At 31 October 2020, the company had invoices owing from customers of £1,800, but expected that 5% of this would ultimately be uncollectable. The company also had trade payables of £460. 8. The company borrowed £2,500 of long-term loan on 1 November 2018. The annual interest rate on the loan was 4%, paid half-yearly on 30 April and 31 October. However, the company missed the interest payment due on 31 October 2020. 9. The company estimated its tax bill to be £942 and had made a partial payment of £242 for tax bill. 10. On 31 October 2020, the company declared and paid a dividend of £5,414 to ordinary shareholders. 11. At 31 October 2020, the company had an accrue of telephone bill £20. 12. At 31 October 2020, the cash balance at Bank account was £0 after all transactions. However, on 31 October, the company received the cash revenue of £380 for the order that is going to be produced to delivered to customers in January 2021. This has not been recognized. 13. Joy Toy Ltd had not issued any new shares. Also, according to company's new policy in FY2020, the operating expenses are not divided into administration and distribution cost. You Are Required To: a. Prepare the Income Statement of Joy Toy Ltd for the year ended 31 October 2020. (7 Marks) b. Prepare the Balance sheet of Joy Toy Ltd as at 31 October 2020. (10 Marks) c. Identify and explain two qualitative characteristics of useful financial information in accordance with the conceptual framework. Also, discuss whether you have seen these characteristics in Joy Toy Ltd's financial statements. (4 Marks) d. In accordance with IAS 16, describe the effect of change in depreciation estimates on the income statement and balance sheet with examples. (4 Marks) The following information is relevant for the 12 months to 31 October 2020: 1. The company made sales of £65,000 and purchased materials costing £20,500, of which of the materials costing £1,750 remained at the end of the year. Included in this £1,750 were materials costing £550, which had been damaged during the year and were now worthless. 2. Monthly rent was £1,500 and was paid on the first day of each month. Exceptionally, the company paid the rent for November 2020 on the 31 October 2020. 3. Monthly wages were £1,200. On 31 October half of a month's salary was still owing to employees. 4. During the year, the company spent £1,100 on advertising and £700 on office administration. Monthly utility bills amounted to £200. 5. Property, plant, and equipment at the beginning of the year consists of a machine purchased for £20,000 on 1 November 2016 and a delivery van purchased on 1 May 2014 for £7,000. The machine was to be depreciated over five years to a salvage value of £5,000, and the van over six years to a residual value of £1,000. The company calculates depreciation on the straight-line basis starting from the date of acquisition. Assets Property, plant and equipment, net book value 11,500 Inventory 750 Cash at Bank 1,020 Liabilities Trade payables (1,024) Long-term loan (2,500) Net Assets 9,746 Equity Share capital of £1 each Retained earnings Total equity 6,000 3,746 9,746 On 30 April 2020, the delivery van reached the end of its useful life. The company found one buyer Mr. Lewis and disposed of the delivery van, with sale proceeds of £1,850. 6. The company sold the van, deciding to use a private delivery service, which cost £800 for the rest of FY2020. 7. At 31 October 2020, the company had invoices owing from customers of £1,800, but expected that 5% of this would ultimately be uncollectable. The company also had trade payables of £460. 8. The company borrowed £2,500 of long-term loan on 1 November 2018. The annual interest rate on the loan was 4%, paid half-yearly on 30 April and 31 October. However, the company missed the interest payment due on 31 October 2020. 9. The company estimated its tax bill to be £942 and had made a partial payment of £242 for tax bill. 10. On 31 October 2020, the company declared and paid a dividend of £5,414 to ordinary shareholders. 11. At 31 October 2020, the company had an accrue of telephone bill £20. 12. At 31 October 2020, the cash balance at Bank account was £0 after all transactions. However, on 31 October, the company received the cash revenue of £380 for the order that is going to be produced to delivered to customers in January 2021. This has not been recognized. 13. Joy Toy Ltd had not issued any new shares. Also, according to company's new policy in FY2020, the operating expenses are not divided into administration and distribution cost. You Are Required To: a. Prepare the Income Statement of Joy Toy Ltd for the year ended 31 October 2020. (7 Marks) b. Prepare the Balance sheet of Joy Toy Ltd as at 31 October 2020. (10 Marks) c. Identify and explain two qualitative characteristics of useful financial information in accordance with the conceptual framework. Also, discuss whether you have seen these characteristics in Joy Toy Ltd's financial statements. (4 Marks) d. In accordance with IAS 16, describe the effect of change in depreciation estimates on the income statement and balance sheet with examples. (4 Marks) The following information is relevant for the 12 months to 31 October 2020: 1. The company made sales of £65,000 and purchased materials costing £20,500, of which of the materials costing £1,750 remained at the end of the year. Included in this £1,750 were materials costing £550, which had been damaged during the year and were now worthless. 2. Monthly rent was £1,500 and was paid on the first day of each month. Exceptionally, the company paid the rent for November 2020 on the 31 October 2020. 3. Monthly wages were £1,200. On 31 October half of a month's salary was still owing to employees. 4. During the year, the company spent £1,100 on advertising and £700 on office administration. Monthly utility bills amounted to £200. 5. Property, plant, and equipment at the beginning of the year consists of a machine purchased for £20,000 on 1 November 2016 and a delivery van purchased on 1 May 2014 for £7,000. The machine was to be depreciated over five years to a salvage value of £5,000, and the van over six years to a residual value of £1,000. The company calculates depreciation on the straight-line basis starting from the date of acquisition. Assets Property, plant and equipment, net book value 11,500 Inventory 750 Cash at Bank 1,020 Liabilities Trade payables (1,024) Long-term loan (2,500) Net Assets 9,746 Equity Share capital of £1 each Retained earnings Total equity 6,000 3,746 9,746 On 30 April 2020, the delivery van reached the end of its useful life. The company found one buyer Mr. Lewis and disposed of the delivery van, with sale proceeds of £1,850. 6. The company sold the van, deciding to use a private delivery service, which cost £800 for the rest of FY2020. 7. At 31 October 2020, the company had invoices owing from customers of £1,800, but expected that 5% of this would ultimately be uncollectable. The company also had trade payables of £460. 8. The company borrowed £2,500 of long-term loan on 1 November 2018. The annual interest rate on the loan was 4%, paid half-yearly on 30 April and 31 October. However, the company missed the interest payment due on 31 October 2020. 9. The company estimated its tax bill to be £942 and had made a partial payment of £242 for tax bill. 10. On 31 October 2020, the company declared and paid a dividend of £5,414 to ordinary shareholders. 11. At 31 October 2020, the company had an accrue of telephone bill £20. 12. At 31 October 2020, the cash balance at Bank account was £0 after all transactions. However, on 31 October, the company received the cash revenue of £380 for the order that is going to be produced to delivered to customers in January 2021. This has not been recognized. 13. Joy Toy Ltd had not issued any new shares. Also, according to company's new policy in FY2020, the operating expenses are not divided into administration and distribution cost. You Are Required To: a. Prepare the Income Statement of Joy Toy Ltd for the year ended 31 October 2020. (7 Marks) b. Prepare the Balance sheet of Joy Toy Ltd as at 31 October 2020. (10 Marks) c. Identify and explain two qualitative characteristics of useful financial information in accordance with the conceptual framework. Also, discuss whether you have seen these characteristics in Joy Toy Ltd's financial statements. (4 Marks) d. In accordance with IAS 16, describe the effect of change in depreciation estimates on the income statement and balance sheet with examples. (4 Marks) The following information is relevant for the 12 months to 31 October 2020: 1. The company made sales of £65,000 and purchased materials costing £20,500, of which of the materials costing £1,750 remained at the end of the year. Included in this £1,750 were materials costing £550, which had been damaged during the year and were now worthless. 2. Monthly rent was £1,500 and was paid on the first day of each month. Exceptionally, the company paid the rent for November 2020 on the 31 October 2020. 3. Monthly wages were £1,200. On 31 October half of a month's salary was still owing to employees. 4. During the year, the company spent £1,100 on advertising and £700 on office administration. Monthly utility bills amounted to £200. 5. Property, plant, and equipment at the beginning of the year consists of a machine purchased for £20,000 on 1 November 2016 and a delivery van purchased on 1 May 2014 for £7,000. The machine was to be depreciated over five years to a salvage value of £5,000, and the van over six years to a residual value of £1,000. The company calculates depreciation on the straight-line basis starting from the date of acquisition. Assets Property, plant and equipment, net book value 11,500 Inventory 750 Cash at Bank 1,020 Liabilities Trade payables (1,024) Long-term loan (2,500) Net Assets 9,746 Equity Share capital of £1 each Retained earnings Total equity 6,000 3,746 9,746 On 30 April 2020, the delivery van reached the end of its useful life. The company found one buyer Mr. Lewis and disposed of the delivery van, with sale proceeds of £1,850. 6. The company sold the van, deciding to use a private delivery service, which cost £800 for the rest of FY2020. 7. At 31 October 2020, the company had invoices owing from customers of £1,800, but expected that 5% of this would ultimately be uncollectable. The company also had trade payables of £460. 8. The company borrowed £2,500 of long-term loan on 1 November 2018. The annual interest rate on the loan was 4%, paid half-yearly on 30 April and 31 October. However, the company missed the interest payment due on 31 October 2020. 9. The company estimated its tax bill to be £942 and had made a partial payment of £242 for tax bill. 10. On 31 October 2020, the company declared and paid a dividend of £5,414 to ordinary shareholders. 11. At 31 October 2020, the company had an accrue of telephone bill £20. 12. At 31 October 2020, the cash balance at Bank account was £0 after all transactions. However, on 31 October, the company received the cash revenue of £380 for the order that is going to be produced to delivered to customers in January 2021. This has not been recognized. 13. Joy Toy Ltd had not issued any new shares. Also, according to company's new policy in FY2020, the operating expenses are not divided into administration and distribution cost. You Are Required To: a. Prepare the Income Statement of Joy Toy Ltd for the year ended 31 October 2020. (7 Marks) b. Prepare the Balance sheet of Joy Toy Ltd as at 31 October 2020. (10 Marks) c. Identify and explain two qualitative characteristics of useful financial information in accordance with the conceptual framework. Also, discuss whether you have seen these characteristics in Joy Toy Ltd's financial statements. (4 Marks) d. In accordance with IAS 16, describe the effect of change in depreciation estimates on the income statement and balance sheet with examples. (4 Marks) The following information is relevant for the 12 months to 31 October 2020: 1. The company made sales of £65,000 and purchased materials costing £20,500, of which of the materials costing £1,750 remained at the end of the year. Included in this £1,750 were materials costing £550, which had been damaged during the year and were now worthless. 2. Monthly rent was £1,500 and was paid on the first day of each month. Exceptionally, the company paid the rent for November 2020 on the 31 October 2020. 3. Monthly wages were £1,200. On 31 October half of a month's salary was still owing to employees. 4. During the year, the company spent £1,100 on advertising and £700 on office administration. Monthly utility bills amounted to £200. 5. Property, plant, and equipment at the beginning of the year consists of a machine purchased for £20,000 on 1 November 2016 and a delivery van purchased on 1 May 2014 for £7,000. The machine was to be depreciated over five years to a salvage value of £5,000, and the van over six years to a residual value of £1,000. The company calculates depreciation on the straight-line basis starting from the date of acquisition. Assets Property, plant and equipment, net book value 11,500 Inventory 750 Cash at Bank 1,020 Liabilities Trade payables (1,024) Long-term loan (2,500) Net Assets 9,746 Equity Share capital of £1 each Retained earnings Total equity 6,000 3,746 9,746 On 30 April 2020, the delivery van reached the end of its useful life. The company found one buyer Mr. Lewis and disposed of the delivery van, with sale proceeds of £1,850. 6. The company sold the van, deciding to use a private delivery service, which cost £800 for the rest of FY2020. 7. At 31 October 2020, the company had invoices owing from customers of £1,800, but expected that 5% of this would ultimately be uncollectable. The company also had trade payables of £460. 8. The company borrowed £2,500 of long-term loan on 1 November 2018. The annual interest rate on the loan was 4%, paid half-yearly on 30 April and 31 October. However, the company missed the interest payment due on 31 October 2020. 9. The company estimated its tax bill to be £942 and had made a partial payment of £242 for tax bill. 10. On 31 October 2020, the company declared and paid a dividend of £5,414 to ordinary shareholders. 11. At 31 October 2020, the company had an accrue of telephone bill £20. 12. At 31 October 2020, the cash balance at Bank account was £0 after all transactions. However, on 31 October, the company received the cash revenue of £380 for the order that is going to be produced to delivered to customers in January 2021. This has not been recognized. 13. Joy Toy Ltd had not issued any new shares. Also, according to company's new policy in FY2020, the operating expenses are not divided into administration and distribution cost. You Are Required To: a. Prepare the Income Statement of Joy Toy Ltd for the year ended 31 October 2020. (7 Marks) b. Prepare the Balance sheet of Joy Toy Ltd as at 31 October 2020. (10 Marks) c. Identify and explain two qualitative characteristics of useful financial information in accordance with the conceptual framework. Also, discuss whether you have seen these characteristics in Joy Toy Ltd's financial statements. (4 Marks) d. In accordance with IAS 16, describe the effect of change in depreciation estimates on the income statement and balance sheet with examples. (4 Marks) The following information is relevant for the 12 months to 31 October 2020: 1. The company made sales of £65,000 and purchased materials costing £20,500, of which of the materials costing £1,750 remained at the end of the year. Included in this £1,750 were materials costing £550, which had been damaged during the year and were now worthless. 2. Monthly rent was £1,500 and was paid on the first day of each month. Exceptionally, the company paid the rent for November 2020 on the 31 October 2020. 3. Monthly wages were £1,200. On 31 October half of a month's salary was still owing to employees. 4. During the year, the company spent £1,100 on advertising and £700 on office administration. Monthly utility bills amounted to £200. 5. Property, plant, and equipment at the beginning of the year consists of a machine purchased for £20,000 on 1 November 2016 and a delivery van purchased on 1 May 2014 for £7,000. The machine was to be depreciated over five years to a salvage value of £5,000, and the van over six years to a residual value of £1,000. The company calculates depreciation on the straight-line basis starting from the date of acquisition. Assets Property, plant and equipment, net book value 11,500 Inventory 750 Cash at Bank 1,020 Liabilities Trade payables (1,024) Long-term loan (2,500) Net Assets 9,746 Equity Share capital of £1 each Retained earnings Total equity 6,000 3,746 9,746 On 30 April 2020, the delivery van reached the end of its useful life. The company found one buyer Mr. Lewis and disposed of the delivery van, with sale proceeds of £1,850. 6. The company sold the van, deciding to use a private delivery service, which cost £800 for the rest of FY2020. 7. At 31 October 2020, the company had invoices owing from customers of £1,800, but expected that 5% of this would ultimately be uncollectable. The company also had trade payables of £460. 8. The company borrowed £2,500 of long-term loan on 1 November 2018. The annual interest rate on the loan was 4%, paid half-yearly on 30 April and 31 October. However, the company missed the interest payment due on 31 October 2020. 9. The company estimated its tax bill to be £942 and had made a partial payment of £242 for tax bill. 10. On 31 October 2020, the company declared and paid a dividend of £5,414 to ordinary shareholders. 11. At 31 October 2020, the company had an accrue of telephone bill £20. 12. At 31 October 2020, the cash balance at Bank account was £0 after all transactions. However, on 31 October, the company received the cash revenue of £380 for the order that is going to be produced to delivered to customers in January 2021. This has not been recognized. 13. Joy Toy Ltd had not issued any new shares. Also, according to company's new policy in FY2020, the operating expenses are not divided into administration and distribution cost. You Are Required To: a. Prepare the Income Statement of Joy Toy Ltd for the year ended 31 October 2020. (7 Marks) b. Prepare the Balance sheet of Joy Toy Ltd as at 31 October 2020. (10 Marks) c. Identify and explain two qualitative characteristics of useful financial information in accordance with the conceptual framework. Also, discuss whether you have seen these characteristics in Joy Toy Ltd's financial statements. (4 Marks) d. In accordance with IAS 16, describe the effect of change in depreciation estimates on the income statement and balance sheet with examples. (4 Marks)
Expert Answer:
Answer rating: 100% (QA)
Income Statement Sales 65000 Cost of goods sold 20050 Gross profit 44950 Operative expenses Rent 150... View the full answer
Related Book For
Fundamental Accounting Principles
ISBN: 978-0078110870
20th Edition
Authors: John J. Wild, Ken W. Shaw, Barbara Chiappetta
Posted Date:
Students also viewed these general management questions
-
Consider the sketch of a foundation at a depth of 5m in clay soil with properties below. P is applied eccentrically on the footing. c' = 5kPa, cu = 45kPa, p= 30 You = 18.5kN/m and Yat=21.5kN/m Note,...
-
1. What is the new balance on a loan which had: A previous balance = $1,028.61 APR = 12% Purchases & Cash Advances = $322.20 Payments & Credits = $300 Group of answer choices $10.29 $1,000.00...
-
(a) Describe the accounting treatment of Property Plant and Equipment under Different Accounting Regulations using numerical examples of your choice. (b) Describe the potential changes in measurement...
-
United Research Associates (URA) had received a contract to produce two units of a new cruise missile guidance control. The first unit took 4,000 hours to complete and cost $ 30,000 in materials and...
-
Wangs Concrete Service notes that the number of jobs each month follows the following distribution: 10 with probability 0.15, 11 with probability 0. 20, 12 with probability 0.20, 13 with probability...
-
The annual report is considered by some to be the single most important printed document that companies produce. In recent years, annual reports have become large documents. They now include such...
-
Fill in the Blank. If all the probability information of a stationary random process can be obtained from a single sample function, the process is said to be ___________.
-
Moab, Inc. manufactures and distributes high-tech biking gadgets. It has decided to streamline some of its operations so that it will be able to be more productive and efficient. Because of this...
-
Most materials tend to either lose electrons or gain electrons when rubbed. For example, rabbit fur tends to lose electrons when rubbed, while an acrylic (plastic) rod tends to gain electrons.The...
-
Kelly Consulting Post-Closing Trial Balance April 30, 20Y8 Account number Debit Credit Money 11 22,100 accounts receivable 12 3,400 supplies 14 1,350 prepaid rent 15 3,200 prepaid insurance sixteen...
-
Respond that the following statements are TRUE or FALSE: 1) The fixed overhead volume variance is a volume variance, not a cost variance. 2) The fixed overhead volume variance always shows...
-
Use the following to answer questions The company reported the following income statement results: Sales $ 8 0 0 , 0 0 0 Sales returns & allowances 1 0 , 0 0 0 Gross profit 3 8 3 , 1 5 0 Operating...
-
Discuss an audit checklist that you would use to execute a PCI audit for a target organization.
-
Blockchain Company (BC) disposed of a machine they owned for cash. It originally cost BC $33,000. The accumulated depreciation at the date of disposal was $28,000. A gain on the disposal of $3,300...
-
How do payroll taxes impact the cost of employees to the employer, they Increase costs Do not impact costs Increase then decrease costs Decrease costs?
-
Assume direct labor is fixed. What is the increase (decrease) in net operating income that would result from this plan over the current operations?
-
Compare and contrast how IBM and Papa John's Pizza must market their products given that one is b2b and one is b2c.
-
Explain how two samples can have the same mean but different standard deviations. Draw a bar graph that shows the two samples, their means an standard deviations as error bars. T S
-
What is the issue price of a $2,000 bond sold at 9814? What is the issue price of a $6,000 bond sold at 10112?
-
Refer to the income statement of Palm in Appendix A. Does its income statement report a gross profit figure? If yes, what is the amount?
-
The following selected information is taken from the work sheet for Wayman Company as of December 31, 2011. Using this information, determine the amount for K. Wayman, Capital, that should be...
-
King Henry V of England has decided to wage war on France and has engaged your services to assist him to assemble an appropriate army, which can consist of four types of troops: cavalry, men at arms,...
-
As shown in the ASPEN PLUS simulation flowsheet in Fig. 21.15, liquid toluene is to be heated from 100 to \(350^{\circ} \mathrm{F}\) while liquid styrene is to be cooled from 300 to \(100^{\circ}...
-
Using calculus, determine all maxima, \(m\) inima, and saddle points for the following unconstrained two-dimensional objective functions: (a) \(f\left\{x_{1} x_{2} ight\}=2 x_{1}^{3}+4 x_{1}...
Study smarter with the SolutionInn App