MGT6153 MOCK EXAM
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MGT6153 MOCK EXAM
SOLUTIONS TO NUMERICAL QUESTIONS
Question A1
(a) Aberdeen Ltd Statement of Comprehensive Income for the Year Ended 31
December 2021
Revenue
Cost of Sales (W1)
Gross Profit
Distribution costs (W2)
Administrative expenses (W3)
Profit/Loss before interest
Finance costs (250,000x6%)
Profit/Loss for the year
£
2,347,000
(1,977,000)
370,000
(130,000)
(273,000)
(33,000)
(15,000)
(48,000)
Other comprehensive income
Revaluation gains 250,000
Total comprehensive income 202,000
(b) Aberdeen Ltd Statement of Financial Position as at 31 December 2021
Assets £
Non-current assets
Land 1,000,000
Buildings (3500k – 420k –70k) 3,010,000
Vehicles (42k– 10k – 8k) 24,000
4,034,000
Current assets
Inventory 497,000
Trade receivables (230k-10k- 11k) 209,000
Bank (22k +240k) 262,000
968,000
Total assets 5,002,000
Equity and liabilities |
|
Equity |
|
Share capital (550k + 100k (W4)) |
650,000 |
Share premium (800k + 140k (W4)) |
940,000 |
Revaluation reserve (W5) |
250,000 |
Retained earnings (2,710k – 48k) |
2,662,000 |
Total equity |
4,502,000 |
Non-current liabilities |
|
6% loan |
250,000 |
Current liabilities |
|
Trade payables |
235,000 |
Interest payables |
15,000 |
Total current liabilities |
250,000 |
Total equity and liabilities |
5,002,000 |
Aberdeen Ltd Statement of Changes in Equity for the year ended 31 December 2021
Beg.
Balance
Share
capital/premium
Profit
Revaluation
Total
Ordinary
Shares
550,000
100,000
-
650,000
Revolution
Reserve
-
-
-
250,000
250,000
Share
Premium
800,000
140,000
-
940,000
Retained
earnings
2,710,000
-
(48,000)
2,662,000
Total
4,060,000
240,000
(48,000)
250,000
4,502,000
Workings:
W1:
Cost of Sales
Opening inventory
Purchases
Closing inventory (500k – 23k + 20k)
£
542,000
1,932,000
2,474,000
(497,000)
1,977,000
W2:
Depreciations (£000)
Vehicles: (42,000 – 10,000) x 25% = 8,000
Building: 3,500,000 /50 = 70,000
Distribution Cost |
£ |
Depreciation of buildings |
35,000 |
Depreciation of Vehicles |
8,000 |
Distribution costs |
87,000 130,000 |
W3: Administrative Expenses |
£ |
Provision for doubtful debts |
11,000 |
[5% x (230,000- 10,000)] |
|
Directors’ salary |
65,000 |
Discount allowed |
32,000 |
Bad debt written off |
10,000 |
Depreciation of buildings |
35,000 |
Administrative expenses |
120,000 273,000 |
W4: Rights issue
Number of shares at the beginning of the year: £550,000 share capital / £0.50 = 1,100,000
New shares issued: 1,100,000 x 2 / 11 = 200,000
Share capital: 200,000 x £0.5 = £100,000, share premium: 200,000 x £(1.2 – 0.5) = £140,000 Cash of £240,000 has been raised and needs to be recorded.
W5: revaluation reserve
Increase carrying amount of land on statement of financial position by £250,000 to £1,000,000. Create a revaluation reserve under equity of £250,000, and other comprehensive income £250,000.
Question B1
a) Workings:
W1: Adjustment for depreciation
Depreciation: At 31/12/2018
Less: On disposals
At 31/12/2019
Charge for year
£
7,700,000
(1,180,000)
6,520,000
7,800,000
1,280,000
W2: Adjustment on disposal
Disposals at cost
Less; Accumulated depreciation Net book value
Disposal proceeds
Loss on disposal
W3: Taxation
Opening balance
Charge for year
Less: closing balance
Taxation paid
W4: Trade and other payables
At 31/12/2018
At 31/12/2019
Less: Interest accrued
Decrease in payables
2,900,000
(160,000)
£
2,400,000
(1,180,000)
1,220,000
1,130,000
90,000
£
2,300,000
1,340,000
3,640,000
(1,640,000)
2,000,000
£
3,100,000
2,740,000
360,000
Bristol plc Statement of Cash Flows for the year ended 31 December 2021
Cash flows from operating activities
Profit before taxation
Adjustments for:
Finance costs
Operating profit
Adjust for
Depreciation (W1)
Loss on sale of equipment (W2)
Increase in inventories
Increase in trade receivables
Decrease in trade payables (W4)
£000
600
1,280
90
(570)
(600)
(360)
£000
2,150
2,750
Cash generated from operations
Interest paid (280 + 320/2)
Taxation paid (W3)
Net cash from operating activities
Cash flow from investing activities
Payments to acquire non-current assets Receipts from the sale of non-current assets
Net cash used in investing activities
Cash flows from financing activities
Increase in debentures
Increase in share capital (2,300 – 2,000)
Dividends paid
Net cash from financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at 1 Jan 2021 (1,000 – 3,000)
Cash and cash equivalents at 31 Dec 2021 (320 – 3,500)
2,590
(440)
(2,000)
150
(6,400)
1,130
(5,270)
4,000
300
(360)
3,940
(1,180)
(2,000)
(3,180)
2022-08-03