Need some accountant's hands on that question.

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  1. #1

    Join Date
    Jun 2009
    Posts
    4

    Exclamation Need some accountant's hands on that question.

    I study accounting after i quit the job.But ,i stuck it at part (3) and don't know if i am right in that whole question....i hope there are some smart professional person help me out with this.

    1) building NBV is 282240.Plant and equipment NBV IS 82016.
    2) Capital will be 506000.
    3)Current liability is -141744
    Net profit after tax is 87105.6

    Above all, am i right?........otherwise, whole shit will be wrong.....
    Hope someone can help me out with it.....
    Thanks for million!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!1


    The director of Lewis Limited has obtained average data for the industry as a whole. He wishes to see what the results and position of the company would be if in the following year its performance was to coincide with the industry averages.

    At 1st July 2008, actual figures for the company included the following:

    Building at written down value $ 288,000
    Plant and equipment at written down value $ 102,520
    Stock $ 44,000
    12% Debenture (repayable in 2009) $ 88,000
    Ordinary share capital of 50 cents per share $ 176,000

    The following forecast is available for the year ended 30th June 2009

    1) Depreciation on fixed assets using reducing balance method

    I. Buildings 2%
    II. Plant and equipment 20%

    2) At 30th June 2009 total assets minus current liabilities will be $506,000.

    3) Net Profit after tax for the year will be 15% of total assets minus all external liabilities, both long and short terms.

    4) Net profit after tax will be 20% of gross profit

    5) Corporation tax will be 25% of profit before tax

    6) Cost of sales will be 60% of turnover

    7) Closing stock will represent 55 days' average cost of sales.

    8) Any difference between total expenses and the aggregate of expenses ascertained from this given information will represent other administrative expenses.

    9) Proposed dividend will be 5 cents/share

    10) The collection period for the trade debtors will be an average of 40 days of the annual turnover.

    11) The payment period for the amount of trade creditors will be 30 days average of purchases.

    Calculation are based on a year of 365 days

    Required:

    (a) Prepare a profit and loss account for the year ended 30th June 2009.

    (b) Prepare a balance sheet as at 30th June 2009.


  2. #2

    Join Date
    Jul 2009
    Posts
    26

    hope this is some consolation

    I am a UK qualified ACA and I cannot believe they want you to do this question for your studies. I actually cant do it and when you are actually an accountant in real life you will never have to do anything like this!!

    sorry i cant help more. I guess maybe what I'm not sure is what assumptions I'm supposed to make- like has the debenture already been paid off pre June 2009 (question only says "2009") and do you assume that debtors at 30 June 2008 are zero??


  3. #3

    Join Date
    Mar 2006
    Posts
    4,043

    I am not an accountant and this type of question in university and grad school turned me off any interest in the numbers side of business. However, by the time I hit the executive ranks of a large P&C insurer, I realized how bad that thinking was and I should have stuck with it.

    Not sure about this question but I know that there was one insurance course that if people did well on that they tended to be good claim adjusters on very large bodily injury and property damage claims both in understanding the issues and negotiating fair settlements. When we assessed the grades on this outside Insurance Institute course (Canada) against job performance even at the mid-level of claim adjusters we could see a difference on the job.

    Not sure if this type of question applies to accounting or not. In other words, they ask this crap to determine if you have the requisite aptitude and thinking processes to tackle something that you will never see in real life.

    Having said this, this doesn't help this guy. Sorry. Get a class mate who is smart and team up - that is how I did it in grad school and in business.


  4. #4

    Join Date
    Jun 2005
    Location
    Hong Kong
    Posts
    23,205
    Quote Originally Posted by LOJITT:
    I guess maybe what I'm not sure is what assumptions I'm supposed to make- like has the debenture already been paid off pre June 2009 (question only says "2009") and do you assume that debtors at 30 June 2008 are zero??
    The first one does indeed seem to require an assumption. But why do you need to know the debtors at 30 June 2008? It doesn't affect either the P&L for the year or the Balance Sheet at 30 June 2009.