On 1st January 2012 the summarised accounts of Hickey Enterprises Limited showed the following:
Summarised accounts of Hickey Enterprises Limited @ 1st January 2012 Total assets less current liabilities 850,000
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Less long term liability 8% Debentures
Net assets
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100,000
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750,000
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|
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Equity
170,000 Ordinary shares @ £1 each 170,000
Share premium 30,000
Revenue reserves 450,000
Total Equity 650,000
8% Preference shares 100,000
750,000
1) Referring to the above summary - what is the value of the company's capital employed as at 1st January 2012?
2) On 30th June 2012 a piece of land that had previously been valued in Hickey Enterprises' accounts at a cost of £120,000 was revalued to £160,000. Prepare the journal entry to show this revaluation.
3) On 1st March, 2012 a further 20,000 Hickey Enterprises Ltd ordinary shares were issued at £1.30 and these were fully paid (cash was received and banked).
Prepare the journal entry to record this share issue and show the updated ledger accounts for both the ordinary share capital and the share premium.
4) On 30th June, 2012 within Hickey Enterprises Ltd 50% debentures were redeemed at par. Show the journal entry to record this redemption.
5) Assuming that the retained profit for the year ended 31st December, 2012 was £145,000, what would then be the value of the Total equity at that date?
Itemise between ordinary shares, share premium, revenue reserves and revaluation reserves.
Questions 9, 10 and 11 refer to the following information:
Broatch, Rose and Wren are in partnership and admitted Fox as a partner on 1st January, 2013.
An extract of the Balance sheet of the partnership on 31st December, 2012 showed:
Fox was admitted as a partner on 1st January and contributed £40,000 and this was paid into the partnership bank account.
At that date the goodwill was valued as £70,000 and this is not to remain in the books.
The existing profit sharing ratio:
The revised profit sharing ratio:
It was agreed that the partners would be credited with salaries of:
Drawings for the year:
Interest on capital (based on the balances after the admission of the partner) is to be credited at a rate of 5% per annum.
Profit for the year ended 31 December, 2013 was £230,000
6) Prepare the partners' capital accounts on the admission of Fox as a partner clearly showing the treatment of goodwill.
7) Prepare the goodwill account showing clearly the introduction of goodwill and its elimination from the books of the partnership.
8) Show the partners current accounts as at 31st December 2013
9) Books to Learn Limited's sales for the period are £755,000. The gross profit on these sales is £490,750. Using the GP to sales formula, calculate the gross profit percentage. What would the cost of sales value and percentage be?
From the above summarised profit and loss statement for Smith and Jones, calculate the following ratios:
- Net profit to sales
- Expenses to sales
- Gross profit to sales
- Cost of sales
Case Scenario
Remember to back up your work as you go along and you will be required to produce reports to answer the tasks in this case scenario.
Task
Post the initial trial balance from the above into your accounting software. You may need to create new nominal codes depending on the software.
Print the following reports:
- An initial trial balance
- An initial profit and loss account
- An initial trial balance
Submit these reports as part of your assignment to your tutor.
Post the amendments needed for the admission of Gehan Noel into the partnership taking into account the goodwill.
Print a report that shows the above journal transactions and send to your tutor as part of your assignment.
Complete the following entries for the Webfinity and Beyond partnership
- Post the transactions to represent the disposal of the old computers and the acquisition of the new computers. A general or sundry creditors' account may be used instead of a purchase ledger account for the purchase on credit.
- Post the depreciation of the fixed assets.
- Post the necessary adjustments for accruals and prepayments
- Post the necessary adjustments for opening and closing stock.
- Post the necessary journals for the change in bad debt provision.
After entering the above transactions print the following to be sent to your tutor as part of your assignment:
- A draft trial balance
- A draft profit and loss account
- A draft balance sheet
Process the year end and make the necessary adjustments in accordance with the profit sharing agreements.
Then print the following to be sent to your tutor as part of your assignment:
- Opening balance sheet for 2012/2013
- Opening trial balance for 2012/2013