Sbfia401a Prepare Financial Reports

BSBFIA401A – PREPARE FINANCIAL REPORTS

ASSESSMENT2

TASK 1 – 20 Marks

Detailed below is information in respect of balance day adjustments which are required at 30 June 2014.

The following information is provided from the General Ledger as at 30 June 2014.

Accounts Receivable$320,000

Accounts Payable$99,000

Motor Vehicles$320,000

Allowance for Doubtful Debts$15000

Bad Debts$2200

Accumulated Depreciation – Motor Vehicle$96000

Inventory$10500

Business uses the Perpetual Inventory Method.

THE ABOVE INFORMATION RELATES TO QUESTIONS 1 TO 4 ONLY.

1.Additional Bad debts to be written off, at 30/6/14 are $440.

2.Doubtful Debts to be 5% of Accounts Receivable (after additional Bad Debt write off)

3.Depreciation for the year ended 30/6/14 is on a straight line basis. Motor Vehicles are depreciated at 15% per annum. What is the balance day adjustment for Depreciation?

4.Physical stocktake revealed a figure of $10200.

______

5.On 31 May 2013 $3 300 ($3 000 + $300 GST) was received for two months’ rent income in advance. Complete the balance day reversal adjustment entry required on 1 July 20X8.

6.On 30 June 2013 J Hogan is paid $2 600 for long service leave accrued in the provision account.

7.On 30 June 2013 the balance of inventory account in the general ledger was $59 870. Entry required to adjust to the physical stocktake figure of $59 600.

8.Wages to be accrued $3 400.

Required:

(a)Prepare general journal entries, including narrations for the above balance day adjustments as at 30 June 2014.

(b)Show the necessary reversal General Journals as at 1 July 2014

TASK 2 – 20 Marks

Using the following list of accounts and end of period adjustments for CD MUSIC SHOP; you are required to prepare:

BALANCE DAY ADJUSTMENTS ON NEXT PAGE

(a) aClassified Income Statement for the year ended 30 June 2014

(b) a Classified Balance Sheet as at 30 June 2014

(THIS MEANS THAT THE FORMAT OF BOTH STATEMENTS MUST SHOW CLASSIFICATIONS)

The Business uses the Perpetual Inventory Method

CD MUSIC SHOP

GST Input Tax /GST Paid500

Accounts Receivable Control40 330

GST Payable/GST Collected600

Petty Cash100

Land and Buildings170 000

Allowance for Doubtful Debts1600

Accounts Payable Control2 000

Motor Vehicles34 400

Accumulated Depreciation – motor vehicles15 500

Vehicle Expenses2 160

Bank2 085

Mortgage on Buildings 40 000

Capital ?

Sales164 500

Discount Received434

Bad Debts Recovered200

Inventory94 500

Advertising3 492

Interest Paid4 000

Insurance714

Wages – general 12 000

Salaries – Salesmen41 000

Office Expenses984

Discount Allowed211

Bad Debts1 300

Drawings3 700

Doubtful Debts300

Cost of Goods Sold16200

Accumulated Depreciation – Buildings35 000

BALANCE DAY ADJUSTMENTS, at 30 June 2014, are as follows:

Inventory as per stock take$92 000

Accrued wages-General$2300

Prepaid Insurance$114

Depreciation – motor vehicles $6800

Depreciation – Buildings$15000

Further Bad Debt writeoff $330

Allowance for Doubtful Debts to be 5% of Accounts Receivable

TASK 3 – 20 Marks

Prepare general journal entries to correct the following errors:

Note: Subsidiary ledgers for accounts receivable and accounts payable are used. If GST is affected it should be included in the general journal entry.

(a)The amount of the float for petty cash is considered to be too high. Show the general journal entry to decrease the float from $1 300 to $1 000.

(b)When the advertising account was paid for $1 540 including GST, the advertising portion of the amount was incorrectly posted to the stationery account.

(c)Tom Brown, an account receivable, paid the amount owing on his account of $480. This payment was incorrectly recorded as $840.

(d)The cash sale of old equipment at book value for $187 including GST has been incorrectly credited to the sales account for $187.

(e)Goods taken by the proprietor for his own use $99 including GST have been debited to sales $99 and credited to drawings $99.

TASK 4 – 40 Marks

On September 1, 2013 Mac Pty Ltd acquired Machine A for $44,000 cash ($40,000 + $4,000 GST). The machine had an estimated residual value of $3,300 ($3,000 + $300 GST).

The Machine’s estimated useful life was 5 years. The Machine was operational from October 1, 2013.

Management is unsure which method of depreciation to use. You are required to prepare depreciation worksheets for the machine using the reducing balance method and the straight line method, so that management can make a comparison.

The depreciation rate for Reducing Balance is30% .

Required:

a)Prepare the depreciation worksheets for the years ended 30 June 2014, 2015 and 2016for both the Reducing Balance and Straight Line methods

b)Prepareledgeraccounts up to30 June 2016 based on the Reducing Balance Method

c)Prepare an extract of the Income Statement and the Balance Sheet as at 30 June 2014 based on the Straight LineMethod

BSBFIA401A – Assessment 2 V3 NSIMeadowbankCollege 1