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Lomond Ltd is a manufacturer of various types of furniture units. Recently one of its large customers, Bamboo Ltd has offered a contract to Lomond Ltd for the supply of 500 units. Below are the details for the production: Material A: Each unit requires 7kg of this material. Currently 2,400 kg of Material A is held by the business and it is regularly used by the business. This material of was originally bought for £40 per kg. It would cost £47 per kg to replace it. Sales value is £43 per kg. Material B: Each unit requires 3kg of this material. Currently 2,000 kg of Material B is held by the business. This material was originally bought for £24 per kg. The material is not currently used by the business and its scrap value is £14 per kg. The only foreseeable alternative use is as a substitute for material D (in constant use) but this would involve further processing cost of £6 per kg. The current buying cost of material D is £18 per kg. Replacement cost for material B is £26 per kg. Skilled labour: Each unit requires 8 hours of skilled labour. It is currently paid at a rate of £18 an hour and skilled labour is hired on a permanent basis. 1,200 hours can be provided by members of staff who currently have no work to do due to a quiet time. Only taking staff off other work can provide the remaining hours needed for this new project. This other work is charged out to customers at £45 an hour and material cost is £8 per hour. Equipment: It cost £800,000 when it was bought 5 years ago. Current depreciation charge per year is £40,000 per year. At present, it is be rented out generating income of £70,000 per year. This equipment is needed for one year in this new project. Overheads: It is a company policy to charge a fair share of the general costs (rent, heating and so on) to each contract undertaken at the rate of £4 for each skilled labour hour used on the contract. If this project is undertaken, the general costs are expected increase by £1,750 as a result of undertaking the contract. Required Calculate the minimum price at which the contract could be undertaken by Lomond Ltd. For each part, you should clearly show supporting workings and provide a brief explanation for your choice.(Total: 30 marks)

Q:

The post-closing trial balance of Wildhorse Corporation at December 31, 2020, contains the following stockholders' equity accounts. Preferred Stock (14,600 shares issued) $730,000 2,430,000 Common Stock (243,000 shares issued) Paid-in Capital in Excess of Par-Preferred Stock 243,000 Paid-in Capital in Excess of Par-Common Stock 418,000 Common Stock Dividends Distributable 243,000 985,220 Retained Earnings A review of the accounting records reveals the following. No errors have been made in recording 2020 transactions or in preparing the closing entry for net income. Preferred stock is $50 par, 6%, and cumulative; 14,600 shares have been outstanding since January 1, 2019. Authorized stock is 19,600 shares of preferred, 486,000 shares of common with a $10 par value. 1. 2. 3. 4. 5. 6. The January 1 balance in Retained Earnings was $1,130,000. On July 1, 20,200 shares of common stock were issued for cash at $16 per share. On September 1, the company discovered an understatement error of $91,400 in computing salaries and wages expense in 2019. The net of tax effect of $63,980 was properly debited directly to Retained Earnings. 7. A cash dividend of $243,000 was declared and properly allocated to preferred and common stock on October 1. No dividends were paid to preferred stockholders in 2019. 8. On December 31, a 10% common stock dividend was declared out of retained earnings on common stock when the market price per share was $16. Net income for the year was $551,000. 9. 10. On December 31, 2020, the directors authorized disclosure of a $201,000 restriction of retained earnings for plant expansion. (Use Note X.)

Q:

The following is the Income Statement of Falcon Ltd for the year ended 31 Dec 2021: 2021 £'000 Revenue 15,650 Cost of sales (8,500) Gross profit 7,150 Expenses (1,200) Interest expense (42) Profit before tax 5,908 Tax expense (1,200) Profit after tax 4,708 The following is the Statement of Financial Position of Falcon Ltd as at 31 Dec 2020 and 2021: 2020 2021 ASSETS £'000 £'000 Non-current Assets Land 2,650 2,670 Equipment Cost 2,000 2,620 Less: Accum.Depreciation (400) (770) Net Book Value of Equipment 1,600 1,850 Current Assets Inventories 1,350 1,400 Trade Receivables 200 156 Cash 120 5,479 Total Assets 5,920 11,555 EQUITIES AND LIABILITIES Share Capital - £1 shares 3,000 3,500 Share premium 1,500 1,750 Revaluation Reserve 200 220 Retained Earnings 170 4,740 Current Liabilities Trade Payables 125 80 Tax Payable 900 1,200 Interest Payable 25 20 Non- current Liabilities Debenture Loan 0 45 Total Equity and Liabilities 5,920 11,555 You are informed that: a) Equipment that originally cost £300,000 was sold for cash of £350,000. Accumulated depreciation relating to the plant sold amounted to £50,000. The profit/loss on disposal is included in expenses in Income Statement. b) The company issued 500,000 ordinary shares at a price of £1.5 each. c) Dividend payment for the year was £138,000. d) Increase in Land's value of £20,000 relates to its revaluation during this year. Required: Prepare the complete statement of cash flows for Falcon Ltd for the year ended 31 Dec 2021. Show supporting workings.

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