Assuming that the company is planning to raise S$8 million for future expansion, propose a suitable source of financing to management and give reasons.
PRINCIPLES OF ACCOUNTING & FINANCE
2)
All answers should be typewritten using Arial size 12 in the solution templates provided.
MarksQuestion 1 20
Question 2 20
Question 3 30
Question 4 30
TOTAL 100
Question 1 (20 marks)
Fausi started FitnessPro Pte Ltd on 1 July 2021. The company sells a wide range of health equipment and conducts personal training sessions. The retail shop is located at Tampines and the office is at Ubi.
Fausi prepared the following Profit and Loss Statement and Balance Sheet for the company after 12 months of operations and thinks that there are errors in the statements. He needs your assistance to check and prepare the corrected classified Profit and Loss Statement and Balance Sheet.
Fausi
Profit and Loss Statement as at 30 June 2022
$ $ $
Sales Revenue 120,000
Accrued Revenue 4,000
Personal Training Fees Revenue 35,000
Gross Profit 159,000
Less: Operating Expense
Selling Expense
Salaries Expense (refer to Note 1) 40,000
Accrued Expense 2,000 42,000
General and Administrative Expense
Interest Expense 3,700
Rent Expense (refer to Note 2) 36,000
Shares in Singtel 10,000
Delivery Van Expense 4,000
Depreciation – Delivery Van 3,000 56,700
Financial Expense
Prepaid Expense 3,100
Bank Charges 400
Telephone Expense 2,000 5,500 104,200
Net Profit 54,800
Fausi
Balance Sheet for the year ended 30 June 2022
Equity $ $ $
Capital 55,000
Add: Net Profit 54,800
Less: Drawings 6,000
103,800
Represented by:
Current Assets
Cash at Bank 17,600
Inventories 38,000
Accounts Payable 12,350
Delivery Van 30,000
Add: Accumulated Depreciation – Delivery Van 9,000 39,000
106,950
Less: Current Liabilities
Loan from BOA (due 1 Jul 2024) 40,000
Accounts Receivable 21,050 61,050
Working Capital 45,900
Non-Current Assets
Cost of Goods Sold 60,500
Unearned Revenue 6,000 66,500
Total Assets 112,400
Additional Information
A0% (A is the 4th digit of your admin number) of the salaries are for salesmen and the remaining are for office staff.
e.g. if your admin number is 2112345J, then the figure is 20%
if your admin number is 2103202J, then the figure is 30%
if the 4th digit of your admin number is 0 (e.g. 2100002J), then use 40%
Rent expense of $B,000 (B is the 5th digit of your admin number) is used for the shop and the remaining is for the office.
e.g. if your admin number is 2123456J, then the figure is $4,000
if your admin number is 2123567J, then the figure is $5,000
if the 5th digit of your admin number is 0 (e.g. 2100002J), then use $5,000.
Profit and Loss Statement
$ $ $
(9 marks)
Balance Sheet
$ $ $
(11 marks)
Question 2 (20 marks)
Read the article (https://www.businesstimes.com.sg/companies-markets/shares-of-econ-healthcare-close-36-higher-than-its-ipo-price-on-catalist-relisting) on Econ Healthcare (Asia) Limited’s initial public offering (IPO) and answer questions (i) to (v):
Which stock exchange is the company listed? Mainboard or Catalist? (2m)
When were the company’s shares first publicly traded on the stock exchange? (1m)
What was the IPO issue price? (1m)
How much net proceeds was raised from this IPO? (1m)
How did the company plan to use the proceeds? (1m)
Assuming that the company is planning to raise S$8 million for future expansion, propose a suitable source of financing to management and give reasons.
You are to quote the source of information (e.g. printscreen from website, annual report, etc.)
(14 marks)
Question 3 (30 marks)
Kimly Limited and Sheng Siong Group Ltd are public companies limited by shares.
About Kimly Limited
Kimly Limited is one of the largest traditional coffee shop operators in Singapore. The Group operates and manages an extensive network of coffee shops, food courts and industrial canteens.
About Sheng Siong Group Ltd
Sheng Siong Group Ltd is principally engaged in operating the Sheng Siong groceries chain. Its stores are primarily located in retail locations in the heartlands of Singapore.
Note
Students with an even register number will answer questions related to Kimly Limited.
Students with an odd register number will answer questions related to Sheng Siong Group Ltd.
Students who do not do the assigned company will be heavily penalised.
Company Assigned
a) Refer to the company’s financial statements in the annual report for 2021 and compute the following financial ratios. Show your workings and round your figures to 2 decimal places.
Ratio 2021 2020
Net Profit Margin (%)
(use Profit for the Year)
Current Ratio
(use Group figures)
Debt Ratio (%)
(use Group figures)
(18 marks)
b) Comment on the ratios calculated in part (a).
