Solved: XY Limited commenced trading on 1 February with

fully paid
XY Limited commenced trading on 1 February with fully paid

XY Limited commenced trading on 1 February with fully paid issued share capital of £500 000,
Fixed Assets of £275 000 and Cash at Bank of £225 000. By the end of April, the following
transactions had taken place: Purchases on credit from suppliers amounted to £572 500 of
which £525 000 was raw materials and £47 500 was for items classified as production
overhead.

2. Wages incurred for all staff were £675 000, represented by cash paid £500 000 and wage
deductions of £175 000 in respect of income tax etc.

3. Payments were made by cheque for the following overhead costs:

4. Issues of raw materials were £180 000 to Department A, £192 500 to Department B and £65
000 for production overhead items.

5 Wages incurred were analyzed to functions as follows:

6 Production overhead absorbed in the period by Department A was £110 000 and by
Department B £120 000.

7 The production facilities, when not in use, were patrolled by guards from a security firm and
£26 000 was owing for this service. £39 000 was also owed to a firm of management
consultants which advises on production procedures; invoices for these two services are to be
entered into the accounts.

8 The cost of finished goods completed was

Sales on credit were £870 000 and the cost of those sales was £700 000.

10 Depreciation of productive plant and equipment was £15 000.

11 Cash received from debtors totaled £520 000.

12 Payments to creditors were £150 000.

Reach out to freelance2040@yahoo.com for enquiry.

 You are required:

(a) To open the ledger accounts at the commencement of the trading period;

(b) Using integrated accounting, to record the transactions for the three months ended 30 April;

(c) To prepare, in vertical format, for presentation to management,

(i) A profit statement for the period;

(ii) The balance sheet at 30 April.

XY Limited commenced trading on 1 February with fully paid

ANSWER
https://solvedquest.com/xy-limited-commenced-trading-on-1-february-with-fully-paid/

Reach out to freelance2040@yahoo.com for enquiry.

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