The Statement Of Financial Position As At 31st December 2016 For Soze Limited: Accounting For Managers Assignments, UCD, Ireland

Question One

The statement of financial position as of 31^st December 2016 for Soze Limited is presented below:

During the year ended 31^st December 2017, the following transactions occurred within Soze Limited’s business:

• Unpaid wages that were outstanding and accrued at the end of the prior year of €40,000 were paid on the 3^rd January 2017.
• Equipment was purchased for €200,000.
• The business generated sales revenue of €80,000. Of these sales, €60,000 were cash sales and €20,000 were credit sales. The inventory sold cost Soze Limited €20,000.
• A debtor, X Ltd, who owed the company €5,000, went into liquidation. The company was informed that it will not receive the outstanding
• Cash was received from debtors as payment against their accounts of €10,000.
• €30,000 worth of inventory was purchased on credit from a
• Soze Limited approved and paid a dividend of €10,000.
• A prepayment of €3,000 was recognized at the end of the previous financial year about electricity. The company paid bills totaling €8,000 during the 2017 financial year. In addition, a €2,000 electricity bill was outstanding at the end of the.
• The company depreciates all property, plant, and equipment at the end of the year at a depreciation rate of 5% on cost, using the straight-line method. It is the company’s policy to charge a full year of depreciation on any property, plant, and equipment acquired during the.

Question Two

 You have recently been appointed the sales manager at Amazing Smoothie Ltd, a company which manufactures natural fruit smoothies. Amazing Smoothie Limited has a major customer, Dublin Fruit Stores Limited, which accounts for approximately 30% of Amazing Smoothie’s total sales revenue each year. Historically, Dublin Fruit Stores has paid for its purchases from Amazing Smoothie Ltd with cash. However, the company has requested a 60-day credit facility for all future purchases. You are provided with financial information for Dublin Fruit Stores Limited for the last three financial years below:

Question Three Part I

A management accountant at X Ltd has provided you with a forecast profit statement for the 2019 financial year for a proposed new division of the company:

The above forecast is based on estimated sales of 100,000 units.

• Explain the difference between a variable and a fixed
• Calculate the new division’s estimated break-even point in
• Calculate the number of units that must be sold by the new division to achieve an operating profit target of €50,000.

Part II

Using Watts and Zimmerman’s (1978)’s Positive Accounting Theory, explain why managers may engage in earnings management practices.

Question Four

 You are a team manager at BizzMedia Ltd. BizzMedia operates a social media website. The company was formed two years ago and has experienced significant and rapid growth. The website currently has over 20 million active users.

The company employs 30 people. Most of the employees are programmers who work in small teams of three. The teams of programmers are responsible for developing new applications which will potentially monetize the BizzMedia site. Half of the programmers have worked for BizzMedia since the company was created.

A new financial controller has recently been appointed at BizzMedia. The financial controller previously worked as an accountant for a large and successful manufacturing company. The controller has expressed concerns about the company’s lack of financial controls and is insisting the company implements a budget to help control costs and motivate its staff.

• Drawing on your understanding of budgeting, what behavioral effects may arise from the implementation of budgetary control at BizzMedia?
• Drawing on your understanding of budgeting, discuss the appropriateness of budgeting.