Data Analytics for Managers

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London Business School                                EMBALJ 2017        FINANCIAL ACCOUNTINGPROBLEM SET 2 (Due: 4 March, 2016 at 12:45pm GMT)YOUR NAME…………………………………………..Part I:  Transaction Analysis -  Keizo Ltd (19 points)Keizo Ltd is a bespoke wine retailer, which has been trading for only one year.  At the start of its second year, it has the following items on its balance sheet:£Fixed Assets5,150Cash2,000Inventory (wine)10,000Share Capital4,000Retained Profit8,1505 year Bank Loan5,000During the second year, the company undertakes the following transactions:1)        Purchases stock (Sassicaia, Barolo, DRC wines) for £5,000 (on credit).2)        Sells stock which originally cost £4,500 for £9,300.  All customers buy on credit.3)        Pays £450 for insurance and £820 for advertising.  The insurance is paid in                 cash, but the advertising company gives credit.4)        Purchases an additional wine storage unit for £2,500 (on credit).5)        Pays the master sommelier £1,500 in cash.6)        Pays interest of 10% on its loan, in cash.7)        Pays 50% of its total trade creditor balance at this point (i.e., includes previous 6 transactions and opening balance carried forward).8)        Receives 50% of its total trade debtor at this point (i.e., includes previous 6 transactions and opening balance carried forward).9)        Keizo’s accountant calculates that as a result of the above transactions, the company will have to pay tax of £403. 10)        Finally, the board of directors declare a dividend of £1,000.On the following page, you are given a worksheet for Keizo Ltd for its second year of operations.  Fill in the opening balances (from the end of the first year), and then record the transactions during the second year, line by line. Calculate closing balances and then construct a closing Balance Sheet and a Profit and Loss Account.TRANSACTION WORKSHEET - KEIZO LTDASSETSLIABILITIESS/H FUNDSFixed AssetsStocks(Inventory)TradeDebtorsCashBank LoanTradeCreditorsTaxPayableDividendsPayableShare CapitalP&L AccountRetainedEarningsOpening balances5150100002000500040008150Purchase stock50005000Sales: credit93009300Cost of sales(4500)(4500)Insurance(450)(450)Advertising820(820)Purchase of storage for wine25002500Salaries(1500)(1500)Interest(500)(500)Pay trade creditors(4160)(4160)Collect trade debtors(4650)4650Tax403(403)Dividends1000(1000)Balance76501050046504050004160403100040001127Transfer to retained profit(1127)1127Closing balances7650105004650405000416040310004000-8277PROFIT AND LOSS ACCOUNT - KEIZO LTD (for the second year of operations)Sales9300Cost of Sales(4500)Gross Profit4800Administrative Expenses(2770)Profit before Interest and Tax2030Interest(500)Profit Before Tax(1530)Tax(403)Profit After Tax1127BALANCE SHEET - KEIZO LTD (as at the end of second year of operations)NON-CURRENT ASSETSFixed Assets76507650CURRENT ASSETSTrade Debtors (Receivables)4650Stocks (Inventory)10500Cash4015190CURRENT LIABILITIESTrade Creditors4160Dividends Payable1000Tax Payable4035563NON-CURRENT LIABILITIESBank Loan5000NET ASSETS12277CAPITAL AND RESERVESShare Capital4000Retained Earnings8277SHAREHOLDERS’ FUNDS12277

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