CHAPTER 9 Sample Question 100 Mark Question The financial position of Giangello Ltd on 01/01/2013 is shown in the following Balance Sheet: Fixed Assets


Land and Buildings Equipment Vehicles


Current Assets Stock


Debtors (less 5% provision)


less Creditors: Amounts falling due within one year Creditors Bank


Net Current Assets


Financed By Capital & Reserves Authorised 500,000 Ordinary Shares @ €1 each Issued 300,000 Ordinary Shares @ €1 each Share Premium P & L Balance


Balance Sheet as at 01/01/2013 Cost Dep to date €


€


255,000 35,000 40,000


330,000


56,200 39,900


36,000 7,000


15,300 2,800 4,000


22,100 96,100 9 43,000


53,100 361,000


Net €


239,700 32,200 36,000


307,900


300,000 10,000 51,000


361,000


The following transactions took place during 2013: Jan: The company revalued land and buildings at €300,000 on 01/01/2013. 10% of the revalued amount was attributable to land.


Feb: Goods which were previously sold for €6,000 plus VAT 21% were returned to Giangello Ltd. Giangello Ltd issued a credit note for €7,000. The selling price of these goods was cost plus 20%.


Mar: Giangello Ltd decided that the provision for bad debts should be raised to 7% of debtors. Apr: Giangello Ltd paid €4,800 rent by cheque for the year ended 30/04/2014. May: An interim dividend of 6 cent per share was declared and proposed to be paid in January 2014. Jun: A creditor who was owed €8,000 accepted a vehicle for which the book value was €9,000. The vehicle cost €12,000.


Jul: Giangello Ltd made a payment of €1,980 to their creditor after having received a discount of 10%. Aug: A payment of €2,500 was received from a debtor whose debt had previously been written off and who now wishes to trade with Giangello Ltd again. This represented 80% of the original debt and the debtor is to pay the remainder off at his earliest convenience.


Sept: Goods previously bought on credit for €2,200 by Giangello Ltd were returned. Owing to a delay in returning the goods, a restocking charge of 10% of the invoice price was incurred.


Nov: Giangello Ltd received the balance of the previously written off debt as agreed in August. Dec: The buildings depreciate at the rate of 3% of value per annum as at 01/01/2013. Equipment and vehicles are expected to depreciate at the rate of 4% and 10% of value respectively per annum as at 31/12/2013.


You are required to: Record on a Tabular Statement the effect each of the above transactions had on the relevant asset and liability and ascertain total assets and liabilities on 31/12/2013. [100 Marks]


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