QUESTION 1 Bugs Bunny is the owner and manager of Bunny Enterprise, a business establishment selling electrical goods in the city of Looney Tunes. All sales are on credit and are based on a 40% markup on cost price. All collections are received in the month following the sales. The opening balances of selected assets, liabilities and equity of the business as at 1 June 2021 are shown in the worksheet on page 3. As at 1 June 2021 The current ratio of Bunny Enterprise was 2.2 and its quick ratio was 1.3. The plant and equipment had a carrying amount of $288,000. Accrued expenses of $76,000 include 6 months of unpaid utilities amounting to $18,000 Unearned revenue relates an advance payment from a customer for electrical goods to be delivered equally over the months of June and July 2021. The bank loan represents 60 monthly instalments. The final instalment is expected to be paid in May 2026 During the month ended 30 June 2021, the following events/transactions occurred: June 4 Paid half of the unpaid utilities upon receiving a warning notice from the utility company. The remaining outstanding balance will be paid in July 2021 and August 2021 7 Paid monthly loan instalment 9 Bunny Enterprise made a payment for Bugs Bunny's personal holiday expenses $2,000. The owner will reimburse the business in 30 days' time. Bugs Bunny took out $5,000 of electrical goods from the store for personal use. 11 16 22 29 30 Purchased additional computers for office use $12,000 on credit. Secured a $210,000 contract to sell electrical goods to a new customer in July 2021 Recorded June 2021 payment from customers, less $20,000 bad debt. Electrical goods costing $250,000 were delivered to customers during the month of June 2021 The bank paid $200 interest into the bank account of Bunny Enterprise. 30 Additional information: On 1 October 2020, Bunny Enterprise purchased a 12-months insurance plan to protect the assets of the business with effect from 1 November 2020. The prepaid expenses of $20,000 as at 1 June 2021 represents the unutilised portion of that insurance plan. The monthly utilities incurred by Bunny Enterprise is $3,000. Bunny Enterprise depreciates its plant and equipment using the straight-line method over a useful life of 5 years with no residual value. Depreciation for all plant and equipment items will only commence in the month following the purchase. Required: (a) In the following Worksheet, 1) Enter the amounts for the opening balances marked (B) Bank Date: June Cash at bank Accounts receivables Prepaid expenses Inventory Plant and equipment Accumulated depreciation Accounta payables Accrued expenses Unearned revenue Profit & Loe Capital NC loan 1 199,000 405,000 20.000 A $80,000 B 328,000 75,000 D 600,000
