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Watch Me Flex Profit and Loss

Watch Me Flex (WMF) is a watch retailer partnership in Shanghai, China facing declining sales. The document provides WMF's 2019 financial information and instructs preparing final accounts for a tax review. It details WMF's sales revenue, expenses, assets, liabilities, tax rate, and fiscal year end and calculates missing values for equity and salaries.

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90 views1 page

Watch Me Flex Profit and Loss

Watch Me Flex (WMF) is a watch retailer partnership in Shanghai, China facing declining sales. The document provides WMF's 2019 financial information and instructs preparing final accounts for a tax review. It details WMF's sales revenue, expenses, assets, liabilities, tax rate, and fiscal year end and calculates missing values for equity and salaries.

Uploaded by

ezradsouza05
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Worksheet 17

Final Accounts (2)

Watch Me Flex (WMF)

Watch Me Flex (WMF) is a watch retailer based in Shanghai, China. It operates as a partnership between three
owners, Eric, Nicolas, and Alvin. It specializes in the distribution of luxury branded watches, such as Rolex,
Patek Phillipe, and Audemars Piguet. Due to the falling economic growth in China, WMF has been facing
declining sales revenue during the past year. Further, with the crackdown of corruption, The State
Administration of Taxation is reviewing many businesses. To prepare for WMF’s review, the owners hired a
new finance manager to prepare the final accounts for the tax authority’s review.

Table 1: Select financial information for WMF for 2019. Figures in Chinese yuan (¥).

Items (¥)
Sales revenue 12,000,000
Total current assets 2,570,500
Total current liabilities 2,880,780
Utilities 95,320
Cost of goods sold (COGS) 10,500,000
Equity X
Rent 155,000
Salaries Y
Long-term bank loan 970,500
Depreciation (in 2019) 77,200
Net fixed assets 1,350,500
Total expenses 1,218,400
Interest 123,500
Promotion expenses 30,780

The State Administration of Taxation in China stipulates a standard corporate tax rate of 25%. The fiscal year
ends on 31 December for WMF.

(a) State two features of a partnership. [2 marks]

………………………………………………………………………………………………………………………………

………………………………………………………………………………………………………………………………

(b) Using the financial information provided in Table 1, calculate the value of X (equity) for WMF
(show all your working). [2 marks]

………………………………………………………………………………………………………………………………

………………………………………………………………………………………………………………………………

………………………………………………………………………………………………………………………………

(c) Using the financial information provided in Table 1, calculate the value of Y (salaries) for
WMF (show all your working). [2 marks]

………………………………………………………………………………………………………………………………

………………………………………………………………………………………………………………………………

………………………………………………………………………………………………………………………………

(d) On a separate piece of paper, construct a profit and loss account for WMF for the year ending
2019. [4 marks]

© Level7 Education Limited | Gems International School, Al Khail, Dubai | Redistribution is strictly prohibited | Page 38

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