Explain the function of a journal in the accounting process

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Reference no: EM132161039

Prepare financial reports Assignment -

TASK 1 -

1. Explain the Accounting Entity Assumption.

2. What is Fixed Asset register and why does a company need to maintain an assets register?

3. Explain the function of a journal in the accounting process.

4. What is the journal entry used if the company sold an asset with a loss?

5. Explain unearned income with an example. When should a company recognize income?

6. Give two more examples of the balance day adjustments a company should record before issuing the final financial report at end of accounting periods?

7. Why would a business determine an amount for "Doubtful Debts" and outline the steps that could be taken to calculate the allowance?

8. Prepare the adjustment entry as of 30/06/2012 under the following:

A. On 27 of June 2012, the company paid last week's wage. Wages that are due and not paid:

28th of June 1200
29th of June 1450
30th of June weekend, no wages

B. Rent paid on 1/12/11 for one year $12,000 net of GST, the company accountant recorded all payment as expense on 1/12/11.

C. The company is required to issue a bank guarantee for one year, bank withheld $20,000 on 31/12/2011 from the company bank account with interest of 4.5% that will be calculated monthly and will be paid at the maturity date.

D. On 30/04/12, the company signed a monthly maintenance service contract for $500 each month; the company policy is to receive the 1st six months in advance. The company received $3000 on 30th of April 2012. Company accountant recorded the following entry on the 30th of April:

Date	Details	Dr	Cr
30/04/12	Cash at Bank	$3000
	Income received in advance		$3000

E. According to the balance sheet, the inventory was $223,500. At the end of the financial year stock take, you have been advised that the inventory value is only $210,000.

F. On 30/06/2012, the company aged receivables which have a total of $306,400. The company estimated 2% of 90 days receivable and 10% of over 90 days will not be able to be collected.

Aged Receivable Summary 30/6/2013
Total Due	0-30 days	31-60 days	61-90 days	91-120 days
$311,400	$220,000	$60,000	$18,000	$16,400

Q9. Prepare journal entries for disposal of fixed assets

Company sold Equipment worth $120,000 for $50,000. Depreciation recorded at the rate of 20% yearly for 3 years.
Motor vehicle purchased for $80,000 was sold for $20,000 after usage of 2 years at rate of 25% yearly

TASK 2 -

Deprecation of Assets:

Straight line method: On 1/12/ 2011, a company purchased a machine costing $1,750. It is expected to have 5 years estimated useful life and value of $250 at the end of the 5th Year

Prepare the deprecation schedule for the life of the asset.
Record the depreciation journal entries at the end of financial year for year 1 only.

Double -Declining balance method: A business purchased cleaning equipment in 2008 for $8,500 and is depreciated by the double declining method for an expected life of 12 years. Original salvage value was estimated to be $2,500 at the end of 12 years.

Prepare the deprecation schedule for the life of the asset.
What is the book value of the cleaning equipment at the end of 2014?

Sum of the Digits method: A machine costing $5,000 was purchased on 01/07/2011. The expected resale value at the end of its five-year useful life is $1,000.

Prepare the depreciation schedule for the life of the asset.
Record the depreciation journal entries at the end of financial year 30/06/2012.

Reference no: EM132161039

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len2161039

11/7/2018 10:10:38 PM

Instructions to the Candidates - This assessment is to be completed according to the instructions given below in this document. Should you not answer the tasks correctly, you will be given feedback on the results and gaps in knowledge. You will be entitled to one (1) resubmit in showing your competence with this unit. If you are not sure about any aspect of this assessment, please ask for clarification from your assessor. Please refer to the College re-submission and re-sit policy for more information. If you have questions and other concerns that may affect your performance in the Assessment, please inform the assessor immediately.

len2161039

11/7/2018 10:10:32 PM

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len2161039

11/7/2018 10:10:26 PM

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