Assignment
QUESTION 1: Balance Day Adjustments
|
Chipping Good Takeaway
Trial Balance
30 June 2016
|
|
|
Debit ($)
|
Credit ($)
|
|
Shop Cleaning Expense
|
58 400
|
|
|
Water Expense
|
3752
|
|
|
Motor Vehicle
|
45 000
|
|
|
Cash at Bank
|
146 810
|
|
|
Shop Furniture
|
75 000
|
|
|
Gas Expense
|
5034
|
|
|
Sales Returns & Allowances
|
1 060
|
|
|
Interest expense
|
9 200
|
|
|
Discount Received
|
|
2 250
|
|
Electricity Expense
|
7400
|
|
|
Lilly, Capital
|
|
264 475
|
|
Accounts Receivable
|
650
|
|
|
Loan
|
|
55 885
|
|
Accumulated Depreciation - Motor Vehicle
|
|
9 000
|
|
Inventory (1 July 2015)
|
58 950
|
|
|
Rent Expense
|
30 256
|
|
|
Bookkeepers Wages Expense
|
41 459
|
|
|
Shop Staff Wages Expense
|
49 090
|
|
|
Purchases
|
253 000
|
|
|
Advertising Expense
|
24 700
|
|
|
Office Cleaning Expense
|
20 000
|
|
|
Accounts Payable
|
|
10 233
|
|
Office Supplies Expense
|
2 350
|
|
|
Lilly, Drawings
|
58 065
|
|
|
Cooking Oil Disposal Expense
|
12 683
|
|
|
Repairs and Maintenance Payable
|
|
10 750
|
|
Sales
|
|
634436
|
|
Accumulated Depreciation - Refrigeration Equipment
|
|
32 625
|
|
Accrued Rent
|
|
2 270
|
|
Refrigeration Equipment
|
95 625
|
|
|
Discount Allowed
|
1 300
|
|
|
Deep Fryer
|
18 300
|
|
|
Insurance Expense
|
3 840
|
|
|
Totals
|
1 021 924
|
1 021 924
|
Lilly has emailed you the following list of account information related to the year ended 30 June 2016:
(1) The Shop Furniture is expected to have a useful life of seven years and have a $1290 residual value (calculate and record the depreciation expense for the year). The deep fryer is expected to be depreciated at an amount of $9,000 per year and have a residual value of $300.
(2) The Office Supplies on hand at 30 June 2016 was $843.
(3) The 12 month Insurance policy (policy #247786) of $3 840 was paid on February 1 2016.
(4) The Motor Vehicle is expected to have a useful life of five years and have a zero scrap value (calculate and record the depreciation expense for the year).
(5) $12 314 of the recorded sales represent receipts for catering at the Nutwood Music Festival which is not until the 4th August 2016.
(6) On 30th June, Lillyestimated$50 of Accounts Receivable will not be collected as this amount has been outstanding for 240 days.
(7) Staff wages payable but not recorded as at 30 June are $1 886. Of this $848 was bookkeepers wages payable whilst the remaining amount of $1 038 was shop staff wages payable.
(8) The bank has approved an overdraft facility for $10 000 for Chipping Good Takeaway.
(9) The Refrigeration Equipment is expected to have a useful life of ten years and have a $4 000 scrap value (calculate and record the depreciation expense for the year).
REQUIRED:
It is now the end of the financial year and Lilly requires you to undertake the following:
a. Prepare the Balance Day Adjustment Journals for Chipping Good Takeaway where required. Include narration (explanation) for each journal entry.
b. Post the journals from (a) above to the General Ledger provided.
c. Complete the attached Adjusted Trial Balance provided for the account balances calculated in the General Ledger from (b) above.
a. Prepare the Balance Day Adjustment Journals for Chipping Good Takeawaywhere required. Include narration (explanation) for each journal entry.
b. Post the journals from (a) above to the General Ledger provided. All ledgers must be footed.
c. Complete the attached Adjusted Trial Balance in the proforma provided. You may need to insert additional accounts that are not currently listed.
|
Chipping Good Takeaway
- ADJUSTED TRIAL BALANCEAS AT 30 JUNE 2016
|
Debit ($)
|
Credit ($)
|
|
Shop Cleaning Expense
|
58 400
|
|
|
Water Expense
|
3752
|
|
|
Motor Vehicle
|
45 000
|
|
|
Cash at Bank
|
146 810
|
|
|
Shop Furniture
|
75 000
|
|
|
Gas Expense
|
5034
|
|
|
Sales Returns & Allowances
|
1 060
|
|
|
Interest expense
|
9 200
|
|
|
Discount Received
|
|
2 250
|
|
Electricity Expense
|
7400
|
|
|
Lilly, Capital
|
|
264 475
|
|
Accounts Receivable
|
650
|
|
|
Loan
|
|
55 885
|
|
Accumulated Depreciation - Motor Vehicle
|
|
|
|
Inventory
|
58 950
|
|
|
Rent Expense
|
30 256
|
|
|
Bookkeepers Wages Expense
|
|
|
|
Shop Staff Wages Expense
|
|
|
|
Purchases
|
253 000
|
|
|
Advertising Expense
|
24 700
|
|
|
Office Cleaning Expense
|
20 000
|
|
|
Accounts Payable
|
|
10 233
|
|
Office Supplies Expense
|
|
|
|
Lilly, Drawings
|
58 065
|
|
|
Cooking Oil Disposal Expense
|
12 683
|
|
|
Repairs and Maintenance Payable
|
|
10 750
|
|
Sales
|
|
|
|
Accumulated Depreciation - Refrigeration Equipment
|
|
|
|
Accrued Rent
|
|
2 270
|
|
Refrigeration Equipment
|
95 625
|
|
|
Discount Allowed
|
1 300
|
|
|
Deep Fryer
|
18 300
|
|
|
Insurance Expense
|
|
|
|
TOTAL
|
|
|
QUESTION 2: Financial Statement
The following Trial Balance for Buzz's Toyshop has been prepared at year end by Buzz but he realises it is not in the correct order.
Buzz'sToy Shop - TRIAL BALANCE AS AT 30 JUNE 2016
|
Shop Furniture & Fittings
|
Debit ($)
|
Credit ($)
|
|
Shop Furniture & Fittings
|
30 421
|
|
|
Accounts Receivable
|
46 089
|
|
|
Accumulated Depreciation - Shop Furniture & Fittings
|
|
9020
|
|
Office Rent Expense
|
3 650
|
|
|
Cash at Bank
|
43 066
|
|
|
Advertising Payable
|
|
4526
|
|
Sales
|
|
545 000
|
|
Electricity Expense
|
1 568
|
|
|
Purchases
|
386 210
|
|
|
Buzz, Capital
|
|
44 810
|
|
Depreciation Expense - Shop Furniture & Fittings
|
3 550
|
|
|
Interest received
|
|
2 310
|
|
Freight Inwards
|
2 820
|
|
|
Shop Rent Expense
|
25 650
|
|
|
Accounts Payable
|
|
16 018
|
|
Discount Allowed
|
3 725
|
|
|
Inventory (1 July 2015)
|
20 960
|
|
|
Salaries Expense - Store
|
33 400
|
|
|
Loan Payable
|
|
33 600
|
|
Allowance for Doubtful Debts
|
|
1 000
|
|
Prepaid Advertising
|
1 540
|
|
|
Interest Payable
|
|
620
|
|
Advertising Expense
|
6 547
|
|
|
Purchase returns and allowances
|
|
5 421
|
|
Sales Equipment
|
14 400
|
|
|
Interest Expense
|
470
|
|
|
Doubtful Debts Expense
|
1 000
|
|
|
Buzz, Drawings
|
18 500
|
|
|
Sales Returns & Allowances
|
8 630
|
|
|
Discount Received
|
|
3 171
|
|
Office Salaries Expense
|
13 300
|
|
**The loan is payable in equal amounts over 48 months**
**A physical stocktake of inventory at 30th June 2016 revealed $46,750 on hand.
REQUIRED:
Prepare a fully classified Income StatementandStatement of Changes in Equityusing the Trial Balance provided for the period in question
QUESTION 3: Accounting Concepts
For each of the following scenarios, in your own words, using references where appropriate:
(a) Explain which accounting concept/s or definitions has/have been violated, and
(b) State the correct accounting treatment required.
Superman Pty Ltd provides superhero services to those in perilous situations. Once Clark Kent (aka Superman) becomes aware of someone in need he races to the one and only telephone booth on the corner of 42nd and 62nd street to change into his distinctive blue costume.
You are the Chief Financial Officer of Superman Pty Ltd and during your last meeting with Clark Kent he requested that the telephone booth on the corner of 42nd and 62nd street be listed as an asset in the Superman Pty Ltd business as he argues that he requires this particular booth to change into his Superhero costume and cannot use any other booth, as this particular booth is larger than any other in the city and has a secret invisible cupboard in which he stores his Superman costume.
In your own words, in a letter document format please advise Clark Kent whether or not the telephone booth can be recorded as an asset in the business of Superman Pty Ltd. Refer to the conceptual framework.
QUESTION 4: Cash Flow Statement
Sally Slipper is a client of your accounting firm. Sally has sought your advice regarding the potential purchase of a shoe shop. Sally has provided you with the summarised cash flow statements for two shoe shops which are currently for sale. You have told Sally that you will review the two summarised cash flow statements and will send her a letter explaining each section of the cash flow statement and which of the two businesses has the healthier cash flow situation. Sally is quite confused about the cash flow statements so you have assured her that you will fully explain your analysis each of the three types of cash flows for each business.
The letter must be written in your own words.
|
|
Instep Ltd
|
Soft Sole's Ltd
|
|
Cash flow from Operating Activities
|
28 800
|
(28 800)
|
|
Cash flow from Investing Activities
|
(19 200)
|
19 200
|
|
Cash flow from Financing Activities
|
16 000
|
(16 000)
|
|
Net increase / (decrease) in cash held
|
25 600
|
(25 600)
|
|
Cash at the beginning of the year
|
44 300
|
44 300
|
|
Cash at the end of the year
|
69 900
|
18 700
|
[Word limit 400 words]
Attachment:- Template.rar