Data Analytics for Managers
Essay by Hasnain Butt • March 28, 2016 • Case Study • 753 Words (4 Pages) • 1,545 Views
London Business School EMBALJ 2017
FINANCIAL ACCOUNTING
PROBLEM SET 2 (Due: 4 March, 2016 at 12:45pm GMT)
YOUR NAME…………………………………………..
Part I: Transaction Analysis - Keizo Ltd (19 points)
Keizo Ltd is a bespoke wine retailer, which has been trading for only one year. At the start of its second year, it has the following items on its balance sheet:
£ | |
Fixed Assets | 5,150 |
Cash | 2,000 |
Inventory (wine) | 10,000 |
Share Capital | 4,000 |
Retained Profit | 8,150 |
5 year Bank Loan | 5,000 |
During the second year, the company undertakes the following transactions:
1) Purchases stock (Sassicaia, Barolo, DRC wines) for £5,000 (on credit).
2) Sells stock which originally cost £4,500 for £9,300. All customers buy on credit.
3) Pays £450 for insurance and £820 for advertising. The insurance is paid in
cash, but the advertising company gives credit.
4) Purchases an additional wine storage unit for £2,500 (on credit).
5) Pays the master sommelier £1,500 in cash.
6) Pays interest of 10% on its loan, in cash.
7) Pays 50% of its total trade creditor balance at this point (i.e., includes previous 6 transactions and opening balance carried forward).
8) Receives 50% of its total trade debtor at this point (i.e., includes previous 6 transactions and opening balance carried forward).
9) Keizo’s accountant calculates that as a result of the above transactions, the company will have to pay tax of £403.
10) Finally, the board of directors declare a dividend of £1,000.
On the following page, you are given a worksheet for Keizo Ltd for its second year of operations. Fill in the opening balances (from the end of the first year), and then record the transactions during the second year, line by line. Calculate closing balances and then construct a closing Balance Sheet and a Profit and Loss Account.
TRANSACTION WORKSHEET - KEIZO LTD
ASSETS | LIABILITIES | S/H FUNDS | |||||||||
Fixed Assets | Stocks (Inventory) | Trade Debtors | Cash | Bank Loan | Trade Creditors | Tax Payable | Dividends Payable | Share Capital | P&L Account | Retained Earnings | |
Opening balances | 5150 | 10000 | 2000 | 5000 | 4000 | 8150 | |||||
Purchase stock | 5000 | 5000 | |||||||||
Sales: credit | 9300 | 9300 | |||||||||
Cost of sales | (4500) | (4500) | |||||||||
Insurance | (450) | (450) | |||||||||
Advertising | 820 | (820) | |||||||||
Purchase of storage for wine | 2500 | 2500 | |||||||||
Salaries | (1500) | (1500) | |||||||||
Interest | (500) | (500) | |||||||||
Pay trade creditors | (4160) | (4160) | |||||||||
Collect trade debtors | (4650) | 4650 | |||||||||
Tax | 403 | (403) | |||||||||
Dividends | 1000 | (1000) | |||||||||
Balance | 7650 | 10500 | 4650 | 40 | 5000 | 4160 | 403 | 1000 | 4000 | 1127 | |
Transfer to retained profit | (1127) | 1127 | |||||||||
Closing balances | 7650 | 10500 | 4650 | 40 | 5000 | 4160 | 403 | 1000 | 4000 | - | 8277 |
PROFIT AND LOSS ACCOUNT - KEIZO LTD (for the second year of operations)
Sales | 9300 |
Cost of Sales | (4500) |
Gross Profit | 4800 |
Administrative Expenses | (2770) |
Profit before Interest and Tax | 2030 |
Interest | (500) |
Profit Before Tax | (1530) |
Tax | (403) |
Profit After Tax | 1127 |
BALANCE SHEET - KEIZO LTD (as at the end of second year of operations)
NON-CURRENT ASSETS | |
Fixed Assets | 7650 |
7650 | |
CURRENT ASSETS | |
Trade Debtors (Receivables) | 4650 |
Stocks (Inventory) | 10500 |
Cash | 40 |
15190 | |
CURRENT LIABILITIES | |
Trade Creditors | 4160 |
Dividends Payable | 1000 |
Tax Payable | 403 |
5563 | |
NON-CURRENT LIABILITIES | |
Bank Loan | 5000 |
NET ASSETS | 12277 |
CAPITAL AND RESERVES | |
Share Capital | 4000 |
Retained Earnings | 8277 |
SHAREHOLDERS’ FUNDS | 12277 |
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