Question A033B

Beatrice Michael owns a small manufacturing business. Information for the years ended 31 December 2019 and 31 December 2020 is as follows: 2019 2020 Sales revenue 320,000 280,000 Cost of sales 160,000 160,000 Overheads 140,000 90,000 Current assets 420,000 360,000 Current liabilities 140,000 180,000 REQUIRED i. Calculate a relevant ratio to show the liquidity of the business for each of the two years. State the formula used. Calculate one relevant ratio to show the profitability of the business for each of the two years. State the formula used. iii. Write a report to Beatrice explaining the significance of the ratios calculated.
From the following trial balance of G. Brown after his first year’s trading, you are required to draw up an income statement for the year ending 30th June 2020. Also prepare a balance sheet as at 30th June 2020. Trial balance as at 30th June 2020 Dr(000) Cr(000) Sales 265,900 Purchases 154,870 Rent 4,200 Lighting and heating expenses 530 Salaries and wages 51,400 Insurance 2,100 Buildings 85,000 Fixtures 1,100 Accounts payable 31,300 Sundry expenses 412 Accounts payable 15,910 Cash at bank 14,590 Drawings 30,000 Vans 16,000 Motor running expenses 4,110 Capital 114,202 396,012 396,012 Inventory at 30 June 2020 was TSh16,280,000.

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