BHMH1041 Accounting for Non-business Students Individual Assignment 1 2022/23 Sem 2 Assignment Question (50 marks) ABC Limited (ABC) is a service company specialized in providing office cleaning services for their clients. Some clients pay in advance for services; others are billed after services have been performed. Advance payments are credited to an account entitled 'Unearned Service Fees'. Adjusting entries are performed on a monthly basis. Closing entries are performed annually on 31 December. Below is ABC's Unadjusted Trial Balance at the year ended 31 December 2022. BHMH1041 Accounting for Non-business Students Individual Assignment 1 2022/23Sem2 The following events have not yet adjusted to the above Unadjusted Trial Balance: (1) The service for the amount of $7,500 rendered to a customer who had paid in advance in November 2022 was completed on 31 December 2022. The payment in advance has been recorded in the Unadjusted Trial Balance. (2) A service contract amounting to $1,500 had been provided on 31 December 2022 to a client but was unrecorded and uncollected. (3) ABC pays rent quarterly in advance. The most recent advance payment of $5,400 was made on 1 November 2022 . The next rent payment of $5,400 will be made on 1 February 2023. (4) ABC estimates that income taxes expense for the entire year is $11,700. The full amount is due in early 2023. (5) Equipment depreciation expense for December 2022 is $750. (6) Office supplies on hand as at 31 December 2022 amount to $1,590. (7) ABC signed an agreement with G1000 Ltd on 31 December 2022 for the provision of 3-month's cleaning service commencing March 2023. The agreement specifies that G1000 Ltd has to pay a minimum monthly fee of $18,000 with effect from 1 March 2023. (8) On 31 December 2022, ABC declared a cash dividend of $0.15 per share and to be paid next year. Required: (a) Prepare the necessary adjusting journal entries at 31 December 2022 so as to bring the accounting records of ABC up-to-date. If any of the above events does not require adjusting entries, write down "no entry" and name the relevant accounting principle to support your answer. (16 marks) (b) Prepare the income statement of ABC for the year ended 31 December 2022 in proper format, i.e. classifying the individual items under the captions of Revenues, Expenses, Profit before taxes, Income tax and Profit after taxes. (6 marks) (c) Prepare the statement of financial position of ABC as at 31 December 2022 in proper format, i.e. classifying the individual items under the captions of Assets, Liabilities, and Shareholders' Equity. (7 marks) (d) Record the relevant year-end closing journal entries. (8 marks) BHMH1041 Accounting for Non-business Students Individual Assignment 1 2022/23Sem2 (e) Prepare the After-closing Trial Balance as at 31 December 2022. (7 marks) (f) Financial statements give users information regarding the liquidity and profitability of a business organization. Give one example of an external user who would be interested in the liquidity of an organization and one example of an external user who would be interested in the profitability of an organization. Briefly explain their purpose of the interest. (4 marks) (g) A trial balance provides proof that the ledger is in balance and gives assurance that equal debits and credits have been recorded for all transactions. However, it has its own limitations. List any two limitations of a trial balance. (2 marks) BHMH1041 Accounting for Non-business Students Individual Assignment 1 2022/23 Sem 2 Assignment Question (50 marks) ABC Limited (ABC) is a service company specialized in providing office cleaning services for their clients. Some clients pay in advance for services; others are billed after services have been performed. Advance payments are credited to an account entitled 'Unearned Service Fees'. Adjusting entries are performed on a monthly basis. Closing entries are performed annually on 31 December. Below is ABC's Unadjusted Trial Balance at the year ended 31 December 2022. BHMH1041 Accounting for Non-business Students Individual Assignment 1 2022/23Sem2 The following events have not yet adjusted to the above Unadjusted Trial Balance: (1) The service for the amount of $7,500 rendered to a customer who had paid in advance in November 2022 was completed on 31 December 2022. The payment in advance has been recorded in the Unadjusted Trial Balance. (2) A service contract amounting to $1,500 had been provided on 31 December 2022 to a client but was unrecorded and uncollected. (3) ABC pays rent quarterly in advance. The most recent advance payment of $5,400 was made on 1 November 2022 . The next rent payment of $5,400 will be made on 1 February 2023. (4) ABC estimates that income taxes expense for the entire year is $11,700. The full amount is due in early 2023. (5) Equipment depreciation expense for December 2022 is $750. (6) Office supplies on hand as at 31 December 2022 amount to $1,590. (7) ABC signed an agreement with G1000 Ltd on 31 December 2022 for the provision of 3-month's cleaning service commencing March 2023. The agreement specifies that G1000 Ltd has to pay a minimum monthly fee of $18,000 with effect from 1 March 2023. (8) On 31 December 2022, ABC declared a cash dividend of $0.15 per share and to be paid next year. Required: (a) Prepare the necessary adjusting journal entries at 31 December 2022 so as to bring the accounting records of ABC up-to-date. If any of the above events does not require adjusting entries, write down "no entry" and name the relevant accounting principle to support your answer. (16 marks) (b) Prepare the income statement of ABC for the year ended 31 December 2022 in proper format, i.e. classifying the individual items under the captions of Revenues, Expenses, Profit before taxes, Income tax and Profit after taxes. (6 marks) (c) Prepare the statement of financial position of ABC as at 31 December 2022 in proper format, i.e. classifying the individual items under the captions of Assets, Liabilities, and Shareholders' Equity. (7 marks) (d) Record the relevant year-end closing journal entries. (8 marks) BHMH1041 Accounting for Non-business Students Individual Assignment 1 2022/23Sem2 (e) Prepare the After-closing Trial Balance as at 31 December 2022. (7 marks) (f) Financial statements give users information regarding the liquidity and profitability of a business organization. Give one example of an external user who would be interested in the liquidity of an organization and one example of an external user who would be interested in the profitability of an organization. Briefly explain their purpose of the interest. (4 marks) (g) A trial balance provides proof that the ledger is in balance and gives assurance that equal debits and credits have been recorded for all transactions. However, it has its own limitations. List any two limitations of a trial balance. (2 marks)