AC4052QA Financial Accounting – APR22INTAKE

Assessment Component: Coursework

Weighting: This Coursework contributes 100% to the Overall Module Mark

Word count (1500 words Max):  Section A 1200 words(max) and Section B 300 words(max)

Submission: Students to submit to Turnitin via module Weblearn

INSTRUCTIONS:

This coursework has two sections. Section A has ONE question and Section B has TWO questions.

- Answer all question 
- Show all working out.
- It is mandatory to use the template provided
- You must show all working out. You may use Excel, but you must show the formula for the excel calculations

SECTION A

QEUESTION 1

This assignment requires each student to work on the published financial statements of ASOS PLC for two years from 2020 to 2021.

You are required:

Write a brief report on the performance of ASOS over the financial periods 2020 to 2021.You should use the financial statements provided below to calculate the required accounting ratios shown below and use any other information relevant to ASOS PLC for your comments. Information can be accessed from the annual report and accounts and any other source of evidence that you believe helps to explain the company’s performance and position. (30Marks)

Calculate ratios from ASOS 2020 and 2021 annual reports and comment on the comparative performance

ASOS year end 31 August 2020-21   20212020 Income statement£m£m Sales revenue3,9113,264 Cost of sales2,1341,716 Gross profit1,7761,547 Operating profit (use for PBIT)190151 Interest paid1310      20212020 Balance sheet£m£m Non-current assets1,325970 Current assets1,5601,020 Inventories807532 Trade and other receivables5860 Current assets less inventories753487 Current liabilities998818 Trade and other payables956770 Non-current liabilities1,034810 Total equity1,034810 Capital employed2,0681,621 

SOLUTION: A1             2021 2020 Ratios: Profitability      Return on capital employed      Net profit margin      Asset turnover      Comments                         Working capital:   2021  2020 Inventory days      Receivable days      Payable days            Comments                             Liquidity:   2021  2020  Current ratio      Acid test      Comments                        Long- term financing:   2021  2020  Gearing            Comments                             

                                                          Marking criteria for section A:

 Explanatory comments on the assessment criteria  Maximum marks for each section  Recommended marks Assessment criteria: (Guidelines – suggested –under FOUR MAIN HEADINGS) Correct answersCalculations(18 marks): 2marks each -   1mark for 2020, 1 mark for 2021Interpretation of ratios (comparative comments)  Relevance, clear demonstration of understanding and applied in context (9 Marks): 1marks for each specific ratioConclusion/ RecommendationsIdentifying the key points raised (3marks)  

SECTION B

Question B1 (58marks)

GIORGIO F PLC:  The following balances were extracted from the accounting records of Giorgio F PLC Trial Balance as of 31 March 2020    DRCR Purchases372,000  Trade payables 80,000 Salaries and wages54,000  Directors' remuneration10,000  Audit fees3,000  Heat and light25,000  Inventory, 01 April 2019125,000  Debenture Interest10,000  Interim dividend paid120,000  Building at cost500,000  Building - accumulated depreciation 01 Apr 2019 50,000 Fixtures and fittings at cost100,000  Fixtures and fittings - accumulated depreciation, 01 Apr 2019 20,000 10% Debentures - 2023 90,000 Ordinary share capital (fully paid) 800,000 Trade receivables120,000  Bank267,000  Revenue     940,000 Share premium account 150,000 Retained earnings 145,000 Communications expenses20,000  General reserve 22,000 Long-term investments571,000                 2,297,000            2,297,000

The following additional information as of 31 March 2020 should be considered:  (i) Inventory was valued at £127,000   (ii) Audit fees of £500 were outstanding   (iii) The prepaid debenture interest is to be accounted for   (iv) Depreciation is to charge on buildings at 10% on the straight-line basis and on       fixtures and fittings at 15% on the reducing balance basis   (v) The directors decided to transfer £30,000 to the general reserve account    Required:    Prepare for Giorgio F PLC:   (a) the statement of profit or loss for the year ended 31 March 2020    (b) the statement of changes in equity for the year ended 31 March 2020    (c) the statement of financial position for the year ended 31 March 2020   

SOLUTION: B1

- (22marks)

GIORGIO F PLCSTATEMENT OF PROFIT OR LOSS ACCOUNT FOR THE YEAR ENDED 31 MARCH 2020 ££Revenue Cost of Sales(W1) Gross Profit Operating expenses(W2) Profit from operations Finance costs Profit for the year 

WORKINGS  ££ (W1)COST OF SALES   Opening inventory   Purchases (+)   Closing inventory (-)         (W2)OPERATING EXPENSES   Heat and light   Audit fee   Communication expenses   Salaries & wages   Directors' remuneration   Provision for depreciation:       Buildings       Fixtures &Fitting     

b. (14marks)

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED31 MARCH 2020 Ordinary share capitalShare premium Retained earnings General reservesTotal      Bal as of 01 April 2019     Profit for the year     Dividends paid     Transfer to general reserves     Total     

C. (22marks)

GORGIO F LIMITEDSTATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2020 £ £ £Non-current assets   Property, Plant & Machinery (W3)   Long-term investments       Total   Current assets  Prepaid Debenture Interest   Inventory   Trade Receivables   Bank          Total assets     Equity and Liabilities  Ordinary Share Capital  Share premium  Retained Earnings  General Reserves     Non-current liabilities  10% Debentures - 2020     Current liabilities  Trade Payables  Accrued audit fees      Equity and total liabilities  

(W3)Non-current assets    Property, Plant & Machinery      Cost Accumulated DepreciationNBV  £££ Buildings    Fixtures & Fittings    Total   

Question B2 (12marks)

Grazyna Ltd, a new business, starts trading in sports shoes on 1st January 2021 and expects to make the following transactions for the 6 months ending 30th June2021:

(i)          Sales are expected to be 300 units (sports shoes) per month for the 4months from January to April then 400        units per month from May to June.

(ii)         The selling price will be £50 per unit.

(iii)        All sales will be cash sales with cash received in the same month the sale takes place.

(iv)        Purchases of inventory (sports shoes) will take place on month after the sales take place. (i.e., purchase takes             place in January will be paid in February). Each unit of inventory will cost £30.

(v)          Wages are expected to be £1000 per month and will be paid in the month in which they are incurred.

(vi)        Rent will be £2000 per month to be paid quarterly in advance (i.e., the rent payment for January, February and March 2021 will be made on 1st January 2021).

(vii)       General overheads are expected to cost £1000 per month and will be paid in the month in which they are         incurred.

Required

a)           Prepare a cash budget for the 6 months from January to June 2021. Show the cash receipts and cash payments              the business expects to have each month and the cash balance at the end of each month. (7marks)

b)           Prepare a profit budget for the 6 months ending 30th June 2021 (the month-by-month breakdown is not required only the total for the 6 months). (5marks)

              Tip: You will need to work out the value of total sales revenue and total purchases of inventory for the 6 months to arrive at gross profit.         There is no opening or closing inventory to worry about.

SOLUTION B2 (12marks)

- (7marks)

Grazyna Ltd Cash Budget for 6 Months to 30/6/21MonthJanuaryFeb.MarchAprilMayJuneTotal £££££££Sales       Purchases       Wages       Rent       Overheads       Monthly net cash flow       Balance @ beginning of the month       Balance @ the end of the month       

b.  (5marks)                               

Grazyna Ltd Profit Budget for 6 Months to 30/6/21 ££Sales  Less Cost of sales:  Inventory purchases  Gross Profit  Less expenses:  Rent  Wages  Overheads  Net profit  

Academic Integrity and Plagiarism                                         

Academic integrity requires honesty in your studies. You should not present another person’s sentences or ideas as your own work. You should clearly identify quotations through the use of quotation marks and references to the sources. Failure to adhere to these academic standards may lead to allegations of academic misconduct, which will be investigated by the Academic Integrity team at QA.

Academic misconduct covers a variety of practices, such as:

For full details of academic misconduct and how allegations are investigated, see the relevant section of the University’s academic regulations: https://student.londonmet.ac.uk/your-studies/student-administration/rules-and-regulations/academic-misconduct/.  
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