AC4052QA Financial Accounting – APR22INTAKE

 

 

 

Assessment Component: Coursework

 

Weighting: This Coursework contributes 100% to the Overall Module Mark

 

Word count (1500 words Max):  Section A 1200 words(max) and Section B 300 words(max)

 

 

Submission: Students to submit to Turnitin via module Weblearn

 

Deadline: Monday 25 July 2022

 

 

 

INSTRUCTIONS:

This coursework has two sections. Section A has ONE question and Section B has TWO questions.

 

1. Answer all question
2. Show all working out.
3. It is mandatory to use the template provided
4. You must show all working out. You may use Excel, but you must show the formula for the excel calculations

 

 

 

 

 

 

 

 

 

 

 

 

SECTION A [30marks]

QEUESTION 1

This assignment requires each student to work on the published financial statements of ASOS PLC for two years from 2020 to 2021.

 

You are required:

Write a brief report on the performance of ASOS over the financial periods 2020 to 2021.You should use the financial statements provided below to calculate the required accounting ratios shown below and use any other information relevant to ASOS PLC for your comments. Information can be accessed from the annual report and accounts and any other source of evidence that you believe helps to explain the company’s performance and position. (30Marks)

 

Calculate ratios from ASOS 2020 and 2021 annual reports and comment on the comparative performance

 

ASOS year end 31 August 2020-21
	2021	2020
Income statement	£m	£m
Sales revenue	3,911	3,264
Cost of sales	2,134	1,716
Gross profit	1,776	1,547
Operating profit (use for PBIT)	190	151
Interest paid	13	10
	2021	2020
Balance sheet	£m	£m
Non-current assets	1,325	970
Current assets	1,560	1,020
Inventories	807	532
Trade and other receivables	58	60
Current assets less inventories	753	487
Current liabilities	998	818
Trade and other payables	956	770
Non-current liabilities	1,034	810
Total equity	1,034	810
Capital employed	2,068	1,621

 

 

 

SOLUTION: A1
	2021			2020
Ratios: [9marks] Profitability
Return on capital employed
Net profit margin
Asset turnover
Comments
Working capital: [9marks]		2021			2020
Inventory days
Receivable days
Payable days
Comments
Liquidity: [6marks]		2021			2020
Current ratio
Acid test
Comments
Long- term financing: [3marks]		2021			2020
Gearing
Comments

 

 

                                                                Marking criteria for section A:

	Explanatory comments on the assessment criteria	Maximum marks for each section  Recommended marks
	Assessment criteria: (Guidelines – suggested –under FOUR MAIN HEADINGS)
Correct answers	Calculations	(18 marks): 2marks each –   1mark for 2020, 1 mark for 2021
Interpretation of ratios (comparative comments)	Relevance, clear demonstration of understanding and applied in context	(9 Marks): 1marks for each specific ratio
Conclusion/ Recommendations	Identifying the key points raised	(3marks)

 

 

 

 

 

 

SECTION B [70marks]

 

Question B1 (58marks)

 

GIORGIO F PLC:
The following balances were extracted from the accounting records of Giorgio F PLC
Trial Balance as of 31 March 2020
	DR	CR
Purchases	372,000
Trade payables		80,000
Salaries and wages	54,000
Directors’ remuneration	10,000
Audit fees	3,000
Heat and light	25,000
Inventory, 01 April 2019	125,000
Debenture Interest	10,000
Interim dividend paid	120,000
Building at cost	500,000
Building – accumulated depreciation 01 Apr 2019		50,000
Fixtures and fittings at cost	100,000
Fixtures and fittings – accumulated depreciation, 01 Apr 2019		20,000
10% Debentures – 2023		90,000
Ordinary share capital (fully paid)		800,000
Trade receivables	120,000
Bank	267,000
Revenue		940,000
Share premium account		150,000
Retained earnings		145,000
Communications expenses	20,000
General reserve		22,000
Long-term investments	571,000
	2,297,000	2,297,000

 

The following additional information as of 31 March 2020 should be considered:
(i) Inventory was valued at £127,000
(ii) Audit fees of £500 were outstanding
(iii) The prepaid debenture interest is to be accounted for
(iv) Depreciation is to charge on buildings at 10% on the straight-line basis and on
fixtures and fittings at 15% on the reducing balance basis
(v) The directors decided to transfer £30,000 to the general reserve account
Required:
Prepare for Giorgio F PLC:
(a) the statement of profit or loss for the year ended 31 March 2020 [22marks]
(b) the statement of changes in equity for the year ended 31 March 2020 [14marks]
(c) the statement of financial position for the year ended 31 March 2020 [22marks]

 

 

 

 

 

 

 

 

 

 

 

SOLUTION: B1

1. (22marks)

GIORGIO F PLC
STATEMENT OF PROFIT OR LOSS ACCOUNT FOR THE YEAR ENDED 31 MARCH 2020
	£	£
Revenue
Cost of Sales	(W1)
Gross Profit
Operating expenses	(W2)
Profit from operations
Finance costs
Profit for the year

 

WORKINGS		£	£
(W1)	COST OF SALES
	Opening inventory
	Purchases (+)
	Closing inventory (-)
(W2)	OPERATING EXPENSES
	Heat and light
	Audit fee
	Communication expenses
	Salaries & wages
	Directors’ remuneration
	Provision for depreciation:
	Buildings
	Fixtures &Fitting

 

 

1. (14marks)

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED
31 MARCH 2020
	Ordinary share capital	Share premium	Retained earnings	General reserves	Total
Bal as of 01 April 2019
Profit for the year
Dividends paid
Transfer to general reserves
Total

 

 

 

 

 

 

 

 

1. (22marks)

GORGIO F LIMITED
STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2020
	£	£	£
Non-current assets
Property, Plant & Machinery (W3)
Long-term investments
Total
Current assets
Prepaid Debenture Interest
Inventory
Trade Receivables
Bank
Total assets
Equity and Liabilities
Ordinary Share Capital
Share premium
Retained Earnings
General Reserves
Non-current liabilities
10% Debentures – 2020
Current liabilities
Trade Payables
Accrued audit fees
Equity and total liabilities

 

 

(W3)	Non-current assets
	Property, Plant & Machinery
		Cost	Accumulated Depreciation	NBV
		£	£	£
	Buildings
	Fixtures & Fittings
	Total

 

 

 

 

 

Question B2 (12marks)

Grazyna Ltd, a new business, starts trading in sports shoes on 1^st January 2021 and expects to make the following transactions for the 6 months ending 30th June2021:

 

(i)            Sales are expected to be 300 units (sports shoes) per month for the 4months from January to April then 400                 units per month from May to June.

(ii)           The selling price will be £50 per unit.

(iii)          All sales will be cash sales with cash received in the same month the sale takes place.

(iv)          Purchases of inventory (sports shoes) will take place on month after the sales take place. (i.e., purchase takes              place in January will be paid in February). Each unit of inventory will cost £30.

(v)           Wages are expected to be £1000 per month and will be paid in the month in which they are incurred.

(vi)          Rent will be £2000 per month to be paid quarterly in advance (i.e., the rent payment for January, February and           March 2021 will be made on 1st January 2021).

(vii)         General overheads are expected to cost £1000 per month and will be paid in the month in which they are      incurred.

 

Required

 

2021. a) Prepare a cash budget for the 6 months from January to June 2021. Show the cash receipts and cash payments the business expects to have each month and the cash balance at the end of each month. (7marks)

 

1. b) Prepare a profit budget for the 6 months ending 30th June 2021 (the month-by-month breakdown is not required only the total for the 6 months). (5marks)

                Tip: You will need to work out the value of total sales revenue and total purchases of inventory for the 6 months to arrive at gross profit.            There is no opening or closing inventory to worry about.

 

 

SOLUTION B2 (12marks)

1. (7marks)

Grazyna Ltd Cash Budget for 6 Months to 30/6/21
Month	January	Feb.	March	April	May	June	Total
	£	£	£	£	£	£	£
Sales
Purchases
Wages
Rent
Overheads
Monthly net cash flow
Balance @ beginning of the month
Balance @ the end of the month

 

1. (5marks)                

Grazyna Ltd Profit Budget for 6 Months to 30/6/21
	£	£
Sales
Less Cost of sales:
Inventory purchases
Gross Profit
Less expenses:
Rent
Wages
Overheads
Net profit

 

 

 

Academic Integrity and Plagiarism

 

Academic integrity requires honesty in your studies. You should not present another person’s sentences or ideas as your own work. You should clearly identify quotations through the use of quotation marks and references to the sources. Failure to adhere to these academic standards may lead to allegations of academic misconduct, which will be investigated by the Academic Integrity team at QA.

 

Academic misconduct covers a variety of practices, such as:

 

• Plagiarism: copying another person’s ideas or words and presenting them as your own work, without the use of quotation marks and/or references.
• Self-plagiarism: reproducing parts of one of your assignments in another piece of work.
• Inventing, altering or falsifying the results of experiments or research.
• Commissioning another person to complete an assessment.
• Collaborating with others in the production of a piece of assessed work which is presented as entirely your own work.
• Cheating in an exam (e.g. by taking revision notes into the exam room).
• Ghosting ( e.g you buy a piece of work )

 

For full details of academic misconduct and how allegations are investigated, see the relevant section of the University’s academic regulations: https://student.londonmet.ac.uk/your-studies/student-administration/rules-and-regulations/academic-misconduct/.