UNIVERSITY OF TECHNICAL EDUCATION BTEC HND IN BUSINESS (MANAGEMENT)

ASSIGNMENT COVER SHEET

NAME OF STUDENT REGISTRATION NO. UNIT TITLE ASSIGNMENT TITLE ASSIGNMENT NO NAME OF ASSESSOR SUBMISSION DEADLINE

Unit 10: Financial Reporting Preparation of Financial Statements 1 of 2 12pm - 29 June 2012

I, __________________________ hereby confirm that this assignment is my own work and not copied or plagiarized from any source. I have referenced the sources from which information is obtained by me for this assignment.

________________________________ Signature

_________________________ Date

----------------------------------------------------------------------------------------------------------------

FOR OFFICIAL USE

Assignment Received By: Date:

FR Assignment 1 NQF April 2012 CC

Unit Outcomes
Outcome Evidence for the criteria Feedback Assessors decision
First Re-

Internal Verification

Prepare financial statements from complete or incomplete records (2)

Prepare financial statements for a variety of businesses from a trial balance, making appropriate adjustments

Prepare financial statements from incomplete records Prepare a consolidated balance sheet and profit and loss account for a simple group of companies

Present financial information in accepted formats for publication (3)

Explain how the information needs of different user groups vary

Prepare financial statements in a form suitable for publication by a sole trader, partnership and limited company M1 D1 M2 D2

Merit grades awarded Distinction grades awarded

M3 D3

FR Assignment 1 NQF April 2012 CC

Outcome

Evidence for the criteria

Feedback

Assessors decision

Internal Verification

Comments by Assessor - Common Skills

A B C D E F G

Assignment
( ) Well-structured; Reference is done properly / should be done (if any) Overall, youve Areas for improvement:

ASSESSOR SIGNATURE NAME:.........................................................................................

DATE

(Oral feedback was also provided) STUDENT SIGNATURE NAME :.................................................................................

FOR INTERNAL USE ONLY VERIFIED YES NO DATE NAME : ........................................................................... : ...........................................................................

DATE

VERIFIED BY : ...........................................................................

COMMON SKILLS & COMPETENCIES ASSESSED (indicated by X)

FR Assignment 1 NQF April 2012 CC

A. MANAGING & DEVELOPING SELF

1. Managing own roles & responsibilities 2. Manage own time in achieving objectives 3. Undertakes personal and career development 4. Transfer skills gained to new/changing situations & contexts

D. MANAGING TASKS & SOLVING PROBLEMS

12. Use information sources

13. Deal with a combination of routine & non-routine tasks 14. Identify & solve routine & non-routine problems

B. WORKING WITH & RELATING TO OTHERS

5. Treat others beliefs and opinions with respect 6. Relate & interact effectively with individuals & groups 7. Work effectively as a team member

E. APPLYING NUMERACY
15. Applying numerical skills and techniques

F. APPLYING TECHNOLOGY
16. Use a range of technological equipment and systems

C. COMMUNICATING
8. Receive and respond to a variety of information 9. Present information in a variety of visual forms 10. Communicate in writing 11. Participate in oral & no-verbal communication

X X

G. APPLYING DESIGN AND CREATIVITY

17. Applying a range of skills and techniques to develop a variety of ideas in the creation of new / modified products, services or situations 18. Use a range of thought processes

SCENARIO Recently you jointed AccountServe Firm as an Assistant Accountant, specialises in meeting basic to complex accounting and accounting-related requirements of businesses. Its scope ranges from value-added book-keeping to innovative services to their clients. One of your firm client approaches to seek assistance on compilation of full set accounts in order to apply bank facilities and also submit to his annual report to income tax department. Your client does not know standard accounting systems, methods and procedures to follow in order to maintain full set of accounts of his business. Now you are assigned to provide various services seeking by the client, they are: Explain how the information needs of different user groups vary (3 a)

A.

Preparation of Financial Statements

Stephen Chee, a sole trader selling advertising specialty products for velour and leatherette drawstring bags, eyeglass bags, jewellery bags & pen bags to hold various promotional products to increase customer perceived value. The following trial balance was extracted from the ledger of Stephen Chee, as at 31 May 2011 the end of his financial year. Stephen Chee Trial Balance as at 31 May 2011
Debit Property, at cost Equipment, at cost
FR Assignment 1 NQF April 2012 CC

Credit

120,000 80,000
4

Provisions for depreciation (as at 1 June 20X0) on property on equipment Purchases Sales Stock, as at 1 June 2010 Discounts allowed Discounts received Returns out Wages and salaries Bad debts Loan interest Other operating expenses Trade payables Trade receivables Cash in hand Bank Drawings Allowance for receivables 17% long term loan Capital, as at 1 June 2010 _______ 667,800 38,000 300 1,300 24,000 500 30,000 121,300 667,800 58,800 4,600 5,100 17,700 36,000 50,000 18,000 4,800 15,000 250,000 402,200 20,000 38,000

The following additional information as at 31 May 2011 is available. (a) Inventory as at the close of business has been valued at cost at 42,000. (b) Wages and salaries need to be accrued by 800. (c) Other operating expenses are prepaid by 300. (d) The allowance for receivables is to be adjusted so that it is 2% of trade receivables. (e) Depreciation for the year ended 31 May 2011 has still to be provided for as follows. Property: 1.5% per annum using the straight line method; and Equipment: 25% per annum using the reducing balance method.

You are required to:

FR Assignment 1 NQF April 2012 CC

Prepare financial statements for a variety of business from a trial balance, making appropriate adjustments (2 a, 3 b)

(Hints: Prepare Stephen Chee's income statement for the year ended 31 May 2011 and his statement of financial position as at that date. Note: show workings clearly)

B.

Incomplete Records

Stephen Chee has some other business too but he approached your accounting firm seeking an advice to prepare an appropriate set of accounts for his business. The following information has been extracted from the business records. From the files, you pick up his records and it reading as below based on 31 March 2011:
1.4.2010 Creditors Expenses outstanding Fixed assets (includes machinery) Stock in hand Cash in hand Cash at bank Sundry debtors Details of the years transactions are as follows: Cash and discount credited to debtors Returns from debtors Bad debts Sales (Both cash and credit) Discount allowed by creditors Returns to creditors Capital introduced by cheque Collection from debtors (Deposited into bank after receiving cash) Cash purchases Expenses paid by cash Drawings by cheque Machinery acquired by cheque Cash deposited into bank Cash withdrawn from bank Cash sales Payment to creditors by cheque 1,280,000 29,000 8,400 1,436,200 14,000 8,000 170,000 1,250,000 20,600 191,400 8,600 63,600 100,000 184,800 92,000 1,205,400 315,400 12,000 232,200 160,800 59,200 80,000 330,600 31.3.2011 248,000 6,600 240,800 222,400 24,000 137,600 ?

FR Assignment 1 NQF April 2012 CC

Note: Stephen Chee has not sold any Fixed Asset during the year.

You are required to: Prepare financial statements from incomplete records. Prepare financial statements in a form suitable for publication by a sole trader (2 b, 3b)
(Hints: From the above given information by Stephen Chee, prepare trading and profit and loss account for the year ended 31.3.2011. Also draft his Balance Sheet as at 31.3.2011)

C.

Financial Statement Publication by a Partnership Firm

Brown and Eve are partners sharing Profits and Losses in the ratio of 3:2. On 30th September, 2010 they admit Stephen Chee as a partner, and the new profit ratio is 2:2:1. Stephen brought in Fixtures 3,000 and cash 10,000, the goodwill being Brown and Eve 20,000 and Stephen 10,000 but neither figure is to be brought into the books. On 31st March, 2011, the partnership is dissolved, Brown retiring and the other two partners forming a company called ES Limited with equal capitals, taking over all remaining assets and liabilities, goodwill being agreed at 40,000 and brought into books of the company. Brown agrees to take over the business car at 3,700: Plant was sold for 3,000 being in excess of requirements. The profit of the two preceding years were 17,200 and 19,000 respectively and it was agreed that for the half year ended 30th September, 2010 the net profit was to be taken as equal to the average of the two preceding years and the current year. No entry has been made when Stephen Chee entered, except cash. No new book being opened by ES Company Ltd., Brown agreed to have 50,000 as loan to the company, secured by 12% Debentures. The following is the Trial Balance as on 31st March, 2011.
Capital Accounts: Brown Eve Stephen Chee Drawing Accounts: Brown Eve Stephen Chee Debtors & Creditors Plant (Book value of plant sold 4,000)
FR Assignment 1 NQF April 2012 CC

35,000 20,000 10,000 6,000 5,000 2,800 31,000 23,000

7

12,000

Fixtures Motor Car Stock on 31st March, 2011 Bank P & L Account for the year

7,000 2,700 13,000 16,300 29,800 106,800 106,800

You are required to: Prepare financial statements in a form suitable for publication by a partnership (2 a, 3 b)

(Hints: Prepare Goodwill Adjustment Account; Capital Accounts of Partners; Profit and Loss Appropriation Account; Balance Sheet of ES Ltd. as on 31st March, 2011)

D.

Consolidation of Accounts

On 1 October 2010 ES Ltd purchased 75% of the equity shares in Sentosa. The acquisition was through a share exchange of two shares in ES for every three shares in Sentosa. The stock market price of ESs shares at 1 October 2010 was 4 per share. The summarised statements of comprehensive income for the two companies for the year ended 31 March 2011 are:
ES Ltd 000 Revenue Cost of sales Gross profit Distribution costs Administrative expenses Finance costs Profit before tax Income tax expense Profit for the year Other comprehensive income
FR Assignment 1 NQF April 2012 CC 8

Sentosa 000 240,000 (110,000) 130,000 (12,000) (23,000) (1,200) 93,800 (27,800) 66,000

450,000 (260,000 ) 190,000 (23,600) (27,000) (1,500) 137,900 (48,000) 89,900

Gain on revaluation of land (note (i)) Loss on fair value of equity financial asset investment Total comprehensive income

2,500 (700) 1,800 91,700

1,000 (400) 600 66,600

The following information for the equity of the companies at 1 April 2010 (i.e. before the share exchange took place) is available: 000 000 Equity shares of 1 each 250,000 160,000 Share premium 100,000 Nil Revaluation reserve (land) 8,400 Nil Other equity reserve (re equity financial asset investment) 3,200 2,200 Retained earnings 90,000 125,000 The following information is relevant: i. ESs policy is to revalue the groups land to market value at the end of each accounting period. Prior to its acquisition Sentosas land had been valued at historical cost. During the post-acquisition period Sentosas land had increased in value over its value at the date of acquisition by 1 million. Sentosa has recognised the revaluation within its own financial statements.
ii.

Immediately after the acquisition of Sentosa on 1 October 2010, ES transferred an item of plant with a carrying amount of 4 million to Sentosa at an agreed value of 5 million. At this date the plant had a remaining life of two and half years. ES had included the profit on this transfer as a reduction in its depreciation costs. All depreciation is charged to cost of sales. After the acquisition Sentosa sold goods to ES for 40 million. These goods had cost Sentosa 30 million. 12 million of the goods sold remained in ESs closing inventory. ESs policy is to value the non-controlling interest of Sentosa at the date of acquisition at its fair value which the directors determined to be 100 million. The goodwill of Sentosa has not suffered any impairment. All items in the above statements of comprehensive income are deemed to accrue evenly over the year unless otherwise indicated.

iii.

iv.

v. vi.

You are required to: Prepare a consolidated balance sheet and profit and loss account for ES Ltd (2 c, 3 b)

FR Assignment 1 NQF April 2012 CC

(Hints: Prepare the consolidated statement of comprehensive income of ES for the year ended 31 March 2011; Prepare the equity section (including the non-controlling interest) of the consolidated statement of financial position of ES as at 31 March 2011. Note: you are NOT required to calculate consolidated goodwill or produce the statement of changes in equity.)

FR Assignment 1 NQF April 2012 CC

10

GRADING Pass is achieved by meeting all the requirements defined in the assessment criteria. (Refer page 2 of the assignment brief) Merit Identify and apply strategies to find appropriate solutions. (M1)

Characteristics / Possible Evidence relevant theories and techniques have been applied to prepare financial statement from incomplete records for sole trader and partnership firm. Select and apply appropriate techniques. (M2)

Characteristics / Possible Evidence Apply range of methods and techniques to prepare financial statements in a form suitable for publication to various internal and external users. Present and communicate appropriate findings (M3)

Characteristics / Possible Evidence The work is presented in a professionally-written report with appropriate structure and timely submission of work. Distinction Use critical reflection to evaluate own work and justify valid conclusions (D1) Characteristics / Possible Evidence the validity of results judged in the preparation of the profit and loss statement and balance sheet and presented in accepted format. Take responsibility for managing and organising activities (D2)

Characteristics / Possible Evidence evidence of independence and also importance of interdependence recognized to prepare financial statements for publication by a limited company as well as the information needs of different user groups. Common Skills Grading
To achieve a Pass grade a student must, show evidence of commitment and responsibility taken related to task, some responses to a variety of information, attempt to use vary methods of presentation and evidence of different information sources used as well as correctly identified the skills needed for numerical application, but inappropriate techniques used on occasions. To achieve a Merit grade a student must, show evidence of high level commitment and total acceptance of responsibility, clear and appropriate responses using accurate methods of presentation and a clear variety of information sources used as well as select and use appropriate skills and techniques. Understand the results obtained. To achieve a Distinction grade a student must, show evidence of outstanding level of commitment and eager to accept increased levels of responsibility; clear understanding and outstanding quality of presentation and respond to a variety of information, wide and appropriate information sources used as well as apply numerical skills and techniques to draw valid conclusions.

FR Assignment 1 NQF April 2012 CC

11

PRESENTATION 1. The assignment should have a cover page that includes the assignment title, assignment number, course title, module title, Lecturer/tutor name and students name. Attach all the pages of assignment brief/cover sheet with your report and leave them blank for official use. 2. Ensure that authenticity declaration has been signed. 3. This is an individual assignment. 4. Content sheet with a list of all headings and page numbers. 5. A fully typed up professionally presented report document. Use 12 point Arial or Times New Roman script.
6.

Your assignment should be word-processed and should not exceed 2,500 words in length.

7. Use the Harvard referencing system. 8. Exhibits/appendices are outside this limit. 9. The assignment should be not contain a bibliography but should contain a list of any references used in the assignment. NOTES TO STUDENTS FOR SUMMISSION

Check carefully the submission date and the instructions given with the assignment. Late assignments will not be accepted. Ensure that you give yourself enough time to complete the assignment by the due date. Do not leave things such as printing to the last minute excuses of this nature will not be accepted for failure to hand-in the work on time. You must take responsibility for managing your own time effectively. If you are unable to hand in your assignment on time and have valid reasons such as illness, you may apply (in writing) for an extension. Failure to achieve a PASS grade will results in a REFERRAL grade being given. Take great care that if you use other peoples work or ideas in your assignment, you properly reference them in your text and any bibliography. NOTE: If you are caught plagiarizing, the University policies and procedures will apply.

12

13