PART A 

Jill commences trading 1st September 2017 preparing accounts to 30th September 2018. Her transactions in first month were as follows:

1/09 Started business with £3,000 in the Bank and £800 cash

2/09 Purchased goods £900 on credit from Ron

3/09 Bought Computer £800 paying by cheque

5/09 Sold goods for £500 and received the money in Bank

6/09 Bought goods on cash £400 from C Jones

10/09 Paid rent by cheque £300

12/09 Bought stationery £100 paying in cash

18/09 Goods returned to Ron £100

21/09 Let off part of the premises receiving rent by cheque £100

23/09 Sold goods on credit to Bill £400

23/09 Sold goods of £1500 and received cash

24/09 Bought a car for business use paying by cheque £900

30/09 Paid the month’s wages by cash £400

30/09 Jill took cash for herself £550

 

Required: 

 

a) Write double entry record the transactions in T-accounts

b) Balance the accounts and bring down an opening balance

c) Extract a Trial balance as at 30th September 2018

d) Prepare an Income Statement for the period ended 30th September 2018

**Assuming closing inventory of £ 300.00

e) Prepare a Statement of Financial Position as at 30th September 2018

 

PART B

i.  With the use of data from Part A (d and e) of Financial Statements, calculate the following ratios for Jill

Competitors Average 

  • Net profit margin                                                                             30%
  • Gross profit margin                                                                         58%
  • Current ratio                                                                                   70x
  • Acid test ratio                                                                                 50x
  • Accounts receivable collection period                                            57 days
  • Accounts payable payment period                                                   85 days

You MUST use the figures from the Income Statement and Statement of Financial Position calculated in Part A (d and e) and also clearly state formula applied. 

ii.  Assuming Jill’s competitor’s ratio averages are as stated above: Analyse her performance with reference to each of the ratios calculated in comparison to those of her competitor. (Maximum of 200 words).

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