The Cooper Family - The Shares in Cooper Ltd - Accounting Assignment Help

Assignment Task:

The Cooper family owns all the shares in Cooper Ltd – a New Zealand company selling sports equipment in New Plymouth. George and Colin, two of the company’s shareholders are becoming increasingly concerned about the lack of dividend payments and have asked you to analyse the company’s accounts.

The following information relates to the company, whose financial year is 1 January to 31 December.

• Credit sales comprised 75% of sales in both years. Normal credit terms for accounts receivable are 30 days. The company does not provide for doubtful debts, but writes bad debts off when they are 12 months old.
• Normal credit given by suppliers of stock is 30 days. All purchases are credit purchases and all accounts payable relate to those purchases.
• Purchases totalled $885,000 in 2017 and $1,231,000 in 2018.
• Inventory at 1 January 2017 was $95,000.
• The bank overdraft limit is $25,000 and it is secured over the current assets of the business. In December 2018 the bank sent the company a letter requesting that the overdraft be reduced to its limit by 31 January 2019.
• The land and building were purchased on 1 January 2018. $210,000 was borrowed under a mortgage with annual principal repayments of $21,000 due on 31 December. If the company had not purchased the land and building, the cost of renting the business premises would have increased to $22,000 in the 2018 year.
• The Tax payable on the Balance Sheet is payable annually on 20 January.
• The shares in Air NZ have a market value of $35,000 at 31 December 2018.
• A new car costing $55,000 was purchased on 1 January 2018 for the managing director, John Cooper. The only other vehicle owned by the company is a van which is used to deliver sales.

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