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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 1st 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

 

  1. 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/.

 

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