How to do question 4&8?

QUESTION 4

(a)Cameron Ltd purchased a new photocopier on 1 July, 2010 at a cost of $16,500.The machine has an estimated residual value of $1,500 and an estimated useful life of 5 years or 30,000 copies.Complete the table for each of the 5 years under each depreciation method.

Assume that actual production in each year was 5,000, 4,000, 8,000, 7,000 and 6,000 copies respectively.

For the Reducing Balance method use 35% as the rate.You are required to round your calculations to the nearest whole dollar.

Year ended

Straight line Units of Use Reducing Balance

(35% rate)

Depreciation

Accumulated

Depreciation

Carrying Amount

Depreciation

Accumulated

Depreciation

Carrying

Amount

Depreciation

Accumulated

Depreciation

Carrying Amount

30/6/11

30/6/12

30/6/13

30/6/14

30/6/15

TOTAL

WORKINGS:

(b)According to the Australian Accounting Standards, what are the three factors which contribute to the decline in service potential of a depreciable non- current asset?Briefly describe these three factors.Answer in point form.

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(c)XYZ Company purchased a printing machine for $20,000 on 1 July, 2008.

This machine is a non-current asset and is depreciated using the straight line basis.On 30 September, 2010, the machine was completely overhauled at a cost of $5,000.This will extend the useful life by 5 years.

How should this $5,000 expenditure on the overhaul be treated in the books of XYZ Company?Give the criteria to support your decision.

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________________________________________________________________________

________________________________________________________________________

________________________________________________________________________

________________________________________________________________________

QUESTION 8

CASH FLOW STATEMENT

The following information has been extracted from the books of Thomas Enterprises for the year ended 30 June 2010:

Details of cash account:

Cash balance at start of year29000

Cash balance at end of yearoverdraft9000

_____________

Cash receipts during year

Accounts receivable341500

Revenue 50000

Capital contributed4000_____________

Cash payments during year

Accounts payable 185000

Wages40000

Cash expenses38000

Owners drawings50500

Payment of mortgage20000

Payment for office equipment22500

Payment for land77500_____________

Required:

a)Prepare a cash flow statement for the year ended 30 June 2010 for Thomas Enterprises on the following page.

b)Net Profit for Thomas Enterprises was $250,000, explain why this figure is different to the net cash provided from operating activities.

CASH FLOW STATEMENT FOR YEAR ENDED 30 JUNE 2010

$

$

Cash flows from operating activities

Cash flows from investing activities

Cash flows from financing activities

BSD110 ACCOUNTING TOPIC 13 REVISION LECTURE SAMPLE FINAL EXAM PAPER 2 HOURS FOR WORKING NO PERUSAL ALL QUESTIONS ARE TO BE ANSWERED ON THIS EXAM PAPER MARKS FOR EACH QUESTION ARE INDICATED WRITE YOUR ANSWER TO EACH QUESTION ONLY IN THE SPACE PROVIDED. STUDENTS ARE PERMITTED TO BRING THE FOLLOWING MATERIALS TO THIS EXAMINATION: Writing implements, pens, pencils, ruler, eraser and calculator (NO graphics calculators allowed), paper translation dictionaries ONLY (NO electronic dictionaries allowed). BSD110 QUESTION 1 Name the ratio which matches the description given. Description Name of Ratio only (no formula or detail required) Measures the entity's ability to satisfy periodic interest payments from current profits Measures the portion of each dollar of sales that represents net profit Measures the entity's ability to pay all of its current liabilities if they became due and payable immediately QUESTION 2 a) Using the following information, prepare the September Cash Budget for Seaside Foods Other information: The cash at bank balance at 1 September was $89,000 debit balance. Actual and Forecasted Sales were as follows: Month Cash Sales June July August September October November 15,000 20,000 25,000 30,000 22,000 32,000 Credit Sales (Accounts Receivable) 75,000 90,000 80,000 65,000 90,000 75,000 Accounts Receivable (Credit Sales) are usually collected in the following manner: 75% in the month following sale 15% in the second month following sale and 10% in the third month following sale Purchases are paid as followed: 70% in the same month of the purchase 30% in the month following the purchase. Purchases are as follows: August Purchases 24,050 September purchases (estimates) 11,560 BSD110 Other expenses estimated as follows: Depreciation expense 1,100 Cost of goods sold 21,980 Rent expense (per month) 8,000 Wages expense (per month) 15,200 *Advertising expense (per month) 1500 *(Advertising expense includes the prepaid amount of $500). New equipment costing $23,000 will be paid for in September. Cash Budget for Seaside Foods for the month of September SEPTEMBER BEGINNING BALANCE ESTIMATED RECEIPTS TOTAL ESTIMATED CASH AVAILABLE ESTIMATED PAYMENTS (show workings if needed) TOTAL ESTIMATED PAYMENTS ENDING BALANCE MONTH OF SALE JUNE JULY AUGUST SEPTEMBER OCTOBER NOVEMBER CREDIT SALES $ 75,000 90,000 80,000 65,000 90,000 75,000 TOTAL BSD110 SEPTEMBER b) Is depreciation expense included in a Cash Budget? Explain clearly. ___________________________________________________________________________________________ ___________________________________________________________________________________________ ___________________________________________________________________________________________ ___________________________________________________________________ QUESTION 3 A cash register is located in each department of Kirra's Krazy Store. The register shows the amount of each sale, the cash received from the customer, and any change returned to the customer. The machine also produces a customer receipt but keeps no record of transactions. At the end of the day, the assistant counts the cash in the register and deposits it in the store's bank account. Required: What are two internal control weaknesses over cash receipts in the above situation? How can the internal control be improved to overcome these weaknesses? ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ _______________________________ _______________________________________________________________________ BSD110 QUESTION 4 (a) Cameron Ltd purchased a new photocopier on 1 July, 2010 at a cost of $16,500. The machine has an estimated residual value of $1,500 and an estimated useful life of 5 years or 30,000 copies. Complete the table for each of the 5 years under each depreciation method. Assume that actual production in each year was 5,000, 4,000, 8,000, 7,000 and 6,000 copies respectively. For the Reducing Balance method use 35% as the rate. You are required to round your calculations to the nearest whole dollar. Year ended Straight line Depreciatio n Accumulate d Depreciatio n Reducing Balance (35% rate) Units of Use Carrying Amount Depreciati on Accumulated Depreciation Carrying Amount Depreciati on 30/6/11 30/6/12 30/6/13 30/6/14 30/6/15 TOTAL WORKINGS: BSD110 Accumulate d Depreciation Carrying Amount BSD110 (b) According to the Australian Accounting Standards, what are the three factors which contribute to the decline in service potential of a depreciable non- current asset? Briefly describe these three factors. Answer in point form. ______________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________ (c) XYZ Company purchased a printing machine for $20,000 on 1 July, 2008. This machine is a non-current asset and is depreciated using the straight line basis. On 30 September, 2010, the machine was completely overhauled at a cost of $5,000. This will extend the useful life by 5 years. How should this $5,000 expenditure on the overhaul be treated in the books of XYZ Company? Give the criteria to support your decision. ______________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________ ________________________________________________________________________ BSD110 QUESTION 5 The following information is gathered in relation to sales and purchases of inventory during January. Assume the business uses the perpetual inventory method. January1 January 14 January 25 January 31 Beginning Inventory Purchases Sales Ending Inventory 150 450 300 300 items @ $3 = $ 450 items @ $6 = $2,700 items @ $10 = $3,000 items Calculate the cost of goods sold and the value of ending inventory for each of the methods indicated below given the information about purchases and sales during the month. 1. Cost of goods sold using average cost $__________ 2. Cost of goods sold using FIFO $__________ 3. Ending inventory using average cost $__________ 4. Ending Inventory using FIFO $__________ WORKINGS: (b) Which method will give the highest profit for January and why? ____________________________________________________________________________ ____________________________________________________________________________ ___________________________________________________________________ (c) Explain the Lower of Cost or Net Realisable Value (NRV) rule. ____________________________________________________________________________ ____________________________________________________________________________ ___________________________________________________________________ BSD110 (d) Date Prepare the journal entries required for the sale (assume it was a cash sale) on January 25 using the FIFO method above in Part (a). GENERAL JOURNAL Post Ref Details BSD110 DR CR QUESTION 6 (a) Gala Greetings sells boxes of greeting cards for $5.00 per box. Variable costs are $2.50. The business expects to sell 1,500 boxes of greeting cards. Fixed costs are $2,350. What is the contribution margin per unit? What is the breakeven point in units? What is the profit if the business sells 1,500 boxes? What Sales level in units and dollars is required to make a profit of $600? (b) Prepare an Income Statement in Contribution Margin Format for Gala Greetings assuming that the business sells 1,500 boxes. (c) In general, what is the effect on the breakeven point if variable costs increase? QUESTION 7 BSD110 The following adjusted trial balance was provided for King Enterprises for the year as at 30 June 2016. King Enterprises Adjusted Trial Balance as at 30/6/2016 ACCOUNT Cash at Bank Accounts Receivable Supplies Prepaid Rent Furniture Accumulated Depreciation - Furniture Building Accumulated Depreciation - Building Accounts Payable Salary Payable Interest Payable Unearned Service Revenue Loans Payable Capital Drawings Service Revenue Rent Expense Salary Expense Supplies Expense Depreciation Expense - Furniture Depreciation Expense - Building DR CR 4,800 2,600 600 2,000 18,000 300 48,000 200 18,200 600 100 400 20,000 33,200 1,000 7,400 1,000 1,800 100 300 200 $80,400 $80,400 Prepare the following financial reports for King Enterprises on the templates provided below: i. The Income Statement ii. Statement of Changes in Equity iii. Balance Sheet Insert the correct headings for each financial statement. (i) BSD110 King Enterprises Income Statement $ BSD110 $ (ii) King Enterprises Statement of Changes in Equity $ BSD110 $ (iii) King Enterprises Balance Sheet __________________________ BSD110 QUESTION 8 CASH FLOW STATEMENT The following information has been extracted from the books of Thomas Enterprises for the year ended 30 June 2010: Details of cash account: Cash balance at start of year Cash balance at end of yearoverdraft Cash receipts during year Accounts receivable Revenue Capital contributed 29000 _____________ 9000 341500 50000 4000 _____________ Cash payments during year Accounts payable Wages Cash expenses Owners drawings Payment of mortgage Payment for office equipment Payment for land 185000 40000 38000 50500 20000 22500 77500 _____________ Required: a) Prepare a cash flow statement for the year ended 30 June 2010 for Thomas Enterprises on the following page. b) Net Profit for Thomas Enterprises was $250,000, explain why this figure is different to the net cash provided from operating activities. BSD110 CASH FLOW STATEMENT FOR YEAR ENDED 30 JUNE 2010 $ Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities BSD110 $ QUESTION 9 McLeod Enterprises has calculated the following ratios for the past 2 years: 2012 2013 Current Ratio 0.9:1 0.7:1 Average Collection Period 40 days 55 days Debt Ratio 55% 70% Rate of Return on Total Assets (ROA) 11% 8% Required: Fill in the table below for McLeod Enterprises based on the ratios given Ratio What is the relevant category for this ratio? Is the change in the ratio from 2012 to 2013 good news or bad news? Current Ratio Average Collection Period Debt Ratio Rate of Return on Total Assets (ROA) BSD110 What is a reliable Rule of Thumb for this ratio for this firm in Australia? QUESTION 10 The bank reconciliation statement for Joy Ltd at 30 November 2016 is shown below. JOY LTD Bank reconciliation statement 30 November 2016 Cash balance per bank statement $ 14 367.90 Add: Outstanding deposits 2 530.20 Less: Unpresented cheques 16 898.10 Cheque number Cheque amount 3451 $2 260.40 3470 720.10 3471 844.50 3472 1 426.80 3474 1 050.00 6 301.80 $10 596.30 Cash balance as per ledger The December bank statement showed the following cheques and deposits: Information from bank statement Cheques Date Number Deposits Amount Date Amount 1/12 3451 $ 2 260.40 1/12 $ 2 530.20 2/12 3471 844.50 4/12 1 211.60 7/12 3472 1 426.80 8/12 2 365.10 4/12 3475 1 640.70 16/12 2 672.70 8/12 3476 1 300.00 21/12 2 945.00 10/12 3477 2 130.00 26/12 2 567.30 15/12 3479 3 080.00 29/12 2 836.00 27/12 3480 600.00 30/12 1 025.00 30/12 3482 475.50 29/12 3483 1 140.00 31/12 3485 540.80 Total $15 438.70 Total $18 152.90 Joy Ltd's cash records for December showed the following: BSD110 Cash payments journal (Chq is the cheque number) Date Chq Amount Date Chq Amount 1/12 3475 $1 640.70 20/12 3482 $475.50 2/12 3476 1 300.00 22/12 3483 1 140.00 2/12 3477 2 130.00 23/12 3484 832.00 4/12 3478 538.20 24/12 3485 450.80 8/12 3479 3 080.00 30/12 3486 1 389.50 10/12 3480 600.00 Total 17/12 3481 807.40 $14 384.10 Cash receipts journal Date Amount banked 3/12 $ 1 211.60 7/12 2 365.10 15/12 2 672.70 20/12 2 954.00 25/12 2 567.30 28/12 2 836.00 30/12 1 025.00 31/12 1 190.40 $16 822.10 The bank statement contained two items: A credit of $3145 for the collection of a $3000 note for Joy Ltd; interest of $160; a collection fee of $15.00. Joy Ltd has not accrued any interest on the note. A debit of $647.10 for a dishonoured cheque written by A. Jordan, a customer. At 31 December the cheque had not been redeposited in the bank. . At 31 December the cash balance per Joy Ltd's records was $13 034.30, and the cash balance per bank statement was $19 580.00. The bank did not make any errors, but two errors were made by Joy Ltd. Required: (a) How should the above transactions be processed when reconciling the bank account? BSD110 For each transaction type above, indicate if they are a bank reconciliation item or belong in the cash journals. (b) Prepare a bank reconciliation at 31 December. $ END OF PAPER BSD110