Unit Code, Number and Title Unit 10: Financial Accounting

Semester and Academic Year Semester 1, 2020 – 2021

Unit Assessor(s) Ms.Nguyen Thi Thanh Mai and Dr.Le Thi Thu Ha

Assignment Number and Title A2: Financial Accounting (2 of 2)

Issue Date

Submission Date To be announced by office

IV Name Dr. Le Thi Thu Ha (IV) and Dr. Doti Chee (Lead IV)

IV Date

Submission Format

The submission is in the form of an individual written report. This should be written in a concise, formal
business style using 1.5 spacing and font size 12. You are required to make use of headings, paragraphs
and subsections as appropriate, and all work must be supported with research and referenced using the
Harvard referencing system. Please also provide a bibliography using the Harvard referencing system.
The submission is in the form of a portfolio of prepared financial accounts and written reflective
summaries that examine the differences between the financial accounts and the control reconciliations
prepared. These are to be produced for a range of different businesses e.g. sole traders, partnerships and
limited companies.

Unit Learning Outcomes

LO2 Prepare final accounts for sole traders, partnerships or limited companies in accordance with appropriate
principles, conventions and standards

LO3 Perform bank reconciliations to ensure company and bank records are correct

LO4 Reconcile control accounts and shift recorded transactions from the suspense accounts to the right accounts
Assignment Brief and Guidance

Scenario and activity

You are a junior accountant in a small accountancy firm and you have been asked to prepare and produce a range of
final accounts for a number of different businesses. You have been provided with a range of individual companies
financial details from which to create a general ledger, a trial balance, income statement and balance sheet. You will
need to make adjustments as required and once the general ledger is completed you will also have to check the bank
statements provided to make any bank reconciliations. Once completed you will present to your line manager a
portfolio of final accounts that includes a reflective summary that compares the different types of accounts produced.

You have also been given a number of company ledgers where errors have been detected and control accounts to
check over and reconcile, these will also be included in your portfolio. In addition to this a summary explanation of
the control reconciliation process is to be presented to identify how and why you made reconciliations for each one.

Scenario 1:
Ngoi Sao plc's trial balance as at 31 October 2020 is shown below.
£'000 £'000
Ordinary share capital (£1 shares)   15,000
Share premium 3,750
Trade payables   2,099
Land and buildings – cost   26,364
Land and buildings – accumulated depreciation at 1 November 2020   
5,250
Plant and equipment – cost   9,375
Plant and equipment – accumulated depreciation at 1 November 2020   
5,550
Trade receivables   4,077
Accruals at 31 October 2020   327
8% bank loan repayable in 10 years   11,250
Cash at bank   7,331
Retained earnings   7,351
Interest paid   450
Gross profit   11,728
Distribution costs   4,082
Administrative expenses   3,592
Closing inventories 5,909
Dividends paid   1,125    
62,305 62,305
Further information
(1) Depreciation is to be provided for the year as follows:
Buildings 2% per annum Straight line basis
Plant and equipment 20% per annum Reducing balance basis
Depreciation is apportioned as follows:
%
Distribution costs 60
Administrative expenses 40
Land, which is non-depreciable, is included in the trial balance at a cost of £11,364,000.
(2) The company began a series of television adverts for the company's range of products on 1 October 2020 at a
cost of £33,000. The adverts were to run for three months and were to be paid for in full at the end of December
2020. Advertising expenses are to be included in distribution costs.

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(3) Interest on the bank loan for the last six months of the year has not been included in the accounts in the trial
balance.
(4) The corporation tax charge for the year has been calculated as £728,000.
(5) During the year Ngoi Sao plc rented some additional warehouse space. Ngoi Sao plc have paid rent until
31 December 2020. The annual rent is £48,000 and is charged to distribution costs.
(6) Ngoi Sao plc made a 1 for 5 bonus share issue during the year from share premium. The bonus issue has not yet
been accounted for.
(7) Volan plc is a customer of Ngoi Sao plc with a debt of £35,000. On 29 October 2020, Ngoi Sao plc received a
letter from the liquidator of Volan plc to advise that the debt would not be paid. No accounting has taken place
in respect of irrecoverable debts. Irrecoverable debts should be charged to administration costs.
(8) An item of plant and equipment was damaged in a flood on 30 October 2020. At 31 October 2020 the carrying
amount of the item (after deducting depreciation for the year) was £55,000, the value in use was assessed as
£36,000 and the far value less disposal costs was £40,000. Impairment is charged to administration costs.
(9) A cheque sent to a supplier for £69,000 has been incorrectly recorded as £96,000.
Requirement
Prepare the statement of profit or loss for Ngoi Sao plc for the year ended 31 October 2020 and the statement of
financial position at that date.

Scenario 2:
Requirement: Make bank reconciliation, correction of errors and adjusting entries for Pink and recalculate the net
profit/net loss of Pink for the period.
Pink's business bank statement showed an overdrawn balance of £5,800 on 31 May 20X7. When this was reconciled to the cash
at bank account, the following differences were noted:

 £
(1) Bank charges not recorded in cash at bank account  30
(2) Standing order for local property tax not entered in cash at bank account  300
(3) Outstanding lodgements  1,300
(4) Credited in error to Pink's account by the bank  100

Pink’s draft accounts show a net loss of £22,000 for the year. On additional investigation you discover the following.
(5) £2,000 of repairs had been incorrectly recorded as a purchase of machinery on the last day of the year.
(6) Cash of £500, received in respect of a debt written off many years ago, had been credited to receivables.
(7) Closing inventory includes items costing £1,000 which were sold and delivered to the customer on the year
end date.
(8) Goods invoiced at £25 had been returned by Pink to the supplier for a full refund. The only accounting
entry made for the return was to debit the purchases account and credit the suspense account with £52.

Scenario 3: Internet excercise

- Visit the Vinamilk homepage. Access the most recent annual report (English version). Locate the titled
“Revenue” in the Income Statement for the year ended 31 st December 2019. Please review the
explanation of the company’s policies related to Revenue Recognition and indicate which items the
revenue includes? (show details of figures, accounting policy)
- Explain how the income statement and the statement of changes in equity relate to the balance sheet?
What are the meanings of these statements? Apply for financial statement of Vinamilk.

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 Learning Outcomes and Assessment Criteria

Pass Merit Distinction

LO2 Prepare final accounts for sole-traders, partnerships and

limited companies in accordance with appropriate principles,
conventions and standards
D2 Compare the essential
P3 Prepare final accounts M2 Make adjustments to features of each financial
from given trial balance. balances of sum accounts account statement to
for example, accruals, analyse the differences
P4 Produce final accounts depreciation and between them in terms
for a range of examples prepayments before purpose, structure and content
that include sole-traders, preparing the final
partnerships or limited accounts.
companies.
LO3 Perform bank reconciliations to ensure company and bank D3 Prepare accurate bank
records are correct reconciliations that apply
appropriate tools and
P5 Apply the bank M3 Apply the reconciliation techniques to check general
reconciliation process to process demonstrating the use accounts and balance sheets.
prepare a number of bank of deposit in transit,
reconciliations. outstanding checks and Not
Sufficient Funds (NSF) check.

LO4 Reconcile control accounts and shift recorded transactions D4 Produce accurate accounts
from the suspense accounts to the right accounts that have been reconciled
applying the appropriate
P6 Explain the process taken to M4 Demonstrate methods.
reconcile control accounts and understanding of the different
clear suspense accounts using types of accounts and how and
given account examples. why they are reconciled.

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