The following information is taken from the accounting records of Conversano Plc at 31 December 2017....
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
The following information is taken from the accounting records of Conversano Plc at 31 December 2017. Dr £'000 4,000 Cr £'000 Land & Buildings Land & Buildings - accumulated depreciation Plant& Equipment - cost Plant& Equipment - accumulated depreciation Motor vehicles - cost Motor vehicles- accumulated depreciation Stocks as at 1 January 2017 Trade Receivables (debtors) Cash at Bank Trade Payables (creditors) 5% Debentures (repayable in 2025) Interest received Sales Revenue Ordinary £1 Shares Share Premium Account Accumulated profit & loss as at 1* January 2017 Purchases of stock for resale Debenture Interest Administration expenses Distribution expenses Taxation charge for year 600 5,600 4,240 850 550 2,950 680 1,100 710 1,200 250 10,900 1,800 1,200 3,720 6,260 160 1,940 780 850 25,170 25,170 In addition, the following information is provided regarding matters which are not reflected in the above figures: (i) Following a physical stock count on 1" December, inventory at that date is valued at £2,470,000. (ii) The figure for administrative expenses includes the payment of insurance premiums of £680,000 covering the period of 12 months ending on 31 March 2018. (ii) Included in purchases is a payment of £150,000 relating to certain items which have been used within the company for its own activities rather than having been added to inventory for resale. Question 1 continued overleaf (iv) A customer who owes Conversano £80,000 has recently been declared bankrupt and consequently it is uncertain whether the company will be able to recover payment of the outstanding debt. (vi) The fee payable to the auditors for audit of the financial statements for the year to 31st December 2017 is estimated to be £110,000. (v) On 31st December 2017, the company issued a further 200,000 £1 shares. The issue price was £2 per share and they were fully subscribed and paid up. The effects of this issue have not yet been included in the financial records. Required (a) Prepare accounting records to show the effect of the above information on the balances for relevant items at 31s December 2017. You are required only to create records for those account balances you consider to be affected by the additional information. (You may use the template provided or alternative presentations, as long as you show complete records for the adjustments to the affected accounts.) (15 marks) (b) State the overall change in the net profit for the year resulting from your adjustments. (3 marks) (c) Prepare a draft Statement of Financial Position (Balance Sheet) for Conversano Plc at 31st December 2017. (7 marks) (d) Explain the meaning of the 'Accruals Concept' and illustrate the application of this concept with reference to your treatment of two of the items (i) to (vi) above. (10 marks) The following information is taken from the accounting records of Conversano Plc at 31 December 2017. Dr £'000 4,000 Cr £'000 Land & Buildings Land & Buildings - accumulated depreciation Plant& Equipment - cost Plant& Equipment - accumulated depreciation Motor vehicles - cost Motor vehicles- accumulated depreciation Stocks as at 1 January 2017 Trade Receivables (debtors) Cash at Bank Trade Payables (creditors) 5% Debentures (repayable in 2025) Interest received Sales Revenue Ordinary £1 Shares Share Premium Account Accumulated profit & loss as at 1* January 2017 Purchases of stock for resale Debenture Interest Administration expenses Distribution expenses Taxation charge for year 600 5,600 4,240 850 550 2,950 680 1,100 710 1,200 250 10,900 1,800 1,200 3,720 6,260 160 1,940 780 850 25,170 25,170 In addition, the following information is provided regarding matters which are not reflected in the above figures: (i) Following a physical stock count on 1" December, inventory at that date is valued at £2,470,000. (ii) The figure for administrative expenses includes the payment of insurance premiums of £680,000 covering the period of 12 months ending on 31 March 2018. (ii) Included in purchases is a payment of £150,000 relating to certain items which have been used within the company for its own activities rather than having been added to inventory for resale. Question 1 continued overleaf (iv) A customer who owes Conversano £80,000 has recently been declared bankrupt and consequently it is uncertain whether the company will be able to recover payment of the outstanding debt. (vi) The fee payable to the auditors for audit of the financial statements for the year to 31st December 2017 is estimated to be £110,000. (v) On 31st December 2017, the company issued a further 200,000 £1 shares. The issue price was £2 per share and they were fully subscribed and paid up. The effects of this issue have not yet been included in the financial records. Required (a) Prepare accounting records to show the effect of the above information on the balances for relevant items at 31s December 2017. You are required only to create records for those account balances you consider to be affected by the additional information. (You may use the template provided or alternative presentations, as long as you show complete records for the adjustments to the affected accounts.) (15 marks) (b) State the overall change in the net profit for the year resulting from your adjustments. (3 marks) (c) Prepare a draft Statement of Financial Position (Balance Sheet) for Conversano Plc at 31st December 2017. (7 marks) (d) Explain the meaning of the 'Accruals Concept' and illustrate the application of this concept with reference to your treatment of two of the items (i) to (vi) above. (10 marks)
Expert Answer:
Related Book For
Intermediate Accounting
ISBN: 978-0324300987
10th Edition
Authors: Loren A Nikolai, D. Bazley and Jefferson P. Jones
Posted Date:
Students also viewed these accounting questions
-
The following information is taken from the accounting records of the Propst-Steele Production Corporation: 1. Issued 5,000 shares of no-par common stock at $15 per share. 2. Issued an additional...
-
The following information is taken from the accounting records of four different companies. Provide the missing amounts. Assume there are no indirect materials used in the companys finishedproduct....
-
The following information is taken from the accounting records of four different companies. Provide the missing amounts. Assume there are no indirect materials used in the company's finished product....
-
A circular post, a rectangular post, and a post of cruciform cross section are each compressed by loads that produce a resultant force P acting at the edge of the cross section (see figure). The...
-
Given x = 0101 and y = 1010 in twos complement notation (i.e., x = 5, y = -6), compute the product p = x y with Booth's algorithm.
-
Use the Booth algorithm to multiply 23 (multiplicand) by 29 (multiplier), where each number is represented using 6 bits.
-
A healthcare home-care firm has a profit margin of 15 percent on visiting nurse sales of $\$ 20,000,000$. If the firm has debt of $\$ 7,500,000$, total assets of $\$ 22,500,000$, and an after-tax...
-
Holcomb Candles, Inc. manufactures decorative candles and has contracted with a national retailer to supply a set of special holiday candles to its 8,500 stores. These include large jars, small jars,...
-
The following data from the just completed year are taken from the accounting records of Mason Company: Sales Direct labor cost $524,000 $70,000 Raw material purchases $118,000 Selling expenses...
-
Modern Kitchenware Co. specializes in the manufacturing and distribution of items used in the kitchen. Among its many products are microwave ovens, toasters, electric can openers, etc. Its home base...
-
A distillation column is used to separate a mixture of two components, A and B, into two overhead streams and one bottom stream. The molar flow rate of the mixture entering the column is given by F =...
-
Regina gets a monthly 30 year, 7/1 Adjustable Rate Mortgage for $900,000. The initial teaser rate of 2.75%, the interest then resets to 250 basis points above 1 year CMT. Right before the rate resets...
-
You have the following cash flows for a possible project: Years Cash flows 0 -3000 1 700 2 750 3 4 5 1,000 800 700 Calculate the DCF The discount rates should be in a percentage format to two decimal...
-
7. (10 points) A routing transit number (RTN) is a bank code used in the United States which appears on the bottom of checks. The most common form of an RTN has nine digits, where the last digit is a...
-
Questions based off aspiring accounting major What is the preferred career path you would like to work toward achieving? What are the qualifications for this career path beyond your current degree (...
-
Steve is employed full-time as a high-school math teacher. He also owns three rental properties; when he has extra time (usually during the summer months) he performs maintenance and makes...
-
If a single taxpayer has earned $55,000 taxable income, and the tax rates are 0 - $22,100 = 15%; $22,100 - $53,500 = 28%; and $53,501 - $115,000 = 31%, how much income tax is required this year?
-
Federated Shipping, a competing overnight delivery service, informs the customer in Problem 65 that they would ship the 5-pound package for $29.95 and the 20-pound package for $59.20. (A) If...
-
In 2007 the Huxley Company, a real estate company, purchased some raw land for $60,000 and resold it on credit for $90,000. Because of the speculative nature of the usefulness of the land, the...
-
The following 2007 information is available for the Payne Company: Partial additional information: The net income for 2007 totaled $1,600. During 2007 the company sold for $390, equipment that cost...
-
Briefly discuss the procedures followed by the FASB for issuing a statement of concepts or standards.
-
Verify that \(\left|\Delta v_{\mathrm{u} x} ight| /\left|\Delta v_{\mathrm{s} x} ight| \approx 1 / 3\) for the two carts in Figure 4.9. Figure 4.9 Velocity-versus-time graph for a standard cart and a...
-
What is the ratio of the \(x\) components of the change in velocity for the plastic and metal carts, \(\Delta v_{\mathrm{p} x} / \Delta v_{\mathrm{m} x}\), in Figure 4.10? Figure 4.10...
-
Is the inertia of the cart of unknown inertia in Figure 4.9 greater or less than that of the standard cart? Figure 4.9 Velocity-versus-time graph for a standard cart and a cart of unknown inertia...
Study smarter with the SolutionInn App