UNIVERSITY OF TECHNOLOGY JAMAICA

SCHOOL OF BUSINESS ADMINISTRATION

Module Name Introduction to Financial Accounting

Module Code ACC2001

Take Home Assignment Summer 2024

Instructions

This paper has 10 pages and 4 questions. It should be completed as a group assignment.
Each group should consist of 4 members
The completed assignment should be uploaded on Moodle by Friday July 26, 2024.

ACC2001 Summer 2024 Assignment Page 1 of 11

Question One
The Minty Alley is a manufacturer of herbal body wash. The firm has provided the
following details for 2022 :

DETAILS Dr Cr
Purchases of Indirect Material 230,000
Direct Expenses 30,000
Factory General Expenses 40,000
Opening Stock of Indirect Materials 20,000
Loan Interest Paid 40,000
Capital 850,000
Opening stock of Raw Material 70,000
Carriage In on Raw Material 6,500
Commission Income 40,000
Rent Income 75000
Purchases of Raw Material 640,000
Opening Stock of WIP 22,000
Opening Stock of Finished Goods 45,000
Wages 300,000
Insurance 50,000
Utilities 80,000
Property Plant and Equipment PPE 950,000
Motor Vehicle 800,000
Prov for Depn PPE 125,000
Prov for Depn Motor Vehicle 24,000
Provision for Unrealized Profit 12,000
Provision for Bad Debts 8,000
Debtors 65,000
Bank 240,000
Creditors 95,500
10% Loan 500,000
1,500,00
Sales 0
Return Inwards 6,000
Drawings 30,000
Cash 55,000
346950
0 3469500

The following additional information is also provided:

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 1. Closing stock
Raw material 65,000, Indirect Material 35,000. Work in Progress 21125, Finished
Goods 93,500

2. Wages owing by 60,000, insurance prepaid by 10,000

3. Depreciation is to be charges on the non current assets as follows

Property plant and equipment 5% on the reducing balance Motor vehicle 10% on the
straight line basis. All depreciation charges are to be applied equally in the factory and
the office

4. The provision for bad debts is to be adjusted to 10% of the debtors

5. The commission income is owing by 10,000 while the rent income is prepaid by
15,000

6. The goods produced are to be marked up by 10% in the factory before being
transferred as finished goods

7. The wages is to be applied 50% to the office, 30% indirectly to the factory, and 20%
directly in the factory

8. Apportion the insurance and the utilities cost 60% to the factory and the remainder
to the office

Required

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 1. Prepare the Manufacturing Account and Income Statement for the year ending
December 31, 2022; as well as the Statement of Financial Position as at December 31,
2022 ( 55 marks )

2. Explain the classification of closing stock as used in the manufacturing enterprise

(10 marks )

3. Given that the goods produced are to be marked up by a percentage rate before being
transferred as finished goods, briefly explain

a) the accounting treatment for the amount calculated based on the mark up (5 marks )

b) the accounting implications if the finished goods are not all sold off at the end of
the year ( 10 marks )

Question Two

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Sprat Morrison plc has provided the following data for the year 2022 :

DETAILS Dr Cr
Office Supplies 40,000
Wages and Salaries 210,000
Utilities 65,000
Insurance 80,000
Share Premium 40,000
General Reserves 120,000
Debenture Interest 40,000
Loan Interest 55,000
Retained Earning at January 1, 2022 60,000
Management Fees 80,000
Directors Fees 110,000
10% Preference Shares @ 2. 400,000
Ordinary Share Capital @ $0.50 800,000
10% Debenture 550,000
10% Loan 800,000
Property Plant and Equipment 1,800,000
Motor Vehicle 800,000
Prov for Depreciation PPE 210,000
Prov for Depreciation Motor Vehicle 68,000
Debtors 120,200
Creditors 155,500
Commission Income 80,000
Rent Income 120,000
Goodwill 400,000
Bank 65700
Cash 95500
Interim Ordinary Shares Premium 2000
Interim Preference Shares Dividends 10,000
Stock at December 31 . 2022 580,000
Sales Turnover 2,000,000
Cost of Sales 861,500
5,409,200 5,409,200

The following additional information was also available :

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 1. Wages is owing by $40,000 while insurance is prepaid by $25,000

2. The commission income is prepaid by $20,000 while the rent income of $30,000 is
owing

3. Provide for depreciation as follows : Property Plant and Equipment 10% on the
straight line; motor vehicle 5% on the reducing balance.

4. Transfer $40,000 for the profits to the general reserves

5. Corporation tax is estimated to be $50,000

6. The directors have approved the following : the settlement of the preference share
dividends; a new issue of 600,000 ordinary shares for which $480,000 was received
by cheque from the broker. No further ordinary shares dividends was declared.

7. The Expenses should be appropriated as follows

Expense Admin S & D

Office Supplies 50% 50%
Wages and Salaries 70% 30%
Utilities 80% 20%
Insurance 40% 60%
Management Fees 80% 20%
Directors Fees 50% 50%
Depreciation 60% 40%

8. Write off 25% of the goodwill

Required

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 1. Prepare the Statement of Profit and Loss and the Statement of Change in Equity for
the year ending December 31, 2022; as well as the Statement of Financial Position as
at December 31, 2022 ( 70 marks)

2. Explain five factors that may influence a company’s decision to pay dividends.
(10 marks )

3. Explain four non cash dividends options that a company may pursue ( 10 marks )

4. A company may leverage its financing by way of grants and subsidies. Briefly
explain (a) grants; and (b) subsidies. Give two appropriate examples for each term
(10 marks )

Question Three

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 Yendi Phillips is a former Miss Jamaica (World), Miss Jamaica (Universe), former host of
Digicel Rising Stars and brand ambassador for Toyota. She is also the owner of Odessey
a dietary meal replacement plan. The firm has provided the following data for 2022:

Condensed Income Statement Condensed Balance Sheet

Net Sales 1,600,500 Non Current Assets 2,400,000

Current Assets
Cost of Goods Sold Stock 74,500
220,00
Opening stock 53,000 Debtors 0
100,50
Add Net purchases 410,000 Bank 0
Less Closing stock (74,500) (388,500) Receivables 32,000 427,000
Gross Profit 1,212,000 Total Assets 2,827,000
Net Operating
Expenses (515,500)
Capital & Reserves
500,00
PBIT 696,500 Ordinary Shares @ $1.00 0
450,00
Less interest -40,000 10% Pref Shares @ $1 0
550,00
Profit before tax 656,500 Reserves 0
531,50
Less tax (200,000) Retained Profits 0 2,031,500
PAT 456,500
Non-Current Liability
Retained Earning b/d 300,000 10% Loan 400,000
Total Profit for the Year 756,500
(120,000
Less Transfer to Res ) Current Liabilities
250,00
Less Dividends Creditors 0
145,50
Ordinary (60,000) Accounts Payable 0 395,500
Total Equity &
Preference (45,000) (225,000) Liabilities 2,827,000
Retained Earning c/d 531,500

Market Price per

Share 3.75

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The following comparative ratios relate to

i. Yendi Phillips results in the preceding two years

ii. Jasia Williams a competitor in the dietary meal business
iii. The average performance of the dietary meal industry:

JASIA INDUSTRY YENDI

2020 2021 2022

Dividend Yield 2.45 % 2.75 %

Debtors Turnover 12.54 10.61

Current Ratio 0.85 :1 1.05 : 1

Net Profit Margin 22.47% 25.5%

Fixed Asset Turnover Period 264 days 311 days

Total Assets to Total Liabilities 5.84 : 1 4.12 : 1

Earnings Per Share 0.63 0.70

Gearing Ratio 28.13% 31.5%

ROCE 23.13 % 24.5%

Acid Test Ratio 0.63 : 1 0.75 :1

Required

a. Compute the corresponding ratios for Yendi Phillips for 2022 ( 10 marks )

b. Using appropriate ratios from the table above, comment on the performance of Yendi
Phillips in the areas of liquidity, solvency, profitability, asset management, and market
investment, by way of

i. A Trend Analysis ( 15 marks )

ACC2001 Summer 2024 Assignment Page 9 of 11
 ii. A Competitor Analysis ( 15 marks )

c. Discuss five non-financial factors that would be useful in the assessment of the
performance of Yendi Phillips? ( 10 marks )

Question Four
The Calder Estate is a agricultural consultancy firm. The following payroll data was
obtained for the month of September 2022

Sam Burke and Percy Williams are watchmen They work alternative 12 hour shifts. They
basic pay is $60,000 per month, with non taxable meal allowance of $20,000 per month and
protective clothing allowance of $10,000 per month.

Sydney Forbes is the Caretaker and Handiman. His basic pay is $45,000 per month He
receives protective clothing allowance of $20000 per month, and he also works 20 hours
over time at a rate of $1500 per hour.

Shearon Smith and Renae Seymour are Administrative Assistants. Their basic pay is
$165000. They also receives uniform allowance of $25,000 per month as well as $10,000
for material aid and supplies. In August Shearon worked 16 hours of overtime while Rena
worked 20 hours over tine. The overtime rate is $2000 per hour and is paid in September

Bramble Hayles and Sachin Wong are Business Development Officers. They each earn
basic pay of $85,000 per month plus travelling at a rate of $140 per kilometre. They are
also paid a commission on their previous months new business accounts at a rate of 5%.
During August Hayles travelled 180 kilometre and posted new business of $2,500,000
while Wong travelled 220 kilometre and recorded new business for $3,000,000.

Lineat Calder is the General Manager. Her annual basic pay is $9,000,000 She also earns
travelling of $30,000 per month as well as entertainment allowance of $20,000 per month
and housing allowance of $50,000 per month. She qualifies for a 20% duty concession if
she choses to acquire a motor car up to a ceiling of $12,000,000.

All employees participates in a monthly contribution as the following:

- Health insurance at a rate of 1 % of basic pay
- Union dues of $1,200
- Pension funds at a rate of 5% of basic pay
- Staff welfare fund at a rate of 1% of basic pay

Calder has a car loan arrangement and repays $120,000 per month.

Sydney Forbes occasionally washes and maintains the General Manager’s car as a private
arrangement and she hands him an envelop each month with an average of $10,000. Sam

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Percy and Syd purchase lunch and a rum on credit at Tamoyah’s Tavern. They each pay
$5,000 cash on their account every month All the employees except for Calder join a
partner in the community and throws one hand for $3,000 each month .

Required Draft the payroll for Calder Estate for September 2022. ( 40 marks )

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