Data Analytics for Managers

London Business School                                EMBALJ 2017        

FINANCIAL ACCOUNTING

PROBLEM 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:

During 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 LTD

PROFIT AND LOSS ACCOUNT - KEIZO LTD (for the second year of operations)

BALANCE SHEET - KEIZO LTD (as at the end of second year of operations)

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