Accounting Assignment



Accounting Assignment

Question

Matt's Meats 2012 is an independent butchers shop which stocks the choicest meats from around the world, many of which are imported especially to meet specific local demand from different cultural groups that have settled in the area. Indeed, the owner, Matt, specifically forms a relationship with local groups, which he calls 'partners', so that he can discover and fulfil their 'favourite foods', the brand name he uses for the service that locates and sources such delicacies.

Matt has been getting ready for the Olympics. He has particularly seen an increase in demand for eastern European meats of the finest quality, from local eastern European communities.

During the year ended 31 January 2012 his bookkeeper has recorded his transactions, and extracted the following balances at the end of the financial year:

Matts Meats Trial Balance as at 31st January 2012

Dr Cr

Capital at 1 February 2011

£ 416,834

Personal drawings

£ 27,500

Business loan 8% repayable 2016

£ 150,000

Fuel (Electricity and gas) paid

£ 18,020

Insurance premiums paid

£ 13,130

Business rates

£ 24,040

Irrecoverable (bad) debts

£ 3,050

Vehicle expenses

£ 2,130

Sundry expenses

£ 46,320

Salary

£ 25,100

Loan interest paid (for first 6 months)

£ 6,000

Allowance for irrecoverable (bad) debts

£ 800

Bank and cash balances

£ 210

£ 8,430

Premises at cost

£ 420,000

Fixtures and Fittings at cost

£ 125,630

Depreciation of fixtures and fittings 1.2.11

£ 27,426

Delivery vehicle at cost

£ 9,500

Receivables & payables

£ 11,400

£ 22,430

Revenue

£ 938,500

Sales returns

£ 2,260

Purchases of speciality meats

£ 664,580

Purchase returns

£ 2,580

Inventory (stocks) at 1 February 2011

£ 75,430

Wages (treat as a cost)

£ 92,700

_ _______

_ _______

£ 1,567,000

£ 1,567,000

The following additional information should also be taken into account:

Inventory (stocks) at end was found by stock take to be: £ 55,300.

Vehicle expenses are £ 209 pre-paid.

Provide for depreciation (amortisation) on fixtures & fittings at 10% on cost.

Provide for depreciation on the new vehicle at 30% on the net book value.

The property is an investment property and is not depreciated (amortised).

Electricity and gas owing is £ 1,350.

The allowance for irrecoverable debts is to be changed to 5% of receivables.

Insurance is £ 2,600 prepaid.

Business rates are £ 5,382 pre-paid.

The accrued interest owing should be provided.

Required

Prepare an income statement for the year ended 31st January 2012 and a statement of financial position as at 31st January 2012, for Matt's Meats, using excel.(60 marks)

In order to prepare the income statement and a statement of financial position, all the additional information has to be taken into account and all relevant heads of accounts have to be sorted and updated as per the additional information. The additional information is updated with proper reasoning as below:

Inventory (stocks) at end was found by stock take to be: £ 55,300.

The ending stock will be used as an asset in the balance sheet and used for the purpose of calculating COGS (cost of goods sold).

Vehicle expenses are £ 209 pre-paid.

The vehicle expenses are pre-paid £ 209, which means the actual expense is £ 1,921 (£ 2,130 - £ 209). The amount £ 1,921 will be used in the income statement, while £ 209 will be posted in the balance sheet as a current asset.

Provide for depreciation (amortisation) on fixtures & fittings at 10% on ...