Recent Question/Assignment

Student Number: (enter on the line below)
Student Name: (enter on the line below)
Assessment Weight: 50 total marks
• All questions must be answered in this paper.
• Completed answers must be submitted to Blackboard by the published due date and time.
Please strictly follow the submission instructions posted in the announcement
This assessment consists of six (6) questions and is designed to assess your level of knowledge of the key topics covered in this unit

Question 1 (8 marks)
Phoenix Ltd’s sells silk scarfs. It uses the Periodic Inventory System and prepares financial statements at the end of each month. The following information is provided in relation to its inventory at the beginning of the month November 2021 and all purchases during the month. Ignore GST.
Units Total cost ($)
1/11 Beginning inventory 1105 22,100
10/11 Purchase 1300 26,650
20/11 Purchase 1235 25,935
25/11 Purchase 1053 23,166
Totals 4,693 $97,851
A physical count at the end of the month verified that 1,200 scarfs were on hand.
A. Determine the cost of the ending inventory and the cost of sales for the month of November, using the Average Costing method. (2 marks)
B. Assume that on 5 November, inventory was sold for $2,800 on credit. What would be the journal entry/entries to record the sales transaction? What would be the entry/entries to record the purchase of inventory on 10 November? (2 marks)
C. What would be the entries for the two transactions in requirement B if the business had used the perpetual inventory system? (2 marks)
D. Assume that the perpetual inventory system is used, the entity’s inventory records show that 1,300 scarfs should be on hand. Given the physical count of inventory mentioned in the question is accurate, what accounting adjustment would be needed (assuming FIFO method is used) and what might the need for this adjustment indicate about the business’s operations? (2 marks)
Question 2 (10 marks)
Safe Security Doors Ltd. undertakes bank reconciliation at the end of each month before preparing its monthly financial statements. The following information is produced by comparing the cash deposits and withdrawals recorded by the business in October with their bank statement received for the month ending 31 October 2021:
a. The bank statement for the month of October shows a credit balance of $157,150 as at 31 October 2021.
b. Safe Security Doors Ltd.’s cash at bank ledger account has a debit balance of $152,922 at 31 October 2021.
c. Bank statement shows a direct electronic transfer from a customer of $16,590 that has not been recorded by the entity.
d. $10,990 cash received from a customer Adam on 30 October (invoice no. 511) and $15,463 cash received from another customer Brian on 31 October (invoice no. 513) are recorded in the entity’s accounting record but are not shown in the bank statement.
e. Cheque no. 412 and 413 are not included in the bank statement.
# 412 $ 11,263
# 413 $ 9,730
f. Safe Security Doors Ltd. incorrectly recorded a payment for supplies expenses as $3,100 in its record. The correct amount for the cheque issued is $4,400 instead.
g. A dishonoured cheque written by a customer Cindy Davis, $5,700.
h. Interest earned on bank account is $119
i. Bank deducted transaction fees of $21 for an overseas transfer by the entity.
The business doesn’t use special journals for record keeping. All transactions are recorded in the general journal and posted to ledgers immediately.
A. Prepare a bank reconciliation statement for Safe Security Doors Ltd as at 31 October 2021. You should show both the adjusted cash balance per book and per bank and also indicate clearly whether the balance is a debit or credit. (7 marks)
B. Discuss three (3) internal control principles for cash payments. Provide corresponding examples of procedures that are applicable to each principle. (3 marks)
Question 3 (10 marks)
AU Removals’ financial year ends on 31 December each year. On 1 January 2019, AU Removals purchased a truck for $144,000. You are the accountant of the business and you have estimated that the truck is to last 10 years and to have 6,000 residual value at that point. As per the business plan, the truck can be used to drive 315,000 kilometres over the 10 years, with per-year projections of 18,000 km, 24,000 km, 21,000 km, respectively over the first three years.
A. Calculate the accumulated depreciation balance at the end of the second year using each of the following depreciation bases. Show your workings. Your calculations should be rounded to the nearest whole number dollar amount. (6 marks)
a. straight-line
b. diminishing balance (27 per cent rate)
c. units-of-production.
B. Discuss the nature of depreciation. (2 marks)
C. Suppose that, on 31 December 2020, the truck is sold for $125,000 in cash. Assuming the straight-line method is used, record the transaction in the general journal. (2 marks)
Question 4 (8 marks)
The following data is extracted from the financial records of AU Tiles. The data is in relation to the financial year ending 31 December 2018 and 31 December 2019.
31 December 2018 31 December 2019
$ $
Cash at bank 17,600 20,800
Inventories 1,046,400 1,209,600
Accounts receivable 810,000 832,000
Bills receivable 13,600 15,680
Bad debts written off during the year 9,920 -
Sales revenue for the year 2,912,000 4,160,000
Discount allowed 5,120 4,480
The business uses the Income Statement method to estimate its’ doubtful debts each year. It has been estimated that 1% of the sales revenue of the year will be the bad debts expense for the year. At the beginning of Year 2018, the Allowance for Doubtful Debts account has a credit balance of $19,000.
A. Determine the amounts of the following accounts. Show your workings for each item. (2 marks)
a) Bad debts expenses for the year ending 31 December 2018
b) Allowance for doubtful debts at the end of year 2018
c) Bad expenses for the year ending 31 December 2019
d) Allowance for doubtful debts at the end of year 2019
B. Calculate the receivable turnover ratio for year 2019 and comment on the ratio. (2 marks)
C. Discuss the differences between ageing method and percentage of net credit sales method. (2 marks)
D. Using the information provided in the question and your calculation from requirement A, prepare the Current Assets section of the balance sheet as at 31 December 2019. (2 marks)
Question 5 (4 marks)
Apply the definition and recognition criteria of liabilities, discuss why, or why not, each of the following items is recognised as a liability in the financial statement.
a) Provision for doubtful debts
b) Provision for warranty
c) Pre-collected fees from customer
d) GST receivable
e) GST collection
f) A disputable lawsuit
g) 10-years Mortgage
h) Notes payable
Question 6 (10 marks)
Tidy & Cleaning Services provides cleaning and housekeeping services to both households and businesses. The entity prepares financial statements at the end of each month. The following information is provided in relation to the business’s operations in the month of August 2021.
1. On 1 August, a 5-month rent of $35,000 is paid for the period from 1 August to 31 December 2021.
2. On 2 August, the business signed an advertising agreement, that costs $4,500 for three (3) months plus $1 per each click on their advertisements, with an online website to promote its business for the next three months. The agreement stated $1,500 per month will need to be paid in advance at the beginning of each month, $1 per each click on their ads will be paid at the end of the 3rd month agreement. A $1,500 advance was paid on 2 August.
3. On 10 August, Marco Motel paid the business $35,000 in advance to do the cleaning of their guest rooms for the next five months. By the end of August, 20% of the cleaning work has been completed.
4. Cleaning supplies account had a debit balance of $550 at the beginning of the month. On 20 August, the business purchased $5,200 cleanings supplies. At the end of the month, a physical count shows that $1,250 of supplies are still on hand.
5. The business has 15 part-time employees who each earn $210 per day. They all worked 20 days in the month of August. They were paid for the 20 days on 31 August.
6. A 1-year insurance policy of $4,200 was purchased on 1 January 2021.
A. Record the transactions occurred in the month of August in the general journal. (5 marks)
B. Prepare the necessary adjusting entries at the end of the month. (5 marks)
Submission instructions:
• Save submission with your STUDENT ID NUMBER and UNIT CODE e.g. EMV54897 HI5001
• Submission must be in MICROSOFT WORD FORMAT ONLY
• Upload your submission to the appropriate link on Blackboard
• Only one submission is accepted. Please ensure your submission is the correct document.
• All submissions are automatically passed through SafeAssign to assess academic integrity.