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FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Unseen Question 2 Jayden Ltd sells a range of indoor and outdoor furniture by recycling and reinterpreting old furniture and other wood, metal, glass and plastic products obtained from a variety of sources such as derelict buildings, deceased estate auctions and so on. Revenue comes from sales to the general public and businesses such as hotels and restaurants. Some small items are collected by customers but generally goods are delivered by Jayden Ltd. The directors have reported that it has been another good year for the organisation and that they expect the coming year to be successful. The draft income statement for 2015 together with audited figures for 2014 are given below: 30 June 2014 30 June 2015 (draft) (actual) Revenue Cost of sales Gross profit Other income Operating expenses Administration Selling and distribution Finance costs. Profit/(loss) before tax 536 994 (322 187) 214 807 (95 438) (50 575) (7 434) 61 360 617 140 (302 788) 314 352 7186 (92 064) (79 933) (7 623) 141 918 Required You are planning the audit of Jayden Ltd for the year ended 30 June 2022, discuss the issues to be considered in your audit planning from the information contained in the income statements. Hint - first you need to calculate some rations such as (i) Gross Profit margin Ratio, (ii) Profit margin (iii) times interest earned and contrast a trend analysis.
Transcribed Image Text:Unseen Question 2 Jayden Ltd sells a range of indoor and outdoor furniture by recycling and reinterpreting old furniture and other wood, metal, glass and plastic products obtained from a variety of sources such as derelict buildings, deceased estate auctions and so on. Revenue comes from sales to the general public and businesses such as hotels and restaurants. Some small items are collected by customers but generally goods are delivered by Jayden Ltd. The directors have reported that it has been another good year for the organisation and that they expect the coming year to be successful. The draft income statement for 2015 together with audited figures for 2014 are given below: 30 June 2014 30 June 2015 (draft) (actual) Revenue Cost of sales Gross profit Other income Operating expenses Administration Selling and distribution Finance costs. Profit/(loss) before tax 536 994 (322 187) 214 807 (95 438) (50 575) (7 434) 61 360 617 140 (302 788) 314 352 7186 (92 064) (79 933) (7 623) 141 918 Required You are planning the audit of Jayden Ltd for the year ended 30 June 2022, discuss the issues to be considered in your audit planning from the information contained in the income statements. Hint - first you need to calculate some rations such as (i) Gross Profit margin Ratio, (ii) Profit margin (iii) times interest earned and contrast a trend analysis.
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