Assignment Part I
Question 1
Refer to the consolidated financial statements (including notes) in the 2012 annual report of JB Hi-Fi Limited (www.jbhifi.com.au ) and answer the following:
1. What is the value of the business' sales revenue for the current and previous years? Calculate the percentage change in sales revenue.
2. What is the business' profit after tax for the current and previous years? Calculate the percentage change in profit after tax.
3. Compare the percentage changes calculated in 1. and 2. What information does this provide?
4. What is the total value of inventory for the current and previous years? Calculate the percentage change in inventory. Comment on the inventory management by comparingthe percentage change in inventory with the percentage calculated in 1.
5. Calculate inventory turnover for the current and previous years.What does the change in inventory turnover indicatewith respect to the profitability of the group?
6. Have trade receivables increased or decreased over this year, and by how much? Is the figure reported gross or net receivables?
7. What was the amount of bad debts written off for the current and previous years?What are the possible reasons for the change in the amount of bad debts written off?
8. Calculate the average collection period for trade receivables for the current and previous years using the gross method. Comment on the credit control performance of the group?(Hint: if net credit sales is not available, total salescan be used as a substitute to calculate the average collection period. Assuming the proportion of cash to credit sales has remained constant.)
9. Calculate appropriate profitability ratios for 2012 and 2011, and assess JB Hi-Fi's profit performance.
Question 2
You are the accountant for ColourfulPollies Flower Shop. You are required to complete the bank reconciliation for the business for the month ended 30 April 2012. The bank reconciliation for March 2012 is as follows:
|
ColourfulPollies Flower Shop
Bank Reconciliation
as at 31 March 2012
|
|
|
Balance per bank statement 31 March 2012
|
$4634.58 Cr
|
|
ADD: Outstanding deposit
|
432.67
|
|
|
5067.25
|
|
LESS: UnpresentedCheques
Cheque No 5467 $67.35
5468 134.89
5470 287.34
|
489.58
|
|
Balance per Cash at Bank account as at 31 March 2012
|
$4577.67Dr
|
Abridged cash receipts and cash payments journal are shown below. Both journals have been finalised and posted to the general ledger account as at 30 April 2012.
|
Cash Payments Journal
|
|
Date
|
Account
|
Cheque no.
|
Cash at Bank
|
|
2012
|
|
|
|
|
Apr-01
|
White Ltd
|
5471
|
345.67
|
|
2
|
Blue Ltd
|
5472
|
189.60
|
|
4
|
Wages and salaries
|
5473
|
880.00
|
|
5
|
Petty cash
|
5474
|
54.65
|
|
D. Red
|
5475
|
125.60
|
|
8
|
Tan & Sons
|
5476
|
54.90
|
|
9
|
Calpol Petrol
|
5477
|
95.00
|
|
Accommodation
|
5478
|
235.40
|
|
11
|
Green & Partner
|
5479
|
584.30
|
|
12
|
Electricity Ltd
|
5480
|
720.89
|
|
15
|
Big Gas Corporation
|
5481
|
220.54
|
|
Telephone Company
|
5482
|
325.90
|
|
17
|
Advertising
|
5483
|
220.00
|
|
18
|
Wages and salaries
|
5484
|
880.00
|
|
19
|
Donation - Blue Cross
|
5485
|
50.00
|
|
22
|
Freight
|
5486
|
80.00
|
|
24
|
Purchases
|
5487
|
2 080.90
|
|
25
|
Calpol Petrol
|
5488
|
56.80
|
|
26
|
R Vermillion
|
5489
|
125.00
|
|
29
|
Petty Cash
|
5490
|
42.05
|
|
30
|
T Crimson
|
5491
|
38.70
|
|
|
|
|
7 405.90
|
|
|
|
|
|
|
Cash Receipts Journal
|
|
|
Date
|
Account
|
Cash at Bank
|
|
|
2012
|
|
|
|
|
Apr-01
|
Sales
|
599.54
|
|
|
2
|
G Whitlam
|
56.98
|
|
|
|
Sales
|
515.90
|
|
|
4
|
P. Gorton
|
64.00
|
|
|
|
Sales
|
602.78
|
|
|
5
|
Sales
|
548.70
|
|
|
8
|
B Hawke
|
98.00
|
|
|
|
J Howard
|
45.68
|
|
|
|
Sales
|
555.60
|
|
|
9
|
Sales
|
525.00
|
|
|
12
|
P Keating
|
34.65
|
|
|
|
Sales
|
502.40
|
|
|
15
|
Sales
|
519.56
|
|
|
17
|
B McMahon
|
35.40
|
|
|
|
G Whitlam
|
22.20
|
|
|
|
Sales
|
440.86
|
|
|
19
|
P Keating - dishonored cheque
|
-34.65
|
|
|
|
Sales
|
498.90
|
|
|
22
|
Sales
|
548.65
|
|
|
26
|
B Sneddon
|
34.50
|
|
|
|
Sales
|
536.00
|
|
|
29
|
Sales
|
506.80
|
|
|
30
|
Sales
|
480.65
|
|
|
|
|
7738.10
|
|
|
|
|
|
|
|
ColourfulPollies
|
|
Bank Statement for 31 March 2012 - 30 April 2012
|
|
|
|
|
|
|
|
Date
|
Particulars
|
Debit
|
Credit
|
Balance
|
|
|
2012
|
|
|
|
|
|
|
Apr-01
|
Balance
|
|
|
4,634.58
|
CR
|
|
2
|
5468
|
134.89
|
|
4,499.69
|
CR
|
|
Deposit
|
|
432.67
|
4,932.36
|
CR
|
|
Deposit
|
|
599.54
|
5,531.90
|
CR
|
|
3
|
Deposit
|
|
572.88
|
6,104.78
|
CR
|
|
4
|
Term Deposit maturing
|
|
10,527.10
|
16,631.88
|
CR
|
|
5471
|
345.67
|
|
16,286.21
|
CR
|
|
5472
|
189.60
|
|
16,096.61
|
CR
|
|
5473
|
880.00
|
|
15,216.61
|
CR
|
|
Deposit
|
|
666.78
|
15,883.39
|
CR
|
|
5
|
5474
|
54.65
|
|
15,828.74
|
CR
|
|
Deposit
|
|
548.70
|
16,377.44
|
CR
|
|
6
|
5470
|
287.34
|
|
16,090.10
|
CR
|
|
8
|
Deposit
|
|
699.28
|
16,789.38
|
CR
|
|
9
|
5477
|
95.00
|
|
16,694.38
|
CR
|
|
Deposit
|
|
525.00
|
17,219.38
|
CR
|
|
10
|
Term Deposit invested
|
15,000.00
|
|
2,219.38
|
CR
|
|
12
|
5475
|
125.60
|
|
2,093.78
|
CR
|
|
5478
|
235.40
|
|
1,858.38
|
CR
|
|
Returned Cheque
|
98.00
|
|
1,760.38
|
CR
|
|
Deposit
|
|
537.05
|
2,297.43
|
CR
|
|
15
|
5479
|
584.30
|
|
1,713.13
|
CR
|
|
5476
|
54.90
|
|
1,658.23
|
CR
|
|
5481
|
220.54
|
|
1,437.69
|
CR
|
|
Deposit
|
|
519.56
|
1,957.25
|
CR
|
|
17
|
5482
|
325.90
|
|
1,631.35
|
CR
|
|
5479
|
584.30
|
|
1,047.05
|
CR
|
|
Deposit
|
|
498.46
|
1,545.51
|
CR
|
|
18
|
5484
|
880.00
|
|
665.51
|
CR
|
|
|
|
|
|
|
|
|
19
|
5480
|
720.89
|
|
55.38
|
DR
|
|
|
|
|
|
|
|
|
5483
|
230.00
|
|
285.38
|
DR
|
|
Deposit
|
|
498.90
|
213.52
|
CR
|
|
Returned Cheque
|
34.65
|
|
178.87
|
CR
|
|
22
|
5486
|
80.00
|
|
98.87
|
CR
|
|
Deposit
|
|
548.65
|
647.52
|
CR
|
|
26
|
5485
|
50.00
|
|
597.52
|
CR
|
|
|
|
|
|
|
|
|
5487
|
2,080.90
|
|
1,483.38
|
DR
|
|
|
|
|
|
|
|
|
Deposit
|
|
570.50
|
912.88
|
DR
|
|
|
|
|
|
|
|
|
29
|
5488
|
56.80
|
|
969.68
|
DR
|
|
|
|
|
|
|
|
|
5490
|
42.05
|
|
1,011.73
|
DR
|
|
|
|
|
|
|
|
|
30
|
Deposit
|
|
506.80
|
504.93
|
DR
|
|
|
|
|
|
|
|
|
Bank Charges
|
60.00
|
|
564.93
|
DR
|
|
|
|
|
|
|
|
|
Interest Paid
|
8.00
|
|
572.93
|
DR
|
|
TOTAL
|
23,459.38
|
18,251.87
|
|
|
|
|
|
|
|
|
The following is a copy of the bank statement for the month of April 2012.
Additional information:
- Cheque No 5483 - the invoice amount from the Sydney Morning Herald was for $230
- 4 April - A term deposit matured and was deposited directly to the bank account. The amount included interest of $527.10
- 10 April - A new term deposit commenced for $15 000 for a term of 6 months
Required:
1) The final totals from the Cash Receipts and Cash Payments Journals have been posted to the General Ledger account for Cash at Bank, prepare any journal entries required to reconcile the bank statements to the general ledger at 30 April 2012. Narrations are required.
2) Prepare the general ledger account for Cash at Bank (in T-account format) showing the final account balance as at 30 April 2012.
3) Prepare the bank reconciliation statement as at 30 April 2012.
4) With the completion of the bank reconciliation, outlinethree conclusions can be drawn regarding controls over cash and the usefulness of preparing a bank reconciliation.
Assignment Part II
Question 1
Part A
Yarra Stationery Store is in the city center of Sydney. At the end of the business reporting period on 30 June 2013, the following accounts appeared in two of its trial balances. All accounts have normal balances.The ending inventory was determined by a physical stock take count was $47 930.
|
Account
|
Unadjusted
|
Adjusted
|
|
Cash at bank
|
$ 21 900
|
$21 900
|
|
Accounts receivable
|
26 230
|
26 230
|
|
Inventory (1 July 2012)
|
59 170
|
59 170
|
|
Prepaid insurance
|
2 400
|
700
|
|
Store equipment
|
39 060
|
39 060
|
|
Accumulated depreciation - store equipment
|
11 560
|
15 660
|
|
Delivery van
|
9 800
|
9 800
|
|
Accumulated depreciation - vehicle
|
4 100
|
6 130
|
|
Accounts payable
|
12 780
|
12 780
|
|
Loan payable
|
15 000
|
15 000
|
|
Interest payable
|
|
980
|
|
Rent payable
|
|
11 500
|
|
Yarra, Capital
|
78 620
|
78 620
|
|
Yarra, Drawings
|
21 780
|
21 780
|
|
Sales
|
357 960
|
357 960
|
|
Sales returns and allowances
|
14 610
|
14 610
|
|
Discount received
|
1 070
|
1 070
|
|
Purchases
|
199 570
|
199 570
|
|
Purchases returns and allowances
|
12 800
|
12 800
|
|
Freight inwards
|
4 120
|
4 120
|
|
Sales salaries expense
|
43 100
|
43 100
|
|
Freight outwards
|
2 000
|
2 000
|
|
Discount allowed
|
1 800
|
1 800
|
|
Interest expense
|
2 130
|
3 110
|
|
Insurance expense
|
|
1 700
|
|
Depreciation expense - store equipment
|
|
4 100
|
|
Depreciation expense - vehicle
|
|
2 030
|
|
Office salaries expense
|
46 220
|
46 220
|
|
Rent expense
|
|
11 500
|
Required:
1) By comparing the Unadjusted Trial Balance with the Adjusted Trial Balance, journalise the adjusting entries that you can discern were made. Narrations are required.
2) Journalise the closing entries that are necessary. Narrations are required.
3) Prepare an Income Statement for the year ended 30 June 2013.
Part B
Givenchy and Energy are two businesses that are very similar in many aspects. One difference is the depreciation methods they apply. Givenchy uses the straight-line method while Energy uses the reducing-balance method at double the straight-line rate. On 1 July 2010, both businesses acquired the following depreciable assets.
|
Asset
|
Cost
|
Residual value
|
Useful life
|
|
Building
|
$250 000
|
$20 000
|
40 years
|
|
Equipment
|
125 000
|
10 000
|
10 years
|
Including the appropriate depreciation expenses, annual profit for the businesses in the years 2011, 2012 and 2013 were as follows.
|
|
2011
|
2012
|
2013
|
Total
|
|
Givenchy
|
$80 000
|
$84 000
|
$90 000
|
$254 000
|
|
Energy
|
70 000
|
76 000
|
85 000
|
231 000
|
As at 30 June 2013, the two businesses have similar financial positions except that Energy has more cash than Givenchy. Linda Young is considering investing in one of the businesses andhas come to you for advice.
Required:
1) Reconstruct an extract from the Balance Sheet showing the value of depreciable assets for the year ended 30 June 2012 for Energy.Show all workings (Round the accumulated depreciation to the nearest dollar).
2) Assuming Energy also uses the straight-line method of depreciation, calculate the annual profit for Energy for 2011, 2012 and 2013,showing all workings.
3) Based on the information given and your calculations, explain why Energy has more cash than Givenchy as at 30 June 2013. Has the annual depreciation expense contributed to the business cash flow position? Advise Linda Young which company she should invest in? Justify your answer.
Question 2
Part A
Mira Maz loves decorating and set up her own business a few years ago; Mira's Decorating Touches. The business is registered for GST, and has a 30 September year-end date.
The business is doing very well lately and Mira no longer has time to manage the books. She has approached you as her friend, and chartered accountant, to help her prepare her financial statements. Mira has provided you with her adjusted ledger balance as at 30 September 2012, as follows:
|
Account
|
Adjusted
|
|
Accounts payable
|
$36 036
|
|
Accounts receivable
|
102 528
|
|
Accumulated depreciation - delivery equipment
|
37 440
|
|
Accumulated depreciation - furniture and fixtures
|
21 216
|
|
Advertising expense
|
35 880
|
|
Cash at bank
|
35 688
|
|
Cost of sales
|
549 744
|
|
Delivery equipment
|
62 400
|
|
Depreciation expense - delivery equipment
|
12 480
|
|
Depreciation expense - furniture and fixtures
|
5 304
|
|
Discount allowed
|
9 048
|
|
Discount received
|
11 232
|
|
Electricity expense
|
13 344
|
|
Freight inwards
|
12 480
|
|
Freight outwards
|
24 336
|
|
Furniture and fixtures
|
53 040
|
|
GST Collections
|
94 817
|
|
GST Outlays
|
67 205
|
|
Insurance expense
|
3 744
|
|
Inventory
|
187 200
|
|
Loan payable
|
156 000
|
|
Mira Maz, Capital
|
162 552
|
|
Mira Maz, Drawings
|
37 440
|
|
Office Supplies expense
|
2 496
|
|
Office Supplies on hand
|
1 872
|
|
Prepaid insurance
|
2 808
|
|
Rent expense
|
38 064
|
|
Salaries expense
|
140 784
|
|
Salaries payable
|
4 680
|
|
Sales revenue
|
961 400
|
|
Sales returns and allowances
|
13 232
|
Required:
1) Mira is keen to see the balance of her capital account, and asks you to prepare the narrative Balance Sheet as at 30 September 2012.
2) When you review the Balance Sheet, you notice Mira has not accounted for any doubtful debts. You advise her to provide you with an ageing analysis of her debtors. She provides you with the following analysis, but has not completed the last column:
|
|
Accounts Receivable Balance
|
% estimated uncollectable
|
Estimated bad debts
|
|
Accounts not yet due
|
$38 600
|
5
|
|
|
Accounts overdue: 10 - 30 days
|
12 378
|
10
|
|
|
31 - 60 days
|
10 150
|
20
|
|
|
61 - 120 days
|
6 400
|
35
|
|
|
121 days and over
|
35 000
|
85
|
|
|
|
$102 528
|
|
|
2a) Complete the last column, in the table above, showing all calculations below and round to the two decimal places.
2b) Prepare the journal entry to establish the Allowance for doubtful debts account, in accordance with your calculations in the last column from the table above. Narrationsare not required.
|
Date
|
Account
|
Debit
|
Credit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2c) On inspection of correspondence with debtors, it was determined that amounts due from customers totaling $33 000 must be written-off as uncollectable. Record the journal entry to reflect this. Narrations are not required.
|
Date
|
Account
|
Debit
|
Credit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2d) The following day, Mira rings you to tell you that she received a cheque for $18 700, as payment in full for one of the accounts that had been written off as uncollectable. Record the journal entries to record the transaction. Narrations are not required.
Part B
Following are three requirements that affect certain assets:
1. the lower of cost and net realisable value rule;
2. accounting for depreciation by means of an accumulated depreciation account; and
3. accounting for doubtful debts by means of an allowance for doubtful debts account.
Required:
a) Which three accounting assumptions enable these three requirements to be used? Explain your answer.
b) Explain why we use these three requirements. (Hint: discuss how the relevant accounts, and the corresponding accounts, for each of the three requirements effect aspects of the Balance Sheet and Income Statement, in terms of overstatements or understatements.)
c) Explain what the collective impact is of these three requirements on the quality of the resulting accounting information provided to users.