Can someone please help with this assignment, it is due really soon and I am struggling!!

Financial Accounting 2 ACG 27, Study Period 2, 2016 Case Study for Annual Report Assignment The following details are taken from the accounting records of the company as at 30 June 2016. Debit Sales Sales returns Other revenues and income Expenses Cash at bank Vehicles (at cost net of depreciation) Equipment (at cost net of depreciation) Buildings (at cost net of depreciation) Land (at cost net of depreciation) Accounts receivable Allowance for doubtful debts Prepaid rent received Inventory (at lower of cost and net realisable value) Loan with BankQ Accrued expenses Provision for legal case Provision for annual leave Accounts payable Dividends declared and paid Share capital General reserve Retained earnings (1 July 2015) Credit 43,700,000 3,260,000 17,950,000 58,632,000 1,430,000 4,710,000 6,890,000 8,320,000 9,600,000 6,407,400 190,400 38,000 4,328,000 3,000,000 764,000 450,000 310,000 718,000 1,060,000 104,637,400 12,651,000 15,600,000 9,266,000 104,637,400 Additional information: Note: Unless otherwise indicated the events and transactions outlined below have already been accounted for in the balances above if required. (a) Share capital at 30 June 2016 comprised: 1,000,000 ordinary shares issued and paid to $2.50 in 2007. Share issue costs of $18,000 were incurred in this issue. 3,000,000 ordinary shares. These shares were issued in March 2012 at an issue price of $3.40, with $1 due on application, $0.80 due allotment. All allotment monies were received by 1 May 2012. Share issue costs of $31,000 were incurred in this issue. A first and final call for $1.60 per ACG 27 SP2 2016 Assignment Case Study page 1 of 4 share was made on 4 September 2015. All call money was received by 1 October 2015. (b) (c) Included in the amount of 'Expenses' in the trial balance above are: $26,420,000 Cost of sales $9,200,000 for wages and salaries. Annual leave expense of $715,000. The balance of the provision for annual leave as at 30 June 2015 was $195,000. Depreciation on land of $820,000. Depreciation on equipment of $2,310,000. The company has reviewed this on 1 July 2015 and decided that for a number of items the depreciation would now be calculated using the diminishing balance method at 25% per annum as this better reflects the pattern of consumption. Previously depreciation was calculated straight line on cost over an average 6 years. This has increased depreciation by $450,000 in this year. Depreciation on vehicles of $785,000 Depreciation on buildings of $360,000 Advertising expenses of $3,800,000. Utilities (including power) $1,900,000 Other operating expenses $4,780,000 $1,690,000 payment to auditors (of this amount $800,000 related to training related services) Interest expense of $186,000. $690,000 expense for bad and doubtful debts. The company estimates bad and doubtful debts based on an ageing of accounts receivable at the end of the reporting period. During 2015 the company was concerned about the time it took to receive money from some customers and noted that the rate of doubtful debts was increasing. In August 2015 undertook a review and decided that where payments were overdue customers would be telephoned directly (rather then sending a letter as had previously been done) and that if a customers account was overdue no further credit sales would be allowed. This change has reduced the amount of bad and doubtful debts, yet had little impact on sales. $200 for employee photographs taken at training day (the company agreed to pay for these). (Note: This does not detail all expenses included in the total of ''Expenses' in the trial balance above -You should classify the remaining expenses as 'other' or 'miscellaneous') Other revenues and income includes: Services revenue of $17,680,000 Rent revenue of $145,000. The company is currently renting some land to another company. The prepaid rent in the trial balances relates to this. Net gain on sale of non-current assets of $125,000. During the period the company sold the following assets, in separate and unrelated transactions. ACG 27 SP2 2016 Assignment Case Study page 2 of 4 - A heavy vehicle was sold in September 2015 for $560,000. At the time of the sale this vehicle had a carrying amount (i.e. cost less accumulated depreciation) of $415,000. - An item of equipment was sold in May 2016 for $310,000. At the time of the sale this equipment had a carrying amount (i.e. cost less accumulated depreciation) of $330,000. These were the only sales of non-current assets made during the period. (d) Accrued expenses relates to: Interest accrued of $157,000. This relates to the loan from BankQ. The company borrowed $6,000,000 on 1 September 2013 under the following terms: - At 31 August each year a principal repayment of $1,500,000 is required. Interest is also payable annually at 31 August. Wages/salaries payable of $197,000 Other expenses including utilities $410,000. (e) On 30 June 2015 the Directors recommended a dividend of $580,000 from retained earnings (this was subject to approval at the Annual General Meeting). This dividend approved and paid on 22 August 2015. An interim dividend of $0.12 per share (from retained earnings) was declared and paid on 1 February 2016. The following events/transactions are not reflected in the trial balance above. You will need to make appropriate adjustments if required. (f) On 30 June 2016 the directors: transferred $5,500,000 from retained earnings to the general reserve recommended a final dividend of 16c per share from retained earnings. This was subject to approval at the Annual General Meeting to be held in late August 2016. (g) The trial balance had been prepared by the trainee accountant. On reviewing this in early July 2016, the Chief accountant noted the following: The trainee accountant has recorded depreciation for land, as the fair value of the land had decreased in this year (The trainee accountant determined this by comparing land values recorded on council rates documents). No depreciation for land has been included in previous years. (Note: The company measures items of land at cost). (h) The balance of the legal provision in the trial balance is the balance as at 1 July 2015. The trainee accountant is unsure how to account for possible changes in this, and so this has not been adjusted since 30 June 2015. The balance at 1 July 2015 related to a claim made against the company by an employee for a work place injury in September 2014 which resulted in the employee going deaf. The matter was decided (finalised) in court on ACG 27 SP2 2016 Assignment Case Study page 3 of 4 22 June 2016. Although the court considered that the employee had contributed to the injury by failing to follow all of the company's procedures, the court determined that the company was also partly at fault and awarded damages of $110,000 against the company. The company paid this amount on the 1 August 2016. (i) In late July 2016 a small business that operates in the same industry as the company, approached the company as the owner of the small business, Mr Exhausted, advised he was retiring. Following negotiations, the company purchased the business of Mr Exhausted on 5 August 2016 and agreed to pay $20,000,000 in 4 instalments of $5,000,000 each over the next year. The first quarterly payment is to be made on 1 September 2016. The business of Mr Exhausted has an extensive and loyal customer base and so the company hopes to increase sales (and market share). The first two instalments for this purchase are expected to be financed by the sale of an item of land. (j) On 4 July 2016 the company was advised by its lawyers that the wife of the employee injured in September 2014 (see h above) was suing the company for $500,000 compensation for pain and suffering due to the impact her partner's injury had on her life. The lawyers have advised that there is a 25% probability that the company will lose the case (i.e. that the company will be required to pay any compensation) and have also advised that if any compensation is payable they believe it would more likely be limited to between $50,000 and $100,000. (k) The company tax rate is 30%. Ignore tax-effect accounting. Tax expense should be based on 30% of the accounting profit before tax. No tax expense has yet been recorded You should assume that the company is a reporting entity and that the date the annual report (including the financial report) is authorised for issue is the 16 August 2016. ACG 27 SP2 2016 Assignment Case Study page 4 of 4