Question 1
Fibertech GmbH is a distributor of outdoors technical clothing. The company outsources the production of clothing to external manufacturers in Bangladesh and sells the clothing under its own brands. Below you are provided with the balance sheet at the end of x3 and x4, and the profit & loss and cash T-accounts for x4. Note that some numbers are missing in the T-accounts. You’ll have to infer them in the questions below.
Fibertech GmbH Balance sheets at 31 December x3 and x4 (amounts in €000)
|
|
Dec 31, x3 |
Dec 31, x4 |
|
Non-current assets |
|
|
|
Brands |
50 |
90 |
|
Land |
200 |
200 |
|
Building and equipment, gross |
540 |
580 |
|
less: Accumulated depreciation |
-484 |
-474 |
|
Building and equipment, net |
56 |
106 |
|
Total non-current assets |
306 |
396 |
|
|
|
|
|
Current assets |
|
|
|
Inventories |
250 |
350 |
|
Accounts receivable |
400 |
500 |
|
Prepaid insurance |
4 |
6 |
|
Cash |
340 |
239 |
|
Total current assets |
994 |
1095 |
|
Total assets |
1300 |
1491 |
|
|
|
|
|
Shareholders’ equity |
|
|
|
Share capital |
170 |
170 |
|
Retained profits |
120 |
426 |
|
Total shareholders’ equity |
290 |
596 |
|
|
|
|
|
Non-current liabilities |
|
|
|
Long-term bank loan |
600 |
450 |
|
|
|
|
|
Current liabilities |
|
|
|
Short-term portion of long-term bank loan |
150 |
150 |
|
Accounts payable |
200 |
250 |
|
Taxes payable |
35 |
25 |
|
Interest payable |
25 |
20 |
|
Total current liabilities |
410 |
445 |
|
Total liabilities and shareholders’ equity |
1300 |
1491 |
Profit and loss year x4
|
|
Debit |
Credit |
|
|
|
|
|
– BB |
|
Cost of goods sold |
1400 |
2200 |
Total sales |
|
Depreciation expense |
40 |
15 |
Gain on sale of buildings and equipment |
|
Selling and administration salaries |
240 |
|
|
|
Insurance expense |
? |
|
|
|
Interest expense |
? |
|
|
|
Income taxes |
? |
|
|
|
|
|
336 |
Net Income |
Cash
|
|
Debit |
Credit |
|
|
BB |
340 |
|
|
|
Receipts from customers |
2100 |
? |
Payments to suppliers |
|
Proceeds from sale of buildings and equipment |
45 |
120 |
Purchase of equipment |
|
|
|
240 |
Payments of salaries |
|
|
|
36 |
Prepayments of insurance |
|
|
|
60 |
Payments of interest on loans |
|
|
|
150 |
Loan repayment |
|
|
|
120 |
Payments of taxes |
|
|
|
? |
Payments of dividends |
|
|
|
40 |
Purchase of brand |
|
EB |
239 |
|
|
Additional note:
Fibertech estimates its brands have an indefinite life and consequently they are not amortized.
Compute the following items for year x4: (using T-accounts might be helpful)
0) Compute the purchases on credit from suppliers in x4: (0 points. Please note this is a sample question.)
(a) 1,300
(b) 1,500
(c) 1,450
(d) 1,600
Solution: with the help of the relevant T-account
Inventories
|
BB |
250 |
|
|
|
Purchases |
1500 |
1400 |
COGS from profit and loss T-account |
|
EB |
350 |
|
|
Purchases = COGS + (EB – BB) = 1,400 + (350 – 250) = 1,500
Question:
Compute the payments to suppliers in x4:
