CHAPTER 9
Question 5 The financial position of Michelangelo Ltd on 01/01/2013 is shown in the following Balance Sheet:
Fixed Assets
Land and Buildings Equipment Goodwill
Current Assets Stock
Debtors (less 3% provision) Insurance Prepaid
less Creditors: Amounts falling due within one year Creditors Bank
Rates Due Net Current Assets
Financed By Capital & Reserves Authorised 800,000 Ordinary Shares @ €1 each Issued 725,000 Ordinary Shares @ €1 each Share Premium P & L Balance
Balance Sheet as at 01/01/2013 Cost €
750,000 98,000
848,000 65,325
26,675 2,000
39,500 6,450 750
Dep to date €
22,500 9,800
32,300 94,000 46,700
47,300 913,000
725,000 38,000
150,000 913,000
The following transactions took place during 2013: Jan: Michelangelo Ltd bought an adjoining business which included buildings of €50,000, debtors €15,000, equipment €27,000 and creditors €26,000. The purchase price was discharged by granting the seller 70,000 shares in Michelangelo Ltd at a premium of 25 cent per share.
Feb: Michelangelo Ltd received €3,000 from a debtor in full settlement of a €3,200 debt. Mar: Michelangelo Ltd revalued land and buildings at €1,200,000 on 01/03/2013. €50,000 was attributable to land.
Apr: Goods which were previously sold for €4,200 plus VAT 21% were returned to Michelangelo Ltd. Michelangelo Ltd issued a credit note and included an €82 restocking charge. The selling price of these goods was cost plus 20%.
May: An interim dividend of 5 cent per share was declared and proposed to be paid in January 2014. Jun: Michelangelo Ltd received a bank statement on 30th June showing a direct debit of €4,800 to cover insurance costs for the year ended 30/06/2013.
Jul: Michelangelo Ltd paid rates of €5,250 for the year ended 31/07/2014. Aug: Michelangelo Ltd decided that the provision for bad debts should be raised to 4% of debtors. Sept: Michelangelo Ltd made a payment of €1,080 to their creditor after receiving a discount of 10%. Oct: Equipment which cost €35,000 was traded in against new equipment costing €62,000. An allowance of €16,000 was made for the old equipment. Depreciation to date on the old equipment was €3,500.
Dec: The buildings depreciate at a rate of 3% per annum of value on 31/03/2013. The total depreciation charge on equipment for the year amounted to €12,500.
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 the total assets and liabilities on 31/12/2013.
9
Net €
727,500 88,200 50,000
865,700
Create a column for VAT.
131
TIP
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