Question 1 (85 marks)
Crown Limited is a merchandiser incorporated in Hong Kong. The company’s statements of financial position and income statement for the year ended 31 December 2021 are as follows:
Crown Limited
Statement of financial position
As at 31 December 2021
2021
2020
Non-current assets
Property, plant and equipment
105,450
76,500
Accumulated depreciation
(48,300)
(30,600)
57,150
45,900
Current assets
Cash
53,925
31,800
Accounts Receivable
19,425
23,250
Inventory
175,350
139,875
248,700
194,925
Total Assets
305,850
240,825
Equity and liabilities
Equity
Ordinary share capital
165,000
150,000
Share premium capital
42,000
15,000
Retained earning
55,875
33,450
262,875
198,450
Current liabilities
Accounts payable
38,475
35,625
Tax payable
4,500
6,750
42,975
42,375
Total equity and liabilities
305,850
240,825
Crown Limited
Statement of profit or loss and other comprehensive income
For the year ended 31 December 2021
$
Revenue
609,750
Cost of goods sold
(279,000)
Gross profit
330,750
Other operating expense
Depreciation expenses
17,700
Other expenses
179,775
(197,475)
Profit before tax
133,275
Tax expenses
(44,850)
Net profit
88,425
Other information
Purchased equipment for $28,950
Issued 3,000 ordinary shares for $14 each
Declared and paid $66,000 of cash dividends. The company’s management wants to classify payments for dividends as financing activities.
The Accounts receivable ratio and Profit margin for 2020 are 26 and 12.23% respectively.
Required:
Prepare the statement of cash flows for Crown Limited for the year ended on 31 December 2021 according to indirect method. Show your workings. (55 marks)
Compute and comment on the following ratios for 2021. (Correct your answers to 2 decimal places) (30 marks)
-Current ratio
-Accounts receivable turnover
-Acid test ratio
-Debt ratio
-Equity ratio
-Profit margin
Note: for you to be able to compare you would need to know the ratios of both 2020 and 2021. Show all your workings.
Question 2 (15 marks)
Please use the following information to prepare a manufacturing statement for Woody Company for the month ended June 30. (15 marks)
$
Goods in process inventory, May 31
12,600
Goods in process inventory, June 30
16,500
Direct materials used during June
21,000
Direct labor used during June
31,000
Factory overhead
Indirect material
6,400
Indirect labor
9,200
Factory rent
12,000
Factory depreciation
15,000
Factory utilities
18,400
Note: marks will be awarded for good form and presentation.
<End of assignment>
