ACCT 1008 Accounting for Business Assignment, University of

Accounting for Business Assignment -

Accounting for Business Assignment - Learning Outcomes

The Assignment is a further opportunity to apply the knowledge and skills that you are developing. The Assignment also develops learning outcomes which are highly valued by the employers of accounting graduates: Knowledge, Judgement, Critical analysis and Problem-solving skills, and Communication skills. Learning outcomes are the knowledge and skills that graduates are expected to know, understand and be able to do as a result of their learning.

QUESTION 1: Balance Day Adjustments

Below is the unadjusted Trial Balance for Pool Wave, a pool product and maintenance shop owned and operated by Wade Wilson, as at 30 June 2018.

Pool Wave Unadjusted Trial Balance As at 30 June 2018


Debit ($)

Credit ($)

Cash at Bank

26,766


Accounts Receivable

31,875


Inventory

140,400


Prepaid Insurance

4,914


Office Supplies on hand

3,276


Furniture & Fittings

39,780


Accumulated Depreciation - Furniture & Fittings


11,934

Cleaning Equipment

46,800


Accumulated Depreciation - Cleaning Equipment


18,720

Accounts Payable


27,027

Loan Payable


117,000

W. Wilson - Capital


66,222

W. Wilson - Drawings

28,080


Sales Revenue


691,029

Sales Returns and Allowances

9,924


Cost of Good Sold

412,308


Discount received


12,957

Freight inwards

9,360


Sales Salary Expense

68,328


Delivery Expense

18,252


Advertising Expense

26,910


Rent Expense

28,548


Office Salaries Expense

33,750


Electricity Expense

8,832


Discount Allowed

6,786





Totals

944 889

944 889

1. Office Salaries which are payable but not recorded as at 30 June are $785.

2. Both the Furniture & Fittings and the Cleaning Equipment are expected to be used evenly over their useful lives. The expected total useful lives and residual values of both assets is as follows:


Estimated Useful life

Estimated Residual

Furniture & Fittings

8 years

$1 780

Cleaning Equipment

10 years

$2 100

3. A physical stocktake of inventory on 30 June 2018 revealed $139 200 of stock on hand

4. A count of the stationery room revealed that office supplies on hand at 30 June 2018 were $1 737. (Hint: The difference between the supplies on hand and supplies in the unadjusted trial balance should be treated as an expense.)

5. The balance in the Prepaid Insurance account represents a 12-month insurance policy that commenced on 1 March 2018.

6. $2 700 of the recorded Sales Revenue is for specially imported robotic pool cleaner that will not be delivered to the customer until 24 July 2018.

7. As of 30 June 2018, Wade has estimated that 4% of his Accounts Receivable may not be collected.

8. Wade last paid an electricity bill on 31 May 2018, and estimates that his power usage from then until 30 June 2018 was $220.

REQUIRED: It is now the end of the financial year and Wade has asked you to prepare any necessary balance day adjusting journals.

Use the General Journal document provided to record the correctly formatted journal entries required.

QUESTION 2: Financial Statements

Tony Stark owns and operates a dry cleaning and pressing business called "Ironing Man". At year end Tony has prepared the following partially completed Trial Balance. Tony knows it is not in the correct order and he has not yet included all the Balance Sheet accounts. There is however sufficient information to complete an Income Statement.

IRONING MAN TRIAL BALANCE AS AT 30 JUNE 2018


Debit ($)

Credit ($)

Shop Shelving

255 000


Delivery Van

120 000


Sales


1 560 000

Purchases

576 000


Insurance Expense

19 500


Allowance for Doubtful Debts


4 932

Accounts Receivable

82 200


Bank Overdraft


3 000

Shop Water Expense

12 000


Discount Received


6 000

Interest Expense

12 300


Office Water Expense

4 140


Loan (repayable 1 Oct 2019)


138 000

Discount Allowed

3 450


Bookkeepers Wages

75 000


Shop Staff Wages

256 386


Accumulated Depreciation - Office Furniture & Fittings


18 900

Accounts Payable


23 268

Doubtful Debts

4 932


Freight Inwards Expense

6 450


Advertising Expense

14 100


Shop Rent Expense

196 000


Office Cleaning Expense

35 400


Depreciation - Shop Shelving

36 000


Interest Received


4 500

Unearned Revenue


3 600

Depreciation - Delivery Van

30 000


Accumulated Depreciation - Shop Shelving


72 000

T. Stark, Capital (1 July 2017)


400 650

Depreciation - Office Furniture & Fittings

18 900


Inventory (1 July 2017)

157 200


Office Furniture and Fittings

96 000


Office Rent

53 750


Freight Out

22 260


Electricity Expense

29 100


Purchase Returns and Allowances


18 600

T. Stark, Drawings

108 000


Sales Returns & Allowances

2 850


Shop Cleaning

21 600


Tony has provided the following additional information to assist in your statement preparation:

  • 30% of the electricity expense specifically relates to the administration office. The remainder of this expense relates to running the store.
  • $15 600 of the insurance expense relates coverage for the shop premises. The remainder of this expense relates to the office.
  • The inventory stock take conducted on 30 June 2018 revealed $54,900 of stock on hand.

REQUIRED: Prepare a fully classified Income Statement using the partially completed Trial Balance and additional information provided.

QUESTION 3: Accounting Concepts, Communication

Part 1: The Business Letter

You are employed as a graduate accountant in a mid-tier accounting firm called Professional Accounting Solutions. As part of your ongoing professional development, the Managing Partner periodically presents you with a client's financial statements and asks you for comments in your own words (using references where appropriate), to demonstrate your understanding of various accounting concepts and assumptions.

This year, the managing Partner has provided you with the reports of Cycles'R Us and has asked that you write a formal business letter to her addressing the technical issues referred to below. She will then keep the letter on your employment file. The letter should be no more than 300 - 400 words (maximum). Penalties may be applied if the word limit is exceeded.

REQUIRED: On the following page, you are required write a letter in your own words to Christine Daniels (Managing Partner) addressing the three issues referred to below.

You have been presented with the accounts of Cycles'R US (a cycling shop owned and operated by Judy Wheeler) for the year ending 30 June 2018, and asked to explain the following:

1. Judy purchased a computer on 1 June 2018. Identify the correct treatment for recording the computer and explain why we cannot simply expense the entire cost. Refer to any appropriate accounting assumptions and/or definitions in your response.

2. Business owners often mistakenly believe that the 'carrying amount' of an asset in the Balance Sheet represents the asset's market or replacement value. With this in mind, explain the meaning of the amounts in the balance sheet extract below.

CYCLES' R US Balance sheet extract as at 30 June 2018

Computer

$2000

 

Less Accumulated Depreciation

200

$1800

3. As part of the process of preparing the year end accounts, a series of adjusting entries have been recorded, one of which is an entry to record the depreciation of assets. Explain the importance of adjusting entries by using the relevant accounting concepts, and also indicate the effect on the financial statements if the depreciation adjusting entry was not included.

Part 2: Use of communication skills

The following aspects of your written communication skills development will be awarded.

BEING RELEVANT

Does what is written contribute to answering the question(s)

  • Setting out to specifically answer the question(s) by using relevant information,
  • Staying 'on track' with answers,
  • Avoiding straying from the question and going off on irrelevant tangents.

WRITING FOR A PROFESSIONAL BUSINESS AUDIENCE (including good presentation)

  • The written work is clear and understandable,
  • Where applicable, the written work is based on the facts and available evidence,
  • Exaggeration and bold statements which are not supported by the facts and evidence are avoided.

Good presentation

  • The written work contains no spelling and grammatical errors. Obvious evidence of editing displayed. (Where the work contains any spelling and grammatical errors, it cannot be awarded more than 5 marks),
  • Any headings and sub-headings display properly, and are used consistently throughout the document,
  • Page numbering is used. It is usual for page numbering to commence on page 2 of a business document as "2",
  • Font size and font style are used consistently throughout the document,

QUESTION 4: Cash Flow Statement

You are provided with the following financial information for Dwayne Pipe Plumbing:

DWAYNE PIPE PLUMBING COMPARATIVE BALANCE SHEETS AS AT 30 JUNE

Current Assets

2019

2018

Cash on Hand

$1 200


$4 000


Cash at Bank

-


1 009


Accounts Receivable (net)

5 200


4 500


Inventory

28 000


18 000


Prepaid Expenses

1 650

$36 050

650

$28 159

Non-Current Assets





Plant & Equipment

83 500


64 000


Less:Accum. Depreciation

(23 000)

60 500

(17 600)

46 400

Total Assets


96 550


74 559






Current Liabilities





Bank Overdraft

6 402


-


Accounts Payable

4 000


2 800


Expenses Payable

780


790


Tax Payable

890

12 072

1 200

4 790

Non-Current Liabilities





Bank Loan


20 000


20 000

Total Liabilities


32 072


24 790

Net Assets


$64 478


$49 769






Equity





Capital - D.Pipe


64 478


49 769



$64 478


$49 769

 

DWAYNE PIPE PLUMBING INCOME STATEMENT FOR THE YEAR ENDED 30 JUNE 2018 

Net Sales


$107000

Cost of Sales


45 200

Gross Profit:


61 800

Other Revenue:



Discount Received

$280


Interest Revenue

40

320



62 120

Expenses:



Selling & Admin Expense

16 500


Doubtful Debts Expense

354


Depreciation Expense

5 400


Interest Expense

3 800

26 054

Profit before tax


36 066

Income Tax Expense


3 378

Profit


$32 688

ANSWER THIS QUESTION ON THE PRO FORMA PROVIDED.

REQUIRED:

a. Prepare a Statement of Cash Flows in the pro forma provided on the following page. You must show all calculations (an answer without supporting calculations will receive zero marks).

Attachment:- Assignment File.rar


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