During the examination of the financial records of various company clients you find the following material...

 

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During the examination of the financial records of various company clients you find the following material items: (a) (b) (c) The profit and loss account of Freddy's Conner Ltd for the year ended 30 June 2003 has charged therein GH¢16,400, being general rates payable for thee year commencing 1 April 2003, and GH¢15,000 being rent paid for the quarter to 30 September 2003. In the accounts for the year ended 31 May 2003, Bepos Ltd has included in sales GH$40,000 which represents goods sent to customers on a sale or return basis. On 31 August 2003 Jargoos Ltd has stocks and work in progress in the balance sheet at cost, including apportioned overheads, amounting to GHe110.000. Information available indicates that sales have been falling rapidly in the last six months following the introduction to the market of a rival product of improved specification and lower price. The company has an issued share capital of GH20,000 and a debit balance on reserves of GH¢2,500 on 31 August 2003. Requirement Write short memoranda to the directors of each of the above companies explaining the fundamental accounting concepts involved and the adjustment, if any, to their accounts which you consider necessary. During the examination of the financial records of various company clients you find the following material items: (a) (b) (c) The profit and loss account of Freddy's Conner Ltd for the year ended 30 June 2003 has charged therein GH¢16,400, being general rates payable for thee year commencing 1 April 2003, and GH¢15,000 being rent paid for the quarter to 30 September 2003. In the accounts for the year ended 31 May 2003, Bepos Ltd has included in sales GH$40,000 which represents goods sent to customers on a sale or return basis. On 31 August 2003 Jargoos Ltd has stocks and work in progress in the balance sheet at cost, including apportioned overheads, amounting to GHe110.000. Information available indicates that sales have been falling rapidly in the last six months following the introduction to the market of a rival product of improved specification and lower price. The company has an issued share capital of GH20,000 and a debit balance on reserves of GH¢2,500 on 31 August 2003. Requirement Write short memoranda to the directors of each of the above companies explaining the fundamental accounting concepts involved and the adjustment, if any, to their accounts which you consider necessary.

Answer rating: 100% (QA)

MEMORANDA To the directors of Freddys Conner Ltd I have examined ... View the full answer