UOWCHK Faculty of Business BUS10250 Financial Accounting 2020 – 21 Sem B Final Online Assignment 2 Instructions: 1) Answer all two questions 2) Time allowed: 1 hour 30 minutes 3) Type all the answers in the attached Word file – “Answer file template for Final Online Assignment 2”

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UOWCHK Faculty of Business BUS10250 Financial Accounting 2020 – 21 Sem B Final Online Assignment 2 Instructions: 1) Answer all two questions 2) Time allowed: 1 hour 30 minutes 3) Type all the answers in the attached Word file – “Answer file template for Final Online Assignment 2”. Ten marks will be deducted for any other format. Format of file name for submission should be as follow: Student number - student full name – tutorial group (For example: 12345678 - Chan Tai Man - Txx) Submit your file to UOW Moodle – Final Online Assignment 2 4) Late submission is not allowed. One mark per minute will be deducted for late submission. 1 Attempt all TWO questions (Show all of your workings and calculation in each question) Question 1 The following is the trial balance of WOU Ltd. on 31 December 20x1. Trial balance as at 31 December 20x1 Debit Credit $’000 $’000 100,000 Ordinary shares $2.80 each 280 60,000 10% preference shares $2.0 each 120 Equipment, at cost 360 Machinery, at cost 140 Purchases and sales 655 1,097 Trade debtors and creditors 158 64 Accumulated depreciation of equipment 60 Accumulated depreciation of machinery 30 Salaries 144 Returns inwards and returns outwards 10 13 General expenses 78 Interim dividend on preference shares 6 Interim dividend on ordinary shares 20 Interest on loan notes, half year to 30 June 20x1 6 Insurance 10 Bad debts 4 Allowance for doubtful debts 5 Inventories at 1 January 20x1 56 Cash at bank 176 Retained profits 34 10% loan notes 20x1-20x6 ___ 120 1,823 1,823 Addition information: (1) Inventories at 31 December 20x1 were valued at $58,000. (2) At 31 December 20x1, salaries due amounted to $4,000 and insurance paid in advance amounted to $5,000. (3) A machinery with net book value of $50,000 (cost at $60,000 and accumulated depreciation at $10,000) was sold for $20,000 during the year. This transaction has not been recorded because the proceed of sale is still not yet received at year end. (4) Depreciation for the year 20x1 is to be provided on equipment at 20% on cost and on machinery at 20% on reducing balance basis. (5) The allowance for doubtful debts is to be revised to 4% of debtors at 31 December 20x1. The reported figure for debtors at 31 December 20x1 includes a debt of $8,000 now considered to be irrecoverable. (6) A directors’ remuneration amount to $20,000 is to be provided for the year ended 31 December 20x1. (7) A taxation of $20,000 is to be provided. Required to prepare: (a) an Income Statement for the year ended 31 December 20x1; and (b) a Statement of Financial Position as at 31 December 20x1. (Total 35 marks) 2 Question 2 Selected data for two similar companies in the garment industry are as follows. G2 BOB Annual sales Cost of goods sold Salary Other expenses 1,000,000 300,000 150,000 250000 1,500,000 600,000 200,000 175,000 Cash Debtors Prepayments Stocks Equipment (net) 85,000 115,000 22,000 450,000 485,000 250,000 177,000 35,000 460,000 627,000 Total current liabilities Long-term liabilities Capital and retained earnings 250,000 400,000 507,000 320,000 500,000 729,000 Required: (a) Calculate each company’s net profit ratio, current ratio, quick ratio, stock turnover ratio, and debt ratio. (10 marks) (b) Which of the two companies, as judged by the preceding information, would you consider as being in a better financial position and why? (5 marks) (Total 15 marks) THE END 3 UOW College Hong Kong FACULTY OF BUSINESS 2020 – 21 Sem. B Final Online Assignment 2 Course name: Financial Accounting Course Code: BUS 10250 Student Number: ___________________________ Student Full Name: _________________________ Tutorial Group: __________________________ 1 Answer to Question 1 WOU Limited Income Statement for the year end______________ $’000 Sales Less: Cost of sales Gross Profit Less: Expenses Net profit before taxation Less: taxation Net profit after taxation 2 $’000 WOY Limited Statement of Financial Position as at______________ $’000 $’000 Non Current Assets Total non current assets Current Assets Total current assets Total Assets Equity and Liabilities Non current liabilities Current Liabilities Total Equity and Liabilities 3 $’000 Answer to Question 2 A) Show clearly your workings and answers: G2 BOB i. Net profit margin ii. Current ratio iii. Quick ratio iv. Stock turnover ratio v. Debt ratio B) Comment : 4