Rainbow Hotel Trial Balance for the year ended 28 February 2022

Dr Cr
£ £
Sales Revenue 3,927,980
Purchases 2,964,930
Bank loan (due in 2030) 365,000
Insurance 23,420
Advertising 29,300
Buildings at cost 605,000
Accumulated Depreciation - Building (1 Feb 2021) 105,550
Administration Expenses 101,340
Interest Received 5,750
Salaries and wages 416,520
Bank balance 33,500
Accounts receivables 550,900
Retained profits at 1 Feb 2021 38,840
Interest paid 16,550
Fixtures and Fittings 390,500
Accumulated Depreciation - Fixtures & Fittings (1 Feb 2021) 45,450
Accounts payables 390,230
Inventory 31,240
Ordinary share capital (£1 shares) 300,000
Share Premium 35,900
Rent Expense 51,500
5,214,700 5,214,700

Additional information - The following matters are to be taken into account:

1. The total amount of accounts receivable that will be written off is £5,650, and the company has additionally decided to
make a receivable allowance of 2.5% of the outstanding receivable.

2. The insurance expense includes £4,500 paid in the quarter ending March 31, 2022.

3. Depreciation will be assessed as follows:Buildings 7% straight line Fixtures and fittings. 20% decreasing balance

4. The Administrative Expenses include £32,900 in telephone expenses. The last telephone bill was issued six weeks
before the end of the year and has yet to be received.

5. A 20% tax rate must be applied to the net profit, and an accrual must be set aside.

6. Closing Inventory on February 28th was £27,850.

Rainbow Hotel Income Statement for the year ended 28 th February, 2022
£ £ Working Notes
Sales 3,927,980
Less: Cost of Sales
Opening Stock 31,240
Purchases 2,964,930
(Closing Stock) 27,850 2,968,320 6
GROSS PROFIT 959,660
Less: Expenses
Insurance 21,920 2
Advertising 29,300
Salaries and wages 416,520
Rent Expense 51,500
Administration Expenses 105,631 4
Irrecoverable Debt 5,650 1
Allowance for Irrecoverable Debt 13,631 1
Depreciation:
Building 42,350 3
Fixtures 69,010 755,513 3
OPERATING PROFIT 204,147
Interest Received 5,750
Interest paid 16,550
NET PROFIT 193,347
Less: Taxation 38,669 5
NET PROFIT AFTER TAX 154,678
Retained profit (as on 1 st March, 2022) 38,840
Retained Profit 193,518

Rainbow Hotel Balance Sheet as at 28 th February 2022

£ £ £
Non-Current Assets: Cost Acc Depr NBV
Buildings 605,000 147,900 457,100
Fixtures and Fittings 390,500 114,460 276,040
733,140
Current Assets:
Inventory 27,850
Accounts Receivables 531,619
Bank balance 33,500
Prepaid Insurance 1,500 594,469

Total Assets 1,327,609

Current Liabilities:
Accounts Payables 390,230
Accrued Telephone Expenses 4,291
Accrued Taxation 38,669 433,191

Non Current Liabilities:

Bank Loan (due in 2030) 365,000

Equity:
Share Capital (300,000 equity shares @ £1 each) 300,000
Share Premium 35,900
Retained Profit 193,518 529,418

Total Liabilities 1,327,609

WORKINGS £

1 Accounts Receivables 550,900

Less: Bad debts written off 5,650 IS - Loss
545,250
Less: Allowance for Bad Debts @2.5% 13,631 IS - Provision
Net Accounts Reeceivables 531,619 SFP - CA

2 Insurance 23,420
Less: Prepaid Insurance (prepaid for March 2022 - 1/3rd of £ 4,500) 1,500 SFP - CA
21,920 IS - Expense

Current Year's Accumulated Accumulated

Rate Depreciation on Cost Depreciation (IS) Depreciation as Depreciation as
3 on 28/2/21 on 28/2/22
Current Year's
Cost x Depreciation Depreciation +
As per TB As per TB
% Accumulatrd
Depreciation
7% Buildings 605,000 42,350 105,550 147,900
20% Fixtures and Fittings 390,500 69,010 45,450 114,460

4 Administration Expense 101,340

Less: Telephone Expenses 32,900
Administration Expense (without including Telephone Exp) 68,440

Telephone Expenses 32,900

Add: Accrued Expense (for 6 weeks) 4,291 SFP - CL
Telephone Expense (for 2021-22) 37,191

Administration Expense (after including accrued Telephone expense) 105,631 IS - Expense

5 Taxation (20% of NP £ 193,347) 38,669

6 Closing Stock 27,850

 Hotel Snowflake
JANUAR FEBRUA
Sales: MARCH APRIL MAY JUNE
Y RY
Total 43000 59500 75000 86500 104000 121000
Cash (current month) 2 29% 12470 17255 21750 25085 30160 35090
Credit (next month) 71% 71% 30530 42245 53250 61415 73840
Total Collection 12470 47785 63995 78335 91575 108930

Purchases 36500 34000 42000 51250 58750 66000

Rent 55500 4625 4625 4625 4625 4625 4625
Wages 5350 5350 5350 5350 5350 5350
Other Costs 14550 14550 14550 14550 14550 14550

Hotel Snowflake Cash budget for the six month ended 30th June 2022
JAN FEB MAR APR MAY JUN
Opening Balance 15,500 - 3,505 - 16,745 - 11,275 535 16,335

Cash Sales 12,470 17,255 21,750 25,085 30,160 35,090

Collection from Customers 30,530 42,245 53,250 61,415 73,840
Cash Inflow 27,970 44,280 47,250 67,060 92,110 125,265

Payments:
Shop Fittings 21,500
Payment to Suppliers 36,500 34,000 42,000 51,250 58,750
Rent 4,625 4,625 4,625 4,625 4,625 4,625
Wages 5,350 5,350 5,350 5,350 5,350 5,350
Other costs 14,550 14,550 14,550 14,550 14,550
Cash Outflow 31,475 61,025 58,525 66,525 75,775 83,275

Closing Balance - 3,505 - 16,745 - 11,275 535 16,335 41,990

 Ritz Hotel

2019 2018 2017

INCOME STATEMENT £'000 £'000 £'000

Turnover 50,316 47,082 46,068

Cost of Sales (23,522) (21,659) (21,283)
Gross Profit 26,794 25,423 24,785

Administrative Expenses (14,821) (14,393) (13,827)

Other Operating Income 4,273 3,936 3,572

Operating Profit 16,246 14,966 14,530

Interest Received 91 45 4

Interest Paid (13,898) (8,228) (1,708)

Profit Before Taxation 2,439 6,783 12,826

Tax on Profit (1,858) (1,715) (2,469)

tal Comprehensive Profit for the Year 581 5,068 10,357

BALANCE SHEET 2019 2018 2017

£'000 £'000 £'000
Fixed Assets
Tangible Assets 153,022 152,705 151,582

153,022 152,705 151,582

Current Assets
Inventories 1,801 1,765 1,524
Debtors: Amounts falling due after 1 yea 228,374 225,944 76,776
Debtors: Amounts falling due within 1 y 3,538 3,161 3,662
Cash at bank and in hand 14,708 11,013 1,172
 248,421 241,883 83,134

Creditors: Amounts falling due within one(10,288)

year (8,200) (9,359)

Net Current Assets 238,133 233,683 73,775

Total Assets less Current Liabilities 391,155 386,388 225,357

Creditors: Amounts falling due after one (309,923)

year (305,737) (149,774)

Net Assets 81,232 80,651 75,583

Capital & Reserves

Share Capital 1,000 1,000 1,000
Revaluation Reserve 22,441 22,441 22,441
Retained Profit 57,791 57,210 52,142

Total Equity 81,232 80,651 75,583

Trade Debtors (Notes to Account - 14) 1,657 1,828 1,903

Trade Creditors (Notes to Accounts - 15) 2,435 2,370 2,920

Purchases (Opening Inventory + Cost

of Sales - Closing Inventory) 23,486 21,418 19,759
 % Change of
2019 over 2018
Ratio Analysis
Profitability Ratios:
7%
9% Based on Turnover:
5% Gross Profit Margin
Operating Profit Margin
3% Net Profit Margin

9% Based on Investment:
Average Equity
9% Return on Equity

102% Capital Employed

Average Capital Employed
69%
Return on Capital Employed
-64%

8%

-89%
Liquidity Ratios:
Current Ratio
% Change of
2019 over 2018 Acit Test Ratio

0.2%

Efficiency Ratios:
2% Inventory Turnover
1% Average Inventory
12% Inventory Turnover Ratio
34% Inventory Holding Period (days)
 3%
Receivables Turnover
25% Average Receivables
Receivables Turnover Ratio
2% Receivables Collection Period (day

1.23% Payables Turnover

Average Payables
1.37% Payables Turnover Ratio
Payable Payment Period (days)
1% (using cost of sales)

Cash Operating Cycle (in days)

0%
0%
1%

1%
Capital Structure Ratios:
Debt Equity Ratio
-9% Capital Gearing Ratio
Interest paid
3% Interest Coverage Ratio

9%
 Ratio Analysis
Formula 2019 2018

Gross Profit / Turnover * 100 53.25% 54.00%

Operating Profit / Turnover * 100 32.29% 31.79%
Net Profit / Turnover * 100 1.15% 10.76%

(Opening Equity + Closing Equity)/2 80,942 78,117

Net Profit / Average Equity * 100 0.72% 6.49%

Total Assets - Current Liabilities 391,155 386,388

(Opening Capital Employed + Closing Capital Employed)/2 388,772 305,873

EBIT/Avg Capital Employed * 100 4.20% 4.91%

Current Assets / Current Liabilities 24.15 29.50

(CA - Inventory - Drs>1 year) / CL 1.77 1.73

(Opening + Closing Inventory)/2 1,783 1,645

Cost of Sales/Avg Inventory 13.19 13.17
365/Inventory Turnover 27.67 27.71
(Opening + Closing Receivables)/2 1,743 1,866
Turnover / Avg Receivables 28.88 25.24
365/Receivables Turnover 12.64 14.46

(Opening + Closing Payables)/2 2402.5 2645

Purchases / Avg Payables 9.78 8.10
365/ Payables Turnover 37.34 45.08

Inventory Holding + Collection Period - Payment Period 2.97 -2.90

Debt / Equity 3.82 3.79

Interest bearing Capital /Equity 381.53% 379.09%
From the Income Statement 13,898 8,228
EBIT / Interest paid 1.18 1.82
225,357