BS1108 Introduction to Financial Accounting for Business-City, University of London

Instructions to students: All questions are compulsory

Materials:

Dictionaries are not permitted.

TASK: BS1108 Introduction to Financial Accounting for Business Assignment

Question 1

The following is the trial balance of Mars Ltd on 30^th June 2013:

BS1108 Introduction to Financial Accounting for Business

Additional Information:

The directors consider £14,000 of accounts receivable to be bad debt and should therefore be written off.
The directors also propose to provide for doubtful debt at the rate of 5% of the Trade receivable balance at the year end
A total amount of £28,000 relating to utility bills is outstanding and should be provided for.
Inventory at 30^th June 2013 was valued at £895,000.
Corporation tax on profits at 30^th June 2013 is estimated at £58,000.
Both plant & machinery and fixtures and fittings are to be depreciated at an annual rate of 20% on a reducing balance basis.
A dividend of 3 pence per ordinary shares is proposed to be paid

Required:

Prepare the following financial statements for Mars Ltd:

b) Statement of financial position (balance sheet) as at 30^th June 2013(20 marks)(Total: 40 marks)

Venus Ltd – Income Statement for the Year ending 31st Oct 2013

BS1108_Introduction to Financial Accounting for Business BS1108_Introduction_ to_ Financial Accounting for Business

The company’s share price at 31^st October 2013 was £2.30 and the total dividend for the year was 8 pence.

Required:

Using the income statement and balance sheet of Venus Ltd, calculate the following ratios:

You must show the formula for each ratio you have calculated as well as the figures that you have used in each ratio calculation.

2.Briefly discuss the uses and limitations of ratio analysis in assessing a company’s financial position.(8 marks) (Total: 30 marks)