Accounting for Managers (ACCO0724) S2, 2019 x Assignment 1 (20 Marks) QUESTION 1 (10 Marks) en kennett Building Services is a local business operating in the housing industry. Ken Kennett has no formal accounting system and does not use financial statements for decision making. However, ne is negotiating a contract with a supplier of building materials who wants to see his financial statements to ensure that Ken can meet his payments each month. Ken has asked you to prepare Financial statements. Based on his last tax return and the content of his shoebox (where he keeps his invoices and receipts) for this year, you have recorded the following items: $500 3,800 550,000 Cash in the shoebox (with the receipts and invoices) Cash in the bank account Building services provided Amounts owed by customers Wages paid to employees Wages owed to the employees 80,000 150,000 3,500 68,000 310,000 Equipment Building supplies used Building supplies on hand 18,000 Amounts owed to suppliers Motor vehicle Motor vehicle expenses 30,000 32,000 5,600 4,000 Electricity and telephone expenses 5,700 Cash used by Ken for personal expenditure REQUIRED: A Using the information above, prepare a statement of financial performance (income statement) and a statement of financial position (balance sheet) for Ken Kennett Building Services. (6 Marks) B. How would the financial statements you provide help the supplier of building materials decide whether or not to trade with Ken? What parts of the financial statements would be positive indicators that Ken Kennett Building Services would be able to pay for supplies on time and what items may cause some concern for the suppliers? (4 Marks) Examples Assessment 1 s e hat QUESTION 2 (10 Marks) Services to the local Car offers account hip business named CC Accounting Clive has collected the following information et to his business activities at the end of Financial year: $1.500 Office supplies 840 Office supplies expense 255 Telephone expense 330 Motor vehicle expense 1,500 Accounts receivable 7,500 Bank loan 1,080 Accounts payable 8.445 Cash at bank 8,250 Computer equipment 510 Advertising expense Accounting service income The following information was also disclosed from examining Clive's bank statement: $8,250 Accounting service income receipts 3,300 Initial contribution by Clive Bank loan received 9,000 2,355 Payments to suppliers Repayment of loan Computer equipment purchase 1,500 8,250 REQUIRED: A. Without preparing formal financial statements, calculate the following: (6 Marks) 1. Profit/loss for the year 2. Total assets at the end of the year 3. Total liabilities at the end of the year 4. Clive Calmer's capital balance at the end of the year 5. Net cash inflow/outflow for the year B. If Clive had withdrawn $3,000 in cash during the year, what effect would this have incre decrease, no effect) on the figures you calculated in requirement A? (4 Marks) Accounting for Managers (ACCO0724) S2, 2019 x Assignment 1 (20 Marks) QUESTION 1 (10 Marks) en kennett Building Services is a local business operating in the housing industry. Ken Kennett has no formal accounting system and does not use financial statements for decision making. However, ne is negotiating a contract with a supplier of building materials who wants to see his financial statements to ensure that Ken can meet his payments each month. Ken has asked you to prepare Financial statements. Based on his last tax return and the content of his shoebox (where he keeps his invoices and receipts) for this year, you have recorded the following items: $500 3,800 550,000 Cash in the shoebox (with the receipts and invoices) Cash in the bank account Building services provided Amounts owed by customers Wages paid to employees Wages owed to the employees 80,000 150,000 3,500 68,000 310,000 Equipment Building supplies used Building supplies on hand 18,000 Amounts owed to suppliers Motor vehicle Motor vehicle expenses 30,000 32,000 5,600 4,000 Electricity and telephone expenses 5,700 Cash used by Ken for personal expenditure REQUIRED: A Using the information above, prepare a statement of financial performance (income statement) and a statement of financial position (balance sheet) for Ken Kennett Building Services. (6 Marks) B. How would the financial statements you provide help the supplier of building materials decide whether or not to trade with Ken? What parts of the financial statements would be positive indicators that Ken Kennett Building Services would be able to pay for supplies on time and what items may cause some concern for the suppliers? (4 Marks) Examples Assessment 1 s e hat QUESTION 2 (10 Marks) Services to the local Car offers account hip business named CC Accounting Clive has collected the following information et to his business activities at the end of Financial year: $1.500 Office supplies 840 Office supplies expense 255 Telephone expense 330 Motor vehicle expense 1,500 Accounts receivable 7,500 Bank loan 1,080 Accounts payable 8.445 Cash at bank 8,250 Computer equipment 510 Advertising expense Accounting service income The following information was also disclosed from examining Clive's bank statement: $8,250 Accounting service income receipts 3,300 Initial contribution by Clive Bank loan received 9,000 2,355 Payments to suppliers Repayment of loan Computer equipment purchase 1,500 8,250 REQUIRED: A. Without preparing formal financial statements, calculate the following: (6 Marks) 1. Profit/loss for the year 2. Total assets at the end of the year 3. Total liabilities at the end of the year 4. Clive Calmer's capital balance at the end of the year 5. Net cash inflow/outflow for the year B. If Clive had withdrawn $3,000 in cash during the year, what effect would this have incre decrease, no effect) on the figures you calculated in requirement A? (4 Marks)