The instructions are attached below. Please use an Excel file.Thanks
Here’s the questions:
Best Advice for You Ltd.’ was launched on 1 January, Year 1, offering consulting services. Shareholders contributed pound160,000 to the business and the business further arranged a bank overdraft (initially pound320,000). All of these funds were used to buy cars for trips to clients, to lease an office and to hire assistants. The business’ opening balances were: ‘Best Advice for You Ltd.’ engaged in the following transactions during its first year of trading (all transactions in pound000; all cash transactions conducted via the overdrawn bank current account): Bills totaling 2, 400 were sent to clients. 1, 600 were received from those clients. 2,000 was paid in operating expenses (including salaries to the assistants, computer hire, online information services, etc.) A bill was received for 200, for office rent for Year 1, payable in arrears in January, Year 2. Depreciation on company cars was taken into consideration (assuming straight-line method, 10 years of useful economic life and pound80,000 of residual value). Bank interest of 140 was paid. Record in journal form how you deal with transactions 1 – 6. Write up the business’ ledger for the year (including separate accounts for various expenses). Draw up the trial balance as at 31.12.1. Produce a profit and loss account for the year ended 31.12.1. Produce the closing balance sheet as at 31.12.1. The auditors advise the business that a provision for doubtful debts at 5% of the closing debtors’ figure should be made. Without restating your previous calculations, describe the impact of recognizing this provision in the financial statements. How would you evaluate the capital structure of the business and its potential to raise additional debt in the future?Show transcribed image text Best Advice for You Ltd.’ was launched on 1 January, Year 1, offering consulting services. Shareholders contributed pound160,000 to the business and the business further arranged a bank overdraft (initially pound320,000). All of these funds were used to buy cars for trips to clients, to lease an office and to hire assistants. The business’ opening balances were: ‘Best Advice for You Ltd.’ engaged in the following transactions during its first year of trading (all transactions in pound000; all cash transactions conducted via the overdrawn bank current account): Bills totaling 2, 400 were sent to clients. 1, 600 were received from those clients. 2,000 was paid in operating expenses (including salaries to the assistants, computer hire, online information services, etc.) A bill was received for 200, for office rent for Year 1, payable in arrears in January, Year 2. Depreciation on company cars was taken into consideration (assuming straight-line method, 10 years of useful economic life and pound80,000 of residual value). Bank interest of 140 was paid. Record in journal form how you deal with transactions 1 – 6. Write up the business’ ledger for the year (including separate accounts for various expenses). Draw up the trial balance as at 31.12.1. Produce a profit and loss account for the year ended 31.12.1. Produce the closing balance sheet as at 31.12.1. The auditors advise the business that a provision for doubtful debts at 5% of the closing debtors’ figure should be made. Without restating your previous calculations, describe the impact of recognizing this provision in the financial statements. How would you evaluate the capital structure of the business and its potential to raise additional debt in the future?
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