The following information is taken from the accounting records of Harvard Froots Limited at 30th November...
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The following information is taken from the accounting records of Harvard Froots Limited at 30th November 2018. Harvard Froots Limited is a company which imports fresh fruit and vegetables from around the globe and sells them to independent grocers across the UK. Trial Balance Cr £'000 Dr £'000 150,000 83,000 Equity shares of £1 each Retained earnings as at 1 December 2017 Inventory Purchases for the year to 30 November 2018 Bank loan @ 4% Interest Warehouse property cost Accumulated depreciation on warehouse property at 1 December 2017 203,000 40,000 600,000 360,000 Motor vehicles cost 72,100 Accumulated depreciation on motor vehicles at 1 December 2017 Fixed asset purchases for the year to 30 November 2018 56,000 Trade and other receivables 28,000 Cash 41,000 Trade and other payables 29,300 27,000 700 Inventory at 1 December 2017 Tax expense for the year to 30 November 2018 Revenue for the year to 30 November 2018 304,500 Operating expenses for the year to 30 November 2018 51,000 1,022,800 1,022,800 In addition, the following information is provided regarding matters which are not reflected in the above figures: (i) On 31 October 2018, they made a payment in cash of £24,000 for one years' rental on their head office. (ii) One of the two distribution warehouses was disposed of on 1 December 2017. It cost £200,000 in 1985 and had been depreciated on a straight line basis, over 30 years. The proceeds of the sale were £350,000. (iii) Depreciation has not yet been accounted for. Motor vehicles are charged on a reducing balance basis at 40%. The remaining warehouse property was bought for £400,000 and is charged on a straight line basis over 30 years, with a £100,000 scrap value. (iv) The closing inventory balance is £25,000 and costs of sales is calculated on a periodic basis. (v) One of Harvard Froot's customers has gone bankrupt. Harvard Froot are unlikely to be able to recover the £5,000 owed to them and need to make a bad debt provision for this amount. (vi) The interest on the loan has not yet been accounted for or paid. Required (a) Prepare accounting records to show the effect of the information provided in points (i) to (vi) on the balances at 30th November 2018, as shown in the trial balance above. You must use the Manchester Method to show the opening trial balance, the adjustments and the closing figures. Please label your workings and show any calculations. (16 marks) (b) Prepare a draft Income Statement for the year to 30th November 2018 for Harvard Froots Limited. (6 marks) (c) Show the cost, accumulated depreciation and net book value of each of the categories of fixed assets (warehouse property and vehicles) and the total for fixed assets at 1 December 2017 and 30 November 2018 for Harvard Froots Limited. (9 marks) (d) Briefly explain why the profit is different from the cash flow in a company and illustrate your answer with reference to your treatment of two of the items (i) to (vi) above. (9 marks) (Total 40 marks) The following information is taken from the accounting records of Harvard Froots Limited at 30th November 2018. Harvard Froots Limited is a company which imports fresh fruit and vegetables from around the globe and sells them to independent grocers across the UK. Trial Balance Cr £'000 Dr £'000 150,000 83,000 Equity shares of £1 each Retained earnings as at 1 December 2017 Inventory Purchases for the year to 30 November 2018 Bank loan @ 4% Interest Warehouse property cost Accumulated depreciation on warehouse property at 1 December 2017 203,000 40,000 600,000 360,000 Motor vehicles cost 72,100 Accumulated depreciation on motor vehicles at 1 December 2017 Fixed asset purchases for the year to 30 November 2018 56,000 Trade and other receivables 28,000 Cash 41,000 Trade and other payables 29,300 27,000 700 Inventory at 1 December 2017 Tax expense for the year to 30 November 2018 Revenue for the year to 30 November 2018 304,500 Operating expenses for the year to 30 November 2018 51,000 1,022,800 1,022,800 In addition, the following information is provided regarding matters which are not reflected in the above figures: (i) On 31 October 2018, they made a payment in cash of £24,000 for one years' rental on their head office. (ii) One of the two distribution warehouses was disposed of on 1 December 2017. It cost £200,000 in 1985 and had been depreciated on a straight line basis, over 30 years. The proceeds of the sale were £350,000. (iii) Depreciation has not yet been accounted for. Motor vehicles are charged on a reducing balance basis at 40%. The remaining warehouse property was bought for £400,000 and is charged on a straight line basis over 30 years, with a £100,000 scrap value. (iv) The closing inventory balance is £25,000 and costs of sales is calculated on a periodic basis. (v) One of Harvard Froot's customers has gone bankrupt. Harvard Froot are unlikely to be able to recover the £5,000 owed to them and need to make a bad debt provision for this amount. (vi) The interest on the loan has not yet been accounted for or paid. Required (a) Prepare accounting records to show the effect of the information provided in points (i) to (vi) on the balances at 30th November 2018, as shown in the trial balance above. You must use the Manchester Method to show the opening trial balance, the adjustments and the closing figures. Please label your workings and show any calculations. (16 marks) (b) Prepare a draft Income Statement for the year to 30th November 2018 for Harvard Froots Limited. (6 marks) (c) Show the cost, accumulated depreciation and net book value of each of the categories of fixed assets (warehouse property and vehicles) and the total for fixed assets at 1 December 2017 and 30 November 2018 for Harvard Froots Limited. (9 marks) (d) Briefly explain why the profit is different from the cash flow in a company and illustrate your answer with reference to your treatment of two of the items (i) to (vi) above. (9 marks) (Total 40 marks)
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Trial Balance of Harvard froots Limited at 30th Nov 2018 As on 30th Nov 2018 Opening Adjustments Closing Trial Balance Dr 000 Cr 000 Adj Dr 000 Adj Cr ... View the full answer
Related Book For
Intermediate Accounting
ISBN: 978-0324300987
10th Edition
Authors: Loren A Nikolai, D. Bazley and Jefferson P. Jones
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