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