Fossick Ltd is a spaghetti wholesaler, which has been trading for only one year. At the start of its second year, it has the following items on its balance sheet: £ Fixed Assets 1,100 Cash 2,000 Share Capital 700 Retained Profit 900 5 year Bank Loan 1,500 During the second year, the company undertakes the following transactions: 1) Purchases stock (raw, untreated spaghetti) for £500, on credit. 2) Sells stock which originally cost £500 for £1,000. All customers buy on credit. 3) Pays £50 for insurance for that year and £120 for advertising that year. The insurance is paid in cash, but the advertising company gives credit. 4) Purchases a spaghetti pump for £950, on credit. 5) Pays the spaghetti taster £90 in cash. 6) Pays interest of 10% on its loan, in cash. 7) Pays £1,000 to its trade creditors. 8) Receives £690 from its customers. 9) Fossick's accountant calculates that as a result of the above transactions, the company will have to pay tax of £32. 10) Finally, the board of directors declare a dividend of £25. On the following page, you are given a worksheet for Fossick's second year. Fill in the opening balances (from the end of the first year), and then record the transactions during the second year, line by line. Calculate closing balances and then construct a closing Balance Sheet and a Profit and Loss Account. Part I: TRANSACTION WORKSHEET – FOSSICK LTD (20 points) ASSETS LIABILITIES S/H FUNDS Fixed Assets Stocks (Inventory) Trade Debtors Cash Bank Loan Trade Creditors Tax Payable Dividends Payable Share Capital P&L A/C Retained Earnings Opening balances Purchase stock Sales: credit Cost of sales Insurance Advertising Purchase machine