Below is the trial balance of Gloria's Greengrocers at 5 April 2023.

Trading account:
Sales		1,392,000
Opening inventory	5,850
Purchases	863,600
Carriage inwards	1,430
Other revenues and expenses:
Income from flower arranging services		18,361
Rent	28,944
Insurance	5,126
Advertising expense	2,938
Heating and lighting	4,168
Shop and office expenses	23,748
Salaries and wages	368,112
Discounts allowed	1,980
Carriage outwards	218
Balance sheet accounts:
Fixtures and fittings at cost	312,000
Fixtures and fittings - accumulated depreciation at 6 April 2022		96,000
Motor vehicles at cost	84,000
Motor vehicles - accumulated depreciation at 6 April 2022		52,200
Receivables	3,646
Allowance for irrecoverable receivables (at 6 April 2022)		716
Bank	33,371
Payables		23,256
Loan		18,000
Capital		147,998
Drawings	9,400
	1,748,531	1,748,531

The following information is relevant.

1. The closing inventory at 5 April 2023 is valued at 4,974.
2. On 5 December 2022, Gloria sold a motor vehicle for 4,820. The customer was due to pay Gloria on 5 April 2023 but only paid half of the amount due by cheque on the last day of the accounting year. Nothing regarding the disposal transaction, including any cash received, has been recorded in the accounts. This motor vehicle had been bought on 6 October 2021 for 6,572.
3. On 5 February 2023, Gloria bought a new motor vehicle for 12,000 on credit terms. The credit entry was correctly dealt with but Gloria mistakenly debited Fixtures and Fitting at cost.
4. Depreciation on motor vehicles is provided at 25% per annum using the reducing balance basis on a monthly pro-rata basis. Depreciation on fixtures, fittings and equipment is provided at 15% per annum on the straight line basis, assuming no residual value. There were no purchases or disposals of fixtures, fittings, and equipment during the year.
5. Gloria estimates that 1,864 due from customers will be irrecoverable and must be written off.
6. The allowance for receivables is to be set at 4% of net receivables at 5 April 2023.
7. Rent includes a prepayment of 580.
8. The heating bill will arrive on 5 May 2023 and 390 is expected to relate to the period ended 5 April 2023.
9. An accrual of 474 is needed for insurance.
10. The long-term loan is repayable in 10 years' time. Interest payable on the loan is 5% and will be paid once per year.

Required:

a.Prepare the income statement for Gloria's Greengrocers for the period ended 5 April 2023. Your answer should only be in round pounds. Show your workings, including a full non-current assets note.

b.Prepare the balance sheet for Gloria's Greengrocers as at 5 April 2023. Show your workings. Your answer should only be in round pounds. Show your workings, including a full non-current assets note.

c.

i.Explain the difference between accrued and prepaid expenses.

ii.Briefly explain the adjustments needed at the period-end for accrued expenses and prepaid expenses to prepare 'true and fair' financial statements. You must illustrate/support your explanation with examples using dates and figures. (Your answer should not involve double-entries nor T-accounts but should indicate the effect of the adjustments on the income statement and the balance sheet at the period-end. Your answer should also not include any discussion on the meaning of 'true and fair' financial statements.)

Q2

Aziz, a sole trader, owns and manages a business which manufactures and sells one special type of tool for home improvement stores.

Set out below is the sales revenue and profit for 2023.

Year	Sales	Profit
2023	464,820	146,522

In 2023, the business manufactured and sold 104,000 units and had fixed costs of 121,370. All other costs were variable.

a.Calculate the selling price and variable cost per unit for 2023. (Answers should be to the nearest penny. Any figures used in further answers to this question should be rounded numbers.)

b.Calculate the sales revenue level, both in units and money terms, at which the business broke even in 2023. (Answers for all breakeven questions should be rounded up to the next whole number or pound.)

c.Complete a contribution analysis table that indicates fixed, variable and total costs, as well as revenue, for 2023 at production levels of 0, 100,000, 200,000 and 300,000 units.

d.Illustrate your answers to (a), (b) and (c) above on a breakeven chart that shows revenue, total cost and fixed cost lines with an appropriate legend for each. Your chart should be labelled with an arrow that points to the breakeven point as well as to the margin of safety area.

e.Aziz had considered spending an additional 16,400 on advertising in 2023. He predicted that such an additional investment would have increased the sales and production volume in the year to 108,000 units at a better selling price of 4.60. He also predicted there would have been no other changes to his fixed costs for the year nor any changes to the variable cost per unit.

• i.If his predictions had proved correct, what would have been his new profit for the year?
• ii.If his predictions had proved correct, what would have been his new breakeven point, in units, for the year? (Answers for all breakeven questions should be rounded up to the nearest whole number or pound.)