Reference no: EM132364424 , Length: 47 Pages

Assignment - Accounting Basics Questions

Question 1 -

(a) Required: For the following transactions, complete the Transaction Analysis Chart. (The first transaction has been completed for you.)

Date	Transaction	Account Name	Account Type	$ Increase +  or $ Decrease -	DR or  CR
01/6	Initial capital paid into business bank account $35,000	Bank Capital	A OE	+$35,000 +$35,000	DR CR
02/6	Received money for a long term loan $100,000
03/6	Paid business insurance premium $700 + $70 GST + $40 stamp duty (no GST).
04/6	Paid cash for stationery $165 including GST
05/6	Interest received on bank account $25 (GST does not apply)
06/6	Service revenues earned in cash amounted to $2,000 + $200 GST
07/6	Commission revenue received $1200 + $120 GST
08/6	Paid cash for a vehicle $16,000 + $1,600 GST
09/6	Drawings $1,000
10/6	Paid $20,000 off the loan

Also required: Using the templates provided:

(b) Prepare General Journal entries for the transactions.

(c) Post the General Journal entries to the ledgers and include 'DR' or 'CR' to each running Balance for each ledger account.

(d) Prepare a Trial Balance as at 10 June.

(e) If a trial balance does not balance, what steps would you take to ensure that it balances? If the trial balance does balance, does that mean it is fully correct, and why?

(f) Describe the concept of double entry accounting.

Question 2 -

a. T. Rade operates a petty cash system per its organisational procedures. Vouchers are checked and processed by the Petty Cashier and recorded in the Petty Cash Book.

From the following information for T. Rade:

(a) Prepare and balance the Petty Cash Book.

(b) Prepare the General Journal entries for:

(i) Establishment of the petty cash fund, and

(ii) Reimbursement of the fund.

01/7 The Petty Cashier received cheque 4233 for $100 to establish the fund.

In their organisational policy and procedure documents T. Rade specify that each expense is to be recorded on a separate voucher.

During the following week the Petty Cashier checked and paid the following amounts (GST inclusive), with each expense being on a separate voucher (starting at Voucher No. 1):

• 01/7 Tea & coffee $17.60 (GST Free),
• 01/7 taxi fare $7.70
• 02/7 Courier $11.00,
• 02/7 stationery $4.40
• 04/7 Biscuits $9.35,
• 04/7 taxi fare $9.90
• 06/7 Courier $5.50,
• 06/7 stationery $3.30
• 07/7 Office cleaning $11.00

The fund was reimbursed on July 8 (cheque 4275).

c. Small business, in particular those that are owner-operated, often have less formal ways of dealing with petty cash expenses. Instead of using a cash imprest system, list 2 alternative methods that could be used to deal with petty cash expenses which would still maintain the integrity of the relationship of the business' financial systems. Why might a business review and update the way they treat petty cash expenses?

Question 3 -

Below are selected transactions from the general journal of Brian Smith Catering for the month of March. These journals are in line with its policies and procedures and have been approved by the Finance Accountant.

General Journal - Brian Smith Catering
Date	Particulars	Folio	Debit	Credit
March 01	Catering Supplies GST Paid Accounts Payable - Andrea   Credit purchase of catering stock	715 125 210.01	600 60	660
20	Catering Supplies GST Paid Accounts Payable - Dave   Credit purchase of catering stock	715 125 210.03	300 30	330
27	Accounts Payable - Andrea Bank   Payment of account	210.01 100	660	660
30	Telephone GST Paid Accounts Payable - Telstra   Telephone account received	765 125 210.04	100 10	110
31	Accounts Payable - Office Shop Bank Payment of account	210.02 100	88	88

Required:

(a) In line with its policies and procedures, post from the general journal to the general ledger and to the individual creditor accounts in the accounts payable subsidiary ledger. The opening balances have been entered for you.

(b) Prepare a schedule of accounts payable as at 31 March.

Question 4 -

Paymore Landscapers supplies you with the following information for October (see in attached file).

Required:

(a) Enter the above transactions into the General Journal.

(b) Post to the General Ledger and to the individual debtor accounts in the Receivables Subsidiary Ledger.

(c) Prepare a schedule of Accounts Receivable as at 31 October.

(d) Please advise what is required in setting up subsidiary ledgers. How are transactions now processed?

(e) What steps would you take if, in 8c), the total of the subsidiary ledger did not reconcile with the control account balance?

(f) You are developing the policies and procedures in relation to credit sales. What processes would you include in relation to:

i. preparing invoices

ii. preparing journal entries for these invoices

iii. authorising these journal entries

iv. filing invoices for auditing purposes (this may be related to the invoice numbering system)?

Tip: the specific answers to these questions may not be completely found in the textbook. Use your learning and understanding of recording credit sales to arrive at your answers. Feel free to research other sources to assist you.

i. preparing invoices

ii. preparing journal entries for these invoices

iii. authorising these journal entries

iv. filing invoices for auditing purposes (this may be related to the invoice numbering system).

(g) Please complete the tax invoice based on the following sales details:

Sale of a quantity of 1,000 ABC books at $15 each (including GST) to Ben Smith (123 Smith St, Smithville 9015), on 30-day terms, based on order #236, invoice #89. Shipped on 16 June 2018 via Alpha Couriers.

Question 5 -

At 30 June, H. Henry has been examining the amounts outstanding from his Accounts Receivable.

One account, I. Doubt, owes $1,650 (including GST) but pays only $550 on 30 June, stating that he will be unable to pay the balance. Henry decides to write off the balance of Doubt's debt as being unrecoverable.

Lester is both a customer and a supplier. Henry wants to adjust for a $660 balance both owing to, and owed by, L. Lester.

Required:

(a) Record, as General Journal entries, the receipt of cash from customer I. Doubt and the write-off of the balance as irrecoverable.

(b) Record the General Journal entry for the contra adjustment.

(c) Post the entries to the General Ledger accounts and to the Subsidiary Ledger accounts for I. Doubt and L. Lester.

(d) What report can be used to manage debtors and assist in the identification of bad or doubtful debts, and what information does it contain?

(e) You are establishing a credit policy to assist in the collection of monies owing by your customers. Please provide details of the steps you would include to recover overdue debts, based on varying levels of lateness.

How would your policy change if you believed the level of overdue debts was too high?

(f) Peters Plants sells artificial plants for indoor and outdoor use. The company is owned and managed by Peter Petersen.

Credit Policy -

Terms and conditions - Standard credit terms are net 30 days. At the end of the month an aged receivables report and overdue accounts are reviewed. Monthly statements are issued at the end of the month.

Collection Procedures

The following steps are taken regarding the collection of monies owing:

0-30 days current: Invoice/s sent to customer with month end statement

31-60 days overdue account: Overdue sticker sent with next statement

61-90 days overdue account: Phone call informing customer credit facility will be put on hold

91 + days overdue account: If a customer's debt is more than $150 a letter informing the customer their account will be turned over to a collection agency if payment is not received within 14 days.

Customer Delinquency -

A debt that is 90 + days overdue and less than $150 will be written off as a bad debt.

Tip: the specific answers to all of the following questions for 9(f) may not be completely found in the textbook. Use your learning and understanding of recording and administering credit sales and dealing with credit customers to arrive at your answers. Feel free to research other sources to assist you.

 

Required:

f(i) Using the information provided in Peters Plants Aged Receivable report as at 31 March 2018, complete an Overdue Accounts Review.

f(ii) Using the information from Peters Plants' Credit Policy and Aged Receivables report as at 31 March 2018, what steps would you take regarding the collection of monies outstanding as at 31 March 2018?

f(iii) Who would you distribute these reports to?

f(iv) Where would these reports be filed?

(g) In order to pay the invoices that have been received from your suppliers, what checks would you first undertake on these supplier invoices before making payment?

Tip: the specific answer to this question may not be completely found in the textbook. Use your learning and understanding of recording and administering credit purchases to arrive at your answers. Feel free to research other sources to assist you.

Question 6 -

The accountant of Harvey Imports provides trading information for the year ending 30 June 2016. As most stock is imported, customs duty is paid on many items of stock. There are also delivery charges incurred.

At 30 June 2016, the records of Harvey Imports provide the following details:

Purchases ledger balance $32,300

Stocktake at 30 June 2016 $17,800

Customs Duty account balance $1,600

Opening inventory $32,000

Freight Inwards account balance $1,550

Sales account balance $51,800

Required: Prepare a Trading Statement for the year ending 30 June 2016 with detail for the COGS

Question 7 -

ABC Boxes made the following transactions (see attached file) during the month of August. ABC Boxes use a periodic inventory system.

Required:

a. Enter the above transactions into the Credit Sales Journal. Cross-balance using the column totals.

b. Refer to the invoices above. ABC Boxes received a payment from B Brown and issued the following payment receipt.

The funds were banked and the following journal entry was recorded in the Cash Receipts Journal.

Dr Bank $1,340.00

Cr Debtors $1,340.00

Required: Check the invoice for B Brown and the cash receipt given to B Brown.

(Hint: Have the amounts in the Cash Receipts Journal been recorded correctly?)

Record the adjustment needed in the Cash Receipts Journal to correct the error?

Question 8 -

McGuire Corp made the following Credit Purchases and Returns during April. All amounts include GST, and McGuire Corp uses a periodic inventory system.

Date	Tax Invoice/Tax Adjustment	Details	Amount (inc. GST)
April 02	A1356	Received invoice from B Brown for inventory purchases	$1,100
06	B 9686	Bought goods on credit from Ruby Rose	770
13	8923	Purchased office equip. on credit from Equipwerx	1,320
18	A1421	Bought trade goods from B Brown	671
21	C00134	Received tax adjustment note from B Brown for overcharge on invoice A1356	33
26	B9888	Received a tax invoice for stock from Ruby Rose	1,100
30	060509	Purchased goods from Pretty in Pink	550

Required: Enter the transactions into the Credit Purchases Journal.

Question 9 -

From the following information for A. Liu prepare for May 31:

(a) Cash Balance Summary for May and Bank Ledger Account for May

(b) Bank reconciliation statement. Tip: Follow the steps in the bank reconciliation process per chapter 11.5.

The reconciliation on April 30 showed that the Bank Ledger Account had a credit balance (overdraft) of $3,182.90.

The Bank Statement had reconciled to the Bank Ledger Account after allowing for:

• An outstanding deposit $733.10, and
• Unpresented cheque #324856 for $934.02

For May:

Extract Cash Receipts Book of A. Liu		Extract Cash Payments Book of A. Liu
02/05	$ 1,446.52	01/05	324875	$ 1,526.16
07/05	3,486.72	04/05	324876	905.70
11/05	1,538.90	08/05	324877	2,404.38
11/05	436.84	12/05	324878	1,702.86
12/05	2,360.20	15/05	324879	1,296.98
21/05	1,039.30	20/05	324880	561.40
30/05	846.76	28/05	324881	1,958.30

 

The Best Bank    Ltd
Bank Statement  for  A. Liu
Date	Particulars	Debit	Credit	Balance
	Brought forward			$ 2,981.98 Dr
01/05	Cheque #324875	$ 1,526.16		4,508.14 Dr
	Cash/cheques deposit		$ 733.10	3,775.04 Dr
02/05	Cash/cheques deposit		1,446.52	2,328.52 Dr
05/05	Cheque #324856	934.02		3,262.54 Dr
07/05	Cash/cheques deposit		3,486.72	224.18 Cr
11/05	Cash/cheques deposit		1,538.90	1,763.08 Cr
12/05	Cheque #324877	2,404.38		641.30 Dr
	Cash/cheques deposit		436.84	204.46 Dr
15/05	Cheque book fee	50.00		254.46 Dr
17/05	Cheque #324879	1,296.98		1,551.44 Dr
18/05	Cash/cheques deposit		2,360.20	808.76 Cr
21/05	Cheque #324878	1,702.86		894.10 Dr
24/05	L. Mami cheque dishonour	551.56		1,445.66 Dr
	Dishonour fee	15.00		1,460.66 Dr
25/05	Cheque # 324876	905.70		2,366.36 Dr
26/05	Cash/cheques deposit		1,039.30	1,327.06 Dr
31/05	Cheque #324880	561.40		1,888.46 Dr

(a) Cash Balance Summary for A. Liu as at 31 May

(b) Tip: If any, be certain to list any Unpresented Cheques or Outstanding Deposits in this Bank Reconciliation.

(c) Provide 3 examples that would give rise to a difference between a bank statement and the bank ledger account of a business.

Question 10 -

Joshua Owen commenced business on 1 September, and had several special transactions during the month:

Date - Transactions

Sept 01 - Owen contributed the following to the business: Premises $85,000, Cash $4,000, Mortgage on Premises $30,000 and Shop Fittings $3,000.

Sept 09 - Owen gave the business a Motor Vehicle valued at $5,000 to be used for delivering goods to customers.

Sept 11 - Stock costing $80 plus $8 GST was taken by Owen's children.

Sept 14 - Surplus shelving, valued at $50 plus $5 GST, was taken by Owen for storing tools in his home garage.

Required: General Journal entries to record these transactions.

Question 11 -

Please find a Trial Balance from the ledger of E. Norman, as well as Income Statement and Balance Sheet templates per its policies and procedures:

Required:

(a) Complete the worksheet.

WORKSHEET	Trial Balance		Income Statement		Balance Sheet
Accounts	Debit	Credit	Debit	Credit	Debit	Credit
Building	31,483
Bank	1,900
Accounts Receivable	3,700
Accounts Payable		5,000
GST Collected		2,600
GST Paid	2,000
Sales		44,593
Cost of Goods Sold	21,118
Office Equipment	950
Inventory	13,832
Delivery Expenses	475
Insurance	228
Electricity	532
Telephone	190
Salaries	2,470
Rates	238
Discount Allowed	1,007
Rent	484
Commission Income		807
Capital (opening)		27,607
Net Profit
Totals	80,607	80,607

(b) Prepare an Income Statement for year ended 30 June.

(c) Prepare a Balance Sheet at 30 June.

(d) Identify features of interim reports.

(e) Consider this statement: 'Interim reports' are described as 'interim' because end of year processes have not yet been completed. True or False.

Question 12 -

A motor vehicle was purchased on 31 March 2016 for $42,000 plus GST. It has an expected useful life of 5 years and is being depreciated using the straight-line method to a residual value of $10,000 plus GST.

Assuming balance day is 30 June:

Required:

(a) How much is depreciation each year? (Show your workings).

(b) How much is depreciation on 30 June 2016? (Show your workings).

(c) Prepare a journal entry to record depreciation on 30 June 2016.

(d) Prepare a depreciation schedule to 30 June 2018.

Question 13 -

On 30 November 2015 a finishing machine was sold.

Its capital cost was $25,000 and accumulated depreciation was $13,000 at date of sale. Tip: Accumulated depreciation has been provided up to the date of sale. Thus no further depreciation is required to be recorded.

The machine was sold on credit to Jake Strong for $14,300 (including GST) with the purchaser paying a $1,000 deposit.

Balance date is 30 June 2016.

Required:

(a) Record General Journal entries to account for the sale of the finishing machine and post to the relevant ledger accounts.

(b) Transfer the profit or loss on disposal to the Profit and Loss account at 30 June.

Question 14 -

Monarch Manufacturing purchased a new forklift. A check of Monarch's records revealed that an Asset Register record for the forklift vehicle had not been created. The Manager has now asked you to prepare the Asset Register record for this forklift. She has provided you with the following information regarding the forklift:

• A forklift, a Toyota Hi-Lift, was purchased for $80,000 (excluding GST) on the 1 July 2016 from Queens Street Toyota.
• The forklift was registered for road use with registration no. ABC-123.
• The forklift was located at Monarch's Melbourne factory.
• The estimated life of the forklift was set at 5 years.
• Our internal asset number FORK16 was assigned to the asset.
• The company accountant has instructed that straight line depreciation method will be use and estimated the residual value at the end of the effective life to be $5,000.
• Due to a change in requirements, the forklift was sold on 1 January 2018 for $44,000 (excluding GST) giving a profit/loss on disposal.

Required: Prepare the Asset Register record for the forklift.

Question 15 -

Ledger Account balances (prior to any Balance Day Adjustments) as at 30 June 2016:

Insurance	$ 2,400
Rent	1,800
Interest Income	1,400
Plant	10,000
Accumulated Depreciation - Plant	6,000
Accounts Receivable (before bad debts write off - see info. below)	5,550
Allowance for Doubtful Debts	200

Additional Information:

• On 1 December 2015 a one-year insurance premium was paid, for $2,400 plus GST.
• Insurance cover starts on 1 December.
• Rent paid in advance $150 at 30 June 2016.
• Interest earned but not received $350 at 30 June 2016.
• Depreciation to be provided $1,000 at 30 June 2016.
• Bad Debts to be written off $500 plus $50 GST at 30 June 2016.
• Allowance for Doubtful Debts to be adjusted to 5.5% of Accounts Receivable.

Tip: In your calculation, remember to consider the bad debt amount to be written off and the existing Allowance for Doubtful Debts balance.

Required:

(a) General Journal entries for the Balance Day Adjustments.

(b) Reversing General Journal entries on 1 July 2016.

Question 16 -

You are provided with the General Ledger with balances (in part (b) below) of E. Norman after balance day adjustments have been posted.

Required:

(a) Prepare the closing general journal entries.

(b) Post entries to the General Ledger.

(c) Post-closing Trial Balance.

Question 17 -

You are provided with the following Trial Balance at 30 June 2019 for Maloney Co. This company uses the perpetual inventory system.

Maloney Co - Trial Balance at 30 June 2019
	$	$
Accumulated Depreciation - Van		13,000
Advertising	3,900
Bank	720
Capital		15,270
Accounts Payable		5,250
Accounts Receivable	6,000
Delivery Van	60,000
Discount Allowed	400
Insurance	900
Investments	20,000
Mortgage		24,000
Inventory at 30/6/2019	10,900
Cost of Goods Sold	117,700
Rent	13,000
Sales		220,000
Wages - Office	25,000
Wages - Sales	20,000
GST Paid	2,000
GST Collected		3,000
	280,520	280,520
Additional Information - Balance Day Adjustments still to be recorded:
Prepaid rent	1,100
Depreciation - Van	2,100

Required:

(a) Prepare a Ten Column Worksheet.

(b) Prepare the Income Statement for the year ended 30 June 2019.

(c) Prepare the Balance Sheet as at 30 June 2019.

(d) What checks have you undertaken to ensure that the Income Statement and the Balance Sheet are correct?

(e) What steps would you undertake if you believe the Income Statement or the Balance Sheet are not correct, or if the Balance Sheet does not balance?

Attachment:- Accounting Basics Questions.rar