UL22/0371 SECTION B (80 MARKS) Answer ALL questions from this section 2. Ziggy's Bistro Ltd (Ziggy's)...
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UL22/0371 SECTION B (80 MARKS) Answer ALL questions from this section 2. Ziggy's Bistro Ltd (Ziggy's) operates a small Moroccan style restaurant in Virginia Water, UK. The owner, Don Ziggy, has recruited you to help him in preparing his accounts for the first four months of the accounting period. Don Ziggy has provided you with the following information for the period from September 1, 2021 to December 31, 2021. iii) Month iv) September October November December v) Page 2 of 6 Staff wages Rates [as allocated] Insurance [as allocated] Advertising Other general expenses Apart from the cost of sales, other expenses of operating the restaurant were as follows: Sales ($) UL22/0371 Cash 43,387 35,511 96,000 82,747 Credit 96,000 112,000 128,000 192,000 The following additional information is available relating to the business: i) Gross profit margin was 60% of net sales revenue. ii) Sales returns were: September 2.43%; October 2.38%; November 0%; and December 1% of total sales. (Assume that monthly trade receivables are not affected by sales returns). September October November December $ $ $ $ 40,000 40,000 1,600 1,600 800 800 1,200 1,200 27,200 27,200 48,000 1,600 800 1,360 29,600 Page 3 of 6 On September 1, 2021 opening inventory was zero. Closing inventory was constant from month to month at a cost value of $7,200. Insurance was paid one year in advance on 1 September, 2021. 56,000 1,600 800 1,440 31,200 QUESTION CONTINUES ON NEXT PAGE Rates are paid in two instalments on September 1 and March 1 each year. Rates for the first half of the accounting period were paid on September 1 UL22/0371 v) vii) viii) ix) x) vi) All other expenses (e.g., staff wages, advertising and general expenses) are paid as they are incurred. Non-current assets at September 1, 2021 were $384,000. Non-current assets acquired on December 1, 2021 amounted to $192,000. Depreciation of Non-current Assets is by the straight-line method, assuming nil salvage value and a useful life of 5 years. Depreciation is charged on a monthly basis beginning in the month on which the asset is acquired. Ziggy's pays its suppliers one month in arrears. xi) xii) xiii) QUESTION CONTINUES ON NEXT PAGE Page 3 of 6 Rates are paid in two instalments on September 1 and March 1 each year. Rates for the first half of the accounting period were paid on September 1, 2021. The company has no non-current liabilities but finances its working capital with a bank overdraft. The credit segment of the business is showing a lot of promise. Ziggy's Bistro's largest clients are companies which pay on credit. Ziggy's has arranged a month's credit on all purchases with these customers. The company's Current Ratio is 84.878%. Required: (a) Prepare an income statement for the four months period September to December 2021 inclusive. You should present your income statement by month along with a total column for the 4 months from September 1 to December 31, 2021. List each item on the income statement and show all workings. (25 marks) (b) Prepare a balance sheet at December 31, 2021. Show workings clearly. (Note: you will have to use the ratios in the case to calculate total liabilities before you calculate capital. Round your figures to the nearest whole number). (15 marks) UL22/0371 (c) Drawing on your calculations in (a) and (b) above, identify and explain how Don Ziggy might attempt to finance the shortfall of funding in his business without using the existing bank overdraft. (10 marks) Total: 50 marks Page 4 of 6 UL22/0371 SECTION B (80 MARKS) Answer ALL questions from this section 2. Ziggy's Bistro Ltd (Ziggy's) operates a small Moroccan style restaurant in Virginia Water, UK. The owner, Don Ziggy, has recruited you to help him in preparing his accounts for the first four months of the accounting period. Don Ziggy has provided you with the following information for the period from September 1, 2021 to December 31, 2021. iii) Month iv) September October November December v) Page 2 of 6 Staff wages Rates [as allocated] Insurance [as allocated] Advertising Other general expenses Apart from the cost of sales, other expenses of operating the restaurant were as follows: Sales ($) UL22/0371 Cash 43,387 35,511 96,000 82,747 Credit 96,000 112,000 128,000 192,000 The following additional information is available relating to the business: i) Gross profit margin was 60% of net sales revenue. ii) Sales returns were: September 2.43%; October 2.38%; November 0%; and December 1% of total sales. (Assume that monthly trade receivables are not affected by sales returns). September October November December $ $ $ $ 40,000 40,000 1,600 1,600 800 800 1,200 1,200 27,200 27,200 48,000 1,600 800 1,360 29,600 Page 3 of 6 On September 1, 2021 opening inventory was zero. Closing inventory was constant from month to month at a cost value of $7,200. Insurance was paid one year in advance on 1 September, 2021. 56,000 1,600 800 1,440 31,200 QUESTION CONTINUES ON NEXT PAGE Rates are paid in two instalments on September 1 and March 1 each year. Rates for the first half of the accounting period were paid on September 1 UL22/0371 v) vii) viii) ix) x) vi) All other expenses (e.g., staff wages, advertising and general expenses) are paid as they are incurred. Non-current assets at September 1, 2021 were $384,000. Non-current assets acquired on December 1, 2021 amounted to $192,000. Depreciation of Non-current Assets is by the straight-line method, assuming nil salvage value and a useful life of 5 years. Depreciation is charged on a monthly basis beginning in the month on which the asset is acquired. Ziggy's pays its suppliers one month in arrears. xi) xii) xiii) QUESTION CONTINUES ON NEXT PAGE Page 3 of 6 Rates are paid in two instalments on September 1 and March 1 each year. Rates for the first half of the accounting period were paid on September 1, 2021. The company has no non-current liabilities but finances its working capital with a bank overdraft. The credit segment of the business is showing a lot of promise. Ziggy's Bistro's largest clients are companies which pay on credit. Ziggy's has arranged a month's credit on all purchases with these customers. The company's Current Ratio is 84.878%. Required: (a) Prepare an income statement for the four months period September to December 2021 inclusive. You should present your income statement by month along with a total column for the 4 months from September 1 to December 31, 2021. List each item on the income statement and show all workings. (25 marks) (b) Prepare a balance sheet at December 31, 2021. Show workings clearly. (Note: you will have to use the ratios in the case to calculate total liabilities before you calculate capital. Round your figures to the nearest whole number). (15 marks) UL22/0371 (c) Drawing on your calculations in (a) and (b) above, identify and explain how Don Ziggy might attempt to finance the shortfall of funding in his business without using the existing bank overdraft. (10 marks) Total: 50 marks Page 4 of 6
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Microeconomics An Intuitive Approach with Calculus
ISBN: 978-0538453257
1st edition
Authors: Thomas Nechyba
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