CHAPTER 9
Question 7 The financial position of Ranuccio Ltd on 01/01/2013 is shown in the following Balance Sheet:
Fixed Assets
Land & Buildings Equipment
Furniture and Fittings
Current Assets Stock
Debtors (less 2% provision) Advertising Prepaid
less Creditors: Amounts falling due within one year Creditors
Bank Overdraft Expenses Due
Net Current Assets
Financed By Capital & Reserves Authorised 500,000 Ordinary Shares @ €1 each Issued 350,000 Ordinary Shares @ €1 each Share Premium P & L Balance
Balance Sheet as at 01/01/2013 Cost €
450,000 55,000 45,000
550,000 24,710
24,500 1,250
26,760 3,598 1,000
Dep to date €
18,000 11,000 4,500
33,500 50,460 31,358
19,102 535,602
350,000 20,000
165,602 535,602
The following transactions took place during 2013: Jan: Ranuccio Ltd bought an adjoining business on 01/01/2013. This business included buildings of €100,000, debtors €16,000, equipment €27,000 and creditors €22,000. The purchase price was discharged by granting the seller 120,000 shares at a premium of 20 cent per share.
Feb: Ranuccio Ltd decided that the provision for bad debts should be raised to 3% of debtors. Mar: A payment of €1,200 was received from a debtor whose debt had previously been written off. The debtor now wishes to trade. This payment represents 60% of the debt and the remainder of the debt is to be paid in January 2014. On the same day, Ranuccio Ltd sold goods valued at €500 on credit to this debtor. These goods have a mark up of 25%.
Apr: Ranuccio accepted €1,200 in full settlement from a debtor who owed €1,300. May: Ranuccio Ltd received a bank statement on 31st May showing a direct debit of €3,600 to cover advertising for the year ended 31/05/2014 and a credit transfer of €5,000 received to cover 10 months rent in advance from 1st May.
Jun: Received first and final payment of €650 from a debtor who was declared bankrupt. This amounted to 25 cent for every €1.
Jul: Goods previously bought for €1,650 were returned. Owing to a delay in returning the goods, a restocking charge of 10% of invoice price was incurred.
Aug: Goods previously sold for €2,400 were returned. The selling price of these goods was cost plus 20%. Due to a delay in returning the goods, a credit note was issued showing a deduction of 5% of invoice price as a restocking charge.
Sept: Ranuccio Ltd received €40,000 from the issue of remaining shares and in turn an interim dividend of 5 cent per share was declared and proposed to be paid in January 2014.
Oct: Equipment which cost €25,000 was traded in against new equipment costing €50,000. An allowance of €8,000 was made for the old equipment. Depreciation to date on the old equipment was €2,500.
Dec: The buildings depreciate at a rate of 3% of book value as on 31/12/2013. The depreciation rate for the year on equipment and fixtures and fittings is to account for 10% of book value as on 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.
133 9
Net €
432,000 44,000 40,500
516,500
Bad debt recovered is a gain in the P & L Account.
TIP
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