Guys, i can not describe my anger and frastration with this course, to be precise, not the course (i found it easy), but the mock exam. I am totally stuck in one place, and all my course provider does, returns the work to me with highlighted mistake. The comments they make are not helpful at all. I feel so helpless and desperate, cause I want to move on badly, and I am not getting why it is not correct. I feel like crying. Did anyone have their mck exam recently, can anyone go with me through this? Any help or advise would be much appreciated
Don't forget that you will introduced a Share Premium Account on to the balance sheet for the excess amount per share over the nominal value, as well as increasing the bank
That is making the assumption that all shares were taken up.
I am only guessing but I suspect they are looking for the correct breakdown/ presentation in the balance sheet and if you are totalling the assets together they may mark it incorrect
£0,000,000
£0,000,000
Fixed assets
1.95
Current assets
1.18
Creditors
(0.70)
Net current assets
0.48
Total assets less current liabilities
2.43
Long term liabilities
(0.95)
1.48
This is only a simple layout and there could be other wording used plus you have the capital and reserves section to add (and balance)
I haven't done that exam but if you are losing marks and the maths is right I think maybe its the layout as the financial statements for an incorporated company is a little more rigid
I am only guessing but I suspect they are looking for the correct breakdown/ presentation in the balance sheet and if you are totalling the assets together they may mark it incorrect
This may be the case with the (paper) mock exam being done - but things will have changed with both the (online) mock exam and the real thing as it is more a case of "choosing" correct answers.
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This is the reply I got from the course leader. I think he means stock as shares, but I am sure stock here is meant goods. Becoz my other answers are right. THey are NOT looking for the breakdown at all, all they want is a figure
see what he written
Your question on the shares: The formula has to be net assets plus whatever profit is made on the release of stocks. Stocks value is £250,00 and as the nominal value is £1 this means there are 250,000 shares. 200,000 have been released at £1.40 per share so the answer will be the increased value of the stocks plus the net value of assets.
I think we need more information as I don't think you have given it all? Balance sheet does not appear to balance from what you have given...
Given: Land and Building 1.2m Plant and Equipment 0.75 Debtors 0.5 stock 0.25 bank 0.15 creditors0.7 long term liab 0.95.
Balance sheet would be:
Fixed assets 1.95
current assets: debtors 0.5 stock 0.25 bank 0.15 _____ 0.90
Current liabilities creditors 0.70 _____ 0.2 ____ 2.15 Financed by: Long term liabs 0.95 issued share cap??? 1.20??? ____ 2.15 ____
This being the case, what is missing? Is it share capital currently issued?
Bill is right I think that as the question states 'If the company decided to issue a FURTHER 200,000 SHARES.....' This would suggest to me that they are wanting you to increase the net assets by the full share capital of 200,000 plus the share premium of 80,000 as these shares have not been issued yet so they don't form part of the current share capital???
Don't know what the course leader is talking about, it doesn't make any sense to me, maybe someone else can shed some light on it.....
Does not balance!!!!!!!Are you sure when they say stock they don't mean equity shares? It still would not balance but you would have a different number as your assets....
Thanks thanks thanks to all of you who is looking into this. Thats the think, the balance sheet is just an extract, I have given whatever I had in the task. Please see the question below. I am going mental with this, please note that Q3 total assets I answered 2.85 and it is correct. If stocks were shares, question3 wudnt be 2.85. What do you think guys? Question 4 Please complete the following statements.
PED Ltd had the following balances in its accounts at 31 December 2008. Land and Buildings £1.2m; Plant and Equipment £0.75m; Debtors £0.5m; Stocks £0.25m; Bank £0.15m; Creditors £0.7m; Long Term Liabilities (Loans) £0.95m.
1 What is the value of Equity or Shareholders Interest? 2 What is the value of Capital Employed? 3 What is the value of Total Assets? 4 What is the value of Total Liabilities? 5 What is the value of Net Current Assets? 6 Gearing is a measure of long term liabilities to capital employed, is this company therefore high or low geared? 7 If the company decided to issue a further 200000 shares (£1 each nominal) at £1.40, the total assets of the company would increase to what? 8 The above transaction would involve a DR to Bank and a CR for what value, and to which accounts in the companys books? 9 The relationship of Current Assets to Current Liabilities is a measure of what? 10 In the data for (1) above if profits for year had been £0.58m what was the Return on Capital Employed?
