Service Firm The following were included in the assets and liabilities of the Elms Nursing Home Ltd - Leaving Cert Accounting - Question 6 - 2010

To calculate the profit from the shop, utilize the receipts and payments data:

Shop Receipts:

• Shop receipts: €40,000

Less Expenses:

• Cost of goods sold: €29,800
• Wages and Salaries proportion for shop: 40% of €18,000 = €7,200
• Light and heat: €250
• Insurance: €1,600
• Other Expenses: apparent debits of €1,200 for additional supplies

Profit from shop = Total Receipts - Total Expenses = €40,000 - (29,800 + 7,200 + 250 + 1,600 + 1,200)

Calculating this yields:

Profit from shop = €40,000 - €40,050 = €-50

Thus, shop incurred a loss of €50 for the year ended.

Using information from the Receipts and Payments account and additional data from the trial balance:

Total Income:
Total Income = Shop Profit + Clients Fees + Investment Income + Cleaning Services Income = (-50) + 339,900 + 1,000 + 15,000 = €355,850

Total Expenses:
Sum of operating expenses as provided, including Disallowed Cheques, Professional Costs, Supplies, etc. Stay inclusive of interest and depreciation on assets leading up to 31/12. Use listed items from minor purchase expenditures (add labor costs for service contracts).

Net Profit or Loss: Net Profit or Loss = Total Income - Total Expenses Calculated through total expense summation and expected annual costs should reveal the overall impact. Refer to calculations as outlined and ensure bases of surplus reflect in summary.

Keep checks pristine to support whether profit or loss occurred over 12 months of operational activity for the year.

To prepare the Balance Sheet, classify total assets and liabilities as of 31/12/2009:

Assets:

1. Fixed Assets (after depreciation):
   • Revalued Buildings: €900,000
   • Equipment (after 15% depreciation): €30,750
   • Mini Bus (after 20% depreciation): Value left €40,000

Total Fixed Assets = €900,000 + €30,750 + €40,000 = €970,750

2. Current Assets:
   • Cash at Bank: €2,850
   • Clients Fees: unrestricted funds: €500
   • Closing stock: Shop €1,500, Heating Oil €300.

Total Current Assets = €2,850 + €500 + €1,500 + €300 = €5,150

Total Assets = Fixed + Current = €970,750 + €5,150 = €975,900

Liabilities:

1. Creditors: €1,800
2. Outstanding debts: add across cash owed and other obligations only set against any proceeding cash balances (ensure deducted during pay periods from input and outflows)

Total Liabilities = €1,800 + outstanding credits = X

Use this structure to repeat checks and summarize any remaining points by the time cycle arrives.

In analyzing the financial situation of Elms Nursing Home Ltd, my advice would be:

1. Reassess Pricing Strategy: Given the decline in clients' fees and reported losses, evaluate pricing structures. Increasing fees modestly could improve income streams while remaining competitive.

2. Cost Management: Review and reduce unnecessary expenses. Notably track operational costs, especially utilities and wages, to identify potential savings, particularly concerning overhead that doesn't drive income.

3. Client Retention Strategies: Invest in client care enhancements and community engagement to attract more clients. Offering promotional packages, loyalty benefits or community services can bolster client relationships.

4. Diversification of Services: Explore additional revenue sources such as newer services or partnerships that can enrich overall care.

5. Financial Oversight: Implement stronger financial tracking and reporting to prevent cash flow shortages or oversights in billing and operational expenses.

6. Monitoring and Planning: Establish monthly reviews of the financial performance to stay ahead of any detrimental trends and be proactive in mitigating losses.