Higher Nationals

Assignment Brief – BTEC (RQF)

Higher National Diploma in Business (Business Management)

Student Name/ ID Number Doan Thi Ngoc Nga (Annie) / KJ50500

Unit Number and Title Unit 10: Financial Accounting

Academic Year 2018 - 2019

Unit Assessor Ms. Kha Pham

Assignment Number and Title FA1: Financial Accounts (1 of 2)

Issue Date 07 November 2018

Submission Date 07 December 2018

IV Name

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 single 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 recommended word limit is 1,000 words, although you will not be penalised for
exceeding the total word limit.
Unit Learning Outcomes:

LO1 Record business transactions using double entry book-keeping, and be able to extract a trial balance.

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

Assignment Brief and Guidance:

You work for a small accountancy firm that provides accounting, taxation and auditing services. As a
Junior Accountant, you have been asked by regular clients to record business transactions using double
entry book-keeping and extract a trial balance; and prepare final accounts in accordance with appropriate
accounting standards. This assignment has three parts:

Part A:
Dr. Nghia Tran runs a veterinary shop. The account balances as of October 1 are given below. All are
normal balances.
Assets £ Revenue £
Cash 2,459 Professional fees 72,118
Accounts Receivable 18,120
Prepaid Insurance 980 Expenses
Automobile 20,650 Salary expense 14,380
Furniture and Equipment 5,963 Rent Expense 10,320
Liabilities Automobile Expense 859
Accounts Payable 1,590 Utilities Expense 1,213
Owner’s Equity Supplies Expense 840
N. Tran, Capital 42,076
N. Tran, Drawing 40,000

The following transactions occurred during October of this year.

a. Paid rent for October in cash, £1,290.
b. Paid £1,800 for a 12-month coverage of insurance starting from this month.
c. Bought medical equipment on credit from Pet Surgical Supply, £849, of which £200 was paid and
the remaining balance was due in 30 days.
d. Billed patients for services performed, £9,015.
e. Paid employee salaries, £1,797.
f. Received and paid gas and electric bill, £112.
g. Received cash from patient previously billed, £11,060.
h. Received bill for gasoline for car, used only in the professional practice, from Garza Fuel
Company, £116.
i. Paid creditors on account, £1,590.
j. Dr. Nghia Tran withdrew cash for personal use, £5,000.
Required:
1. Record October journal entries using double-entry bookkeeping rule.
2. Record T-accounts.
3. Prepare Trial Balance for Dr. Nghia Tran dated October 31.
Part B:

At ABC Co., Ltd, the accountant is preparing the financial statements for the year ending 31 October
2018 and requires your assistance. The following trial balance has been extracted from the general
ledger.

Account Dr C
r
£’000 £’000
Buildings at cost 740
Buildings accumulated depreciation, 1 November 2017 60
Plant at cost 220
Plant accumulated depreciation, 1 November 2017 110
Bank balance 70
Revenue 1,800
Net purchases 1,140
Inventory at 1 November 2017 160
Cash 20
Accounts payable 250
Accounts receivable 320
Administrative expenses 325
Provision for bad and doubtful debts at 1 November 2017 10
Retained earnings at 1 November 2017 130
Equity shares, £1 415
Share premium account 80
2,925 2,925

The following additional information is also available:

 The provision for bad and doubtful debts is to be increased to 5% of accounts receivable. The
provision for bad and doubtful debts is treated as an administrative expense.
 Plant is depreciated at 20% per annum using the reducing balance method and buildings are
depreciated at 5% per annum on their original cost. Depreciation is treated as a cost of sales
expense.
 Closing inventory has been counted and is valued at £75,000.
 An invoice of £15,000 for energy costs relating to the quarter ended 31 October 2018 was
received on 2 November 2018. Energy costs are included in administrative expenses.

Required:
Prepare the income statement and balance sheet of ABC Co., Ltd as at 31 October 2018.

Part C:
The following trial balance is of Quentin company as at 31 May 2018:
 Debit Credit
£’000 £’000
Bank 50
Inventory at 1 June 2017 1,200
General expenses 600
Heating and lighting 90
Marketing and advertising expenses 248
Wages 490
Buildings at cost 5,000
Motor vehicles at cost 160
Plant and equipment at cost 700
Retained earnings at 1 June 2017 280
Accounts receivable 438
Purchases 2,200
Loan note interest paid 30
5% Loan note 600
Revenue 5,876
Discounts received 150
Trade payables 500
£1 ordinary shares 1,500
Accumulated depreciation at 1 June 2017
Buildings 2,000
Motor Vehicle 60
Plant and equipment 240
11,206 11,206

The following notes are relevant.

(a) Inventory at 31 May 2018 was valued at £800,000.
(b) Marketing and advertising expenses include £6,000 paid in advance for a marketing campaign
which will begin in June 2018. Marketing and advertising expenses should be allocated to
administrative expenses.
(c) There are wages outstanding of £10,000 for the year ended 31 May 2018.
(d) A customer ceased trading owing the company £38,000; the debt is not expected to be recovered.
(e) A provision for bad and doubtful debts is to be established amounting to 5% of accounts receivable.
(f) Depreciation is to be provided for as follows.
i. Buildings at 5% per annum on their original cost, allocated 50% to cost of sales, 20% to
distribution costs and 30% to administrative expenses.
ii. Motor vehicles at 25% per annum of their written down value, allocated to distribution costs.
iii. Plant and equipment at 20% per annum of their written down value, allocated to cost of sales.
(g) No dividends have been paid or declared.
(h) Income tax of £250,000 is to be provided for the year.
(i) The audit fee accrual is estimated to be £20,000.
(j) The expenses listed below should be apportioned as follows.

Cost of sales (%) Distribution Administrative

costs (%) expenses (%)
General expenses 10 40 50
 Heating and lighting 50 30 20
Wages and salaries 60 30 10

Required:
Prepare the following financial statements for the year ended 31 May 2018 for Quentin, showing
workings where appropriate:
(a) Trading and Profit and Loss Account
(b) Balance Sheet
Learning Outcomes and Assessment Criteria

Learning Outcome Pass Merit Distinction

LO1 Record business P1 Apply the double M1 Analyse sales and D1 Record correctly
transactions using entry book-keeping purchase transactions transactions and
double entry system of debits and to compile a trial produce an accurate
book-keeping, and be credits. Record sales balance using double trial balance by
able to extract a trial and purchases entry book-keeping completing the balance
balance transactions in a appropriately and off of ledger accounts,
general ledger. effectively. checking that each
transaction is recorded
in line with accepted
accounting principles.
P2 Produce a trial
balance applying the
use of the balance off
rule to complete the
ledger.

LO2 Prepare final P3 Prepare final M2 Analyse profit and D2 Apply appropriate
accounts for sole- accounts from given loss accounts, balance and accurate
traders, trial balance figures sheet and cash flow calculations for the
partnerships and adjusting for accruals, statements appropriate constructing of the final
limited companies in depreciation and for the given examples. accounts.
accordance with prepayments.
appropriate principles,
conventions and
standards

P4 Produce final
accounts for a range of
examples that include
sole-traders,
partnerships or limited
companies.

Pearson Education 2017

Higher Education Qualifications
Assignment Brief