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Accounts of a Service Firm The Burke family are involved in the tourist industry - Leaving Cert Accounting - Question 6 - 2013
Question 6
Accounts of a Service Firm The Burke family are involved in the tourist industry. They run a Bed and Breakfast and rent bicycles and a holiday home to tourists duri... show full transcript
Worked Solution & Example Answer:Accounts of a Service Firm The Burke family are involved in the tourist industry - Leaving Cert Accounting - Question 6 - 2013
Step 1
Prepare a statement showing the Accumulated Fund of the Burke family tourism business on 01/01/2012.
Answer
To prepare the statement of the Accumulated Fund, we need to list the assets and liabilities as of 01/01/2012:
Assets
- Bed and Breakfast Premises: €450,000
- Holiday Home: €120,000
- Equipment & Linen: €3,600
- Bicycles: €5,200
- Stock of fuel and heating oil: €2,200
- Cash: €4,500
Total Assets = €450,000 + €120,000 + €3,600 + €5,200 + €2,200 + €4,500 = €585,500
Liabilities
- Advance deposits from tourists for holiday home: €1,500
Total Liabilities = €1,500
Accumulated Fund Calculation
Accumulated Fund on 01/01/2012 = Total Assets - Total Liabilities
Accumulated Fund = €585,500 - €1,500 = €584,000
Step 2
Prepare an Income and Expenditure Account for the year ended 31/12/2012.
Answer
To prepare the Income and Expenditure Account, we list all incomes and expenditures as follows:
Income
- Receipts from Guests: €32,000
- Rent from Holiday Home: €18,000
- Receipts from Bicycles: €2,200
Total Income = €32,000 + €18,000 + €2,200 = €52,200
Expenditure
- Provisions for Bed and Breakfast: €8,500
- Light and Heat: €1,600
- Wages: €19,000
- Laundry: €2,400
- Advertising: €1,200
- Repairs and Maintenance: €6,600
- Depreciation on Bicycles: €1,000
- Depreciation on Equipment & Linen: €900
Total Expenditure = €8,500 + €1,600 + €19,000 + €2,400 + €1,200 + €6,600 + €1,000 + €900 = €41,200
Excess Income over Expenditure
Excess Income = Total Income - Total Expenditure = €52,200 - €41,200 = €11,000
Step 3
Prepare a Balance Sheet on 31/12/2012.
Answer
To prepare the Balance Sheet, we categorize all assets and liabilities:
Fixed Assets
- Bed and Breakfast: €450,000
- Holiday Home: €120,000
- Equipment & Linen: €2,200
- Bicycles: €5,000
Total Fixed Assets = €450,000 + €120,000 + €2,200 + €5,000 = €577,200
Current Assets
- Bank: €16,500
- Stock of oil: €650
Total Current Assets = €16,500 + €650 = €17,150
Total Assets = Fixed Assets + Current Assets = €577,200 + €17,150 = €594,350**
Current Liabilities
- Advance Deposits: €1,400
- Provisions: €260
Total Current Liabilities = €1,400 + €260 = €1,660
Net Worth
Net Worth = Total Assets - Total Liabilities = €594,350 - €1,660 = €592,690