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Question 3: Preparation of Financial Reports Jane Lent from Janes Design World has provided you with the final Trial Balance for the reporting period. Using

Question 3: Preparation of Financial Reports

Jane Lent from Janes Design World has provided you with the final Trial Balance for the reporting period. Using the information provided you are required to:

  1. Prepare a statement of comprehensive income for the year ended 30 June 2021.
  2. Prepare a statement of financial position as at 30 June 2021.

Before preparing the required financial reports, Jane has asked you to the check the Trial Balance as she is aware that there are some errors, and as a result she cant get the Trial Balance to balance!

When you have identified the errors, make a note of them in the space provided below, and make the alterations in the Trial Balance, so that it balances and can then be relied on to prepare the Financial Reports.

Errors identified

Error

Correction Required

Jane Design World

Trial Balance as at June 30, 2021.

Debit

Credit

$

$

Accounts Receivable

54,690

Accounts Payable

32,875

Accrued Income

3,450

Accrued expenses

5,450

Accumulated Depreciation Motor Vehicles

42,000

Accumulated Depreciation Computer equipment

12,900

Allowances for Doubtful Debts

2,125

Advertising

10,560

Bank Fees and Charges

780

Bad Debts

925

Capital: Jane Lent

285,700

Cartage Inward

15,400

Cash at bank

16,990

Commission Income

6,200

Computer Equipment

33,000

Customs Duty

9,600

Delivery expenses

112,500

Depreciation Motor Vehicles

21,000

Depreciation Computer equipment

6,525

Discount Expense

4,350

Doubtful Debts

2,125

Drawings: Jane Lent

13,800

Goodwill

20,000

GST Collected

6,980

GST Paid

3,250

Insurance General

4,950

Interest on Loan

6,850

Insurance on stock

5,400

Land and buildings

475,000

Long Term Loan

65,000

Loss on Sale of Motor Vehicles

5,800

Motor Vehicles

65,000

Motor Vehicle Expenses

11,350

Mortgage on Land

150,000

Office Wages

23,600

Petty Cash

500

Prepaid Income

8,750

Prepaid Expenses

6,500

Profit on Sale of Non-Current Asset

9,500

Provision for Annual Leave

12,000

Provision for Long Service Leave

38,000

Purchases Returns and Allowances

6,750

Purchases

275,640

Rental Income

9,750

Rates expense

1,395

Sales Returns and Allowances

6,850

Sales

696,700

Stock (1/7/19)

45,300

Shares in HBP Pty Ltd

80,000

Wages salespersons

47,600

Total

$1,423,805.00

$1,357,555.00

Balance Day Adjustment

Stock on hand (30/6/2021)

$ 85,700.00

Question 4: Theory Questions:

a) provide an explanation of the principles of double entry bookkeeping. b) describe the purpose of Balance Day Adjustments. What is the importance of the Matching principle in relation to Balance Day Adjustments?

c) Which Accounting standard sets out the guidelines for the presentation of Financial Reports?

d) What is the objective of the Accounting Standard you listed in Q3, and how does it aim to achieve this?

e) What is the purpose of the General Ledger

f) List 2 (two) basic functions of an organisations accounting (information) system.

g) What accounting controls should be in place to assist to minimise and detect errors?

h) An accounting system must be designed to meet the needs of the users of the accounting information it provides. What 3 (three) factors will help to determine how the system should be designed?

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