Expert answer:Balance sheet, Balance day adjustment, General Led
Expert answer:MUST KNOW ALL ACCOUNTING EQUATION AND CONCEPT. Must know how to elaborate and write cash flow statement. Please answer all question. Thank you
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QUESTION 2: Balance Day Adjustments (25 marks)
This is not a typo. Q1 was included in Part A of the assignment, which now continues in Q2.
Below is the unadjusted Trial Balance for Auldana Custom Concrete Foundations as at 30th June
2016.
NOTE: Please use this trial balance to complete the question ( NOT the trial balance you completed in
Part A of the assignment).
ATRIUM FLORAL SUPPLIES
UNADJUSTED TRIAL BALANCE
AS AT 30 June 2017
Debit ($)
18 388
19 685
20 050
5 514
2 676
51 030
Cash at Bank
Accounts Receivable
Inventory
Prepaid Insurance
Office Supplies on hand
Furniture & Fittings
Accumulated Depreciation – Furniture & Fittings
Equipment
Accumulated Depreciation – Equipment
Accounts Payable
Advertising Payable
Loan Payable
Penny’s AFS – Capital
Penny’s AFS – Drawings
Sales Revenue
Sales Returns and Allowances
Cost of Sales
Discount received
Freight inwards
Sales Salary Expense
Delivery Expense
Advertising Expense
Rent Expense
Office Salaries Expense
Electricity Expense
Discount Allowed
Totals
Credit ($)
12 634
74 845
18 120
25 327
1 700
48 805
53 580
36 655
725 900
10 010
162 308
13 096
7 920
66 936
19 692
26 660
27 148
35 150
7 656
6 839
599 162
On the next page is Penny’s information related to the year that ended 30 June 2016.
1
599 162
(1)
A count of the stationery room showed that Office Supplies on hand at 30th June 2016 were
$2 510.
(2)
Both the Furniture & Fittings and the Equipment will be used evenly over their useful lives.
The expected total useful lives and residual values of both assets is as follows:
Furniture & Fittings
Equipment
Estimated Useful life
6 years
10 years
Estimated Residual
$6030
$800
(3)
Interest on the loan is 8.5% per year. Interest accrued but not recorded at 30th June was
$248.
(4)
In order to allow for cash flow fluctuations, the bank has approved a $25,000 overdraft
facility for Penny’s business bank account.
(5)
The balance in the Prepaid Insurance account represents a 12 month insurance policy that
commenced on 1st March 2017.
(6)
$6 250 of the recorded Sales Revenue is for deposits paid for floral arrangements which will
not be delivered until July/August 2017.
(7)
As of 30th June 2017, Penny has estimated that 2% of her Accounts Receivable will not be
collected.
REQUIRED:
As it is now the end of the financial year, you have to undertake the following work for Penny:
a. Prepare any necessary Balance Day Adjustment Journals for AFS. Include a brief narration
(explanation) for each journal entry.
(11 marks)
b. Post the journals from (a) above to the General Ledgers provided.
(7 marks)
c. Complete the Adjusted Trial Balance provided for the account balances calculated in the
General Ledgers from (b) above.
(7 marks)
2
a.
Date
Prepare any necessary Balance Day Adjustment Journals for AFS. Include a brief
narration (explanation) for each journal entry.
Details
Debit ($)
3
Credit ($)
b.
Complete and post the journals from (a) above to the General Ledgers provided below. All
ledgers must be footed.
Allowance for Doubtful Debts
Prepaid Insurance
Office Supplies on Hand
Accumulated Depreciation – Furniture and Fittings
Accumulated Depreciation – Delivery Equipment
Unearned Sales
Interest Payable
Sales
4
Interest Expense
Depreciation – Furniture and Fittings
Depreciation – Delivery Equipment
Office Supplies Expense
Insurance Expense
Doubtful Debts Expense
5
c.
Complete the Adjusted Trial Balance provided below. You may need to insert additional
accounts that are not currently listed.
ATRIUM FLORAL SUPPIES
ADJUSTED TRIAL BALANCE
AS AT 30 JUNE 2016
Debit ($)
18 388
19 685
20 050
Cash at Bank
Accounts Receivable
Inventory
Prepaid Insurance
Office Supplies on hand
Furniture & Fittings
Accumulated Depreciation – Furniture & Fittings
Delivery Equipment
Accumulated Depreciation – Delivery Equipment
Accounts Payable
Advertising Payable
Loan Payable (long term)
Penny’s AFS – Capital
Penny’s AFS – Drawings
Sales Revenue
Sales Returns and Allowances
Cost of Sales
Discount received
Freight inwards
Sales Salary Expense
Delivery Expense
Advertising Expense
Rent Expense
Office Salaries Expense
Electricity Expense
Discount Allowed
Credit ($)
51 030
74 845
25 327
1 700
48 805
53 580
36 655
9 924
162 308
13 096
7 920
66 936
19 692
26 660
27 148
7 656
6 839
Totals
6
QUESTION 3: Financial Statement (18 marks)
The following Trial Balance for Perry’s Parisian Pastries has been prepared at year end by Perry, but
he realises it is not in the correct order.
REQUIRED:
Using the Trial Balance provided below, prepare the following for the period in question:
1. Fully classified Balance Sheet
2. Statement of Changes in Equity
Perry’s Parisian Pastries
TRIAL BALANCE AS AT 30 JUNE 2016
Debit ($)
Shop Furniture & Fittings
32 500
Accounts Receivable
63 730
Accumulated Depreciation – Shop Furniture & Fittings
Rent Expense – Admin
3 420
Cash at Bank
24 650
Advertising Payable
Sales
Electricity Expense
1 450
COGS
285 210
Perry, Capital
Depreciation Expense – Shop Furniture & Fittings
3 750
Freight Inwards
2 930
Rent Expense – Store
27 500
Accounts Payable
Discount Allowed
3 790
Inventory
22 445
Salaries Expense – Store
33 400
Loan Payable
Allowance for Doubtful Debts
Prepaid Advertising
1 550
Interest Payable
Advertising Expense
635
Sales Equipment
12 500
Interest Expense
730
Doubtful Debts Expense
1 100
Perry, Drawings
16 600
Sales Returns & Allowances
6 905
Discount Received
Salaries Expense – Admin
13 975
Totals
558 770
•
The loan is payable in equal amounts over 30 months
Answer on following pages
7
Credit ($)
9 240
3 600
445 385
48 010
15 235
32 400
1 100
580
3 220
558 770
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QUESTION 4: Accounting Concepts (10 marks)
You are employed as a graduate accountant in a mid-tier accounting firm. One of the partners has
asked you to review the following cases where a client has violated at least one of the assumptions,
concepts or definitions you studied at university. The partner has asked for a written report in your
own words (using references where appropriate), to please explain:
a) which concept or assumption has been violated, and;
b) what the correct treatment should be.
i.
The bookkeeper of Pest Eradicator Services recorded revenues of $47,000 for the month
because the manager told her that was the amount of revenue earned. The manager, whose
monthly bonus is based on total revenues, said that the invoices and other documents the
bookkeeper was working from were wrong. These invoices and documents showed revenue
for the month as $33,000.
[5 marks]
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ii.
The owner of a paper delivery round added $65,000 to the assets shown in his Balance
Sheet. He did this because he had spent years building up the goodwill of his customers.
“Surely”, he said, “this goodwill is an asset that should be shown in the Balance Sheet”.
[5 marks]
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QUESTION 5: Cash Flow Statement (17 marks)
Below are the summarised cash flow statements for two businesses. Comment in your own words
using referencing where appropriate on which one has a healthier cash flow situation and justify
your answer by explaining the significance of each of the three types of cash flows for each business:
Amatil Light
To the Max
Cash flow from Operating Activities
12 900
(13 500)
Cash flow from Investing Activities
(7 300)
19 700
Cash flow from Financing Activities
(6 900)
(3 300)
Net increase / (decrease) in cash held
(1 300)
2 900
Cash at the beginning of the year
7 500
3 700
Cash at the end of the year
6 200
6 600
[Approximately 400 words expected in your answer]
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